BERYL A. HOWELL, United States District Judge.
After the plaintiff, Silver State Land, LLC ("SSL" or "plaintiff"), invested millions of dollars in developing plans for, and successfully bidding and paying the purchase price to obtain the patent on, approximately 480 acres of federal land located in the City of Henderson, Nevada, LLC, the former Acting Assistant Secretary of Land and Minerals Management ("LMM") in the U.S. Department of the Interior ("DOI"), in accordance with the recommendation of the former Principal Deputy Director of DOI's Bureau of Land Management ("BLM") (collectively "the agency"), decided to cancel the patent issuance process, withhold the patent and terminate the land sale. The plaintiff filed this lawsuit to challenge this agency action,
The factual background of the instant dispute was generally summarized in the Court's prior decision denying the plaintiff's motion to supplement the administrative record, grant extra-record review, or take judicial notice of an Order issued by a Nevada state court, see Silver State Land, LLC v. Beaudreau, 59 F.Supp.3d 158, 161-63 (D.D.C.2014), and will be reviewed with additional pertinent detail again here. The genesis of this public land dispute was an ambitious agreement, in early September 2011, between the City of Henderson, Nevada ("Henderson" or "the City") and the Las Vegas National Sports Center LLC ("LVNSC"), for the purchase and development of an approximately 480-acre parcel of public land (the "Property") under the administration of BLM. Admin. Record ("AR") 1590, 1592, ECF No. 25.
The agreement between the City and LVNSC, titled "Master Project Agreement" ("MPA"), provided that LVNSC, or its affiliates, would develop, construct and operate "four state-of-the-art sporting event venues," along with mixed-use retail, residential and entertainment facilities, on the Property. AR 1589-1601.
The MPA provided clear and obvious benefits to the City. Specifically, LVNSC agreed to develop and construct the project, in consultation with the City, which would, with some limitation on use, "jointly own all of the Project architectural drawings, renderings, designs, plans and specifications." AR 1592 (MPA § 1.3). The City also had the right to participate in designing the project and veto changes to any element of the project that would result in elimination of any of the planned venues or noncompliance with certain agreed upon standards. AR 1593 (MPA § 1.7(b)). In addition, upon completion of the construction of each planned venue, LVNSC was required to "transfer ownership of the applicable venue, together with the portion of the Property upon which such Venue is situated, ... to the City," AR 1598-99 (MPA § 3.4), which would own the venue "for public purposes," AR 1592 (MPA § 1.3).
In accordance with the MPA and the SNPLMA's "joint selection process," the City nominated the Property for sale to LVNSC under BLM's "Direct Sale Process as set forth in 43 CFR 2711.3-3." AR 15 (Letter, dated Sept. 7, 2011, from City's Mayor to BLM). The City explained the reasons for its request for a noncompetitive direct sale as follows: "a competitive sale is not appropriate and the public interest would be best served by a direct sale" because the property subject to the sale "is an integral part of a project of public importance and speculative bidding would jeopardize a timely completion and economic viability of the project." Id. The City stressed that the project would (1) result in the creation of "approximately 10,000 immediate construction jobs on site, and permanent service and management jobs that will provide employment for an estimated 4,000 employees;" (2) "provide `meaningful economic diversification';" (3) advance "Henderson's planning objectives for the area;" and (4) "stabilize and enhance land values and promote future development opportunities on other private and public land in the vicinity." Id. at 15-16. In sum, the City urged the direct sale process to "ensure prompt fair market value and [] support vital public objectives consistent with Henderson's regional land-use plan." AR 17.
After "careful review" of the City's request and the LVNSC proposal, BLM concluded
On April 4, 2012, BLM published in the Federal Register a Notice of Realty Action ("NORA") for a modified competitive, sealed-bid sale process in which the plaintiff, as the designated bidder, would be offered the right to meet the highest bid for the Property. AR 10-13 (77 Fed. Reg. 20413-16). The Notice explained that the plaintiff was the designated bidder because it had "developed an agreement" with the City "for long-term public benefits to the City and local residents," namely, "to develop the property for public recreation and commercial uses approved by the City." AR 11. The plaintiff's failure or refusal to meet the highest bid "shall constitute a waiver of the modified competitive bidding procedure for this proposed sale," id., and the highest "bidder will be declared the successful bidder in accordance with the regulations at 43 CFR 2711.3-2(c)," id. If no acceptable bids were received, "the parcel may remain available for sale at a future date in accordance with a competitive sale procedures without further notice." Id. A successful bidder accrued no contractual or other rights against the United States "until BLM officially accepts the offer to purchase and the full bid price is submitted by the 180th day following the sale." AR 12. Notably, notwithstanding the potential accrual of rights by the successful bidder, the NORA cautioned that, under 43 CFR 2711.3-1(f), "BLM may accept or reject any or all offers to purchase, or withdraw any parcel of land ... from sale, if, in the opinion of a BLM authorized officer, consummation of the sale would be inconsistent with any law, or for other reasons as may be provided by applicable law or regulations." AR 13.
On June 4, 2012, the plaintiff submitted a bid to purchase the land for $10,560,000, which was the appraised value previously determined by BLM under an appraisal prepared by a third party and reviewed and approved by DOI's Office of Valuation Services. AR 851.
