Source: https://www.legalcrystal.com/case/104777/andrus-vs-shell-oil-co
Timestamp: 2017-09-24 22:57:37
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Matched Legal Cases: ['§ 22', '§ 181', '§ 336', '§ 181', '§ 2319', '§ 22', '§ 336']

Andrus Vs Shell Oil Co - Citation 104777 - Court Judgment | LegalCrystal
Andrus Vs. Shell Oil Co. - Court Judgment
LegalCrystal Citation legalcrystal.com/104777
Case Number 446 U.S. 657
Appellant Andrus
andrus v. shell oil co. - 446 u.s. 657 (1980) u.s. supreme court andrus v. shell oil co., 446 u.s. 657 (1980) andrus v. shell oil co. no. 78-1815 argued january 15, 1980 decided june 2, 1980 446 u.s. 657 certiorari to the united states court of appeals for the tenth circuit syllabus the general mining law of 1872 permits citizens to explore the public domain and search for minerals and, if they discover "valuable mineral deposits," to obtain title to the land on which such deposits are located. the mineral leasing act (act), enacted in 1920, withdrew oil shale from the general mining law and provided that thereafter oil shale would be subject to disposition only through leases, except that a savings clause preserved.....
Andrus v. Shell Oil Co. - 446 U.S. 657 (1980)
U.S. Supreme Court Andrus v. Shell Oil Co., 446 U.S. 657 (1980)
Held: The oil shale deposits in question are "valuable mineral deposits" patentable under the Act's savings clause. The Act's history and the developments subsequent to its passage indicate that the Government should not be permitted to invalidate pre-1920 oil shale claims by imposing a present marketability requirement on such claims. The Department's original position, as set forth in Instructions, issued shortly after the Act became law, authorizing the General Land Office
to begin adjudicating applications for patents for pre-1920 oil shale claims, and later enunciated in Freeman v. Summers, is the correct view of the Act as it applies to the patentability of pre-1920 oil shale claims. Pp. 446 U. S. 663 -673.
BURGER, C.J., delivered the opinion of the Court, in which WHITE, BLACKMUN, POWELL, REHNQUIST, and STEVENS, JJ., joined. STEWART, J., filed a dissenting opinion, in which BRENNAN and MARSHALL, JJ., joined, post, p. 446 U. S. 673 .
The general mining law of 1872, 30 U.S.C. § 22 et seq., provides that citizens may enter and explore the public domain, and search for minerals; if they discover "valuable mineral deposits," they may obtain title to the land on which such deposits are located. [ Footnote 1 ] In 1920, Congress altered this
program with the enactment of the Mineral Leasing Act. 41 Stat. 437, as amended, 30 U.S.C. § 181 et seq. The Act withdrew oil shale and several other minerals from the general mining law and provided that thereafter these minerals would be subject to disposition only through leases. A savings clause, however, 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." [ Footnote 2 ]
The action involves two groups of oil shale claims located by claimants on public lands in Garfield County, Colo., prior to the enactment of the Mineral Leasing Act. [ Footnote 3 ] The first group of claims, designated Mountain Boys Nos. 6 and 7, was located in 1918. In 1920, a business trust purchased the claims for $25,000, and in 1924 an application for patent was filed with
The complaints were consolidated and tried to a hearing examiner, who, in 1970, ruled the claims valid. The hearing examiner observed that, under established case law, the test for determining a "valuable mineral deposit" was whether the deposit was one justifying present expenditures with a reasonable prospect of developing a profitable mine. See United States v. Coleman, 390 U. S. 599 (1968); Castle v. Womble, 19 L.D. 455 (1894). [ Footnote 4 ] He then reviewed the history
"While at the present time there has been no considerable production of oil from shales, due to the fact that abundant quantities of oil have been produced more cheaply from wells, there is no possible doubt of its value and of the fact that it constitutes an enormously valuable resource for future use by the American people. "
The Board of Land Appeals reversed. Adopting the findings of the hearing examiner, the Board concluded that oil shale claims located prior to 1920 failed the test of value because, at the time of location, there did not appear "as a present fact . . . a reasonable prospect of success in developing an operating mine that would yield a reasonable profit." (Emphasis in original.) The Board recognized that this conclusion was at odds with prior departmental precedent, and
particularly with Freeman v. Summers; but it rejected that precedent as inconsistent with the general mining law, and therefore unsound. The Board then considered whether its newly enunciated interpretation should be given only prospective effect. It found that respondents' reliance on prior rulings was minimal, and that the Department's responsibility as trustee of public lands required it to correct a plainly erroneous decision. [ Footnote 5 ] Accordingly, it ruled that its new interpretation applied to the Mountain Boys and Shoup claims, and that those claims were invalid.
The legislative history of the 1920 Mineral Leasing Act shows that Congress did not consider "present marketability" a prerequisite to the patentability of oil shale. [ Footnote 6 ] In the extensive hearings and debates that preceded the passage of the 1920 Act, there is no intimation that Congress contemplated such a requirement; indeed, the contrary appears. During the 1919 floor debates in the House of Representatives, an amendment was proposed which would have substituted the phrase "deposits in paying quantities" for "valuable mineral." That amendment, however, was promptly withdrawn after Mr. Sinott, the House floor manager, voiced his objection to the change:
58 Cong.Rec. 7537 (1919) (emphasis added). An examination of the relevant decisions at the time underscores the point. Those decisions are clear in rejecting a requirement that a miner must "demonstrat[e] that the vein . . . would pay all the expenses of removing, extracting, crushing, and reducing the ore, and leave a profit to the owner," Book v. Justice Mining Co., 58 F. 106, 124 (CC Nev. 1893), and in holding that "it is enough if the vein or deposit has a present or prospective commercial value.'" Madison v. Octave Oil Co., 154 Cal. 768, 772, 99 P. 176, 178 (1908) (emphasis added). Accord, Cascaden v. Bartolis, 146 F. 739 (CA9 1906); United States v. Ohio Oil Co., 240 F. 996, 998 (Wyo.1916); Montana Cent. R. Co. v. Migeon, 68 F. 811, 814 (CC Mont. 1895); East Tintic Consolidated-Mining Co., 43 L.D. 79, 81 (1914); 2 C. Lindley, American Law Relating to Mines and Mineral Lands § 336, pp. 768-769 (3d ed.1914). See generally Reeves, The Origin and Development of the Rules of Discovery, 8 Land & Water L.Rev. 1 (1973).
