ROSEMARY M. COLLYER, United States District Judge.
Plaintiff William Tuttle leased restricted Indian land in Riverside County, California, for a term of 50 years. The land is owned by the United States in trust for the Colorado River Indian Tribes. In 2010, the Bureau of Indian Affairs terminated the lease, finding that Mr. Tuttle had violated several of its provisions. The termination decision was affirmed by the Interior Board of Indian Appeals. The Bureau of Indian Affairs and the Interior Board of Indian Appeals are constituent agencies of the Department of Interior. Plaintiff sued the Secretary of the Interior, in her official capacity, complaining that the agency's decision to terminate was arbitrary and capricious, in violation of both the Indian Long-Term Leasing Act and the terms of the Lease itself. Having reviewed the entire administrative record, the Court concludes that the agency acted reasonably on the record before it and within its authority. The Secretary's motion for summary judgment will be granted.
Decades ago, in United States v. Brigham Young University, No. CV 72 3058-DWW (C.D. Cal. 1977), the United States brought suit to quiet title to the property at issue here. The district court found that the United States was the rightful owner of the property, in trust for the Colorado River Indian Tribes (Tribes), and that brothers William and Robert Tuttle wrongfully possessed a portion of the property "without any right, title, or interest therein." AR 387-91.
The Lease further provided that it was governed by "the Act of April 30, 1964 (78 Stat. 188), as supplemented by Part 131, Leasing and Permitting, of the Code of Federal Regulations, Title 25 — Indians, and any amendments thereto relative to business leases on restricted Indian lands, all of which by reference are made a part hereof." AR 239. The Act of April 30, 1964 (78 Stat. 188) declared certain lands, including the Property, to be held by the United States in trust for the Tribes. Thus, the Lease acknowledged the fact of beneficial ownership and expressly stated that the Lease was governed by federal regulations and subsequent amendments to the regulations.
25 U.S.C. § 415. As recited in the Lease, the Secretary delegated that authority to the Commissioner of the Bureau of Indian Affairs (BIA); such authority was redelegated to the BIA Regional Director, and then redelegated again to the BIA Superintendent of the Colorado River Agency:
AR 248.
The Lease gave the Tuttles the right to live on the Property and to use the Property for "commercial or community development and all uses necessary to community development" for a term expiring in 2027. AR 240. In exchange, the Tuttles were required to pay rent to the Tribes and to maintain public liability and fire insurance. After Robert Tuttle died, William Tuttle inherited his brother's ownership interest.
Mr. Tuttle was required to pay "Base Rent," annually and in advance, at a per-acre rate, starting from five dollars per acre for years one through five of the lease term ($491.20/year), increasing to ten dollars per acre for years six through twenty ($982.42/year), and increasing to fifteen dollars per acre for years twenty-one through fifty ($1,473.60/year). AR 240-41. Section V of the Lease required:
AR 244.
Section VI of the Lease required the Lessee to carry liability insurance with prescribed minimum coverages, "written jointly to protect Lessee and Lessor" and that "[e]vidence of insurance shall be furnished to the Secretary" of the Department of the Interior. Id. Article 3 of the Lease Addendum required the Lessee to carry fire insurance jointly in the names of Lessee and Lessor and to provide proof of insurance to the Secretary. AR 250.
At some point, Mr. Tuttle developed the Property for commercial purposes, see AR 39, and as a result on June 2, 1986, the parties executed a Modification to the Lease. See AR 74-76. The Modification required the payment of "Percentage Rent," in addition to Base Rent, in the amount of three percent (3%) of the gross
AR 75. The 1986 Modification required an annual accounting as follows:
AR 75.
Article 17 of the Lease provided remedies in the event of default:
AR 262-63. In other words, in the event of default, the BIA (as the Secretary's delegee) had to send written notice of such default to the Lessee. The Lease provided a 30-day cure period for a default of a payment provision and a 60-day cure period for a default of any other provision. If the Lessee failed to cure on time, the BIA could terminate the Lease. Id.
Between 1994 and 1999, Mr. Tuttle stopped making payments to the Tribes. See AR 40. When he started paying rent again in 1999, the Tribes refused to accept the payments, claiming that Mr. Tuttle had repudiated the Lease so that it was no longer valid. See AR 40-41. In response, Mr. Tuttle challenged the 1986 Modification, claiming that the Tribes and the Bureau of Indian Affairs had coerced him into agreeing to it and arguing that it was invalid. AR 40. The parties reached a partial resolution in September 2004, whereby Mr. Tuttle paid the back rent that was due and, under protest, paid interest. Id.
