Solenex LLC v. David Bernhardt

United States Court of Appeals

FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued January 21, 2020 Decided June 16, 2020

No. 18-5343

SOLENEX LLC, A LOUISIANA LIMITED LIABILITY COMPANY,

APPELLEE

v.

DAVID LONGLY BERNHARDT, SECRETARY, U.S. DEPARTMENT

OF THE INTERIOR, ET AL.,

APPELLEES

BLACKFEET HEADWATERS ALLIANCE, ET AL.,

APPELLANTS

Consolidated with 18-5345

Appeals from the United States District Court

for the District of Columbia

(No. 1:13-cv-00993)

Brian C. Toth, Attorney, U.S. Department of Justice,

argued the cause for federal appellants. With him on the briefs

were Jeffrey Bossert Clark, Assistant Attorney General, Eric

A. Grant, Deputy Assistant Attorney General, Stephen A.

Vaden, General Counsel, U.S. Department of Agriculture, and

Charles E. Spicknall, Attorney.

2

Timothy J. Preso argued the cause and filed the briefs for

intervenor-appellants.

Joel West Williams and Kim Jerome Gottschalk were on

the brief for amicus curiae Blackfeet Tribe in support of

appellants and reversal of the district court.

David C. McDonald argued the cause for appellee. With

him on the brief were Ivan L. London, Zach W. Fitzgerald, and

Zhonette M. Brown. Christian B. Corrigan entered an

appearance.

Rebecca W. Watson was on the brief for amicus curiae

Western Energy Alliance in support of appellee and the

decision below.

Before: TATEL, GARLAND, and MILLETT, Circuit Judges.

Opinion for the Court filed by Circuit Judge MILLETT.

MILLETT, Circuit Judge: The Badger-Two Medicine Area

(“Two Medicine Area”) is a region of unique cultural,

religious, spiritual, historical, and environmental significance.

Solenex LLC holds an oil and gas lease (“Lease”) over a

portion of that area. In 2016, the Secretary of the Interior

cancelled the Lease because of the Two Medicine Area’s multi-

faceted significance and Interior’s failure to conduct the proper

pre-lease analyses required under the National Environmental

Policy Act (“NEPA”), 42 U.S.C. §§ 4321 et seq., and the

National Historic Preservation Act (“Historic Preservation

Act”), 54 U.S.C. §§ 300101 et seq. When Solenex challenged

that cancellation decision, the district court ruled in its favor.

The court held that the amount of time that had elapsed between

the Lease’s issuance and its cancellation violated the

Administrative Procedure Act (“APA”), 5 U.S.C. §§ 551 et

3

seq., and that the Secretary failed to consider Solenex’s

reliance interests before cancelling the Lease.

Each of those determinations was erroneous. First, delay

by itself is not enough to render the Lease cancellation arbitrary

or capricious. Second, the Secretary did consider, and in fact

compensated, Solenex’s identified reliance interests. For those

reasons, we vacate the district court’s judgment.

I

A

The Two Medicine Area has long held a special place in

the cultural history and religious life of the Blackfeet Tribe.

The Tribe’s oral history describes how its people began to

suffer and die shortly after the world’s creation. Seeing that

suffering, the Creator returned to the Blackfeet and took them

into the countryside and mountains of what would become the

traditional Blackfeet territory, including the Two Medicine

Area. There, the Creator introduced the Blackfeet to healing

trees, bushes, and plants, and taught them how to seek the

Creator and other spirits. Seeking those spirits, which is “a

central and inseparable part of [the Tribe’s] religion and

lifeway,” requires the Blackfeet to be in the proper

geographical location and to undertake special preparations for

religious ceremonies in the area. J.A. 2021, 2029.

The Two Medicine Area’s topography includes high

mountain peaks and river valleys, and it offers relative isolation

and a supply of high-quality plants, animals, and minerals, all

of which are central to the Blackfeet people’s religious,

spiritual, and cultural practices. For those reasons, it remains a

place of spiritual power for the Blackfeet people because “[i]t

is there that the spirits remain” and where the Blackfeet “can

go, as they have been for centuries in accordance with their

4

beliefs and traditions, to be alone near Creator Sun while still

standing on Mother Earth so that their prayers can be heard by

these two Creators[.]” J.A. 2023.

Many of those same religious and cultural characteristics

render the Two Medicine Area environmentally significant.

