In the Supreme Court of the United States
NEW WEST MATERIALS, LLC, ET AL.,
INTERIOR BOARD OF LAND APPEALS, ET AL.
ON PETITION FOR A WRIT OF CERTIORARI
TO THE UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
BRIEF FOR THE RESPONDENTS IN OPPOSITION
PAUL D. CLEMENT
Counsel of Record
RONALD J. TENPAS
Acting Assistant Attorney
ELIZABETH ANN PETERSON
Department of Justice
Washington, D.C. 20530-0001
Whether the reservation to the United States of "the oil, gas, and all other mineral deposits" in the Small Tract Act of 1938, ch. 317, 52 Stat. 609, as amended by Act of June 8, 1954, ch. 270, 68 Stat. 239, repealed by Federal Land Policy and Management Act of 1976, Pub. L. No. 94-579, § 702, 90 Stat. 2789, encompasses com mercially valuable sand and gravel.
In the Supreme Court of the United States
NEW WEST MATERIALS, LLC, ET AL.,
INTERIOR BOARD OF LAND APPEALS, ET AL.
ON PETITION FOR A WRIT OF CERTIORARI
TO THE UNITED STATES COURT OF APPEALS FOR THE FOURTH CIRCUIT
BRIEF FOR THE RESPONDENTS IN OPPOSITION
The opinion of the court of appeals (Pet. App. 1a- 11a) is not published in the Federal Reporter but is re printed in 216 Fed. Appx. 385. The opinion of the dis trict court (Pet. App. 14a-45a) is reported at 398 F._Supp. 2d 438. The decision of the Interior Board of Land Appeals (Pet. App. 46a-80a) is reported at 164 I.B.L.A. 126.
The judgment of the court of appeals was entered on February 8, 2007. A petition for rehearing was denied on April 13, 2007 (Pet. App. 12a-13a). The petition for a writ of certiorari was filed on July 11, 2007. The juris diction of this Court is invoked under 28 U.S.C. 1254(1).
This case concerns the scope of the reservation of "the oil, gas and all other mineral deposits"1 in the pat ents to approximately 82 acres of land near Phoenix, Arizona. The United States issued the original patents to the property in 1959, pursuant to the Small Tract Act of 1938 (STA), ch. 317, 52 Stat. 609, amended by Act of June 8, 1954 (1954 Act), ch. 270, 68 Stat. 239, repealed by Federal Land Policy and Management Act of 1976, Pub. L. No. 94-579, § 702, 90 Stat. 2789. The STA autho rized the Secretary of the Interior (Secretary) to sell or lease small tracts of vacant land, subject to the reserva tion to the United States of the mineral estate in the lands. After purchasing and consolidating several par cels, the current owner leased the property for the pur pose of extracting commercially valuable sand and gravel. The Bureau of Land Management (BLM) deter mined that the sand and gravel deposits are reserved to the United States under the STA, and thus may not be removed without federal authorization. The Interior Board of Land Appeals (IBLA), the district court, and the court of appeals upheld BLM's determination.
1. The STA, enacted in 1938, authorized the Secre tary to classify and sell or lease to individuals small tracts of vacant public land for home, health, business, or recreational sites. The STA permitted the Secretary to classify parcels of up to five acres as "chiefly valu able" for any of these specified uses, and to sell or lease the tracts to qualified individuals at a price "no less than the cost of making any survey necessary to properly describe the land sold." 52 Stat. 609. The Secretary was to sell or lease no more than one tract to any person or organization, "except upon a showing of good faith and reasons satisfactory to the Secretary." Ibid.
As originally enacted, the STA required that all pat ents issued under the Act contain a reservation to the United States of "the oil, gas, and other mineral depos its, together with the right to prospect for, mine, and remove the same under applicable law and such regula tions as the Secretary may prescribe." 52 Stat. 609. When Congress amended the STA in 1954, it expanded the categories of uses for which the tracts could be leased or sold. It also clarified that the mineral reserva tion to be included in all leases and patents under the Act encompassed "oil, gas, and all other mineral depos its." 1954 Act § 2, 68 Stat. 239 (emphasis added).
