Hoyl v. Babbitt, 93-B-988.
| Decision Date | 14 June 1996 |
| Docket Number | No. 93-B-988.,93-B-988. |
| Citation | 927 F. Supp. 1411 |
| Parties | Alfred G. HOYL, Plaintiff, v. Bruce BABBITT, Secretary, Department of the Interior, Defendant. |
| Court | U.S. District Court — District of Colorado |
James F. Engelking, Denver, CO, for Plaintiff.
Robert D. Clark, Assistant U.S. Attorney, Denver, CO, for Defendant.
Petitioner Alfred G. Hoyl (Hoyl) appeals the determination of the Interior Board of Land Appeals (IBLA) denying a suspension of operations under § 7(b) or § 39 of the Mineral Land Leasing Act of 1920 (MLA), 30 U.S.C. §§ 207(b), 209. I affirm the decision of the IBLA.
In 1966, Gerald Tresner sought to obtain a federal coal lease under the Mineral Leasing Act of 1920 (MLA), 30 U.S.C. § 181 et. seq., for land north of Fruita, Colorado. He filed and was granted a prospecting permit on October 1, 1966 which ripened upon discovery of coal into three preference right lease applications (PRLAs). Defendant's Exh. U. To be entitled to a coal lease, Tresner had to prove that the discovered coal was commercially viable.
Hoyl and Donald E. Wilde owned fee land next to Tresner's PRLAs which contained cameo and anchor coal outcrops. In 1976 Tresner entered into an operating agreement with Hoyl and Donald E. Wilde for development of these coal seams. Hoyl submitted a hypothetical mine plan for development of the PRLAs to the United States Geological Survey which was approved on June 23, 1977. Hoyl, Wilde and Tresner then contracted with Dorchester Coal Inc. (Dorchester) to develop the mine site on the fee land. Mining on the fee land was complete by 1979.
On July 18, 1980, pursuant to the National Environmental Policy Act, 42 U.S.C. § 4321 et.seq., the Bureau of Land Management (BLM) prepared an environmental assessment (EA) on Tresner's PRLAs and found that the mine plan was the preferred alternative. Tresner then assigned the three PRLAs to Dorchester. Each PRLA was issued as a separate lease containing one logical mining unit. The leases were issued in Dorchester's name on July 1, 1981.
The coal entries on the fee land were kept open after 1979 while leases for the federal land were sought. On June 21, 1983 a fire broke out in the entries. The United States Safety and Health Administration ordered the entries sealed and flooded. While the entries remained closed, Dorchester filed a resource recovery and protection plan (R2P2) under the new federal regulations. On October 6, 1983, Dorchester sent a letter to the BLM requesting a modification to the two interior boundaries between the three leases. Dorchester requested this modification after conducting drilling which indicated that each unit was sufficient to support a single independent operation through the use of long-wall technology. No request was made to suspend operations based on the fire. After the fire, BLM prepared a schedule for the preparation of an environmental impact statement (EIS) but later decided to forego it.
In late 1983 and early 1984, Dorchester submitted separate mine plans for each lease to the Office of Surface and Mining (OSM) and the Mined Land Reclamation Division (MLRD). All of the applications were seriously deficient because of inadequate baseline data. OSM promptly notified Dorchester of these deficiencies which were never corrected. From 1985 through 1988 the OSM and MLRD did not act on the applications due to insufficient information.
In 1986 Dorchester was sold and the federal leases were eventually owned by American Shield Development Company (American Shield). In 1988, American Shield withdrew the R2P2 stating: "After careful evaluation of the plans outlined in the pending permit applications for the above referenced leases we have determined that the development of the coal resources as proposed is not feasible under the current market conditions." Defendant's Ex. E. In 1988, the BLM notified American Shield that it was in default on its bonding requirements and failure to cure the default would result in a loss of the federal leases.
To protect his interest in the leases, Hoyl met with BLM personnel on February 23, 1989 to discuss his options. After this meeting, Hoyl bought Wilde's and Tresner's interests in the federal leases. On April 3, 1989 he requested a transfer to him of record title interest in the federal leases from American Shield. He then requested a suspension of operations and production under section 39 and section 7(b) of the Mineral Leasing Act, 30 U.S.C. § 209, 207(b), on April 6, 1989.
