[00:00:04] Speaker 06:
Mr. Toth.

[00:00:27] Speaker 04:
Mr. Chief Judge, and may it please the Court, the District Court here committed two main errors concerning the merits of its review of the Secretary of the Interior's decision to cancel the mineral lease underlying plaintiff's, plaintiff's mineral lease underlying the National Forest.

[00:00:43] Speaker 04:
First, the District Court failed to consider the express stated reasons

[00:00:49] Speaker 04:
the Secretary of the Interior in its actual cancellation decision.

[00:00:54] Speaker 04:
Specifically, the Secretary concluded that when the lease was originally issued, it violated the National Environmental Policy Act, or NEPA, as well as the National Historic Preservation Act, or the NHPA.

[00:01:07] Speaker 04:
Now that failure to review the agency's actual state express reasons for its decision is contrary to fundamental principles of administrative law and by itself is grounds for a remand.

[00:01:21] Speaker 04:
We would ask this court to go further and actually review the agency's reasoning as it can in any administrative review case de novo on the administrative record and hold that the Secretary of the Interior's reasons

[00:01:34] Speaker 04:
for determining that the original lease's issuance violated NEPA and the NHPA were rational and supported by the record.

[00:01:43] Speaker 04:
The second main error that the district court committed on the merits was that it held contrary to the record that Interior both ignored and rejected out of hand plaintiffs' purported reliance interest.

[00:01:58] Speaker 04:
That conclusion was contrary to the record because plaintiffs' reliance interests were not so serious or substantial to require discussion under the FOX-TV standard.

[00:02:09] Speaker 04:
But even if they were, the Secretary's cancellation decision adequately considered those interests.

[00:02:15] Speaker 04:
specifically by offering to refund the entirety of the rents paid not only by plaintiff, but by plaintiff's predecessors in the lease.

[00:02:24] Speaker 04:
That amount totaled approximately what plaintiff claimed were his expenses, non-legal expenses.

[00:02:31] Speaker 04:
And so the court's conclusion that reliance interest were not adequately considered was contrary to the record and also warrants reverse.

[00:02:43] Speaker 02:
There's the lease and there's the application to drill.

[00:02:45] Speaker 02:
I'm trying to figure out if you don't have, if the application to drill is not to be granted for a lot of reasons explained in your decision making, can there, how can you have a lease?

[00:03:03] Speaker 02:
Because what's leased here is not really land.

[00:03:05] Speaker 02:
What's leased is sort of a right to access the minerals underneath.

[00:03:10] Speaker 02:
in this case, it's a mineral lease in terms of the lease itself.

[00:03:17] Speaker 02:
And so if you have a lease like that, then no application to drill it could be granted.

[00:03:24] Speaker 02:
Can you still have the lease?

[00:03:25] Speaker 02:
I mean, they're treated as almost separate here, and I'm trying to figure out how the lease can operate if there can be no development of the minerals.

[00:03:34] Speaker 04:
On the facts of this case, I think that's correct, Judge Malat.

[00:03:37] Speaker 04:
I believe that because the secretary concluded in agreement with the advisory council on historic preservation that any development, any mineral development in this area would create an unmitigable cultural effect on the tribe's cultural district, that no permission to drill could, in fact, be granted for the lease.

[00:03:57] Speaker 04:
And I think that's why the secretary both canceled the lease and denied the application for permission to drill in the same decision.

[00:04:04] Speaker 02:
But has Solonax or somewhere on the administrative record anyone suggested or made a representation as to how the lease could function if the minerals can't be developed or was it understood that these go hand in hand?

[00:04:17] Speaker 04:
I think, you know, this lease was issued back in the early 80s when there was a, you know, a lot of these leases did not include stipulations to protect surface occupancy throughout the entirety of the lease area.

[00:04:30] Speaker 04:
So had they, I'm trying to get to your question in a different way, but had Interior in the lease itself said, well, we're going to grant the lease, but it's subject to not occupying the surface except for exploratory wells or exploratory drilling until you actually submit a proposal for application for permission to drill and we have more detail about

[00:04:51] Speaker 04:
where the surface impacts will occur and so forth, and subject to our further NEPA review, and that's when we'll give you permission to occupy the entirety of the surface.

[00:05:02] Speaker 04:
That's not what it did here.

[00:05:04] Speaker 04:
It may do that in some leases, but the stipulations for these leases suffer from that flaw that this court in Peterson

[00:05:13] Speaker 04:
found to be fatal, which is that they don't prohibit surface occupancy throughout the entirety of the area.

[00:05:20] Speaker 04:
So I believe you're correct that they could not function apart from a drilling program.

[00:05:27] Speaker 02:
It's just so much of the administrative action was on the applications to drill and not on police itself.

[00:05:34] Speaker 02:
And I was just curious about how that mystery developed that way.

[00:05:38] Speaker 04:
Yeah.

[00:05:39] Speaker 04:
sure about.

[00:05:40] Speaker 02:
So district courts seem to be surprised here about canceling the lease.

[00:05:44] Speaker 02:
And that's what I'm trying to understand.

[00:05:46] Speaker 04:
So I think you're right that they go on the facts of this case they go hand in hand.