During the Summer and Fall of 2012, the record contains emails indicating that the plaintiff was "having some difficulty coming up with financial backing on this project." AR 764 (Internal BLM email, dated Sept. 27, 2012). Although plaintiff's representative communicated to BLM in an email that the final balance due would be deposited by November 20, 2012, AR 744 (Email, dated Nov. 15, 2012, from Mike Ford to BLM), the payment was not received until November 28, 2012, when the plaintiff deposited into an escrow the amount of $8,428,000. AR 599, 617, 694, 692. According to the plaintiff, this payment triggered BLM's obligation to issue a patent giving the plaintiff the title to the Property within 30 days. Compl. ¶¶ 13-14.
In the evening of the same day that the plaintiff paid the balance owed on the Property into escrow, the plaintiff's affiliated company, LVNSC, terminated the MPA with the City. AR 650-51 (BLM Internal Working Document, dated November 30, 2012, noting that "hours after tendering the balance of the purchase price for the parcel, [plaintiff] provided written notice to the City of Henderson that the project development was no longer viable and stated they were terminating their agreement with the City."). According to LVNSC's hand-delivered letter to the City, LVNSC exercised the authority under MPA § 3.2 to terminate the agreement "[b]ecause the overall project is not viable as contemplated by the MPA." AR 29 (Letter, dated Nov. 28, 2012, from LVNSC to City). Notwithstanding the termination, LVNSC indicated it was "fully committed to achieving development of the arena complex and accompanying development in a way that will greatly enhance the City and surrounding areas." Id.
The City's response to LVNSC's termination of the MPA was swift. Early the next morning, on November 29, 2012, in an email to BLM, the City's attorney requested that BLM "immediately withdraw" the Property nominated for plaintiff pursuant to 43 CFR 2711.3-1, because at a meeting the previous evening, the plaintiff "informed the City that they were backing out of their agreement with the City that would obligate them to build an arena on the property, which was the state[d] [sic] purpose of the Notice of Realty Action." AR 690 (Email, dated Nov. 29, 2012, from the City to BLM). Believing that the plaintiff "fraudulently induced the City and the federal government to sell [the] [sic] land with the intention of not meeting the stated obligations of the nominated buyer for the modified direct sale," the City requested that "BLM does not grant the patent for the 480 acres to [plaintiff]." Id.
The City's attorney followed-up his email with a letter to BLM, reiterating the request "that BLM refuse to accept the funds deposited by [Christopher] Milam's entities into escrow and that BLM refrain from further processing or issuing a land patent conveying the Property to SSL." AR 28 (Letter, dated Nov. 29, 2012, from the City to BLM).
The escrow instructions provided that BLM had 30 days, until December 28, 2012, to issue the patent after the plaintiff released the sale funds to the title company. AR 302, 308, 638, 641, 803. As of December 5, 2012, BLM understood that the "City does not believe it is in the public interest to issue the patent to [the plaintiff], as the contract between the City and [the plaintiff] is no longer in effect." Id.
In order to facilitate its discussions with the City, on December 20, 2012, the plaintiff agreed to an escrow extension of 40 days until February 6, 2013. AR 301, 304, 523, 584. The plaintiff agreed to a second escrow extension until March 28, 2013, after the City filed suit, on January 28, 2013, in Nevada state court against the plaintiff "alleging fraud related claims and contract claims." AR 295, 301, 530-564. BLM was aware of the lawsuit and briefing on the City's motion for preliminary injunction in that case. AR 302, 311-434, 435, 437-517.
In March 2013, the plaintiff and the City apparently settled that state court litigation without any admission on either side regarding liability. AR 202 (Settlement Agreement).
On May 10, 2013, three days before the scheduled date for the issuance of the patent, BLM submitted an almost 130-page "Recommendation Memorandum for the Assistant Secretary" of LLM regarding "Termination of Patent Issuance to [the Plaintiff] for Land Nominated for Sale by the City of Henderson, Nevada for Arena Development Project." AR 3-130 (hereinafter "Recommendation Mem."). The same day, upon consideration of this Recommendation Memorandum, Tommy Beaudreau, LLM's then-Acting Assistant Secretary, issued a final Decision Memorandum approving BLM's recommendation to assert jurisdiction over the matter and directing BLM to: "(i) not issue the patent to [the plaintiff], (ii) terminate the sale process, and (iii) take the steps necessary to return the purchase deposit and bid guarantee to [the plaintiff], as expeditiously as practicable." AR 133, 138.
BLM immediately advised the plaintiff the same day that the Acting Assistant Secretary for LMM directed BLM to: "(i) not issue the patent to [the plaintiff], (ii) terminate the sale process, and (iii) take the steps necessary to return the purchase deposit and bid guarantee to [the plaintiff], as expeditiously as practicable." AR 134 (Letter, dated May 10, 2013, from BLM to plaintiff "Re: Termination of Patent Issuance to [Plaintiff] for the 480 acres Nominated for Sale by the City of Henderson, Nevada for Arena Development Project"). BLM explained that "the sports arena development agreement between the City of Henderson" and plaintiff "served as the basis for BLM's decision to utilize a modified competitive sales process for this parcel, as opposed to the competitive sales process" under the FLPMA. Id.
Less than a week after BLM notified the plaintiff that the patent on the Property
Pursuant to Federal Rule of Civil Procedure 56, summary judgment may be granted when the Court finds, based upon the pleadings, depositions, affidavits, and other factual materials in the record, "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), (c); see Tolan v. Cotton, ___ U.S. ___, 134 S.Ct. 1861, 1866, 188 L.Ed.2d 895 (2014) (per curiam); Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). "A genuine issue of material fact exists if the evidence, `viewed in a light most favorable to the nonmoving party,' could support a reasonable jury's verdict for the non-moving party." Muwekma Ohlone Tribe v. Salazar, 708 F.3d 209, 215 (D.C.Cir.2013) (quoting McCready v. Nicholson, 465 F.3d 1, 7 (D.C.Cir.2006)).
