USA. v. Hess

• Citation: 194 F.3d 1164
• Decision Date: 05 November 1999
• Docket Number: No. 98-1127,98-1127
• Parties: (10th Cir. 1999) UNITED STATES OF AMERICA, on its own behalf and on behalf of the Southern Ute Indian Tribe, Plaintiff-Counter-Defendant - Appellee, v. LULU MAE HESS; LOYD HESS; ALTON HESS; LLH DEVELOPMENT CORPORATION, Defendants-Counter-Claimants - Appellants
• Court: United States Courts of Appeals. United States Court of Appeals (10th Circuit)

Page 1164

194 F.3d 1164 (10th Cir. 1999)

UNITED STATES OF AMERICA, on its own behalf and on behalf of the Southern Ute Indian Tribe, Plaintiff-Counter-Defendant - Appellee, v. LULU MAE HESS; LOYD HESS; ALTON HESS; LLH DEVELOPMENT CORPORATION, Defendants-Counter-Claimants - Appellants.

No. 98-1127

UNITED STATES COURT OF APPEALS TENTH CIRCUIT

November 5, 1999

Appeal from the United States District Court for the District of Colorado (D.C. No. 95-Z-1894) [Copyrighted Material Omitted] Elizabeth Ann Peterson (Henry Solano, United States Attorney, Denver, Colorado; Lois G. Schiffer, Assistant Attorney General, Department of Justice, Washington, D.C.; Michael E. Hegarty, Assistant United States Attorney, Denver, Colorado; Robert L. Klarquist, Department of Justice, Washington, D.C.; Janet Spaulding, of counsel, United States Department of the Interior, Albuquerque, New Mexico, with her on the brief) of the United States Department of Justice, Washington, D.C., for Plaintiff-Counter-Defendant - Appellee.

George Robert Miller of McDaniel, Baty & Miller, LLC, Durango, Colorado, for Defendants-Counter-Claimants-Appellants.

Christopher G. Hayes, Craig R. Carver, and Don H. Sherwood, of Alfers & Carver, LLC, Denver, Colorado, filed a brief for amicus curiae The Colorado Rock Products Association and the National Stone Association.

Michael E. McLachlan and Jeffrey P. Robbins, Durango, Colorado, filed a brief for amicus curiae Board of County Commissioners of La Plata County, Colorado.

Before BRORBY, HOLLOWAY and LUCERO, Circuit Judges.

BRORBY, Circuit Judge.

This appeal arises from an action brought by the United States against Appellants Lulu Mae Hess, Loyd Hess, Alton Hess and LLH Development Corporation (collectively referred to as the "Hess family"). The government seeks quiet title to ownership of gravel located on a ranch acquired by the Hess family as successors-in-interest following a land exchange patent issued pursuant to the Indian Reorganization Act of 1934, 25 U.S.C. §§ 461 - 479. At issue is whether the reservation of "all minerals" in the exchange patent, as reserved by the government in trust for the Southern Ute Indian Tribe, includes "gravel" as a matter of law. We exercise jurisdiction under 28 U.S.C. § 1291.

HISTORICAL BACKGROUND

The issue before us requires a brief examination of the ownership history of the land on which the mineral interest is claimed. In 1868, the government set aside almost sixteen million acres as an Indian reservation for the Confederated Bands of Utes. United States v. Southern Ute Tribe or Band of Indians, 402 U.S. 159, 162 (1971). Under the Act of 1880, the Southern Ute Indian Tribe ceded their portion of the reservation to the United States in exchange for cash payments and allotment of land along the La Plata River to individual Tribe members.¹ The purpose of the Act was to dismantle the Ute reservation, and thereby destroy the tribal structure, change the Utes' nomadic ways, and convert them from a pastoral to an agricultural people. Southern Ute Tribe, 402 U.S. at 163 (citing 10 Cong. Rec. 2059, 2066 (1880)); see also United States v. Southern Ute Tribe, 423 F.2d at 349. The government in turn sold the ceded reservation land for cash, set portions aside for public purposes, or disposed of it as free homesteads under various public land and homestead acts. See Southern Ute Tribe, 402 U.S. at 160-61; Amoco Prod., 874 F. Supp. at 1148. One of the last homestead acts Congress passed for the purpose of opening ceded, non-allotted lands to public entry and settlement was the Stock-Raising Homestead Act of 1916.² This Act provided for the settlement of homesteads on lands where the surface was deemed "'chiefly valuable for grazing and raising forage crops," and reserved to the United States "all the coal and other minerals'" in lands patented under the Act. See Western Nuclear, 462 U.S. at 38-39 (quoting 43 U.S.C. §§ 291, 292, 299).

