982 F.2d 1389 (9th Cir. 1993), 91-35799, Stock West Corp. v. Lujan

Docket Nº:91-35799.
Citation:982 F.2d 1389
Party Name:STOCK WEST CORPORATION, an Oregon corporation, Plaintiff-Appellant, v. Manuel LUJAN, Jr., in his official capacity as Secretary of the United States Department of Interior; Stanley Speaks, in his official capacity as Portland Area Director, Bureau of Indian Affairs; Interior Board of Indian Appeals, Defendants-Appellees.
Case Date:January 13, 1993
Court:United States Courts of Appeals, Court of Appeals for the Ninth Circuit

Page 1389

982 F.2d 1389 (9th Cir. 1993)

STOCK WEST CORPORATION, an Oregon corporation, Plaintiff-Appellant,


Manuel LUJAN, Jr., in his official capacity as Secretary of

the United States Department of Interior; Stanley Speaks,

in his official capacity as Portland Area Director, Bureau

of Indian Affairs; Interior Board of Indian Appeals,


No. 91-35799.

United States Court of Appeals, Ninth Circuit

January 13, 1993

Argued and Submitted July 10, 1992.

Page 1390

Barbee B. Lyon, Tonken, Torp, Galen, Marmaduke & Booth, Portland, OR, for plaintiff-appellant.

David W. Harder, U.S. Dept. of Justice, Washington, DC, for defendants-appellees.

Appeal from the United States District Court for the District of Oregon.

Before: TANG, FERGUSON and THOMPSON, Circuit Judges.

Page 1391

TANG, Circuit Judge:

Stock West Corporation ("Stock West" or "Company") appeals the dismissal of its action seeking judicial review of agency decisions. Specifically, the Company seeks review of the United States Department of the Interior's decisions not to approve pursuant to 25 U.S.C. § 81 two contracts between Stock West and two corporations established under the laws of the Confederated Tribes of the Colville Reservation ("Tribe"). Stock West contends the district court erred in dismissing the case for lack of prudential standing and nonjoinder of the Tribe as an indispensable party under Federal Rule of Civil Procedure 19. We vacate-in-part, reverse-in-part, and remand.


In 1984, Stock West signed two contracts with two tribal entities, the Colville Tribal Enterprise Corporation and the Colville Indian Precision Pine Company. Under the contracts, Stock West was to manage the construction and subsequent operation of a sawmill on the Tribe's reservation in Oregon. Both contracts contained arbitration provisions.

Under 25 U.S.C. § 81, some contracts made with Indians must be approved by the Secretary of the Interior and the Commissioner of Indian Affairs. Failure to obtain Interior Department approval of contracts subject to section 81 renders such contracts void. 1

The Secretary and the Commissioner have delegated their responsibilities under section 81 to Bureau of Indian Affairs ("BIA") Area Directors. See 25 U.S.C. § 1a (authorizing delegations of authority). Decisions made by BIA Area Directors are subject to administrative appeal. See id.; 25 C.F.R. §§ 2.1-.21 (setting forth appeal procedures); 43 C.F.R. §§ 4.200-.340 (additional procedures made relevant under 25 C.F.R. § 2.4(e)).

The two contracts at issue provide for Interior Department approval. However, the Interior Department has maintained consistently that the contracts are not subject to section 81, and do not require agency approval. The agreements have therefore never been approved by the Department.

The Department first took the position in September 1984 when the parties submitted the contracts for review that section 81 approval was not necessary. At that time, the Secretary's delegate stated, "If the parties or the Regional Solicitor determine my approval of these documents is necessary or desirable, I will reconsider my decision not to approve." At the request of the Tribe, the BIA reconsidered its decision but did not change its position. No administrative appeal was taken from this decision and the parties proceeded as though the contracts were in effect.

In 1986, the tribal corporations filed a lawsuit in tribal court alleging that Stock West was in breach of the agreements.

Page 1392

Stock West denied the allegations and pursuant to the agreements moved the tribal court to compel arbitration. 2 The tribal corporations opposed arbitration, arguing that the contracts--including the arbitration provisions--were void under 25 U.S.C. § 81 for lack of Interior Department approval.

Shortly before the tribal suit was filed, Stock West had again sought section 81 approval of the two contracts. Again, the BIA denied the request on the ground that section 81 did not apply. Stock West did not appeal administratively this decision.

In May 1988, the tribal court ruled that the contracts were subject to section 81 and that the agreements--including the arbitration provisions--were therefore void for lack of section 81 approval. Confederated Tribes v. Stock West, Inc., 15 Indian L.Rep. (Am. Indian Law. Training Program) 6019 (Colville Tribal Ct. May 2, 1988).

