Orion Reserves Ltd. Partnership v. Salazar

• Decision Date: 23 January 2009
• Docket Number: No. 07-5281.,No. 07-5290.,07-5281.,07-5290.
• Citation: 553 F.3d 697
• Parties: ORION RESERVES LIMITED PARTNERSHIP, Appellee/Cross-Appellant v. Ken SALAZAR, Secretary, U.S. Department of the Interior, et al., Appellants/Cross-Appellees.
• Court: U.S. Court of Appeals — District of Columbia Circuit

553 F.3d 697

ORION RESERVES LIMITED PARTNERSHIP, Appellee/Cross-Appellant v. Ken SALAZAR, Secretary, U.S. Department of the Interior, et al., Appellants/Cross-Appellees.

No. 07-5281.

No. 07-5290.

United States Court of Appeals, District of Columbia Circuit.

Argued September 16, 2008.

Decided January 23, 2009.

Appeals from the United States District Court for the District of Columbia (No. 04cv00791).

Robert H. Oakley, Attorney, U.S. Department of Justice, argued the cause for appellants/cross-appellees. With him on the briefs was Ellen J. Durkee, Attorney. R. Craig Lawrence, Assistant U.S. Attorney, entered an appearance.

Donald L. Morgan argued the cause and filed the briefs for appellee/cross-appellant.

Before: GINSBURG, GARLAND, and GRIFFITH, Circuit Judges.

Opinion for the Court filed by Circuit Judge GRIFFITH.

GRIFFITH, Circuit Judge:

This appeal involves a challenge by Orion Reserves Limited Partnership (Orion) to a decision of the Department of the Interior (Interior) invalidating 156 oil shale mining claims on federal land. The district court concluded that Interior's decision was arbitrary and capricious. We reach the opposite conclusion, which is compelled by the Supreme Court's holding in Hickel v. Oil Shale Corp., 400 U.S. 48, 91 S.Ct. 196, 27 L.Ed.2d 193 (1970), that when a party substantially fails to perform the assessment work required by federal law it loses its claim to mine oil shale.

I.

A.

To encourage mining in the western United States, Congress enacted the General Mining Law of 1872 (Mining Law), 30 U.S.C. §§ 22-54 (2000), declaring valuable mineral deposits in federal lands "open to exploration and purchase," id. § 22. The Mining Law provides that citizens may stake, or "locate," claims to extract minerals without prior government permission and without paying royalties to the United States. Id. § 26. Claimants may also apply for purchase of a deed, or "patent," conveying full legal title to the land on which their claims are located. Id. § 29.

Even without a patent, claimants can maintain their mining rights indefinitely so long as they comply with federal, state, and local requirements. Id. §§ 26, 28. Among these obligations is a duty to perform annual assessment work. The Mining Law requires that "until a patent has been issued therefor, not less than $100 worth of labor shall be performed or improvements made during each year." Id. § 28. When a claimant fails to perform this annual assessment work, his claim is "open[ed] to relocation ... as if no location of the [mineral deposit] had ever been made." Id. In other words, if a claimant does not complete the required annual labor or improvements, he will lose his rights in the land to a competing claimant who does. If, however, a claimant who has failed to perform assessment work later resumes work before anyone else has staked a competing claim, his original claim remains intact under a statutory exception known as the "resumption provision." Id. After passage of the Mining Law, Interior promulgated regulations stating that failure to perform required annual assessment work would "subject a claim to relocation" unless the claimant "resumed work after such failure and before relocation." Nature and Extent of Mining Claims, 37 Pub. Lands Dec. 757, 759 (1909).

The Mineral Leasing Act of 1920 (Leasing Act), 30 U.S.C. §§ 181-287, authorized Interior to take a more active role in regulating mining on federal lands. Replacing the system of location and patent for oil shale (and several other minerals), the Leasing Act requires new claimants to lease mined land from the Secretary of the Interior and to pay the federal government annual rental fees and royalties to obtain "the privilege of mining, extracting and disposing of" valuable minerals. Id. § 241. Of relevance here, claims made under the Mining Law's system of location and patent were preserved under a "savings clause," provided those claims were "thereafter maintained in compliance with the laws under which initiated." Id. § 193. Interior subsequently promulgated revised regulations with a preface noting that regulations associated with the Mining Law no longer apply to minerals, like oil shale, listed in the Leasing Act, "except as to valid claims" existing at the enactment of the Leasing Act "and thereafter duly maintained pursuant to the law under which located." Nature and Extent of Mining Claims, 49 Pub. Lands Dec. 58, 58 Note (1923).

B.