[00:05:52] Speaker 02:
When you say the facts of this case because

[00:05:55] Speaker 04:
because the original lease did not contain any stipulations to prohibit surface occupancy.

[00:06:00] Speaker 04:
And so it essentially makes it, it makes the lease not worth very much if they can't drill anywhere.

[00:06:08] Speaker 02:
I mean in other cases maybe... Well not worth very much, it's not the same thing as the lease cannot, there can be no

[00:06:16] Speaker 02:
practical leasing because the lease, again, as I understand it, is not of lands.

[00:06:20] Speaker 02:
I mean, land kind of goes along with it, but it's the right to extract minerals in a designated area.

[00:06:28] Speaker 04:
No, I think I was just speaking a little too colloquially.

[00:06:31] Speaker 04:
I mean, what the Advisory Council on Historic Preservation found here was that any drilling or oil and gas development in this area would create unmitigable impacts to the tribe's cultural interests.

[00:06:45] Speaker 04:
And I think with that specific finding, with which the Secretaries of Agriculture and the Secretary of the Interior both concurred,

[00:06:53] Speaker 04:
that we do have a factual situation where drilling would not cure, a new application for drilling would not cure the defects in the original lease.

[00:07:04] Speaker 05:
Can I ask you about, when you started your remarks here this morning, you focused on the merits of the cancellation decision.

[00:07:14] Speaker 05:
I understood your, and you deal with that in your reply brief too, but I understood your opening brief here.

[00:07:21] Speaker 05:
to be asking us to reverse the district court on the reasons he gave, which was delay and reliance, and send the merits back to the district court.

[00:07:30] Speaker 05:
Is that true?

[00:07:31] Speaker 05:
Did I misread your brief?

[00:07:33] Speaker 04:
We didn't specifically ask for remand.

[00:07:36] Speaker 04:
I mean, we put the NEPA arguments into our opening brief.

[00:07:40] Speaker 04:
The plaintiffs raise that as an alternative ground for affirming the district court.

[00:07:45] Speaker 04:
Instead of defending the district court's decision on its own terms, the plaintiff raises that NEPA noncompliance and says that's an alternative way of affirming.

[00:07:56] Speaker 05:
But you're not telling us today.

[00:07:58] Speaker 05:
Are you asking us to deal with the merits?

[00:08:00] Speaker 05:
Suppose we agree with you on the delay in the reliance issues.

[00:08:07] Speaker 05:
Do you want this court to address the merits, or would it be better to send them back to the district court?

[00:08:12] Speaker 05:
We think this court should address the merits.

[00:08:14] Speaker 04:
Should?

[00:08:15] Speaker 04:
Yes.

[00:08:15] Speaker 04:
We think you're obviously not compelled to.

[00:08:19] Speaker 04:
You have two choices.

[00:08:20] Speaker 04:
That's fine.

[00:08:20] Speaker 04:
Thank you.

[00:08:21] Speaker 02:
We have to address their alternative grounds for affirmance.

[00:08:24] Speaker 04:
Yes, I believe so.

[00:08:25] Speaker 04:
I mean, that's what they've put forth.

[00:08:28] Speaker 04:
In addition to the merits, which, you know, I want to emphasize that the Department of the Interior found both violations of NEPA and the NHPA in the original issuance of the lease, either of those constitutes a separate ground supporting the Secretary of the Interior's cancellation decision.

[00:08:48] Speaker 04:
As to NEPA, there were three separate grounds that... Can I pause over this?

[00:08:53] Speaker 01:
You know of a case that says we have to address alternative grounds that the district court did not address?

[00:08:58] Speaker 04:
I'm not aware of a case on that.

[00:09:04] Speaker 04:
I know you have authority to reach... To have two-part on raising here.

[00:09:11] Speaker 04:
Yeah, I'm struggling.

[00:09:12] Speaker 04:
As I stand here, I'm kind of struggling to puzzle it out.

[00:09:15] Speaker 04:
whether you could ask the district court to rule on those issues in the first instance, because obviously this court's in a better position to rule the reasoning of the judge.

[00:09:25] Speaker 04:
If they've opined on the question, it's a question of first impression.

[00:09:30] Speaker 04:
But I think this Court has, you know, the issues have been fully briefed before this Court, and this Court certainly has the tools to decide these pure questions of law based on the record that the parties have presented here.

[00:09:41] Speaker 04:
It's de novo review of the administrative record as to the merits issue.

[00:09:45] Speaker 04:
As to the issue of

[00:09:47] Speaker 04:
whether the Secretary of the Interior has authority to cancel a lease.

[00:09:51] Speaker 04:
That's also a purely legal question, and there are arguments.

[00:09:55] Speaker 04:
I think this Court should take the opportunity to squarely reject those arguments.

[00:09:58] Speaker 04:
Given the Court's recent decision in the Silver State case, that applies same legal principles of the Secretary's authority to manage the public lands, only not in a lease cancellation context, in the context of

[00:10:11] Speaker 04:
canceling a sale of the public lands, which would have been a transfer of the entirety of the fee and control out of the Secretary's hands.

[00:10:20] Speaker 04:
We think the logic of that decision and the Supreme Court's decision in Bochet make abundantly clear that there's this long line of statutes, which has a long historical pedigree, charging the Secretary of the Interior and before him the Secretary of the Treasury of supervising the management of the public lands.

