Western Refining Southwest, Inc. et al v. United States Department of the Interior et al
Filing
51
MEMORANDUM OPINION AND ORDER by District Judge Judith C. Herrera reversing IBIA's decisions overturning the twenty-year renewal of Western's right-of-way over Allotment No. 2073. (baw)
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEW MEXICO
WESTERN REFINING SOUTHWEST, INC.
And WESTERN REFINING PIPELINE, LLC,
Plaintiffs,
vs.
Civ. No. 16-442 JH/GBW
U.S. DEPARTMENT OF THE INTERIOR, and
SALLY JEWELL, in her official capacity as
Secretary of the Interior,
Defendants.
MEMORANDUM OPINION AND ORDER
This case is before the Court on review of two decisions by the Interior Board of Indian
Affairs (“IBIA). The Court has jurisdiction to review that decision under the Administrative
Procedures Act (“APA”), 5 U.S.C. § 701 et seq. This case presents the novel question of whether
the IBIA may lawfully require consent from not only the holder of a life estate in an Indian
allotment, but also that person’s heirs, before granting a right-of-way over the property. The
Court has examined the Plaintiffs’ opening brief [Doc. 44], Defendant’s response [Doc. 45], and
Plaintiffs’ reply [Doc. 46], as well as the exhibits thereto and the administrative record provided
by the parties. After reviewing these and the relevant legal precedents, the Court concludes that it
was not improper for the IBIA to look to the common law to fill gaps in the relevant statutory
scheme, nor was it improper for it to apply its decision retroactively to the right-of-way sought
by Western. However, the IBIA erred by raising the issue sua sponte and then ruling on it
without giving the parties an opportunity to be heard.
STANDARD OF REVIEW
Under the APA, a court may set aside agency action only if it is “arbitrary, capricious, an
abuse of discretion, or otherwise not in accordance with law.” 5 U.S.C. § 706(2)(A); accord
Utah Shared Access Alliance v. United States Forest Serv., 288 F.3d 1205, 1208 (10th Cir.
2002). An agency’s decision is arbitrary and capricious if the agency (1) “entirely failed to
consider an important aspect of the problem,” (2) “offered an explanation for its decision that
runs counter to the evidence before the agency, or is so implausible that it could not be ascribed
to a difference in view or the product of agency expertise,” (3) “failed to base its decision on
consideration of the relevant factors,” or (4) made “a clear error of judgment.” Utah Envtl. Cong.
v. Troyer, 479 F.3d 1269, 1280 (10th Cir. 2007) (quotations omitted). The Court’s “inquiry under
the APA must be thorough, but the standard of review is very deferential to the agency.”
Hillsdale Envtl. Loss Prevention, Inc. v. U.S. Army Corps of Engineers, 702 F.3d 1156, 1165
(10th Cir. 2012) (quotations omitted). “Agency action, whether it is classified as ‘formal’ or
‘informal,’ will be set aside as arbitrary unless it is supported by ‘substantial evidence’ in the
administrative record.” Pennaco Energy, Inc. v. U.S. Dep’t of the Interior, 377 F.3d 1147, 1156
(10th Cir. 2004) (citing Olenhouse v. Commodity Credit Corp., 42 F.3d 1560, 1575 (10th Cir.
1994)).
In Chevron, U.S.A., Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837
(1984), the Supreme Court addressed the deference owed to an administrative agency
interpreting the statute it is tasked with implementing. It concluded that if Congress has not
directly addressed the precise question at issue, “the court does not simply impose its own
construction on the statute, as would be necessary in the absence of an administrative
interpretation. Rather, if the statute is silent or ambiguous with respect to the specific issue, the
2
question for the court is whether the agency’s answer is based on a permissible construction of
the statute.” Id. at 843. “The power of an administrative agency to administer a congressionally
created ... program necessarily requires the formulation of policy and the making of rules to fill
any gap left, implicitly or explicitly, by Congress.” Morton v. Ruiz, 415 U.S. 199, 231 (1974).
As discussed below, Western argues that the IBIA’s decision is not entitled to deference
under Chevron.
FACTUAL AND PROCEDURAL BACKGROUND
The underlying facts are not in dispute.
Plaintiffs (collectively, “Western”) operate a buried crude oil pipeline that runs 75 miles
from the San Juan Basin to an oil refinery near Gallup, New Mexico. The pipeline at issue here
traverses tribal, federal, state, and privately-owned land, and Western holds easements for rightsof-way across 74.48 miles of the pipeline. However, this case arises from a dispute over the
easement for a .52-mile segment of pipeline that crosses Navajo Indian Allotment No. 2073—
land that is held in trust by the United States and allotted to individual citizens of the Navajo
Nation.1
On June 22, 2009, Western filed an application to renew its existing right-of-way across
43 Navajo allotments, including the .52-mile portion of pipeline over Allotment No. 2073 that is
at issue in this case. At the time, one of the applicable regulations stated: “The Secretary may …
grant rights-of-way over and across individually owned lands without the consent of the
individual Indian owners when . . . (2) The land is owned by more than one person, and the
owners or owner of a majority of the interests therein consent to the grant.” 25 C.F.R. §
1
Under Indian law, “allotment” is a term of art that means a specific parcel of land, taken from a
larger, common parcel, and granted to an individual. See Affiliated Ute Citizens of Utah v. United
States, 406 U.S. 128, 142 (1972).