The Two Medicine Area is bounded by Glacier National Park,

the Scapegoat and Bob Marshall Wilderness Areas, and the

present-day Blackfeet Indian Reservation. The Two Medicine

Area functions as a habitat for a number of species, including

bald eagles, peregrine falcons, grizzly bears, elk, wolves, lynx,

and wolverines, and it serves as a “critical wildlife movement

corridor[.]” J.A. 327. In recognition of its critical

environmental status and to preserve the region, the United

States Forest Service in 2009 banned motorized vehicles from

all trails and prohibited snowmobiling.

B

In June 1982, the Bureau of Land Management, which is

housed within the Department of the Interior, issued oil and gas

leases within the Two Medicine Area. One of those leases was

issued to Sidney Longwell. To obtain the Lease, Longwell paid

the first year’s rental fee, in the amount of $1 per acre, totaling

$6,247.00.

The Lease did not convey an unrestricted right to drill.

Instead, Longwell was required to obtain permission from both

the Bureau and the Forest Service before drilling could occur.1

The Environmental Assessment conducted by the Forest

Service before the Lease was issued expressly reaffirmed the

contingent nature of the right. As the Environmental

Assessment explained, the “decision to lease is only the first

1

The Bureau manages subsurface mineral rights, while the

Forest Service handles surface activities on certain federal lands.

5

step of a multi-step decision process.” J.A. 2222. The Forest

Service recognized that the Two Medicine Area “may contain

areas of spiritual importance,” and that “the Blackfeet people

prefer[red] to identify th[o]se areas on a project-by-project

basis.” J.A. 2254. If mitigation of any negative effects was

“not possible[,]” then “the area may be avoided completely[.]”

J.A. 2280.

In addition to the explicitly contingent status of drilling,

the Lease provided that it was “subject to all rules and

regulations of the Secretary of the Interior now or hereafter in

force, when not inconsistent with any express and specific

provisions herein[.]” J.A. 2106. In July 1983, approximately

one year after issuing the Lease, Interior amended its

regulations to make clear that “[l]eases shall be subject to

cancellation if improperly issued.” Minerals Management and

Oil and Gas Leasing on Federal Lands, 48 Fed. Reg. 33,648,

33,674 (July 22, 1983).

One year after receiving the Lease, Longwell assigned it

to three companies: America Petrofina Company of Texas,

Petrofina Delaware, Inc., and AGIP Petroleum Company

(collectively, “Fina”). Longwell retained a production

payment based on the value of any oil and gas produced in the

future from the Two Medicine Area. J.A. 42.

Fina submitted an application on November 21, 1983, for

permission to drill in the Two Medicine Area. The Bureau, the

Forest Service, and the Montana Department of Fish, Wildlife,

and Parks jointly conducted a proposed Environmental

Assessment analyzing the impact of drilling on the

environmental, historical, cultural, and religious significance

of the area. The Fish and Wildlife Service issued a biological

opinion in which it concluded that “the proposed action would

jeopardize the grizzly bear and gray wolf,” which were

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threatened species. J.A. 657. A modification to the proposed

drilling action was subsequently made, and the Area Manager

for the Bureau approved the revised application on January 31,

1985.

Several conservation groups and the Blackfeet Tribe filed

an administrative appeal with the Interior Board of Land

Appeals (“Interior Appeals Board”). The conservation groups

and the Tribe alleged that the approval violated NEPA, the

Endangered Species Act, 16 U.S.C. §§ 1531 et seq., the

Archeological and Historic Preservation Act, id. §§ 469 et seq.,

and the Range Land Renewable Resources Planning Act, id.

§§ 1600 et seq. The Interior Appeals Board agreed in part,

setting aside the Bureau’s grant of the drilling application

because, among other things, it failed to consider whether

cultural resources would be impacted by the location of a

proposed access route.

In the wake of that decision, Fina chose to seek relief from

Interior and requested that the Lease be suspended. That

request was granted, and the Lease was placed in suspension

on October 1, 1985. As a result, the agency suspended Fina’s

“rental and minimum royalty payments” to Interior and tolled

the Lease term. J.A. 2213. The Lease, and the leaseholders’

obligations under it, have remained in suspension to the present

day.