In APA cases such as this one, involving cross-motions for summary judgment, "the district judge sits as an appellate tribunal. The `entire case' on review is a question of law." Am. Bioscience, Inc. v. Thompson, 269 F.3d 1077, 1083 (D.C.Cir. 2001) (collecting cases). Thus, this Court need not and ought not engage in lengthy fact finding, since "[g]enerally speaking, district courts reviewing agency action under the APA's arbitrary and capricious standard do not resolve factual issues, but operate instead as appellate courts resolving legal questions." James Madison Ltd. by Hecht v. Ludwig, 82 F.3d 1085, 1096 (D.C.Cir.1996); see also Lacson v. U.S. Dep't of Homeland Sec., 726 F.3d 170, 171 (D.C.Cir.2013) (noting, in an APA case, that "determining the facts is generally the agency's responsibility, not ours"); Sierra Club v. Mainella, 459 F.Supp.2d 76, 90 (D.D.C.2006) ("Under the APA ... the function of the district court is to determine whether or not as a matter of law the evidence in the administrative record permitted the agency to make the decision it did." (quotation marks and citation omitted)). Judicial review is limited to the administrative record, since "[i]t is black-letter administrative law that in an APA case, a reviewing court should have before it neither more nor less information than did the agency when it made its decision." CTS Corp. v. EPA, 759 F.3d 52, 64 (D.C.Cir.2014) (internal citations and quotation marks omitted; alteration in original); see 5 U.S.C. § 706 ("[T]he Court shall review the whole record or those parts of it cited by a party...."); Fla. Power & Light Co. v. Lorion, 470 U.S. 729, 743, 105 S.Ct. 1598,
The APA authorizes a reviewing court to set aside a challenged agency action "only if it is `arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law.'" Zevallos v. Obama, 793 F.3d 106, 112 (D.C.Cir.2015) (citing 5 U.S.C. § 706(2)(A)) (other internal quotations and citation omitted). The scope of review under the "arbitrary and capricious standard is `highly deferential,'" id.; Am. Trucking Ass'ns, Inc. v. Fed. Motor Carrier Safety Admin., 724 F.3d 243, 245 (D.C.Cir.2013) (same), and "narrow," such that a court is not to substitute its judgment for that of the agency," Judulang v. Holder, ___ U.S. ___, 132 S.Ct. 476, 483, 181 L.Ed.2d 449 (2011); see also Fogo de Chao (Holdings) Inc. v. U.S. Dep't of Homeland Sec., 769 F.3d 1127, 1135 (D.C.Cir.2014) (same); Agape Church, Inc. v. FCC, 738 F.3d 397, 408 (D.C.Cir.2013) (same). Yet, "courts retain a role, and an important one, in ensuring that agencies have engaged in reasoned decisionmaking," Judulang, 132 S.Ct. at 483-484, which is the "touchstone of arbitrary and capricious review," Pharm. Research & Mfrs. of Am. v. FTC, 790 F.3d 198, 209 (D.C.Cir.2015) (internal quotations and citation omitted). Simply put, "the agency must explain why it decided to act as it did." Butte County v. Hogen, 613 F.3d 190, 194 (D.C.Cir.2010).
The D.C. Circuit has recently summarized the circumstances under which an agency action would normally be "arbitrary and capricious" to include "if the agency has relied on factors which Congress has not intended it to consider, entirely failed to consider an important aspect of the problem, 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." Pharm. Research & Mfrs. of Am. v. FTC, 790 F.3d at 209. Thus, when an agency "`fail[s] to provide a reasoned explanation, or where the record belies the agency's conclusion, [the court] must undo its action.'" Cnty. of Los Angeles v. Shalala, 192 F.3d 1005, 1021 (D.C.Cir.1999) (quoting BellSouth Corp. v. FCC, 162 F.3d 1215, 1222 (D.C.Cir.1999)); see Select Specialty Hosp.-Bloomington, Inc. v. Burwell, 757 F.3d 308, 312 (D.C.Cir.2014) (noting that when "`an agency's failure to state its reasoning or to adopt an intelligible decisional standard is [] glaring [] we can declare with confidence that the agency action was arbitrary and capricious'" (quoting Checkosky v. SEC, 23 F.3d 452, 463 (D.C.Cir.1994))); Amerijet Int'l, Inc. v. Pistole, 753 F.3d 1343, 1350 (D.C.Cir.2014) ("[A] fundamental requirement of administrative law is that an agency set forth its reasons for decision; an agency's failure to do so constitutes arbitrary and capricious agency action." (internal quotation marks and citation omitted)). "[C]onclusory statements will not do; an agency's statement must be one of reasoning." Amerijet Int'l Inc., 753 F.3d at 1350 (internal quotation marks omitted; emphasis in the original).
When, as here, review of an agency's action is "bound up with a record-based factual conclusion," the reviewing court must determine whether that conclusion "is supported by substantial evidence." Dickinson v. Zurko, 527 U.S. 150, 164, 119 S.Ct. 1816, 144 L.Ed.2d 143 (1999) (internal quotation marks omitted); see also Kappos v. Hyatt, ___ U.S. ___, 132 S.Ct. 1690,
The plaintiff challenges the LMM decision not to issue the patent for the Property to the plaintiff and to terminate the sale process on three principle grounds: (1) the agency lacked authority to terminate the sale, Pl.'s Mem. at 13; (2) the agency's decision was arbitrary and capricious, id. at 20; and (3) the agency violated the plaintiff's due process rights by terminating the sale without providing the plaintiff an "opportunity or reason to submit additional information, id. at 29. For the reasons detailed below, the Court concludes that the agency interpreted applicable statutory provisions and its own regulations reasonably to provide authority to terminate the sale and, consequently, the challenged decision was not arbitrary and capricious but supported by substantial evidence, and that the plaintiff's due process rights were not violated. Consequently, the challenged decision must be upheld.
