Quantum Entertainment v. U.S. Dept. of Interior
| Citation | 597 F.Supp.2d 146 |
| Decision Date | 19 February 2009 |
| Docket Number | No. 07-1295 (RMU).,07-1295 (RMU). |
| Parties | QUANTUM ENTERTAINMENT, LTD., Plaintiff, v. UNITED STATES DEPARTMENT OF the INTERIOR, BUREAU OF INDIAN AFFAIRS, Defendant. |
| Court | United States District Courts. United States District Court (Columbia) |
Shelby J. Kelley, Nancy J. Appleby, Bracewell & Giuliani LLP, Washington, DC, Charles K. Purcell, Rodey, Dickason, Sloan, Akin & Robb, PA, Albuquerque, NM, for Plaintiff.
Devon Lehman McCune, U.S. Department of Justice, Denver, CO, Kristofor R. Swanson, U.S. Department of Justice, Washington, DC, for Defendant.
GRANTING IN PART AND DENYING IN PART THE PLAINTIFF'S MOTION FOR SUMMARY JUDGMENT; DENYING THE DEFENDANT'S MOTION FOR SUMMARY JUDGMENT
The plaintiff, Quantum Entertainment Limited ("QEL")1, and the defendant, the U.S. Department of the Interior ("DOI") Bureau of Indian Affairs ("BIA"), filed cross-motions for summary judgment on the question of whether the DOI's Interior Board of Indian Appeals ("the Board") violated the Administrative Procedure Act ("APA"), 5 U.S.C. §§ 701, et seq., by promulgating a decision adverse to the plaintiff. Stemming from the administrative review of a contract to which the plaintiff was a party, the Board determined that, under the applicable statute, the contract required the BIA's approval in order to be valid. The Board further concluded, that because the plaintiff failed to obtain the BIA's approval, the contract was invalid. Because the court determines that the Board failed to articulate a reasoned basis for certain determinations central to its holding, the court grants in part the plaintiff's motion for summary judgment and remands the Board's decision that the plaintiff's contract was invalid. The court denies the parties' motions in all other respects. Accordingly, the court remands this case to the Board to explain its decision consistent with this opinion.
On August 1, 1996, the plaintiff entered into a management agreement ("Agreement") with the Santo Domingo Pueblo ("Pueblo")2 and Kewa Gas Limited ("Kewa").3 AR at 0131. The Agreement was for an initial term of ten years, during which time the plaintiff managed a gas distribution business owned by Kewa on lands leased by Kewa from the Pueblo. Id. at 0046. The agreement was never submitted to or approved by the Secretary of the DOI. AR at 0833-34. The parties to the Agreement intended to benefit from a tax exemption available to Indian tribes. Id. at 0046, 0827. The parties to the Agreement performed under the Agreement until 2003 when the governor the Pueblo sought BIA review of the Agreement, beginning the administrative process culminating in this lawsuit. Id. at 0828, 0052.
Congress first enacted in 1871, as part of an appropriations bill, and in 1872, as permanent legislation, what later was codified at 25 U.S.C. § 81 ("Old Section 81"). Id. at 0828 & n. 2. From 1871 until 2000, with minor exceptions not relevant here, the text of Old Section 81 remained substantially unchanged as follows:
No agreement shall be made by any person with any tribe of Indians ... for the payment or delivery of any money or other thing of value ... in consideration of services for said Indians relative to their lands ... unless such contract or agreement be executed and approved [by the Secretary of the DOI ("Secretary")] .... All contracts or agreements made in violation of this section shall be null and void, and all money or other thing of value paid to any person by any Indian, tribe, or any one else, for or on his or their behalf, on account of such services, in excess of the amount approved by the ... Secretary for such services, may be recovered by suit in the name of the United States.
25 U.S.C. § 81 (1994).
Congress enacted Old Section 81 out of concern that "claims agents and attorneys working on contingency fees [were] routinely swindl[ing] Indians out of their land, accepting it as payment for prosecuting dubious claims against the federal government." United States v. Turn Key Gaming, Inc., 260 F.3d 971, 976-77 (8th Cir. 2001) (citing Cong. Globe, 41st Cong., 3d Sess. 1483, 1483-87 (daily ed. Feb. 22, 1871)); see also id. at 976 n. 6, 977 n. 7. Congress's act of legislative protection, through the enactment of Old Section 81, stems from the federal government's trust responsibility to Indian tribes. See Mark A. Smith, Contracting with Tribes under 25 U.S.C. § 81, 20-APR PROB & PROP. 8, 10 (2006) ().
