Rosette, Inc. v. U.S.
| Decision Date | 15 September 1999 |
| Docket Number | No. CIV.93-1379BB/JHG.,CIV.93-1379BB/JHG. |
| Citation | 64 F.Supp.2d 1116 |
| Parties | ROSETTE, INC., et al., Plaintiffs, v. UNITED STATES of America, et al., Defendants. |
| Court | U.S. District Court — District of New Mexico |
Stephen E. Hosford, Steven L. Hernandez, Hubert & Hernandez, Las Cruces, NM, for Plaintiffs.
John W. Zavitz, Assistant U.S. Attorney, Albuquerque, NM, for Defendants.
THIS MATTER is before the Court on Defendant/Counter-Plaintiff's Motion for Summary Judgment (Doc. 125) on its Second Amended Counterclaim (Doc. 122), filed February 12, 1999. This is an action by the United States against Plaintiffs to enjoin Plaintiffs from utilizing or attempting to utilize in any manner certain geothermal resources within the lands covered by a BLM geothermal lease.
Plaintiff Rosette, Inc., (hereinafter "Rosette" or Plaintiffs) owns the surface estate to certain real property in Section 7, Township 25 South, Range 19 West, Hidalgo County, New Mexico ("Section 7"). Plaintiffs trace their title to patents from the United States, issued under the Stock-Raising Homestead Act ("SRHA") enacted December 29, 1916. 43 U.S.C. §§ 299, 301 (1994); Law of Mar. 4, 1923, ch. 245, § 2, 42 Stat. 1445 (repealed 1976); Law of Dec. 29, 1916, ch. 9, §§ 1-8, 10, 39 Stat. 862-64, 65 (repealed 1976). Under these patents, the primary Defendant, the United States of America (hereinafter "the Government" or Defendant), reserved "all the coal and other minerals in the land so entered and patented, together with the right to prospect for, mine, and remove same pursuant to the provisions and limitations of the Act of December 29, 1916."
Several wells were drilled in the eastern half of Section 7 in the late 1940s and early 1950s. Water as hot as 240~Fahrenheit was encountered during this drilling. In 1970, Congress enacted the Geothermal Steam Act, 30 U.S.C. §§ 1001-1028 (1994). This Act granted the Secretary of the Interior authority to lease geothermal resources owned or reserved by the United States.
Plaintiffs are a collection of related corporations controlled by Dale Burgett or members of his immediate family. In 1977, Burgett Investment, Inc., entered into a geothermal lease agreement with Thermal Power Associates, Inc. ("Thermal"). At that time, Thermal was the surface owner of certain land in the eastern half of Section 7. Dale Burgett constructed his first greenhouse on Section 7 in 1978. Also in 1978, the Government offered the geothermal resources under Section 7 pursuant to a Geothermal Resource Lease. Dale Burgett bid on the lease, but Amax Exploration, Inc. ("Amax"), was selected as the successful bidder. Dale Burgett then met with Government employees to discuss the manner of calculating royalties for his use of the geothermal energy under the Amax lease.
In December of 1978, Burgett Investment, Inc., entered into an agreement with Amax to use the geothermal resources under Section 7 for commercial greenhouse purposes. Under the agreement, Burgett Investment, Inc., was designated as an operator under the Amax lease. Burgett agreed to make royalty payments in the amount and manner required by the Government under the lease, and specifically agreed to be "... bound in the conduct of its operations by the terms and conditions of the federal lease to be issued AMAX ...." The lease was issued to Amax in 1979 and Burgett Investment, Inc., was formally designated as an operator under the lease. The Amax lease has been subsequently assigned but Burgett Investment, Inc., has remained the primary operator. Plaintiffs presently have nine commercial greenhouses on Section 7. The geothermal wells used by Plaintiffs to heat the greenhouses are all located in the eastern half of Section 7. The irrigation wells used by Plaintiffs are separate and located outside Section 7.
In 1993, Rosette filed suit against the United States claiming that geothermal resources are not reserved minerals under the SRHA, and, therefore, that the United States lacks the authority to regulate them. The complaint was styled as one for quiet title, ejectment, declaratory judgment, and permanent injunction. In 1996, this Court dismissed Plaintiffs' claims on statute of limitations grounds. (Mem. Op. and Ord. dated Oct. 10, 1996.) Plaintiffs appealed, and the Tenth Circuit affirmed. Rosette, Inc. v. United States, 141 F.3d 1394 (10th Cir.1998). The Government's current motion requires this Court to now consider ownership of the geothermal resources.
