Source: https://m.openjurist.org/446/us/657
Timestamp: 2020-02-16 23:06:52
Document Index: 6651308

Matched Legal Cases: ['§ 181', '§ 37', '§ 193', '§ 28', '§ 28', '§ 37', '§ 4', '§ 2319', '§ 22', '§ 336']

446 U.S. 657 - Andrus v. Shell Oil Company
Cecil D. ANDRUS, Secretary of Interior, Petitioner,
The enactment of the 1920 Mineral Leasing Act put an end to these doubts. By withdrawing "oil shale . . . in lands valuable for such minerals" from disposition under the general mining law, the Congress recognized—at least implicitly—that oil shale had been a locatable mineral. In effect, the 1920 Act did for oil shale what the 1897 Oil Placer Act had done for oil. And, as Congressman Barnett's ready answer demonstrates, once it was settled that oil shale was a mineral subject to location, and once a savings clause was in place preserving pre-existing claims, it was fully expected that such claims would be patentable. The fact that oil shale then had no commercial value simply was not perceived as an obstacle to that end.
Our conclusion that Congress in enacting the 1920 Mineral Leasing Act contemplated that pre-existing oil shale claims could satisfy the discovery requirement of the mining law is confirmed by actions taken in subsequent years by the Interior Department and the Congress.8
"Oil shale having been thus recognized by the Department and by the Congress as a mineral deposit and a source of petroleum . . . lands valuable on account thereof must be held to have been subject to valid location and appropriation under the placer mining laws, to the same extent and subject to the same provisions and conditions as if valuable on account of oil or gas." 47 L.D. 548, 551 (1920) (emphasis added).
The first such patent was issued immediately thereafter. Five years later, the Department rules that patentability was dependent upon the "character, extent, and mode of occurrence of the oil-shale deposits." Dennis v. Utah, 51 L.D. 229, 232 (1925). Present profitability was not mentioned as a relevant, let alone a critical, consideration.
In 1927, the Department decided Freeman v. Summers, 52 L.D. 201. The case arose out of a dispute between an oil shale claimant and an applicant for a homestead patent, and involved two distinct issues: (1) whether a finding of lean surface deposits warranted the geological inference that the claim contained rich "valuable" deposits below; and (2) whether present profitability was a prerequisite to patentability. Both issues were decided in favor of the oil shale claimant: the geological inference was deemed sound and the fact that there was "no possible doubt . . . that [oil shale] constitutes an enormously valuable resource for future use by the American people" was ruled sufficient proof of "value." Id., at 206.
For the next 33 years, Freeman was applied without deviation.9 It was said that its application ensured that "valid rights [would] be protected and permitted to be perfected." Secretary of Interior Ann.Rep. 30 (1927). In all, 523 patents for 2,326 claims covering 349,088 acres were issued under theFreeman rule. This administrative practice, begun immediately upon the passage of the 1920 Act, "has peculiar weight [because] it involves a contemporaneous construction of [the] statute by the men charged with the responsibility of setting its machinery in motion," Norwegian Nitrogen Products Co. v. United States, 288 U.S. 294, 315, 53 S.Ct. 350, 358, 77 L.Ed. 796 (1933). Accord, e. g., United States v. National Assn. of Securities Dealers, 422 U.S. 694, 719, 95 S.Ct. 2427, 2442, 45 L.Ed.2d 486 (1975); Udall v. Tallman, 380 U.S. 1, 16, 85 S.Ct. 792, 801, 13 L.Ed.2d 616 (1965). It provides strong support for the conclusion that Congress did not intend to impose a present marketability requirement on oil shale claims.
In 1930 and 1931, congressional Committees revisited the 1920 Mineral Leasing Act and re-examined the patentability of oil shale claims. Congressional interest in the subject was sparked in large measure by a series of newspaper articles charging that oil shale lands had been "improvidently, erroneously, and unlawfully, if not corruptly, transferred to individuals and private corporations." 74 Cong.Rec. 1079 (1930) (S.Res. 379). The articles were based upon accusations leveled at the Interior Department by Ralph S. Kelly, then the General Land Office Division Inspector in Denver. Kelly's criticism centered on the Freeman v. Summers decision. Fearing another "Teapot Dome" scandal, the Senate authorized the Committee on Public Lands to "inquire into . . . the alienation of oil shale lands."
