Quantum Entm't, Ltd. v. U.S. Dep't of Interior

848 F.Supp.2d 30

QUANTUM ENTERTAINMENT, LTD., Plaintiff,

v.UNITED STATES DEPARTMENT OF INTERIOR, Bureau of Indian Affairs, Defendant.

Civil Action No. 11–47 (RMU).

United States District Court, District of Columbia.

March 26, 2012.

Charles K. Purcell, Rodey, Dickason, Sloan, Akin & Robb, PA, Albuquerque, NM, Nancy J. Appleby, Appleby Law PLLC, Alexandria, VA, for Plaintiff.

Kristofor R. Swanson, U.S. Department of Justice, Washington, DC, for Defendant.

MEMORANDUM OPINION

RICARDO M. URBINA, District Judge.

Granting the Defendant's Motion for Summary Judgment; Denying the Plaintiff's Cross–Motion for Summary Judgment

I. INTRODUCTION

This case comes before the court on the parties' cross-motions for summary judgment. The plaintiff, Quantum Entertainment Limited (“QEL”), commenced this action against the Bureau of Indian Affairs (“BIA”), a department within the United States Department of the Interior (“DOI”). According to the plaintiff, the DOI's Interior Board of Indian Appeals (“the Board”) issued an administrative decision that violated the Administrative Procedure Act (“APA”), 5 U.S.C. §§ 701, et seq. Upon review of that decision, this court previously held that the Board had failed to articulate a reasoned basis for certain findings central to its holding and remanded the case to the Board for further explanation. The Board thereafter issued a revised opinion in 2010, and the parties have now filed cross-motions for summary judgment. Because the Board's 2010 opinion was not arbitrary, capricious or contrary to law, the court grants the defendant's motion for summary judgment and denies the plaintiff's motion.

II. BACKGROUND

A. Statutory Framework

In 1872, Congress passed legislation that governed agreements related to Native American lands, codified at 25 U.S.C. § 81. From 1871 until 2000, this legislation, referred to herein as “Old Section 81,” remained substantially unchanged and read as follows:

No agreement shall be made by any person with any tribe of [Native Americans] ... for the payment or delivery of any money or other thing of value ... in consideration of services for said [Native Americans] relative to their lands ... unless such contract or agreement be executed and approved [by the Secretary of the DOI (“Secretary”) ].... All contracts or agreements made in violation of this section shall be null and void, and all money or other thing of value paid to any person by any [Native American], tribe, or any one else, for or on his or their behalf, on account of such services, in excess of the amount approved by the ... Secretary for such services, may be recovered by suit in the name of the United States.

25 U.S.C. § 81 (1994). Congress passed Old Section 81 out of concern that “claims agents and attorneys working on contingency fees routinely swindl [ed Native Americans] out of their land, accepting it as payment for prosecuting dubious claims against the federal government.” United States v. Turn Key Gaming, Inc., 260 F.3d 971, 976–77 (8th Cir.2001) (citing Cong. Globe, 41st Cong., 3d Sess. 1483, 1483–87 (daily ed. Feb. 22, 1871)); see also id. at 976 n. 6, 977 n. 7.

In 2000, Congress amended Old Section 81 as part of the Native American Tribal Economic Development and Contracts Encouragement Act of 2000. 25 U.S.C. §§ 71, 81, 476. This “amendment” was intended to replace Old Section 81, as the changes to the text were quite substantial. S. Rep. No. 106–150, at 1, 1999 WL 965424 (1999). The relevant text of 25 U.S.C. § 81, as amended (“New Section 81”), states that “[n]o agreement or contract with [a Native American] tribe that encumbers [Native American] lands for a period of 7 or more years shall be valid unless that agreement or contract bears the approval of the Secretary of the Interior or a designee of the Secretary [‘DOI approval’].” 25 U.S.C. § 81(b) (2000). In other words, whereas Old Section 81 required DOI approval of any agreement between Native Americans and others regarding Native American land, New Section 81 only requires DOI approval if an agreement with a Native American tribe would hinder the use of its land for a period of 7 years or more. See id.

The legislative history surrounding the enactment of New Section 81 illustrates that Congress was concerned that “many provisions of [Old Section 81 had] come to be antiquated and unnecessary,” H.R.Rep. No. 106–501, at 2 (2000), as reprinted in 2000 U.S.C.C.A.N. 69, 69, and that their interpretation was unpredictable, seeS.Rep. No. 106–150, at 5, 1999 WL 965424 (1999). Congress acknowledged that “[Native American] tribes, their corporate partners, courts, and the [BIA] have struggled for decades with how to apply [Old] Section 81 in an era that emphasizes tribal self-determination, autonomy, and reservation economic development.” Id. at 2. To address these concerns, Congress passed New Section 81 and thereby narrowed the scope of contracts that require DOI approval. Id. at 9.