Summary judgment is appropriate if there is no genuine issue of material fact and the moving party is entitled to judgment as a matter of law. Fed.R.Civ.P. 56(c). When applying this standard, the Court "examine[s] the factual record and reasonable inferences therefrom in the light most favorable to the party opposing summary judgment." Applied Genetics Int'l, Inc. v. First Affiliated Sec., Inc., 912 F.2d 1238, 1241 (10th Cir.1990). The moving party bears the initial burden of showing the absence of a genuine issue of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 325, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). Only then does the burden shift to the non-movant to come forward with evidence showing that there is a genuine issue of material fact. Bacchus Indus., Inc. v. Arvin Indus., Inc., 939 F.2d 887, 891 (10th Cir.1991). The non-moving party may not avoid summary judgment by resting upon the mere allegations or denials of their pleadings. Id. The Court will consider the motion for summary judgment in light of these standards.
In December 1998, Defendant filed the Second Amended Counterclaim for preliminary and permanent injunction and damages. Defendant sets forth the basis of the dispute in the following terms:
7. By willfully attempting to use the geothermal resources deeper than 1000 feet without authority from the United States and the lessee, Plaintiffs have committed or are now committing a trespass upon the property of the United States.
8. Plaintiffs should be liable to the United States for any damages are [sic] incurred due to the trespass, including the cost of recapping and plugging the well.
(Doc. 122). In a Cross Motion for Summary Judgment, Rosette offers as an affirmative defense that by virtue of Rosette's patents giving Plaintiffs ownership of the surface lands described in their complaint, Rosette owns and has title to the disputed resources. (Doc. 124).
Beneath the land owned by Plaintiffs are sources of geothermal steam that travel through wells to heat Plaintiffs' greenhouses. The surface lands were patented under the SRHA. All patents issued under the Act are "subject to and contain a reservation to the United States of all the coal and other minerals in the lands so entered and patented, together with the right to prospect for, mine, and remove the same." 43 U.S.C. § 299 (emphasis added). Section 299 further provides that "[t]he coal and mineral deposits in such lands shall be subject to disposal by the United States in accordance with the provisions of the coal and mineral land laws in force at the time of such disposal." Id. The patents issued on the lands in Section 7 contain a reservation conforming to the words of the statute.1 The issue at the heart of this case is whether the right to use geothermal as a heat source for the greenhouses passed to Plaintiffs or was retained by the United States under this reservation, i.e., is geothermal reserved as an "other mineral." This Court finds that pursuant to the SRHA, the geothermal resources located under the patented land are retained by the United States.
The language of the SRHA contains no specific reference to geothermal resources. This is hardly surprising as this Act was passed by Congress in 1916. Since that time, vast technological advances have made it possible to locate and develop resources, like geothermal, that were inconceivable in 1916. However, the question is not whether given what modern science has uncovered about the nature of geothermal steam it makes sense to regard it as part of the surface water, but how Congress would have viewed the issue in 1916. See Amoco Prod. Co. v. Southern Ute Indian Tribe, 526 U.S. 865, ___, 119 S.Ct. 1719, 1724, 144 L.Ed.2d 22 (1999). This determination turns on whether Congress intended the statute to be read broadly, thus incorporating geothermal as a mineral in the Act, or narrowly, excluding geothermal as a mineral because it is not specifically reserved by name in the statute. In Amoco, the Supreme Court used the SRHA as an illustration of a broad mineral reservation. The issue in Amoco was whether in applying the Coal Lands Act of 1909 and 1910, the "coal" reserved by the Government included the methane gas trapped within the coal beds. Writing for the Court, Justice Kennedy contrasted the narrow reservation of "coal in those statutes with the broad reservation of `all the coal and other minerals'" in the SRHA saying:
The limited nature of the 1909 and 1910 Act reservations is confirmed by subsequent congressional enactments. When Congress wanted to reserve gas rights that might yield valuable fuel, it did so in explicit terms. In 1912, for example, Congress enacted a statute that reserved "oil and gas" in Utah lands. Act of Aug. 24, 1912, 37 Stat. 496. In addition, both the 1912 Act and a later Act passed in 1914 continued the tradition begun in the 1909 and 1910 Acts of reserving only those minerals enumerated in the statute. See ibid.; Act of July 17, 1914, 38 Stat. 509, as amended, 30 U.S.C. §§ 121-123 (). It was not until 1916 that Congress passed a public lands...
To continue reading
Request your trial
-
Rosette, Inc. v. U.S. Dept. of the Interior
...Stock-Raising Homestead Act. See Rosette Inc. v. United States (Rosette I), 141 F.3d 1394 (10th Cir.1998); Rosette, Inc. v. United States (Rosette II), 64 F.Supp.2d 1116 (D.N.M.1999); Rosette Inc. v. United States (Rosette III), 277 F.3d 1222 (10th {6} Rosette uses water from separate wells......