The Senate Committee held seven days of hearings focusing almost exclusively on "the so-called Freeman-Summers case." Hearings on S.Res. 379 before the Senate Committee on Public Lands and Surveys, 71st Cong., 3d Sess., 2 (1931). At the outset of the hearings, the Committee was advised by E. C. Finney, Solicitor, Department of the Interior, that 124 oil shale patents had been issued covering 175,000 acres of land and that 63 more patent applications were pending. Finney's statement prompted this interchange:
"Senator PITTMAN: Well, were the shales on those patented lands of commercial value? "Mr. FINNEY: If you mean by that whether they could have been mined and disposed of at a profit at the time of the patent, or now, the answer is no.
"Mr. FINNEY: No; that was not my opinion. I have never held in the world, that I know of, that you had to have an actual commercial discovery of any commodity that you could take out and market at a profit. On the contrary, the department has held that that is not the case. . . ." Id., at 25 (emphasis added).
See also id., at 22-23, 26, 163. The Senate Committee did not produce a report. But one month after the hearings were completed, Senator Nye, the Chairman of the Committee, wrote the Secretary of the Interior that he had " 'conferred with Senator Walsh and beg[ged] to advise that there is no reason why your Department should not proceed to final disposition of the pending application for patents to oil shale lands in conformity with the law.' " App. 103. The patenting of oil shale lands under the standards enunciated inFreeman was at once resumed.
At virtually the same time, the House of Representatives commenced its own investigation into problems relating to oil shale patents. The House Committee, however, focused primarily on the question of assessment work—whether an oil shale claimant was required to perform $100 work per year or forfeit his claim—and not on discovery. But the impact of the Freeman rule was not lost on the Committee:
"Secretary WILBUR: As a matter of conservation, what you say is true, but what we have to meet here is the fact that in the leasing act there was a clause to the effect that valid existing claims were not included, and so we are dealing with claims that are thought to be valid, and the question—
"Mr. SWING (interposing). I realize that, and I understand the feeling of Congress, and I think generally the country, that in drawing the law we do not want to cut the ground from under the person who has initiated a right." Consolidated Hearings on Applications for Patent on Oil Shale Lands before the House Committee on the Public Lands, 71st Cong., 3d Sess., 100 (1931).10
In 1956 Congress again turned its attention to the patentability of oil shale. That year it amended the mining laws by eliminating the requirement that locators must obtain and convey to the United States existing homestead surfaceland patents in order to qualify for a mining patent on minerals withdrawn under the 1920 Mineral Leasing Act. See Pub.L. 743, 70 Stat. 592. Where a surface owner refused to cooperate with the mining claimant and sell his estate, this requirement prevented the mining claimant from patenting his claim. See James W. Bell, 52 L.D. 197 (1927). In hearings on the amendment, it was emphasized that oil shale claimants would be principal beneficiaries of the amendment:
"Mr. ASPINNAL. This [bill] does not have to do with any other minerals except the leaseable minerals to which no one can get a patent since 1920. . . . As far as I know, there are only just a few cases that are involved, and most of those cases are in the oil shale lands of eastern Utah and western Colorado. That is all this bill refers to." Hearings on H.R. 6501 before the House Committee on Interior and Insular Affairs 3-4 (1956).
"Under the Department of the Interior decision in the case of James W. Bell . . . the owner of a valid mining claim located before February 25, 1920, on lands covered by the 1914 act, in order to obtain a patent to the minerals, is required to acquire the outstanding interest of the surface owner and thereafter to execute a deed of reconveyance to the United States . . . . From 1946 to 1955, inclusive, 71 mining claims, including 67 oil shale claims, were issued under this procedure. The committee is informed that in a few cases mining claimants have been unable to obtain the cooperation of the owners of the surface estate and have been prevented thereby from obtaining patent to the mineral estate." S.Rep.No. 2524, 84th Cong., 2d Sess., 2 (1956); H.R.Rep.No. 2198, 84th Cong., 2d Sess., 2 (1956), U.S.Code Cong. & Admin.News, pp. 3391, 3392 (emphasis added).
The position of the Government in this case is not without a certain irony. Its challenge to respondents' pre-1920 oil shale claims as a "nonvaluable" comes at a time when the value of such claims has increased sharply as the Nation searches for alternative energy sources to meet its pressing needs. If the Government were to succeed in invalidating old claims and in leasing the lands at public auction, the Treasury, no doubt, would be substantially enriched. However, the history of the 1920 Mineral Leasing Act and developments subsequent to that Act persuade us that the Government cannot achieve that end by imposing a present marketability requirement on oil shale claims.11 We conclude that the original position of the Department of the Interior, enunciated in the 1920 Instructions and in Freeman v. Summers, is the correct view of the Mineral Leasing Act as it applies to the patentability of those claims.12
Oil shale was patentable under the general mining law from 1872 until 1920.1 In 1920, Congress enacted the Mineral Leasing Act, 30 U.S.C. § 181 et seq. That legislation withdrew oil shale and certain other minerals from the general mining law, but preserved "valid claims existent at date of the passage of this Act and thereafter maintained in compliance with the laws under which initiated, which claims may be perfected under such laws, including discovery." Act of Feb. 25, 1920, ch. 85, § 37, 41 Stat. 451, as amended, 30 U.S.C. § 193.
