Background
In January 2022, park rangers at Greers Ferry Lake in Arkansas discovered that sixty-nine trees had been cut down on government land adjacent to Jackie Lackie’s property. The Army Corps of Engineers, which manages the lake, believed Lackie was responsible. In April 2022, the Corps sent Lackie a letter threatening legal action and revocation of his shoreline use permit—which authorized his dock and access path—unless he paid $6,017.28 for the appraised value of the damaged trees. Enclosed was a settlement and memorandum of agreement that stated the parties wanted to “settle this case concerning all matters on the public lands” and that the agreement would settle “all known disputes between the Corps of Engineers and the landowner, Mr. Lackie.”
Lackie denied cutting the trees but agreed to pay the settlement amount to avoid the trespass notice on his property. Five days after receiving the letter, Lackie telephoned a park ranger and asked whether his permit would be revoked; the ranger said revocation was a lengthy process. Lackie later visited the Corps office and delivered his signed settlement agreement and payment. A week after signing, despite the settlement agreement, District Commander Eric Noe revoked Lackie’s permit, citing violations of permit conditions. Lackie appealed and then sued, seeking judicial review of the revocation under the Administrative Procedure Act.
The district court affirmed the Corps’s revocation decision, holding that the Corps’s April 8 letter made clear “the issue of whether Lackie’s permit would be revoked was not resolved” by the settlement agreement. Lackie appealed to the Eighth Circuit.
The Court’s Holding
The Eighth Circuit reversed. Chief Judge Colloton, writing for the panel, held that the settlement agreement’s plain language—stating that it “settles all known disputes” and addresses “all matters on the public lands”—unambiguously encompasses the dispute over Lackie’s shoreline use permit. At the time the settlement was executed, a genuine dispute existed over whether Lackie would retain his permit; the Corps had informed him that it was recommending revocation, putting him on notice that his permit was in jeopardy. Lackie then sought to prevent the revocation and later requested an informal hearing before the District Commander, which established the existence of a concrete dispute over the permit.
The court rejected the Corps’s argument that its April 8 transmittal letter—which mentioned the recommendation to revoke—and Lackie’s subsequent offer to pay additional money proved the parties did not intend to settle the permit dispute. The settlement agreement did not reserve the right to revoke the permit, and its language was not ambiguous. While extrinsic evidence could explain ambiguous terms, the broad language here left no room for doubt. The letter was not executed by both parties and did not qualify as a separate document altering the agreement’s scope. Moreover, Lackie’s later offer to pay $32,000 to avoid revocation was reasonable given that the Corps was taking the position the permit was still revocable despite the settlement.
The court concluded that the parties reached a binding agreement to resolve “all known disputes,” including the dispute over Lackie’s permit. The Corps’s decision to revoke the permit after entering into this settlement was arbitrary and capricious under the Administrative Procedure Act. The court reversed the district court’s judgment and remanded with instructions to set aside the permit revocation.
Key Takeaways
- Settlement agreements between the United States and private parties are interpreted under federal common law, which looks to state law (here, Arkansas law) for guidance, applying the plain, ordinary meaning of the words as the parties intended them.
- Language settling “all known disputes” and “all matters” on public lands is unambiguous and sweeps in all disputes that existed at the time of execution, unless the agreement expressly reserves certain rights.
- An agency cannot circumvent a settlement agreement’s plain language by pointing to accompanying letters or internal recommendations that were not executed by both parties or incorporated into the agreement itself.
- An agency action is arbitrary and capricious under the APA when it violates a binding settlement agreement settling all disputes between the parties.
Why It Matters
This decision provides important protection for property owners entering into settlement agreements with federal agencies. Agencies are now bound by the plain language of such agreements, and cannot unilaterally preserve rights or pursue remedies that were effectively waived when the agreement settled “all known disputes.” The decision clarifies that broad, unqualified settlement language will be read to encompass all disputes in existence at the time of execution—a principle that curbs post-settlement agency action and discourages the kind of enforcement overreach that occurred here, where the Corps accepted payment under a settlement only to revoke the permit anyway.
For federal land managers and agencies generally, the decision reinforces the importance of drafting settlement agreements with precision if certain claims or enforcement rights are to be preserved. An agency cannot achieve strategic advantage by first threatening multiple remedies (here, prosecution and permit revocation) and then, after extracting a settlement payment that purports to resolve all disputes, selectively pursuing the remedies it withheld from the settlement’s scope. The Eighth Circuit’s insistence on faithful interpretation of settlement language consistent with Arkansas contract law signals that federal agencies must live by the agreements they negotiate with private parties.