[00:10:40] Speaker 04:
And so long as the secretary retains control or authority of the fee title, he has authority to dispose of the title in the way he sees fit, subject to judicial review for arbitrariness, of course.

[00:10:54] Speaker 02:
Can you tell me when, where they were first put on notice, Solonis was first put on, or whoever was the owner at the time, I suppose, Fino or whoever's relevant, that the lease itself,

[00:11:09] Speaker 02:
was at risk of being canceled?

[00:11:13] Speaker 04:
As apart from the application for permission to drill.

[00:11:16] Speaker 04:
I believe, I mean, the clearest notice came when the United States filed its position in the district court in November of 2015, I believe it was.

[00:11:28] Speaker 04:
That was at pages 254 to 260 of the Joint Appendix.

[00:11:31] Speaker 04:
That's our district court filing in November of 2015 to Solon X. Much earlier on, the flaws were made plain.

[00:11:40] Speaker 04:
It was as to the NEPA compliance of the application for permission to drill, but that has to rely on or tier to the original EA.

[00:11:50] Speaker 04:
And that's what it was doing there.

[00:11:51] Speaker 04:
So it's sort of a nested reliance.

[00:11:54] Speaker 02:
Was that made explicit?

[00:11:56] Speaker 04:
I'm sorry?

[00:11:56] Speaker 02:
Was it made explicit that the

[00:11:58] Speaker 02:
NHPA analysis of the application to drill would also imperil the lease?

[00:12:09] Speaker 04:
I believe if you look back at the first administrative appeal decision by the Interior Board of Land Appeals, this is the IDLA decision from

[00:12:21] Speaker 04:
In August of 1985, pages 973 to 1006 in the Joint Appendix, I think it's going to make clear the way that IBLA adjudicated the administrative appeal that the flaws extended to the original EA, which was prepared for the lease as well.

[00:12:40] Speaker 04:
I see I'm running down out of time, and I'd like to reserve whatever I have left for rebuttal.

[00:13:04] Speaker 00:
Good morning, Your Honors.

[00:13:05] Speaker 00:
Timothy Presso for the intervener appellates.

[00:13:08] Speaker 00:
I appreciate the court granting us an allocation of argument time.

[00:13:13] Speaker 00:
I'd like to use that time first with respect to Judge Millett's question.

[00:13:17] Speaker 00:
At JA 1136 is the document from the mid-1980s in which my clients in this case raised the issue of

[00:13:30] Speaker 00:
the lease being illegal under the authority that had developed about the government's NEPA responsibilities in connection with federal oil and gas leasing.

[00:13:40] Speaker 00:
That's not the government saying that the lease is subject to cancellation, but it's a public protest of the lease's invalidity that dates back to the mid-1980s.

[00:13:50] Speaker 00:
And that issue persisted through the numerous subsequent approvals and has been in the record that this leaseholder inherited now approaching more than 30 years.

[00:14:04] Speaker 00:
The other point I'd like to make with my time this morning is that when we look back at this long line of case law supporting the enduring nature of the Interior Secretary's administrative cancellation authority,

[00:14:18] Speaker 00:
What we see is it's grounded in the Supreme Court's concern in cases like Knight versus United Land Association that the Secretary had to have the power to protect the public's interest in the public lands.

[00:14:32] Speaker 00:
concern is front and center in this case.

[00:14:36] Speaker 00:
The challenged lease cancellation decision protects an area that the Blackfeet Tribe has described as its last traditional sacred territory.

[00:14:45] Speaker 00:
It's an area that offers important habitat for grizzly bears, elk, and numerous other sensitive species adjacent to Glacier National Park.

[00:14:54] Speaker 00:
The inconsistency of oil and gas development with those values is underscored by a host of enactments ranging from

[00:15:02] Speaker 00:
administrative and legislative mineral withdrawals, to the designation of the traditional cultural district, to the opinion of the advisory council here that made clear that oil and gas development on this lease would inflict such a severe blow to the Blackfeet Tribe's cultural interests that their ability to practice their cultural traditions in this area would be lost.

[00:15:23] Speaker 00:
So for my clients, for our interests,

[00:15:26] Speaker 00:
The invalidity of this lease is critical to their ability to protect not only theirs, but the larger public interest in this landscape adjacent to Glacier National Park.

[00:15:35] Speaker 00:
On the other side, Solonex has options to protect its economic interest.

[00:15:41] Speaker 00:
The Griffin and Griffin Exploration case cited in our brief makes clear that even with a lawful cancellation of its lease by the Secretary, Solonix has a contract claim in the Federal Court of Claims against the United States for damages that it has sustained through investments and if it can prove expectation damages for this lease.

[00:16:03] Speaker 00:
So Solonix has options.

[00:16:05] Speaker 00:
There is no such safety net for the public interest in these lands, for the tribe's interest, and for my client's interest.

[00:16:11] Speaker 00:
And that's a very important consideration we ask the court.

[00:16:15] Speaker 02:
There were a lot of these leases that were canceled in the wake of the Connor decision and our decision.

[00:16:22] Speaker 02:
Do you know if anyone has had a successful case in the claims court for damages?

