Oil Shale Corporation v. Morton, C-8680

• Decision Date: 19 December 1973
• Docket Number: C-9202.,C-8691,C-8685,No. C-8680,C-8680
• Citation: 370 F. Supp. 108
• Parties: The OIL SHALE CORPORATION and Energy Resources Technology Land, Inc., Plaintiffs, v. Rogers C. B. MORTON, Secretary of the Interior, Defendant. Joseph B. UMPLEBY et al., Plaintiffs, v. Rogers C. B. MORTON, Secretary of the Interior, Defendant. Barnette T. NAPIER et al., Plaintiffs, v. Rogers C. B. MORTON, Secretary of the Interior, Defendant. Penelope Chase BROWN et al., Plaintiffs, v. Rogers C. B. MORTON, Secretary of the Interior, Defendant.
• Court: U.S. District Court — District of Colorado

370 F. Supp. 108

The OIL SHALE CORPORATION and Energy Resources Technology Land, Inc., Plaintiffs, v. Rogers C. B. MORTON, Secretary of the Interior, Defendant.

Joseph B. UMPLEBY et al., Plaintiffs, v. Rogers C. B. MORTON, Secretary of the Interior, Defendant.

Barnette T. NAPIER et al., Plaintiffs, v. Rogers C. B. MORTON, Secretary of the Interior, Defendant.

Penelope Chase BROWN et al., Plaintiffs, v. Rogers C. B. MORTON, Secretary of the Interior, Defendant.

Nos. C-8680, C-8685, C-8691, C-9202.

United States District Court, D. Colorado.

December 19, 1973.

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Warren O. Martin, Denver, Colo., for plaintiffs in C-8685.

Samuel R. Freeman, Denver, Colo., for plaintiffs in C-8691.

Fowler Hamilton, Richard W. Hulbert, New York City, James B. Dean, Denver, Colo., Donald L. Morgan, Washington, D. C., for plaintiffs in C-8680 and C-9202.

Thomas L. McKevitt, Atty., Dept. of Justice, Washington, D. C., John R. Little, Jr., Acting Regional Sol., Lowell Madsen, Dept. of Interior, Denver, Colo., for defendant.

MEMORANDUM OPINION AND ORDER

FINESILVER, District Judge.

These cases concern the present validity of certain oil shale claims located on the Colorado Western Slope. The Department of the Interior refused to issue mineral patents to the claim owners, asserting that the claims were declared void in Departmental contest proceedings some forty years ago. The claimants contend that the Department erred in denying patents on this basis, since the contest proceedings themselves were voided and vacated by the Secretary of the Interior in 1935.

The issues presented in this case are exceedingly complex and technical, and matters have been further complicated by the fact that these cases are in their tenth year of litigation, after a series of appeals culminating in a remand to this Court by the United States Supreme Court.

As a result, the Court is of the opinion that our discussion below will be better understood if we preface it with a brief encapsulation of our holdings herein. The Court holds as follows:

A. The denial of patents was erroneous and warrants remand to the Interior Department for reprocessing of the patent applications rejected.

B. The denial was erroneous because the contest proceedings which provided the basis therefor were vacated by the Secretary of the Interior in The Shale Oil Company, 55 I.D. 287 (1935), and are of no present effect.

C. In addition to the vacation of the contest proceedings, the Secretary and Department of Interior consistently stated, from 1935 until the early 1960's, that these old contest proceedings did not operate to render oil shale claims invalid. Also regulations were adopted and in force during this period declaring this to be the Department's official position.

D. The Department cannot now retroactively reverse its long standing position on these old contest proceedings, and the Court holds that the Government is estopped from denying patents on the basis of those proceedings.

E. This does not mean that the claimants are entitled to patents, or that their claims are valid on all grounds. We merely hold that the claims are not invalid by virtue of the old contest proceedings, and that Interior's action in denying patents on the basis of the old contest proceedings was erroneous.

F. On remand to the Interior Department for reprocessing of the patent applications, all bases for the claims' invalidity are to be considered, as directed by the Supreme Court in Hickel v. TOSCO, 400 U.S. 48, 91 S.Ct. 196, 27 L. Ed.2d 193 (1970).

G. In addition to the substantive error of Interior in denying patents on the basis of the old contest proceedings, the Departmental processing of the patent applications was procedurally defective and warrants a remand for reprocessing to correct these procedural defects.

H. On remand for reprocessing the Administrative Procedures Act is to be employed in an adversary, evidentiary hearing on all issues, not yet decided, which may invalidate these claims. Fraud, abandonment and discovery are to be considered on remand as the Supreme Court directed in TOSCO, supra.

I. Since we hold the old contest proceedings to be vacated and of no present effect, we need not consider the issues of the appropriateness of judicial review of those proceedings at this time, nor of the adequacy of service of process therein. This is consistent with the Supreme Court's remand instructions. TOSCO, supra, at p. 58.

