Solenex LLC v. Bernhardt

962 F.3d 520

SOLENEX LLC, a Louisiana Limited Liability Company, Appellee

v.David Longly BERNHARDT, Secretary, U.S. Department of the Interior, et al., Appellees

Blackfeet Headwaters Alliance, et al., Appellants

No. 18-5343

C/w 18-5345

United States Court of Appeals, District of Columbia Circuit.

Argued January 21, 2020

Decided June 16, 2020

Brian C. Toth, Attorney, U.S. Department of Justice, argued the cause for federal appellants. With him on the briefs were Jeffrey Bossert Clark, Assistant Attorney General, Eric A. Grant, Deputy Assistant Attorney General, Stephen A. Vaden, General Counsel, U.S. Department of Agriculture, and Charles E. Spicknall, Attorney.

Timothy J. Preso argued the cause and filed the briefs for intervenor-appellants.

Joel West Williams and Kim Jerome Gottschalk, Boulder, CO, were on the brief for amicus curiae Blackfeet Tribe in support of appellants and reversal of the district court.

David C. McDonald argued the cause for appellee. With him on the brief were Ivan L. London, Zach W. Fitzgerald, and Zhonette M. Brown. Christian B. Corrigan entered an appearance.

Rebecca W. Watson, Denver, CO, was on the brief for amicus curiae Western Energy Alliance in support of appellee and the decision below.

Before: Tatel, Garland, and Millett, Circuit Judges.

Millett, Circuit Judge:

The Badger-Two Medicine Area ("Two Medicine Area") is a region of unique cultural, religious, spiritual, historical, and environmental significance. Solenex LLC holds an oil and gas lease ("Lease") over a portion of that area. In 2016, the Secretary of the Interior cancelled the Lease because of the Two Medicine Area's multi-faceted significance and Interior's failure to conduct the proper pre-lease analyses required under the National Environmental Policy Act ("NEPA"), 42 U.S.C. §§ 4321 et seq. , and the National Historic Preservation Act ("Historic Preservation Act"), 54 U.S.C. §§ 300101 et seq. When Solenex challenged that cancellation decision, the district court ruled in its favor. The court held that the amount of time that had elapsed between the Lease's issuance and its cancellation violated the Administrative Procedure Act ("APA"), 5 U.S.C. §§ 551 et seq. , and that the Secretary failed to consider Solenex's reliance interests before cancelling the Lease.

Each of those determinations was erroneous. First, delay by itself is not enough to render the Lease cancellation arbitrary or capricious. Second, the Secretary did consider, and in fact compensated, Solenex's identified reliance interests. For those reasons, we vacate the district court's judgment.

I

A

The Two Medicine Area has long held a special place in the cultural history and religious life of the Blackfeet Tribe. The Tribe's oral history describes how its people began to suffer and die shortly after the world's creation. Seeing that suffering, the Creator returned to the Blackfeet and took them into the countryside and mountains of what would become the traditional Blackfeet territory, including the Two Medicine Area. There, the Creator introduced the Blackfeet to healing trees, bushes, and plants, and taught them how to seek the Creator and other spirits. Seeking those spirits, which is "a central and inseparable part of [the Tribe's] religion and lifeway," requires the Blackfeet to be in the proper geographical location and to undertake special preparations for religious ceremonies in the area. J.A. 2021, 2029.

The Two Medicine Area's topography includes high mountain peaks and river valleys, and it offers relative isolation and a supply of high-quality plants, animals, and minerals, all of which are central to the Blackfeet people's religious, spiritual, and cultural practices. For those reasons, it remains a place of spiritual power for the Blackfeet people because "[i]t is there that the spirits remain" and where the Blackfeet "can go, as they have been for centuries in accordance with their beliefs and traditions, to be alone near Creator Sun while still standing on Mother Earth so that their prayers can be heard by these two Creators[.]" J.A. 2023.

Many of those same religious and cultural characteristics render the Two Medicine Area environmentally significant. The Two Medicine Area is bounded by Glacier National Park, the Scapegoat and Bob Marshall Wilderness Areas, and the present-day Blackfeet Indian Reservation. The Two Medicine Area functions as a habitat for a number of species, including bald eagles, peregrine falcons, grizzly bears, elk, wolves, lynx, and wolverines, and it serves as a "critical wildlife movement corridor[.]" J.A. 327. In recognition of its critical environmental status and to preserve the region, the United States Forest Service in 2009 banned motorized vehicles from all trails and prohibited snowmobiling.

