Marathon Oil Co. v. Lujan, Civ. A. No. 89-F-1829.

CourtUnited States District Courts. 10th Circuit. United States District Court of Colorado
Citation751 F. Supp. 1454
Docket NumberCiv. A. No. 89-F-1829.
PartiesMARATHON OIL COMPANY, Joan L. Savage, Barbara Cliff Toner, and Frank G. Cooley, as Personal Representative of the Estate of Cameron Cliff, Plaintiffs, v. Manuel LUJAN, Jr., Secretary of the Interior, Delos Sy Jamison, Director, Bureau of Land Management, and the Department of the Interior, Defendants.
Decision Date20 June 1990

COPYRIGHT MATERIAL OMITTED

Don H. Sherwood, James M. King, Sherman & Howard, Denver, Colo. and John S. White, Patton, Boggs & Blow, Washington, D.C., for plaintiffs.

Michael J. Norton, U.S. Atty., William G. Pharo, Asst. U.S. Atty., Denver, Colo. and Gerald S. Fish, Atty., Dept. of Justice, Land and Natural Resources Div., Washington, D.C., for defendants.

MEMORANDUM OPINION AND ORDER

SHERMAN G. FINESILVER, Chief Judge.

This case involves entitlement to oil shale mining patents by plaintiffs, owners of real estate in Western Colorado, and is the latest phase of extensive litigation concerning validity of claims to oil shale patents.1 Questions presented are whether plaintiffs have complied with all requirements necessary for issuance of patents and whether defendants are acting beyond appropriate parameters in withholding patents.

Plaintiff Marathon Oil Company is a corporation organized under the laws of the State of Ohio. Plaintiffs Joan Savage and Barbara Cliff Toner are residents of Rifle, Colorado. Plaintiff Frank G. Cooley is a resident of Meeker, Colorado, and is the duly appointed representative of the estate of Cameron Cliff, a deceased individual.

Defendant Manual Lujan, Jr. is the Secretary of Interior of the United States. Defendant Delos Sy Jamison is the Director, Bureau of Land Management ("BLM"), of the Department of the Interior. Defendant Department of the Interior ("Department") is a United States agency. Defendants are charged with administration of the laws relating to the possession, purchase, and patenting of mineral lands in the public domain, 30 U.S.C. §§ 21 through 54. Jurisdiction is invoked pursuant to 28 U.S.C. §§ 1331 and 1361. Venue is based on 28 U.S.C. § 1391(e)(3).

Procedurally, plaintiffs move the court for summary judgment. In the alternative, plaintiffs move for a writ of mandamus or mandatory injunction. Defendants also move the court for summary judgment. We have heard oral argument on the cross motions for summary judgment and on plaintiff's motions for other relief.

By way of summary, we find that plaintiffs have complied with existing mining law and other requirements, and no impediments for issuance of patents have been reported. Yet, the Department continues to delay issuance of patents. No persuasive reasons exist to justify Departmental inaction. In addition, the Department has abused its discretion and plaintiffs are entitled to issuance of patents. For reasons set forth, we find the issues in favor of plaintiffs on the question of mandamus and also grant summary judgment to plaintiffs.

The review that follows chronicles the irregular history of Departmental, legislative, and court decisions as they relate to assessment and discovery aspects of valid mining claims.2 While the debate continues in the executive and legislative branches of government, definitive legal interpretation is necessary to bring consistency to mining law in the context of oil shale activity.3

I. THE MARATHON LITIGATION; BACKGROUND

Plaintiffs own six contiguous association placer mining claims in western Rio Blanco County, Colorado. The claims were located on April 5, 1918, and comprise some 982.92 acres. ("Portland Claim Nos. 1-6"). On April 4, 1986, plaintiffs filed Mineral Application No. C-43354 in the Colorado State Office of the BLM ("local BLM"), pursuant to 30 U.S.C. §§ 35 and 37.

Plaintiffs' efforts to obtain patents run from early 1986 to 1990. We highlight crucial dates. From March 31, 1986 through June 1, 1987, the Department imposed an administrative moratorium on processing oil shale patent applications. On June 9, 1987, defendants notified plaintiffs that the local BLM would perform a mineral examination of the claims in June and July of that year, and requested that plaintiffs' representative locate sample points and identify completed assessment work. Field work was completed in late July, 1987.

On December 9, 1987, plaintiffs filed all proofs for patents required by 30 U.S.C. § 29, including an application to purchase claims and payment of purchase price.4 The Department adjudicated the application, confirming that plaintiffs had met all requirements of posting notices, publication, title, improvements, survey, and other final proofs necessary for patents. The Department entered a Final Certificate for the claims on May 11, 1988. A final report was required, however, to validate the claims before patents could issue.5

On August 16, 1988, Marathon contacted the BLM office in Washington, D.C., questioning whether the mineral report was completed. Marathon formally requested that the Department release the mineral report to the applicants and place it in the public record. (Ex. 21). The Bureau expressed concern about standards used to determine the validity of the claims. (Ex. 23).