3
169.3(c)(2) (Apr. 1, 2015). The regulations at that time did not address the question of how to
calculate a majority interest when one or more interest holder has only a life estate in the
property. Further, the record contains no evidence of any statute or previous administrative
decision addressing the issue.
On August 2, 2010, the Bureau of Indian Affairs (“BIA”) granted Western’s request and
issued a twenty-year renewal of the right of way over Allotment No. 2073. This renewal was
based on consent from eight individual owners of the undivided interest in Allotment No. 2073.
Among these individuals were Tom Morgan (42.5% interest) and Mary B. Tom (14.16%
interest). Five others each held a .38% undivided interest, and one held an undivided 1.67%
interest. By adding together each of these undivided interests, the BIA calculated that Western
had obtained consent from a collective 60.26% of the undivided interests in the allotment—a
majority as required by the regulation. Implicit in this calculation was the assumption—not
expressly addressed by the BIA—that Mr. Morgan had the sole power to consent for his portion
of the undivided interest despite the fact that he owns only a life estate in the allotment.2 In
return for their consent, the interest owners accepted compensation from Western. The BIA
appraised a twenty-year easement under Allotment 2073 to be worth $2,650. However, Western
paid them $6,656.00, or roughly two and a half times that amount.
Patrick Adakai, one of the five who owns a .38% undivided interest in Allotment No.
2073, appealed the BIA’s decision to renew Western’s right of way to the Interior Board of
Indian Appeals (“IBIA”). Adakai argued that Western obtained consents from other landowners
through flawed procedures and that Western paid too little in compensation. Adakai did not
dispute the BIA’s decision permitting Mr. Morgan to consent for his entire 42.5% undivided
2
It later turned out that Ms. Tom also held only a life estate in the Allotment.
4
interest, even though he owned only a life estate. On January 8, 2013, the IBIA vacated the
renewal of the easement not because of any flaw pointed out by Adakai, but on an issue it raised
sua sponte: that because Mr. Morgan had only a life estate in the property and had bequeathed
future remainder interests to others (referred to as “remaindermen”) through “gift deeds,” his
consent was legally insufficient without additional consents from these “remaindermen.” Neither
the BIA, Western, nor Adakai had the opportunity to brief the issue.
The IBIA’s decision recognized that the question had not been raised in the briefs and
that then-existing regulations did not speak to the question of consent by a holder of a life estate.
Thus, there was no authority directly on point. However, the IBIA asserted that it had the
authority to “correct manifest error” by the BIA. Turning to “general principles of property law,”
the IBIA concluded that as a holder of a life estate only, Morgan lacked authority to encumber
the Allotment beyond his lifetime. The IBIA then remanded the matter to the BIA. At this point,
it came to light that Ms. Tom also held a life estate in the Allotment.
As a result of the IBIA’s decision, Western attempted to obtain consent from both Mr.
Morgan’s and Ms. Tom’s remaindermen. Western successfully obtained consent from Ms.
Tom’s remaindermen. However, Western was able to obtain consent from only four of Mr.
Morgan’s eight remaindermen—not a majority. The four non-consenting remaindermen, who
collectively owned less than one percent of the undivided interest in Allotment 2073, demanded
that Western pay them $8.6 million for renewal of an easement that had an appraised fair market
value of $2,650.
On April 8, 2014, on remand from the IBIA, the BIA relied upon the 2013 IBIA decision
and the denial of consent by half of Morgan’s remaindermen to deny Western’s easement
renewal on Allotment No. 2073. Western appealed this decision to the IBIA, arguing that either
5
the 2010 renewal should be upheld, or in the alternative that the renewal should be allowed for
Mr. Morgan’s lifetime.3 Western argued that the BIA misinterpreted the IBIA’s 2013 decision,
including with regard to calculating majority consent, and failed to consider the specific
language of Ms. Tom’s and Mr. Morgan’s gift deeds. Western further argued that although in
2013 the IBIA had decided sua sponte the question of whether life tenants may consent to a right
of way beyond their lifetimes and retain all the income, the appeal put that question before the
IBIA. Western acknowledged that neither the regulations nor the General Right of Way Act of
1948 answered the dispute, but it did not argue that the IBIA lacked authority to consider general
property law in resolving it.
On May 4, 2016, the IBIA denied Western’s appeal in part by refusing to require the BIA
to renew the right-of-way across Allotment No. 2073 for a fixed and unqualified 20-year term.
Rather, the IBIA concluded that Western was entitled to a qualified right-of-way for 20 years or
the life of Mr. Morgan or Ms. Tom, whichever is the shortest period. The IBIA reasoned that
“the deeds contain no language that expressly or impliedly reserved, for the life tenants, the
authority to grant an interest beyond their lifetimes.” The IBIA also found that “because the
owners of a majority of the future interests in the Allotment did not consent to the [right-of-way]
renewal, the [BIA] did not err in refusing to issue an unqualified 20-year renewal.”