Although the STA was repealed by the Federal Land Policy and Management Act of 1976, Pub. L. No. 94-579, § 702, 90 Stat. 2789, that statute expressly pre served the United States' rights under the mineral res ervation provision, § 701(c), 90 Stat. 2786. By the time the STA was repealed, approximately 450,000 acres in 14 Western States, from Alaska to Wyoming, were classi fied for small tract purposes. See BLM, U.S. Dep't of the Interior, Instruction Memo No. 80-540, The Small Tract Act (Act of June 1, as Amended): Guide Book for Managing Existing Small Tract Areas Encl. 1, at 27 (Apr. 1, 1980) (C.A. App. 94). Approximately 230,000 acres had been transferred into private ownership. Ibid.
2. Petitioner JWR, Inc. (JWR) is the current owner of property near Phoenix, Arizona, patented under the STA to several private owners in 1959. The property remained vacant until 2000, when JWR purchased the parcels, each of which contained approximately 5 acres, and consolidated them into a single tract of approxi mately 82 acres. Pet. App. 4a; id. at 16a-17a. Shortly thereafter, JWR leased the property to petitioner New West Materials, LLC (New West), for the express pur pose of mining sand and gravel. Id. at 4a.
In November 2001, BLM notified New West's oper ations manager that the sand and gravel were reserved to the United States under the STA, and that New West was not authorized to remove the sand and gravel with out approval of the Department of the Interior. Pet. App. 47a. BLM then issued a decision finding that New West had "committed an act of nonwillful trespass by removing and selling mineral material" without the con tractual right to do so. Id. at 4a.
New West continued to remove sand and gravel un der an escrow arrangement with BLM, pending final resolution of the dispute. Between 2001, when BLM discovered that New West was mining sand and gravel on the property, and 2004, New West extracted more than 2.5 million tons of sand and gravel from two large mining pits approximately 20 to 28 feet deep and occu pying approximately 268,000 square feet, or 6.5 acres. Pet. App. 17a, 19a & n.9.
3. Petitioners appealed BLM's trespass order to the IBLA. The IBLA affirmed BLM's order, concluding that the mineral reservation of the STA "cannot mean ingfully be distinguished" from that in Section 9 of the Stock-Raising Homestead Act of 1916 (SRHA), 43 U.S.C. 299, which this Court had construed to include gravel deposits in Watt v. Western Nuclear, Inc., 462 U.S. 36 (1983). Pet. App. 59a-61a. One IBLA member dissented. Id. at 64a-80a. The IBLA denied New West's request for rehearing. Id. at 81a-82a.
4. Petitioners sought review under the Administra tive Procedure Act, 5 U.S.C. 701 et seq., in the United States District Court for the Eastern Dictrict of Vir ginia. On cross-motions for summary judgment, the district court upheld the decision of the IBLA. Conclud ing that the IBLA's construction of the STA was entitled to deference under Chevron U.S.A. Inc. v. NRDC, 467 U.S. 837 (1984), the district court upheld the IBLA's interpretation of the statute as reasonable, in light of the statute's language, history, and purpose. Pet. App. 14a-45a.
5. The court of appeals affirmed in an unpublished per curiam opinion. Pet. App. 1a-11a. Although the court declined to address whether the IBLA's decision was entitled to Chevron deference, id. at 6a, it agreed with the IBLA that the STA's reservation of "the oil, gas and all other mineral deposits" encompassed sand and gravel deposits, id. at 11a. Guided by this Court's deci sions in Western Nuclear and BedRoc Limited, LLC v. United States, 541 U.S. 176 (2004), the court concluded that the plain language of the reservation in the STA covered sand and gravel deposits. Pet. App. 8a-9a.2 The court of appeals also found support for its ruling in con temporaneous judicial and administrative decisions. Finally, the court of appeals noted that Congress's pur pose in reserving mineral rights under the STA, as un der the statute at issue in Western Nuclear, was to pro mote development of both the surface and mineral re sources of the patented lands. The court held that, as in Western Nuclear, that purpose would be thwarted by interpreting the STA's mineral reservation to exclude sand and gravel, since Congress would not have ex pected persons residing or operating small businesses on five-acre plots to exploit the sand and gravel depos its. Id. at 10a.
The court of appeals' unpublished decision correctly applied this Court's precedents, and does not conflict with the decision of any other court of appeals. Further review is not warranted.