Nothing in the Act's legislative history suggests anything to the contrary. Descriptions by legislators of the saving clause drew no distinction between oil shale and other covered claims. See, e. g., 59 Cong.Rec. 2711-2712 (1920) (Rep. Taylor); 58 Cong.Rec. 7780-7781 (1919).2 In the face of conflicting evidence on the subject, Congress may well have thought that many oil shale claims would meet the traditional criteria of patentability. But it did not accord such claims any special legislative treatment.
"[L]ands valuable on account [of oil shale] must be held to have been subject to valid location and appropriation under the placer mining laws, to the same extent and subject to the same provisions and conditions as if valuable on account of oil or gas. Entries and applications for patent for oil shale placer claims will, therefore, be adjudicated . . . in accordance with the same legal provisions and with reference to the same requirements and limitations as are applicable to oil and gas placers." 47 L.D. 548, 551 (1920) (emphasis added).
Such a contemporaneous construction of the statute by the agency charged with its application is entitled to substantial weight. See United States v. National Assn. of Securities Dealers, 422 U.S. 694, 719, 95 S.Ct. 2427, 2442, 45 L.Ed.2d 486; Udall v. Tallman, 380 U.S. 1, 16, 85 S.Ct. 792, 801, 13 L.Ed.2d 616.
The saving clause of the Mineral Leasing Act thus directs that the validity of all claims brought thereunder—including those relating to oil shale—must be judged according to the general criteria of patentability that were established in the mining law as of 1920. And I am convinced that nothing that Congress has done since 1920 can be read to have modified this mandate.
The Court points to congressional committee hearings that were held in 1931 on the Secretary's 1927 Freeman v. Summers decision, and notes that there resulted from this inquiry no legislative rejection of the Department's then prevailing generous treatment of oil shale claims. But of far greater significance, in my opinion, is the fact that not a single remark by a Senator or Representative, let alone by a congressional committee, can be found approving the liberal standard enunciated in Freeman v. Summers, 52 L.D. 201, even though such a statement could not, in any event, have overridden the plain meaning of the saving clause of the Mineral Leasing Act. See TVA v. Hill, 437 U.S. 153, 191-193, 98 S.Ct. 2279, 2299-2301, 57 L.Ed.2d 117; SEC v. Sloan, 436 U.S. 103, 121, 98 S.Ct. 1702, 1712-1714, 56 L.Ed.2d 148.
The Court purports to find support for its position in legislation enacted by Congress in 1956. But that legislation dealt with the totally unrelated problem of competing surface and mineral estates, and has nothing to do with the question at issue here. See Pub.L. 743, 70 Stat. 592; S.Rep.No. 2524, 84th Cong., 2d Sess. (1956); H.R.Rep.No. 2198, 84th Cong., 2d Sess. (1956).
The respondents' patent applications were, I think, quite properly rejected at the administrative level for the simple reason that they failed to satisfy the requirements of the general mining law as of 1920. By 1920, the law was clear that a mineral land patent could issue only when the applicant had made a "discovery" of a "valuable mineral deposit." Union Oil Co. v. Smith, 249 U.S. 337, 346, 39 S.Ct. 308, 310, 63 L.Ed. 635 (1919). Through departmental and judicial decisions, it had been further established that a "discovery" occurs only when minerals are found in such quantity and quality as to justify a prudent man to expend his labor and means with a reasonable prospect of success in developing a valuable mine. Chrisman v. Miller, 197 U.S. 313, 321-323, 25 S.Ct. 468, 470-471, 49 L.Ed. 770 (1905); H. H. Yard, 38 L.D. 59, 70 (1909); Castle v. Womble, 19 L.D. 455, 457 (1894). See Cameron v. United States, 252 U.S. 450, 459, 40 S.Ct. 410, 412, 64 L.Ed. 659 (1920); Casey v. Northern Pacific R. Co., 15 L.D. 439, 440 (1892).
