Quantum Entertainment Ltd. v. United States Department of the Interior

United States Court of Appeals

FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued February 15, 2013 Decided April 30, 2013

No. 12-5133

QUANTUM ENTERTAINMENT LIMITED,

A NEW MEXICO LIMITED LIABILITY COMPANY,

APPELLANT

v.

UNITED STATES DEPARTMENT OF THE INTERIOR,

BUREAU OF INDIAN AFFAIRS,

APPELLEE

Appeal from the United States District Court

for the District of Columbia

(No. 1:11-cv-00047)

Charles K. Purcell argued the cause for appellant. With

him on the brief was Nancy J. Appleby.

Matthew Littleton, Attorney, U.S. Department of Justice,

argued the cause for appellee. With him on the brief were

William J. Lazarus, and John L. Smeltzer, Attorneys. Tamara

N. Rountree, Attorney, entered an appearance.

Before: GARLAND, Chief Judge, ROGERS and TATEL,

Circuit Judges.

Opinion for the Court by Circuit Judge ROGERS.

2

ROGERS, Circuit Judge: This appeal involves questions of

statutory retroactivity, which the court analyzes under the two-

part test in Landgraf v. USI Film Products, 511 U.S. 244, 280

(1994). Agreeing with the Interior Board of Indian Appeals, the

district court ruled that Quantum Entertainment Limited’s 1996

Management Agreement with the Santo Domingo Pueblo, a

federally recognized Indian tribe, and its tribal corporation,

Kewa Gas Limited, was null and void for lack of approval by the

Secretary of the Interior as required by 25 U.S.C. § 81 (1994),

and that it was incapable of being validated by the 2000

amendment to § 81, the application of which would be

impermissibly retroactive. Quantum challenges the Board’s

determinations that application of the 2000 amendment would

be impermissibly retroactive and that § 81 applies to the 1996

Agreement.

Application of Landgraf’s retroactivity test does not work

in Quantum’s favor. First, Congress made no clear statement

that it intended the 2000 amendment to apply retroactively, see

511 U.S. at 280. Second, because the 1996 Agreement required

Secretarial approval that was never obtained and the parties

agree the Agreement would be valid without Secretarial

approval under § 81 as amended, the application of the new law

would give life to a null and void agreement, thereby attaching

“new legal consequences” to it, id. at 269–70, 280. Although

the Pueblo may have voluntarily undertaken the stated duties

and liabilities under the Agreement, such an agreement was null

and void without Secretarial approval before 2000. Since the

Secretary never approved the Agreement, any legislative

validation of the “duties” or “liabilit[ies]” attached to it was

impermissibly retroactive. Id. at 280. Quantum’s challenges to

the scope of § 81 itself are unavailing. Accordingly, we affirm

the grant of summary judgment, venturing no opinion on

whether Quantum could recover in quantum meruit, an issue not

briefed by the parties.

3

I.

On August 14, 1996, Quantum entered into an agreement

with the Pueblo, acting through its Tribal Council, and Kewa

Gas to manage, supervise, and operate Kewa Gas’s gasoline

distribution business on the Pueblo’s reservation in New

Mexico. Quantum is a limited liability company incorporated

in the state of New Mexico, “engaged in, among other things,

the business of managing gas distribution businesses.” 1996

Agreement Recitals, C. Kewa Gas was chartered in 1996 by the

Tribal Council of the Pueblo for the purpose of “carry[ing] on

certain economic development activities on behalf of the Pueblo,

including . . . operation of a gasoline distribution business,”

Tribal Council Res. No. S.D. 08-96-18 (Aug. 14, 1996); at the

time of the Agreement it was registered as a distributor with the

New Mexico Tax and Revenue Department, 1996 Agreement

Recitals, A, B.

Under the terms of the Agreement, Quantum exercised

nearly exclusive control over Kewa Gas’s distribution business.

It supervised “the general operations . . . including the purchase,

marketing, sale and delivery of branded and unbranded gasoline

and special fuels,” and was to “[s]elect and train personnel,”

“[n]egotiate prices and coordinate deliveries,” “[m]aintain

proper and suitable records and books of account for” Kewa

Gas, and “provide for normal repairs, replacements, and

maintenance of equipment.” Agreement, § 1.2(a)–(c), (e), (g).

