The opinion
In the United States Court of Federal Claims
No. 11-884
Filed: October 7, 2014
****************************************
* The California Desert Conservation
* Act, 43 U.S.C. § 1781;
* The California Desert Protection Act,
* 16 U.S.C. § 1410aaa−7j;
* The Common Varieties Act,
REOFORCE, Inc., Theodore SIMONSON, and * 30 U.S.C. § 611;
Ronald STEHN, * The Federal Land Management and
* Policy Act of 1976, 43
Plaintiffs, * U.S.C. § 1701 et seq.;
* The Mining Law of 1872,
v. * 30 U.S.C. §§ 22–54;
* Takings Clause of the Fifth
THE UNITED STATES, * Amendment to the United States
* Constitution, U.S. Const. amend. V,
Defendant. * cl. 4;
* Unpatented mining claims;
* 28 U.S.C. § 2501 (statute of
* limitations);
* RCFC 12(h)(3) (lack of subject matter
* jurisdiction).
****************************************
Richard Meritt Stephens, Groen, Stephens & Klinge, LLP, Bellevue, Washington, Counsel for
Plaintiffs.
Kristofor Ross Swanson, Trial Attorney, United States Department of Justice, Washington,
D.C., Counsel for the Government.
MEMORANDUM OPINION AND FINAL ORDER
BRADEN, Judge.
On August 7, 1995, the United States Department of Interior’s Bureau of Land
Management (“BLM” or the “Government”) entered into a Memorandum of Understanding
(“MOU”) concerning the potential transfer of certain federal land to the State of California
(“California” or the “State”). In this case, it is alleged that the BLM effected a taking of
Plaintiffs’ unpatented mining claims on this land from the date the MOU issued until May 12,
2008, when the validity of Plaintiffs’ property rights on three of these claims was recognized.
To facilitate a review of this Memorandum Opinion and Order, the court has provided the
following outline:
I. THE RELEVANT FEDERAL STATUTES AND REGULATIONS GOVERNING
UNPATENTED MINING CLAIMS. ................................................................................. 3
A. The 1872 General Mining Law. .............................................................................. 3
B. The 1955 Common Varieties Act. .......................................................................... 6
C. The California Surface Mining And Reclamation Act of 1975. ............................. 7
D. The 1976 Federal Land Policy And Management Act. .......................................... 7
E. The 1976 California Desert Protection Act and the 1994 California Desert
Protection Act. ........................................................................................................ 8
II. THE RELEVANT FACTS. ................................................................................................ 8
A. Activities Regarding Plaintiffs’ Unpatented Mining Claims From The Early July
1995......................................................................................................................... 8
B. On August 7, 1995, The Bureau Of Land Management Entered Into A
Memorandum Of Understanding With The State Of California. ......................... 22
C. Activities Regarding Plaintiffs’ Unpatented Mining Clams After The August 7,
1995 Memorandum Of Understanding Was Operational. .................................... 25
D. On May 13, 1997, The Bureau of Land Management Withdrew Certain Public
Lands, “Subject To Valid Existing Rights” And Subsequent Activities Regarding
Plaintiffs’ Unpatented Mining Claims Until March 2006. ................................... 26
E. On March 15, 2006, The Bureau of Land Management Instituted A Contest
Proceeding To Determine The Validity Of Plaintiffs’ Unpatented Mining Claims.
............................................................................................................................... 32
F. The Contest Proceeding And May 12, 2008 Settlement Agreement. ................... 32
G. Activities Regarding Plaintiffs’ Mining Claims After The May 12, 2008
Settlement Agreement. .......................................................................................... 33
III. PROCEDURAL HISTORY.............................................................................................. 33
IV. DISCUSSION. .................................................................................................................. 36
A. Whether 28 U.S.C. § 2501 Bars Plaintiffs’ Takings Claims. ............................... 36
B. Whether Plaintiffs Have Standing. ....................................................................... 38
C. Whether The August 7, 1995 Memorandum Of Understanding Between The
Bureau Of Land Management And The State Of California Effected A Taking of
Plaintiffs’ Unpatented Mining Claims. ................................................................. 40
2
1. Whether Plaintiffs Had A Compensable Property Right On August 7,
1995, When The Department Of The Interior Entered Into The
Memorandum Of Understanding With The State Of California. ............. 40
2. Assuming, Arguendo, That Plaintiffs Had A Compensable Property Right
On August 7, 1995, Whether The Character Of The Memorandum Of
Understanding Effected A Taking. ........................................................... 40
D. Assuming, Arguendo, That The August 7, 1995 Memorandum Of Understanding
Effected A Taking Of Plaintiffs’ Mining Rights, Compensation Is Not Warranted.