[00:16:28] Speaker 00:
Regarding those leases, I see that my time is expired, so if you'll permit me.

[00:16:34] Speaker 00:
I do not know of any such claim.

[00:16:37] Speaker 00:
I would say this, the Griffin and Griffin case is relatively recent in the Court of Claims, and I think probably my assumption would be that a lot of leaseholders having had a lawful cancellation of their lease, for instance, by a federal court as happened in the Bob Marshall case on remand would not think they had a viable contract claim, but the Griffin and Griffin case makes clear

[00:16:57] Speaker 00:
They do, in fact, have such a claim.

[00:16:59] Speaker 00:
In the case of the Badger II medicine, in particular, the area we're talking about in this case, the lease relinquishments have occurred voluntarily to date, for the most part.

[00:17:10] Speaker 00:
There were the relinquishments that occurred after Congress established a mineral withdrawal in 2006 and provided tax incentives for relinquishment of leases.

[00:17:19] Speaker 00:
There was the large-scale Devon lease relinquishment that occurred about the same time this lease was canceled, in which Devon acknowledged it was, as they said,

[00:17:26] Speaker 00:
the right thing to do.

[00:17:28] Speaker 00:
There was the Moncrief lease cancellation that was challenged before this court, subject to a settlement recently, which I assume the court's seen some indication of that, but that was resolved amicably through a settlement.

[00:17:40] Speaker 00:
The only one that really, the only holdout issue in terms of a contest to the cancellation of the lease in this area is the controversy before the court here today.

[00:17:50] Speaker 00:
So I'm not sure we've kind of had the circumstances that would have presented that to the Court of Claims yet.

[00:17:54] Speaker 00:
Thank you for the opportunity.

[00:17:55] Speaker 00:
I appreciate it.

[00:17:56] Speaker 00:
We ask you to reverse the district court and to be clear, reverse on the merits, not remand.

[00:18:00] Speaker 01:
Thank you.

[00:18:16] Speaker 03:
Thank you, Your Honor.

[00:18:17] Speaker 03:
David McDonald for the appellees.

[00:18:19] Speaker 03:
Appellants' decades-long delay in completing the review of Solonex's application for a permit to drill was so egregious that it required judicial intervention.

[00:18:29] Speaker 03:
Then, after the court forced their hand, Appellants instead sidestepped the court's order and abruptly canceled Solonex's lease over a purported procedural defect more than 30 years old.

[00:18:41] Speaker 03:
This came as a surprise to Solonex because... How is that sidestepping?

[00:18:44] Speaker 01:
I thought the court directed them to make a decision and they made a decision.

[00:18:49] Speaker 03:
Because, Your Honor, the court directed them to make a decision on the suspension of the APD.

[00:18:55] Speaker 03:
Rather than coming to a conclusion on that mandamus lawsuit over the delay, they instead chose for the first time to hold that the lease was invalid.

[00:19:05] Speaker 03:
And that wasn't what they were directed to do.

[00:19:08] Speaker 01:
Well, the court doesn't have the authority to direct them to do one thing or another just to reach a decision.

[00:19:13] Speaker 03:
Right, you're right.

[00:19:14] Speaker 03:
The court set aside their decision as, sorry, before that.

[00:19:19] Speaker 01:
Before that, I understand your argument later, but it seems to me that they were ordered to make a decision and they made a decision.

[00:19:28] Speaker 01:
They happened to be against you, but they made a decision.

[00:19:31] Speaker 03:
They didn't decide on the validity of the APD.

[00:19:34] Speaker 03:
They decided on the least validity, which this is the first time they had ever expressed that concern.

[00:19:41] Speaker 03:
It actually goes direct opposite to what they had been stating for years, continuously and explicitly.

[00:19:49] Speaker 03:
And despite Appellant's attempts to minimize and trivialize the harms here,

[00:19:57] Speaker 03:
This cancellation after affirming its validity for 30 plus years is arbitrary and precious in violation of their delegated authority.

[00:20:08] Speaker 03:
Because whatever authority agencies may have to reconsider their decisions, that authority must be exercised within a reasonable period of time.

[00:20:17] Speaker 03:
And that's borne out by both this court's case law and the Supreme Court's case law.

[00:20:21] Speaker 03:
Boshay v. Udall, which appellants rely on heavily for their claims of authority here,

[00:20:27] Speaker 03:
Actually in that case, the Supreme Court went out of its way to explain that the cancellation that it upheld was undertaken within the 30 days allowed for appeal.

[00:20:37] Speaker 03:
They remark about the reasonable time several times and even warn future courts not to use this case as an excuse to allow agencies to abuse their authority.

[00:20:52] Speaker 03:
And this goes through to this court's case law as well, the Albertson v. FCC case.

[00:20:56] Speaker 03:
Also, the reconsideration was allowed because it was within the 20 days allowed for appeal.

[00:21:02] Speaker 03:
Or in Masoleski v. Trudeau, which while the court

[00:21:07] Speaker 03:
chose not to form a bright line rule for how long agencies have to reconsider, it did state that that time should be measured in weeks rather than years, and certainly not more than 30 years, as is the case here.