The application to drill went through a series of additional

appeals and remands. In April 1987, the Bureau approved the

drilling application. On administrative appeal, the Bureau

requested and obtained a voluntary remand.

On remand, the Bureau and the Forest Service finally

undertook a comprehensive environmental, cultural, and

historical study and prepared an Environmental Impact

Statement, see 42 U.S.C. § 4332(2)(c). The Environmental

7

Impact Statement covered the applications by Fina and another

company to drill in the same portion of the Two Medicine Area.

The Statement documented that the Two Medicine Area

“possesses characteristics which are considered important for

the practice of traditional culture and religion,” and that Tribal

members “value the area’s clean air and water, the limited

access which affords less chance of disturbance, and the beauty

of the relatively undisturbed environment.” J.A. 1109.

The Blackfeet Tribe expressed the critical need to maintain

the Two Medicine Area as one of its last surviving spiritual

sites, since other sites had already been subjected to extensive

tourist activity and ongoing mineral exploration. The

widescale destruction of spiritual environs for the Tribe raised

the specter that “this generation and future generations [would]

not have future opportunities to practice religion in an

undisturbed environment.” J.A. 1110.

Despite those concerns, the Bureau again approved Fina’s

drilling application in February 1991. An administrative

appeal followed, and the Bureau once again requested a

voluntary remand.

In 1993, the Bureau approved the application to drill.

Conservation groups and members of the Blackfeet Tribe filed

suit in federal court, alleging violations of the APA, NEPA, the

Historic Preservation Act, the American Indian Religious

Freedom Act, 42 U.S.C. §§ 1996 et seq., and the Convention

Concerning the Protection of the World Cultural and Natural

Heritage, Nov. 16, 1972, 1037 U.N.T.S. 151. That suit was

subsequently stayed in light of legislation introduced in

Congress that would have banned surface-disturbing activities

in the Two Medicine Area, including drilling, see Badger-Two

Medicine Protection Act, S. 853, 103d Cong. (1993).

8

While the legislative ban on drilling was being considered,

the Forest Service concluded that there was “a property eligible

for the National Register of Historic Places” within the Two

Medicine Area. J.A. 1308. To facilitate the Service’s review

process, the Lease’s suspension was repeatedly reauthorized

through the “conclusion of the historic property review.”

J.A. 1318. On April 5, 1999, while the Lease remained in

suspension, Fina assigned it back to Longwell.

In 2002, the Forest Service designated the “Badger-Two

Medicine Blackfoot Traditional Cultural District” as eligible

for listing in the National Register of Historic Places based on

the Blackfeet Tribe’s use of “the lands for traditional purposes

for generations[.]” J.A. 2059. That Cultural District adjoined

and later fully incorporated the area covered by the Lease.

Longwell was informed of the Service’s determination, and the

Bureau confirmed that the Lease suspension would continue

until the Historic Preservation Act and NEPA issues were

resolved.

In the midst of those administrative and legislative

proceedings focused on the Two Medicine Area’s eligibility for

drilling, Solenex, a company founded by Longwell, chose to

acquire the Lease in July 2004.

In 2006, shortly after Solenex acquired the Lease,

Congress withdrew the Two Medicine Area from “disposition

under all laws relating to mineral * * * leasing,” subject to

valid existing rights. See Tax Relief and Health Care Act, Pub.

L. No. 109-432, div. C, § 403(b)(1)(B), 120 Stat. 2922, 3050–

3051. Congress also provided tax incentives for leaseholders

who willingly relinquished their leases. Id. § 403(c), 120 Stat.

at 3051.

9

C

Solenex chose not to obtain the relief that Congress offered

in the 2006 legislation. Instead, on June 28, 2013, Solenex

filed suit, asserting that the relevant agencies unreasonably

delayed and withheld permission for drilling. In July 2015, the

district court granted summary judgment to Solenex,

concluding that the agencies engaged in unreasonable delay,

and ordered them to submit, within 21 days, a schedule for

resolution of the Lease’s suspension. See Solenex v. Jewell,

156 F. Supp. 3d 83, 85–86 (D.D.C. 2015). After subsequent

proceedings, the court ordered the Bureau “to determine by

November 23, 2015 whether to initiate the process for

cancellation of the [L]ease.” J.A. 252.

Meanwhile, in September 2015, the Advisory Council on

Historic Preservation recommended that the drilling approval

be revoked and that the Lease be cancelled. J.A. 331, 214–217.