The agency contends that it has plenary authority to terminate sales where consummation would be contrary to law. Def.'s Mem. at 8-9. Citing both provisions of the FLPMA and agency regulations, the plaintiff counters that the agency had no authority to refuse to issue the patent eleven months after accepting the plaintiff's offer. The plaintiff argues, first, that "§ 203 of the FLPMA," codified at 43 U.S.C. § 1713, "strictly constrains the authority to withdraw a sale of public land... within 30 days of receipt of an offer," Pl.'s Mem. at 13; second, under § 208 of the FLPMA, 43 U.S.C. § 1718, the agency had a "ministerial duty to deliver the patent" once the plaintiff's offer was accepted, id. at 18; and, third, § 204(a) of the
The agency argues, and the Court agrees, that the DOI Secretary has authority to terminate the sale of public land, even after acceptance of a purchase offer, where consummation of the sale would be contrary to law. Defs.' Mem. at 12. This conclusion is predicated on longstanding principles relating to the general statutory mandate of DOI and its Secretary to manage public lands, consistent with statutory requirements, together with the broad authority generally granted to DOI to carry out this responsibility and, more specifically, to determine the validity of claims to public lands. The Supreme Court, over a century ago, described the DOI Secretary's role thusly:
Knight v. United States Land Association, 142 U.S. 161, 181, 12 S.Ct. 258, 35 L.Ed. 974 (1891). Consistent with this responsibility, the Knight Court explained that "if, when a patent is about to issue, the Secretary should discover a fatal defect in the proceedings, or that by reason of some newly ascertained fact the patent, if issued, would have to be annulled, ... it would hardly be seriously contended that the Secretary might not interfere and prevent the execution of the patent." Id. at 178, 12 S.Ct. 258. The Court stressed that "[h]e could not be obliged to sit quietly and allow a proceeding to be consummated, which it would be immediately his duty to ask the attorney general to take measures to annul." Id.
The Supreme Court has never wavered from the Knight Court's view of the DOI Secretary's authority both to determine the validity of claims to public land and deny issuance of a patent to a claimant whose claim is invalid.
In accordance with this binding precedent, courts have consistently found that, in the exercise of the DOI Secretary's "plenary authority," the agency may evaluate the validity of a claim to government land at any time up to the actual issuance of the patent since, until title is transferred, DOI remains the legal steward responsible for ensuring that any conveyance of the land is in strict compliance with Congressional mandates. See Union Oil Co. of Cal. v. Udall, 289 F.2d 790, 792 (D.C.Cir.1961) ("Assuming arguendo that [the plaintiff] acquired equitable title by payment and receipt, it is well established that until legal title has passed to the applicant for a patent, the Secretary may require further inquiry into the validity of claimed rights to public land." (citations omitted)); Southern Utah Wilderness Alliance v. Bureau of Land Management, 425 F.3d 735, 753 (10th Cir.2005) ("`[I]n the absence of some direction to the contrary,' the general statutory provisions giving the Land Department authority to execute the laws regulating the public lands also give it authority to inquire into claims against the government under a statutory grant of land. The Supreme Court made clear, however, that the agency's authority continues only `so long as the legal title remains in the government.'" (quoting Cameron, 252 U.S. at 460-61, 40 S.Ct. 410)); Schade v. Andrus, 638 F.2d 122, 124 (9th Cir.1981) ("[T]he Secretary of the Interior has `broad plenary power over the disposition of public lands' ... so long as legal title remains in the government, there is continuing jurisdiction in the Department to consider all issues in land claims" (internal citations omitted)); Ideal Basic Indus., Inc. v. Morton, 542 F.2d 1364, 1367-78 (9th Cir.1976) ("[T]he Secretary of Interior has broad plenary powers over the disposition of public lands. He has a continuing jurisdiction with respect to these lands until a patent issues, and he is not estopped by the principles of res judicata or finality of administrative action from correcting or reversing an erroneous decision by his subordinates or predecessors in interest."); Adams v. U.S., 318 F.2d 861, n. 10 (9th Cir.1963) (noting that the government has the power to determine if the claim is valid, and if invalid, "to declare it null and void" (quoting Cameron, 252 U.S. at 460, 40 S.Ct. 410)).
The plaintiff "acknowledges that the Secretary may have broad powers over the disposition of federal land," Pl.'s Reply in Supp. Pl.'s Mot. for Summ. J. and Opp'n to Defs.' Cross-Mot. for Summ. J. ("Pl.'s Reply") at 7, ECF No. 35, but nonetheless dismisses this long line of cases confirming the plenary powers of the DOI Secretary
The plaintiff's strained effort to limit the multiple holdings of Supreme Court and Circuit courts, including the D.C. Circuit, by arguing that those cases addressed the plenary power of the DOI Secretary only under "archaic statutes," id. at 8, cannot be squared with the clear language of the cases and the continuing statutory grants of authority to the Secretary. For example, the Cameron Court relied on the "general statutory provisions" as confiding "the execution of the laws regulating the acquisition of rights in the public lands and the general care of these lands ... to the land department" and tasking "the Secretary of the Interior, as the head of the department... with seeing that this authority is rightly exercised to the end that valid claims may be recognized, invalid ones eliminated, and the rights of the public preserved." Cameron, 252 U.S. at 459-60, 40 S.Ct. 410. Even though "the mineral land law does not in itself confer such authority on the land department," the Cameron Court did not hesitate to conclude that, "in the absence of some direction to the contrary, the general statutory provisions before mentioned vest [authority to determine the validity of claims] in the land department." Id. at 461, 40 S.Ct. 410. Moreover, "the power of the department to inquire into the extent and validity of the rights claimed against the Government does not cease until the legal title has passed." Id.