To be sure, prior to the passage of the 1920 Act, there existed considerable uncertainty as to whether oil shale was patentable. [ Footnote 7 ] That uncertainty, however, related to whether oil shale was a "mineral" under the mining law, and not to its "value." Similar doubts had arisen in the late 19th century
Hearings at 918. 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
Our conclusion that Congress in enacting the 1920 Mineral Leasing Act contemplated that preexisting 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. [ Footnote 8 ]
For the next 33 years, Freeman was applied without deviation. [ Footnote 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 the Freeman rule. This administrative practice, begun immediately upon the passage of the 1920 Act,
Norwegian Nitrogen Products Co. v. United States, 288 U. S. 294 , 288 U. S. 315 (1933). Accord, e.g., United States v. National Assn. of Securities Dealers, 422 U. S. 694 , 422 U. S. 719 (1975); Udall v. Tallman, 380 U. S. 1 , 380 U. S. 16 (1965). It provides strong support for the conclusion that Congress did not intend to impose a present marketability requirement on oil shale claims.
At virtually the same time, the House of Representatives commenced its own investigation into problems relating to
Consolidated Hearings on Applications for Patent on Oil Shale Lands before the House Committee on the Public Lands, 71st Cong., 3d Sess., 100 (1931). [ Footnote 10 ]
Hearings on H.R. 6501 before the House Committee on Interior and Insular Affairs 4 (1956). See also Hearings on H.R. 6501 before the Subcommittee on Mines and Mining of the House Committee on Interior and
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. [ Footnote 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. [ Footnote 12 ]
In Chrisman v. Miller, 197 U. S. 313 (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 , 371 U. S. 335 -336 (1963); Cameron v. United States, 252 U. S. 450 , 252 U. S. 459 (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.
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 , 361 U. S. 313 (1960). This sound admonition has guided several of our recent decisions. See, e.g., TVA v. Hill, 437 U. S. 153 , 437 U. S. 189 -193 (1978); SEC v. Sloan, 436 U. S. 103 , 436 U. S. 119 -122 (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 everything from which aid can be derived." United States v. Fisher, 2 Cranch 358, 386 (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 , 444 U. S. 596 (1980); Red Lion Broadcasting Co. v. FCC, 395 U. S. 367 , 395 U. S. 380 -381 (1969); NLRB v. Bell Aerospace Co., 416 U. S. 267 , 416 U. S. 274 -275 (1974).
The dissent overlooks the abundant evidence that Congress, since 1920, has consistently viewed oil shale as a "valuable mineral" under the general mining law. The dissent dismisses the 1931 hearings and the 1956 Act as irrelevancies: as for the 1931 hearings, the dissent states that "not a single remark by a Senator or Representative" approved the Freeman standard; as for the 1956 Act, we are informed that Congress "dealt with [a] totally unrelated problem." Post at 446 U. S. 676 . Neither of these observations is correct. The 1931 Senate hearings were called specifically to review the Freeman case for fear that another "Teapot Dome" scandal was brewing. Rarely has an administrative law decision received such exhaustive congressional scrutiny. And following that scrutiny, no action was taken to disturb the settled administrative practice; rather Senator Nye advised the Interior Department to continue patenting oil shale claims. Similarly, to characterize the 1956 Act as "totally unrelated" is to blink reality. The patentability of oil shale land was an essential predicate to that legislation; if oil shale land was nonpatentable, then Congress performed a useless act.
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," post at 446 U. S. 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 446 U. S. 678 , is inaccurate. As a leading treatise has observed,
Oil shale was patentable under the general mining law from
1872 until 1920. [ Footnote 2/1 ] 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
There is not one shred of evidence that Congress enacted the saving clause of the Mineral Leasing Act with the purpose of exempting oil shale claims from the usual requirements of patentability. On its face, the 1920 version of the
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). [ Footnote 2/2 ] 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 , 422 U. S. 719 ; Udall v. Tallman, 380 U. S. 1 , 380 U. S. 16 .
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 , 437 U. S. 191 -193; SEC v. Sloan, 436 U. S. 103 , 436 U. S. 121 .
The only reasonable inference that can be drawn from the events of 1931 and 1956 is that on those two occasions, as in 1920, Congress declined to assume that every pre-1920 oil
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 , 249 U. S. 346 (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 , 197 U. S. 321 -323 (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 , 252 U. S. 459 (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, [ Footnote 2/3 ] 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 , 252 U. S. 299 (1920); Cameron v. United States, supra at 252 U. S. 459 ; United States v. Iron Silver Mining Co., 128 U. S. 673 , 128 U. S. 684 (1884). [ Footnote 2/4 ] 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 , 139 U. S. 521 -524 (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.
With respect to the oil shale deposits at issue in this case, the Board of Land Appeals found that they "never have been a valuable mineral deposit within the meaning of the general
Rev.Stat. § 2319 et seq., as amended, 30 U.S.C. § 22 et seq. See Union Oil Co. v. Smith, 249 U. S. 337 , 249 U. S. 345 -346.
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 446 U. S. 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.
Sec 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 446 U. S. 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).