The Council stated that “the Solenex exploratory well along

with the reasonably foreseeable full field development would

be so damaging to the [traditional cultural district] that the

Blackfeet Tribe’s ability to practice their religious and cultural

traditions in this area as part of their community life and

development would be lost.” J.A. 331. The Council

recommended that the drilling permit be revoked, the Lease

cancelled, and the Two Medicine Area safeguarded from any

future mineral development.

After further inter-agency consultation, the Secretary

informed the court on November 23rd that the agency would

be initiating cancellation procedures. Solenex did not respond

to that filing for nearly two months. After a brief stay and

further dispute, the district court held a status conference on

March 16, 2016. The court then requested that the Secretary

issue a decision in the next 24 hours.

10

To comply with the district court’s 24-hour timeline,

Interior issued a written decision cancelling the Lease on

March 17th. J.A. 326-341. The Secretary explained that

cancellation was necessary because drilling would violate both

NEPA and the Historic Preservation Act. The Secretary stated

at the outset that an environmental impact analysis should have

been made prior to the initial leasing decision. But it was not.

Instead, the agency’s Environmental Assessment for leasing

erroneously delayed that environmental analysis until the

receipt of applications for surface-disturbing activity like

drilling. In addition, the Environmental Assessment failed to

consider a no-action alternative regarding leasing as the law

requires. The Secretary further acknowledged that the agency

had failed to meet the requirements of the Historic Preservation

Act in issuing the Lease. The Secretary explained, in

particular, that the agency had failed to undertake the required

consultation efforts prior to issuance and, instead, wrongly

delayed compliance with that Act to the drilling approval stage.

As a result, the Secretary determined that the Lease was

voidable.

The Secretary then concluded that there was no viable way

to make the Lease valid. In the intervening years, Congress

had “permanently prohibited oil and gas leasing in the Badger-

Two Medicine area.” J.A. 338 (citing Tax Relief and Health

Care Act, div. C, § 403(b)(1)(B), 120 Stat. at 3050–3051). As

a result, the Secretary determined that it could not lawfully re-

validate the Lease. The Secretary stated, lastly, that even if the

agency had retained discretion to validate the Lease, “the facts

as discussed * * * d[id] not warrant doing so.” J.A. 338.

In the wake of the cancellation decision, Solenex filed a

supplemental complaint challenging the cancellation.

Specifically, Solenex asserted that the Secretary lacked the

legal authority to cancel the Lease; Solenex was protected as a

11

bona fide purchaser; and the cancellation decision was arbitrary

and capricious. Solenex also argued that the decision was

barred by estoppel, laches, and the statute of limitations.

On September 24, 2018, the district court granted

summary judgment in favor of Solenex. See Solenex LLC v.

Jewell, 334 F. Supp. 3d 174, 177 (D.D.C. 2018). The court

concluded that it need not decide whether the Secretary

possessed the legal authority to cancel the Lease “because this

case turn[ed] on its unique facts.” Id. at 181. “[E]ven assuming

the authority to administratively cancel leases,” the district

court ruled, the Secretary’s “failure to consider the reliance

interests at stake in cancelling [the Lease] and the

accompanying [drilling application approval] after three

decades” violated the APA. Id. at 182.

The district court based its APA ruling specifically on the

amount of “time that ha[d] elapsed and the resulting reliance

interests at stake.” Solenex, 334 F. Supp. 3d at 182. The

district court cited caselaw holding that unreasonable agency

delay in taking an action violated the APA. In the district

court’s estimation, “[t]he same logic applie[d] here.” Id.

Assuming that the Secretary had the authority to

administratively cancel the Lease based on error in its initial

issuance, the district court ruled that “[a]n unreasonable

amount of time to correct an alleged agency error, especially

where the record shows that error was readily discoverable

from the beginning, violates the APA.” Id.

The district court added that “[a]gency delay of course has

a practical effect: it creates reliance interests.” Solenex, 334

F. Supp. 3d at 183. That was “particularly true in the context

of agency reconsideration of its decision to grant [Solenex]

certain interests, [because] ‘such reconsideration must be

timely.’” Id. (quoting Prieto v. United States, 655 F. Supp.