............................................................................................................................... 41
V. CONCLUSION. ................................................................................................................ 43
* * *
I. THE RELEVANT FEDERAL STATUTES AND REGULATIONS GOVERNING
UNPATENTED MINING CLAIMS.
A. The 1872 General Mining Law.
In 1872, Congress enacted 30 U.S.C. §§ 22–54 (“the General Mining Law”) that
provides:
[A]ll valuable mineral deposits in lands belonging to the United States, both
surveyed and unsurveyed, shall be free and open to exploration and purchase, and
the lands in which they are found to occupation and purchase, by citizens of the
United States . . . under regulations prescribed by law[.]
30 U.S.C. § 22.
The General Mining Law “made public lands available to people for the purpose of
mining valuable mineral deposits,” with the aim of “reward[ing] and encourag[ing] the discovery
of minerals that are valuable in an economic sense.” United States v. Coleman, 390 U.S. 599,
602 (1968); see also Cal. Coastal Comm’n v. Granite Rock Co., 480 U.S. 572, 595 (1987)
(Powell, J., concurring in part and dissenting in part) (“In general, [the General Mining Law of
1872] opens the public lands to exploration. If one discovers valuable mineral deposits, the
statute grants him the right to extract and sell the minerals without paying a royalty to the United
States, as well as the right—subject to certain statutory requirements—to obtain fee title to the
land.”).
To secure rights under the General Mining Law, a claimant first must “locate” a valid
mining claim on federal lands, physically mark the boundaries of the claim, post a discovery
monument and notice, and satisfy other applicable statutory and regulatory requirements. See 30
U.S.C. § 28 (enumerating the requirements for “location” of a mining claim, including distinctly
marking the boundaries of the claim and maintaining adequate records concerning the date of
location and boundaries of the claims); see also United States v. Locke, 471 U.S. 84, 86 (1985)
(“‘Discovery’ of a mineral deposit, followed by the minimal procedures required to formally
3
‘locate’ the deposit, gives an individual the right of exclusive possession of the land for mining
purposes[.]”). But the location of a mining claim is only the first step in the process, because “a
mining claimant acquires no vested rights by location of a mining claim. Even though a claim
may be perfected in all other respects, unless and until a claimant is able to show that the claim
is supported by a discovery of a valuable locatable mineral within the boundaries of the claim,
no rights are acquired.” United States v. Rocky Conner, 139 IBLA 361, 365 (1997) (emphasis
added).
For mining claims 2 located on areas designated as “Limited Use” or “Class L” lands, the
BLM requires an operator to submit and obtain approval of a plan of operations “before
beginning operations greater than casual use.” 43 C.F.R. § 3809.11(a). 3 This requirement has
been in place since 1980, when the BLM promulgated surface management regulations for
mining operations, to prevent “unnecessary or undue degradation of federal lands which may
result from operations authorized by the mining laws.” NOTICE OF FINAL RULEMAKING, 45 FED.