1. This Court has twice considered whether sand and gravel are reserved minerals under land-grant stat utes administered by the Department of the Interior. In Watt v. Western Nuclear, Inc., 462 U.S. 36 (1983), the Court held that a statutory reservation of "all the coal and other minerals" encompassed gravel. More re cently, in BedRoc Limited, LLC v. United States, 541 U.S. 176 (2004), the Court interpreted a different stat ute's reservation of "valuable minerals" to exclude sand and gravel. Declining an invitation to overrule Western Nuclear, the plurality in BedRoc instead distinguished that case on the ground that Congress narrowed the scope of the reservation by using the modifier "valu able." Id. at 184. The plurality interpreted the statute's reservation of "valuable minerals" to encompass only minerals commonly regarded as valuable as of the date of the statute's passage. Id. at 184-185. In both cases, the Court concluded that the scope of a statutorily man dated minerals reservation turns on the meaning of the terms of the statutory reservation at the time of enact ment and on Congress's intent in reserving the mineral rights of the United States. See Western Nuclear, 462 U.S. at 47; see also BedRoc, 541 U.S. at 184 (plurality opinion) ("[T]he proper inquiry focuses on the ordinary meaning of the reservation at the time Congress enacted it.").
Petitioners contend (Pet. 13-19) that the Court should supplant the rule established in Western Nuclear and reaffirmed in BedRoc in favor of a different analy sis. Specifically, petitioners assert that the scope of a statutory mineral reservation should be evaluated not according to the meaning of the text and Congress's in tent at the time of the statute's passage, but according to the value of the mineral at the time the land was pat ented. Under petitioners' proposed "valuable-when-pat ented" test, the scope of each mineral reservation would depend on the market conditions present in the vicinity of the patented lands as of the date of the patent, with respect to each of the various individual mineral sub stances located on the lands. See Pet. 13. Petitioners' contention does not warrant this Court's review.
As a threshold matter, petitioners' proposed valu able-when-patented test is inconsistent with this Court's precedent. In Western Nuclear, this Court held that gravel is a reserved mineral under Section 9 of the SRHA, 43 U.S.C. 299. Looking to the purpose and his tory of the statute, the Court noted that the SRHA, like other land-grant statutes containing mineral reserva tions, was intended to "facilitate development of both surface and subsurface resources." Western Nuclear, 462 U.S. at 49-52; see BedRoc, 541 U.S. at 182 (plurality opinion). The Court concluded that Congress intended to achieve that goal by reserving the mineral estate and patenting only those interests necessary for the in tended surface use. Western Nuclear, 462 U.S. at 56. The Court reasoned that to interpret the statute to in clude gravel in a surface estate intended to be used for stock-raising and raising crops would make exploitation of the mineral dependent on "the initiative of persons whose interests were known to lie elsewhere." Ibid. Petitioners' valuable-when-patented test would thwart Congress's intent by making the exploitation of any commercially valuable mineral whose value was un known at the time of the patent dependent on the initia tive of persons who bought the land for purposes unre lated to exploitation of the mineral estate. See ibid.3
Moreover, despite petitioners' claims, application of the valuable-when-patented test to statutorily mandated mineral reservations would not "settle this area of law." Pet. 4. On the contrary, adoption of petitioners' pro posed test would result in widespread uncertainty. Peti tioners' proposed test calls for a fact-intensive, site-spe cific, case-by-case examination of the hypothetical prof itability of extracting a mineral that may not even have been known to exist at the time of the patent. Even as suming that the historical facts necessary to conduct that burdensome analysis could be adequately estab lished as a practical matter, subjecting federal patents to such an inquiry would result in differing interpreta tions of identical language in land patents issued under the same federal land-grant statute, and thus in differ ing sets of property rights accorded to similarly situated patentees, depending on the location of the land pat ented or the time of the patent. Petitioners offer no au thority to suggest that Congress would have intended that result.