Stock West subsequently again renewed its request for BIA approval of the contracts. By letter dated February 21, 1989, the BIA replied that, in view of (1) its prior assertions that the contracts were not subject to section 81, (2) the parties' failure to appeal these prior decisions, (3) the pending litigation between the parties, and (4) the fact that the tribal corporations were no longer seeking section 81 approval, the BIA did "not believe it appropriate to consider Stock West's request to retroactively approve these contracts." Stock West appealed this decision to the Interior Board of Indian Appeals ("IBIA"). See 25 C.F.R. § 2.4(e); 43 C.F.R. § 4.332 (setting 30 day period within which to appeal). 3 On administrative appeal, the Tribe filed a brief supporting the BIA's decision and suggested that Stock West's appeal was untimely.

Although the Company's administrative appeal was filed within 30 days after the last BIA decision, the IBIA dismissed the appeal on the ground that Stock West had not timely appealed the earlier BIA decisions:

The record shows that appellant [i.e., Stock West] believed in 1984 and at all times since then that BIA approval of these agreements was necessary for them to be effective. BIA, on the advice of counsel, disagreed with appellant, and specifically denied appellant's requests to approve or to retroactively approve the agreements on three separate occasions. Appellant appealed only the last of these denials. The Board finds that this appeal must be dismissed as being an untimely appeal from appellee's [i.e., the BIA Area Director's] January 9, 1985, refusal to approve the agreements and/or his July 21, 1987, refusal to approve the agreements retroactively. In either case, appellee's decision became final when no timely appeal was taken. Under 43 CFR 4.332(a), the Board lacks jurisdiction over an untimely appeal.

Stock West, Inc. v. Portland Area Director, BIA, 18 IBIA 7, 11 (Oct. 5, 1989).

In March of 1990, Stock West filed this action in district court against the Secretary of the Interior, the BIA Area Director, and the IBIA. In its complaint, Stock West requests the following relief: judicial declarations that Stock West's administrative appeal to the IBIA was timely, that the BIA's refusal to consider Stock West's request for retroactive section 81 approval was arbitrary and capricious, and that the BIA's refusal to grant section 81 approval was arbitrary and capricious. Stock West also seeks an injunction requiring defendants to grant retroactive section 81 approval of the agreements. The complaint cites as the bases for federal jurisdiction 5 U.S.C. § 702 (providing for judicial review under the Administrative Procedure Act)

Page 1393

and 28 U.S.C. § 1331 (general federal question jurisdiction).

On July 10, 1990, the Findings and Recommendation of a federal magistrate judge were filed in the district court. The magistrate judge concluded that Stock West lacked prudential standing to seek review of the Interior Department decisions because the Company's interests were not within the zone of interests protected or regulated by 25 U.S.C. § 81. The magistrate judge also found that dismissal was required because the Tribe was a necessary party under Fed.R.Civ.P. 19 and the Tribe could not be joined due to sovereign immunity. Given these two conclusions, the magistrate judge found it unnecessary to consider the additional argument that the absence of any law governing Stock West's claims rendered the matter nonjusticiable.

The district court adopted the Findings and Recommendation of the magistrate judge without comment and dismissed the action. Stock West timely appeals.


Section 10(c) of the Administrative Procedure Act, ch. 324, 60 Stat. 237, 243 (1946), codified as revised at 5 U.S.C. § 704, provides that agency action otherwise deemed final shall be final for purposes of seeking judicial review notwithstanding the availability of an appeal to a superior agency authority. The statute also provides, however, that an agency may promulgate regulations requiring that an administrative appeal be taken before judicial review of the agency action can be obtained. 4

Since 1975, regulations governing challenges to decisions of the Bureau of Indian Affairs have required an administrative appeal from most BIA decisions before judicial review of such decisions can be obtained. See, e.g., 25 C.F.R. § 2.3(b) (1988); 40 Fed.Reg. 20,625-26 (1975). In 1989, the regulations requiring an administrative appeal were revised without changing the appeal requirement. See 54 Fed.Reg. 6478, 7666 (1989). The provision requiring an appeal now appears at 25 C.F.R. § 2.6(a) (1992). 5 These regulatory revisions also eliminated an intermediate appeal to the Commissioner of Indian Affairs and provided for direct review of BIA Area Director decisions by the Interior Board of Indian Appeals. See 54 Fed.Reg. 6478 (1989); compare 25 C.F.R. § 2.3(a) (1988) with id. § 2.4(e) (1992). At the same time, the rules governing appeals to the IBIA were amended to "ensure compatibility between those regulations and regulations of the Bureau of Indian Affairs." 54 Fed.Reg. 6483 (1989). In particular, one amendment reiterated the need for an appeal to the IBIA before the decision of an BIA Area Director could be reviewed judicially...

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