Oil Shale Corporation v. Udall, Civ. A. No. 8680

Decision Date21 December 1966
Docket NumberCiv. A. No. 8680,9202.,8691,8685
PartiesThe OIL SHALE CORPORATION and Energy Resources Technology Land, Incorporated, Plaintiffs, v. Stewart L. UDALL, Secretary of the Interior, Defendant. Joseph B. UMPLEBY and Wasatch Development Co., Plaintiffs, v. Stewart L. UDALL, Secretary of the Interior, Defendant. Barnette T. NAPIER, Grace A. Savage, Joan L. Savage, Maude B. Farnum, St. Clair Napier Catlin, William H. Farnum, Jr., John R. Farnum, John W. Savage, and Neil S. Mincer, Plaintiffs, v. Stewart L. UDALL, Secretary of the Interior, Defendant. Penelope Chase BROWN, individually and as trustee, and the Oil Shale Corporation, Plaintiffs, v. Stewart L. UDALL, Secretary of the Interior, Defendant.
CourtU.S. District Court — District of Colorado

Tweedy, Mosley, Aley & Young, Denver, Colo., for plaintiffs in Civil Actions Nos. 8680 and 9202, Cleary, Gottlieb, Steen & Hamilton, New York City, of counsel.

Fred M. Winner, Denver, Colo., of counsel, in Civil Action No. 8680.

Edward N. Juhan, Fred M. Winner, William S. Livingston, Denver, Colo., for plaintiffs in Civil Action No. 8685.

Schmidt & Van Cise, Richard L. Eason, Denver, Colo., for plaintiffs in Civil Action No. 8691.

Lawrence M. Henry, U. S. Atty. for Dist. of Colorado, David I. Shedroff, Asst. U. S. Atty., Denver, Colo., Thomas L. McKevitt, Atty., Dept. of Justice, Washington, D. C., for defendant, Robert W. Mesch, and Lowell Madsen, Attys., Office of Regional Sol., Dept. of Interior, Denver, Colo., of counsel.

MEMORANDUM OPINION AND ORDER

WILLIAM E. DOYLE, District Judge.

The four above-named actions arise under the Constitution and laws of the United States. Plaintiffs in all four actions seek an adjudication that certain decisions of the Department of the Interior, hereinafter the Department, regarding oil shale placer mining claims in Colorado are erroneous, invalid and without force and effect. Plaintiffs in Civil Action Nos. 8685, 8691 and 9202 seek mandatory orders to compel the Department to issue patents on several placer claims pursuant to certain applications filed by plaintiffs. Plaintiffs in Civil Action No. 8680 have not filed a patent application, but seek a declaratory judgment regarding their alleged rights to gain patents from the Department on several of the Colorado oil shale mining claims. The trial was to the Court. Extensive trial and post-trial briefs have been filed, voluminous exhibits have been received in evidence, and oral arguments have been presented. The case now stands submitted.

There are few factual disputes. Most of the controversy concerns the policies of the Department and certain Supreme Court decisions relating to extensive oil shale reserves in Colorado, Utah and Wyoming. For the sake of clarity, the position of the plaintiffs in each of the consolidated cases will be summarized at the outset. The specific facts surrounding the claims in the several actions are related so as to clarify the issues and furnish basis for the decisions.

Civil Action No. 8680

Plaintiffs, The Oil Shale Corporation and Energy Resources Technology Corporation, Inc. are, respectively, Nevada and Colorado corporations. Energy Resources allegedly owns certain oil shale mining claims, referred to as the Group A Bute Claims (officially entitled Bute Placer Mining Claims Nos. 1-19, inclusive, 21-28 inclusive, and 30-32 inclusive). The Oil Shale Corporation allegedly owns the Group B Bute Claims (officially entitled Bute Placer Mining Claims Nos. 33-48, inclusive), the Camp Bird Claims (officially entitled Camp Bird Placer Mining Claims Nos. 1-20, inclusive) and the Atlas Claims (officially, the Atlas Placer Mining Claims Nos. 1, 2, 3, 7, 9, 10, 12, 17, 18). All of these claims are located in Rio Blanco County, Colorado; all allegedly contain valuable oil deposits.

Plaintiffs trace their interests in these claims through one Tell Ertl who, during the 1950's, acquired them from the original claimants and their successors in interest by purchase and forfeiture proceedings under Title 30 U.S.C. § 28. Hamilton v. Ertl, 146 Colo. 80, 360 P.2d 660 (1961). All of the claims were allegedly located by the original claimants during December, 1919 and January, 1920. Thus they predate enactment of the Mineral Leasing Act of February 25, 1920, 41 Stat. 437, Title 30 U.S.C. § 181 et seq. This act changed the mining law policy in that certain mineral lands were withdrawn from location.

