Seven up Pete Venture v. Schweitzer

• Decision Date: 21 April 2008
• Docket Number: No. 06-35384.,06-35384.
• Citation: 523 F.3d 948
• Parties: SEVEN UP PETE VENTURE, an Arizona general partnership dba Seven Up Pete Joint Venture; Canyon Resources Corporation, a Delaware corporation; Jean Muir; Irene Hunter, Doctor; David Muir; Alice Canfield; Tony Palaoro; June E. Rothe-Barneson; Amazon Mining Company, a Montana partnership; Paul Antonioli; Stephen Antonioli; James E. Hoskins, Plaintiffs-Appellants, v. Brian SCHWEITZER, Governor of the State of Montana; Richard Opper, Director of the Montana Department of Environmental Quality, Defendants-Appellees.
• Court: U.S. Court of Appeals — Ninth Circuit

523 F.3d 948

SEVEN UP PETE VENTURE, an Arizona general partnership dba Seven Up Pete Joint Venture; Canyon Resources Corporation, a Delaware corporation; Jean Muir; Irene Hunter, Doctor; David Muir; Alice Canfield; Tony Palaoro; June E. Rothe-Barneson; Amazon Mining Company, a Montana partnership; Paul Antonioli; Stephen Antonioli; James E. Hoskins, Plaintiffs-Appellants, v. Brian SCHWEITZER, Governor of the State of Montana; Richard Opper, Director of the Montana Department of Environmental Quality, Defendants-Appellees.

No. 06-35384.

United States Court of Appeals, Ninth Circuit.

Argued and Submitted November 7, 2007.

Filed April 21, 2008.

Sean Connelly, Reilly, Pozner & Connelly, LLP, Denver, CO, for the plaintiffs-appellants.

Anthony Johnstone, Assistant Attorney General, Helena, MT, for the defendants-appellees.

Appeal from the United States District Court for the District of Montana; Charles C. Lovell, District Judge, Presiding. D.C. No. CV-00-00013-CCL.

Before: WILLIAM C. CANBY, JR., SUSAN P. GRABER, and RONALD M. GOULD, Circuit Judges.

CANBY, Circuit Judge:

The primary question before us is whether the Eleventh Amendment precludes federal jurisdiction over an action seeking compensation under the Fifth and Fourteenth Amendments for a taking of property by a State.

The factual setting of this case is simple enough; the procedural context is more complicated. Seven Up Pete Venture ("the Venture") and other plaintiffs acquired leases of Montana state property for the purpose of mining gold, silver and other trace minerals.¹ Subsequently, voters of Montana enacted Initiative 137 ("I-137"), which banned open-pit mining for gold or silver by the cyanide heap leaching process. The Venture then brought this reverse condemnation action in federal district court against the Governor of Montana and the Director of the Montana Department of Environmental Quality in their official capacities. The Venture contended that I-137 effected a regulatory taking of their property, for which the State of Montana must pay just compensation under the Fifth and Fourteenth Amendments of the United States Constitution. At the same time, the Venture brought a reverse condemnation action in Montana state court. The Venture then obtained a stay of the federal proceedings pending resolution of the state claims. After the Montana Supreme Court rejected the Venture's claims, the district court dismissed the federal takings claims under the Eleventh Amendment and, in the alternative, under the doctrine of issue preclusion. The Venture now appeals that dismissal.

We join a number of our sister circuits and hold that the Eleventh Amendment bars a reverse condemnation action brought in federal court against state officers in their official capacities. We therefore affirm the district court's dismissal of the Venture's takings claims on that ground without reaching the question of issue preclusion.

BACKGROUND

I. Factual History²

In 1991, the Venture acquired six leaseholds ("the Mineral Leases") of state-owned mineral estates in the vicinity of Lincoln, Montana. The lands encompassed by the Mineral Leases comprise an area known as the "McDonald Project." According to feasibility studies, the McDonald Project contains more than 9 million ounces of gold and 20 million ounces of silver. Approximately half of these minerals could be recovered profitably through open-pit extraction combined with cyanide leaching of the ore. In addition to its interest in the McDonald Project, the Venture owns surface leases as well as other surface and mineral interests in two other areas also located east of Lincoln, Montana. These areas are designated as "Keep Cool Prospect" and "Seven Up Pete Project." The remaining plaintiffs own surface or mineral interests in the general vicinity of Lincoln, Montana.

Throughout the mid-1990s, the Venture and the State of Montana engaged in discussions regarding the environmental impact and viability of mining in the McDonald Project. Neither the Venture nor any other plaintiff ever obtained a permit to begin mining operations, as required by Montana Code Annotated section 82-4-335(1), and no mining has in fact taken place to date in the Project.

