Tosco Corp. v. Hodel, Civ. A. No. C-8680

• Court: United States District Courts. 10th Circuit. United States District Court of Colorado
• Writing for the Court: SHERMAN G. FINESILVER
• Citation: 611 F. Supp. 1130
• Parties: TOSCO CORPORATION and Energy Resources Technology Land, Inc., Plaintiffs, v. Donald P. HODEL, Secretary of the Interior, Defendant, Joseph B. UMPLEBY, and Wasatch Development Co., Plaintiffs, v. Donald P. HODEL, Secretary of the Interior, Defendant, Barnette T. NAPIER, Grace A. Savage, Joan L. Savage, Maude B. Farnum, St. Clair Napier Castlin, William H. Farnum, Jr., John R. Farnum, John W. Savage, and Neil S. Mincer, Plaintiff, v. Donald P. HODEL, Secretary of Interior, Defendant, Penelope Chase BROWN, Individually and as a trustee, and Tosco Corporation, Plaintiffs, v. Donald P. HODEL, Secretary of Interior, Defendant.
• Decision Date: 01 May 1985
• Docket Number: C-8691 and C-9202.,Civ. A. No. C-8680,C-8685

611 F. Supp. 1130

TOSCO CORPORATION and Energy Resources Technology Land, Inc., Plaintiffs,
v.
Donald P. HODEL, Secretary of the Interior, Defendant,
Joseph B. UMPLEBY, and Wasatch Development Co., Plaintiffs,
v.
Donald P. HODEL, Secretary of the Interior, Defendant,
Barnette T. NAPIER, Grace A. Savage, Joan L. Savage, Maude B. Farnum, St. Clair Napier Castlin, William H. Farnum, Jr., John R. Farnum, John W. Savage, and Neil S. Mincer, Plaintiff,
v.
Donald P. HODEL, Secretary of Interior, Defendant,
Penelope Chase BROWN, Individually and as a trustee, and Tosco Corporation, Plaintiffs,
v.
Donald P. HODEL, Secretary of Interior, Defendant.

Civ. A. Nos. C-8680, C-8685, C-8691 and C-9202.

United States District Court, D. Colorado.

May 1, 1985.

611 F. Supp. 1131

COPYRIGHT MATERIAL OMITTED

611 F. Supp. 1132

COPYRIGHT MATERIAL OMITTED

611 F. Supp. 1133

COPYRIGHT MATERIAL OMITTED

611 F. Supp. 1134

COPYRIGHT MATERIAL OMITTED

611 F. Supp. 1135

Donald L. Morgan, Cleary, Gottlieb, Steen & Hamilton, Washington, D.C., Richard W. Hulbert, Cleary, Gottlieb, Steen & Hamilton, New York City, James Clark, W.D. Maer, Don Sherwood, Jacques Ruda, Denver, Colo., John W. Savage, Rifle, Colo., for plaintiffs

Gerald S. Fish, Dept. of Justice, Washington, D.C., Robert N. Miller, U.S. Atty., Marla E. Mansfield, Lowell L. Madsen, Lyle K. Rising, U.S. Dept. of Interior, Office of Regional Sol., Denver, Colo., for defendant.

MEMORANDUM OPINION AND ORDER

OUTLINE I. SUMMARIZATION OF HOLDINGS II. INTRODUCTION AND OVERVIEW A. The Litigation B. Mineral Leasing Act of 1920 III. PRIOR PROCEEDINGS IN THIS AND OTHER OIL SHALE LITIGATION A. The Period of the Mineral Leasing Act in 1920 to Department's Change of Policy in 1964 1. Prior to 1920 2. Mineral Leasing Act of 1920 3. 1920's and 1930's 4. Supreme Court Opinions During the Period and Relevant Administrative Rulings: Wilbur v. U.S. Ex Rel. Krushnic (1930) and Ickes v. Virginia-Colorado Development Corp. (1935) 5. The Oil Shale Company (1935 Interior Decision) 6. Union Oil Company (1964 Interior Decision)