REG. 78,902, 78,909 (Nov. 26, 1980); see also id. at 78,911 (promulgating 43 C.F.R. § 3809)
(“An approved plan of operations is required prior to commencing . . . [a]ny operation, except
casual use, in . . . [the] California Desert Conservation Area”); 43 C.F.R. § 3809.1-4 (1983)
(“An approved plan of operations is required prior to commencing . . . [a]ny operation, except
casual use, in . . . [l]ands in the California Desert Conservation Area designated as ‘controlled’
or ‘limited’ use areas[.]”); 43 C.F.R. § 3809.1-4 (1994) (same); 43 C.F.R. § 3809.11(c) (same);
43 C.F.R. § 3809.11(c)(1) (2014) (same).
The BLM requires that a plan of operations must include: operator information; a
description of the mining operations to be undertaken; maps; water management plans; and other
information “sufficient for BLM to determine that the plan of operations prevents unnecessary or
undue degradation.” 43 C.F.R. § 3809.401. Once a plan of operations is approved, an operator
is entitled to begin mining, consistent with the plan and applicable statutory and regulatory
requirements. See 43 C.F.R. § 3809.412 (“You must not begin operations until BLM approves
your plan of operations[.]”); see also 43 C.F.R. § 3809.415(a) (obligating a mining claimant to
comply with “the terms and conditions of your notice or approved plan of operations and other
Federal and State laws related to environmental protection and protection of cultural resources”);
43 C.F.R. § 3809.3 (requiring a mining claimant to follow state laws or regulations for
operations on public lands, unless they conflict with the BLM’s regulations). When a mining
2
The mining claims at issue in this case are located within the California Desert
Conservation Area, established by Congress in 1976, pursuant to Section 601 of the Federal
Land Management and Policy Act. See 43 U.S.C. § 1781 (establishing the California Desert
Conservation Area “to provide for the immediate and future protection and administration of
[those] lands . . . within the framework of a program of multiple use and sustained yield, and the
maintenance of environmental quality”). The claims are located on lands designated as “Limited
Use” or “Class L” lands. JSF ¶ 5 (“The El Paso placer claims and Big Jim Lode claim were and
are located within the Conservation Area on land that the [BLM] has designated as ‘Limited
Use’ or ‘Class L’ lands.”).
3
“Casual use,” is defined as “activities ordinarily resulting in no or negligible disturbance
of public lands or resources.” 43 C.F.R. § 3809.5.
4
operator decides to make changes to the “operations described in [the] approved plan of
operations,” the operator is requires to submit, and have approved, a modified plan of operations.
See 43 C.F.R. § 3809.431; see also id. § 432(a) (explaining that the “BLM will review and
approve a modification of your plan of operations in the same manner as it reviewed and
approved your initial plan [of operations]”).
As a matter of law, the “location” of a mining claim and an approved plan of operations
do not convey a compensable property interest to extract and sell minerals. See Skaw v. United
States, 13 Cl. Ct. 7, 28 (1987), aff’d, 847 F.2d 842 (Fed. Cir. 1988) (“Until the discovery of a
valuable mineral deposit, the locator has only a gratuity from the United States.”) (emphasis
added); see also id. (“A valuable mineral deposit is an occurrence of mineralization of such
quantity and quality as to warrant a person of ordinary prudence in the expenditure of time and
money in the development of a mine and the extraction of the mineral.”); Payne v. United States,
31 Fed. Cl. 709, 711 (1994) (“[A] finding that the unpatented claim is valid against the United
States . . . can only be made if there has been a discovery of [a] mineral within the limits of the
claim.”).
A “discovery” sufficient to vest a claimant with a compensable property right requires
that the claimant physically must locate a mineral deposit that is “of such a 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.’” Best v. Humboldt Placer
Min. Co., 371 U.S. 334, 335−36 (1963) (holding that unpatented mining claims are “valid against
the United States if there has been a discovery of mineral within the limits of the claim”)
(quoting Castle v. Womble, 19 Pub. Lands Dec. 455, 457 (1894)). A mining claimant also must
establish that “the mineral can be ‘extracted, removed, and marketed at a profit.’”
Coleman v. United States, 390 U.S. 599, 600 (1968).