12

1187, 1191 (D.D.C. 1987)). The district court concluded that

the “federal defendants not only failed to consider the reliance

interests at stake, they dismissed them out of hand,” id., which

constituted “arbitrary and capricious agency action,” id. at 184

(internal quotation marks omitted).

The district court then remanded the matter to the

Secretary “with the order that the Solenex [L]ease be

reinstated.” Solenex, 334 F. Supp. 3d at 184. The Secretary

and intervenors timely appealed.

II

The district court exercised subject matter jurisdiction

under 28 U.S.C. § 1331. This court’s jurisdiction arises under

28 U.S.C. § 1291.

We review de novo the district court’s grant of summary

judgment. Silver State Land, LLC v. Schneider, 843 F.3d 982,

989 (D.C. Cir. 2016). “An agency’s action withstands review

under the Administrative Procedure Act unless it is ‘arbitrary,

capricious, an abuse of discretion, or otherwise not in

accordance with law.’” Id. (quoting 5 U.S.C. § 706(2)(A)).

III

The district court’s reliance on agency delay and Interior’s

asserted failure to consider Solenex’s reliance interests finds no

purchase in circuit precedent or the administrative record.2

2

On appeal, Solenex primarily argues for affirmance on

grounds not relied upon by the district court, arguing that the

Secretary did not have the legal authority to cancel the Lease,

Solenex Br. 27, and that the agency relied on improper factors, id. at

36. We decline to address those arguments for the first time on

appeal. See Liberty Property Trust v. Republic Properties Corp., 577

13

A

1

The district court rested its summary judgment decision in

significant part on what it concluded was undue delay in the

decision to cancel the Lease. Solenex, 334 F. Supp. 3d at 182–

183. But the law is well settled that “[d]elay alone is not

enough” to strip the agency of its ability to act or to justify

setting aside agency action. Dayton Tire v. Secretary of Labor,

671 F.3d 1249, 1253 (D.C. Cir. 2012); see also General Motors

Corp. v. United States, 496 U.S. 530, 541 (1990) (holding

agency’s failure to act on an implementation plan within a

reasonable period of time did not itself preclude enforcement

of the plan); Linemaster Switch Corp. v. EPA, 938 F.2d 1299,

1304 (D.C. Cir. 1991) (“We are especially reluctant to * * *

curb [an agency’s] substantive authority in light of Supreme

Court decisions declining to restrict agencies’ powers when

Congress has not indicated any intent to do so and has crafted

less drastic remedies for the agency’s failure to act.”); United

States v. Popovich, 820 F.2d 134, 138 (5th Cir. 1987) (“Today

we squarely face whether section 706 and 555 of the APA may

be used not only to compel but also to bar agency action

unreasonably delayed. We conclude that the plain language of

the statute provides no authority for dismissing the action of

the [agency].”).

That rule applies even to lengthy periods of agency delay.

For example, in Dayton Tire, we declined to invalidate agency

action on the ground that it was taken after a twelve-year delay,

even though the agency itself characterized that lag as

F.3d 335, 341 (D.C. Cir. 2009) (“Although we * * * have the

discretion to consider questions of law that were not passed upon by

the District Court, this court’s normal rule is to avoid such

consideration.”) (formatting modified).

14

“excessive and deplorable.” 671 F.3d at 1253. What matters,

this court explained, is not the prolongation itself. Rather, it is

the actual “consequences of the * * * delay that dictate whether

corrective action is needed.” Id. (formatting modified).

To be sure, the APA gives courts the authority to “compel

agency action unlawfully withheld or unreasonably delayed[.]”

5 U.S.C. § 706(1); see also Nader v. FCC, 520 F.2d 182, 206–

207 (D.C. Cir. 1975). But that distinct authority says nothing

about whether agency action that has been taken can be

invalidated based solely on the amount of time preceding that

action.

In other words, delay itself does not render agency action

unlawful. What matters for the arbitrary-and-capricious

analysis are the identified consequences or harms that flow

from the agency delay.

2

Given that precedent, the district court misstepped by

relying on delay alone to invalidate the Lease’s cancellation.

In the district court’s estimation, “[a]n unreasonable amount of

time to correct an alleged agency error, especially where the

record shows that error was readily discoverable from the

beginning, violates the APA.” Solenex, 334 F. Supp. 3d at 182.