Of controlling significance here is the fact that, by 1920, two refinements of this "prudent man test" had occurred. First, it was clear that, although the patent applicant did not have to demonstrate that his mining efforts would definitely yield some profit,3 he at least had to show that they probably would. Cataract Gold Mining Co., 43 L.D. 248, 254 (1914). See Cole v. Ralph, 252 U.S. 286, 299, 40 S.Ct. 321, 327, 64 L.Ed. 567 (1920); Cameron v. United States, supra, at 459, 40 S.Ct., at 412; United States v. Iron Silver Mining Co., 128 U.S. 673, 684, 9 S.Ct. 195, 199, 32 L.Ed. 571 (1884).4 Second, this required showing of probable profitability had to rest primarily on presently demonstrable, not speculative, fact. See Davis's Administrator v. Weibbold, 139 U.S. 507, 521-524, 11 S.Ct. 628, 633-634, 35 L.Ed. 238 (1891); Castle v. Womble, supra, at 457 ("the requirement relating to discovery refers to present facts, and not to the probabilities of the future"); Casey v. Northern Pacific R. Co., supra, at 440; Winters v. Bliss, 14 L.D. 59, 62 (1892). Thus, the applicant could not satisfy the applicable standard by pointing to such highly uncertain future events as market changes or technological advances in an attempt to demonstrate a reasonable prospect of success.
Discovery of a "valuable mineral" is not the only prerequisite of patentability. The mining law also provides that until a patent is issued a claimant must perform $100 worth of labor or make $100 of improvements on his claim during each year and that a patent may issue only on a showing that the claimant has expended a total of $500 on the claim. 30 U.S.C. §§ 28, 29. See Hickel v. Oil Shale Corp., 400 U.S. 48, 91 S.Ct. 196, 27 L.Ed.2d 193 (1970). In addition, a claim "must be distinctly marked on the ground so that its boundaries can be readily traced." 30 U.S.C. § 28; Kendall v. San Juan Silver Mining Co., 144 U.S. 658, 12 S.Ct. 779, 36 L.Ed. 583 (1892). If the requirements of the mining law are satisfied, the land may be patented for $2.50 per acre. 30 U.S.C. § 37. There is no deadline within which a locator must file for patent, though to satisfy the discovery requirement the claimant must show the existence of "valuable mineral deposits" both at the time of location and at the time of determination. Barrows v. Hickel, 447 F.2d 80, 82 (CA9 1971).
In Chrisman v. Miller, 197 U.S. 313, 25 S.Ct. 468, 49 L.Ed. 770 (1905), this Court approved the Department of the Interior's "prudent-man test" under which discovery of a "valuable mineral deposit" requires proof of a deposit of such character that "a person of ordinary prudence would be justified in the further expenditure of his labor and means, with a reasonable prospect of success, in developing a valuable mine." Castle v. Womble, 19 L.D., at 457. Accord, Best v. Humboldt Placer Mining Co., 371 U.S. 334, 335-336, 83 S.Ct. 379, 381-382, 9 L.Ed.2d 350 (1963); Cameron v. United States, 252 U.S. 450, 459, 40 S.Ct. 410, 412, 64 L.Ed. 659 (1920). In United States v. Coleman, the Court approved the Department's marketability test—whether a mineral can be "extracted, removed and marketed at a profit" deeming it a logical complement of the prudent-man standard.
"no commercial quantity or any appreciable amount of shale oil has ever been produced in this country, nor any standardized process of production has yet been evolved or recommended or agreed upon in this country by the Bureau of Mines or anyone else, and it has not yet been demonstrated that the oil-shale industry can be made commercially profitable. . . ." H.R.Rep.No. 563, 65th Cong., 2d Sess., 18 (1918).
See also 58 Cong.Rec. 4271, 4279 (1919) (remarks of Sen. Smoot); Hearings on H.R. 3232 and S. 2812 before the House Committee on the Public Lands, 65th Cong., 2d Sess., 811, 890, 1257 (1918) (hereafter Hearings).
Mr. John Fry, one of the Committee witnesses who represented the oil shale interest before Congress, was candid on that point:
This Court has observed that "the views of a subsequent Congress form a hazardous basis for inferring the intent of an earlier one." United States v. Price, 361 U.S. 304, 313, 80 S.Ct. 326, 331, 4 L.Ed.2d 334 (1960). This sound admonition has guided several of our recent decisions. See, e. g., TVA v. Hill, 437 U.S. 153, 189-193, 98 S.Ct. 2279, 2299-2301, 57 L.Ed.2d 117 (1978); SEC v. Sloan, 436 U.S. 103, 119-122, 98 S.Ct. 1702, 1712-1714, 56 L.Ed.2d 148 (1978). Yet we cannot fail to note Mr. Chief Justice Marshall's dictum that "[w]here the mind labours to discover the design of the legislature, it seizes every thing from which aid can be derived." United States v. Fisher, 2 Cranch 358, 386, 2 L.Ed. 304 (1805). In consequence, while arguments predicated upon subsequent congressional actions must be weighed with extreme care, they should not be rejected out of hand as a source that a court may consider in the search for legislative intent. See, e. g., Seatrain Shipbuilding Corp. v. Shell Oil Co., 444 U.S. 572, 596, 100 S.Ct. 800, 814, 63 L.Ed.2d 36 (1980); Red Lion Broadcasting Co. v. FCC, 395 U.S. 367, 380-381, 89 S.Ct. 1794, 1801, 23 L.Ed.2d 371 (1969); NLRB v. Bell Aerospace Co., 416 U.S. 267, 274-275, 94 S.Ct. 1757, 1761-1762, 40 L.Ed.2d 134 (1974).