To determine if a discovery has been made, the BLM conducts a validity examination,
also referred to as a valid existing rights (“VER”) determination. See Freeman v. United States,
83 Fed. Cl. 530, 533 (2008) (recognizing that the BLM has primary jurisdiction to determine the
validity of mining claims, and that “a validity determination of the mining claims is necessary to
establish a compensable property interest”); see also Vane Minerals (US), LLC v. United States,
116 Fed. Cl. 48, 57 (2014) (“The BLM and Forest Service must conduct a valid existing rights
determination to ascertain whether a claimant has made a discovery of a valuable mineral
deposit[.]”); Ware v. United States, 57 Fed. Cl. 782, 786 (2003) (“The determination of validity
has been placed by Congress in the hands of the Department of the Interior.”); Payne, 31 Fed. Cl.
at 712 (staying a case to allow the BLM to undertake “a validity determination” of unpatented
mining claims, because that “determination has to be made before plaintiffs could recover”). If
the BLM determines that a claimant has not discovered a valuable mineral deposit, it will initiate
contest proceedings before an administrative law judge at the Department of the Interior. See 43
C.F.R. § 4.451-1 (allowing the Government to “initiate contests for any cause affecting the
legality of validity of any . . . mining claim”); see also Cook v. United States, 85 Fed. Cl. 820,
824 (2009) (explaining that the BLM has authority to “file an administrative contest proceeding
if the [G]overnment finds that the mining claim does not in fact contain a discovery of a valuable
mineral deposit”). And, a mining claimant has the right to appeal an administrative law judge’s
adverse decision to the Interior Board of Land Appeals (“IBLA”) and then to appeal to a United
States District Court, pursuant to the Administrative Procedure Act, 5 U.S.C. § 551. See
5
Aulston v. United States, 823 F.2d 510, 513 (Fed. Cir. 1987) (“Although judicial review of the
IBLA determination is not precluded, Congress has vested review in the district courts, not in the
[United States Court of Federal Claims]”). Indeed, where the BLM has “decided that the United
States (not the claimants) own the disputed [mining claims], the [United States] Court of
[Federal] Claims [can]not review or overturn that administrative determination, even though that
court indisputably ha[s] jurisdiction over ‘taking’ claims.” Id. at 514.
Provided that a claimant makes a discovery and complies with applicable regulations, the
owner of unpatented mining claims has the right to extract minerals from the ground, but the
Government maintains fee simple in the land. See Best, 371 U.S. at 335–36 (describing
unpatented mining claims as “a possessory interest in land that is ‘mineral in character’”); see
also Kunkes v. United States, 78 F.3d 1549, 1554 (Fed. Cir. 1996) (explaining that, with an
unpatented mining claim, “[t]itle to the land remains with the United States, and the unpatented
mining claim holder has the right to use the Government’s fee simple estate for mining
purposes”).
It is established that unpatented mining claims are property within the protection of the
Fifth Amendment’s prohibition against uncompensated takings. See Kunkes, 78 F.3d at 1551.
But, the Government “maintains broad powers over the terms and conditions upon which the
public lands can be used, leased, and acquired,” and it retains significant regulatory authority
over unpatented mining claims. See Locke, 471 U.S. at 104. For example, a claimant may only
use the land encompassing an unpatented mining claim in ways that are “reasonably incident to
mining,” be required to pay annual maintenance fees, or forfeit the claims for failure to meet
other certain statutory and regulatory requirements. See Michael v. United States, 549 Fed.
App’x 960, 961 (Fed. Cir. 2013) (enumerating limitations on the scope of an unpatented mining
claimant’s property right); see also Kunkes, 78 F.3d at 1551.
In sum, as a matter of law, Congress authorized the Government, “after proper notice and
upon adequate hearing, to determine whether the claim is valid and, if not to declare it null and
void.” Cameron v. United States, 252 U.S. 450, 460 (1920).
