Silver State Land, LLC v. Schneider

• Decision Date: 16 December 2016
• Docket Number: No. 16-5018,16-5018
• Citation: 843 F.3d 982
• Parties: Silver State Land, LLC, Appellant v. Janice M. Schneider, in her official capacity as Assistant Secretary, Land and Minerals Management, and Neil Kornze, in his official capacity as Principal Deputy Director, Appellees
• Court: U.S. Court of Appeals — District of Columbia Circuit

843 F.3d 982

Silver State Land, LLC, Appellant

v.Janice M. Schneider, in her official capacity as Assistant Secretary, Land and Minerals Management, and Neil Kornze, in his official capacity as Principal Deputy Director, Appellees

No. 16-5018

United States Court of Appeals, District of Columbia Circuit.

Argued October 13, 2016

Decided December 16, 2016

Paul B. Smyth, Washington, DC, argued the cause and filed the briefs for appellant. John F. Henault, Jr. entered an appearance.

Jeffrey S. Beelaert, Attorney, U.S. Department of Justice, argued the cause for appellees. With him on the brief were John C. Cruden, Assistant Attorney General, and William B. Lazarus and David C. Shilton, Attorneys.

Before: Henderson and Rogers, Circuit Judges, and Edwards, Senior Circuit Judge.

Edwards, Senior Circuit Judge:

In September 2011, the City of Henderson, Nevada (the "City" or "Henderson") executed an agreement with the Las Vegas National Sports Center ("Sports Center") to construct sports venues on a 480-acre parcel of federally-owned public land. Under the agreement, Sports Center was to serve as the developer and work with the City in designing the project. In exchange, the City agreed to request the Bureau of Land Management ("Bureau") in the Department of Interior ("Department") to convey the public land to the developer. After completion of the project, the developer was to transfer ownership of the land and the sports complex to the City, and the City would lease back the venues to the developer.

After reviewing the City's request, the Bureau agreed to conduct a modified competitive auction of the land. The City accepted the Bureau's terms and then substituted Appellant Silver State Land, LLC ("Silver State"), a controlled affiliate of Sports Center, as the designated bidder. In April 2012, the Bureau announced that Silver State would be the designated bidder in a sealed-bid sale because it had agreed "to develop the property for public recreation and commercial uses approved by the City." Joint Appendix ("JA") 371. Under the modified bidding process, Silver State had the right to match the highest bid.

On June 4, 2012, Silver State submitted the only bid, which was accepted by the Bureau. On November 28, 2012, Silver State paid the balance of money due in connection with the sale and asked the Bureau to issue the patent for the land so that Silver State could record it. Within hours after Silver State transferred the funds to the Bureau, Sports Center terminated its agreement with Henderson. On November 29, 2012, Henderson requested the Bureau to cancel the public land sale because the developer had backed out of its agreement to build the sports complex. In January 2013, the City filed an action in Nevada state court against the developer. However, the parties settled the state court litigation in March 2013. Silver State agreed to give the City $4.25 million after it received and recorded the patent, and the City agreed to withdraw its objection to the land sale. Silver State also agreed not to pursue the sports complex project, or any other development, in Henderson.

After reviewing the matter, the Department determined that the Bureau should not give Appellant a patent for the land. Silver State filed suit in District Court to challenge the Department's action. Appellant contended that the Department—through the Appellee, the Assistant Secretary for Land and Minerals Management ("the Secretary")—violated the Federal Land Policy and Management Act of 1976 ("the Act") by canceling the land sale more than thirty days after Appellant paid for the land.

The District Court held that the Secretary had plenary power to terminate the land sale because consummation of the sale would have been contrary to law. See Silver State Land, LLC v. Schneider , 145 F.Supp.3d 113 (D.D.C. 2015). The District Court agreed with the Secretary that the Bureau had authorized a modified competitive land auction, giving special preference to Appellant, only because of the public benefits that the sale was to produce. Those public benefits were to come from the agreement that Appellant had signed with Henderson to build a sports complex, which was supposed to attract jobs and tourism to the region. However, after Appellant obtained the benefit of the modified competitive auction, it broke off the agreement with Henderson. The District Court therefore accepted the Secretary's position that issuing the patent to Appellant would be contrary to the public benefits requirement needed to authorize a modified competitive auction. The court granted summary judgment to the Secretary and Silver State now appeals.