Hoyl met with BLM personnel again on June 26, 1989 to discuss the status of his suspension application. He then provided a $50,000 cash bond for the transfer of record title to the leases and a surety bond for annual rental payments. The bonds were not secured until December 14, 1989 when Hoyl purchased three U.S. Treasury Notes and cash bonds which were filed December 20, 1989. Decision, January 11, 1990, P's Ex. 12. The federal leases were transferred to Hoyl and Wilde jointly on January 1, 1990. On January 22, 1990, the BLM issued a memorandum stating that the application for suspension could now be processed as Hoyl was the record title holder.
On August 21, 1990 BLM issued its decision denying the application for suspension. The § 39 suspension application requested a five year suspension during which Hoyl could complete due diligence work. Hoyl also requested a force majeure suspension under § 7(b). In the absence of suspension, the due diligence period would expire on July 1, 1991. In the suspension application, Hoyl stated that "We expect to commence permitting without delay and will keep you advised as to our progress." Thus, in his application, Hoyl admitted that a permit to mine under SMCRA had not been obtained.
The BLM issued its opinion denying suspension on August 21, 1990. The decision was rendered after Hoyl presented additional data on June 18, 1990 which included a mine development schedule. The BLM determined that the mine development schedule shows that production will not be achieved until the fourth year of the production plan. Because suspension denies all beneficial use of the lease including access to conduct mining to achieve due diligence there would only be eighteen months remaining at the end of the suspension to achieve production. By Hoyl's own representations, a suspension would not permit him to achieve diligent development in eighteen months.
The BLM also determined that Hoyl was not entitled to suspension because he did not meet its prerequisites. To qualify for a suspension, an operator must have authorization to mine and have begun onsite development. The BLM found that American Shield formally withdrew permitting applications in 1988. The MLRD confirmed that Hoyl had not submitted a permit. Moreover, Hoyl states in his application that "we expect to commence permitting without delay," acknowledging that the requisite permits had not been acquired. The BLM concluded that the mine portals on the fee lands sealed after the fire were only one of several alternatives for maximizing extraction of coal. No federal coal would be lost in the absence of suspension.
Addressing force majeure, the BLM determined that the 1983 fire did not constitute an "unexpected or uncontrollable event that may excuse a party from contractual obligations." The 1983 fire did not interrupt operations as no operations had commenced on the federal leases. Furthermore, any claim that the fire interrupted operations on the fee land was not founded because mining had ceased four years before the fire. Finally, the permit application submitted by Dorchester in 1983 indicated that the spontaneous combustion problem was controllable and would not restrict development. BLM, thus, denied suspension for force majeure. Hoyl appealed.
On appeal, the IBLA affirmed the BLM's denial of suspension by decision dated June 3, 1992. Hoyl's petition for reconsideration was granted. On reconsideration, the IBLA considered new arguments raised by counsel for Hoyl as he had proceeded pro se in the hearing before the BLM and the appeal in front of the IBLA.
On reconsideration Hoyl argued that the denial of suspension under § 39 was inconsistent with the BLM's grant of suspension to Trapper Mining, Inc. where the BLM found that the suspension would prevent a loss of mineral resources. The IBLA found that the facts concerning the Trapper lease were distinct from the facts of Hoyl's lease. Significantly, no operation had ever occurred on Hoyl's federal leases and representations made by Hoyl's predecessor in interest, Dorchester, indicated that each lease could be developed as a separate mining unit.
Hoyl next argued that administrative delays had denied him beneficial use of his federal leases. IBLA rejected these arguments finding that any delay was not prejudicial to Hoyl because he was not the owner of the federal leases at the time. Moreover, any administrative delay was negated by the fact that the applications, which arguably may have been subject to delay, were withdrawn. Thus, the failure to develop the federal leases was the result of the lessee's choices and not government delay.
Hoyl's final argument was that the government should be estopped from denying the suspension application because he relied on representations made by BLM personnel regarding his suspension application. In the absence of these representations, Hoyl asserted that he would not have made significant investments to rehabilitate the leases. The IBLA found that at most Hoyl established that BLM officials had expressed optimism regarding his application but had not actively misinformed him. Because there was no active misconduct, estoppel was not warranted. The IBLA reaffirmed the June 3, 1992 decision on February 9, 1993. On April 5, 1993 IBLA issued a decision terminating the lease.
Hoyl filed this action on May 7, 1993. Hoyl asserts seven claims of error: (1) failure of the...
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