611 F. Supp. 1136

B. The Period 1966-1970. Impact Cases: Oil Shale Corp. v. Udall, (D.Colo 1966); Udall v. Tosco (10th Cir.1969); Hickel v. Oil Shale Corp. (Sup.Ct 1970) C. The Period 1970-1980. Additional Court Cases and Administrative Proceedings. Oil Shale Corp. v. Morton, (D.Colo.1973); Oil Shale Corp. v. Morton, (10th Cir.1975); Bohme I (Interior Board Decision 1980) D. Further Litigation on the Issue of What Constitutes Valid Discovery (Supreme Court 1980) E. New Requirement for Valid Discovery Enunciated by Interior: Bohme II (1980 Interior Decision) F. Additional Administrative Decisions: United States v. Weber (1980 Interior Board Decision); United States v. Energy Resources Technology Land, et al., (1983 Interior Board Decision) G. Additional Effort by Interior to Invalidate Patents: United States v. Eaton Shale Company (D.Colo.1977) IV. OIL SHALE BACKGROUND V. THE GEOLOGY OF THE GREEN RIVER FORMATION VI. THE OLD CONTEST PROCEEDINGS ARE NO LONGER A PROPER BASIS FOR DENIAL OF PATENTS SINCE THE INTERIOR DECISION IN THE OIL SHALE COMPANY CASE VII. THE DEPARTMENT'S INTERPRETATION, PRONOUNCEMENTS AND RULES FOLLOWING VIRGINIA-COLORADO HAVE THE FORCE OF LAW, THUS PREVENTING LATER ABROGATION BY INTERIOR IN 1964 A. Effect of Pronouncements, Construction of Statutes and Decisional Law and Promulgation of Rules by Interior B. Summary of Effect of Department of Interior Action from 1935-1961 In Granting Patents Where Claims Had Been Declared Null and Void C. Effect of Congressional Inquiry on Mining Issues: Principle of Application of Contemporaneous Construction by Interior D. The Department's Actions in 1964 were Done in Violation of Claimants' Entitlement to Due Process VIII. DISCOVERY ISSUES: ANALYSIS OF ANDRUS v. SHELL OIL CO. AND FREEMAN v. SUMMERS A. Discussion of Principal Cases and Effect of Congressional Inquiry IX. PERFORMANCE OF ANNUAL ASSESSMENT WORK: EFFECT OF NON-PERFORMANCE A. Nature of Locator's Interest in an Unpatented Mining Claim B. Requirements of Annual Assessment Work C. Burden of Proof as to Annual Work Performance D. Performance of Annual Work: Proof and Timeliness E. Significant BLM Regulation (1972) Dealing with Performance of Assessment Work F. United States v. LockeÔÇöThe United States Supreme Court Interprets Hickel v. Oil Shale Corp. and the Concept of Substantial Compliance; Annual Work Requirement; Doctrine of Abandonment and Equitable Estoppel G. SummaryÔÇöSubstantial Compliance X. EFFECT OF INCOMPLETE NOTICE AND OTHER DEFECTS IN PRIOR CONTEST PROCEEDINGS

611 F. Supp. 1137

XI. THE UNITED STATES IS ESTOPPED FROM ASSERTING INVALIDITY OF OIL SHALE CLAIMS BECAUSE OF NONPERFORMANCE OF ASSESSMENT WORK: THE APPLICATION OF LACHES A. Estoppel Considerations B. Relevant History of Present Litigation C. Legal Analysis of Equitable Estoppel D. Findings and Conclusions Regarding Estoppel E. Application of the Doctrine of Laches XII. APPLICABILITY OF THE TEN-ACRE RULE XIII. ORDER

SHERMAN G. FINESILVER, Chief Judge:

These cases are the latest phase in the extensive litigation concerning the validity of mining claims to oil shale deposits located in Garfield and Rio Blanco Counties in Western Colorado.¹ Nearly 100 mining claims are involved covering 15,550 acres. The Department of the Interior (hereinafter "department", "Interior", or "government") seeks to invalidate mining claims and refuses to issue mineral patents to the claim owners, principally asserting that the claims were declared void in departmental contest proceedings some forty years ago. Plaintiffs, who are mining 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. Plaintiffs assert in this action that the mining claims are valid.