On May 18, 2005, the BIA Regional Director issued a decision on Mr. Tuttle's challenge to the Modification. The Regional Director determined that the Modification
Mr. Tuttle appealed to the Interior Board of Indian Appeals (IBIA). On February 7, 2008, the IBIA upheld the validity of the Modification, AR 52-53, but overturned the order that Mr. Tuttle pay interest on rental payments he had timely tendered but that the Tribes had refused to accept. AR 54. The IBIA remanded the case to the Regional Director to determine the amount due to Mr. Tuttle to compensate him for the overpayment of interest. Id. On September 23, 2009, the BIA Regional Director advised Mr. Tuttle by letter that his overpayment totaled $10,504.79 and that the Tribes and/or the Superintendent of the Colorado River Agency would notify Mr. Tuttle by separate letter whether that amount would be refunded or credited. AR at 33-34.
By a joint letter dated September 30, 2009, the Tribes and the Superintendent informed Mr. Tuttle that the Tribes had calculated that he was owed a credit in the amount of $10,504.79 toward the outstanding balance due under the Lease. AR 26. While Mr. Tuttle again had failed to pay Base Rent for 2005, 2006, and 2009, the credit was applied and these arrearages were offset for amounts due through March 21, 2009. AR 27. However, the September 30 letter also included a Notice of Default, informing Mr. Tuttle that he was in violation of the Lease because: (1) he had failed to pay Percentage Rent since March 1991; (2) he had failed to submit certified statements of gross business receipts for fiscal years (FY) 1992-2008; and (3) he had failed to provide proper proof of current public liability insurance and fire insurance. AR 26-29.
In a letter received by the Tribes on October 13, 2009, Mr. Tuttle requested more time to respond to the Notice of Default due to "health problems." AR 401. Three days later, the Tribes received a second letter from Mr. Tuttle, which included an uncertified estimate of the gross receipts for business conducted on the Property, together with payment of three percent (3%) of that estimate, which he deducted from the monies owed to him. AR 156. Mr. Tuttle explained that "[t]he financial records of the sublessees are simple and not complicated. We would prefer not to incur the expense of having a Certified Public Accountant verify this ... information." AR 157. Mr. Tuttle included an invoice for a public liability insurance policy effective from September 18, 2009 through September 18, 2010. AR 158. Mr. Tuttle also stated that he intended to appeal the IBIA's February 2008 decision to federal court. AR 157. There is no evidence in the record that Mr. Tuttle ever appealed the February 2008 IBIA decision.
On March 2, 2010, BIA's Superintendent of the Colorado River Agency sent a Notice of Cancellation of Lease to Mr. Tuttle by certified mail. AR 20-24. The Notice reiterated the Lease violations that had
The Notice informed Mr. Tuttle of his right to administratively appeal the cancellation decision within 30 days of the date he received the Notice. AR 24. On March 11, 2010, Mr. Tuttle asked for a 45-day extension of time to cure all violations because his insurance agent was unavailable due to illness. AR 213.
Mr. Tuttle timely appealed the Notice of Cancellation to the BIA's Acting Regional Director on April 1, 2010. AR 4. On April 29, 2010, the Acting Regional Director notified Mr. Tuttle that the Notice of Cancellation was stayed by the filing of the appeal and that he had 30 days to submit a Statement of Reasons. AR 201.
Mr. Tuttle submitted a Statement of Reasons on May 6, 2010. AR 192-93. He stated that he had had a certificate of insurance for every year and that he sent the 2009-2010 certificate of liability insurance to the BIA, including evidence of the Tribes as additional named insured. AR 193. He further indicated that his accountant was preparing certified statements and he would pay what he owed when those were completed. As a measure of good faith, he indicated that he would send a check for $4,000 on the next day, which he diligently did. AR 193, 198. After consulting with the Tribes, BIA placed the check in a special deposit account pending the decision on Mr. Tuttle's appeal.