Significantly, it appears that this controversy led the Department of the Interior (“DOI”)
to engage in rulemaking regarding whether remaindermen consent should be required for rightsof-way. In 2014, the DOI proposed a rule that would have permitted holders of life estates to
3
On September 4, 2014, while its appeal of the BIA’s decision was apparently pending, Western
Refining filed a lawsuit in this Court seeking under 25 U.S.C. § 357 to obtain by eminent domain
the right to continued presence and operation of its pipeline across Allotment No. 2073. See
Western Refining Southwest, Inc. v. 3.7820 Acres of Land In McKinley County, New Mexico,
14cv804 KG/KK, Complaint, Doc. 1. That case has been stayed pending the final outcome of
this appeal of the administrative proceedings. See id. at Docs. 166 and 172.
6
consent to a right of way for the duration of their estates. However, in late 2015 the DOI settled
on a different rule requiring consent not only from the holder of a life estate, but also from the
holders of the majority of the remainder interest. 25 C.F.R. § 169.109 (2016). This regulation
went into effect in April of 2016 and does not apply to the controversy currently before the
Court.
DISCUSSION
Western has sued the United States and asks this Court to set aside the IBIA requirement
of remaindermen consent on the grounds that it is improperly retroactive and contrary to law,
including the General Right-of-Way Act of 1948, 25 U.S.C. §§ 323-328, and applicable
Department of Interior regulations. Western contends that the IBIA’s 2013 and 2016 decisions
overturning renewal and then denying unqualified 20-year renewal of the right-of-way on
Allotment No. 2073 are final agency actions reviewable under the Administrative Procedures
Act (APA). Western asks for a declaration that consent of the majority of current owners, and
not of their remaindermen, is all that was required under the General Right-of-Way Act and thenexisting regulations governing its right-of-way renewal applications, and that the BIA’s 2010
renewal of the easement for a 20-year term is valid. Western also asks the Court to enjoin the
Defendant to approve a renewal of its 20-year unqualified right-of-way over Allotment No.
2073.
I.
Did the IBIA Improperly Create and Apply a New Rule Retroactively?
Western argues first that in ruling on remaindermen consent, the IBIA created a new rule
and applied it retroactively in violation of limitations on retroactive rulemaking. Western’s
argument has two parts. First it relies on Tenth Circuit decisions limiting an agency’s ability to
use administrative adjudicatory proceedings to overthrow a rule on which a party has previously
7
relied. Next, it argues that principles of due process and equal protection require—via the fivefactor test set forth by the Tenth Circuit in Stewart Capital Corp. v. Andrus, 701 F.2d 846, 848
(10th Cir. 1983)—that the Court reverse the IBIA’s ruling. Neither argument is persuasive under
the facts of this case.
A.
Imposing new, retroactive rules through administrative adjudicatory proceedings
Western argues that the Tenth Circuit’s decisions in De Niz Robles v. Lynch, 803 F.3d
1165 (10th Cir. 2015) and Gutierrez-Brizuela v. Lynch, 834 F.3d 1142 (10th Cir. 2016)
demonstrate that the IBIA created a new rule through its adjudication procedures and then
wrongfully applied it retroactively to overturn the BIA’s renewal of Western’s easement.
Western contrasts this adjudicatory action with the Department of Interior’s rulemaking process
requiring public notice and opportunity to comment prior to promulgation of a new regulation,
which is then applied prospectively. According to Western, the Tenth Circuit cases prohibit the
IBIA’s actions in this case. However, the two cases Western cites simply do not apply in the
circumstances presented here.
In De Niz Robles v. Lynch, 803 F.3d 1165 (10th Cir. 2015), two immigration statutes
were at odds, one giving the Attorney General discretion to “adjust” the immigration status of
certain persons who have entered the country illegally, the other significantly limiting that
discretion. Id. at 1167. Confronted with that statutory tension, the Tenth Circuit held that the
AG’s discretion remained intact. Id. (citing Padilla-Caldera v. Gonzales, 426 F.3d 1294 (10th
Cir. 2005)). In reliance on the Padilla-Caldera decision, De Niz Robles filed a petition with the
AG to adjust his status. However, his petition languished for years, and before the AG ruled on it
the Board of Immigration Appeals issued a decision that was directly opposed to PadillaCaldera, concluding that the AG lacks the discretion to adjust the status of individuals like De
8
Niz Robles who entered the country illegally. See In re Briones, 24 I. & N. Dec. 355 (BIA 2007).
When the Board of Immigration Appeals finally got around to hearing De Niz Robles’ petition, it
followed Briones, not the Tenth Circuit’s opinion in Padilla-Caldera, and held that De Niz
Robles was ineligible for adjustment of his status and therefore subject to removal. Id. at 1168.
This meant that De Niz Robles had wasted years in justifiable reliance on the earlier decision in
Padilla-Caldera, when he could have been pursuing his remedies under Briones instead. The
question in De Niz Robles was whether it was proper for the Board of Immigration Appeals to
apply its new rule in Briones retroactively to someone who had relied on the earlier rule set forth
by the Tenth Circuit in Padilla-Caldera. The court concluded that it was not.
As the Tenth Circuit explained in De Niz Robles, typically executive agencies cannot
overrule federal courts when it comes to interpreting the law. 803 F.3d at 1167. An exception
applies when a statutory scheme is ambiguous, in which case Congress has delegated policymaking responsibilities to the agency and the courts must defer to the agency’s policy choice,
provided that choice is reasonably consistent with the legislative scheme. Id. (citing Chevron,
U.S.A., Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837 (1984)). Further, under
these circumstances courts must defer to the agency even when doing so means that court must
overrule
its
own
previous
statutory
interpretation. Id.