B. The 1955 Common Varieties Act.
In 1955, Congress enacted the Common Varieties Act, 30 U.S.C. § 611, that withdrew
certain “common varieties” of minerals, such as sand, gravel, pumice, and pumicite, from the
General Mining Law. See 30 U.S.C. § 611 (“No deposit of common varieties of sand, stone,
gravel, pumice, pumicite, or cinders and no deposit of petrified wood shall be deemed a valuable
mineral deposit within the meaning of the mining laws of the United States so as to give
effective validity to any mining claim hereafter located under such mining laws[.]”). Mineral
deposits that “ha[ve] some property giving it distinct and special value,” however, are excluded
from the Common Varieties Act, and are subject to private ownership, i.e., they are “locatable,”
under the General Mining Law. Id. These types of mineral deposits are referred to as
“uncommon variety minerals.” Copar Pumice Co. v. United States, 112 Fed. Cl. 515, 521
(2013).
To ascertain whether a deposit constitutes an uncommon variety, the BLM prepares a
“mineral examination report,” 43 C.F.R. § 3809.100(a), known as a “common variety
6
determination[.]” See Cook, 85 Fed. Cl. at 824 (construing Section 3809.100 as requiring a
“common variety determination”). A mineral examination report may confirm a mineral’s status
as an “uncommon variety.” Id. at 824.
C. The California Surface Mining And Reclamation Act of 1975.
In 1995, California’s Surface Mining and Reclamation Act of 1975 (“SMARA”) was
enacted that requires a mine operator must have an approved plan in place before it may reclaim
lands surrounding a mine after operations cease, by “ripping all compacted aboveground surface
disturbance, followed by the recontouring, stabilization, and approximation of the soil surface
against the long-term effects of erosion.” Cal. Pub. Res. Code § 2710; DX-131; see also
Nelson v. Cnty. of Kern, 190 Cal. App. 4th 252, 259 n.3 (2010) (“SMARA requires reclamation
plans for surface mining operations in California after 1975 . . . and provides that ‘no person
shall conduct surface mining operations unless a permit is obtained from, a reclamation plan has
been submitted to and approved by, and financial assurances for reclamation have been approved
by, the lead agency for the operation pursuant to this article.’” (quoting Cal. Pub. Res.
Code. § 2770)). A bond and reclamation plan is required only for aboveground mines, but if an
underground mine has more than one-acre of total surface area disturbance, SMARA does apply.
DX-131.
D. The 1976 Federal Land Policy And Management Act.
In 1976, Congress enacted the Federal Land Policy and Management Act (“FLPMA”) to
administer public lands more efficiently and comprehensively by balancing environmental,
economic, and federalism concerns. See 43 U.S.C. § 1701(a)(1)–(13) (enumerating the polices
of FLPMA). Pursuant to Section 204, the Secretary of the Interior (the “Secretary”) is
authorized to withdraw certain public lands from location and entry from the General Mining
Law. See 43 U.S.C. § 1714(a) (“[T]he Secretary is authorized to make . . . withdrawals[,] but
only in accordance with the provisions and limitations of this section.”); see also id. § 1702(j)
(providing that “‘withdrawal’ means withholding an area of Federal land from settlement, sale,
location, or entry, under some or all of the general land laws”). The Secretary also has authority
to “segregate[]” lands from the operation of the public lands laws of the United States for a
limited period of time, by publishing notice of the segregation in the Federal Register. See 43
U.S.C. § 1714(b)(1).
A withdrawal prohibits establishment of new mining claims on public lands but does not
extinguish claims of the discovery of a valuable mineral deposit that was made prior to the date
of withdrawal. See Skaw, 13 Cl. Ct. at 28 (“When land is closed to location under the mining
laws subsequent to the location of a mining claim, the validity of the claim cannot be recognized
unless the claim was supported by a valid discovery at the time of the withdrawal.”); see also
Cameron, 252 U.S. at 456 (holding that a mining claim is valid if “there is an adequate mineral
discovery within the limits of the claim” that “preceded the creation of [the] reserve [that
withdrew the lands]”).
7
E. The 1976 California Desert Protection Act and the 1994 California Desert
Protection Act.
In 1976, Congress also enacted the California Desert Conservation Protection Act. See
43 U.S.C. § 1781(d) (directing the Secretary to “prepare and implement a comprehensive, long-
range plan for the management, use, development, and protection of the public lands within the
California Desert Conservation Area”). On October 31, 1994, the California Desert Protection
Act (“CDPA”) was enacted that directed the Secretary to transfer certain lands within the
California Desert Protection Area to the State for inclusion in Red Rock Canyon State Park. See
16 U.S.C. § 410aaa-71.
II. THE RELEVANT FACTS. 5
A. Activities Regarding Plaintiffs’ Unpatented Mining Claims From The Early
July 1995.