On May 17, 2010, the Acting Regional Director informed Mr. Tuttle that his Statement of Reasons failed to explain why the Notice of Cancellation was in error, but that BIA would give Mr. Tuttle additional time to amend his appeal documents to state clearly the bases for his appeal. AR 190. Mr. Tuttle submitted another Statement of Reasons on May 25, 2010. AR 167-170. He claimed that the reasons for the Notice of Cancellation had "largely been addressed and deficiencies resolved," and that "[t]he delays resulted from both health issues which affected the Petitioner's ability to deal with the business matters underlying the decision being appealed and the unavailability of Petitioner's Certified Accountant." AR 167. Mr. Tuttle included a compilation report prepared by a certified public account summarizing gross revenues received from leased premises and business rentals due and owing. AR 174-79. The accountant noted that the report had been "prepared on an accounting
Finding these reasons inadequate, the Acting Regional Director affirmed the Notice of Cancellation on July 19, 2010. AR 121-127. The July 19 decision emphasized that the Notice of Default was issued on September 30, 2009, but Mr. Tuttle had made no attempt to cure until "long after the cure period" had expired. AR 125. The Acting Regional Director further decided that Mr. Tuttle's right to cure had expired at the end of the cure period in the Lease and that his submissions in May 2010 were insufficient to effect a cure "without the express waiver and consent" of the Tribes. Id. The Acting Regional Director added, "our regulations provide that where a lessee fails to cure within the requisite time period, we should consult with the Indian landowner and determine whether the lease should be cancelled." AR 125-26 (citing 25 C.F.R. § 162.619(a)).
On August 18, 2010, Mr. Tuttle filed a notice of appeal to the IBIA. AR 116-120. He alleged that the termination was erroneous as a matter of fact and that all deficiencies were cured prior to the termination. AR 116-17.
Challenging the IBIA decision under the Administrative Procedure Act (APA), 5 U.S.C. §§ 701 et seq., Mr. Tuttle sued the Department of the Interior and, in their official capacities, the Secretary of the Department of the Interior, Sally Jewell, and the Assistant Secretary for Indian Affairs, Kevin Washburn (collectively, the Secretary). Mr. Tuttle claims that the Secretary's termination of the Lease was arbitrary and capricious, beyond the scope of the IBIA's authority, and not in accordance with the law. See Compl. [Dkt. 1] ¶¶ 6, 58. The parties have filed cross motions for summary judgment. See Pl. Mot. for Summ. J. [Dkt. 24] (Pl. MSJ); Def. Mot. for Summ. J. [Dkt. 26]; Def. Mem. in Support [Dkt. 27]; Pl. Reply [Dkt. 33]; Def. Reply [Dkt. 36].
IBIA's ruling is a final agency action subject to review under the APA. See Feezor
Under Rule 56 of the Federal Rules of Civil Procedure, summary judgment shall be granted "if the movant shows 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); accord Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). In reviewing a final agency action under the Administrative Procedure Act, however, the standard set forth in Rule 56 "does not apply because of the limited role of a court in reviewing the administrative record." Sierra Club v. Mainella, 459 F.Supp.2d 76, 89 (D.D.C.2006) (internal citation omitted), appeal dismissed, Nos. 06-5419 & 07-5004, 2007 WL 1125716 (D.C.Cir. Mar. 30, 2007); see also Charter Operators of Alaska v. Blank, 844 F.Supp.2d 122, 126-27 (D.D.C.2012). Under the APA, the agency's role is to resolve factual issues to reach a decision supported by the administrative record, while the district court role is to determine whether as a matter of law the evidence in the administrative record allowed the agency to make the decision it did. Sierra Club, 459 F.Supp.2d at 90. "Summary judgment thus serves as the mechanism for deciding, as a matter of law, whether the agency action is supported by the administrative record and otherwise consistent with the APA standard of review." Id.
