Hallenbeck v. Kleppe

• Decision Date: 18 January 1979
• Docket Number: No. 76-2035,76-2035
• Citation: 590 F.2d 852
• Parties: Charles V. HALLENBECK, Jr., and Clyde A. Hallenbeck, as Individuals, as Trustees, and as Members of a Class, Plaintiffs-Appellants, v. Thomas KLEPPE, Secretary of the Interior, and Earl Butz, Secretary of Agriculture, Defendants-Appellees.
• Court: U.S. Court of Appeals — Tenth Circuit

Page 852

590 F.2d 852

Charles V. HALLENBECK, Jr., and Clyde A. Hallenbeck, as Individuals, as Trustees, and as Members of a Class, Plaintiffs-Appellants, v. Thomas KLEPPE, Secretary of the Interior, and Earl Butz, Secretary of Agriculture, Defendants-Appellees.

No. 76-2035.

United States Court of Appeals, Tenth Circuit.

Argued March 14, 1978.

Decided Jan. 18, 1979.

Marvin B. Woolf, Boulder, Colo., for plaintiffs-appellants.

Robert L. Klarquist, Dept. of Justice, Washington, D.C. (Peter R. Taft, Asst. Atty. Gen., Washington, D.C., James L. Treece, U.S. Atty., Jerre W. Dixon, Asst. U.S. Atty., Denver, Colo., and Edmund B. Clark, Dept. of Justice, Washington, D.C., were on the brief), for defendants-appellees.

Before HOLLOWAY, BARRETT and McKAY, Circuit Judges.

HOLLOWAY, Circuit Judge.

The plaintiffs-appellants Hallenbeck and others appeal a district court summary judgment in favor of the government. The controversy began with an administrative contest of seven placer mining claims located before 1955 ¹ by the late C. V. Hallenbeck, Sr., ² in the San Isabel National Forest in Lake County, Colorado. The government's contest proceeding resulted in a decision by an administrative law judge against the contestees, and his decision was in turn affirmed by the Interior Board of Land Appeals. 21 IBLA 296. The instant judicial review followed.

The government initiated the contest proceeding in December 1970. After a two-day hearing in 1974 the administrative law judge declared the seven claims invalid. In July 1975 the Hallenbecks commenced this suit in the district court seeking, Inter alia, to enjoin the government from removing sand and gravel, cutting timber, building roads and doing other work on the claims in connection with the Bureau of Reclamation's Frying Pan-Arkansas Project. An appeal from the administrative law judge's decision was completed, and the Interior Board of Land Appeals affirmed the ruling that the claims were invalid. The complaint in the district court was then amended to challenge that decision. The district court limited its consideration to judicial review of the administrative decision pursuant to 5 U.S.C. §§ 702, et seq.

The government moved for summary judgment on the administrative record. In September 1976 the district court entered its findings and conclusions, holding that the findings of the Department of the Interior of invalidity of the claims were supported by substantial evidence, and were neither arbitrary, capricious nor otherwise not in accordance with the law. ³ The court's order dismissed the action and this appeal followed.

For reversal the plaintiffs-appellants claim that there was error in that: (1) the government was in bad faith in its manner of conducting investigation of the claims and delaying filing of the contest, so that estoppel and laches apply against the government; (2) the plaintiffs had presented evidence in the administrative hearing demonstrating that a valuable marketable discovery had been made on the claims, satisfying their burden of proving the validity of the claims; (3) the government failed to carry its burden of establishing that the Hallenbeck placer claim was invalid; (4) the district court erred as a matter of law when it held that a mineral claimant cannot "hoard" valuable minerals such as the plaintiffs' sand and gravel; (5) the court erred in not considering valuable mineral deposits on adjoining property; and (6) the court erred in not granting a trial De novo to the plaintiffs since the administrative law judge had been mistaken as a matter of law in holding that sand and gravel deposits will not serve to support a discovery required under the mining laws.

The laches and estoppel issues.

First, we treat the plaintiffs' contention that the government was in bad faith in its investigation and delay of the contest proceeding, in thus delaying the hearing until after the death of C. B. Hallenbeck, Sr., and in not offering its own evidence as to the value of sand and gravel it took from the claims for use in the Frying Pan-Arkansas Project. More specifically, plaintiffs argue that although the government knew about their claims for many years the contest proceeding was delayed until after the important testimony of Mr. C. B. Hallenbeck, Sr., was unavailable, along with other evidence of gold on the claims which was lost or stolen before the date of trial. (Brief for Plaintiffs-Appellants, 4-5).