[00:21:22] Speaker 03:
And even more recently in the IV sports medicine case, this court quoted that language several times, discussed timely fashion, reasonable amount of time,

[00:21:33] Speaker 03:
And even in the Silver State case, which appellants again rely on fairly heavily, the reconsideration in that case occurred mere months after the initial decision.

[00:21:45] Speaker 03:
And it was immediately after the agency learned that they had been effectively defrauded by the party in that case.

[00:21:53] Speaker 01:
What do we do with the language in that case that says the secretary's authority to cancel an invalid land sale extends at least until the issuance of the land patent?

[00:22:04] Speaker 03:
It's a slightly different case because it's an online patent.

[00:22:08] Speaker 03:
This is the lease.

[00:22:10] Speaker 03:
But I think in that case, it's important.

[00:22:11] Speaker 03:
Wait, wait, wait.

[00:22:12] Speaker 05:
I think you just misunderstood Chief Judge Garrow's question.

[00:22:18] Speaker 05:
His question was that the agency can revoke the lease anytime up until the patent.

[00:22:28] Speaker 05:
That was the question, I think.

[00:22:31] Speaker 05:
Of course, this isn't a patent case.

[00:22:33] Speaker ?:
All right.

[00:22:34] Speaker 03:
So what's the answer?

[00:22:37] Speaker 03:
The answer is that in that case and none of the other cases was the delay as significant as the delay here.

[00:22:44] Speaker 03:
That's all these cases are dealing with a reversal within the ordinary course as soon as they're made aware of a problem.

[00:22:52] Speaker 03:
These are all, these are months, weeks, periods of time.

[00:22:55] Speaker 03:
This isn't an agency changing policy generation later and then reversing a 30-something-year-old decision.

[00:23:06] Speaker 03:
The facts of this case are so egregious that I think it takes it out of that area.

[00:23:10] Speaker 05:
Well, what do you do with our decision in Dayton-Tire where we said that it's not the delay that makes something arbitrary and capricious.

[00:23:19] Speaker 05:
It's the consequences of the delay.

[00:23:22] Speaker 05:
A delay in and of itself, which is what the district court ruled, doesn't make something arbitrary and capricious.

[00:23:28] Speaker 05:
You have to look to see what the consequences are.

[00:23:31] Speaker 05:
Do you agree with me?

[00:23:34] Speaker 03:
Yes, Your Honor.

[00:23:35] Speaker 05:
So therefore, the district court was wrong that delay in and of itself made this arbitrary and capricious, right?

[00:23:42] Speaker 03:
I don't think that's quite what the lower court held.

[00:23:48] Speaker 03:
The lower court said it was delay and the delay was egregious.

[00:23:51] Speaker 03:
That's the largest, most obvious fact here.

[00:23:54] Speaker 03:
But it wasn't just the delay.

[00:23:55] Speaker 03:
It was the fact that the agencies have spent decades affirmatively stating that the lease was valid, both explicitly and implicitly.

[00:24:04] Speaker 03:
They did that throughout the 80s and 90s and through continuing processes up until 2015, there was no indication that the agencies considered the lease issuance invalid.

[00:24:16] Speaker 03:
That was only in 2015 when they first remarked that it might be in 2016 when they finally did so.

[00:24:23] Speaker 03:
So as we see it, that's the association of data processing.

[00:24:30] Speaker 02:
The ability to extract minerals from this land was very much in question throughout all that time period.

[00:24:38] Speaker 02:
Is that right?

[00:24:39] Speaker 03:
Yes, your honor.

[00:24:40] Speaker 02:
And can you explain to me how when you have a lease

[00:24:46] Speaker 02:
of mineral rights if a determination is made that you cannot extract any minerals, that does not necessarily put you on notice that your lease is going to go away too.

[00:25:00] Speaker 02:
Can you have a lease in any practical way without the right?

[00:25:06] Speaker 02:
to drill or otherwise extract minerals?

[00:25:08] Speaker 03:
Yes, Your Honor.

[00:25:09] Speaker 03:
Because again, like you stated, that the issuance of the APD is a separate issue from the validity of the lease itself.

[00:25:16] Speaker 03:
And while in, say, today, the lease, OK, maybe there's no development opportunity now, technology is developing at a very rapid rate.

[00:25:26] Speaker 03:
What is mitigatable now is not what was mitigatable 10 years ago.

[00:25:30] Speaker 02:
That sounds like time is favorable.

[00:25:32] Speaker 02:
The passage of time is something that would be favorable to you.

[00:25:36] Speaker 02:
Do you need new technology to somehow come along for you to be able to develop these minerals?

[00:25:42] Speaker 03:
Possibly, Your Honor, but that's the side step in the court's order.

[00:25:46] Speaker 03:
They short-circuited that process.

[00:25:49] Speaker 03:
There was no opportunity to look to see if there might be mitigated.

[00:25:52] Speaker 02:
I mean, all this time has gone by, and it wasn't as though Solonix was walled off from the process.

[00:25:59] Speaker 02:
There were, as you show, lots of communications.

[00:26:02] Speaker 02:
I'm just trying to understand how they would have thought, what they would have thought would have been left of the lease if these determinations, which we're very much about, can we extract minerals in this area consistent with environmental and cultural and tribal religious practices?