J. Plaintiff TOSCO, in C-8680, did not file a patent application, and is thus in a different position from that of the other plaintiffs. TOSCO seeks a determination in the nature of a declaratory judgment as to the present effect of the old contest proceedings. As already stated, we hold those contest proceedings to have been vacated and to be of no present effect to invalidate oil shale claims. Should TOSCO file a patent application however, all other issues relating to the validity of its claims will be open in the processing of its patent application, subject to proper procedural safeguards in the resolution of those other issues by Interior.

I. INTRODUCTION AND OVERVIEW

In this consolidated proceeding plaintiffs generally seek to obtain judicial review and relief with respect to administrative proceedings within the Department of Interior concerning the validity of a number of unpatented oil shale placer mining claims located on the Green River Formation in Colorado. The subject claims were located under the provisions of the Mining Act of 1872, now 30 U.S.C. Section 21 et seq., prior to the enactment of the Mineral Leasing Act of 1920, now 30 U.S.C. Section 181 et seq.

Plaintiffs Umpleby, Napier and Brown, in C-8685, C-8691 and C-9202 respectively, seek mandatory orders compelling the Interior Department to issue patents to them on their oil shale claims; plaintiff TOSCO in C-8680, desires a declaratory judgment regarding the validity of its claims.

In the interest of brevity the recitations of specific facts respecting plaintiffs' claims are herein adopted as set forth in the Appendix to the Supreme Court's opinion in Hickel v. TOSCO, supra, at 400 U.S. 59 ff., 91 S.Ct. 196 and the original district court opinion in these cases, Oil Shale Corp. v. Udall, 261 F.Supp. 954 (D.C.Colo.1966).

In 1962, the Manager of the Colorado Land Office, Bureau of Land Management, Department of the Interior, rejected the patent applications of plaintiffs Umpleby, Napier and Brown. The asserted basis for this rejection was the existence of decisions, entered in contest proceedings initiated against the claims in the 1930's by the Department, declaring the claims void for failure to perform annual assessment work thereon.

The Manager's decision was affirmed by the Solicitor of the Interior Department, sitting for the Secretary, in Union Oil Co., 71 I.D. 169 (1964).

Shortly thereafter, the plaintiffs brought an action in the United States District Court for the District of Colorado seeking judicial review of these Departmental actions. Their argument on that review should be briefly sketched at this point, to make the judicial holdings thereon comprehensible.

MINERAL LEASING ACT

The Mineral Leasing Act had forbidden location of new oil shale claims after the date of its enactment, February 25, 1920, and provided that thereafter oil shale and other fossil fuels could only be extracted on a lease basis, and the land containing such minerals could not pass into private ownership based on new claims being filed and reduced to patent, The Act contained a "savings clause" however, Section 37 of the Act, 30 U.S. C. Section 193, which provided that claims located prior to the enactment of the Act could be reduced to patent and pass into private ownerhip, if "thereafter maintained in compliance with the laws under which initiated." 30 U.S.C. § 193.

One of the provisions of the general mining law, 30 U.S.C. § 28, provided that unless a claimant performed $100 worth of assessment work on his claim in each year, that claim would be ripe for relocation by another claimant.^*

While at first blush a salutary provision, the course of recent mining history reflects that Section 37 of the Leasing Act has prompted more uncertainty and given rise to more litigation than any other provision of the mining laws.¹

Controversy as to the interpretation of this section has surfaced mainly in connection with the necessity of assessment work to maintain oil shale claims. The series of Supreme Court decisions cited and discussed below are illustrative of the disputes and uncertainties that have prevailed in this critical area for over forty years.

Continued litigation has flowed from TOSCO, supra, creating an understandable and realistic uneasiness in the nation's mining industry. Certainly the interest of the United States, in the face of serious energy crises, would be better served by establishing a semblance of stability in interest in oil shale lands, rather than continuing the uncertainties created by litigation over the infinite interpretation of an ambiguous statute.^**

A close reading of case law and Interior decisions, rules, and directives clearly reflects a quagmire of inconsistent holdings and interpretations. A title examiner called upon to examine the title status of pre-1920 oil shale claims and patents on such claims would have difficulty expressing a clear opinion as to claim or title status.

PRIOR PROCEEDINGS IN THIS LITIGATION

SUPREME COURT REMAND

In the early 1930's, the Interior Department contested a great number of oil shale claims on the grounds that assessment work had not been performed during certain years, and declared the claims void because of this non-compliance with 30 U.S.C. § 28.

In the judicial review in the district court, plaintiffs argued that these voidances of their claims in the 1930's were themselves invalid, because there had been no subject matter jurisdiction for the Department to...