(citing National
Cable
&
Telecommunications Ass’n v. Brand X Internet Services, 545 U.S. 967 (2005)). However, in a
very lengthy and detailed opinion, the Tenth Circuit explained why under the circumstances in
De Niz Robles, it was improper for the Board of Immigration Appeals to apply its rule
retroactively. One of the chief reasons is that “[i]n the Chevron step two/ Brand X context, it’s
easy to see the ‘ill effect[s]’ of retroactivity: upsetting settled expectations with a new rule of
9
general applicability, penalizing persons for past conduct, doing so with a full view of the
winners and losers—all with a decisionmaker driven by partisan politics.” 803 F.3d at 1176.
In the De Niz Robles decision upon which Western relies, the Tenth Circuit explained,
clearly and repeatedly, that it was talking about “a Chevron step two/Brand X scenario.” To
clarify, under the Chevron analysis, “step two” is reached when “the statute is silent or
ambiguous with respect to the specific issue, [and] the question for the court is whether the
agency’s answer is based on a permissible construction of the statute.” Chevron, 467 U.S. at 843.
The Chevron element is satisfied in the present dispute because both parties agree that neither the
General Right-of-Way Act of 1948 nor any other applicable federal statute addresses the
question of whether remaindermen consent is required for renewal of a right-of-way on an Indian
allotment, and the IBIA’s reasoning is based on a permissible construction of the statute.
However, in order for De Niz Robles to apply, the factual circumstances must also fit
with Brand X. In a Brand X scenario, a federal court is obliged to overrule its own previous
pronouncement on the silent or ambiguous statute in favor of a more recent decision by a federal
agency entrusted with policy-making responsibilities. Brand X, 545 U.S. at 981-83. This element
is not satisfied here; the parties point to no previous ruling by any federal court addressing the
question of remainderman consent. For that matter, Western cannot point to a previous ruling by
a federal agency. Instead, Western asserts that it “relied on existing rules and BIA practices in
renewing a right-of-way,” but it cites nothing in the record supporting that statement, leaving the
Court to wonder as to the exact nature of those previous rules and practices. The absence of this
information is odd, considering so much of Western’s argument depends upon the contention
that it relied on a well-established practice which did not require remaindermen consent. In any
event, because there was no previous judicial pronouncement on remaindermen consent, this
10
case does not present a Brand X scenario and therefore is not governed by the caution against
retroactivity set forth in De Niz Robles.
It appears that the “reliance interest” that Western actually seeks to protect is its reliance
on the BIA’s initial 2010 decision approving Western’s request for the renewal. One result of
that reliance was Western’s payment to the interest holders. However, it is common in the course
of litigation for a party to appeal an initial decision, as Adakai did here. As the appellee, Western
knew the that there was a risk that the decision could be reversed. There is nothing unusual about
that. If every party that prevailed in litigation could prevent subsequent appellate reversals by
taking action in reliance on the lower court’s decision, then appellate reversals could be halted
universally. That is not the law.
B.
Application of the Stewart Capital Factors
Next, Western argues that the IBIA has violated “every protection against retroactive
agency adjudication,” citing the five-factor test set forth in Stewart Capital Corp. v. Andrus, 701
F.2d 846, 848 (10th Cir. 1983). Those factors, which are meant to guide a court in determining
whether an agency decision should be applied only prospectively, are:
1. Whether the particular case is one of first impression;
2. Whether a new rule represents an abrupt departure from well-established
practice or merely attempts to fill a void in an unsettled area of the law;
3. The extent to which a party, against whom the new rule is applied, relied on the
former rule;
4. The degree of burden which a retroactive order imposes on a party; and
5. The statutory interest in applying a new rule despite reliance of a party on an
old standard.
Id. at 848. According to Western, the act of requiring remainderman consent violates all five
factors. The Court disagrees.
As to the first factor, both parties agree that remaindermen consent was an issue of first
impression for the BIA and the IBIA. No then-existing statute or rule answered the question of
11
whether the holder of a life estate could give unqualified consent to the renewal of a right-of-way
without the consent of all or some of the remaindermen.
However, as to the second factor, it is far from clear that the IBIA’s ruling represented an
abrupt departure from a well-established practice on remaindermen consent. In fact, the record
contains no evidence whatsoever regarding the BIA’s established practice, if any, prior to this
case. Western asserts that “[s]ettled practice limited right-of-way consents to current owners.”
Doc. 44 at 11. However, Western cites to no evidence of such a practice. Western gives no
examples of previous instances in which the owner of a life estate was permitted to consent to an
unqualified right-of-way without the consent of his or her remaindermen. Further, it appears that
in their written decisions neither the BIA nor the IBIA considered or even mentioned any
previous or established practice as to remaindermen consent. Quite simply, the record is devoid
of any evidence of such a practice—there is only the unsupported assertion in Western’s brief.