In the 1930s, the government "initiated a marked shift in Indian policy from 'allotment and assimilation' which deemphasized tribal existence ... to a 'revival of tribalism.'" See Amoco Prod., 874 F. Supp. at 1151. This self-determination policy culminated in the Indian Reorganization Act of 1934 which authorized the Secretary of the Interior to restore tribal ownership in the remaining surplus lands of any Indian reservation. Id. (citing 25 U.S.C. § 463). As a result of this and other acts of Congress, the Southern Ute Tribe's reservation became

a checkerboard of different types of ownership interests including tribal lands held in trust by the United States for the benefit of the Tribe, lands held by the Tribe in its own name, individual Indian land allotments subject to federal trust restrictions, land owned in fee simple by individual Indians, and lands held in fee simple by non-Indians.

Id. (citing Southern Ute Indian Tribe v. Board of County Comm'rs, 855 F.Supp. 1194, 1196 (D. Colo. 1994)). In order to remedy this "checkerboarding" and effectuate "land consolidations between Indians and non-Indians within the reservation," Congress included a provision in the Indian Reorganization Act authorizing the Secretary of the Interior to acquire, through purchase, exchange or relinquishment, any interest in lands within the reservation for the benefit of the Indian tribes. 25 U.S.C. §§ 463, 463e. The Act's only relevant condition concerning exchanges involved a requirement that the lands exchanged be of "equal value." Id. at § 463(e).

With this legislative and historical background in mind, we next chronicle the Hess family's acquisition of the property at issue. In 1935, Lulu Mae Hess' father, Arvil Brown, proved-up his homestead under the Stock-Raising Homestead Act and received a United States patent for 640 acres located in La Plata County, near Durango, Colorado, and adjacent to reservation lands eventually restored to the Southern Ute Tribe. Pursuant to the provisions of the Stock-Raising Homestead Act, Mr. Brown's land patent contained a reservation to the United States of "coal and other minerals."

In 1941, in conjunction with the Secretary of the Interior's authority under the Indian Reorganization Act, the government began several years of negotiations with Mr. Brown for the purpose of exchanging his 640-acre homestead for 440 acres of land held by the government in trust for the Southern Ute Tribe. The purpose of the exchange was to consolidate the Tribe's lands into manageable, contiguous tracts.

As part of the government's proposed land exchange, an appraiser viewed both properties in 1945, valuing each at $770 and assigning no value to the properties' oil, gas and mineral rights. Following the appraisals, the Ute Tribal Council agreed to the exchange by formal resolution. However, because Mr. Brown did not own, and therefore could not convey, the mineral rights to his homestead, the Superintendent of the Southern Ute Agency recommended to the government that "a reservation should be made on the lands ... proposed for exchange with Mr. Brown." In June 1946, Mr. Brown signed an Offer to Convey his homestead which contained the government's added reservation "that all oil and gas, coal and other minerals" be reserved for the Southern Ute Tribe. On July 1, 1946, Mr. Brown deeded his homestead to the government.

For the next two years, various government officials and agencies examined the details and filing requirements involved in the land exchange and determined the exchanged lands were of equal value, and the reservation of minerals would not adversely affect the administration, use or value of the land. Finally, on October 6, 1948, the government issued an exchange patent to Mr. Brown "subject to the reservation of all minerals in and to the land, including oil and gas, to the United States for the use and benefit of the Southern Ute Tribe."

In 1963, Mr. Brown's daughter, Lulu Mae Hess, and her husband, Loyd Hess, purchased the 440 acres of Tribal land Mr. Brown acquired by exchange (i.e., the Hess Property). In 1968, the Hess family began extracting Animas gravel from a pit (Hess pit) located on their property for use on their roads and to construct a feed lot. It is important to note that an extremely large volume of commercial grade gravel, known as "Animas" gravel, comprises the surface, or near-surface, of the ground in the area surrounding Durango, Colorado, and is of similar quality throughout the region. Almost all of the Hess property is underlaid with gravel, including commercial quality "Animas" gravel deposits and noncommercial quality "Florida" alluvial and colluvial gravels.

In 1980, the Hess family used gravel from the Hess Pit and another pit on their property to construct roads in a subdivision created on their property known as Juniper Heights.³ Later, Lulu Mae and Loyd Hess' son, Alton Hess, sold the leftover Animas gravel from the Hess Pit area to local ranchers. Three years later, Alton Hess obtained a gravel lease from his parents and began obtaining state and county permits for operation of the Hess pit, using the name "Sunnyside Gravel." In 1984, Alton Hess erected a 4' by 4' business sign on the state highway near the Hess family property which states:

SUNNYSIDE GRAVEL

247-1596

GRAVEL, TOPSOIL, HAULING, EXCAVATION

He also placed a "permit sign" at the turnoff of the highway giving the required notice concerning his operation of the gravel pit. In addition, the Hess pit is clearly visible from numerous locations on the Southern Ute Tribal lands. Alton Hess also has placed advertisements in the yellow pages of the Southwest Colorado telephone directory every year since 1985. Similarly, he distributed numerous brochures and placed numerous advertisements in the Durango Herald offering gravel for sale.

Between 1983 and 1996, Alton Hess removed approximately 147,619 cubic yards of Animas gravel from the Hess pit for the Hess family's use, for small individual sales to local ranchers for...