We affirm the judgment of the District Court. We hold that the Secretary had plenary power to terminate the land sale, and that the Act did not constrain the Secretary's power. We reject Appellant's claim that the Secretary's action was arbitrary and capricious. Appellant's Agreement with the City was the sole justification for the special auction. However, the auction sale was rendered unlawful when Sports Center terminated the agreement. Finally, we hold that Appellant did not suffer a Due Process Clause violation because it never acquired a property interest in the land.

I. BACKGROUND

A. Statutory and Regulatory Background

Appellee, the Assistant Secretary for Land and Minerals Management of the Department of the Interior, oversees the Bureau of Land Management. The scope of the Bureau's authority over federal public lands is defined by a patchwork of statutes. An 1812 statute established the General Land-Office, located in the Department of the Treasury, with the power "to superintend, execute and perform, all such acts and things, touching or respecting the public lands of the United States." Act of Apr. 25, 1812, ch. 68, § 1, 2 Stat. 716, 716. When Congress created the Department of the Interior in 1849, it directed "the Secretary of the Interior [to] perform all the duties in relation to the General Land Office ... now discharged by the Secretary of the Treasury." Act of Mar. 3, 1849, ch. 108, § 3, 9 Stat. 395, 395. In 1946, Congress established the Bureau of Land Management and charged it with performing "[t]he functions of the General Land Office." 1946 Reorganization Plan No. 3, § 403(a), 60 Stat. 1100. The result of this reorganization is the current statutory authorization for the Bureau:

The Secretary of the Interior or such officer as he may designate shall perform all executive duties appertaining to the surveying and sale of the public lands of the United States, or in anywise respecting such public lands, and, also, such as relate to private claims of land, and the issuing of patents for all grants of land under the authority of the Government.

43 U.S.C. § 2. The Supreme Court, interpreting the Department and the General Land Office's statutory authorizations, has held that "the Department has been granted plenary authority over the administration of public lands." Best v. Humboldt Placer Min. Co. , 371 U.S. 334, 336, 83 S.Ct. 379, 9 L.Ed.2d 350 (1963).

Although the Department enjoys plenary authority "as a general rule," this authority may be constrained if there is "some specific provision to the contrary in respect to any particular grant of public land." Corp. of the Catholic Bishop of Nesqually v. Gibbon , 158 U.S. 155, 167, 15 S.Ct. 779, 39 L.Ed. 931 (1895). One such provision is at issue in this case: the Federal Land Policy and Management Act of 1976. The Act declares that its provisions shall "be construed as supplemental to and not in derogation of the purposes for which public lands are administered under other provisions of law." 43 U.S.C. § 1701(b). The Act outlines certain procedures that govern the sale of public land. It requires, inter alia , sales of public land to "be conducted under competitive bidding procedures to be established by the Secretary." 43 U.S.C. § 1713(f).

Pursuant to § 1713(f), the Department has promulgated regulations governing competitive bidding. In accordance with the statute's default rule that public land sales "shall be conducted under competitive bidding procedures," id. the Department's regulations require that the "general procedure for sales of public lands" is a competitive public auction. 43 C.F.R. § 2710.0–6(c)(3)(i). However, if certain conditions are met, the Department may deviate from the general procedure and use either a direct sale or a modified competitive sale. 43 C.F.R. § 2710.0–6(c)(3)(ii), (iii). To use a modified competitive sale, the Department must determine that "it is necessary in order to assure equitable distribution of land among purchasers or to recognize equitable considerations or public policies." 43 C.F.R. § 2711.3–2(a).

The Act prescribes a timeline for the Secretary to follow when issuing a patent to the winning bidder in either a competitive or modified competitive bidding process:

The Secretary shall accept or reject, in writing, any offer to purchase made through competitive bidding at his invitation no later than thirty days after the receipt of such offer.... Prior to the expiration of such periods the Secretary may refuse to accept any offer or may withdraw any land or interest in land from sale under this section when he determines that consummation of the sale would not be consistent with this Act or other applicable law.

43 U.S.C. § 1713(g).

B. Factual and Procedural Background

Las Vegas has never been home to a major league sports franchise. Texas real estate developer Chris Milam sought to capitalize on this opportunity. In 2011, Milam's Las Vegas National Sports Center signed a Master Project Agreement ("the Agreement") with the City of Henderson, Nevada. The Agreement specified that Henderson would nominate a 480-acre tract of federal public land in the city for sale to Sports Center pursuant to the Southern Nevada Public Land Management Act. Under the Agreement, Sports Center promised to "plan, design, develop, construct, complete and operate" a major...