In 2000, however, Congress amended Old Section 81 as part of the Indian Tribal Economic Development and Contracts Encouragement Act of 2000. 25 U.S.C. §§ 71, 81, 476. This "amendment" was intended to replace Old Section 81, as the changes to the text where quite substantial. See S. REP. NO. 106-150, at 1, 1999 WL 965424 (1999). The relevant text of 25 U.S.C. § 81 ("New Section 81"), as amended, states that "[n]o agreement or contract with an Indian tribe that encumbers Indian lands for a period of 7 or more years shall be valid unless that agreement or contract bears the approval of the Secretary of the Interior or a designee of the Secretary." 25 U.S.C. § 81(b).
The legislative history surrounding the enactment of New Section 81 illustrates that Congress was concerned that "many provisions of [Old Section 81] have come to be antiquated and unnecessary," H.R.REP. No. 106-501, at 2 (2000), as reprinted in 2000 U.S.C.C.A.N. 69, 69, and their interpretation unpredictable, see S. REP. NO. 106-150, at 5, 1999 WL 965424 (1999). Congress acknowledged that "Indian tribes, their corporate partners, courts, and the [BIA] have struggled for decades with how to apply [Old] Section 81 in an era that emphasizes tribal self-determination, autonomy, and reservation economic development." Id. at 2. To address these concerns, Congress narrowed the scope of contracts that required the Secretary's approval under New Section 81. Id. at 9. Congress, however, expressed no intent regarding the application of New Section 81 to contracts formed before its enactment.
On March 28, 2003, the governor of the Pueblo, Everett Chavez, wrote a letter to the BIA requesting its review of the Agreement in accordance with the terms of the Agreement and the BIA's role "[a]s the federal trust agency[.]" AR at 0052. Governor Chavez requested the review because he strongly believed that the Agreement was "far too lucrative" for the plaintiff. Id. On October 23, 2003, the acting regional director of the BIA, Ronald Toya, informed Governor Chavez and the plaintiff that upon review of the Agreement, the BIA concluded that it was never legally valid. Id. at 0036-0041. Specifically, the BIA determined that (1) the Agreement was subject to review under Old Section 81 because it was formed before the enactment of New Section 81; (2) the Agreement required approval by the BIA, as the designee of the Secretary of the DOI; (3) the retroactive approval of the Agreement would not be in the best interest of the Pueblo; and (4) because the Agreement was not approved by the BIA, it "has never been legally valid and any monies received by [the plaintiff] pursuant to [the Agreement] were unauthorized." Id. at 0036-0041.
The plaintiff appealed the BIA's decision to the Board, which issued its opinion on March 27, 2007. Id. at 0826. The Board made two determinations on the merits of the appeal. First, it affirmed the BIA's "choice of law to review the Agreement under Old Section 81 rather than under [New Section 81.]" Id. at 0826, 0840-0842. Second, it affirmed in part and abstained in part regarding the BIA's determination that Old Section 81 required the BIA's approval as the designee of the Secretary of the DOI. Id. at 0826, 0842-0848. In reviewing the merits of the BIA's decision that the Agreement was within the scope of contracts that required approval under Old Section 81, the Board applied the following three-part test: "(1) is the Agreement with a `tribe of Indians,' (2) is the Agreement for the payment or delivery of any money or other thing of value in consideration of services for the tribe, and (3) is the Agreement `relative to' Indian lands?" Id. at 0842. The Board affirmed the BIA's decision that the Agreement was with an Indian tribe, concluded that the parties did not dispute the second element, and "abstain[ed] from making a determination regarding the third element because of collateral judicial proceedings involving the [DOI]." Id. at 0842.
On July 20, 2007, the plaintiff sought review of the Board's decision in this court. The parties filed cross-motions for summary judgment disputing the legal propriety of the Board's order and opinion. The court now turns to the resolution of these issues.
Summary judgment is appropriate when "the pleadings, the discovery and disclosure materials on file, and any affidavits show that there is no genuine issue as to any material fact and that the movant is entitled to judgment as a matter of law." FED.R.CIV.P. 56(c); see also Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986); Diamond v. Atwood, 43 F.3d 1538, 1540 (D.C.Cir.1995). To determine which facts are "material," a court must look to the substantive law on which each claim rests. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). A "genuine issue" is one whose resolution could establish an element of a claim or defense and, therefore, affect the outcome of the action. Celotex, 477 U.S. at 322, 106 S.Ct. 2548; Anderson, 477 U.S. at 248, 106 S.Ct. 2505.
In ruling on a motion for summary judgment, the court must draw all justifiable inferences in the nonmoving party's...
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