On December 6, 1988, the Department enunciated its standards for determining valid oil shale claims.6 The standards follow rationale expressed in Freeman v. Summers, 52 L.D. 201 (1927), and Andrus v. Shell Oil Co., 446 U.S. 657, 100 S.Ct. 1932, 64 L.Ed.2d 593 (1980):7

An exposure of the prospectively valuable rich beds of oil shale of the Green River Formation within the boundaries of the mining claim yielding 15 gallons or more of shale oil per ton of rock, in beds not less than one foot thick, yielding 1500 barrels or more per acre. Further, this standard may be met by an exposure of marlstone tongue of the Green River Formation, yielding not less than three gallons of shale oil per ton of rock upon destructive distillation, inferred to connect to the uppermost strata of prospectively valuable rich beds of oil shale lying at depth within the boundaries of the mining claim, but the inferred connection of the qualifying marlstone tongue need not occur within the confines of the mining claim.

Ex. 24.8

On December 16, 1988, the Department ordered the local BLM to complete processing of plaintiffs' patent application. The local BLM estimated that all patent materials could be completed by February 15, 1989. In late December, the Department confirmed that the Freeman and Andrus standards should apply to plaintiffs' claims. (Ex. 28).9

Around February 1, 1989, the Department issued its Final Mineral Report on plaintiffs' claims. The report's conclusions remain undisputed — it recommends patenting of plaintiffs' valid mining claims. This needed action has never been forthcoming. From February 1989 to June 1990, final patents remain in administrative limbo.

A. A LOCATOR OR OWNER HAS A VESTED PROPERTY INTEREST IN HIS CLAIM

Rights to patents vest upon issuance of the final certificate, conditioned on subsequent field work that verifies valid discovery and compliance with other requirements. Benson Mining Co. v. Alta Mining Co., 145 U.S. 428, 431-32, 12 S.Ct. 877, 878-79, 36 L.Ed. 762 (1891); Davis v. Nelson, 329 F.2d 840, 845 (9th Cir.1964); Utah Int'l, Inc. v. Andrus, 488 F.Supp. 976 (D.Colo.1980).10 Our review of long-established law indicates that oil shale claimants have vested property rights. Such property rights grant owners rights to alienate, are subject to taxation, and cannot be divested if claimants demonstrate substantial compliance with maintenance requirements enumerated under the mining law. In like manner, patents shall issue upon compliance with prerequisites to patenting claims.

Mining claims, in the language of the Supreme Court, are "real property in the fullest sense."11 Legal title to land remains in the United States, but claimants enjoy valid, equitable, possessory title, subject to taxation, transferrable by deed or devise and otherwise possessing incidents of real property.12 Wilbur v. United States ex rel. Krushnic, 280 U.S. 306, 50 S.Ct. 103, 74 L.Ed. 445 (1930), describes the interest held by a locator of a mining claim:

When the location of a mining claim is perfected under the law, it has the effect of a grant by the United States of the rights of present and exclusive possession. The claim is property in the fullest sense of the term; and may be sold, transferred, mortgaged, and inherited without infringing any right or title of the United States. The right of the owner is taxable by the state; and is "real property" subject to the lien of a judgment recovered against the owner in a state or territorial court.... The owner is not required to purchase the claim or secure patent from the United States but so long as he complies with the provisions of the mining laws, his possessory right, for all practical purposes of ownership, is as good as though secured by patent....

Krushnic, 280 U.S. at 316-17, 50 S.Ct. at 104; see also United States v. Locke, 471 U.S. 84, 86, 105 S.Ct. 1785, 1788, 85 L.Ed.2d 64 (1985).

Claims can be mined indefinitely without application for patent. So long as annual assessment work is performed, locators of claims can hold possessory title indefinitely.13 Also, claim holders can seek patent by certifying application to the proper land office on completion of $500 worth of annual work, pursuant to 30 U.S.C. § 29.

The law is well-settled. Upon compliance with requirements of 30 U.S.C. § 29, the applicant's right to a mineral patent mature, and the Department has no authority to withhold patents under such circumstances. Locke, 471 U.S. at 86, 105 S.Ct. at 1788; Krushnic, 280 U.S. at 318-19, 50 S.Ct. at 105; Union Oil Co. v. Smith, 249 U.S. at 349, 39 S.Ct. at 311; South Dakota v. Andrus, 614 F.2d 1190, 1193 (8th Cir.), cert. denied, 449 U.S. 822, 101 S.Ct. 80, 66 L.Ed.2d 24 (1980); United States v. Kosanke Sand Co., 12 I.B.L.A....

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