[00:26:19] Speaker 02:
And that was very much in doubt.

[00:26:21] Speaker 02:
I'm trying to understand how there could be a separate thing, but I'll still have my lease and the leases to get the minerals that they said you can't get.

[00:26:31] Speaker 03:
That was in question.

[00:26:32] Speaker 03:
That was the debate for a very long time.

[00:26:34] Speaker 03:
But again, that doesn't affect the actual validity of the underlying lease.

[00:26:38] Speaker 02:
How do I know that?

[00:26:39] Speaker 02:
Because the whole point of the lease is it's a lease for mineral.

[00:26:42] Speaker 02:
It's not as though you could put up a house there.

[00:26:46] Speaker 02:
The lease is just to extract minerals.

[00:26:49] Speaker 02:
And that's why they had to keep suspending the lease because you'd have to, as I understand it, you would have had to keep paying rents and royalties on extracted minerals.

[00:26:58] Speaker 02:
So if they've been saying for sort

[00:27:01] Speaker 02:
year after year after year for a couple of decades that we're not sure we're going to be able to, we're still deciding whether we can get minerals out of here or not.

[00:27:10] Speaker 03:
I think it's important looking back through.

[00:27:12] Speaker 02:
What's left of the lease?

[00:27:13] Speaker 03:
So looking back at the history of this case, I think it's important to recognize that the APD was approved on four separate occasions.

[00:27:20] Speaker 03:
Solenex had every reason to believe that once this process ran its course that they would be able to develop.

[00:27:29] Speaker 03:
There was no indication from the agencies that

[00:27:31] Speaker 03:
they wouldn't be able to do so.

[00:27:33] Speaker 02:
I think Solnex was in contact with the agency throughout this process.

[00:27:38] Speaker 02:
There were communications back and forth.

[00:27:39] Speaker 03:
Yeah, to a certain extent, yes.

[00:27:42] Speaker 03:
So this was both statements directly to Solnex when Sidney Longwell asked specifically, is my lease still valid after he obtained the lease again from FINA.

[00:27:54] Speaker 03:
And the agency explicitly told them, yes, you have a valid lease.

[00:27:57] Speaker 03:
And that is, again, in 2003 with the approval of the oil pipeline project through the same area.

[00:28:03] Speaker 03:
Again, there is no indication that there was environmental impacts or historical impacts at all.

[00:28:09] Speaker 03:
So I think while the actual ability to drill on that land was somewhat in question, it was open to certain mitigation efforts, the actual ownership of the lease was never called into question.

[00:28:23] Speaker 03:
that this process would continue on until reaching a decision that they would be allowed to develop the lease.

[00:28:32] Speaker 01:
District Court mentioned the reliance interest.

[00:28:35] Speaker 01:
What was the evidence of reliance interest that you put forward?

[00:28:39] Speaker 03:
Well, there's not great evidence of reliance in the record itself.

[00:28:44] Speaker 03:
Again, because the agency abruptly switched this decision, there was no opportunity.

[00:28:49] Speaker 03:
They never asked what our reliance interests were.

[00:28:51] Speaker 01:
And I think that goes into your motion for summary judgment.

[00:28:57] Speaker 01:
I mean, there's no rationale for the court to raise a the government didn't address reliance interests unless you made an argument like that.

[00:29:07] Speaker 01:
or unless you offered something to suggest a reliance interest.

[00:29:10] Speaker 01:
So that's why I'm asking.

[00:29:13] Speaker 01:
What was the reliance interest that would prompt the court to rely on a failure to address the reliance interest?

[00:29:21] Speaker 03:
The reliance interest, again, based off of the affirmations over the years, Solonix reacquired the lease and took on Phoenix obligations.

[00:29:32] Speaker 01:
Talking in general theory isn't, again, what I'm asking for.

[00:29:35] Speaker 01:
The only thing I see is the declaration of Mr. Longwell in support of the motion for summary judgment.

[00:29:42] Speaker 01:
And the only thing he mentions in that is that he spent over $35,000.

[00:29:47] Speaker 01:
That's it, nothing else.

[00:29:50] Speaker 01:
And the government agreed to pay approximately $35,000.

[00:29:54] Speaker 01:
So what reliance interest is the court relying on for saying the government's wrong?

[00:30:03] Speaker 03:
Throughout the, after that point, there was all through the Section 106 process, which required Solenex to send representatives to attend those meetings.

[00:30:13] Speaker 03:
There were travel costs and time costs, a series of different things they spent, as well as there was the expenses of Solenex's predecessors and interests.

[00:30:23] Speaker 01:
Those are reliance interests.

[00:30:25] Speaker 01:
None of those are mentioned in the declaration, and none of those seem to be mentioned anywhere.

[00:30:32] Speaker 01:
You know, we've said in the Mingo case that you need very specific, if you're going to rely on reliance, you need very specific affirmations about reliance.

[00:30:42] Speaker 01:
And the only, I'm just asking, is there another place that you can point me other than to this $35,000 number?

[00:30:49] Speaker 03:
No, Your Honor, and that's because, I guess, look under State Farm, the Factor 2,

[00:30:56] Speaker 03:
Agencies entirely failed to consider the possibility that Solonix may have reliance interests.