We feel that the estoppel and laches defenses were not shown to have any merit on the basis of this record. There was no proof of any positive acts or representations made by government agents on which the plaintiffs justifiably relied in losing any evidence, and there was no showing of any intentional delay until Mr. Hallenbeck's testimony or other proof was unavailable. Furthermore, there was no showing of lack of diligence on the government's part and of prejudice to the plaintiffs, both of which are necessary as a foundation for a laches defense. See Roberts v. Morton, 549 F.2d 158, 163-64 (10th Cir.), Cert. denied, 434 U.S. 834, 98 S.Ct. 121, 54 L.Ed.2d 95. Arguments along these lines are made, but they are not demonstrated in the evidence of record. Thus, even assuming some relaxation of the general rule that the government is not subject to such defenses of laches or estoppel in cases involving the public lands, See United States v. California, 332 U.S. 19, 39-40, 67 S.Ct. 1658, 91 L.Ed. 1889, these defenses were not established in the record.

In sum, we find no merit in the plaintiffs' assertions of bad faith on the

part of the government, or in the defenses of laches and

estoppel. The sufficiency of the evidence to

support the administrative findings and

related issues.

Second, we will discuss plaintiffs' contention that the administrative rulings were in error because the plaintiffs had presented evidence at the administrative hearing demonstrating that a valuable marketable discovery had been made on the claims, which satisfied their burden of proving the validity of the claims.

The claimant rather than the government is the proponent of a ruling that he has complied with applicable mining laws. The government must go forward with sufficient evidence to establish Prima facie the invalidity of contested claims, and the burden then shifts to the claimant to show by a preponderance of the evidence that his claim is valid. United States v. Zweifel, 508 F.2d 1150, 1157 (10th Cir.), Cert. denied, 423 U.S. 829, 96 S.Ct. 47, 46 L.Ed.2d 46. To meet his burden the claimant must show that the discovered mineral deposits are of such a character that "a person of ordinary prudence would be justified in the further expenditure of his labor and means, with a reasonable prospect of success, in developing a valuable mine, . . ." Castle v. Womble, 19 L.D. 455, 457. The Supreme Court has approved this prudent-man test for some time. See United States v. Coleman, 390 U.S. 599, 600, 88 S.Ct. 1327, 20 L.Ed.2d 170; Roberts v. Morton, supra, 549 F.2d at 163.

In Coleman the Court discussed the required showing of "valuable mineral deposits" under 30 U.S.C. § 22 as applied to more common solid materials. The Court upheld a ruling of the Secretary of the Interior that it must be shown that the mineral can be "extracted, removed and marketed at a profit" the so-called "marketability test." 390 U.S. at 600, 88 S.Ct. at 1329. The Court rejected the objection that the marketability test imposes a different and more onerous standard on claims for minerals of widespread occurrence than for rarer minerals which have generally been dealt with under the prudent-man test, stating (id. at 603, 88 S.Ct. at 1330-1331):

As we have pointed out above, the prudent-man test and the marketability test are not distinct standards, but are complementary in that the latter is a refinement of the former. While it is true that the marketability test is usually the critical factor in cases involving nonmetallic minerals of widespread occurrence, this is accounted for by the perfectly natural reason that precious metals which are in small supply and for which there is a great demand, sell at a price so high as to leave little room for doubt that they can be extracted and marketed at a profit.

We note that Congress withdrew common varieties of sand and gravel from further location under the mining laws as of July 23, 1955. See 30 U.S.C. § 611 (1970). Thus, mineral claims founded on these materials must meet the marketability test outlined above as of that date. ⁴ Melluzzo v. Morton, 534 F.2d 860, 861-62 (9th Cir.).

As to gold, the government's evidence was presented by Mr. Roberts, a mineral examiner with the Forest Service. On different occasions he took mineral samples starting on July 20, 1964 (II R. 10) from all but the Hallenbeck claim. None were taken from it because Mr. Roberts found no workings on that claim and because Mr. C. V. Hallenbeck, Sr., confirmed later that there were no further workings from which he could take additional samples. (Id. 33-38). The samples were later tested for gold content and the tests ranged from less than .01 milligrams to .25 milligrams of gold, which convert into dollar values of less than one cent to about three cents per cubic yard, calculated in terms of the price of gold when the samples were taken, $39 per troy ounce. Even converted according to the price of gold at the time of the hearing, $178.25 per ounce, the value of the richest claim would only be about 14 cents per cubic yard, and an average of the values of all the samples would be less than six cents per cubic yard. Based on his examination of the claims, Mr. Roberts concluded it would be an unprofitable venture to develop a mining operation on the claims. (Id. 41-42).

Plaintiffs presented evidence of testing which they had done on the claims. They testified that they took a total of seven samples from two of them. Tests on each of the seven samples, assuming a gold...