Moncrief v. United States Department of Interior

UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLUMBIA W.A. MONCRIEF, JR., ) ) Plaintiff, ) ) v. ) Civil Case No. 17-609 (RJL) ) UNITED STATES DEPARTMENT ) OF INTERIOR, ) > F I L E D and ) ) sEP 2 4 2018 JAMIE E. CONNELL, ) . Cl k,U.S.D| &B k t in her official capacity as State Director, ) Cog:ts for the hilr:t:rtlct o?%orlillr’n‘t:)¥a Mom‘aml Dakotas Ojjice, Bureau of Land ) Management, ) ) Defendants. ) ¢~` MEMoRANDUM oPINIoN september§f, 2018 [## 19, 21, 241 Plaintiff W.A. Moncrief, Jr. (“Moncrief’), the holder of a federal oil and gas lease in Montana, brings suit against the United States Department of Interior (“Interior”) and the Director of the Montana Bureau of Land Management (“BLM”) (collectively, “federal defendants” or “the Government”) relating to the Governrnent’s cancellation of his lease after suspending all oil and gas drilling and extraction activity on that lease for more than thirty years. See Compl. [Dkt. # l] 111[ 9_ll, 48_59. Plaintiff seeks declaratory and injunctive relief, including that this Court vacate the cancellation and reinstate the lease, based on federal defendants’ alleged violations of the Administrative Procedure Act (“APA”), 5 U.S.C. § 551 et seq. See Compl. 1[1] 60-86. Before this Court are the parties’ Cross-l\/lotions for Summary Judgment. See Pl.’s Motion for Summary Judgment [Dl.7 IlI. Even Assuming lnterior Had Authority to Cancel the Lease, Plaintiff Moncrief Is a Bona Fide Purchaser Within the lVleaning of the APA The arbitrary cancellation of Moncriefs lease, without notice, also violates his rights a hona_/ide purchaser under the l\/lLA, 30 U.S.C. § 184(h)(2)_; 43 C.F.R. § 3108.4, because Plaintiff l\/[oncrief “[1] acquired his interest in good faith, [2] for valuable consideration, and [3:| without notice of the [alleged] violation,” Sw. Petroleu/n Corp. v. Udall, 361 F.2d 650, 656 (10th Cir. 1966). Defendants claim that only a violation of the l\/lLA itself, not violations of NEPA, NHPA, or other statutes, warrants honafide purchaser protection Defs.’ l\/lot. at 20. But that argument is entirely circular! Defendants cannot at once argue that a violation of NEPA and NHPA renders a lease “subject to cancellation” under its regulations, see 43 7 l also note that defendants apparently ignored the discretion with which agencies apply procedural statutes like NEPA and NHPA as part of the consultation process. See, e.g., Winter v. Natural Resources Defense Council, lnc., 555 U.S. 7, 24 (2008) (noting that the issuance of a detailed, 293-page EA served the same purpose as an EIS oftaking a “hard look at environmental consequences”); Myersville Citizens/`or a Rural Cnuy., [nc. v. F.E.R.C., 783 F.3d 1301, 1322-26 (D.C. Cir. 2015) (upholding “[the] Commission's consideration of the [proposed] alternative in its Environmental Assessment [as] adequate”); Duncan ’s Point Lot Owners Ass ’n [nc., 522 F.3d at 377 (noting that our Circuit “has upheld agency determinations not to prepare an ElS” in several instances)_; City ofGrapevine, Tex. v. Dep’t ofTransp., 17 F.3d 1502, 1509 (D.C. Cir. 1994) (finding no violation of the NHPA where agency approved a project before consulting with the ACHPA because the project “was expressly conditioned upon completion of the § 106 process”). However, l need make no finding on whether there was in fact compliance with NEPA or NHPA. Regardless ofthe lawfulness of the lease’s issuance thirty years ago, the agency’s rescission of the lease must still comply with the APA. See, e.g., A/n. Wild Horse Pres. Ca)npaign, 873 F.3d at 928 (“we cannot condone the correction ofone error by the commitment of another”) (quoting Gray v. Mississippi, 481 U.S. 648, 663 (1987)) (internal quotation marks omitted). 15 C.F.R. §3108.3(d), and at the same time deprive plaintiffofthe the exception in those same regulations prohibiting cancellation “to the extent that such an action adversely affects the title or interest ofa hona_fide purchaser.” 43 C.F.R. § 3108.4. That is too clever by half. Neither a literal, nor a logical, reading of the agency’s regulations could support such a result. Plaintiffl\/loncriefeasily qualifies for bona fide purchaser status because he tendered valuable consideration to his predecessor-in-interest, ARCO. See MoncriefDecl. [Dkt. # 19-2] 11 2. There is no evidence that he did not acquire his interest in good faith. And as for notice, notice of continued suspensions while an ElS was conducted on APDs on other leases is hardly notice that his lease was void for the reasons already outlined above. lndeed, l\/loncrief`s predecessor, ARCO, requested the suspension on the understanding that it would “terminate upon completion of the Environmental lmpact Statement for [the] pending application[s].” see 6/1/88 DOl Letter to ARCO, J.A. Vol. l at 68 (BLl\/[- 1\/1000746); Pl.’s l\/lot. at 11. And the suggestion ofvoidness is further rebutted by lnterior’s failure to cancel the lease to remedy the supposed violation for more than thirty years. Because 1 find a violation of the APA on the grounds above, l need not reach Moncrief`s additional arguments that the Secretary’s cancellation violated his due process rights and was time barred by the statute of limitations CONCLUSION For the reasons outlined above, l find that federal defendants’ decision to cancel the 1\/loncrief lease was arbitrary and capricious '1`hus, for all of the reasons outlined in this Opinion, plaintiffs Motion for Summary Judgment [Dkt. #19] is GRANTED, defendants’ 16 Cross-Motion for Summary Judgment [Dkt. #21] and defendant-intervenor’s Cross- Motion for Summary Judgment [Dkt. #24] are DENIED, and this case is remanded to the Department of lnterior with the order that the Moncrief lease be REINSTATED. United States District Judge 17