In the early 1980’s, Theodore Simonson (“Mr. Simonson”) began to explore pumicite
deposits 7 in California and hired Dr. Charles Chesterman to assist in that effort. PX-1. In
November 1983, Mr. Simonson and his then-wife located twenty-one, forty-acre placer mining
claims 8 in Kern County, California, under the General Mining Law. JSF ¶ 1. In November
1983, four mill site claims 9 also were located in Kern County, California. JSF ¶ 3. These claims
were named as “El Paso 1” through “El Paso 21.” JSF ¶ 1. Thereafter, Mr. Simonson drilled an
exploratory hole on the El Paso 6 claim to determine the thickness of the “Reoforce pumicite”
5
The relevant facts discussed herein were derived from: a September 16–23, 2013 trial
(“TR 1–1360”), where the court heard testimony and admitted: Joint Exhibits (“JX-3–81”);
Plaintiffs’ trial exhibits (“PX-1–445”); and the Government’s trial exhibits (“DX-2–246”). In
addition, the parties submitted a Joint Stipulation of Facts (“JSF 1–26”).
7
Pumicite is a naturally occurring amorphous (without crystal form) silica that is white to
faint gray with “less than one percent iron, and [] composed mostly of micron sized glassy grains
of rhyolitic composition with some smectite and traces of calcite, quartz, feldspar, and
cristobolite.” PX-42. Plaintiffs refer to the pumicite in this case by the name “Rheoforce” or
“Rheolite” at different points in time. PX-3 (1987 Reoforce Business Plan) (describing
“Rheoforce [as] the product, the concept and the company”); 9/16/13 TR 47 (Simonson).
Herein, the court will refer to this mineral as “Reoforce pumicite.”
8
A lode claim is “[a] classic vein, ledge, or other rock in place between definite walls. A
lode claim is located by metes and bounds.” BLM, Mining Claims and Mill Sites,
http://www.blm.gov/ca/st/en/info/iac/faqmc.html (last visited September 16, 2014); see also 43
C.F.R. § 3832.21(a). Placer mining claims include “[a]ll deposits, other than lodes.” BLM,
Mining Claims and Mill Sites, http://www.blm.gov/ca/st/en/info/iac/faqmc.html (last visited
September 16, 2014); see also 43 C.F.R. § 3832.21(b).
9
“A mill site is a location of nonmineral land not contiguous to a vein or lode that you
can use for activities reasonably incident to mineral development on, or production from, the
unpatented or patented lode or placer claim with which it is associated.” 43 C.F.R. § 3832.31.
8
deposit. 9/23/13 TR 1287 (Simonson). That effort confirmed the presence of a pumicite deposit
that was 14 feet thick in some locations, extending to 28 feet thick in others. Id. This was the
only drilling that Mr. Simonson conducted prior to the BLM entering into the MOU in August
1995. 9/17/13 TR 492–93 (Simonson). 11
In January 1984 and March 1985, two other placer claims were located and named as “El
Paso 22” and “El Paso 23.” JSF ¶ 1. Around this time, however, Mr. Simonson also learned that
certain fillers and extenders, such as crystalline silica, were carcinogenic. 9/16/13 TR 60
(Simonson); PX-96 (describing natural silica as “contain[ing] high levels of crystalline quartz
and crystabolite[,] which are potential carcinogens”). Consequently, Mr. Simonson had testing
performed on “Reoforce pumicite” to determine if it contained any quartz, rendering it
potentially carcinogenic. 9/16/13 TR 61 (Simonson). In a January 30, 1984 letter from John A.