B

In June 1982, the Bureau of Land Management, which is housed within the Department of the Interior, issued oil and gas leases within the Two Medicine Area. One of those leases was issued to Sidney Longwell. To obtain the Lease, Longwell paid the first year's rental fee, in the amount of $1 per acre, totaling $6,247.00.

The Lease did not convey an unrestricted right to drill. Instead, Longwell was required to obtain permission from both the Bureau and the Forest Service before drilling could occur.¹ The Environmental Assessment conducted by the Forest Service before the Lease was issued expressly reaffirmed the contingent nature of the right. As the Environmental Assessment explained, the "decision to lease is only the first step of a multi-step decision process." J.A. 2222. The Forest Service recognized that the Two Medicine Area "may contain areas of spiritual importance," and that "the Blackfeet people prefer[red] to identify th[o]se areas on a project-by-project basis." J.A. 2254. If mitigation of any negative effects was "not possible[,]" then "the area may be avoided completely[.]" J.A. 2280.

In addition to the explicitly contingent status of drilling, the Lease provided that it was "subject to all rules and regulations of the Secretary of the Interior now or hereafter in force, when not inconsistent with any express and specific provisions herein[.]" J.A. 2106. In July 1983, approximately one year after issuing the Lease, Interior amended its regulations to make clear that "[l]eases shall be subject to cancellation if improperly issued." Minerals Management and Oil and Gas Leasing on Federal Lands, 48 Fed. Reg. 33,648, 33,674 (July 22, 1983).

One year after receiving the Lease, Longwell assigned it to three companies: America Petrofina Company of Texas, Petrofina Delaware, Inc., and AGIP Petroleum Company (collectively, "Fina"). Longwell retained a production payment based on the value of any oil and gas produced in the future from the Two Medicine Area. J.A. 42.

Fina submitted an application on November 21, 1983, for permission to drill in the Two Medicine Area. The Bureau, the Forest Service, and the Montana Department of Fish, Wildlife, and Parks jointly conducted a proposed Environmental Assessment analyzing the impact of drilling on the environmental, historical, cultural, and religious significance of the area. The Fish and Wildlife Service issued a biological opinion in which it concluded that "the proposed action would jeopardize the grizzly bear and gray wolf," which were threatened species. J.A. 657. A modification to the proposed drilling action was subsequently made, and the Area Manager for the Bureau approved the revised application on January 31, 1985.

Several conservation groups and the Blackfeet Tribe filed an administrative appeal with the Interior Board of Land Appeals ("Interior Appeals Board"). The conservation groups and the Tribe alleged that the approval violated NEPA, the Endangered Species Act, 16 U.S.C. §§ 1531 et seq. , the Archeological and Historic Preservation Act, id. §§ 469 et seq. , and the Range Land Renewable Resources Planning Act, id. §§ 1600 et seq. The Interior Appeals Board agreed in part, setting aside the Bureau's grant of the drilling application because, among other things, it failed to consider whether cultural resources would be impacted by the location of a proposed access route.

In the wake of that decision, Fina chose to seek relief from Interior and requested that the Lease be suspended. That request was granted, and the Lease was placed in suspension on October 1, 1985. As a result, the agency suspended Fina's "rental and minimum royalty payments" to Interior and tolled the Lease term. J.A. 2213. The Lease, and the leaseholders’ obligations under it, have remained in suspension to the present day.

The application to drill went through a series of additional appeals and remands. In April 1987, the Bureau approved the drilling application. On administrative appeal, the Bureau requested and obtained a voluntary remand.

On remand, the Bureau and the Forest Service finally undertook a comprehensive environmental, cultural, and historical study and prepared an Environmental Impact Statement, see 42 U.S.C. § 4332(2)(c). The Environmental Impact Statement covered the applications by Fina and another company to drill in the same portion of the Two Medicine Area. The Statement documented that the Two Medicine Area "possesses characteristics which are considered important for the practice of traditional culture and religion," and that Tribal members "value the area's clean air and water, the limited access which affords less chance of disturbance, and the beauty of the relatively undisturbed environment." J.A. 1109.

The Blackfeet Tribe expressed the critical need to maintain the Two Medicine Area as one of its last surviving spiritual sites, since other sites had already been subjected to extensive tourist activity and ongoing mineral exploration. The widescale destruction of spiritual environs for the Tribe raised the specter that "this generation and future generations [would] not have future opportunities to practice religion in an undisturbed environment." J.A. 1110.

Despite those...