Sheridan-Wyoming Coal Co. v. Krug

• Decision Date: 31 January 1949
• Docket Number: No. 9946.,9946.
• Citation: 84 US App. DC 288,172 F.2d 282
• Parties: SHERIDAN-WYOMING COAL CO., Inc. v. KRUG.
• Court: U.S. Court of Appeals — District of Columbia Circuit

84 US App. DC 288, 172 F.2d 282 (1949)

SHERIDAN-WYOMING COAL CO., Inc. v. KRUG.

No. 9946.

United States Court of Appeals District of Columbia Circuit.

Argued December 9, 1948.

Decided January 31, 1949.

Mr. T. Peter Ansberry and Mr. Stephen J. McMahon, Jr., both of Washington, D. C., for appellant.

Mr. Roger P. Marquis, of Washington, D. C., Attorney, Department of Justice, with whom Mr. A. Devitt Vanech, Asst. Atty. Gen., and Mr. John C. Harrington, of Washington, D. C., Attorney, Department of Justice, were on the brief, for appellee.

Mr. Ward E. Lattin, of Washington, D. C., filed a brief on behalf of Big Horn Coal Company as amicus curiae, urging affirmance.

Before EDGERTON, CLARK and PRETTYMAN, Circuit Judges.

PRETTYMAN, Circuit Judge.

The Sheridan-Wyoming Coal Company, Inc., brought a civil action in the District Court of the United States for the District of Columbia to restrain the Secretary of the Interior from delivering to the Big Horn Coal Company certain leases for federal coal lands. The Secretary moved to dismiss. The court granted that motion upon the grounds that plaintiff had no standing to sue and that the power of the Secretary to grant coal leases is discretionary, not subject to judicial review, and not diminished or restricted by his regulations, specifically Section 193.3 of Title 43, Code of Federal Regulations. Sheridan-Wyoming appealed.

Upon the appeal, this court agreed with the District Court that merely as a member of the coal industry threatened with a new competitor, Sheridan-Wyoming had no standing to sue, citing Alabama Power Co. v. Ickes¹ and similar cases. But Sheridan-Wyoming argued that it was a lessee of federal coal lands, that the regulation mentioned (43 Code Fed.Regs. § 193.3) was part of its lease, and that it thus had a property right threatened with invasion by the proposed leases to Big Horn, relying upon Baltimore & Ohio R. R. v. United States² and similar cases. As to that contention, this court said:³

"The difficulty with the contention in the present case is that no such claim was stated in the complaint. Appellant did not allege in its complaint that it was or is the lessee of federal coal lands, or indicate the nature, content or extent of any lease."

This court, therefore, refused to consider the contention and affirmed the judgment of the District Court but in the mandate gave that court authority to entertain a motion to amend the complaint. Such a motion was presented, offering an amended complaint which contained an allegation that Sheridan-Wyoming was a lessee of federal coal lands, attaching a copy of the lease, and otherwise alleging the facts concerning the lease theretofore presented in the course of the argument in this court. The District Court denied the motion to amend, saying:

"It is the opinion of this Court that the proposed new matter adds nothing material to the claim and issue presented by plaintiff in its original complaint and, hence, granting leave to amend the complaint by adding the proposed new matter would be idle and would needlessly prolong the litigation."

It seems to us perfectly clear that the proposed amendment did add something new and material to the claims and issue presented by the plaintiff. The status of one suing merely as a member of an industry to enjoin threatened competition, and the status of one claiming a property right by contract, threatened with invasion, are wholly different.⁴ The original complaint in the present case rested on the former status. The amended complaint rested also upon the latter. Moreover, we think this court made clear in its opinion upon the first appeal that plaintiff's rights as a member of the coal industry and its rights as owner of a property right by contract were different. We held that as the former it had no standing to sue. But we pointed out that under the Baltimore & Ohio and kindred cases persons claiming protection against threatened invasion of property rights, created by contract upon valid regulations, were entitled to sue.

