Appeals from the United States District Court for the District of Arizona. D.C. Nos. CIV-85-801-PHX- EHC CIV-87-1966-PHX- EHC (Consolidated). Earl H. Carroll, District Judge, Presiding.
Before: Herbert Y. C. Choy, Cecil F. Poole and Stephen Reinhardt, Circuit Judges. Opinion by Judge Choy.
We have before us in these consolidated appeals and cross-appeals another in a series of disputes between the Hopi and Navajo tribes stemming from what was once characterized as "'the greatest title problem of the West.'" Healing v. Jones, 210 F. Supp. 125, 129 (D. Ariz. 1962), aff'd 373 U.S. 758, 10 L. Ed. 2d 703, 83 S. Ct. 1559 (1963) (per curiam).
The Navajo Nation appeals the district court's order enforcing an award to the Hopi Tribe under the Navajo-Hopi Settlement Act, Pub. L. No. 93-531, 88 Stat. 1712, 25 U.S.C. § 640d, et seq. (1980) (the Settlement Act). On the basis of an appraisal issued by the Bureau of Indian Affairs (BIA) and adopted by the Secretary of the Interior (the Secretary), the district court awarded the Hopi Tribe $586,803.60 (the homesite rental determination) for the fair market rental value of homesites occupied by Navajos between 1979 and 1984 in formerly shared lands after their partition and allocation to the Hopi Tribe.
The Navajo Nation appeals this award on the ground that the BIA and the Secretary arbitrarily disregarded relevant factors pertaining to the measurement and valuation of homesite tracts and thereby abused their discretion under the Administrative Procedure Act, 5 U.S.C.A. § 706(2)(A) (1977 & Supp. 1993) (the APA). We affirm the judgment of the district court denying the Navajo Nation's motion for review and granting the Hopi Tribe's motion for judgment upon and enforcement of the homesite rental determination.
The Navajo Nation further appeals the district court's denial of its motion for review of the BIA's determination of the fair market value of the Navajo Nation's post-partition use of Hopi lands for raising livestock between 1979 and 1984, and its motion for summary judgment regarding the dismissal of its administrative appeal challenging the BIA's appraisal. The Assistant Secretary of the Department of the Interior (the Assistant Secretary) declined to consider the Navajo Nation's administrative appeal because the notice of appeal was untimely. The district court concluded that the Assistant Secretary acted properly and denied the motion for summary judgment. On the basis of the BIA's appraisal, the district court awarded the Hopis $1,186,190.77 (the grazing rental determination).
The Navajo Nation contends that the district court and the Assistant Secretary erred in refusing to review this award because the BIA's failure to provide the Navajo Nation constitutionally adequate notice of the final grazing rental determination excused the untimeliness of its petition for review. We agree and remand to the district court for review of the award.
The Hopi Tribe cross-appeals the district court's denial of its motion for summary judgment seeking prejudgment interest on the grazing rental determination. We reverse and remand for a determination of the amount of prejudgment interest owed.
These consolidated appeals and cross-appeals stem from a longstanding dispute over the continued presence of Navajo Indians on 900,000 acres of the Hopi Reservation in northern Arizona. More specifically, these appeals arise from the parties' disagreement over the proper valuation of Navajos' post-partition use of Hopi lands for grazing and homesites and the extent of the Navajo Nation's sovereign immunity from pre-judgment interest on the grazing rental determination.
On December 16, 1882, President Chester A. Arthur signed an executive order withdrawing from the public domain 3,900 square miles in northeastern Arizona to be set aside "'for the use and occupancy of the Moqui [Hopis], and such other Indians as the Secretary of the Interior may see fit to settle thereon.'" Healing, 210 F. Supp. at 129. Long after the creation of the 1882 Executive Order Reservation, the respective entitlements of the Navajo and Hopi tribes in these and surrounding lands remained disputed. In 1962, a special district court panel ruled that the Navajo Nation and the Hopi Tribe had undivided and equal interests in, and should jointly use, a portion of the 1882 Executive Order Reservation that included the 900,000 acres of Hopi land at issue in this appeal (the Joint Use Area). Id. at 191-92.