At a more general level, Quantum also “[d]evelop[ed] policies

for the purpose of maximizing net income from the operations.”

Id. § 1.2(d). The Agreement included a provision for capital

advances by Quantum for construction of physical assets

although for “any construction to expand the Gas Distribution

Business or . . . any capital expenditures costing in excess of

$10,000,” Kewa Gas’s approval was required. Id. § 1.3. In

return for the “day-to-day operation” of the business, Quantum

received an annual management fee of 49% of Kewa Gas’s “Net

4

Income,” payable monthly, a fee of $0.03 per gallon of gasoline

or diesel fuel sold to the Pueblo gas station, and a “performance

bonus” of $0.005 per gallon for every gallon of fuel sold in

excess of 1 million gallons per month. Id. §§ 2.1–2.3.

In addition to provisions for indemnification and settlement

of disputes through binding arbitration, the Agreement included

a non-compete clause. The Pueblo and Kewa Gas covenanted

not to have any interest in any other gas distribution business

within the State of New Mexico, except with respect to the retail

operation of the tribe’s Santo Domingo gas station (located

adjacent to I-25 at the N.M. State Highway 22 exit). Quantum

also agreed to a non-compete covenant, except for areas of the

State that Quantum and Kewa Gas determined could not be

economically serviced by Kewa Gas’s gas distribution business.

The initial term of the Agreement was for 10 years, with

Quantum having the option to renew it for two additional 10-

year terms, subject to a management fee of 44% in the first ten-

year extension and 39% in the second.

By means of the Agreement the parties were able to benefit

from a state tax exemption available to Indian Tribes. Kewa

Gas, which was 100% owned by the Pueblo, was not subject to

New Mexico’s gasoline and special fuel tax. Although Kewa

Gas was the distributor, and the incidence of the tax fell on the

distributor not the purchaser, the State had concluded that the

tax was preempted by federal law, exempting Kewa Gas from

the payment of taxes on the receipt and sale of gasoline and

special fuels to retail outlets in the State. See New Mexico

Taxation and Revenue Dep’t, Ruling No. 640-96-01 (Apr. 4,

1996) (citing Oklahoma Tax Comm’n v. Chickasaw Nation, 515

U.S. 450 (1995)). In 1999, the State replaced the exemption

with a tax deduction for Indian tribal distributors like Kewa Gas

for fuel sold from “a nonmobile storage container located within

. . . [the] reservation . . . for resale outside . . . [the] reservation”

5

not in excess of 2,500,000 gallons per month. N.M. Stat. Ann.

§ 7-13-4(f) (1999).

Restrictions on contracting with Indian Tribes have existed

since 1872. See S. REP. (COMM. INDIAN AFFAIRS) NO. 106-150

1, 7–8 (1999). At the time of the 1996 Agreement, section 81

provided in part:

No agreement shall be made by any person with any

tribe of Indians, . . . in consideration of services for

said Indians relative to their lands, . . . unless such

contract or agreement be executed and approved as

follows:

...

Second. It shall bear the approval of the Secretary of

the Interior and the Commissioner of Indian Affairs

indorsed upon it.

25 U.S.C. § 81 (1994) (emphases added). Congress amended

this provision in 2000 to provide, in relevant part:

No agreement or contract with an Indian tribe that

encumbers Indian lands for a period of 7 or more years

shall be valid unless that agreement or contract bears

the approval of the Secretary of the Interior or a

designee of the Secretary.

25 U.S.C. § 81(b) (2000) (emphasis added). (For ease of

reference we henceforth refer to the former as “old § 81” and the

latter as “new § 81.”) The parties to this appeal stipulated that

the 1996 Agreement would not require Secretarial approval

under new § 81.

In 2003, after the Agreement had been operational for

several years, a new Governor of the Pueblo Tribal Council

advised the Bureau of Indian Affairs by letter that the 1996

6

Agreement had never been approved by the Secretary and that

the Agreement was “far too lucrative” for Quantum. The Acting

Regional Director determined that the Agreement was subject to

the Secretary’s approval under old § 81 and was not in the best

interests of the Pueblo due to the high fees Quantum received

under its terms; the Director declared the Agreement to have

“never been legally valid” under old § 81, the law in effect at the

time the parties entered the Agreement. Act’g. Reg’l Dir.