In determining whether an action was arbitrary and capricious under the APA, a reviewing court must consider whether the agency's decision "was based on a consideration of the relevant factors and whether there has been a clear error of judgment." Marsh v. Or. Natural Res. Council, 490 U.S. 360, 378, 109 S.Ct. 1851, 104 L.Ed.2d 377 (1989) (internal quotation marks and citation omitted). At a minimum, the agency must have considered relevant data and articulated an explanation establishing a "rational connection between the facts found and the choice made." Bowen v. Am. Hosp. Ass'n, 476 U.S. 610, 626, 106 S.Ct. 2101, 90 L.Ed.2d 584 (1986) (internal quotation marks and citation omitted); see also Public Citizen, Inc. v. F.A.A., 988 F.2d 186, 197 (D.C.Cir. 1993) ("The requirement that agency action not be arbitrary or capricious includes a requirement that the agency adequately explain its result."). An agency action is arbitrary or capricious if:
Motor Vehicle Mfrs. Ass'n of U.S., Inc. v. State Farm Mut. Auto. Ins. Co., 463 U.S. 29, 43, 103 S.Ct. 2856, 77 L.Ed.2d 443 (1983). As the Supreme Court has explained, "the scope of review under the `arbitrary and capricious' standard is narrow and a court is not to substitute its judgment for that of the agency." Id. Rather, agency action is normally "entitled to a presumption of regularity." Citizens to Pres. Overton Park, Inc. v. Volpe, 401 U.S. 402, 415, 91 S.Ct. 814, 28 L.Ed.2d 136 (1971), abrogated on other grounds by Califano
The Secretary moves to dismiss for lack of prudential standing under the zone-of-interests test. Under that test, a court must ask whether the plaintiff's interests are "arguably" within the zone of interests to be protected or regulated by the statute he claims was violated. Match-E-Be-Nash-She-Wish Band of Pottawatomi Indians v. Patchak, ___ U.S. ___, 132 S.Ct. 2199, 2210, 183 L.Ed.2d 211 (2012) (quoting Ass'n of Data Processing Serv. Orgs., Inc. v. Camp, 397 U.S. 150, 153, 90 S.Ct. 827, 25 L.Ed.2d 184 (1970)). In an APA case, the plaintiff's cause of action must be within the zone of interests of the relevant underlying substantive statute. Safari Club Int'l v. Jewell, 960 F.Supp.2d 17, 55 (D.D.C.2013). "The test forecloses suit only when a plaintiff's `interests are so marginally related to or inconsistent with the purposes implicit in the statute that it cannot reasonably be assumed that Congress intended to permit the suit.'" Id. (quoting Clarke v. Securities Indus. Ass'n, 479 U.S. 388, 399, 107 S.Ct. 750, 93 L.Ed.2d 757 (1987)).
The Supreme Court recently clarified that (1) the zone-of-interests test no longer falls under the prudential standing umbrella and (2) it is not a jurisdictional requirement.
Here, the Secretary asserts that the Indian Long Term Leasing Act protects only Indian land owners and because Mr. Tuttle is not an Indian he cannot invoke the protections of the Act. See Hollywood Mobile Estates Limited v. Seminole Tribe of Fla., 641 F.3d 1259 (11th Cir.2011). In Hollywood Mobile Estates, a non-Indian business lessee filed suit against the Seminole Tribe and the Secretary of the Interior to enjoin the Tribe from repossessing the property. Id. at 1262-63. After the complaint was filed, the Seminole Tribe asked the BIA to cancel the lease, but the BIA declined because it found that the tenant had not violated the lease. Id. at 1263. The court held that the interests of the non-Indian tenant were not within the zone of interests protected by the Indian Long-Term Leasing Act. Id. at 1269. Consistent with the longstanding relationship between Indians and the Secretary in which the Secretary acts as a fiduciary with respect to Indian property, the Act provides that restricted Indian lands can be leased only with the approval of the Secretary. Without probing analysis, the court held that the statute and its regulations "protect Indian landowners, not non-tribal lessees." Id. at 1270.
Hollywood, which does not bind this Court, reads the statute and its zone of interests too narrowly. The zone of interests
25 U.S.C. § 415(a).
Both lessor and lessee are benefitted by the Secretary's consideration of the availability of police and fire protection and judicial resolution of disputes. In addition, the regulations specifically provide protections for lessees. If a lease of Indian land is violated, the lessee must be provided notice and an opportunity to cure. See 25 C.F.R. § 162.618. Also, if a lease cancelled, the Secretary must provide notice to the tenant, including a right to appeal the cancellation decision. Id. § 162.619. Because Mr. Tuttle's interests are "arguably" within the ambit of the Act and its regulations, the zone of interests test is satisfied and the case will not be dismissed on that ground. Patchak, 132 S.Ct. at 2210.
Mr. Tuttle erroneously argues that the BIA violated the terms of the Lease and the statutory regulations. Mr. Tuttle claims that BIA violated his rights under the Lease by failing to allow him an opportunity to cure under Article 17, and only providing notice and opportunity to cure under 25 C.F.R. § 162.618. Perceiving some kind of conflict between the regulations and the Lease, Mr. Tuttle argues that the Lease terms control.
