Chevron Mining, Inc. v. United States

Decision Date30 September 2015
Docket NumberNo. 13–CV–00328 MCA–KK.,13–CV–00328 MCA–KK.
Citation139 F.Supp.3d 1261
Parties CHEVRON MINING, INC., Plaintiff, v. UNITED STATES of America, United States Department of the Interior, United States Department of Agriculture, Defendants.
CourtU.S. District Court — District of New Mexico

Peter D. Keisler, Quin M. Sorenson, Sidley Austin LLP, Sherrie A. Armstrong, Kirsten L. Nathanson, R. Timothy McCrum, Crowell & Moring LLP, James K. Vines, King & Spalding, Peter J. Schaumberg, Beveridge & Diamond, PC, Washington, DC, Alex Cameron Walker, Jeremy K. Harrison, Jennifer G. Anderson, Modrall, Sperling, Roehl, Harris & Sisk, P.A., Albuquerque, NM, for Plaintiff.

Dustin Maghamfar, John Edward Sullivan, Simi Bhat, Justin Heminger, Eric G. Hostetler, U.S. Department of Justice, Washington, DC, Ruth Fuess Keegan, U.S. Attorney's Office, Albuquerque, NM, for Defendants.



, Chief Judge.

THIS MATTER is before the Court on Plaintiff Chevron Mining, Inc.'s Motion for Partial Summary Judgment Regarding the United States' Ownership Liability [Doc. 28]; Plaintiff's Motion for Partial Summary Judgment Regarding the United States' Arranger Liability [Doc. 29]; and The United States' Cross Motion for Summary Judgment [Doc. 87]. Oral argument on the motions was held on May 6, 2015. Having considered the parties' arguments and submissions, the relevant case law, and otherwise being fully advised in the premises, the Court grants the United States' Motion for Summary Judgment and denies Plaintiff's Motions for Summary Judgment.

History of Mining at the Questa Site

The Court considers the United States' Motion for Summary Judgment first (and ultimately grants the motion), and thus considers the facts in the light most favorable to CMI. Dreiling v. Peugeot Motors of Am., Inc., 850 F.2d 1373, 1377 (10th Cir.1988)

. To the extent that either party contests a supported material fact solely because it is immaterial or incomplete, without submitting any record support, the Court concludes that the party has failed to dispute the facts pursuant to Federal Rule of Civil Procedure 56(c)(1), and thus, such facts are not contested for the purposes of the pending Motions.

At the time this Complaint was filed, CMI operated a molybdenum mine near the village of Questa, in Taos County, New Mexico (hereinafter referred to as "the Questa Site" or "the Questa mine"). The Questa Site is composed of two distinct areas: 1) the mine and waste rock disposal area, approximately four miles east of the town of Questa, New Mexico, and 2) the tailings disposal area, approximately one mile west of the town of Questa. [Doc. 87, ¶ 1; Doc. 91, ¶ 1] From 1919 through the date the Complaint was filed, CMI or its predecessors, including Molycorp (collectively referred to as CMI), engaged in mining at the Questa Site. [Doc. 87, ¶¶ 5, 47; Doc. 91, ¶¶ 5, 47] Mining occurred in three distinct phases: 1) conventional underground mining from 1919 to 1958; 2) open-pit mining from 1964 to 1983; 3) and underground mining from 1983 through the time of briefing in this case. [Doc. 87, ¶ 4; Doc. 91, ¶ 4] During the first period of underground mining, approximately 150,000 tons of waste rock were produced. [Doc. 87, ¶ 6; Doc. 91, ¶ 6] During the period of open-pit mining, nearly 328 million tons of waste rock and stockpiled rock were produced. [Doc. 87, ¶ 30; Doc. 87–4 (U.S. Ex. 4); Doc. 91, ¶ 30]

In 1957, at around the time that the molybdenum supply accessible through the first stage of underground mining was dwindling, the Defense Minerals Exploration Administration (DMEA) of the United States and CMI entered into an Exploration Project Contract. [Doc. 87, ¶ 8; Doc. 91, ¶ 8; Doc 28, ¶ 3] The DMEA contract was in part driven by the United States' domestic molybdenum production goal. [Doc. 28, ¶ 2; Doc. 88, ¶ 2] Under this Contract, CMI was responsible for performing exploration, drilling, and sampling, and creating geologic maps, while the United States agreed to loan CMI funds for half of the expenditures of the work up to $255,250. [Doc. 87, ¶ 8; Doc. 91, ¶ 8; Doc. 28, ¶ 4; Doc. 88, ¶ 4] The Contract contained a "Description of Work;" all exploration work under the contract was subject to Government approval; and CMI was required to submit monthly progress reports. [Doc. 28, ¶ 5; Doc. 88, ¶ 5] CMI conducted additional exploration outside of the DMEA contract and was not precluded by the Government from doing so. [Doc. 88, ¶ 5; Doc. 87, ¶ 7; Doc. 87–5, pp. 3–4 (U.S. Ex. 5); Doc. 91, ¶ 7] Under the DMEA contract, the Government ultimately provided $200,340 to CMI, but CMI independently spent over $4,000,000 in exploration by 1964. [Doc. 87, ¶¶ 12, 15; Doc. 87–4, pp. 3–4 (U.S. Ex. 4); Doc. 91, ¶¶ 12, 15; Doc. 87–3, p. 10 (U.S. Ex. 3) ] Pursuant to the contract, some of the land on which the exploration took place was held by CMI in fee, but much of it was held by CMI via unpatented claims, with the United States retaining title to the land. [Doc. 28, ¶ 6; Doc. 88, ¶ 6]