See, e. g., John M. Debevoise, 67 L.D. 177, 180 (1960); United States v. C. E. Strauss, 59 I.D. 129, 140-142 (1945); Location of Oil Shale Placer Claims, 52 L.D. 631 (1929); Assessment Work on Oil-Shale Claims, 52 L.D. 334 (1928); Standard Shales Products Co., 52 L.D. 522 (1928); James W. Bell, 52 L.D. 197 (1927).
At the conclusion of its hearings, the Committee recommended legislation placing a deadline on the filing of patent applications for oil shale claims and permitting an oil shale claimant to pay $100 a year to the Land Office in lieu of $100 in annual assessment work. Other aspects of the oil shale patentability—including the question of discovery—were not addressed in the proposed legislation. H.R.Rep.No. 2537, 71st Cong., 3d Sess. (1931). The proposal was not enacted by the Congress.
The dissent also overlooks that beginning in 1920 and continuing for four decades, the Interior Department treated oil shale as a "valuable mineral." In paying deference to the doctrine that a "contemporaneous [administrative] construction . . . is entitled to substantial weight," ante, at 676, the dissent ignores this contemporaneous administrative practice. The best evidence of the 1920 standard of patentability is the 1920 Interior Department practice on the matter. The suggestion of the dissent that "future events [such] as market changes" were not meaningful data under the Castle v. Womble test, post, at 678, is inaccurate. As a leading treatise has observed, "[t]he future value concept of Freeman v. Summers is nothing more than the 'reasonable prospect of success' of Castle v. Womble, and the reference to 'present facts' in Castle v. Womble . . . relates to the existence of a vein or lode and not to its value." 1 Rocky Mountain Mineral Law Foundation, American Law of Mining § 4.76, p. 697, n. 2 (1979).
Rev.Stat. § 2319 et seq., as amended, 30 U.S.C. § 22 et seq. See Union Oil Co. v. Smith, 249 U.S. 337, 345-346, 39 S.Ct. 308, 309-310, 63 L.Ed. 635.
The Court's discussion of a 1919 attempt to substitute "deposits in paying quantities" for "valuable mineral" in a provision of the prospective Mineral Leasing Act, and Representative Sinott's response thereto, see ante, at 663-664, has absolutely nothing to do with the issue at hand. The attempted substitution concerned a provision of the prospective Act that set out the circumstances under which exploratory permits would be allowed for oil and gas deposits under the new leasing scheme. See 58 Cong.Rec. 7536-7537 (1919). Thus, the legislative discussion quoted by the Court did not involve oil shale, the requirements of the general mining law, or the Act's saving clause. See id., at 7780-7781.
See also Royal K. Placer, 13 L.D. 86, 89-90 (1891); Tinkham v. McCaffrey, 13 L.D. 517, 518 (1891). The authorities cited by the Court, ante, at 664, do not support a contrary rule. They state that an applicant for a mineral patent need not establish with certainty that a paying mine exists or can be developed on his land, but they do not in any way reject the rule of Castle v. Womble, 19 L.D. 455, 457 (1894), that the applicant must show that there exists a "reasonable prospect of success" in his developing a profitable mine. See Cascaden v. Bartolis, 146 F. 739, 741-742 (CA9 1906); United States v. Ohio Oil Co., 240 F. 996, 998-1004 (Wyo.1916); Montana Cent. R. Co. v. Migeon, 68 F. 811, 814-818 (CC Mont.1895); Book v. Justice Mining Co., 58 F. 106, 120, 123-125 (CC Nev.1893); Madison v. Octave Oil Co., 154 Cal. 768, 771-772, 99 P. 176, 178 (1908); 2 C. Lindley, American Law Relating to Mines and Mineral Lands § 336, pp. 768-773 (3d ed. 1914).