These cases were before us previously on issues involving discovery, performance of annual assessment work and other aspects of mining and administrative law. Oil Shale Corp. v. Morton, 370 F.Supp. 108 (D.Colo.1973). On cross motions for summary judgment, we ruled in favor of the plaintiffs on several independent grounds. The defendant appealed, to the Tenth Circuit Court of Appeals which, expressing the desire to avoid piecemeal litigation, declined to rule on the merits. Instead, the court remanded the entire matter to the district court after broadening the factual and legal questions and directing that they be resolved by the trial court. The trial court was also directed to further remand the case to the Department of Interior where necessary and appropriate to conduct evidentiary hearings on any other unadjudicated issues. Oil Shale Corp. v. Morton, Order of Remand, (10th Cir. Sept. 22, 1975), cert. denied, 426 U.S. 949, 96 S.Ct. 3169, 49 L.Ed.2d 1185 (1976). The administrative proceedings are now concluded.² The cases are ready for determination on all issues and once again are before us on cross motions for summary judgment.^2A

611 F. Supp. 1138

I. SUMMARIZATION OF HOLDINGS

This opinion addresses all matters raised in the pleadings and referred to by the appellate court on remand. Due to the length and complexity of the issues raised, the following summary of holdings is set forth.

1. Since passage of the Mineral Leasing Act of 1920, there can be no private ownership of oil shale lands except as provided in the Savings Clause of the Act.

The mining claims in these proceedings (except where otherwise noted) were properly located prior to 1920 and have been maintained in compliance with the laws under which initiated. They are also valid under the Savings Clause of the Mineral Leasing Act of 1920. Therefore, no impediment exists to reducing the claims to patent and passing into the ownership of plaintiffs.

2. The Green River Formation, as the geological exposure along the Green River in Wyoming was known in the 1860's, was publicly recognized along the Colorado River as early as 1874.

It was known, for instance, that the oil shale beds were interspersed with non-oil-yielding material (e.g. sandstone), and that the richest oil shale beds were in the middle portion of the Formation.

It has been judicially recognized that during the period that the oil shale placer mining claims in question were located (prior to enactment of the Mineral Leasing Act of 1920), "the geology of the Green River Formation was obviously well known, uncomplicated, and the beds were conspicuous." Shell v. Andrus, 591 F.2d 597, 599 (10th Cir.1979), affirmed, 446 U.S. 657, 100 S.Ct. 1932, 64 L.Ed.2d 593 (1980).

3. Section 28 of Title 30 of the United States Code provides that the Secretary of Interior may void an oil shale claim for lack of substantial compliance with the statute requiring annual assessment work. The Supreme Court has ruled that such "substantial compliance" requires only a good faith effort on the part of the locator to develop the claim and facilitate the eventual extraction of the mineral from the earth, and actual and strict compliance is not necessary. Hickel v. Oil Shale Corp., 400 U.S. 48, 91 S.Ct. 196, 27 L.Ed.2d 193 (1970) (hereinafter cited as Tosco or Hickel). See also United States v. Locke, ___ U.S. ___, ___, 105 S.Ct. 1785, 1796, 85 L.Ed.2d 64 (1985).

4. Absent questions of abandonment (not present in claims here), nonperformance of assessment work per se does not automatically terminate valid oil shale claims that were in existence prior to the passage of the Mineral Leasing Act of 1920. 30 U.S.C. ž 28.

5. Rules promulgated by Interior with respect to oil shale claims had the force and effect of law and after being in constant existence for an extensive period of time, could not be capriciously and retroactively repudiated by the department. 5 U.S.C. ž 551(4).

5a. Legal precedents and a thirty year span of Interior decisions, rules, standards and...