The third factor is also not satisfied here, because—for the reasons previously
discussed—there is no evidence that Western relied upon any former rule or even a routine
practice by the IBIA or the BIA. Indeed, there is no evidence that there was any rule or previous
IBIA ruling in place when the IBIA issued its 2013 decision requiring remaindermen consent. As
the DOI aptly points out, “for reliance to establish manifest injustice, it must be reasonable—
reasonably based on settled law contrary to the rule established in the adjudication. The mere
possibility that a party may have relied on its own (rather convenient) assumption that unclear
law would ultimately be resolved in its favor is insufficient to defeat the presumption of
retroactivity when that law is finally clarified.” Qwest Services Corp. v. FCC, 509 F.3d 531, 540
(D.C. Cir. 2007). Western suggests that it has demonstrated reliance with the fact that it paid
above-market compensation to the current owners of interests in the Allotment. However, a party
12
cannot create reasonable reliance through its own actions; rather, the third Stewart Capital
requires a party to demonstrate that it relied reasonably on a prior established rule. Western has
failed to do that. In the absence of any controlling statute, regulation, or prior IBIA ruling, it
appears that Western merely assumed that it need not obtain remainderman consent.
Fourth, the Court must weigh the degree of the burden that the IBIA’s retroactive
decision imposes on Western. As Western points out, retroactive application of the IBIA’s ruling
will make it both more complicated and more expensive for Western to obtain the consents it
needs to obtain the unqualified right-of-way it seeks—and this many years after 2010, when it
obtained consents and paid compensation for the right-of-way. However, Western is not entirely
without remedy, as it may attempt to obtain consent from additional landowners in order to reach
a minority; it need not limit itself to the eight original interest holders and their remaindermen.
Further, as the DOI points out, Western has obtained the right to a qualified right-of-way
pursuant to the IBIA’s 2016 decision. Finally, Western has filed a lawsuit seeking to obtain the
right-of-way via eminent domain. Thus, there is a burden on Western, but it is not unreasonably
heavy.
Finally, the fifth element—whether and to what extent there is a statutory interest in
applying a new rule despite reliance of a party on an old standard—is not fulfilled here. As
previously discussed, Western has not shown that it reasonably relied on an old standard that has
now been overturned by the IBIA’s ruling.
Having weighed each of the Stewart Capital factors, the Court concludes that the IBIA’s
decision requiring remainderman consent may be applied retroactively to Western.
13
II.
Did the IBIA Improperly Rely on Principles of Common Law in a Manner That Is
Arbitrary and Capricious?
Western’s second argument is that it was legally erroneous for the IBIA to rely upon
principles of general property law in determining whether the owners “of a majority of the
interests” granted their consent to the right-of-way. See 25 C.F.R. § 169.3(c)(2) (Apr. 1, 2015)
Western contends that “Indian allotment ownership has little in common with general property
law.” Doc. 44 at 12. In response, the DOI argues that it was appropriate for the IBIA to turn to
common law—as it and other federal agencies often do—to resolve a question unanswered by
the 1948 Act and its related regulations. The DOI contends that it applied the law properly, and
that the IBIA’s decision is entitled to deference.
A.
Reliance on Common Law
The question of how to calculate the percentage of undivided interest in an allotment that
has given consent to a right-of-way when part of that interest rests in a life estate is one not
answered by the 1948 Act or any then-existing regulation—that much is undisputed. As a result,
under Chevron the question for this Court is whether the IBIA’s answer to that question is based
on a permissible construction of the statute. Western argues that the IBIA’s ruling is not entitled
to Chevron deference, and that even if it is entitled to such deference, the Court should find that
the IBIA’s decision was arbitrary and capricious.
1.
Chevron deference
According to Western, “[b]ecause [the IBIA] has no special expertise in general property
law, and was acting under a legal misconception, its decision gets no judicial deference.” Doc.
44 at 12. However, the cases cited by Western for this point are inapposite. In Flores-Molina v.
Sessions, 850 F.3d 1150, 1157 (10th Cir. 2017), the Tenth Circuit refused to give deference to a
decision by a single member of the Board of Immigration Appeals because “[a] decision made
14
by a single board member … is not precedential within the agency and therefore ordinarily is not
entitled to deference” and because the decision did not rest on “a prior precedential BIA decision
addressing the same question.” Id. (internal citation and quotation omitted). That is not the
situation here; there is no indication in the record that either IBIA decision was made by a single
board member. Western relies on another case involving the Board of Immigration Appeals,
Ibarra v. Holder, 736 F.3d 903, 918 and n.19 (10th Cir. 2013), where the court refused to defer
to the Board’s definition of a term found in criminal statutes because the Board had been
inconsistent in defining it, the definition at issue was “so far outside the interpretive gap left by
Congress,” and “the interpretation and exposition of criminal law is a task outside the [Board of
Immigration Appeal’s] sphere of special competence.” Id. Again, that is not the situation here,
where interpreting the General Right-of-Way Act of 1948, with all its implications for Indian
property rights, is within the IBIA’s mandate. Thus, the Court concludes that Chevron deference
does apply to the IBIA’s decision.
2.