The "general statutory provisions" referenced by the Cameron Court continue to delegate to the Secretary the authority to supervise "public business relating to ... Bureau of Land Management." 43 U.S.C. § 1457. BLM has the duty to perform various functions, including those "appertaining to the ... sale of the public lands of the United States, or in anywise respecting such public lands, and also, such as relate to private claims of land, and the issuing of patents for all grants of land under the authority of the government." 43 U.S.C. § 2. While these general statutory provisions pre-date the FLPMA, which was enacted in 1976, the latter act expressly states that it "shall then be construed as supplemental to and not in derogation of the purposes for which public lands are administered under other provisions of law," 43 U.S.C. § 1701(b), and, further, contains a "savings" clause clarifying that "[n]othing in this [FLPMA] shall be deemed to repeal any existing law by implication," id. note, P.L. 94-579, Title VII 701(f), 90 Stat. 2743.
Consequently, the plenary power of the DOI Secretary to determine the lawfulness of the issuance of a patent remains intact, even after passage of the FLPMA, absent a contrary statutory provision. The plaintiff posits that the agency's decision to terminate the sale is contrary to three provisions of the FLPMA, namely, sections 203(g), 208, and 204(a). Pl.'s Mem. at 18. The Court next examines each of these FLPMA sections, which the plaintiff contends effectively limit the Secretary's plenary power.
The plaintiff argues that Section 203(g) of the FLPMA, codified at 43 U.S.C. § 1713(g), limits the "Secretary's and BLM's authority to withdraw the land from sale ... to
FLPMA § 203(g), 43 U.S.C. § 1713(g).
The text of § 203(g) addresses only two scenarios: when the Secretary "may refuse to accept an offer" and when he "may withdraw any land" from sale. The challenged LMM decision falls into neither of these categories. On the contrary, in this case, the agency had already accepted an offer from the plaintiff, so it did not "refuse to accept [the] offer." In addition, the agency did not "withdraw [the] land" from sale generally. See Defs.' Mem. at 20 (clarifying that the Property "remains available for sale under FLPMA"). Instead, the agency terminated the sale specifically to the plaintiff because the sale was predicated on a process that was only lawful under certain conditions meeting the statutory requirements. When those conditions evaporated, the process was no longer statutorily permissible and any sale resulting from that impermissible process was similarly legally deficient. As the agency explains, the Secretary decided "not to consummate the sale when the basis for BLM's utilization of special procedures no longer existed." Id. at 13. In short, the agency is correct that the plain language of the statute does not address the Secretary's authority to terminate the sale, where the agency has already accepted the offer within 30 days, if consummation would be unlawful. Id. at 14.
The plaintiff seeks to avoid the plain language of § 203(g) by pointing to legislative history in the form of a Senate Report describing an earlier version of this provision considered in an earlier Congressional session prior to enactment of the FLPMA. Pl.'s Opp'n at 8 (quoting S. Rep. 94-538). Specifically, the Senate Report relied upon by the plaintiff describes the earlier version of § 203(g) as "authoriz[ing] the Secretary to refuse an offer of purchase until he has actually accepted the offer. However, he would be bound to consummate the sale once he has accepted the offer." S. REP. NO. 94-583, at 48 (accompanying § 206) (1975). Consistent with this summary, the earlier bill language stated, in the first sentence of the proposed section: "Until the Secretary has accepted an offer to purchase, he may refuse to accept any offer or may withdraw any land or interest in land from sale under this Act when he determines that consummation of the sale would not be consistent with this Act or other applicable law." Id. at 5 (§ 206).
The final enacted language, however, is derived verbatim from the House version of the legislation and uses different language, without an emphasis on the moment of acceptance. Instead, the enacted language reads: "The Secretary shall accept or reject, in writing, any offer to purchase made through competitive bidding at his invitation no later than thirty days after receipt of such offer .... unless the offeror waives his right to a decision within such thirty-day period. Prior to the expiration of such periods the Secretary may refuse to accept any offer or may withdraw any land or interest in land from sale under this section when he determines that consummation of the sale would not be consistent with this Act or other applicable law." 43 U.S.C. § 1713(g); see also H. R. 13777, 94th Cong. § 203(e) (1976).
Moreover, the plaintiff's proffered interpretation of § 203(g) would lead to the absurd result that the Secretary is compelled to consummate a sale that is contrary to law. Such a statutory interpretation is highly disfavored. See United States v. Am. Trucking Ass'ns, Inc., 310 U.S. 534, 543, 60 S.Ct. 1059, 84 L.Ed. 1345 (1940) ("When [one possible statutory] meaning has led to absurd or futile results... this Court has looked beyond the words to the purpose of the act."); see also Corley v. U.S., 556 U.S. 303, 317, 129 S.Ct. 1558, 173 L.Ed.2d 443 (2009) (interpreting criminal procedure statute to avoid "absurdities of literalism"); Ctr. for Biological Diversity v. E.P.A., 722 F.3d 401, 411 (D.C.Cir.2013) (recognizing "`the long-standing rule that a statute should not be construed to produce an absurd result'" (quoting Mova Pharm. Corp. v. Shalala, 140 F.3d 1060, 1068 (D.C.Cir.1998))).
