Mt. St. Helens Mining and Recovery v. U.S.

• Decision Date: 03 September 2004
• Docket Number: No. 03-35498.,03-35498.
• Parties: MT. ST. HELENS MINING AND RECOVERY LIMITED PARTNERSHIP, Plaintiff-Appellant, v. UNITED STATES of America; Dan Glickman, in his capacity as Secretary of Agriculture; Mike Dombeck, in his capacity as Chief of the Forest Service; Nancy Graybeal, in her capacity as Acting Regional Forester, U.S. Forest Service; Claire Lavendel, in her capacity as Supervisor, Gifford-Pinchot National Forest, Defendants-Appellees.
• Court: U.S. Court of Appeals — Ninth Circuit

384 F.3d 721

MT. ST. HELENS MINING AND RECOVERY LIMITED PARTNERSHIP, Plaintiff-Appellant, v. UNITED STATES of America; Dan Glickman, in his capacity as Secretary of Agriculture; Mike Dombeck, in his capacity as Chief of the Forest Service;

Nancy Graybeal, in her capacity as Acting Regional Forester, U.S. Forest Service; Claire Lavendel, in her capacity as Supervisor, Gifford-Pinchot National Forest, Defendants-Appellees.

No. 03-35498.

United States Court of Appeals, Ninth Circuit.

Argued and Submitted June 7, 2004.

Filed September 3, 2004.

Robert P. Hailey, Esq., Spokane, WA, for the appellant.

Peter Angus Winn, Assistant United States Attorney, Seattle, WA, for the appellees.

Appeal from the United States District Court for the Western District of Washington; Franklin D. Burgess, District Judge, Presiding. D.C. No. CV-99-05687-FDB.

Before: BRUNETTI, McKEOWN, and GOULD, Circuit Judges.

BRUNETTI, Circuit Judge:

Appellant, Mount St. Helens Mining and Recovery Limited Partnership (the "Partnership"), filed the underlying suit against Appellees, the United States of America (the "Government"), Dan Glickman, Secretary of the Department of Agriculture (the "Department"), Mike Dombeck, Chief of the Forest Service, Nancy Graybeal, Acting Regional Forester and Claire Lavendel, Supervisor, Gifford-Pinchot National Forest (the "Forest Service"), alleging that the Department violated the Mount St. Helens National Volcanic Monument Act and the Mount St. Helens National Volcanic Monument Completion Act by failing to timely acquire the Partnership's patented mineral interests located within the Mount St. Helens Monument.

After the Partnership filed suit to compel the Department of Agriculture to acquire the Partnership's mineral interests, the Department and the Forest Service offered to exchange land outside the Monument's boundaries valued at $242,000 for the mineral interest owned by the Partnership. The Partnership rejected this offer and Appellees filed a motion for summary judgment. The district court granted the motion, concluding that the Department's offer was not arbitrary, capricious, or contrary to law. We have jurisdiction pursuant to 28 U.S.C. § 1291, and we affirm.

FACTS AND PROCEEDINGS BELOW

A. The Mount St. Helens National Volcanic Monument Act

Following the eruption of Mount St. Helens in 1980, Congress passed "An Act to Designate the Mount St. Helens National Volcanic Monument (the "Monument") in the State of Washington, and For Other Purposes," Pub.L. No. 97-243, 96 Stat. 301, 16 U.S.C. § 431 note (August 26, 1982) (the "Monument Act"). The Monument Act was passed to protect the ecosystem created by the eruption. It provides in pertinent part:

Sec 3.(a) The Secretary [of Agriculture] shall acquire all lands and interests in lands within the boundaries of the Monument by donation, exchange ..., or purchase with donated or appropriated funds ... except that the Secretary may acquire mineral and geothermal interests only by exchange. It is the sense of the Congress that in the case of mineral and geothermal interests such exchanges should be completed within one year after the date of enactment of this Act.

Pub.L. No. 97-243, 96 Stat. 301.

In 1998, Congress, concerned with the lack of progress in acquisitions, passed "An Act to Provide for the Expeditious Completion of the Acquisition of Private Mineral Interests Within the Mount St. Helens National Volcanic Monument" (the "Completion Act"). See Pub.L. No. 105-279, 112 Stat. 2690, 16 U.S.C. § 431 note (Oct. 23, 1998). The Completion Act expressed Congress's intent that the Forest Service continue to expeditiously acquire private property within the Monument area. More than twenty years after the Monument Act was enacted, however, the Department of Agriculture has still not acquired the Partnership's mineral interests located within the Monument.