When this compromise proved unworkable, Congress divided the Joint Use Area into the Navajo Partitioned Lands (NPL) and the Hopi Partitioned Lands (HPL) pursuant to the Settlement Act. The boundary between the NPL and the HPL did not correspond precisely with the patchwork pattern of Hopi and Navajo settlement of the Joint Use Area. Moreover, the Settlement Act permitted the gradual relocation of Hopis and Navajos, still ongoing, to their respective lands. Pending completion of this process, where one tribe's members continue to use or occupy a portion of the other tribe's lands, the Settlement Act mandates that the occupying tribe compensate the other for the "fair rental value" of such use or occupancy. At issue in these appeals is the requirements under section 640(d)-15(a) of the Settlement Act that:
The Navajo Tribe shall pay to the Hopi Tribe the fair rental value as determined by the Secretary for all use by Navajo individuals of any lands partitioned to the Hopi Tribe pursuant to [this Act] subsequent to the date of partition thereof.
In the late 1970s and early 1980s, the Project Officer of the Joint Use Area Administrative Office in Phoenix, Arizona (the Project Officer), undertook to develop a methodology for calculating the amount owed to the Hopi Tribe under section 640d-15(a) for the grazing of Navajo herds in the HPL. The lack of sales data for these rangelands and the absence of closely comparable off-reservation real estate complicated this task. The Deputy Assistant Secretary for Indian Affairs (Deputy Assistant Secretary) contracted for an appraisal taking into account the market value both of Navajo livestock grazed on the HPL and the native grasses they consumed there. In doing so, the Deputy Assistant Secretary rejected the Navajo Nation's proposed methodology based on rent charged by other federal agencies for federal lands.
On March 31 1983, the Navajo Nation moved for reconsideration of the Deputy Assistant Director's "final decision" on behalf of the Department of the Interior in this matter. Factoring in new data while retaining the livestock-based methodology objected to, the Phoenix Area Director of the BIA recalculated the grazing rental determination. The Area Director then notified the Navajo Nation of the revised determination in a letter addressed to the Navajo chairman. The chairman of the Hopi Tribe was notified by delivery of a copy of the letter to the Navajo chairman.
The tribes requested further consultations. Between October 1984 and February 1985, the Area Director met with tribal representatives to discuss the final grazing rental determination. In January 1985, an updated appraisal led the Area Director to lower the preliminary grazing rental determination to $1,328,025.77.*fn1 The Area Director notified the Hopi Tribe of this revised valuation in a letter addressed to the Hopi chairman dated February 15, 1985.
The Area Director mailed a copy of this letter, in an envelope addressed to the Navajo chairman, by regular mail to the Navajo Nation. Navajo officials promptly received and logged the letter, but then misrouted it to an internal department unaware of its import and the timetable for administrative appeal that might be set in motion thereby. The Navajo Nation acknowledges that on February 19, 1985, it received a copy of the February 15 letter to the Hopi chairman. The Navajo Nation also concedes that the Area Director did not receive the Navajo Nation's notice of appeal, dated April 29, 1985, until May 2, 1985, 72 days after the Navajo's receipt of notice of the final determination and more than one month after the expiration of the 30-day period for appeal under the 1985 version of 25 C.F.R. § 2.10 (a), the version of the BIA regulation governing administrative appeals which is applicable here.
The Hopi Tribe moved to dismiss the Navajo Nation's appeal for untimeliness. In a letter dated February 24, 1987, the Assistant Secretary granted this motion. The Navajo Nation challenges the district court's refusal to overturn the Assistant Secretary's action on the ground that the notice of the final grazing rental determination given to the Navajo Nation was constitutionally insufficient.
Following the issuance of the BIA's final grazing rental determination in February 1985, the Deputy Assistant Secretary turned her attention to the previously deferred matter of calculating farmland and homesite rental values. On November 26, 1985, the Deputy Assistant Secretary issued a ruling rejecting the Project Officer's 1980 homesite and farmland valuations for lack of supporting data. The Deputy Assistant Secretary then directed the BIA's central Office to gather new data and issue a revised appraisal.
On November 22, 1986, the report of BIA Appraiser Arvel Hale (the Hale Report) was released. The Hale Report was based on data culled from aerial photographs, on-site inspections, study of topographic maps, and monitoring of relocation by Navajos from the HPL. Adopting a "capitalization of market" approach, the Hale Report calculated homesite rental values by comparing Navajo-occupied portions of the HPL to real estate sold in arms-length transactions in adjacent counties. Hale asserted that a "conscienceous [sic] effort was made to find tracts that had the same limitation as those on the HPL; i.e., no domestic water systems, highway frontage or electrical power." After identifying 129 sales of tracts deemed comparable to Navajo homesites in the HPL, Hale categorized the sold properties and the homesite tracts according to size, climate, elevation and vegetation. Because the Hale Report found little correlation between sale price and proximity to water and paved roads, its calculations did not take these factors into account. Finally, HPL tracts were assigned an annual rental value of 10% of market value, after adjustment for differences in size and date of sale influencing the market value of off-reservation properties in the same category.