In a last gasp effort to construe § 203(g) as limiting the Secretary's authority to refuse an offer to purchase to the time period within thirty days after receipt of such offer, the plaintiff contends that allowing the Secretary to terminate sales whenever they are not in compliance with the law would render the clause "no later than thirty days" superfluous. Pl.'s Reply at 10. The Court disagrees. Failure by the agency to comply with the time limits in § 203(g) to "accept or reject" an offer to purchase would provide a basis for an offeror to bring an action to compel the agency to comply with the statutory time limit and, further, upon acceptance of an
Accordingly, the Court concludes that § 203(g) does not limit the agency's authority to terminate the sale where consummation would be unlawful.
The plaintiff next argues that the agency had a "ministerial duty to deliver the patent" once the plaintiff's offer to purchase the Property had been accepted. Pl.'s Mem. at 18-19. As support, the plaintiff relies upon § 208 of the FLPMA, which states, in pertinent part, that "[t]he Secretary shall issue all patents or other documents of conveyance after any disposal authorized by this Act." 43 U.S.C. § 1718. The agency focuses on the last words in this statutory sentence to point out that this section only "governs issuance of patents `authorized by this Act.'" Defs.' Mem. at 16. As applied to the sale at issue in this lawsuit, the agency points out that when "the primary basis for the modified competitive sale process ... was eliminated," the procedure used to facilitate the sale was no longer appropriate and, therefore, issuance of the patent would not have been a "disposal authorized by this Act." Id.
The Court agrees, as discussed infra in Part III.B, that the record in this case provides substantial evidence for the agency's conclusion regarding the inappropriateness of the procedure used to conduct the sale upon termination by the plaintiff of its agreement with the City.
This conclusion that § 208 requires the issuance of patents to public lands only when legally authorized, is confirmed by other language in § 208, which directs the Secretary, with certain exceptions, to "insert
Accordingly, § 208 does not obligate the agency to deliver the patent even though the offer to purchase had been accepted, when consummation of the sale would be unlawful.
Finally, the plaintiff contends that the Acting Assistant Secretary, who adopted BLM's recommendation to terminate the sale, had no such authority under § 204(a) of the FLPMA, which is titled "Withdrawals of Lands," and provides, in pertinent part, that "the Secretary is authorized to make, modify, extend, or revoke withdrawals but only in accordance with the provisions and limitations of this section. The Secretary may delegate this withdrawal authority only to individuals in the Office of the Secretary who have been appointed by the President, by and with the advice and consent of the Senate." 43 U.S.C. § 1714(a); Pl.'s Mem. at 19. According to the plaintiff, the Acting Assistant Secretary was only "
At the outset, the parties dispute whether the plaintiff adequately asserts this challenge to the lawfulness of the agency action in the complaint. See Defs.' Mem. at 19; Pl.'s Reply at 25-26. No claim for relief is asserted that the agency action must be set aside due to the status of the agency official making the challenged decision. On the contrary, the complaint references only briefly that "Acting Assistant Secretary, exercising the BLM's authority by virtue of 43 C.F.R. § 4.5(a)," made the decision "without authority on May 10, 2013," Compl. ¶ 33. The "without authority" referenced in this allegation does not refer to the status of the official making the challenged decision, however, but to the timeliness of the decision, as confirmed by the caption for the First Claim for Relief. Id. FIRST CLAIM FOR RELIEF ("The Assistant Secretary's Authority to Withdraw the Sale Expired Thirty Days After the BLM Accepted the Offer to Purchase and His Decision is Therefore in Violation of the FLPMA and the APA"). This was plainly not a claim challenging the authority of the decision-maker due to his status. Thus, the plaintiff has failed to plead adequately this legal basis for challenging the agency action.
In any event, even considered on the merits, this claim fails. The requirement in § 1714(a) of a decision-maker who is a Senate-confirmed Presidential nominee, is irrelevant because this statutory provision pertains to the withdrawal of parcels of land from sale, not the termination of land sales. See Defs.' Mem. at 20 (citing AR 8 (Recommendation Mem.)). Rather than being withdrawn from sale, the Property "remains available for sale under FLPMA in accordance with the process requirements of SNPLMA." Id.
The plaintiff discounts this interpretation of § 1714(a) as an "overly
Accordingly, § 1714(a) does not operate as any bar to the Acting Assistant Secretary making the challenged decision to terminate the sale.
The Court concludes that the FLPMA does not limit the DOI Secretary's plenary power to determine, prior to the issuance of a patent, whether such issuance is lawful and to withhold any patent where conveyance of federal public land would be in contravention of Congressional statutory mandates.
Even if the agency is authorized to terminate an unlawful sale after accepting an offer, the plaintiff contends that the decision to terminate the sale here was arbitrary and capricious because "it failed to consider relevant factors and was contrary to evidence." Pl.'s Mem. at 20. The basis for giving the plaintiff preferential status in a modified competitive sale process was the MPA entered into by the plaintiff and the City. The plaintiff, however, canceled that agreement on the evening of the same day the plaintiff deposited into escrow the remaining balance of the final purchase price for the Property to complete the sale. AR 4-5 (Recommendation Mem.). Without the MPA in place, the plaintiff would not have received the benefits of a modified competitive sale process, rendering any subsequent sale to this plaintiff unlawful under 43 U.S.C. § 1713(f) and 43 C.F.R. § 2711.3-2(a). Consequently, the agency decided to terminate the sale to the plaintiff. AR 7.