B. The Partnership's Mineral Interests

The Partnership is the owner of patented mineral interests on about 604 acres of land located within the boundaries of the Monument. The Partnership's interests can best be described as consisting of three irregularly shaped tracts within the Spirit Lake region of the Monument: (1) the Norway-Sweden Group (about 468 acres), (2) the United Group (about 99 acres) and (3) the Chicago Discovery Group (about 37 acres).

The Norway-Sweden Group is located at the head of Spirit Lake. No commercial mineral deposit has ever been discovered in this area. In 1943, the Bureau of Mines performed engineering studies of the area, but determined the copper deposits were too small and of too low grade to develop. After the 1980 eruption, 16% of this area is under water and most of the remainder is covered with blown down timber, ash, and debris.

The United Group is located on the east side of a ridge that separates Spirit Lake and the Green River drainage. Natural vegetation has returned to this area after the eruption and guided walks are led on the land. This area is the focus of the largest valuation dispute between the parties' geological experts. The Partnership's geologists assert that the United Group has the most potential for exploration, while the Forest Service's geologists contend that this area has no potential for exploration and economic development.

The Discovery Group lies north of the United Group on steep terrain. All geologists agree that this area has the least mineral potential of any of the patented mineral interests.

C. The Underlying Action

In 1999, the Partnership filed suit against Appellees, seeking inter alia, an order of mandamus, pursuant to 28 U.S.C. § 1361 and 5 U.S.C. § 706(1), to compel Appellees to complete the acquisition of the Partnership's patented mining interests within the Monument's boundaries. The Partnership demanded that the Department and the Forest Service base its valuation of the Partnership's patented mineral interests—for purposes of acquisition—in part on a geological report prepared by J.A. Empsall. In that report, Empsall estimated that the patented mineral interests had a "gross value for exchange purposes of $321 million in 1983 dollars." Empsall's report prompted Forest Service geologists John Simmons and Ruth Seeger to independently conduct examinations of the Partnership's patented mineral interests. Both Simmons's report and Seeger's report disputed Empsall's conclusions, asserting that Empsall never addressed the issue of whether any of the patented mineral interests could be economically mined. Each concluded that it would cost more to mine and process the copper than it could ever be sold for on the market. Both Simmons and Seeger concluded that the patented mineral interests were speculative claims of nominal value.

The Forest Service then retained two outside geologists, John Balla and Anthony Payne, to study the land. In numerous independent reports, Balla and Payne concurred with the conclusions of Simmons and Seeger that the patented mineral interests of the Partnership were speculative with only nominal value. The Forest Service also requested the advice of Ray Lasmanis, the chief geologist for the State of Washington. Lasmanis, working without compensation, concluded that the patented mineral interests could not be economically developed.

To refute the Forest Service's experts, the Partnership retained Stanley Keith and Jan Rasmussen of MagnaChem, Inc., who specialize in a methodology of mineral computer modeling known as "pluton vectoring analysis." After analyzing rock samples taken from mineral deposits at the United Group, Keith and Rasmussen concluded that there might exist copper deposits to the east of the United Group worth as much as $13 billion dollars.

The Forest Service's outside geologists, Payne and Balla, independently reviewed Keith and Rasmussen's report and each determined that Keith and Rasmussen's work was inconsistent with accepted methodologies used by commercial mining companies for predicting the likelihood of copper deposits. Balla also noted that even if Keith and Rasmussen's report was correct, the Partnership would not own the potentially valuable copper deposits because they were to the east of the United Group.

In September 2001, the Forest Service hired Gerald Halmbacher, a licensed land appraiser with experience in appraising mineral interests, to prepare a valuation of the patented mineral interests based on comparative market values. Halmbacher retained his own consulting geologist, David Wahl, to review the work of the two groups of battling experts. Wahl, just like Balla, noted that any copper deposit predicted by Keith and Rasmussen would not be within the patented mineral interests owned by the Partnership, that their analysis failed to take into account the cost of mining and recovery, and that the only known scattered copper deposit in the area of Mount St. Helens has never been commercially developed and was ultimately sold at a great loss. Wahl concluded:

Although minor amounts of metals have been produced from Partnership claims in the distant past, the claims have received but little exploration/ development attention since the late 1920's and effectively have been inactive since the eruption of Mount St. Helens in 1980. While the claims contain mineral occurrences, potential for development of commercially economic metal deposits is very low. The mineral occurrences present within Partnership claim blocks have been evaluated in past times when commercial exploitation of such occurrences was much more feasible than it is today. Further efforts to develop these mineral occurrences are not justified. It is possible that portions of the claims may have minor value for recreational prospecting and hobbyist mining.

On December 2, 2002, Halmbacher completed his valuation of the Partnership's patented mineral interests. He reviewed the reports of all of the geologists, including the geologist he hired, and examined sales of similar properties around the...