The Navajo Nation brought an appeal before the Interior Board of Indian Appeals (IBIA) challenging the Deputy Assistant Secretary's adoption of the homesite and farmland rental valuations set forth in the Hale Report. This challenge was based on the same objections raised by the Navajo Nation in this appeal as to double billing for grazing and homesite uses, miscalculation of abandoned sites, assumptions about minimum homesite size, reliance on misleading comparables and misidentification of the use to which Navajos were dedicating certain parcels. Pursuant to its privately commissioned critique of the BIA's appraisal (the Centerfire Report), the Navajo Nation proposed an alternative valuation of the fair rental value of the HPL used by Navajos for agricultural and homesite purposes.
On November 26, 1985, the IBIA affirmed the Deputy Assistant Secretary's determination, subject to the BIA's correction of minor misidentifications of use. The IBIA noted the extensive documentation in support of the BIA's appraisal and deemed reasonable the operating assumptions in the Hale Report to which the Navajo Nation had objected. However, the IBIA remanded the homesite rental determination for review of the Navajo Nation's claimed factual errors and correction of verified errors.
On remand, the Acting Area Director of the BIA's Phoenix office considered two rounds of extensive comments and alleged errors raised by the Navajo Nation, as well as the response of the Hopi Tribe, before preparing the final homesite rental determination. The Navajo Nation bolstered its challenge with a list of homesites it alleged were abandoned or dedicated to other uses and thus improperly factored into the homesite rental determination. The Area Director rejected the Navajo Nation's reiterated objections but ordered that revisions be made to correct and update the appraisal, including the deletion of 95 homesites from the BIA's rental rolls. On March 18, 1988, the Assistant Secretary approved and adopted this corrected homesite rental determination.
On May 8, 1987, the Navajo Nation filed suit in the District of Columbia to challenge the Assistant Secretary's dismissal of its appeal of the Acting Director's grazing rental determination. The case was transferred to the District of Arizona and consolidated with the Hopi Tribe's action there in connection with the entire range of the Navajo Nation's post-partition use and occupancy of the HPL. The Hopi Tribe had initiated this action in 1985 to compel the Secretary to issue the rental determinations promptly and accurately.
The Navajo Nation filed a motion for summary judgment challenging the Assistant Secretary's dismissal of the Navajo Nation's administrative appeal for untimeliness. The Navajo Nation contended that the Assistant Secretary violated the tribe's due process right to adequate notice and his trust responsibilities to the Navajo Nation.
On July 2, 1992, the district court issued two orders addressing the grazing rental determination and the homesite/farmland rental determinations respectively. In one order, the district court granted the United States' motion to dismiss the Navajo Nation's challenge to the Secretary's dismissal of its administrative appeal of the grazing rental determination. The district court concluded that due process "does not require notice by personal service upon the Navajo Chairman," and found no trust responsibility mandating liberal interpretation of Department of the Interior regulations in favor of the Navajo Nation. Finding no genuine issues of material fact regarding the notice claim, the district court denied the Navajo Nation's motion for summary judgment. In addition, the district court granted the Hopi Tribe's motion for summary judgment affirming and enforcing the grazing rental determination in the amount of $1,186,190.77, minus the Navajo Nation's previous partial payment of $459,841.84.
In the same order, the district court also rejected the Hopi Tribe's motion for partial summary judgment as to the Navajo Nation's liability for prejudgment interest. The Hopi Tribe argued that payment of such interest was necessary to satisfy Congress' intent that the Navajo Nation pay the Hopi Tribe the "fair rental value" of Navajo homesites in the HPL under section 640d-15(a) of the Settlement Act. The district court found that prejudgment interest was not mandated by statute or equity and could not be assessed against the Navajo Nation absent an unequivocal waiver of its sovereign interest immunity.
In the other order, the district court granted the Hopi Tribe's motion for judgment upon and enforcement of the homesite rental determination. The district court rejected the Navajo Nation's various challenges to the validity of the assumptions and accuracy of the data underlying the homesite rental determination. Accordingly, the district court ruled that the IBIA and the Secretary did not abuse ...