[00:31:02] Speaker 01:
But they didn't pay.

[00:31:03] Speaker 01:
They agreed to pay $35,000.

[00:31:04] Speaker 01:
That seems like a very direct response to the question of reliance.

[00:31:12] Speaker 01:
I would understand an argument that they didn't address it at all, but they did, and they particularly also mentioned that because it had never been developed, the status quo was not altered.

[00:31:26] Speaker 01:
These payments totaling $31,235 were made, our cancellation entitles Solanax to a refund of that amount.

[00:31:37] Speaker 01:
So they addressed what appears to be the only specific claim of reliance raised either before the agency or in the district court.

[00:31:47] Speaker 01:
That's what I'm asking is.

[00:31:48] Speaker 01:
But there doesn't appear to be anything else.

[00:31:51] Speaker 03:
No, Your Honor.

[00:31:54] Speaker 03:
OK.

[00:31:55] Speaker 03:
In addition to acting outside of their authority, and this is the violation due to that, the cancellation is also arbitrary and capricious.

[00:32:04] Speaker 03:
Before, again, the reason I just stated is failure to consider Zolenex's reliance interests, but also because this decision represents an abrupt and unexplained departure from agency precedent, and we see that from the Texas oil case and the Association of Data Processing Organizations cases.

[00:32:20] Speaker 03:
that when an agency acts a certain way explicitly over a very long period of time and then suddenly reverses without any real explanation for why, that is arbitrary and capricious.

[00:32:35] Speaker 03:
So, like I said, we see that.

[00:32:38] Speaker 02:
Again, I'm trying to figure out the sudden switch here because they were studying and working through this, can minerals be developed on this land

[00:32:49] Speaker 02:
all along, almost from the get go.

[00:32:52] Speaker 02:
And then you had intervening decisions from this court, from the Ninth Circuit, the two courts that would cover this territory, and then intervening congressional legislation.

[00:33:03] Speaker 02:
And so with all that going on, and them continuing to study and investigate whether they've complied with NEPA, undertaking more environmental studies, undertaking more NHPA studies,

[00:33:17] Speaker 02:
more information about the cultural value, it doesn't feel to me like a switch.

[00:33:25] Speaker 02:
I'm having trouble understanding that argument.

[00:33:28] Speaker 03:
Well, throughout this whole process, the actual question of least validity, as the intervener stated, was raised by the Blackfeet.

[00:33:35] Speaker 03:
And the agencies explicitly rejected that argument.

[00:33:40] Speaker 03:
They explicitly stated, no, we believe that NEPA and HPA... Well, I think in 1993 they said it's

[00:33:47] Speaker 02:
It hasn't yet been invalidated administratively or judicially.

[00:33:51] Speaker 02:
And that's very different than saying when there's administrative processes ongoing that that could not be a possible outcome.

[00:34:01] Speaker 03:
I disagree on that.

[00:34:04] Speaker 03:
Over and over again you see this in 1987, in 1991, in 1993.

[00:34:09] Speaker 03:
explicitly stating that Conner v. Burford factors were met in this case and that they did not see value in those arguments.

[00:34:17] Speaker 03:
And then you see throughout the process continuing the hearings on suspension and all this process.

[00:34:24] Speaker 03:
If the lease was invalid in 1982,

[00:34:27] Speaker 03:
then there is no reason to do any of this.

[00:34:29] Speaker 03:
The lease should have been canceled at the outset of the process.

[00:34:34] Speaker 03:
Not only did the agencies fail to do that, but appellants actively disagreed with that assessment.

[00:34:41] Speaker 02:
Well, it says that someone, JA1284, in responding to the Connor thing, the Connor case, this lease has not been challenged by administrative appeal or in federal district court.

[00:34:55] Speaker 02:
right, but has been raised during the scoping process for an EIS.

[00:35:01] Speaker 02:
And then he says, I have no authority to cancel or change the lease, but that doesn't mean, and my understanding is that the validity of the lease was raised in the National Wildlife Federation complaint back in the early 90s after the 93 decision.

[00:35:15] Speaker 02:
So it seems like that wasn't a,

[00:35:20] Speaker 02:
your rock solid on this lease, it was there's an issue, it hasn't yet been challenged, administratively or in federal district court, and then there was a federal district court case that challenged, included amongst its challenges, the validity of the lease.

[00:35:34] Speaker 03:
Again, I think that's the agency's recognizing that that question has come up, but whenever the agency was asked to say... That's a little different than saying we have definitively decided that somehow Connor

[00:35:50] Speaker 02:
or our case doesn't apply to this thing just because it hasn't yet happened and I don't have the authority to cancel a lease on my own.

[00:35:57] Speaker 02:
That's a little different.

[00:35:59] Speaker 03:
Yeah, I believe in the 1993 record of decision which I believe was stated as a final agency action and in that situation they did affirmatively state that the need was implied.

[00:36:10] Speaker 02:
Well, that's what I was just reading from.

[00:36:11] Speaker 02:
That's what I was just reading from.

[00:36:12] Speaker 02:
They didn't affirmatively state.

[00:36:13] Speaker 02:
They just said as of now the bill was challenged and the secretary

[00:36:18] Speaker 02:
or whoever was writing the record of decisions that I don't have the authority unilaterally to cancel the lease back then.