Decision at 5 (Oct. 23, 2003). Upon Quantum’s appeal, the

Board of Indian Appeals agreed that the Agreement was not

valid and that old § 81 applied, although it reached that

conclusion for different reasons. The Board concluded that

because the Agreement would have required Secretarial

approval under old § 81 to be valid but would be valid without

Secretarial approval under new § 81, applying new § 81 to the

1996 Agreement would have an impermissible retroactive effect

of “rendering valid an otherwise invalid contract” and so would

“alter the legal consequences of acts completed before New

Section 81 was enacted.” Quantum Entertainment Ltd. v. Acting

Sw. Reg’l Dir., Bureau of Indian Affairs, 44 IBIA 178, 192–93

(2007) (citing Landgraf, 511 U.S. at 269–70 & n.23).

Quantum challenged the Board’s decision in the district

court. The district court granted Quantum’s motion for

summary judgment in part and remanded the case to the Board

to explain the basis for its conclusion the Agreement was

invalid. Quantum Entertainment Ltd. v. U.S. Dep’t of Interior,

597 F. Supp. 2d 148, 156 (D.D.C. 2009). On remand the Board

reaffirmed its conclusion and expanded its reasoning. Quantum

Entertainment Ltd. v. Acting Sw. Reg’l Dir., Bureau of Indian

Affairs, 52 IBIA 289 (2010). Upon Quantum’s further

challenge, the district court granted summary judgment to the

Bureau of Indian Affairs. Quantum Entertainment Ltd. v. U.S.

Dep’t of Interior, 848 F. Supp. 2d 30, 32–33 (D.D.C. 2012).

7

II.

Questions of statutory retroactivity are resolved under the

two-part test established by the Supreme Court in Landgraf, 511

U.S. at 280. This test evolved from the Court’s clarification of

two lines of its precedent concerning the effect of intervening

changes in the law when a statute does not specify its temporal

reach. See id. at 264. “The first is the rule that ‘a court is to

apply the law in effect at the time it renders the decision.’” Id.

(quoting Bradley v. School Bd. of Richmond, 416 U.S. 696, 711

(1974)). “The second is the axiom that ‘[r]etroactivity is not

favored in the law,’ and its interpretative corollary that

‘congressional enactments and administrative rules will not be

construed to have retroactive effect unless their language

requires this result.’” Id. (quoting Bowen v. Georgetown Univ.

Hosp., 488 U.S. 204, 208 (1988)). Before examining these

precedents, the Court in Landgraf observed that “retroactivity is

a matter on which judges tend to have ‘sound . . . instinct[s]’ and

familiar considerations of fair notice, reasonable reliance, and

settled expectations offer sound guidance.” Id. at 270 (internal

citation omitted). Ultimately, however, the Court settled on a

two-part test, instructing that:

When a case implicates a federal statute enacted

after the events in suit, the court’s first task is to

determine [1] whether Congress has expressly

prescribed the statute’s proper reach. If Congress has

done so, of course, there is no need to resort to judicial

default rules. When, however, the statute contains no

such express command, the court must determine [2]

whether the new statute would have retroactive effect,

i.e., whether it would impair rights a party possessed

when he acted, increase a party’s liability for past

conduct, or impose new duties with respect to

transactions already completed. If the statute would

operate retroactively, our traditional presumption

8

teaches that it does not govern absent clear

congressional intent favoring such a result.

Id. at 280. In applying this test, the court owes no deference to

the Board’s retroactivity analysis under Chevron, U.S.A., Inc. v.

Natural Resources Defense Council, Inc., 467 U.S. 837 (1984).

See I.N.S. v. St. Cyr, 533 U.S. 289, 320 n.45 (2001); Arevalo v.

