Opinion ID: 159335
Heading Depth: 1
Heading Rank: 2

Heading: analysis

Text: 38 The hierarchy in this case is that the district court reversed the IBLA's decision, which reversed the BLM's decision. We review, but accord no deference to, the district court's decision. See Mt. Emmons Min. Co. v. Babbitt, 117 F.3d 1167, 1170 (10th Cir. 1997). 39 Under the Administrative Procedure Act (APA), we defer to the decisions of the Interior Board of Land Appeals, and we will set aside an IBLA decision only if it is arbitrary, capricious, otherwise not in accordance with law, or not supported by substantial evidence. American Colloid Co. v. Babbitt, 145 F.3d 1152, 1154 (10th Cir. 1998) (citing 5 U.S.C. § 706; Hoyl v. Babbitt, 129 F.3d 1377, 1382 (10th Cir. 1997)); see also Olenhouse v. Commodity Credit Corp., 42 F.3d 1560, 1575 (10th Cir. 1994) (applying standard of review to informal agency action). 40 This case hinges on two important subsidiary questions that affect our application of the standard of review: (1) when reaching its decision, what weight, if any, must the IBLA accord the findings and decision of the BLM? and (2) what weight, if any, must we accord the findings and decision of the BLM when reviewing the IBLA decision? These questions are pivotal because the district court focused on whether the decision of the BLM, rather than that of the IBLA, was supported by the evidence. 10 Yates/Pogo contend that such an analysis impermissibly deferred to the BLM. We agree. 41 The IBLA has de novo review authority over BLM decisions. 11 See National Wildlife Fed'n, 145 I.B.L.A. 348, 362 (1998) (review is de novo because IBLA is delegated responsibility to decide for the Department 'as fully and finally as might the Secretary' appeals regarding use and disposition of the public lands and their resources) (quoting 43 C.F.R. § 4.1). A decision of a subordinate agency division, such as the BLM, does not bind the agency. See Catron v. Babbitt, 955 F. Supp. 627, 630-31 (W.D. Va. 1997); see also U.S. Soil Conditioning v. NLRB, 606 F.2d 940, 944 (10th Cir. 1979). 42 With respect to our review, we examine both the BLM's and the IBLA's decisions; 12 but, as indicated above regarding our general standard of review, because the IBLA is the final decision maker of the agency, we apply the deferential standard of review to the decision of the IBLA, not of the BLM. 13 See Four B Corp. v. NLRB, 163 F.3d 1177, 1182 (10th Cir. 1998) (court must uphold agency appeals board if supported by substantial evidence; standard of review does not change when subordinate agency division and appeals board reach different conclusions); Catron, 955 F. Supp. at 631 (court must uphold IBLA's decision if supported by substantial evidence); FCC v. Allentown Broad. Corp., 349 U.S. 358, 364 (1955) (upholding FCC reversal of hearing examiner). 43 In this case, the IBLA found insufficient evidence to support the BLM's rejection of a high lease bid for bad faith. The IBLA decided, therefore, based on its own review of the record, that the lease should be awarded to the highest bidder, Yates/Pogo. 44 Applying these standards, we review the IBLA's decision to determine whether it was supported by substantial evidence and was not arbitrary or capricious. 45
46 The IBLA addressed the BLM's findings that: (1) inconsistencies between the Warnock and Hutchinson analyses showed Yates/Pogo's bad faith, (2) Mr. Hutchinson's declaration that the tenth zone was uneconomic rendered the Yates/Pogo bid an undue waste of potash resources, and (3) Yates/Pogo's development of oil and gas would create safety risks and cause an economic hardship on the potash industry. We are unpersuaded by IMC's argument that [b]y focusing on each factor separately, rather than viewing them as being interrelated, . . . the IBLA failed to fully consider the basis for BLM's decision to reject Appellants' bid. Appellee's Br. at 34. Whether we evaluate the factors separately or together, substantial evidence supports the IBLA's decision, as discussed below.