Differing Legal Principles
Next, Western argues that the principles of property rights set forth in the General Rightof-Way Act of 1948 are so different from those in the common law that it was improper for the
IBIA to turn to the common law to help fill a gap in the statute and then-existing regulations. In
support of its argument, Western cites several examples of instances in which the 1948 Act
diverges from the common law. For example, as Western correctly points out, under the common
law all of the owners of an estate must consent to an easement. See Restatement (Third) of
Property (Servitudes) § 2.3 (2000). Similarly, under the common law one may obtain an
easement through prescriptive use in certain circumstances. Id. at § 2.17. In contrast, because the
United States holds title to Indian allotments in trust, certain typical individual property rights do
15
not apply. For example, under the General Right of Way Act of 1948, the BIA can approve a
right-of-way based on simple majority consent of the owners, 25 U.S.C. § 324(1), and it may
grant approval when the heirs of a deceased owner are unknown. Id. at § 324(3). Because the
1948 Act differs from the common law in this way, Western suggests that it is inappropriate to
look to the common law to fill gaps in the statutory scheme.
In response, the DOI argues that it is typical for agencies to look to the common law,
particularly when a statute leaves a particular question open for interpretation:
“[S]tatutes which invade the common law . . . are to be read with a presumption
favoring the retention of long-established and familiar principles, except when a
statutory purpose to the contrary is evident. . . . In order to abrogate a commonlaw principle, the statute must speak directly to the question addressed by the
common law.
United States v. Texas, 507 U.S. 529, 534 (1993). The DOI also cites examples of federal
agencies, including agencies within the DOI, applying the common law to the fill gaps in
legislative and regulatory schemes.
While the DOI acknowledges that the 1948 Act “deviates from some common law rules
so as to address . . .the practical difficulties of obtaining consent from all landowners of highlyfractionated lands,” Doc. 45 at 24, it also argues that the statute creates greater protections for
Indian owners of allotments than does the common law. Specifically, it points to the statutory
requirements of notice and consent to an easement and just compensation for grantors, as well as
the prohibition against easements by adverse possession, prescription, or condemnation by the
states. The DOI contends that these provisions show a Congressional intent to afford owners of
interests in allotments even greater protection than that afforded by the common law, suggesting
that requiring remainderman consent is consistent with that heightened protection.
3.
The purpose of the 1948 Act
16
These arguments overlap somewhat with those in Part II(A)(2), supra.
Western argues that the 1948 Right-of-Way Act evinces a statutory purpose that is
contrary to the common law concepts evident in the IBIA’s ruling requiring remainderman
consent. That is, Western argues that the goal of the 1948 Act was to facilitate rights-of-way over
fractionated Indian land allotments. Western cites Perry v. Navajo Area Director, 31 IBIA 186,
189 (1997), a right-of-way case in which the Area Director of the BIA exercised his power under
the 1948 Act and the implementing regulations to consent to a right-of-way on behalf of the
owners of an allotment who were minors, non compos mentis, or whose whereabouts were
unknown. When those consents were given by the BIA, a majority of the landowners had
consented and the right-of-way was granted. The appellant, an owner who did not consent to the
easement, argued that only those owners who personally consented may be counted in
determining whether a majority of owners had consented. However, the IBIA observed that it
was “the continuing intent of Congress to facilitate the beneficial use of fractionated lands.”
Perry, 31 IBIA at 189. According to Western, the IBIA’s decision here requiring remainderman
consent is contrary to this statutory purpose because it has made the consent process more
burdensome and has “caused this process to further fractionate allotments into present and future
interests.” Doc. 44 at 14. In other words, parties like Western who seek a right-of-way have to
obtain the consent of not only the holders of life estates, but also their remaindermen, thereby
making it more difficult to obtain majority consent.
While in Perry the IBIA did observe that in enacting the 1948 Right-of-Way Act
Congress intended to facilitate the beneficial use of fractionated lands, that is not the only
purpose of the statute. As the DOI points out, another evident purpose is to give heightened
protection to Indians to prevent their interests in land from being unfairly compromised. See,
17
e.g., Loring v. United States, 610 F.2d 649, 651 (9th Cir. 1979) (observing that the Right-of-Way
Act protects Indian allotments from improvident grants of rights-of-way); S. Pac. Transp. Co. v.
Watt, 700 F.2d 550, 552 (9th Cir. 1983) (holding that statute governing rights-of-way over tribal
land was intended to protect Indian interests and must be liberally construed in favor of Indians).
This purpose is evident in the provisions requiring that Indian landowners give consent and
receive just compensation for any grant of right-of-way. See 25 U.S.C. §§ 324-325. As a general
matter, statutes enacted for the protection of Indians must be broadly construed in the Indians’
favor. See Antoine v. Washington, 420 U.S. 194, 199-200 (1975); Morton v. Ruiz, 415 U.S. 199,
236 (1974).
B.
The nature of “gift deeds”
Western also argues that the IBIA erred by relying upon the common law, and then
compounded the error by rejecting Western’s contention that the relevant Native American “gift
deeds” ensure that all power to encumber the Allotment resides in Mr. Morgan and Ms. Tom.
More specifically, Western contends that the virtually identical “gift deeds” by which Mr.
Morgan and Ms. Tom created their life estates in Allotment No. 2073 are simply a way of
creating heirs without limiting their own rights to consent to easements beyond their lifetimes.