Ashcroft, 344 F.3d 1, 9–10 (1st Cir. 2003). Our review of the

grant of summary judgment is de novo, and “in a case like the

instant one, in which the district court reviewed an agency

action under the [Administrative Procedure Act],” this court

“review[s] the administrative action directly, according no

particular deference to the judgment of the district court.” Ass’n

of Private Sector Colls. & Univs. v. Duncan, 681 F.3d 426,

440–41 (D.C. Cir. 2012) (capitalization changed).

Under the first part of the Landgraf test, the court must

determine whether Congress has “express[ly] command[ed]”

that new § 81 apply retroactively. 511 U.S. at 280. Quantum

acknowledges that “[t]he text of New Section 81 . . . does not

explicitly extend the statute’s reach to contracts antedating the

statute’s enactment.” Appellant’s Br. at 24. Instead it urges the

court to focus on new § 81’s legislative history, which indicates

concern about the uncertainty that old § 81 created with regard

to existing contracts as well as the view that there was no longer

a need for Secretarial oversight. See id. at 24-25 (citing S. REP.

NO. 106-150 at *7–*8). Those contracts were vulnerable to qui

tam actions challenging their validity absent Secretarial approval

even after the parties had determined such approval was not

necessary. See id. (citing S. REP. NO. 106-150 at *7).

The legislative histories of new § 81 and old § 81 reveal

that they had different purposes. The 1999 Report of the Senate

Committee on Indian Affairs included the statement that the

paternalistic foundations on which old § 81 rested were no

longer justified as a basis for federal policy. See S. REP. NO.

9

106-150 at 7–8. In its opinion on remand the Board also

examined the legislative history of old § 81 and the resulting

case law, acknowledging that “paternalism, [the] guardian-ward

relationship between the United States and tribal Indians, and

the view that tribes and non-citizen Indians were incompetent to

independently handle their business affairs” provided the

historical context for Congress’s enactment of old § 81.

Quantum, 52 IBIA at 309. The enactment of new § 81 marked

a move away from the concerns underlying old § 81.

Neither Quantum’s nor the Board’s review of the legislative

history, however, reveals that Congress intended new § 81 to

apply retroactively to preexisting agreements. At best, Quantum

has identified statements in the Senate Report that are more

probative of a concern with the need to repeal old § 81 than with

the temporal reach of its amendment. Even assuming a

committee report would be sufficient evidence of an “express

command” by Congress, none appears in the Senate Report here.

Quantum’s cited judicial authority is also of no assistance to it;

the cases track objections to “the paternalistic concern of a

bygone era” while acknowledging that until Congress acts the

courts are bound to apply old § 81. See, e.g., U.S. ex rel. Crow

Creek Sioux Tribe v. Hattum Family Farms, 102 F. Supp. 2d

1154, 1163 (D.S.D. 2000) (quoting U.S. ex rel. Hall v. Tribal

Dev. Corp., 49 F.3d 1208, 1218 (7th Cir. 1995) (Flaum, J.,

concurring). Absent an express prescription by Congress that

new § 81 applies to existing agreements, we turn to the second

part of the Landgraf test.

Under part two of Landgraf’s test, a court must hold that the

application of a new statute is impermissibly retroactive only if

it would “impair rights a party possessed when [it] acted,

increase a party’s liability for past conduct, or impose new

duties with respect to transactions already completed.”

Landgraf, 511 U.S. at 280. To establish a baseline against

which to evaluate any shifts in rights, liabilities, or duties that

10

might arise under new § 81, the Board looked to whether old

§ 81 imposed obligations on the parties when they entered the

1996 Agreement and how those obligations affected the validity

of the Agreement. The Board concluded, as we do, that the

Agreement required Secretarial approval when the parties

entered into it and consequently new § 81 would attach new

legal consequences to the Agreement between Quantum, the

Pueblo, and Kewa Gas, by removing the impediment to its

validity — i.e., the need for Secretarial approval. The Board

explained:

Under Old Section 81, there were no legal

consequences whatsoever that attached to an Indian

tribe through its execution of an agreement that fell

within the scope of the statute, unless and until it was

approved by the Secretary. To declare that New

Section 81 retroactively renders valid and enforceable

agreements that otherwise would remain null and void

under Old Section 81 for lack of Secretarial approval

would have the effect of imposing contractual

obligations and liability on tribes (in this case on the

Pueblo and Kewa) where no such obligations or

liability had previous legal existence.