In 1927, the Department instituted certain contest proceedings, Contest Nos. 11,757, 11,759 and 11,761 against the original claimants regarding the above mining claims. On May 4, 1928, the Commissioner, General Land Office, issued letter decisions declaring the claims null and void for the failure of the named contestees to appear upon notice and process purportedly served and answer charges alleging their failure to perform annual assessment work for the years ending July 1, 1921 to 1927, inclusive, as required by 30 U.S.C. § 28.

Plaintiffs contend that the Supreme Court has, on two occasions, held that the Department lacked authority to declare mining claims null and void for failure to perform annual assessment work. Wilbur v. United States ex rel. Krushnic, 280 U.S. 306, 50 S.Ct. 103, 74 L.Ed. 445 (1930); Ickes v. Virginia-Colorado Development Corporation, 295 U.S. 639, 55 S.Ct. 888, 79 L.Ed. 1627 (1935). Their further contention is that in any event the contestees were not given proper notice of the contest proceedings. They allege that following the Supreme Court's decisions in Wilbur v. United States ex rel. Krushnic, supra, and Ickes v. Virginia-Colorado Development Corporation, supra, the defendant's predecessors in office and various officials and employees of the Department repeatedly and publicly affirmed that the decisions in the assessment work contest proceedings, including Contests Nos. 11,757, 11,759 and 11,761, were null and void; that from 1935 until 1962, the defendant and his predecessors in office issued land patents covering at least 74,000 acres of oil shale claims which had been declared null and void in assessment work proceedings such as those here involved, and which were in all respects of fact and law the same as the mining claims referred to above in which plaintiffs allege to have an interest. Plaintiffs argue that by reason of these acts the Department has adopted a rule of law, which cannot be retroactively altered, that the assessment work contests had no effect on the validity of mining claims. It is further alleged that the plaintiffs and their predecessors in interest have relied upon the rule of law purportedly adopted by the Department.

In 1962, plaintiff Energy Resources and others applied for patents on certain mining claims which had been the subject of departmental contest proceedings during 1930-1933 involving issues identical to those raised in Contest Nos. 11,757, 11,759 and 11,761. On February 16, 1962, the Manager of the Colorado Land Office, Bureau of Land Management, issued an opinion rejecting the applications on the ground that while the original cancellations may have been erroneous as a matter of law at the time they were made, the principles of finality of administrative action, estoppel by adjudication, and res judicata prevent their now being challenged and consequently bar the patenting of such claims. The Manager's decision was affirmed by the Solicitor of the Department on April 17, 1964. Union Oil Company of California, et al., 71 I.D. 169 (1964). The plaintiffs assert that they have exhausted their administrative remedies and that the case is now ready for judicial review. They seek a mandatory injunction compelling the Department to expunge from Department records any decisions, orders, judgments or cancellations entered with respect to the mining claims of plaintiffs in Contests Nos. 11,757, 11,759 and 11,761. They also seek a declaratory judgment declaring such contest proceedings to be of no effect, and an injunction barring the Department from relying upon them to bar their patent applications, and any further relief appropriate.

Civil Action No. 8685

Plaintiffs Umpleby, a Texas citizen, and Wasatch Development Company, a Colorado corporation, seek similar relief in regard to certain mining claims in Garfield County, Colorado, known as the Carbon and Elizabeth claims. Plaintiff Umpleby is a successor in interest from the original claimants and the alleged owner of an undivided thirteen and one-half per cent interest in the unpatented Carbon Nos. 1 through 6 and Elizabeth Nos. 1 through 12 oil shale placer mining claims. Plaintiff Wasatch Development Company is a successor in interest from the original claimants and the alleged owner of an undivided eighty-six and one-half per cent interest in these claims. The claims were allegedly located in 1918, prior to the enactment of the Mineral Leasing Act.

These claims were also the subject of a contest proceeding, Contest No. 12029, initiated by the Department against Umpleby and others in 1929, in which they were declared invalid for failure to perform annual assessment work. On September 8, 1959, plaintiffs filed application for mineral patent (Colo. 030979) on the Carbon Nos. 1 through 4 and Elizabeth Nos. 1, 2, 4 through 12 claims. In Union Oil Company of California, et al., supra, the Land Office Manager's rejection of this patent application was affirmed by the Solicitor. Plaintiffs make assertions similar to those made by plaintiffs in Civil Action No. 8680. They seek a declaration that the Union Oil Company decision is void because of the Supreme Court's decisions in Wilbur v. United States ex rel. Krushnic, supra, and Ickes v. Virginia-Colorado Development Corporation, supra, and the Department's subsequent affirmance thereof, and pray for a mandatory injunction compelling the Department to take such action as is necessary to issue patents to them.

Civil Action No. 8691

In this action, plaintiffs Napier and Grace...

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