The FLPMA favors the use of open competitive bidding for the disposition of public lands. See 43 U.S.C. § 1713(f) ("Competitive bidding requirements. Sales
BLM concluded that these enumerated public benefits vanished upon cancellation of the MPA by the plaintiff later in the same day on which the plaintiff delivered the final payment into escrow for the Property. AR 5. Indeed, the plaintiff's actions prompted the City immediately to request that BLM withhold issuance of the patent to the Property and to initiate legal action for fraudulent misrepresentation against the plaintiff. AR 3.
The plaintiff emphasizes that the City and the plaintiff later reached a settlement agreement resolving the lawsuit, and that this settlement should have been considered by the agency before refusing to consummate the sale. Pl.'s Mem. at 21. Yet, the agency did consider the terms of the settlement agreement and those terms only bolster, rather than undercut, the challenged decision. See AR 5 ("[T]he public benefits [Henderson] wished to promote through the BLM's use of a modified competitive sale process[] no longer exists as evidenced by the Settlement Agreement."). First, the settlement agreement conspicuously does not "require [the plaintiff] or its successors to enter into a new arena development agreement; it simply notes that the land is currently zoned for such use." AR 6. Second, the construction and operation of the "professional sports arena" designed to foster "`economic diversification' of the area" and create tens of thousands of jobs, which were the anticipated and cited "public benefits," were no longer guaranteed to materialize. Third, and more troublingly, BLM notes that the settlement agreement bars the "person who formed [the plaintiff] and promoted the arena projects ... from engaging in any business within Henderson, Nevada." AR 6. This condition in the settlement agreement essentially barred the plaintiff's CEO from conducting any business within the City and made highly questionable whether the plaintiff could develop the land, let alone on the same scale with any of the same features that created the "public benefits" persuading the agency to conduct a modified bid process. Indeed, the plaintiff had apparently already engaged in marketing the Property to investors "for [] residential development," AR 27 (Email, dated Nov. 29, 2012, from the City to BLM), further bolstering BLM's determination that the justifications for utilizing the modified competitive bidding, such as avoiding "speculative bidding" and development delay, were no longer present.
In sum, the agency determination was rational and predicated on substantial
While the plaintiff protests that an open competitive bidding process would not have produced a different result since the plaintiff paid the valuation price for the land and had no competing bids, this argument misses the point. See Pl.'s Reply at 14 (arguing that "competitive bidding would have had the same consequences as modified competitive bidding," noting "the result here would in fact have been the same; there were no competing bidders and SSl would have won the auction."). As the agency points out, if an open competitive bidding process had been used, the plaintiff "would have had an incentive to place a higher bid in the first instance if it knew it was not going to have an opportunity later to match other bids," plus other "potential bidder[s] may have been deterred by the special status [the plaintiff] received through the modified competitive sale process," giving the plaintiff "the right to match another bid." Defs.' Reply at 9. But for the use of the modified bidding process, the sale of the Property would have been more competitive, the plaintiff may have had to pay more for the Property, and the government "may have received greater compensation for the land." Id.
The plaintiff offers four additional arguments to support its view that the challenged decision is arbitrary and capricious: (1) the agency failed to consider the Nevada state court's dismissal, without prejudice, of all fraud claims against the plaintiff, Pl.'s Mem. at 20; (2) the agency did not address how this sale falls within the three limited bases for withdrawing a sale under 43 C.F.R. § 2711.3-1(f), id. at 22; (3) plaintiff's cancellation of the MPA with the City of Henderson does not justify termination, id. at 25; and (4) the agency's termination decision based on the lack of a development agreement is an improper policy shift, id. at 27. None of these arguments has merit but instead reflects the plaintiff's fundamental misunderstanding of the agency's reason for terminating the sale.
First, dismissal of the City's fraud claims would only be relevant to the challenged decision if the agency's decision to terminate the sale were due to the City's allegations of fraudulent misrepresentations by the plaintiff. While the agency was clearly aware of the City's lawsuit, this suit was not the reason for the termination. Instead, the agency focused on whether 43 C.F.R. § 2711.3-2, which repeats the statutory language from 43 U.S.C. § 1713(f), would be met if the premise for a modified competitive bidding process, namely, the MPA and the public benefits accruing from the development anticipated in that agreement, "no longer exists." AR 7 (Recommendation Mem.). Since the decision to terminate the sale was not premised upon the City's lawsuit, the dismissal of any claims asserted in that suit is simply irrelevant. Consequently, the agency action was not arbitrary for failure to consider the dismissal of the fraud claims against the plaintiff in the City's lawsuit.
Second, the plaintiff argues that the challenged decision is governed by 43
Furthermore, the plaintiff's highlighting of the City's "support" of continuing the sale to the plaintiff ignores a significant obstacle: namely, that the City's Settlement Agreement barred the plaintiff's CEO, as well as any entities he owns or controls, from conducting business within the City. AR 200 (Settlement Agreement) ("Milam represents and warrants, unconditionally and irrevocably, that neither he nor any entity which he owns (partially or fully), controls (partially or fully), or has an interest in, will seek to or engage in any business activities or development activities within Henderson, Nevada, including, but not limited to, any business activities or development relating to the land; excepting that Milam may, at the direction of the Lender Parties, take any actions necessary to effect the purchase, financing, and ultimate sale of any part, or all, of the Land.").