Quantum, 52 IBIA at 293. In the Board’s view, applying new

§ 81 to validate an agreement that would have been null and

void under old § 81 would have an impermissible retroactive

effect.

For a different conclusion, Quantum relies on McNair v.

Knott, 302 U.S. 369 (1937), and Ewell v. Daggs, 108 U.S. 143

(1883), as the “[c]ontrolling law,” Appellant’s Br. 26.1 In

1

The court requested post-argument briefing on the effect of

1 U.S.C. § 109, see Landgraf, 511 U.S. at 271, as a result of a question

11

McNair, 302 U.S. at 372–74, the Supreme Court held that a

federal statute had validated an ultra vires pledge agreement by

a Florida bank to secure public deposits despite the agreement

having been made prior to enactment of the statute. And in

Ewell, 108 U.S. at 148–149, 151, the Court held that a provision

of the Texas Constitution repealing an anti-usury law had

revived the obligations arising under a promissory note, which

had been void because of its usurious interest rate. In Ewell, the

Court drew a distinction between contracts that were “absolutely

a nullity” and those that were “voidable merely,” concluding

that the usurious contract was only voidable because it was not

malum in se and therefore could be resurrected by a subsequent

statute. Id. at 149–150. To Quantum these cases establish an

exception to the presumption against retroactivity because the

enforcement of contracts like those in McNair and Ewell and the

1996 Agreement “creates no new legal obligations” — i.e., “it

imposes nothing more than the liability inherent in the

contract[s] [themselves], which the complainant[s] fully

intended to incur.” Appellant’s Br. at 29 (internal quotation

marks, citation, and alterations omitted).

Reliance on these cases is misplaced. First, old § 81 was

enacted in a particular historical context oriented towards

different concerns than those at issue in McNair and Ewell. Old

§ 81 was focused on ensuring the legal incapacity of the Indian

tribes to contract on matters relative to their lands, a limitation

informed by the belief that they were unable to resist the

schemes of unscrupulous non-Indians seeking to swindle them

out of their patrimony. See S. REP. NO. 106-150 at 7–8; see also

raised by the court during oral argument. Neither the Interior

Department nor the United States relied on this provision in the course

of the administrative and judicial proceedings. See U.S. Dep’t of

Justice letter to the Clerk, Feb. 20, 2013 at 4. We consider the issue

waived. See Coburn v. McHugh, 679 F.3d 924, 930 (D.C. Cir. 2012);

Potter v. District of Columbia, 558 F.3d 542, 547 (D.C. Cir. 2009).

12

FELIX S. COHEN, HANDBOOK OF FEDERAL INDIAN LAW 77

(1942). This notion of contracting incapacity emerged from a

history of shameful misdeeds on the part of those dealing with

Indian tribes that the limitations at issue in McNair and Ewell do

not share. For this reason, the Ewell Court might have viewed

an agreement entered into in violation of old § 81 “absolutely a

nullity, in the sense that no right or claim can be derived from”

it, rather than “voidable merely,” and thus capable of being

resurrected by a later statute. Ewell, 108 U.S. at 149.

Second, and more significantly, McNair and Ewell pre-date

Landgraf and applied a different test for determining statutory

retroactivity. In Landgraf, 511 U.S. 244, the Supreme Court’s

comprehensive examination of its prior cases did not result in a

test that recognized an exception to the presumption against

retroactivity where a new statute would, if applied to preexisting

agreements, create new legal duties and obligations. But

McNair and Ewell accepted just that: legally unenforceable

agreements were transformed into valid ones that imposed

previously non-existent obligations on the contracting parties.

The Court’s distinction in Ewell between contracts that are

“absolutely a nullity” and those that are “voidable merely,” as

well as its endorsement of a presumption of retroactive

application of the repeal of anti-usury laws, Ewell, 108 U.S. at

149, conflicts with the two-part test established in Landgraf.

Under the Ewell framework, new legal consequences generated

by a retrospective law repealing penal statutes of the kind in that

case are not problematic. Id. at 150. Similarly, under McNair,

302 U.S. at 372, “validat[ing] transactions that were previously

illegal” is also unproblematic. Under Landgraf this is not so,

and Landgraf, not McNair nor Ewell, provides the controlling

retroactivity test.