The IBLA stated: 47 In our view BLM's conclusion, based on the inconsistencies between the Warnock and Hutchinson submissions, that appellants submitted their bid in bad faith is unwarranted. We do not agree that the reports demonstrate appellants espouse contradictory positions on the economic viability of the potash deposit depending on whether they seek APD approval or potash lease acquisition. Even if the studies did conflict, neither the fact that a later, more comprehensive evaluation specifically designed to evaluate the economic potential of potash lease procurement reached a somewhat different result than an earlier study prepared for a different purpose nor appellants' continued reliance on the earlier Warnock study as support for the issues it was commissioned to address, demonstrates bad faith. Rather the two analyses conform to appellants' acknowledged goal of pursuing the profitable development of both oil and gas and potash. 48 Pogo, 138 I.B.L.A. at 156-57. The record contains substantial evidence to support the IBLA conclusion that the Hutchinson and Warnock reports do not evidence bad faith. The Warnock report calculated a threshold mining thickness necessary to economically mine potash in the lease area. It concluded that the current potash mining companies had more profitable ore reserves to mine for at least thirty years. The Warnock report did not make an evaluation or recommendation with respect to Yates/Pogo's ability to mine the potash. The Hutchinson report focused on the economic potential for Yates/Pogo to develop the potash lease and concluded that the fourth ore zone had economic potential for Yates/Pogo to develop a small mine. 49 The IBLA may draw reasonable inferences from the evidence. See Worley Mills, Inc. v. NLRB, 685 F.2d 362, 365 (10th Cir. 1982) (A federal agency's conclusions based upon such inferences are not to be overturned on review unless they lack a reasonable basis.); Adolph Coors Co. v. FTC, 497 F.2d 1178, 1184 (10th Cir. 1974) (If the inference is supported by substantial evidence, it cannot be set aside even though the court could draw a different inference.) (upholding FTC decision reversing administrative law judge). Thus, because it is supported by substantial evidence, we must accept the IBLA's determination that the Warnock and Hutchinson reports do not contradict nor evidence bad faith.
The IBLA continued: 50 We further reject the claim that awarding the potash lease to appellants would not be in the best interest of recovery of the potassium resources because it would result in the undue waste of potash and could pose an economic hardship on the potash industry. The fact that Hutchinson's analysis identifies as uneconomic some potash ore zones BLM considers commercial does not mean that those zones will be wasted should appellants be awarded the lease. 51 Pogo, 138 I.B.L.A. at 157. The record contains substantial evidence to support the IBLA's decision. The BLM conceded that: While the BLM maps designate a greater extent of mineable reserves than the Hutchinson study, BLM considers Mr. Hutchinson's study as reasonable. The BLM also realizes that economic analyses done before mining are subject to considerable change. Olsen Memo., Appellee's App. at 122. Regarding the fourth ore zone, the BLM stated: More core drilling would be necessary to justify a new mine or develop a detailed mining plan. Cranston Memo., Appellee's App. at 131. The evidence in the record supports the conclusion that Yates/Pogo were not seeking to deceive the BLM, but merely seeking to present the BLM with up-to-date data on the potash reserves of the area. Indeed, the additional data would provide the BLM with a better sense of the potash mining potential in the area. Thus, given all the evidence in the record, the IBLA did not err in deciding that a determination of undue waste of potash was premature at lease issuance.