The parties dispute whether the minerals ultimately found were found as a result of the exploration project or were "interconnected" with the exploration areas covered by the DMEA contract. [Doc. 28, ¶ 8; Doc. 88, ¶ 8; Doc. 87, ¶¶ 10–16; Doc. 91, ¶¶ 10–16] Nonetheless, the United States stated in a "Certification by the United States of America of a Discovery or Development Under an Exploration Project Contract" that "discovery or development" of "molybdenite-bearing areas" "resulted from the exploration work" of the contract. [Doc. 28–10 (CMI Ex. 10) ] The DMEA Exploration Contract ended on June 30, 1960. [Doc. 87, ¶ 11; Doc. 91, ¶ 11] In 1966, CMI made its final royalty payment to the United States under the DMEA contract, which required repayment via royalties if minerals were discovered. [Doc. 28, ¶ 8; Doc. 88, ¶ 8; Doc. 87, ¶ 8; Doc. 91, ¶ 8] Also by 1966, CMI had removed over 71,000,000 tons of overburden and had begun full-scale operation of the open-pit mine. [Doc. 28, ¶ 8; Doc. 88, ¶ 8]

History of Ownership of Relevant Land now part of the Questa Site

In 1961 CMI began efforts to obtain title to many parcels of land which it held via unpatented mining and mill site claims. [Doc. 28, ¶ 9; Doc. 88, ¶ 9] The United States agreed that bringing one of these parcels of land consisting of 454 acres to patent would "protect the Government's royalty interest in the property." [Doc. 28, ¶¶ 9, 10; Doc. 88, ¶¶ 9, 10; Doc. 28–12 (CMI Ex. 12); Doc. 28–13 (CMI Ex. 13) ] These 454 acres of land were patented to CMI in 1970. [Doc. 28, ¶ 10; Doc. 88, ¶ 10] Prior to that time, CMI had deposited waste rock on this land which it held pursuant to unpatented mining claims. [Id. ] The United States was aware that waste rock had been deposited, as shown by a Survey conducted by the Bureau of Land Management, which identified certain tracts of land by parts of the waste dumps. [Doc. 28, ¶ 10(a); Doc. 28–16, pp. 4–6 (CMI Ex. 16); Doc. 88, ¶ 10(a) ]

In early 1969, CMI officials and personnel from the "Regional Office Lands" discussed the matter of either patenting additional tracts of land or engaging in a land exchange by which CMI would acquire 2,226.39 acres of National Forest lands adjacent to the open-pit which had, in part, already been used for waste rock disposal. [Doc. 28, ¶ 11; Doc. 88, ¶ 11; Doc. 28–17 (CMI Ex. 17); Doc. 28–18 (CMI Ex. 18) ] CMI and various Government officials met, corresponded, and negotiated regarding the matter, which ended in the land exchange. [Doc. 28–18 (CMI Ex. 18); Doc. 29–1 (CMI Ex. 19) ] During the process leading up to the land exchange, an Assistant Regional Forester indicated by letter that the property CMI wished to acquire was held by unpatented mining and mill site claims. With regard to the mining claims, he suggested that CMI had two options: either CMI relinquish the mining claims to the United States or the United States would have "to contest the claims through the usual Bureau of Land Management procedures." [Doc. 28–17, p. 1 (CMI Ex. 17) ] The Forester stated: "Because of the time involved in these procedures, most exchange proponents prefer the first suggested means of clearing the claims." [Doc. 28–17, p. 1 (CMI Ex. 17) ] With regard to the mill site claims, the Forester stated:

[O]ur attorney has not been able to determine whether mill site claims can properly be used for mine waste dumps....
We recognize that sufficient land adjacent to the mine for waste dumps must be made available to [CMI] by some means. However, since there is an area of about 2,400 acres of National Forest land involved, we believe it necessary to initiate a friendly validity contest to determine if mill site claims or mining claims can be located solely for the purpose of mine waste disposal, if Molycorp intends to hold the land under the mining laws.
We will be glad to proceed with an exchange if this is the Company's decision.

[Doc. 28–17, pp. 1–2 (CMI Ex. 17) ] CMI relinquished the unpatented mining and mill site claims, and the United States held them in "informal escrow" so that the land exchange could proceed. [Doc. 28–18, p. 2 (CMI Ex. 18) ] The Regional Forest Service also indicated by letter that various governmental agencies disagreed whether "a large series of millsites can be patented for dumping purposes." [Doc. 28–18, p. 1 (CMI Ex. 18) ] However, this letter indicates that, though "the court decisions and Land Department rulings applicable to this use are conflicting and inconclusive," the question was never answered because CMI elected to move forward with the land exchange. [Doc. 28–18, p. 2 (CMI Ex. 18) ]

In 1972, the Forest Service conducted an environmental analysis of the land which was ultimately exchanged. [Doc. 29–2 (CMI Ex. 20) ] This report stated that:

The open pit operation moves 60 to 70 thousand tons of ore and waste per 8–hour shift. Eight parts of this volume are waste which must be dumped outside the periphery of the pit operation.... The selected lands

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