Western points to the language of the gift deeds, which are on BIA-approved forms. Those gift
deeds state that in exchange for “love and other considerations,” Mr. Morgan and Ms. Tom
conveyed all “right, title and interest” in the Allotment to their remaindermen, but reserved for
themselves life estates during which Mr. Morgan and Ms. Tom retain “all income including
surface, subsurface leases and any other sources.” See, e.g., AR 1452, 1455. According to
Western, these instruments show that despite the grant, Mr. Morgan and Ms. Tom continue to
have unlimited power to encumber their property beyond their lifetimes.
18
As evidence of this, Western points to language in the American Indian Probate Reform
Act (“AIPRA”), 25 U.S.C. § 2201(10), that is consistent with the gift deeds. Western contends
that these deeds created a “life estate without regard to waste” under AIPRA, which sets forth the
following definition: “‘without regard to waste’ means, with respect to a life estate interest in
land, that the holder of such estate is entitled to the receipt of all income, including bonuses and
royalties, from such land to the exclusion of the remaindermen.” Id.; See Doc. 44 at 15. Western
then points out that the federal regulations under AIPRA give holders of life estates without
regard to waste the power to deplete the resources of the subject property; according to Western,
this implies that a life estate holder’s rights to the property are unlimited such that they may also
encumber the property beyond their lifetime. It then concludes that there is no evidence that in
creating a life estate, Mr. Morgan or Ms. Tom intended to surrender their power to encumber the
property beyond their lifetimes.
In response, the DOI points out that the IBIA rejected this argument, and that Western
fails to point to any error in the IBIA’s reasoning. It also points out that AIPRA does not apply to
the gift deeds at issue here. Specifically, Mr. Morgan’s gift deed was signed (and his life estate
created) before AIPRA and the relevant regulatory provisions were in effect. Ms. Tom’s life
estate, though created after AIPRA went into effect, is unaffected because it was created by a
conveyance document after June 20, 2006. Western does not dispute that AIPRA does not apply
to Mr. Morgan’s and Ms. Tom’s life estates but dismisses these arguments as “hyper-technical.”
The IBIA rejected Western’s argument, see AR 22-25, and the Court can find no fault
with its reasoning. The language of the gift deeds reserves for the life tenants all the income from
the property during their lifetimes. Nothing in this plain, simple language suggests that the life
19
tenants retained, or even intended to retain, the right encumber the property beyond their
lifetimes.
C.
Analysis
The 1948 Right-of-Way Act and the implementing regulations in force during the
relevant time period are silent as to whether an Indian who holds a life estate in an allotment may
grant a right-of-way beyond his or her lifetime. The Court has already determined that the IBIA’s
decision is entitled to Chevron deference. Thus, the question is whether the IBIA’s decision is
based upon a permissible construction of the statute. The Court concludes that it is.
“Statutes which invade the common law . . . are to be read with a presumption favoring
the retention of long-established and familiar principles, except when a statutory purpose to the
contrary is evident.” Isbrandtsen Co. v. Johnson, 343 U.S. 779, 783 (1952). Here, the statute in
question has at least two relevant purposes—to give heighted protection to the property rights of
Indians on one hand, and to facilitate the beneficial use of fractionated lands on the other. Under
certain circumstances, those purposes can be in conflict; to some extent, that appears to be the
case here. Requiring a majority of remaindermen to consent to a right-of-way that extends past
the lifetime of the holder of a life estate does make it more difficult for companies like Western
who seek the use of Indian allotments. Such a requirement does not precisely “facilitate” the use
of fractionated lands. On the other hand, looking to the common law when the statute is silent
does give greater protection to the property rights of Indian remaindermen.
In this case, the Court cannot say that the IBIA’s decision to require remainderman
consent is based on an impermissible construction of the 1948 Right-of-Way Act or an
unreasonable decision to look to the common law. The question is not whether this Court would
have reached the same result or whether the IBIA reached the best decision under the
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circumstances. Rather, this Court’s review is much less exacting, asking only if it was reasonable
for the IBIA to construe the statute in the manner that it did. This is not to say that the arguments
advanced by Western are without merit. However, as discussed above it is quite common for
federal agencies to turn to the common law to fill gaps left in statutory schemes. As discussed
above, the common law upon is not entirely at odds with the purpose of the 1948 Right-of-Way
Act. And, as previously discussed, neither the language of the gift deeds nor AIPRA leads the
Court to a different conclusion.
Thus, the Court concludes that the IBIA did not err in relying upon the common law to
conclude that remaindermen consent was necessary under the circumstances presented.
III.
Was the IBIA’s Failure to Give Notice Arbitrary and Capricious?
Western’s third argument is that the IBIA acted in a manner that was arbitrary and
capricious when in 2013 overturned the BIA’s grant of an unqualified right-of-way on a legal
issue that it raised sua sponte. No party before the BIA or the IBIA had raised the issue of
whether the owner of a life estate holds the power to grant a right-of-way that extends past his or
her lifetime. No remainderman had asserted his rights. Rather, the IBIA raised the issue on its
own, and then decided it without giving the parties an opportunity to be heard. The IBIA
defended its action by asserting that the issue had been “addressed” in the BIA Regional
Director’s brief, which although it did not discuss the rights of remaindermen vis-à-vis the grant
of a right-of-way, did “defend[] the sufficiency of the documentation relied upon by BIA.” AR
0586. The IBIA also said that it had “authority to address the issue to correct manifest error,”
citing 43 C.F.R. § 4.318. AR 0586. That regulation provides:
An appeal will be limited to those issues that were before the administrative law
judge or Indian probate judge upon the petition for rehearing, reopening, or
regarding tribal purchase of interests, or before the BIA official on review.