52 The IBLA concluded that the BLM's remaining arguments regarding safety concerns (and economic effects of a safety lapse): 53 rely on speculation and assume that BLM will fail to fulfill its responsibilities to carefully scrutinize mining plans of operations submitted pursuant to 43 CFR 3592.1 before granting the approval necessary to allow mining to occur. We believe BLM's authority to approve or disapprove APD's and proposed potash mining plans will be adequate to regulate the parties' activities in the area. 54 Pogo, 138 I.B.L.A. at 157-58. After review of the BLM's decision, we agree with the IBLA that the BLM's conclusion that granting the lease to Yates/Pogo would pose an undue economic hardship on the potash industry relies on speculation about possible safety risks and conjecture about economic ramifications. The record supports IBLA's conclusion that BLM has substantial legal authority to regulate Yates/Pogo's actions under the oil and gas and potash leases to protect the safety of miners. 55 In sum, we hold that the IBLA's decision was supported by substantial evidence in the record. 56
57 IMC also claims that the IBLA's decision was arbitrary and capricious. First, IMC essentially argues that the BLM's decision correctly interpreted the Secretary's 1986 Order and the IBLA decision violated the Order. Next, IMC argues that the IBLA's failure to defer to the BLM's technical expertise was arbitrary and capricious. Under the arbitrary and capricious standard, we must determine whether the agency considered all relevant factors and whether there has been a clear error of judgment. Olenhouse, 42 F.3d at 1574 (citing Motor Vehicle Mfrs. Ass'n v. State Farm Mut. Ins. Co., 463 U.S. 29, 43 (1983)).
58 IMC argues, in essence, that the IBLA was arbitrary and capricious because it incorrectly applied the 1986 Order. 14 Yates/Pogo respond that, at most, the IBLA was interpreting the 1986 Order and making policy decisions that only the IBLA has the authority to make. We agree that the IBLA is authorized to interpret and apply the 1986 Order, including making policy choices, and that its decision did not exceed those bounds. 59 The IBLA has authority to consider whether the [Secretary's] order was properly applied and implemented. Texas Oil & Gas Corp., 46 I.B.L.A. 50, 52 (1980). In the context of this case, our role is not to decide which policy choice is the better one, for it is clear that Congress has entrusted such decisions to the [agency]. Arkansas v. Oklahoma, 503 U.S. 91, 114 (1992). 60 As discussed earlier, the 1986 Order enunciates rules for concurrent operations in . . . production of oil and gas and potash and establishes parallel restrictions on both oil and gas leases and potash leases so that neither will cause a hazard or interfere with the development of the other. 1986 Order, 51 Fed. Reg. at 39,425. The BLM stated that Yates/Pogo's attempt to obtain a potassium lease for the purpose of developing oil and gas resources is contradictory to the general policy of the [1986 Order]. Appellants' App. Vol. I at 238. The IBLA rejected this contention: 61 While BLM finds the concurrent development of oil and gas incompatible with safe potash recovery, appellants disagree and actively pursue simultaneous development of those resources. Resolution of that disagreement, however, is not necessary in order to settle the issues raised in the present appeal since we find that [the bid was not made in bad faith]. 62 Pogo, 138 I.B.L.A. at 157. The IBLA noted that some of the issues surrounding the feasibility of simultaneous oil and gas and potash development . . . will be addressed in the hearing ordered in [the APD appeal]. Id. at 158 n.13 (citing Yates Petroleum Corp., 131 I.B.L.A. 230, 235-36 (1990) (referring APD matter for hearing and decision by administrative law judge)). The IBLA was within its authority when it concluded that awarding the lease to Yates/Pogo would not violate the 1986 Order. 63 Accordingly, we conclude that the IBLA's decision did not violate or otherwise misapply the 1986 Order and, therefore, was not arbitrary and capricious on that ground.
64 Finally, IMC argues that the IBLA decision was arbitrary and capricious because it failed to defer to the BLM's determinations of technical matters. 15 We disagree. The IBLA may choose, but is not obligated, to defer to the BLM's technical determinations. See Deschutes River Landowners Comm., 136 I.B.L.A. 105, 110 (1996). We defer to the IBLA's determinations (not that of the BLM) in areas of its experience and expertise if supported by the record. See e.g., Colorado Pub. Util. Comm'n v. Harmon, 951 F.2d 1571, 1579 (10th Cir. 1991) (court should defer to agency's expertise). We defer to the IBLA's technical determinations and hold that the IBLA decision was not arbitrary and capricious.