[00:36:26] Speaker 03:
Correct, Your Honor.

[00:36:27] Speaker 03:
They don't have the authority to unilaterally cancel the lease.

[00:36:30] Speaker 01:
All right.

[00:36:30] Speaker 01:
Further questions?

[00:36:31] Speaker 01:
Thank you.

[00:36:32] Speaker 01:
Thank you.

[00:36:38] Speaker 01:
Does your time remain?

[00:36:40] Speaker 01:
We'll give you another two minutes and we'll let him have three over.

[00:36:45] Speaker 04:
couple of quick points.

[00:36:46] Speaker 04:
First, on past statements by the agencies about compliance with NEPA and the NHPA, even, I mean, I agree with Judge Malat with your characterization of the statements, is not definitively taking a position that conclusively

[00:37:02] Speaker 04:
these statutes were satisfied here, but even if you take my friend at his word that that's what they meant, those statements meant, the agency is entitled to take a reassessment of its legal risks, and it can do that under the FOX-TV line of cases, so long as it first acknowledges that its changing position, which it did here,

[00:37:24] Speaker 04:
And it expressly acknowledged those past statements at pages 337 and 338 of the Joint Appendix.

[00:37:31] Speaker 04:
That's the secretary's cancellation decision.

[00:37:34] Speaker 04:
And so long as the secretary provides good reasons for the new position, and FOX TV makes clear that those reasons don't have to be necessarily better than the prior reasons, the agency just has to believe they're better, and that's acknowledged by the change, by acknowledging the change in position demonstrates that the agency believed them to be better.

[00:37:54] Speaker 04:
The panel's also correct in observing that, and I believe it was Judge Malat, your observation that the legal validity of this lease has been in question for decades.

[00:38:07] Speaker 04:
It was never fully resolved by a court.

[00:38:09] Speaker 04:
The National Wildlife Federation case was... Well, that's sort of the problem.

[00:38:12] Speaker 02:
It was, as you said, implicitly, but it's not clear to me how explicitly they were on notice about the lease cancellation, risk of lease cancellation.

[00:38:21] Speaker 02:
You said they go hand in hand, but then they say,

[00:38:24] Speaker 02:
No, I assume they're here fighting, because I think there's still some value to the lease, even if they can't develop the minerals.

[00:38:31] Speaker 02:
And I'm just a bit confused.

[00:38:32] Speaker 02:
So I think the better technology would come along.

[00:38:36] Speaker 04:
I don't know that that's the case.

[00:38:38] Speaker 04:
I think the best way to link the APD, the permission to drill, with the original lease issuance is to understand that these legal defects that the court found in Sierra Club against Peterson and Connor against Burford were defects at the original leasing stage.

[00:38:54] Speaker 04:
And the question was whether the agency could cure those at the subsequent stage when it

[00:39:00] Speaker 04:
when it processed the application for permit to drill.

[00:39:03] Speaker 04:
So I think because the case law says this is a defect in the timing of how you first issued the lease with only NEA and only later did an EIS at the drilling permit stage that everybody reasonably understood we were talking about need the compliance at both stages.

[00:39:19] Speaker 02:
What would have happened if you had just said applications for drilling denied?

[00:39:23] Speaker 02:
We just don't see absent material change.

[00:39:26] Speaker 02:
in circumstances there's not going to be any authority to extract minerals from this area.

[00:39:31] Speaker 02:
But you didn't cancel at least.

[00:39:32] Speaker 02:
What would then happen?

[00:39:33] Speaker 04:
So presumably the suspension would lift and the obligation for the lessee to pay rents would kick in.

[00:39:38] Speaker 04:
They'd start having to pay annual rents.

[00:39:42] Speaker 04:
they'd have the remainder of the lease term, which, as I understand it, may be something on the order of three years have expired, say, in the lease.

[00:39:50] Speaker 04:
I'm just going from memory here.

[00:39:53] Speaker 04:
And maybe they'd have another seven years to submit a new application for permission to drill and somehow demonstrate that they have satisfied all the cultural concerns.

[00:40:02] Speaker 04:
But given the Secretary's finding on the cultural issues, I just don't see how they could practically do that.

[00:40:09] Speaker 04:
For all these reasons, we'd ask you to reverse the district court.

[00:40:13] Speaker 00:
Chairman, I'm just a moment to correct the citation.

[00:40:15] Speaker 00:
I made the question.

[00:40:16] Speaker 01:
You're talking about the page number?

[00:40:18] Speaker 01:
Yes.

[00:40:19] Speaker 00:
Yes?

[00:40:20] Speaker 00:
In response to Judge McMillan's question, I had given the court the citation JA 1136.

[00:40:25] Speaker 00:
The document I intended to reference was JA 2185.

[00:40:29] Speaker 00:
That's the document from 1987.

[00:40:30] Speaker 00:
The other one is an early 1990s document.

[00:40:33] Speaker 00:
Sorry for any confusion.

[00:40:34] Speaker 00:
Thank you.

[00:40:34] Speaker 00:
Thank you for the correction.

[00:40:36] Speaker 01:
All right, we'll take the matter under submission.