Under Landgraf, the application of new § 81 to the 1996

Agreement is impermissible because it would “increase [the

Pueblo’s] liability for past conduct” and “impose new duties

13

with respect to transactions already completed.” Landgraf, 511

U.S. at 280. That is, application of new § 81 would create “legal

consequences” different from those that would result from

application of old § 81. Under old § 81, the Agreement would

be “void ab initio as a matter of law in the absence of Secretarial

approval,” Quantum, 55 IBIA at 316, and because applying new

§ 81 would transform the Agreement from void to valid, the

presumption against retroactive legislation precluded the Board

from applying new § 81 to the Agreement, id. at 293, 317.

To the extent considerations of fair notice, reasonable

reliance, and settled expectations remain relevant to the

retroactivity analysis, see Martin v. Hadix, 527 U.S. 343,

357–58 (1999), the plain text of old § 81 is addressed to “any

person” and gives fair warning of the risk for “any person,”

such as Quantum, who fails to obtain Secretarial approval. See

A.K. Mgmt. Co. v. San Manuel Band of Mission Indians, 789

F.2d 785, 788 (9th Cir. 1986). Those who entered agreements

with Indian tribes while old § 81 was in force without seeking

Secretarial approval were on notice that such agreements could

at a later date be deemed void ab initio. Most emphatically old

§ 81 warned that “[a]ll contracts or agreements made in

violation of this section shall be null and void, and all money or

other thing of value paid to any person by any Indian or

tribe . . . may be recovered by suit in the name of the United

States . . . .” 25 U.S.C. § 81 (1994). United States ex rel. Hall

v. Tribal Development Corp., 49 F.3d 1208 (7th Cir. 1995), is

illustrative of such qui tam litigation.

Concerns about unfairness that may arise from a retroactive

determination that the 1996 Agreement was void ab initio are

ameliorated by the possibility that Quantum may recover in

quantum meruit, a question the Board did not resolve, see

Quantum, 44 IBIA at 179. The Board concluded that the issue

was not ripe and noted that none of the parties had addressed

whether the Secretary’s quantum meruit authority survived the

14

amendment of old § 81 in 2000. Id. at 207 & n.24. The Board

observed, however, that if Quantum were to request the

Regional Director to exercise the Secretary’s quantum meruit

authority under old § 81, then the Director would “have an

opportunity to consider the exercise of such authority and to

consider [Quantum’s] views concerning the appropriateness of

quantum meruit relief.” Id.; see also Quantum, 52 IBIA at 290

n.2. The parties have not briefed this question and we venture

no opinion on it.

III.

Our retroactivity analysis assumed that old § 81 requires

that the 1996 Agreement receive Secretarial approval. Quantum

contends, however, that Secretarial approval was not required

under old § 81 because the Agreement was neither “with a[]

tribe of Indians” nor “relative to their lands.” The Board’s

interpretation of ambiguity in old § 81 is entitled to deference

under Chevron, 467 U.S. at 843. This interpretation is also

consistent with the Indian law canon of construction, cf. Cobell

v. Salazar, 573 F.3d 808, 812 (D.C. Cir. 2009), because it

dovetails with the Indian-protective goals of old § 81. The

Board’s assessment of the connection between the “facts found

and the choice made” is reviewed under the “very deferential”

arbitrary and capricious review standard. Rural Cellular Ass’n

v. F.C.C., 588 F.3d 1095, 1105 (D.C. Cir. 2009).

A.

The Board concluded that the Pueblo was a party to the

1996 Agreement and thus that the Agreement was “with a ‘tribe

of Indians’” within the meaning of old § 81. Quantum, 44 IBIA

at 198; see Quantum, 52 IBIA at 292. The preamble to the

Agreement identifies the parties as Quantum “on the one hand”

and the Pueblo and Kewa Gas “on the other hand.” Section 9.9

of the Agreement provides that it “may not be modified or

amended except in writing signed by both parties.” (emphasis

15

added). The Board interpreted these provisions to mean that the

Agreement was between two parties, treating “the Pueblo and

Kewa as a single contracting unit.” Quantum, 44 IBIA at 197.