Congress did not comment on whether New Section 81 applied to contractsformed before its enactment, however. See generally id. When Congress does not expressly prescribe a statute's retroactive reach, courts must consider whether such retroactive application would have an impermissible retroactive effect. Landgraf v. USI Film Prods., 511 U.S. 244, 278 (1994). A new statute has an impermissible retroactive effect if, compared to the old statute, its retroactive application would impair a party's rights or increase his liabilities for past conduct, or if it would impose new duties on a party. Id. In the event that such an impermissible retroactive effect is present, it is presumed that the new statute does not apply retroactively. Id.

B. Factual and Procedural Background

Santo Domingo Pueblo (“Pueblo”) is a Native American pueblo, or tribal community, located in New Mexico. Compl. ¶ 2. Kewa Gas Limited (“Kewa”) is a Registered Indian Tribal Distributor (“RITD”) that operates the Pueblo's retail gas station, its gas distribution business and related businesses. Id. ¶ 20. In August 1996, the plaintiff, QEL, entered into a management agreement (“agreement”) with the Pueblo and Kewa. Id. ¶ 16. The agreement authorized the plaintiff to manage Kewa's gas distribution business and to be compensated at a rate of 49% of income, plus bonuses. Id. The agreement was to last for ten years, but the plaintiff had the option at the end of the first decade to renew it for an additional ten years, and for a subsequent ten-year period thereafter. Id. In other words, the plaintiff could elect to bind the defendant to the agreement for thirty years. Id.

The parties operated under the agreement for six years. Id. ¶¶ 22, 36. In March 2003, however, the Governor of the Pueblo requested that the BIA review the agreement, believing that it was “far too lucrative for” QEL, and adversely “impacted the tribe ... financially.” Id. ¶ 37.

In October 2003, the BIA determined that the agreement was subject to review under Old Section 81 because the parties entered into the agreement before New Section 81 was enacted. Id. ¶ 38. The BIA further reasoned that because the agreement had never been approved by the Secretary of the DOI, Old Section 81 dictated that the agreement had “never been legally valid and any monies received by [the plaintiff] pursuant to [the agreement] were [therefore] unauthorized.” Id.

The plaintiff appealed the BIA's decision to the Board, which upheld the BIA's findings in March 2007. Id. ¶ 43. The Board determined that New Section 81 did not retroactively apply to the agreement and that, therefore, Old Section 81 applied. Compl., Ex. B (“Bd.2007 Decision”), at 3. The Board further concluded that under Old Section 81, the agreement should have received approval from the Secretary of the DOI before going into effect. Id. at 2.

The plaintiff then commenced this action seeking review of the Board's decision. Compl. ¶ 44. In February 2009, the court determined that the Board's decision was arbitrary and capricious because it had failed to address two considerations central to its holding. Mem. Op. (Feb. 19, 2009) at 11. First, this court held that in determining whether Old Section 81 or New Section 81 applied to the agreement, the Board had not fully addressed whether applying New Section 81 would result in an impermissible retroactive effect. Id. Second, in determining whether the agreement required DOI approval under Old Section 81, the Board had neglected to consider whether the agreement was “relative to” Native American lands. Id. at 9–10. For these reasons, the case was remandedto the Board with instructions to explain the basis of its decision. Id. at 14.

In December 2010, the Board issued a more developed opinion that reaffirmed its previous decision. See generally Compl., Ex. C (“Bd.2010 Decision”). In its 2010 opinion, the Board determined that Old Section 81 should apply to the agreement because applying New Section 81 would have an impermissible retroactive effect. Id. at 317. Specifically, the Board concluded, applying New Section 81 would create contractual rights and duties for the parties that had not existed before. Id. The Board also held that under Old Section 81, the agreement required DOI approval because it was related to Native American lands. Id. The defendant has now filed a motion for summary judgment, arguing that the Board's revised opinion satisfied the APA. See generally Def.'s Mot. In response, the plaintiff has filed a cross-motion for summary judgment, contending that the Board erred in making its determinations. See generally Pl.'s Mot. The court now turns to the parties' arguments and the applicable legal standards.

III. ANALYSIS

A. Legal Standard for Summary Judgment

Summary judgment is appropriate when the pleadings and evidence show “that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(a); see also Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106...