It is true that the language in the mandate from this court upon the first appeal was, in part: "with leave to the District Court to dispose of such motion, if made, in such manner as in its discretion seems proper". It is elementary that a trial court has wide discretion in respect to amendments which are not of right. But that discretion may be controlled by the opinion of this court, and the discretion mentioned in the mandate was likewise circumscribed by that opinion. Moreover, such discretion as the trial court had, or was given, could not deprive this court of its appellate jurisdiction over decisions of that court upon questions of law. The Supreme Court, in United States v. Lehigh Valley R. R.,⁵ had for consideration a refusal of a trial court to permit an amendment in a matter governed by the opinion of the Supreme Court in a prior appeal. The Court held the refusal to be "an absolute abuse of discretion" and expressed the extent of its meaning by adding "even although such abuse was obviously occasioned by a misconception of the character of the action of this court and the scope of the mandate."

We now adhere to our original view that plaintiff's status as a lessee of federal coal lands under a lease which incorporated a valid regulation governing such leases, would be materially different from its status as a mere member of the coal industry. Since the District Court denied the motion to amend upon a contrary view of that proposition, and upon that contrary view alone, its judgment must be reversed.

Both appellant and appellee have now twice argued fully before this court the nature of Sheridan-Wyoming's status as lessee under its lease and the regulation which is involved. This litigation has already consumed a long time. Therefore, in remanding the case for further proceedings, we deem it to be in the interest of justice that we now express our view upon that question for the guidance of the District Court in those further proceedings.

We must first have a careful understanding of what is shown by the record to have occurred. Those events relate to Sheridan-Wyoming's lease, the Departmental regulation, Big Horn's application for a lease, and the Secretary's proposed disposition of that application.

Sheridan-Wyoming's Lease. The coal lands involved are in and around Monarch, Wyoming. The coal is a low-grade subbituminous, known as Sheridan area coal. It is high in moisture and almost wholly lacking in stocking qualities. Consumers buy it for immediate use, and mines producing it are unable to maintain steady production throughout the year.

Sheridan-Wyoming was organized in 1920. Substantial portions of the investment in its operations were made long prior to 1934, when the regulation hereinafter discussed was promulgated. It had been a lessee of federal coal lands for many years. Its present lease was executed in September, 1943.

The Regulation of the Department. In 1933 or thereabouts the Department became concerned over the plight of the coal industry upon its lands "and the dread effect of that menacing history upon the public interest." The leasing act⁶ gave the Secretary discretionary power to issue coal leases and to withdraw coal lands from lease.⁷ In 1934 he wrote letters to the Director of the Bureau of Geological Survey and to the Commissioner of the General Land Office containing identical language as follows:

"In the present situation of the coal industry it is desirable that very few, if any, new coal leases or prospecting permits be issued.

"Taking into consideration, however, that there may be some cases where new small coal mines for local needs are advisable and that there may also be cases where leases for shipping mines should not be denied, it is thought that no general order should be issued in effect suspending the leasing act as to new coal leases and prospecting permits. It is believed that substantially the same result can be reached by declining to offer coal lands for lease or to grant prospecting permits unless an actual need is shown for coal which cannot otherwise be reasonably purchased or obtained."

Thereupon the Secretary promulgated the following regulation:

"The General Land Office will make favorable recommendation that leasing units be segregated and that auctions be authorized only in cases where there has been furnished a satisfactory showing that an additional coal mine is needed and that there is an actual need for coal which cannot otherwise be reasonably met."

This regulation was duly published in the Federal Register as part of the Code of Federal Regulations.⁸

Subsequently the regulation was construed by the Department thus: "In such case i. e., where there is already sufficient productive capacity in the vicinity to meet the demands of the market, the rule of the Department precludes the granting of an additional coal lease (43 Code Federal Regulations 193.3)."⁹ In the proffered amended complaint, it is alleged that that ruling represents the heretofore uniform rule of the Department for fourteen years.

Big Horn's Application. The Big Horn Coal Company was incorporated on December 20, 1943. Prior to that incorporation, the persons interested had, on December 2, 1943, procured from the State of Wyoming a lease on certain coal lands belonging to that State, which had theretofore been leased to one Turner, who was unable to meet his commitment. On December 18, 1943, still prior to formal incorporation, the Big Horn people applied for a lease of federal lands adjoining those under lease to Sheridan-Wyoming. The complaint alleges that this application was on the ground that federal land was necessary to the commencement of the new mine.¹⁰ Big Horn did not allege or attempt to show that there was or is a market need for additional coal, which showing is the one requisite for a new lease prescribed by the regulation. Big Horn proceeded to mine its State of Wyoming...