This case involves Orion's attempt to patent 156 oil shale mining claims in Uintah County, Utah that its original predecessor-in-interest located between 1917 and 1919 under the Mining Law. It was not until 1988, however, that another of Orion's predecessors filed patent applications for the claims. In the course of reviewing these applications, the Bureau of Land Management (BLM), a division of Interior, challenged two of Orion's claims, alleging they were invalid because, among other things, Orion's predecessors had failed to perform annual assessment work for significant periods of time. The parties agreed to put the matter on hold until Interior finished processing Orion's other patent applications. The BLM continued its investigation of Orion's claims and discovered a substantial number of years between 1920 and 1970 in which no affidavits, required annually by state law as a record that assessment work was completed, were filed. Although work records differ for each of the 156 claims, with lapses apparently ranging from 18 to 50 years, it was not until 1970 that Orion's predecessors consistently performed at least $100 worth of assessment work each year and made the requisite filings. On this basis, the BLM declared Orion's 156 oil shale claims void. Crippled Horse Invs., L.P., 3833 (UT932-OA) UMC65858 (Bureau Land Mgmt. Sept. 2, 1999) (Crippled Horse I).

Orion appealed the BLM's decision to the Interior Board of Land Appeals (IBLA).¹ Orion did not dispute the missing assessment work records, but argued that it had nevertheless preserved its claims under longstanding judicial and departmental interpretations of federal law, requiring only that Orion resume annual work at some time, which it had done. The IBLA rejected Orion's argument and concluded that Supreme Court precedent requires that claimants "substantially satisfy" the Mining Law's annual assessment work obligation in order to maintain claims under the Leasing Act's savings clause. Crippled Horse Invs., L.P., 161 I.B.L.A. 264, 273-74 (2004) (Crippled Horse II). Orion's ultimate resumption of work in 1970 could not revive claims forfeited by its decades-long failure to perform the required annual assessment labor or improvements. Id. at 277. Orion's failure to file work affidavits for numerous years made out a prima facie case that the work was not performed in those years. Id. at 274-75. Because Orion did not proffer evidence that assessment work was in fact done in years for which no affidavits were filed, the IBLA held that its claims were invalid. Id. at 277.

Orion brought suit in the United States District Court for the District of Columbia challenging the IBLA decision under the Administrative Procedure Act. The district court bifurcated the case, addressing first the merits of the IBLA decision and postponing until later Orion's separate and contingent claim that Interior failed to process its patent applications in a timely fashion. On March 31, 2006, the court granted Orion's motion for summary judgment, reasoning that Orion and its predecessors-in-interest were entitled to rely on the resumption exception to maintain their claims because Interior's regulations allowed for such a resumption privilege when Orion resumed annual assessment work in 1970. Orion Reserves Ltd. P'ship v. Norton, No. 04-0791, slip op. at 8-12 2006 WL 1126810 (D.D.C.2006) (Norton).²

On June 28, 2007, the district court took up the question whether Interior unreasonably delayed action on Orion's patent applications. Orion Reserves Ltd. P'ship v. Kempthorne, 516 F.Supp.2d 8 (D.D.C. 2007) (Kempthorne). The court concluded that "the delay in processing Orion's patent applications ha[d] not been unreasonable," especially given several administrative and congressional moratoria on claim processing, the unusually large size of the land at issue, limited BLM resources, and the complex legal issues involved. Id. at 14-15. The court remanded the proceedings to Interior for further action, but ordered the BLM to file quarterly reports detailing progress made in processing Orion's patent applications. Id. at 16-17.

Interior filed a timely notice of appeal and challenges the district court's conclusion that Orion's repeated and extended failure to perform annual assessment work did not forfeit its oil shale claims. Orion cross-appeals, arguing that Interior unreasonably delayed processing its patent applications. Orion has also lodged a "conditional cross-appeal" asking this court to consider several alternative grounds for affirmance in the event we conclude that the district court's decision on the merits was in error. See Sea-Land Serv., Inc. v. Dep't of Transp., 137 F.3d 640, 649 (D.C.Cir.1998) (recognizing this circuit's willingness to entertain an otherwise prevailing party's conditional cross-appeal seeking affirmance on alternative grounds).

We have jurisdiction under 28 U.S.C. § 1291 and review the summary judgment decision de novo. See Stolt-Nielsen Transp. Group Ltd. v. United States, 534 F.3d 728, 732 (D.C.Cir.2008). Upon concluding that the district court's decision on the merits was in error, we take up and find wanting each of Orion's alternative arguments. We need not reach Orion's unreasonable delay claim because we conclude that Orion's mining claims are no longer valid and therefore no longer need patent processing.

II.

The IBLA's determination that Orion had forfeited its oil shale mining claims, and the district court's conclusion that it had not, turn on undisputed...