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Western Refining Southwest, Inc. v. U.S. Department of Interior

United States District Court, D. New Mexico

July 20, 2017

WESTERN REFINING SOUTHWEST, INC. and WESTERN REFINING PIPELINE, LLC, Plaintiffs,
v.
U.S. DEPARTMENT OF THE INTERIOR, and SALLY JEWELL, in her official capacity as Secretary of the Interior, Defendants.

          MEMORANDUM OPINION AND ORDER

         This matter is before the Court on the Motion to Dismiss for Want of Subject Matter Jurisdiction [Doc. 29] filed by intervenors Patrick Adakai and Frank Adakai (“the Adakais”). The Court has considered the motion, along with the responses [Docs. 30 and 31] filed by the Defendant and the Plaintiffs, respectively. The Adakais chose not to file a reply brief. After consideration of the arguments advanced by the parties and the relevant legal authorities, the Court concludes that the motion should be denied.

         FACTUAL AND PROCEDURAL BACKGROUND

         This case centers on the right-of-way for a buried oil pipeline in northwestern New Mexico. 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 rights-of-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.

         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 BIA 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. § 169.3(c)(2) (Apr. 1, 2015). On August 2, 2010, the Bureau of Indian Affairs (“BIA”) granted the request and issued a twenty-year renewal of the right of way over Allotment No. 2073. This renewal was based on consent from the owners of what BIA calculated to be 60.26% of the individual Indians who held interests in Allotment No. 2073. Among these individuals were Tom Morgan (42.5% interest) and Mary B. Tom (14.16% interest). In return for their consent, the interest owners accepted compensation from Western.

         On December 6, 2012, the Navajo Nation first acquired an interest in Allotment No. 2073 through a probate proceeding for Ms. Anita Adakai. In 2016, the Navajo Nation acquired additional interests in the Allotment through conveyances made under the BIA's land buyback program.

         Patrick Adakai, who owns a .0038461% interest in Allotment No. 2073, appealed the BIA's decision to the Interior Board of Indian Appeals (“IBIA”). Adakai argued that the consents obtained from other landowners were flawed and that the amount of compensation was inadequate. On January 8, 2013, the IBIA vacated the renewal of the easement on an issue it raised sua sponte: that because Morgan and Tom had only a life estate in the property and had bequeathed future remainder interests to others (referred to as “remaindermen”) through “gift deeds, ” their consent was legally insufficient without additional consents from these “remaindermen.” See Doc. 1-2 at 5, 56 IBIA at 108; Doc. 1 at ¶ 13. The decision rested in the theory that as holders of life estates only, Morgan and Tom lacked authority to encumber the Allotment beyond their lifetimes. The IBIA remanded the matter to the BIA.

         As a result of this decision, Western attempted to obtain consent from Morgan and Tom's remaindermen, and was successful in doing so with Tom's. However, Western was able to obtain consent from only four of Morgan's eight remaindermen.

         On April 8, 2014, 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. Doc. 1-1 at 1; 63 IBIA 41. Western appealed this decision to the IBIA.[1] Then, in late 2015, the BIA revised its regulations, for the first time requiring consent not only from the holder of a life estate, but also from the holders of the remainder interest. 25 C.F.R. § 169.109 (2016). Those revised regulations went into effect in April of 2016.

         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 Morgan or Tom, whichever is the shortest period. Doc. 1-1 at 1-2, 13; 63 IBIA 41-42, 53. This was because “the deeds contain no language that expressly or impliedly reserved, for the life tenants, the authority to grant an interest beyond their lifetimes.” Id. at 10, 63 IBIA at 50. 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.” Id. at 2, 63 IBIA 42.

         In the case now before the court, 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 their remaindermen, is all that was required under the General Right-of-Way Act and then-existing 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.

         On June 13, 2016, Patrick and Frank Adakai (“the Adakais”), who own a partial interest in the Allotment, filed their Motion to Intervene, Answer, Motion to Dismiss, and Counterclaim [Doc. 16]. In a Memorandum Opinion and Order [Doc. 28] entered November 29, 2016, the Court denied the motion to intervene but expressly allowed the Adakais to file a new motion to dismiss addressing only the issue of subject matter jurisdiction. That motion is currently before the Court.

         STATUTORY FRAMEWORK

         The APA is not a jurisdiction-conferring statute; it does not directly grant subject matter jurisdiction to the federal courts. See Califano v. Sanders, 430 U.S. 99, 105 (1977); Air Courier Conference v. Am. Postal Workers Union, 498 U.S. 517, 523 n. 3 (1991). Rather, the judicial review provisions of the APA provide a limited cause of action for parties adversely affected by agency action. See Bennett v. Spear, 520 U.S. 154, 175 (1997); Japan Whaling Ass'n v. Am. Cetacean Soc'y, 478 U.S. 221, 230 n. 4 (1986). Although the APA does not directly grant jurisdiction, the federal question statute, 28 U.S.C. § 1331, “confer[s] jurisdiction on federal courts to review agency action, regardless of whether the APA of its own force may serve as a jurisdictional predicate.” Califano, 430 U.S. at 105.

         Judicial review under the APA is based upon “the whole record or those parts of it cited by a party.” 5 U.S.C. § 706. The United States Supreme Court has explained, “the focal point for judicial review [under the APA] should be the administrative record already in existence, not some new record made initially in the reviewing court.” Camp v. Pitts, 411 U.S. 138, 142 (1973) (per curiam); accord Fla. Power & Light v. Lorion, 470 U.S. 729, 743-44 (1985). Thus, even though judicial review rests with a district court, the district court does not act as a fact-finder. Fla. Power & Light, 470 U.S. at 744. Instead, ...


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