However, except as specifically limited in this part or in title 25 of the Code of
21
Federal Regulations, the Board will not be limited in its scope of review and may
exercise the inherent authority of the Secretary to correct a manifest injustice or
error where appropriate.
The Court finds both of the IBIA’s justifications for its actions lack merit.
First, in its Answer Brief, AR 0663 et seq., the BIA Regional Director explained how the
fractionated ownership interest in Allotment No. 2073 had been documented and calculated to
reach a number greater than 50%. See AR 0673-74. However, the brief did not address the
question of whether Mr. Morgan could grant consent for his fractionated interested to the
exclusion of his remaindermen, because that issue was not raised by Mr. Adakai in his appeal,
nor did any other party question Mr. Morgan’s power to consent. Thus, the BIA Regional
Director would not have reason to discuss it in the Answer Brief. By raising it for the first time in
its decision, the IBIA went beyond the scope of the appeal before it. This is in contravention of
43 C.F.R. § 4.318, which states that in ruling on appeal the IBIA is limited to the issues that were
before the BIA.
Second, there was no “manifest error” in the BIA’s decision that would justify the IBIA’s
actions in ruling on a new legal issue without giving the parties an opportunity to be heard.
According to Black’s Law Dictionary, “manifest” means clear, obvious, and unquestionable.
Thus, “manifest error” is defined as “An error that is plain and indisputable, and that amounts to
a complete disregard of the controlling law or the credible evidence in the record.” Black’s Law
Dictionary 243-44 (11th ed. 2019). As previously discussed herein, it was far from plain or
obvious whether remaindermen consent is required under the circumstances presented here. The
statute is silent, and at the time there were no regulations on point. The Tenth Circuit has stated
that “a matter of first impression will generally preclude a finding of plain error.” United States
v. Turrietta, 696 F.3d 972, 981 (10th Cir. 2012). In addition, there was no manifest injustice to
22
be cured. One party or another would be prejudiced financially, whatever the outcome. The IBIA
did not cure manifest injustice (and nor did it claim to) by raising this issue and ruling upon it
without give the parties an opportunity to brief it.
None of the cases cited by the DOI alter this analysis. The DOI contends that the IBIA
has the inherent authority to fill the gap left by the 1948 Right-of-Way Act and applicable
regulations and to redress manifest error. That is beyond dispute. However, that unassailable fact
does not reach the question here, which is whether the IBIA has the authority to both raise and
decide an issue of first impression sua sponte without first giving the parties an opportunity to be
heard. The cases the DOI cites are inapplicable because each of them involves a plain error that
was obvious on the face of the record—a mathematical miscalculation or the omission of an heir
in determining majority consent. See, e.g., Hopi Tribe v. W. Reg’l Dir., 62 IBIA 315, 328 (2016)
(finding manifest error where BIA’s narrative explanation of calculation of grazing fees was not
in accord with mathematical calculations); Ward v. Billings Area Dir., 34 IBIA 81, 90-91 (1999)
(finding manifest error where BIA made mathematical mistakes in calculating damages); Estate
of Paul Widow, 17 IBIA 107, 114 (1989) (omission of heirs in probate proceeding is manifest
error justifying reopening of the case). Not one of these cases involved a legal issue of first
impression being decided without argument from the parties.
Finally, the DOI also suggests that Western has waived this argument because it failed to
argue it before the IBIA. Of course, there is no way that Western could have made this argument
in 2013, because the IBIA raised the matter sua sponte and then remanded the case to the BIA. In
2014, Western could not have argued to the BIA that the IBIA erred in ruling on a new issue sua
sponte, because the BIA has no authority to review the actions of the IBIA. This means that the
only opportunity Western would have had to preserve the issue was before the IBIA in 2016,
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when Western appealed the BIA’s 2013 decision after remand. Essentially, the DOI contends
that Western was required to ask the IBIA to reconsider its 2013 decision in order to preserve its
argument in this Court. However, as Western correctly points out, under the applicable
regulations Western is not required to ask the IBIA for reconsideration because “[t]he filing of a
petition for reconsideration is not required to exhaust administrative remedies.” 42 C.F.R. §
4.314(c). This is consistent with exhaustion requirements under the APA generally. See Darby v.
Cisneros, 509 U.S. 137, 146 (stating that § 10(c) of the APA “relieve[s] parties from the
requirement of petitioning for rehearing before seeking judicial review (unless, of course,
specifically required to do so by statute)”). Thus, Western has not waived its right to appeal the
IBIA’s sua sponte decision on remainderman consent.
Accordingly, the Court concludes that the IBIA was arbitrary and capricious in denying
Western’s application for right-of-way based on a legal issue that was one of first impression and
which none of the parties raised or were permitted to brief prior to the IBIA’s decision. Thus,
Western’s appeal should be granted.
IT IS THEREFORE ORDERED that the IBIA’s decisions overturning the twenty-year
renewal of Western’s right-of-way over Allotment No. 2073 are hereby REVERSED.
___________________________________
UNITED STATES DISTRICT JUDGE
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