But because a party challenging agency action must identify

something more than mere delay—it must identify harmful

consequences emanating from that delay that were not

reasonably taken into account by the agency—Interior’s action

cannot be overturned based on the district court’s concerns

about delay alone.

Both the district court and Solenex failed to point to any

actual adverse consequences arising from the delay itself. That

is unsurprising because the Secretary kept the running of the

15

Lease term suspended during each round of administrative and

judicial review and tolled the leaseholders’ obligation to pay

rents and royalties to the agency.

Beyond that, the reasonableness of delay is a function of

context. Here, it was the product of extensive and complex

environmental, cultural, historical, and religious challenges to

the agency decision, which were then compounded by

intervening legislation that forbade drilling in the area—which

was the sole purpose of the Lease, see J.A. 2107.

Importantly, prior to the Lease’s issuance, the relevant

Environmental Assessment provided explicit notice that the

“decision to lease is only the first step of a multi-step decision

process.” J.A. 2222. Any subsequent proposal to drill on the

land would “be subjected to an environmental analysis” that

would “consider not only the effects of the proposal on the

lease area, but also the cumulative effects of the proposal in

relation to other activities in the affected area.” Id.; see also id.

at 2237 (stating that “[t]he cumulative effects of oil and gas

activity * * * are impossible to predict at this time” and that the

Forest Service intends “to evaluate the cumulative effects of

each exploration proposal through the environmental analysis

of that proposal”).

The same limitations applied as to the cultural impact of

surface-disturbing activity. The Environmental Assessment

noted that the Two Medicine Area was of unique cultural and

religious significance. See J.A. 2254 It therefore expressly

cautioned that, “[t]o insure compliance with the American

Indian Religious Freedom Act, consultation with the Blackfeet

Tribe w[ould] be undertaken for all exploration and

development proposals within the [Two Medicine Area].”

J.A. 2260; see also J.A. 2270 (“There is no need for a cultural

resources inventory at this time because site-specific

16

inventories will be conducted prior to surface disturbance.”);

J.A. 2280 (stating that compliance with the Historic

Preservation Act and the American Indian Religious Freedom

Act “will be required at the time soil disturbing activities are

proposed”).

Given those significant disclosures, warnings, and

conditions, as well as clear advance notice of the analyses that

would be required prior to any drilling authorization, it is no

surprise that the drilling application was delayed. Fina

submitted its drilling application in November 1983. But an

administrative appeal quickly followed, during which Fina

requested that the Lease be suspended, and the company

excused from obligations under its terms. The agency obliged,

suspending all “rental and minimum royalty payments” and

tolling the Lease term. J.A. 2213.

A series of administrative appeals carried the suspended

Lease through 1987, and the agency was subsequently tasked

with developing an Environmental Impact Statement, which

was completed in October 1990. More administrative appeals

ensued. Then, following the Two Medicine Area’s inclusion

as part of a registered historic place in 2002, the agency

engaged in a series of consultation meetings with both Solenex

and the Tribe. Those meetings proved fruitless.

All the while, the leaseholders agreed to allow the Lease

to remain in suspension and to avoid any accompanying

obligations on their part. That includes Solenex—a company

founded by Longwell, who had been involved in these

proceedings from the beginning—which chose to acquire the

Lease in 2004 against that backdrop of administrative, judicial,

and legislative proceedings and without any valid drilling

permit in place.

17

In short, from the Lease’s inception, the various

leaseholders, including Solenex, were aware that the NEPA

and Historic Preservation Act analyses would be necessary

prior to any surface-disturbing activity and that drilling permits

were not guaranteed. The Secretary’s painstaking efforts to

ensure that the agency’s statutory duties were met distinguishes

this case from a long period of unexplained agency inaction. A

failure to cancel the Lease earlier in the process, with less

information, could not have been the sounder or legally

compelled course of action.

For all of those reasons, the district court erred in holding

that the Secretary’s alleged delay, standing alone, rendered the

agency’s cancellation of the Lease arbitrary and capricious.

B

Neither the district court’s nor Solenex’s complaints about

the Secretary’s consideration of reliance interests holds up as a

basis for invalidating the Lease cancellation.