In November 1998, Montana became the first state to prohibit open-pit mining using cyanide heap leaching. It did so by passing ballot initiative I-137, which, as codified, provides:

(1) Open-pit mining for gold or silver using heap leaching or vat leaching with cyanide ore-processing reagents is prohibited except as described in subsection (2).

(2) A mine described in this section operating on November 3, 1998, may continue operating under its existing operating permit or any amended permit that is necessary for the continued operation of the mine.

Mont.Code Ann. § 82-4-390.

According to the complaint, there are no gold or silver recovery processes other than open-pit mining and cyanide leaching that will allow economically viable production of the gold and silver in the McDonald Project. In late 1999, the Montana Department of Environmental Quality informed the Venture that, in light of the passage of I-137, it had halted its review of the Venture's pending application for a mining permit. The Montana Department of Natural Resources and Conservation later informed the Venture that the six Mineral Leases terminated of their own accord due to the Venture's failure to "diligently pursue acquisition of a permit under Montana's Metal Mine Reclamation Act." Seven Up Pete Venture, 114 P.3d at 1015.

II. Procedural History

In April 2000, the Venture filed a complaint in federal court alleging, among other things, that I-137 worked a taking of their property without just compensation in violation of the Fifth and Fourteenth Amendments. On the same day, the Venture also filed a complaint in state court, which alleged, among other things, that I-137 effectuated a regulatory taking of its property rights without just compensation under Montana law.

In the state complaint, the Venture advised the court that it "reserve[d][its] federal claims" for a separate federal action, but was notifying the state court of its "federal claims so that Plaintiffs' state claims may be considered and adjudicated in light of those claims, and not for determination by[the state] Court of [its] federal claims."

The federal district court dismissed the federal Fifth Amendment claim without prejudice on the ground that the suit for compensation was not ripe under Williamson County Regional Planning Commission v. Hamilton Bank of Johnson City, 473 U.S. 172, 186, 105 S.Ct. 3108, 87 L.Ed.2d 126 (1985), because the Venture had not finished pursuing the procedures Montana provides for obtaining just compensation. The district court also concluded that the Venture had preserved its right, pursuant to England v. Louisiana State Board of Medical Examiners, 375 U.S. 411, 84 S.Ct. 461, 11 L.Ed.2d 440 (1964), to "return to federal court at the conclusion of the state court proceedings if it remains necessary to litigate their reserved federal claims." Accordingly, the district court dismissed the Venture's taking claims without prejudice and granted its motion to stay the case pending resolution of the state court proceedings.

The Montana trial court subsequently granted summary judgment in favor of the state in the state court proceedings, and the Montana Supreme Court affirmed. The Montana Supreme Court held that the Venture was not entitled to just compensation because "[t]he guarantees of the Fifth and Fourteenth Amendments apply only when a constitutionally protected property interest is at stake." Seven Up Pete Venture, 114 P.3d at 1017 (alterations and internal quotation marks omitted). The Court reasoned that the Venture's "`opportunity' to seek a permit, which required convincing the State that this cyanide leaching project was appropriate, did not constitute a property right. The State had wide discretion to reject the Venture's permit application, even without the enactment of I-137." Id. at 1019.

The United States Supreme Court denied the Venture's petition for certiorari to review the state court judgment. The Venture timely notified the district court and filed a motion to reopen the case and reinstate the federal takings counts. The district court reopened the case but dismissed the Venture's takings claims with prejudice. It held that the Eleventh Amendment barred the Venture's takings claims because they seek monetary relief against state officials in their official capacities. In the alternative, the district court held that it was required to accord issue-preclusive effect to the Montana Supreme Court's decision.³ The Venture appeals both grounds for dismissal.

DISCUSSION

The Eleventh Amendment has been authoritatively construed to deprive federal courts of jurisdiction over suits by private parties against unconsenting States.⁴ See Seminole Tribe v. Florida, 517 U.S. 44, 54, 116 S.Ct. 1114, 134 L.Ed.2d 252 (1996). This jurisdictional bar remains effective, if a bit less absolute, in cases like this where state officials, instead of the State itself, are the subjects of suit. Generally speaking, "a suit [brought] against a state official in his or her official capacity is not a suit against the official but rather is a suit against the official's office. As such, it is no different from a suit against the State itself." Will v. Mich. Dep't. of State Police, 491 U.S. 58 71, 109 S.Ct. 2304, 105 L.Ed.2d 45 (1989) (citation omitted). If, however, the plaintiffs seek prospective injunctive relief against the state official for a violation of federal law, the Eleventh Amendment does not bar the action. Ex parte Young, 209 U.S. 123, 28 S.Ct. 441, 52 L.Ed. 714 (1908); Edelman v. Jordan, 415 U.S. 651, 664, 94 S.Ct. 1347, 39 L.Ed.2d 662 (1974).

These general principles guide our analysis of the two issues that we decide in this case: 1) whether the Takings Clause occupies a unique...