Petitioners imply (Pet. 10-11, 17) that the Tenth Circuit adopted their proposed test in construing a "similar federal mineral reservation" in United States ex rel. S. Ute Indian Tribe v. Hess, 348 F.3d 1237 (2003) (Hess II). That implication is incorrect. That case did not concern a statutory mineral reservation, but a reser vation contained in an exchange patent issued pursuant to the Indian Reorganization Act, 25 U.S.C. 464. See United States ex rel. S. Ute Indian Tribe v. Hess, 194 F.3d 1164, 1171 (10th Cir. 1999) (Hess I). That statute did not require a mineral reservation. Because the case did not involve a statutory reservation, the Tenth Cir cuit held that the rules of construction set out in West ern Nuclear did not apply. The Tenth Circuit instead "borrow[ed]" state law, which required that the patent be construed in accordance with the intent of the parties at the time of the land exchange. Hess II, 348 F.3d at 1242-1243, 1250 (quoting Hess I, 194 F.3d at 1173). The court held that whether the parties considered gravel to be a commercially valuable mineral at the time of the exchange of the specific property at issue was relevant to the question of their intent. Id. at 1248. The court did not, however, hold that an identical inquiry would be appropriate when interpreting the meaning of a federal statutory reservation of mineral rights applicable to the conveyance of public lands.
Petitioners also purport (Pet. 16-17) to find support for their proposed test in an opinion of the Solicitor of the Department of the Interior concerning the mineral reservation to the Northern Cheyenne Indian Tribe un der a special statute, Act of June 3, 1926, ch. 459, 44 Stat. 690. See Division of Pub. Lands, U.S. Dep't of the Interior, Solicitor's Op. No. M-36379 (Oct. 3, 1956) (Pet. App. 94a-99a). That opinion was rendered more than 25 years before Western Nuclear, and insofar as it can be read to support petitioners' valuable-when-patented test, it has been undermined by this Court's decisions and should not be accorded any weight. See Western Nuclear, 462 U.S. at 68 n.11 (Powell, J., dissenting) (not ing that the majority's decision took a broader view of the scope of the SRHA's mineral reservation than the 1956 Solicitor's opinion took of the mineral reservation under the special statute at issue there). This Court has never read mineral reservations in the public land stat utes in the manner suggested in the Solicitor's opinion, and we are not aware of any other federal administrative or judicial decision that relies on the Solicitor's reason ing.
2. In the alternative, petitioners urge this Court to grant review to establish that Western Nuclear is an exception to a supposed "general rule * * * that a min eral reservation normally does not include sand and gravel." Pet. 19. Petitioners' premise is incorrect, and in any event, this case does not present an opportunity to entertain their suggestion.
Contrary to petitioners' contention (Pet. 21), there is no "general rule" that common materials such as sand and gravel are not "mineral." In Northern Pacific Rail way v. Soderberg, 188 U.S. 526 (1903), the Court con cluded that "mineral lands include not merely metallif erous lands, but all such as are chiefly valuable for their deposits of a mineral character, which are useful in the arts or valuable for purposes of manufacture," and quoted an English court's statement that the term "min eral" in a reservation includes "gravel." Id. at 536-537 (quoting Midland Ry. v. Checkley, 4 L.R.-Eq. 19, 25 (M.R. 1867)). Moreover, as both this Court and the courts below have noted, numerous judicial and adminis trative decisions have treated gravel as a "mineral" within the meaning of both land-grant statutes and fed eral mining laws. See Western Nuclear, 462 U.S. at 44- 46, 56-59; Pet. App. 9a. That was especially so by 1938, when the STA was enacted. See Western Nuclear, 462 U.S. at 45-46 (discussing Zimmerman, 39 Pub. Lands Dec. 310 (Dep't of the Interior 1910), overruled by Lay man, 52 Pub. Lands Dec. 714 (Dep't of the Interior 1929)). And in 1913, the Department of the Interior listed gravel as a mineral in its comprehensive study of the public lands. See id. at 46 n.7.
