Sangre De Cristo Development Co., Inc. v. U.S., 89-2238

• Decision Date: 07 May 1991
• Docket Number: No. 89-2238,89-2238
• Citation: 932 F.2d 891
• Parties: SANGRE DE CRISTO DEVELOPMENT COMPANY, INC., A New Mexico Corporation, Plaintiff-Appellant, Jennie Deden Behles, Trustee in Bankruptcy for Sangre de Cristo Development Company, Inc., Plaintiff-Appellant, v. UNITED STATES of America, Defendant-Appellee.
• Court: U.S. Court of Appeals — Tenth Circuit

Page 891

932 F.2d 891

SANGRE DE CRISTO DEVELOPMENT COMPANY, INC., A New Mexico Corporation, Plaintiff-Appellant Jennie Deden Behles, Trustee in Bankruptcy for Sangre de Cristo Development Company, Inc., Plaintiff-Appellant, v. UNITED STATES of America, Defendant-Appellee.

No. 89-2238.

United States Court of Appeals Tenth Circuit.

May 7, 1991.

Michael D. Bustamante (Arturo B. Ortega, with him on the briefs), Albuquerque, N.M., for plaintiffs-appellants.

Jeffrey P. Kehne, Atty., Dept. of Justice, Environment & Natural Resources Div., Washington, D.C. (Richard B. Stewart, Asst. Atty. Gen., Land & Natural Resources Div., Washington, D.C., John A. Bryson, Atty., Dept. of Justice, Environment & Natural Resources Div., Washington, D.C., William L. Lutz, U.S. Atty., Albuquerque, N.M., Herbert A. Becker, Asst. U.S. Atty., Albuquerque, N.M., James E. Brookshire, Peter Monson, Attys., Dept. of Justice, Criminal Div., Appellate Section, Washington, D.C., Michael P. Healy, Atty., Dept. of Justice, Washington, D.C., with him on the brief), for defendant-appellee.

Before LOGAN, ANDERSON, and EBEL, Circuit Judges.

EBEL, Circuit Judge.

Appellants seek damages against the United States for harm suffered when the Department of the Interior allegedly cancelled a lease agreement reached between the appellants and the Tesuque Indian Pueblo. The appellants claim that the alleged lease cancellation by the Department of the Interior deprived them of a vested property interest and as a result entitles them to recover just compensation under the takings clause of the Fifth Amendment. In addition, the appellants claim that the United States is liable under contract and trust theories. The appellants have raised a battery of additional claims against the United States arising out of the lease, the viability of which depends upon whether the United States has waived its sovereign immunity. Finally, the appellants further allege that the United States negligently prepared an environmental impact statement, which prejudiced the appellants' ability to avail themselves of their rights under the lease.

The United States District Court for the District of New Mexico found for the United States on all the appellants' claims. The district court held that because the Department of the Interior's actions did not deprive the appellants of a vested property interest, the appellants' Fifth Amendment just compensation claim was without merit. The district court also held that the United

States was not liable for the lease under either a breach of contract or a breach of trust theory. The district court further held that Congress did not waive the United States' sovereign immunity with respect to a number of miscellaneous claims filed by the appellants and, therefore, dismissed them. Finally, the district court held that the Department of Interior had not negligently prepared the environmental impact statement. We affirm.

FACTS

In 1968, a number of Santa Fe, New Mexico residents came up with the idea to develop a world class golf course and residential community near Santa Fe on lands owned by the Tesuque Indian Pueblo ("Pueblo"). These individuals formed the Sangre de Cristo Development Company, Inc. ("Sangre"). Sangre negotiated with the Pueblo and on April 17, 1970, the Pueblo and Sangre signed a lease. The lease involved a total of approximately 5000 acres of Pueblo land, some of which were to be developed immediately while the remainder were to be leased pursuant to a series of option agreements contained in the lease. The lease was approved by the Department of the Interior ("Department") on May 2, 1970, as required under 25 U.S.C. Sec. 415(a) (1970).

In May of 1971, Sangre began selling residential lots. On October 21, 1971, two neighboring landowners and two nonprofit environmental groups, seeking to enjoin construction, filed suit against the United States. They claimed that the United States' approval was invalid because no environmental impact study had been undertaken prior to the approval, and they requested an injunction prohibiting the United States from taking further action or granting further approvals pursuant to the lease until a proper environmental study had been completed. The district court denied the request for injunctive relief on the grounds that no study was required under the National Environmental Policy Act ("NEPA"), Pub.L. No. 91-190, 83 Stat. 852 (1970) (codified at 42 U.S.C. Secs. 4321 et seq.). We reversed, holding that the Secretary's approval constituted a major federal action under NEPA which triggered the environmental impact study requirement of Sec. 4332(2)(C). Davis v. Morton, 469 F.2d 593, 597 (10th Cir.1972). We remanded to the district court with instructions that it grant the relief requested by the neighboring landowners and environmental groups and enjoin the United States "from approving, allowing or acting in any way on submissions or approvals required or permitted under the lease agreement until the environmental impact of the project had been studied and evaluated." Id. at 595. The injunction issued on January 31, 1973.