Third, the plaintiff contends that the agency's decision to terminate the sale after cancellation of the MPA was arbitrary because the MPA expressly allowed for cancellation by either party and, if the plaintiff had not been the highest bidder, another party would have been permitted to purchase the Property without a pre-negotiated development agreement in place. This argument ignores the real-world context in which the modified bidding process operated: as the designated bidder, the plaintiff received preferential treatment in setting the terms of its bid and discouraging other potentially interested parties in participating. This preferential treatment was predicated on the extant MPA and the anticipated "public
Fourth, and relatedly, the plaintiff argues that it is an improper policy shift for the agency to require a development agreement before delivering land patents to successful bidders where it has not so required in the past. Pl.'s Mem. at 27. Contrary to the plaintiff's version of events, the agency did not terminate the sale solely because of cancellation of the MPA; it terminated the sale because "the public benefits [the City] wished to promote through BLM's use of a modified competitive sale process [] no longer exist." AR 7 (Recommendation Mem.). Therefore, the termination of the sale reflects no "policy" shift, but rather the agency's compliance with the laws governing disposition of public lands.
In sum, the plaintiff's vigorous efforts to find fault with the agency's decision are not persuasive. On the contrary, the Court finds that the challenged decision is both rational and fully supported by substantial evidence.
The plaintiff faults not only the merits of the agency's decision terminating the land sale, but also the agency's decision-making process because the agency "never provided SSL notice and the opportunity to be heard before withdrawing the land sale and terminating the vested rights that SSL had to the property pursuant to 43 C.F.R. § 2711.3-1(g)." Pl.'s Mem. at 30. In the plaintiff's view, this failure to afford the plaintiff such an opportunity makes the challenged action "particularly arbitrary and capricious," id. at 29, and amounts to a denial of the plaintiff's due process rights.
The Fifth Amendment's Due Process Clause requires that the government provide sufficient procedural protections whenever it deprives an individual of property. See Bd. of Regents v. Roth, 408 U.S. 564, 576, 92 S.Ct. 2701, 33 L.Ed.2d 548 (1972). In evaluating due process claims, such as the plaintiff's here, the court "first ask[s] whether there exists a... property interest of which a person has been deprived, and if so we ask whether the procedures followed by the State were constitutionally sufficient." Swarthout v. Cooke, 562 U.S. 216, 219, 131 S.Ct. 859, 178 L.Ed.2d 732 (2011) (citing Kentucky Dept. of Corrections v. Thompson, 490 U.S. 454, 460, 109 S.Ct. 1904, 104
In this case, the plaintiff's due process argument falls short of meeting the threshold requirement of showing a protectable property interest. See Roth, 408 U.S. at 569, 92 S.Ct. 2701 ("The requirements of procedural due process apply only to the deprivation of interests encompassed by the [Fifth Amendment's] protection of liberty and property."); Hettinga v. United States, 677 F.3d 471, 479-80 (D.C.Cir.2012) (per curiam) (noting threshold requirement "that the government has interfered with a cognizable liberty or property interest"). The plaintiff's procedural due process argument is based on the plaintiff's purported "administrative right to receive the patent," Pl.'s Mem. at 29, pursuant to 43 C.F.R. § 2711.3-1(g), which provides that "[u]ntil the acceptance of the offer and payment of the purchase price, the bidder has no contractual or other rights against the United States, and no action taken shall create any contractual or other obligation of the United States." According to the plaintiff, by delivering final payment for the Property into escrow, the plaintiff triggered an entitlement to receive the patent. Id.
Contrary to the plaintiff's interpretation of this regulation, however, § 2711.3-1(g) merely clarifies when bidders have no rights against the United States, rather than affirmatively stating when bidders possess any rights, let alone the specific right to compel the agency to issue a land patent. See supra at n.14. Moreover, as discussed supra Part III.A, the agency is not obligated to deliver the patent to the plaintiff when consummation of the sale would be contrary to law. Consequently, the plaintiff has no "legitimate claim of entitlement" to which it was deprived without notice or an opportunity to be heard. Roth, 408 U.S. at 577, 92 S.Ct. 2701.
The cases relied upon by the plaintiff to support its due process argument are easily distinguishable. Pl.'s Mem. at 29-30. In Fuentes v. Shevin, 407 U.S. 67, 80-81, 92 S.Ct. 1983, 32 L.Ed.2d 556 (1972), the Court focused on the fact that the goods at issue were taken from the plaintiff's possession pursuant to a challenged state statute, which was held to be unconstitutional for lack of pre-deprivation process. In Roth, the Court distinguishes between "college professors and staff members dismissed during the terms of their contracts," 408 U.S. at 576-77, 92 S.Ct. 2701 (emphasis added), and the plaintiff in that case, whose employment contract with the government ended "with no provision for renewal whatsoever," id. at 578, 92 S.Ct. 2701, concluding that while the former "have interests in continued employment that are safeguarded by due process," id. at 577, 92 S.Ct. 2701, the latter did not, id. at 578, 92 S.Ct. 2701. Finally, as support for the claim that "the government cannot arbitrarily strike down a land claim without due process," Pl.'s Reply at 28, the plaintiff relies on Cameron, where the Supreme Court stated that "the land department has no power to strike down any claim arbitrarily, but so long as the legal title remains in the Government it does have power, after proper notice and upon adequate hearing, to determine whether the claim is valid, and, if it be found invalid,
Accordingly, the Court finds no due process violation.
For the foregoing reasons, the plaintiff's motion for summary judgment is denied and the defendants' cross-motion for summary judgment is granted.
An Order consistent with this Memorandum Opinion will be contemporaneously entered.
