Silver State Land, LLC v. Schneider

• Decision Date: 19 November 2015
• Docket Number: Civil Action No. 13-cv-00717 (BAH)
• Citation: 145 F.Supp.3d 113
• Parties: Silver State Land, LLC, Plaintiff, v. Janice M. Schneider, in her official capacity as Assistant Secretary of Land and Minerals Management, U.S. Department of the Interior, et al., Defendants.
• Court: U.S. District Court — District of Columbia

145 F.Supp.3d 113

Silver State Land, LLC, Plaintiff,

v.Janice M. Schneider, in her official capacity as Assistant Secretary of Land and Minerals Management, U.S. Department of the Interior, et al., Defendants.

Civil Action No. 13-cv-00717 (BAH)

United States District Court, District of Columbia.

Signed November 19, 2015

John F. Henault, Jr., Paul Burton Smyth, W. Hartmann Young, Perkins Coie LLP, Washington, DC, for Plaintiff.Alison D. Garner, U.S. Deparment of Justice, Washington, DC, for Defendants.

MEMORANDUM OPINION

BERYL A. HOWELL, United States District Judge

After the plaintiff, Silver State Land, LLC (“SSL” or “plaintiff”), invested millions of dollars in developing plans for, and successfully bidding and paying the purchase price to obtain the patent on, approximately 480 acres of federal land located in the City of Henderson, Nevada, LLC, the former Acting Assistant Secretary of Land and Minerals Management (“LMM”) in the U.S. Department of the Interior (“DOI”), in accordance with the recommendation of the former Principal Deputy Director of DOI's Bureau of Land Management (“BLM”) (collectively “the agency”), decided to cancel the patent issuance process, withhold the patent and terminate the land sale. The plaintiff filed this lawsuit to challenge this agency action, claiming that “the decision to withdraw the sale was contrary to statutory limitations regarding the ability to withdraw the sale, and was arbitrary and capricious,” in violation of the Administrative Procedure Act (“APA”), 5 U.S.C. § 706(1) and (2). Pl.'s Mot. Summ. J. (“Pl.'s Mot.”), at 1, ECF No. 32; Pl.'s Mem. Supp. Mot. Summ. J. (“Pl.'s Mem.”), at 9, ECF No. 32. Pending before the Court are the plaintiff's motion for summary judgment to set aside the LMM determination and order immediate delivery of the land patent to the plaintiff, Pl.'s Mot. at 1, and the agency's cross-motion for summary judgment, Defs.' Cross-Mot. Summ. J. (Defs.' Mot.”), at 1, ECF No. 33.¹ For the reasons set forth below, the agency's motion is granted and the plaintiff's motion is denied.

I. BACKGROUND

The factual background of the instant dispute was generally summarized in the Court's prior decision denying the plaintiff's motion to supplement the administrative record, grant extra-record review, or take judicial notice of an Order issued by a Nevada state court, see Silver State Land, LLC v. Beaudreau , 59 F.Supp.3d 158, 161–63 (D.D.C.2014), and will be reviewed with additional pertinent detail again here. The genesis of this public land dispute was an ambitious agreement, in early September 2011, between the City of Henderson, Nevada (“Henderson” or “the City”) and the Las Vegas National Sports Center LLC (“LVNSC”), for the purchase and development of an approximately 480-acre parcel of public land (the “Property”) under the administration of BLM. Admin. Record (“AR”) 1590, 1592, ECF No. 25.² This Property had been identified “within the disposal boundary as set forth in the [Southern Nevada Public Land Management Act of 1998] SNPLMA,” AR 1598, which authorized a land disposal program for Southern Nevada, AR 1634. Under the SNPLMA process, BLM worked with local governments and the State Regional Planning Coalition, “to jointly identify land for public purposes ... [and] for privatization that supports the achievement of local and regional land-use plans,” while ensuring fair market return for the American public from all SNPLMA land sales” and “supporting well-planned communities and commercial development in the Las Vegas Valley.” AR 1582.

The agreement between the City and LVNSC, titled “Master Project Agreement” (“MPA”), provided that LVNSC, or its affiliates, would develop, construct and operate “four state-of-the-art sporting event venues,” along with mixed-use retail, residential and entertainment facilities, on the Property. AR 1589–1601.³ While the plaintiff is not mentioned in the MPA, the term “affiliates” is defined as those entities “directly or indirectly controlling, controlled by, or under common control with” LVNSC, which the agreement indicated was wholly owned by “LVNSC (Holding) LLC.” AR 1591, 1609 (MPA § 1.1 and Ex. “C”). LVNSC had the right to assign to its affiliates all or a portion of its rights, interests, responsibilities and obligations under the agreement, upon notice of the assignment to the City. AR 1592, 1603 (MPA §§ 1.2, 7.9).