The Board also concluded that the Pueblo’s 100% ownership of

Kewa Gas’s stock “denoting its complete and exclusive control

over and interest in Kewa at the time the Agreement was

signed” bolstered the conclusion that, “despite [the Pueblo’s and

Kewa Gas’s] distinct roles and obligations . . . , the evidence on

the face of the Agreement indicates that . . . [they] are treated

collectively as a single ‘party.’” Id.

Quantum views the distinct roles of the Pueblo and Kewa

Gas as determinative, and it contends that the Board’s failure to

disaggregate them so the obligations that run between Quantum

and Kewa Gas survive even if those between Quantum and the

Pueblo are null and void is arbitrary and capricious. To

emphasize the distinct legal personalities of the Pueblo and

Kewa Gas, Quantum cites a New Mexico Supreme Court

decision noting that corporate status is a legal identity separate

and distinct from that of a corporation’s shareholders.

Appellant’s Br. at 52 (citing Scott v. AZL Res., Inc., 753 P.2d

897, 900 (N.M. 1988)). Quantum suggests that the

Agreement’s references to “both parties” and other similar

language is equally consistent with the conclusion that Kewa

Gas was the principal contracting party in a three-party

agreement in which the Pueblo’s inclusion was incidental,

pointing to phrases such as “[Kewa Gas] hereby engages

[Quantum] to manage, supervise, and operate [Kewa’s] Gas

Distribution Business” and to the separate signatures of the

Pueblo and Kewa Gas on the Agreement as denoting their

separate legal identities. Id. at 52–53. In Quantum’s view, the

Pueblo is simply a “nominal party” to the Agreement, having

“undert[aken] almost no obligations of its own” insofar as the

single promise it made, not to compete, “was an easy promise

to keep, given that the Pueblo was Kewa [Gas]’s sole

shareholder . . . .” Id. at 53–54. Viewing the Pueblo’s inclusion

16

in the Agreement a “mere afterthought,” id. at 52, Quantum

maintains that the analysis in Inecon Agricorporation v. Tribal

Farms, Inc., 656 F.2d 498, 501 (9th Cir. 1981), should apply so

that the portions of the Agreement that run between Quantum

and Kewa Gas survive even if those between Quantum and the

Pueblo do not.

The Board’s conclusion that the Agreement was with the

Pueblo is neither contrary to the plain meaning of old § 81 nor

arbitrary and capricious. In context, the Agreement is

reasonably interpreted as grouping the Pueblo and Kewa Gas

together as a single party, given that the text of the Agreement

is itself so structured. See Quantum, 44 IBIA at 196–97.

Notably as well, the Agreement subjected the Pueblo to a non-

compete covenant that imposed a real and specific duty on the

Pueblo as a signatory. In Inecon, 656 F.2d at 501, the Ninth

Circuit recognized the contractual obligations between a tribal

corporation and a non-Indian third party despite the “contractual

incapacity of the Tribe,” which was also a signatory to the

Agreement. But the contract in Inecon imposed only a vague

duty of non-interference, giving the Tribe a “limited role.” id.

By contrast, the Pueblo’s duty under the non-compete covenant

in the 1996 Agreement was neither vague nor insubstantial.

Quantum’s assertion that the covenant requires no more of the

Pueblo than that it protect its own interests by abstaining from

involvement in other gas distribution businesses is speculative.

The record hardly negates the possibility that, absent the

covenant, the Pueblo could involve itself in the gas distribution

business in New Mexico markets beyond those in which Kewa

Gas operates; neither does it foreclose other possible

collaborations that might be damaging to Quantum’s economic

interests while benefitting the Pueblo.

Cf. Quantum, 52 IBIA at 309.

17

B.

The Board, upon reviewing the legislative history of old

§ 81 and the case law interpreting it, concluded that the phrase

“relative to [Indian] lands” was indefinite and broad but not

ambiguous, bringing any agreement “relating to, necessarily

connected with, or dependent upon the tribes’ lands” within the

scope of old § 81. Quantum, 52 IBIA at 308. Alternatively,

assuming “relative to” was ambiguous, the Board concluded

that the phrase should be given broad effect in light of “the

historical context of paternalism” underlying old § 81’s

enactment and its legislative history, which did not suggest that

the enacting Congress had any “intent to limit the relative-to-

their-lands language only to agreements that conferred upon the

non-Indian party the incidents of ownership of land.” Id. at 309.