Nor have courts after Western Nuclear "largely confined [its holding] to its particulars," as petitioners suggest. Pet. 21. The cases petitioners cite in support of that proposition (Pet. 21-23) all concerned a non-stat utory mineral reservation, in which the critical inquiry was the intent of the parties with respect to a specific piece of land, not the intent of a Congress that enacted a statutory mineral reservation applicable to all tracts within a category of public lands. See Pet. App. 37a. The decisions themselves distinguish Western Nuclear on that basis. See Miller Land & Mineral Co. v. State Highway Comm'n, 757 P.2d 1001, 1003 (Wyo. 1988) (in terpreting mineral reservation in land transfer between private parties); Rysavy v. Novotny, 401 N.W.2d 540, 542 (S.D. 1987) (same); Downstate Stone Co. v. United States, 712 F.2d 1215, 1219 (7th Cir. 1983) (interpreting mineral reservation in private conveyance to the United States); Burkey v. United States, 25 Cl. Ct. 566, 577 (1992) (same); Hess II, 348 F.3d at 1248 (interpreting mineral reservation in land exchange patent issued pur suant to a statute that did not require the reservation of mineral rights to the United States); Poverty Flats Land & Cattle Co. v. United States, 788 F.2d 676, 683 (10th Cir. 1986) (same).
In any event, this case provides no opportunity to consider whether Western Nuclear "should be recog nized as the exception, not the rule." Pet. 19. Specifi cally applying the analysis of Western Nuclear to the particular statute in this case, the court of appeals cor rectly determined that deposits of sand and gravel are reserved to the United States under the STA. That de termination was correct and raises no issue warranting the Court's review.
The court of appeals correctly relied on "contempo raneous judicial decisions, opinions of the Secretary of the Interior, and IBLA decisions" in concluding that the STA's mineral reservation included sand and gravel when it was enacted in 1938. Pet. App. 9a. The court also determined that Congress "reduced any ambiguity on the question of what mineral deposits might be in cluded under the reservation" when it amended the STA in 1954-five years before the patents in this case were issued-to provide that "all other mineral deposits" were reserved to the United States, 1954 Act § 2, 68 Stat. 239 (emphasis added). Pet App. 7a.
The court of appeals further reasoned, as this Court did in Western Nuclear, that the uses Congress contem plated for the surface estate of patented lands demon strate that Congress did not intend to include sand and gravel deposits in the surface estate. The tracts pat ented under the STA were no more than five acres; Con gress expected that patentees would use these small parcels for residence, recreation, small business, or com munity site purposes. 1954 Act § 1, 68 Stat. 239. Con gress further stipulated that no patentee could receive more than one tract, except upon "a showing of good faith and reasons satisfactory to the Secretary." Ibid. As the court below held, Congress "could not have ex pected the homeowners or small business owners of five acre plots to exploit the subsurface estate." Pet. App. 10a (citation omitted). Finally, as in Western Nuclear, the court of appeals' holding that the reservation of min erals under the STA includes sand and gravel is "but tressed by 'the established rule that land grants are con strued favorably to the Government, that nothing passes except what is conveyed in clear language, and that if there are doubts they are resolved for the Government, not against it.'" 462 U.S. at 59 (quoting United States v. Union Pac. R.R., 353 U.S. 112, 116 (1957)).
Petitioners contend (Pet. 24-27) that Congress could not have intended to enact a reservation of sand and gravel because Congress's purpose of settling the STA parcels "surely would have been frustrated if prospec tive purchasers knew that they were not receiving title to the materials that made up the bulk of the land they were buying," and "[e]xtraction of common materials from such small parcels is not concurrently compatible with the ordinary residential, business and civil develop ments contemplated by the STA on these small plots." This contention is flawed in at least three respects.
First, petitioners' argument assumes that the bulk of STA lands were comprised of sand and gravel. But unlike the Pittman Underground Water Act of 1919, ch. 77, 41 Stat. 293, which applied only to Nevada, where sand and gravel are abundant, see BedRoc, 541 U.S. at 178-179, 184 (plurality opinion), the STA provided for a reservation of mineral deposits in public lands across the country, see 1954 Act §§ 1-2, 68 Stat. 239. And as the district court noted, "while some of the surface es tates sold or leased pursuant to the STA may have been comprised largely of sand and gravel, others certainly were not." Pet. App. 37a-38a. It is unlikely that Con gress intended for the meaning of the STA's mineral reservation to change depending on the mineral content of the particular tract at issue. See id. at 38a.