The argument fails to appreciate that the Lease specified that it was subject to the Indian Long-Term Leasing Act, its regulations, "and any amendments thereto relative to business leases on restricted Indian lands." See AR 239. Under the express terms of the Lease, therefore, the regulations at 25 C.F.R. Part 162 were fully applicable despite the fact that they did not become effective until five years after the Lease was signed.
As described above, Article 17 of the Lease provided that in the event of default, the BIA was required to send a written notice of such default to Mr. Tuttle, providing time to cure. AR 262-63. If Mr. Tuttle failed to cure on time, the BIA was authorized to terminate the Lease. Id. The then-applicable regulations similarly provided for notice and opportunity to cure and in the absence of a cure, authorized cancellation. Section 162.618 of the regulations provided that if BIA determined that a lease was violated, it was required to send the tenant a notice of violation. 25 C.F.R. § 162.618(a).
Id. § 162.619(a).
Id. § 162.619(c).
The BIA followed the default and cancellation procedure set forth in the Lease and regulations. The Superintendent, together with the Tribes, sent a Notice of Default to Mr. Tuttle on September 30, 2009, in compliance with Article 17 of the Lease and § 162.618 of the regulations. The Notice of Default detailed the Lease violations and advised Mr. Tuttle that he had 10 days to cure, dispute the default, or request additional time. AR 26-29.
In a letter received by the Tribes on October 13, 2009, Mr. Tuttle requested more time to respond to the Notice of Default due to "health problems." AR 401. Three days later, the Tribes received a second letter from Mr. Tuttle purporting to cure the Lease violations. In fact, contrary to the Lease requirements, he provided an uncertified estimate of his gross receipts, refusing to incur the expense of a certified public accountant for verification. AR 156. He also provided inadequate evidence of insurance, as the invoice he provided did not show the amount of liability coverage, did not show the Tribes as an additional insured, and did not prove that he carried fire insurance. AR 158.
On March 2, 2010, the Superintendent properly issued a detailed Notice of Cancellation, as required by 25 C.F.R. § 162.619.
Mr. Tuttle claims that the BIA performed no independent review of the bases for cancellation of the Lease and that it allowed the Tribes to draft all documents and make all decisions. He asserts that such improper delegation of authority violated the Lease because only the Secretary of the Interior could effect a Lease cancellation.
Mr. Tuttle cites the July 19, 2010, letter to him from the BIA's Acting Regional Director that affirmed the Superintendent's decision to cancel the Lease, see AR 125, as proof that BIA improperly delegated the cancellation decision to the Tribes. Most particularly, Mr. Tuttle attacks the Acting Regional Director's statement that Mr. Tuttle no longer "had the right to cure the default without the express waiver and consent" of the Tribes. See AR 125-26. Mr. Tuttle interprets the July 19, 2010 letter as an admission by the Acting Regional Director that "no decision could be made" without the consent of the Tribes and that "the Department could not render any decision other than a decision formulated or approved by" the Tribes. Pl. Reply at 14. In furtherance of his argument that there was improper "federal fealty" to the Tribes, id., Mr. Tuttle contends that the Tribes' legal team was directly involved in drafting proposed decision materials that were in turn forwarded to the Secretary for review, edits, and return to the Tribes for finalization. Id. at 13 n.6 (citing AR Supp. 22-25, 85, 88-100, 219-25, 261-63).
Mr. Tuttle is correct that Article 17 of the Lease requires the BIA to decide whether to terminate the lease. Nonetheless, Mr. Tuttle's argument is fundamentally flawed. Both the Lease and Modification were executed by Mr. Tuttle as
BIA's statement that Mr. Tuttle could not cure his breaches without a waiver from the Tribes was correct under the law. The regulations required BIA to consult with the Indian landowners to decide whether to cancel the lease, invoke other remedies, or grant the tenant additional time to cure. 25 C.F.R. § 162.619(a)(1)-(4). The BIA properly consulted with the Tribes, but it had no power or authority to require the Tribes to accept Mr. Tuttle's attempted late cure.
Mr. Tuttle contends that his long delay in attempting to cure should be excused for reasons of ill health and advanced age. He was in his late 80s at the time the Notice of Default and Notice of Cancellation were issued.
For the foregoing reasons, Plaintiff's motion for summary judgment [Dkt. 24] will be denied, and Defendants' motion for summary judgment [Dkt. 26] will be granted. Judgment will be entered in favor of Defendants. Defendants' motion to strike [Dkt. 29] will be granted and Plaintiff's Declaration [Dkt. 24-2] will be stricken. A memorializing Order accompanies this Opinion.