The MPA provided clear and obvious benefits to the City. Specifically, LVNSC agreed to develop and construct the project, in consultation with the City, which would, with some limitation on use, “jointly own all of the Project architectural drawings, renderings, designs, plans and specifications.” AR 1592 (MPA § 1.3). The City also had the right to participate in designing the project and veto changes to any element of the project that would result in elimination of any of the planned venues or noncompliance with certain agreed upon standards. AR 1593 (MPA § 1.7(b)). In addition, upon completion of the construction of each planned venue, LVNSC was required to “transfer ownership of the applicable venue, together with the portion of the Property upon which such Venue is situated, ... to the City,” AR 1598–99 (MPA § 3.4), which would own the venue “for public purposes,” AR 1592 (MPA § 1.3).⁴ The MPA required the City to “lease back” the transferred venue to LVNSC. AR 1599 (MPA § 3.4). Given the anticipated economic benefits to be derived from the project with LVNSC, the City agreed to use its bonding and taxing authority to pay for a portion of the costs of developing the Property, AR 1590, 1596 (MPA Recitals F & G, § 2.2), and to nominate the Property for disposition through direct sale by BLM to LVNSC, AR 1590, 1598 (MPA Recital C, §§ 3.1, 3.3). The MPA was “not intended in any respect to be a development agreement,” AR 1605 (MPA § 7.19), but the parties agreed to negotiate “a form of development agreement,” subject to approval by the City, to be “entered into by the City and LVNSC following BLM Closing.” AR 1599 (MPA § 4.2).

In accordance with the MPA and the SNPLMA's “joint selection process,” the City nominated the Property for sale to LVNSC under BLM's “Direct Sale Process as set forth in 43 CFR 2711.3–3.” AR 15 (Letter, dated Sept. 7, 2011, from City's Mayor to BLM). The City explained the reasons for its request for a noncompetitive direct sale as follows: “a competitive sale is not appropriate and the public interest would be best served by a direct sale” because the property subject to the sale “is an integral part of a project of public importance and speculative bidding would jeopardize a timely completion and economic viability of the project.” Id . The City stressed that the project would (1) result in the creation of “approximately 10,000 immediate construction jobs on site, and permanent service and management jobs that will provide employment for an estimated 4,000 employees;” (2) “provide 'meaningful economic diversification';” (3) advance “Henderson's planning objectives for the area;” and (4) “stabilize and enhance land values and promote future development opportunities on other private and public land in the vicinity.” Id . at 15–16. In sum, the City urged the direct sale process to “ensure prompt fair market value and [ ] support vital public objectives consistent with Henderson's regional land-use plan.” AR 17.

After “careful review” of the City's request and the LVNSC proposal, BLM concluded that a noncompetitive direct sale of the Property to LVNSC was not appropriate since the proposal “does not rise to the level of a 'public project”' as contemplated by the direct sale regulations. AR 19 (Letter, dated Oct. 4, 2011, from BLM to City's Mayor). Nonetheless, BLM suggested “other sale methods,” including “a modified competitive sale,” as provided in 43 CFR 2711.3–2(a). This alternative sale process could be used when necessary “to assure equitable distribution of land among purchasers or to recognize equitable considerations or public policies,” and “could incorporate flexibility through appropriate procedures ....” Id . at 20. Notably, “a statement indicating the purpose or objective of the bidding procedure would be specified in the notice of realty action.” Id . The City agreed to this modified competitive sale process, and designation of LVNSC as the preferential bidder, in order to “support vital public objectives while maintaining consistency with Henderson's regional land-use plan.” AR 1524 (Letter, dated Oct. 10, 2011, from City's Manager to BLM). The City subsequently advised BLM of a “minor change,” requesting that the plaintiff, “a controlled affiliate of the LVNSC,” be the designated bidder for the Property. AR 1209–11 (Letter, dated Jan. 12, 2012, from City's Manager to BLM). Both LVNSC and the plaintiff are wholly owned by Las Vegas National Sports Center (Holding) LLC. AR 1211.

On April 4, 2012, BLM published in the Federal Register a Notice of Realty Action (“NORA”) for a modified competitive, sealed-bid sale process in which the plaintiff, as the designated bidder, would be offered the right to meet the highest bid for the Property. AR 10–13 (77 Fed. Reg. 20413-16 ). The Notice explained that the plaintiff was the designated bidder because it had “developed an agreement” with the City “for long-term public benefits to the City and local residents,” namely, “to develop the property for public recreation and commercial uses approved by the City.” AR 11. The plaintiff's failure or refusal to meet the highest bid “shall constitute a waiver of the modified competitive bidding procedure for this proposed sale,” id ., and the highest “bidder will be declared the successful bidder in accordance with the regulations at 43 CFR 2711.3–2(c),” id. If no acceptable bids were received, “the parcel may remain available for sale at a future date in accordance with a competitive sale procedures without further notice.” Id . A successful bidder accrued no contractual or other rights...