Over the course of the next four and one-half years, a number of entities, including the Bureau of Indian Affairs ("BIA"), the Council on Environmental Quality ("CEQ"), the Assistant Solicitor for Environmental Law, and Sangre, worked to prepare the environmental impact statement ("EIS"). In early 1976, the Pueblo, under new tribal leadership, began to express reservations regarding the lease. By April of 1976, the Pueblo formally requested that the Department void the lease. On August 25, 1977, the Department announced that it would rescind its prior approval of the lease based upon environmental considerations as well as the Pueblo's opposition to the lease. On October 26, 1977, Sangre was subjected to involuntary bankruptcy proceedings. The trustee of Sangre's estate has brought this civil action on behalf of the estate.

DISCUSSION

Part I of this opinion will address Sangre's claim of a wrongful taking under the Fifth Amendment of the Constitution. Part II will address Sangre's breach of contract/breach of trust claims based upon a purported trust relationship between the Pueblo, the United States, and Sangre. Part III will address whether the United States waived its sovereign immunity with respect to a number of miscellaneous claims raised by Sangre. Part IV will address whether the Department negligently prepared the EIS.

I

Sangre argues that when the Department "rescinded" its approval of the lease on August 25, 1977, that this action constituted a taking under the Fifth Amendment, thereby entitling Sangre to recover "just compensation." As Sangre admits in its brief, for it to be successful on this argument, it must prevail on two separate points: (1) that at the time the alleged taking occurred, Sangre had a vested interest protectable under the Fifth Amendment; and (2) that the Department's action constituted a taking under the Fifth Amendment. See In re Consol. United States Atmospheric Testing Litig., 820 F.2d 982, 988 (9th Cir.1987), cert. denied, 485 U.S. 905, 108 S.Ct. 1076, 99 L.Ed.2d 235 (1988). Because we hold that Sangre did not possess a vested interest in the lease at the time the Department rescinded its approval, we need not address the issue of whether the Department's action constituted a taking.

In Davis v. Morton we instructed the district court to grant the relief requested by the environmental groups and the neighboring landowners: "the case is remanded to the trial court with directions to grant the relief prayed for." Davis, 469 F.2d at 598. The relief requested by the environmental groups and the neighboring landowners was

to issue a preliminary and permanent injunction enjoining [the United States] from approving, allowing or acting in any way on submissions or approvals required or permitted under the lease agreement until the environmental impact of the project had been studied and evaluated. [The environmental groups and the neighboring landowners] further requested the court issue a Writ of Mandamus requiring [the United States] to follow mandates of NEPA before taking any future action on the Pueblo lease.

Id. at 595. Sangre contends that this language indicates that we did not invalidate the lease, but that we simply enjoined the project from continuing until the NEPA requirements were fulfilled. We disagree. We held that the initial approval of the lease by the Department was invalid because it was not preceded by the requisite environmental study. That the requested relief only sought an injunction against future action did not narrow the holding that the lease itself had never been validly approved.

In order for the lease to have been valid, the Department's approval was required:

Any restricted Indian lands, whether tribally or individually owned, may be leased by the Indian owners, with the approval of the Secretary of the Interior, for public, religious, educational, recreational, residential or business purposes.... All leases so granted shall be for a term of not to exceed twenty-five years, except leases of land on the ... pueblo of Tesuque ... which may be for a term of not to exceed ninety-nine years....

25 U.S.C. Sec. 415(a) (1970). Further, not just any Departmental approval would suffice--the approval must have been a valid approval. See Gray v. Johnson, 395 F.2d 533, 537 (10th Cir.), cert. denied, 392 U.S. 906, 88 S.Ct. 2056, 20 L.Ed.2d 1364 (1968), where we held that when the BIA approved a lease that was contrary to regulations and not in the best interest of the Indian lessors, the lessee never acquired a vested interest in the lease. In Gray we said, "[a]ctions by the local agency contrary to the regulations and contrary to the best interest of the Indian do not create a vested interest in the lease. Agents of the government must act within the bounds of their authority; and one who deals with them...