The district court relied on a generalized reference to

“reliance interests” to conclude that the cancellation decision

was arbitrary and capricious. Solenex, 334 F. Supp. 3d at 183–

184. But unidentified and unproven reliance interests are not a

valid basis on which to undo agency action. Instead, the harm

occasioned must be specifically identified, reasonably

incurred, and causally tied to the delay. See Mingo Loan Coal

Co. v. EPA, 829 F.3d 710, 722–723 (D.C. Cir. 2016); see also

Bell Atlantic Tel. Cos. v. FCC, 79 F.3d 1195, 1207 (D.C. Cir.

1996) (stating that reliance interests incurred when an issue had

long been in dispute were not reasonable, and evaluating only

“investment incurred in reliance on the prior” position).

The district court made no such particularized finding of

actual harm to specific reliance interests caused by the delay.

18

Instead, the district court seemed to assume that harm to

reliance interests was the inevitable byproduct of the agency’s

delay. See Solenex, 334 F. Supp. 3d at 183 (“Agency delay of

course has a practical effect: it creates reliance interests.”). But

assumptions are not evidence.

Solenex asserts that the district court’s decision is correct

because the record shows that the company did identify

relevant reliance interests. There are two problems with that

argument.

First, the district court overturned the agency’s decision

for an alleged failure to consider reliance interests. But the

reliance interests that Solenex flags were, in fact, specifically

considered and addressed by the Secretary. In an affidavit

submitted to the district court, Longwell “estimate[d]” that

“Solenex and I have spent over $35,000 in seeking to develop

the [L]ease” since the Lease was issued. J.A. 45.

The Secretary adequately considered and addressed that

reliance interest in the cancellation decision, and even offered

to refund to Solenex the rent paid by Solenex’s predecessors in

the amount of $31,235, which approximates the “estimate”

provided by Longwell to the district court. Other than those

funds, Solenex identifies no other reliance interests that the

Secretary failed to consider or address when making the

cancellation decision. See Oral Arg. Tr. 27:19–22 (Q: “I’m

just asking you is there another place that you can point me

other than to this $35,000 number?” A: “No, Your Honor.”)

Second, Solenex itself—the only party suing here—

incurred no expenses at all in developing the Lease. Solenex

did not even acquire the Lease until July 2004, and it claims no

financial investment of its own in the Lease. The expenses to

which Solenex refers and which the Secretary remedied were

incurred by Longwell or other entities, who are not the current

19

holders of the Lease or parties to this action. See J.A. 45; cf.

Solenex Br. 33 (“Solenex and its predecessors spent

considerable time, effort, and resources pursuing the right to

drill on the Lease[.]”) (emphasis added).

That lack of investment by Solenex was understandable

given the circumstances at the time of its acquisition of the

Lease. For the twenty-one preceding years, the Secretary had

asserted the power to cancel leases that were improperly issued.

See 48 Fed. Reg. at 33674 (“Leases shall be subject to

cancellation if improperly issued.”). By 1985, administrative

appellants in the drilling proceedings raised substantial NEPA

compliance issues. And the Lease had been in suspension for

nineteen years by the time Solenex acquired it. In 2002, again

before Solenex acquired the Lease, the Badger-Two Medicine

Blackfoot Traditional Cultural District was deemed eligible for

listing in the National Register of Historic Places. Following

that determination, the Bureau confirmed that the suspension

would continue until NEPA and Historic Preservation Act

issues were resolved. See J.A. 330.3

In sum, the record fails to identify any reliance interests

reasonably incurred by Solenex at all, and the sole investment

of funds made by owners preceding Solenex was expressly

addressed and offered redress by the Secretary. Congress too

offered relief in the form of tax incentives for those affected by

its legislative prohibition on drilling and mineral development

3

To the extent that the district court suggested in passing that

the Secretary acted in bad faith by cancelling the Lease, nothing in

the record remotely supports such an assertion.

20

in the area. See Tax Relief and Health Care Act, div. C.,

§ 403(c), 120 Stat. at 3051.4

IV

The district court erred when it entered summary judgment

in Solenex’s favor. The alleged delay did not, standing alone,

render the cancellation decision invalid. Nor did the Secretary

fail to consider identified reliance interests. For those reasons,

we vacate the district court’s grant of summary judgment to

Solenex and remand for further proceedings consistent with

this opinion.

So ordered.

4

We note that an agency decision to cancel a lease does not

preclude the owner from raising breach of contract claims in the

Court of Federal Claims. See Griffin & Griffin Expl., LLC v. United

States, 116 Fed. Cl. 163, 176 (2014).