Second, even as to those lands comprised largely of sand and gravel, it is undisputed that nothing in the STA or in this Court's precedents would prevent an STA pat entee from making use of surface sand and gravel as necessary for engaging in the uses of the land that Con gress contemplated. See Western Nuclear, 462 U.S. at 54 n.14; see also Pet. App. 11a. The STA forbids only the extraction of sand and gravel deposits. As the court of appeals noted, there is a significant difference be tween the incidental use of sand and gravel to build a home or small business, and the "full-scale commercial mining" of sand and gravel deposits at issue in this case. Ibid.
Third, that the extraction of sand and gravel depos its would entail disruption to holders of the surface es tate does not distinguish it from, for example, the ex traction of gold or copper. See Pet. App. 38a ("[V]irtual ly any type of drilling or mining operation to exploit the mineral estate is likely to disrupt the five acres compris ing a STA surface estate."). And although, as petition ers note (Pet. 25), the STA did not expressly provide for compensation to the surface owner for damages result ing from any mineral exploitation, such a provision would have been unnecessary with regard both to sand and gravel deposits and hardrock materials such as gold and copper. The Secretary's implementing regulations provided only for the disposition of "coal, oil, gas, or other minerals subject to the leasing laws,"4 and prohib ited the prospecting or disposition of the remainder of the reserved mineral estate. 43 C.F.R. 257.14 (Cum. Supp. 1943).
Petitioners also contend (Pet. 24-25) that Congress could not have intended to enact an expansive reserva tion of mineral rights because STA lands, unlike the SRHA lands at issue in Western Nuclear, were not "given away practically for free," but "sold at appraised value." Id. at 25. That contention is without merit. SRHA lands were not "free" in any practical sense; to obtain a patent, an entryman was required to reside on the land for three years and "to make permanent im provements upon the land . . . tending to increase the value of the land for stock-raising purposes of the value of not less than $1.25 per acre." Western Nuclear, 462 U.S. at 38 (brackets and citation omitted). In other words, SRHA patentees paid for the land with years of labor and land improvements. On the other hand, Con gress attached no such conditions to STA patents, and instead gave the Secretary the discretion to set a price for land sales under the statute. 1954 Act § 2, 68 Stat. 239; see STA, 52 Stat. 609 ("[N]o tract shall be sold for less than the cost of making any survey necessary to properly describe the land sold."). To say that the Sec retary ultimately sold the tracts "at appraised value" does not speak to Congress's intent in enacting the STA reservation, nor does it establish that the "appraised value" included the value of rights to sand and gravel deposits.
The petition for a writ of certiorari should be de nied.
PAUL D. CLEMENT
RONALD J. TENPAS
Acting Assistant Attorney
ELIZABETH ANN PETERSON
1 The Small Tract Act requires that the patents reserve "the oil, gas and all other mineral deposits." The reservation as it appears in the pa tents extends to "all oil, gas and other mineral deposits." Pet. App. 17a n.5; C.A. App. 24-38. It is undisputed that the patents properly effec tuate the statutory reservation.
2 The court of appeals' opinion as reproduced in the petition appendix omits a portion of the opinion. The last sentence of Section A should read: "In employing the Court's same plain language approach to this case we find that the plain meaning of the STA's reservation commands the most expansive interpretation available under existing law." See 216 Fed. Appx. 385, 389 (emphasis added); Pet. App. 9a.
3 Petitioners suggest that the plurality opinion in BedRoc implicitly undermined Western Nuclear's approach by interpreting the phrase "valuable minerals" according to the meaning of the term as of the time of the act's passage, thereby establishing that "[v]alue attained later is beside the point." Pet. 18-19 n.4. BedRoc, however, declined to extend that rule beyond the wording of the statute at issue in that case. See 541 U.S. at 183 n.5 (plurality opinion) (distinguishing the SRHA on the ground that, as the Court held in Western Nuclear, use of the unmodi fied term "minerals" called for an inquiry "into whether a substance might at some point have separate value from the soil and might, in the abstract, be susceptible of commercial use"). In any event, this con tention, if accepted, would undermine petitioners' own argument that no minerals except those that had local market value at the time of patent issuance should be deemed reserved, and would support the view that gravel, which was a locatable mineral when the STA was en acted, was reserved in this case.
4 The "minerals subject to the leasing laws" were coal, phosphate, so dium, potassium, oil, oil shale, and gas. Mineral Leasing Act, 30 U.S.C. 181 (1940).