The Board applied “the cardinal rule,” id. at 307, that “until

Congress repeals or amends a statute intended to protect

Indians, we must give it a sweep as broad as its language and

interpret it in light of the Congress that enacted it.” Id. (quoting

Cent. Mach. Co. v. Ariz. State Tax Comm’n, 448 U.S. 160, 166

(1980) (internal quotation marks and alterations omitted)).

The Board offered two rationales for concluding that the

1996 Agreement was “relative to [Indian] lands.” First, it

found that the “value of the Agreement, and the consideration

to Quantum for its services” was derived from the tax benefits

conferred by the business’s location on Pueblo land, and that

because the non-compete clause “limited the right of the Pueblo

and Kewa [Gas] to derive that same value on other Pueblo lands

without Quantum’s consent,” the Agreement was relative to

their lands. Id. at 310. Second, applying a slightly modified

version of the four-factor analysis in Altheimer & Gray v. Sioux

Mfg. Corp., 983 F.2d 803, 811 (7th Cir. 1993),2 the Board

2

In Altheimer, 983 F.2d at 811, the Seventh Circuit identified

four criteria it found in the case law for interpreting the phrase

18

found: (1) the Agreement related to the management of a

facility on the Pueblo’s land; (2) Quantum exercised nearly

exclusive control over the gas distribution business; (3) the non-

compete clause restricted the Pueblo’s use of its lands for

purposes of competing in the gas distribution business in the

State (somewhat like a negative easement); and (4) the tax

benefit derived from the Pueblo’s sovereign status was essential

to the business’s existence because absent the Tribe’s legal

sovereignty the tax benefit would not have accrued to it and

returns for Quantum on the distribution business would have

been significantly less. Quantum, 52 IBIA at 311–314 & n.19.

Quantum protests that the Board’s loose application of the

Altheimer factors, including its recognition of the adequacy of

nearly exclusive, as opposed to exclusive, control under the

modified test and its analogy between the non-compete

provision and a negative easement, so twisted the Seventh

Circuit’s opinion as to make the Board’s decision contrary to

law. The Board is not bound to follow the Seventh Circuit’s

test and concluded that approach did not “encompass[] the outer

limits of what the 41st Congress meant by the phrase ‘relative

to’ Indian lands.” Id. at 310. Its interpretation of the

ambiguous phrase “relative to” is entitled to Chevron deference.

“relative to [Indian] lands” as it relates to contracts between a tribe of

Indians and non-Indian third parties:

(1) Does the contract relate to the management of a facility to

be located on Indian lands? (2) If so, does the non-Indian

party have the exclusive right to operate that facility? (3) Are

the Indians forbidden from encumbering the property? (4)

Does the operation of the facility depend on the legal status of

an Indian tribe being a separate sovereign?

Id. The court cautioned that “none of the above factors are the ‘sine

qua non’ of a contract which relates to Indian lands.” Id.

19

The Board’s factual findings are virtually undisputed. To the

extent that Quantum contests the significance of the non-

compete provision and the relation between the Pueblo’s tribal

sovereignty and the tax benefits accorded to Kewa Gas, its

arguments are unpersuasive. Furthermore, Green v. Menominee

Tribe of Indians in Wisconsin, 233 U.S. 558, 569 (1914), lends

support to the Board’s interpretation, for in that case the

Supreme Court held that a contract regarding the provision of

logging equipment to an Indian tribe for use on their lands was

sufficient to trigger the involvement of the Secretary under an

earlier version of old § 81. Given the tenuous connection of

that transaction to Indian lands and the fact that large fuel

storage containers used in the gasoline distribution business

under the 1996 Agreement were physically on the Pueblo’s

lands, the Board’s conclusion that old § 81 applied was at least

within the outer limits of a permissible interpretation of the

ambiguous phrase, “relative to [Indian] lands.”

Accordingly, we affirm the grant of summary judgment.