Solenex LLC v. David Bernhardt, 962 F.3d 520

Background:

The Badger-Two Medicine Area is culturally and environmentally significant to the Blackfeet Tribe; surface-disturbing activity (e.g., drilling) requires separate agency approvals and NEPA/Historic Preservation Act compliance.
The Bureau of Land Management issued an oil-and-gas lease in 1982 (Longwell), which expressly conditioned drilling on future agency approvals; the lease was repeatedly suspended beginning in 1985 during appeals and environmental/cultural review.
The lease passed through several holders; Solenex acquired it in 2004 while the lease remained suspended and NEPA/Historic Preservation Act issues were unresolved.
Congress in 2006 withdrew the area from mineral leasing (subject to valid existing rights) and offered tax incentives to relinquish leases; Solenex did not accept that relief.
In 2016 the Secretary of the Interior cancelled the lease, concluding the original leasing violated NEPA and the Historic Preservation Act and that validation was not lawful or warranted; Solenex sued and the district court ordered reinstatement, finding agency delay and failure to consider reliance interests violated the APA.
The D.C. Circuit reversed: it held delay alone does not invalidate the cancellation and that the Secretary had considered—and offered compensation for—identified reliance interests, so the district court’s grant of summary judgment to Solenex was vacated.

Issues:

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether agency delay alone renders a later cancellation arbitrary and capricious	Solenex: long delay (decades) to correct an alleged initial error violated the APA and created reliance interests	Interior: delay alone cannot undo substantive agency authority; consequences of delay, not duration alone, govern review	Court: Delay alone is insufficient; must show specific harms from delay—vacated district court on this ground
Whether Secretary failed to consider Solenex’s reliance interests before cancelling	Solenex: agency dismissed reliance interests and failed to account for harms from cancellation	Interior: Secretary considered reliance claims and offered refund of predecessor rent; no other reasonable reliance by Solenex	Court: Secretary adequately considered and addressed reliance interests; Solenex identified no additional reasonable, causally linked reliance harms
Whether Solenex had protectable reliance/investment warranting relief	Solenex: owners and predecessors spent time/money pursuing development; equities favor reinstatement	Interior: Solenex itself made no development expenditures after acquiring lease in 2004; predecessors’ expenditures were addressed and lease had long been suspended with notice of contingencies	Court: Record shows Solenex incurred no reasonable reliance expenditures; predecessor payments approximated and were offered refunded
Whether appellate court should decide other legal challenges (e.g., authority to cancel) raised on appeal	Solenex: also argues Secretary lacked authority and relied on improper factors	Interior: raised below; district court resolved on other grounds	Court: Declined to address new arguments raised for first time on appeal; remanded consistent with opinion

Key Cases Cited

Dayton Tire & Rubber Co. v. Sec’y of Labor, 671 F.3d 1249 (D.C. Cir. 2012) (delay alone does not invalidate agency action; consequences of delay matter)
General Motors Corp. v. United States, 496 U.S. 530 (Sup. Ct. 1990) (agency’s failure to act within a timeframe does not necessarily preclude later enforcement)
Linemaster Switch Corp. v. EPA, 938 F.2d 1299 (D.C. Cir. 1991) (court reluctant to curtail substantive agency authority for inaction absent congressional directive)
Silver State Land, LLC v. Schneider, 843 F.3d 982 (D.C. Cir. 2016) (standard of review for agency action under APA)
Nader v. FCC, 520 F.2d 182 (D.C. Cir. 1975) (court may compel agency action unlawfully withheld)
Mingo Logan Coal Co. v. EPA, 829 F.3d 710 (D.C. Cir. 2016) (reliance interests must be particularized, reasonably incurred, and causally related to prior agency action)
Bell Atlantic Tel. Cos. v. FCC, 79 F.3d 1195 (D.C. Cir. 1996) (reliance investment made while issue was long disputed is not reasonable)
United States v. Popovich, 820 F.2d 134 (5th Cir. 1987) (statutory text does not authorize using APA delay provisions to bar later agency action)