Klasic, Chair of the Earth Sciences Department at California State Polytechnic University at
Pomona to Steve Ryland, a geologist who Mr. Simonson hired to assist with the development of
the mining claims, Professor Klasic explained that he “doubt[ed] if there is quartz in the
[pumicite] sample.” PX-6. But Professor Klasic also cautioned that, while the “analysis was
easy . . . , the interpretation is pure speculation.” PX-6.
In 1984, Mr. Simonson also contacted Steven Driscoll, a Professor of Plastics
Engineering at the University of Lowell in Massachusetts and asked him to analyze “Reoforce
pumicite” to ascertain its potential use by the plastics industry. 9/16/13 TR 45–47 (Simonson).
In May 1984, Professor Driscoll prepared and presented a report at the Society of Plastic
Engineers Annual Technical Conference that analyzed the benefits of using “Reoforce pumicite”
as a mineral filler. 14 The Report concluded that “Reoforce pumicite” “offers some very
attractive advantages,” including: (1) use as a filler in polypropylene, as it led to comparable
tensile properties and flexural strength, improved flexural modulus, and improved
hardness/scratch resistance and “improved handling and processability;” and (2) use as a filler in
ABS, where it led to improved tensile strength, tensile modulus, flexural strength, flexural
modulus, impact strength, and improved hardness/scratch resistance and improved handling and
processability. PX-7.
In September 1985, Mr. Simonson obtained, via quitclaim deed, a twenty-acre
unpatented mining lode claim, identified and named the “Big Jim Lode claim,” that overlapped
portions of an existing claim named El Paso 6 and El Paso 22. JSF ¶ 4.
In January 1987, DL Laboratories compared the reflectance and opacity of various
samples, including a sample comprising 100% Ti02 with one comprising a 40% (Ti02)/60% (a
“Reoforce pumicite”) mixture. PX-16. The results demonstrated that, as the percentage of
11
This was contrary to other testimony. 9/11/13 Springer Direct Testimony, Dkt. No. 78-
1, at 6 (“It is my understanding that only three holes had been drilled on the Reoforce claims
before August 1995 and that, at most, two of those holes intercepted any pumicite.”).
14
According to Professor Driscoll, “fillers” are classified as “extenders, functional, or
reinforcements depending upon the degree of cost reduction and enhancement of functional
properties in the polymeric material system.” PX-7.
9
“Reoforce pumicite” increased, reflectance decreased significantly, but opacity was largely
unchanged. PX-16. Another test was designed to “evaluate two natural glass fillers, [the
“Reoforce pumicite” in two different sizes and Gold Bond R,] for potential use in typical interior
flat latex wall paints,” as an extender. PX-16. That test concluded that the 30 Micron size
“Reoforce pumicite” functionally was equivalent, i.e., neither inferior nor superior, to Gold Bond
R, when used in polyvinyl or ethylene vinyl acetate latex flat paints. PX-16.
On February 9, 1987, Mr. Simonson submitted a Plan Of Operations (“POO”) 17 to the
BLM to mine approximately 100,000 tons per year from El Paso and Big Jim Lode claims. JSF
¶ 7.
On March 1, 1987, Steve Ryland, Mr. Simonson’s geological consultant, provided BLM
with an addendum to the POO. PX-42. On March 3, 1987, Rheoforce filed an Application for
an Environmental Assessment, pursuant to the National Environmental Policy Act of 1969
(“NEPA”), 42 U.S.C. § 4321, requiring federal agencies to provide environmental reports and
analysis requirements when undertaking “major Federal actions significantly affecting the
quality of the human environment.” 42 U.S.C. § 4332(C); PX-21 (March 3, 1987 Environmental
Assessment). In March 1987, DL Laboratories also completed testing on “Reoforce pumicite,” to
“evaluate [the] natural glass fillers submitted by [Reoforce] as partial replacements for titanium
dioxide in an Interior Latex Flat Paint.” PX-19. Those results determined that “Reoforce
pumicite” could serve as a replacement for Titanium Oxide (“Ti02”) in certain paint
formulations. PX-19 (“Based upon the results of this limited study, it appears that both the 16
and 30 micron glass fillers evaluated have potential as replacements for titanium dioxide in paint
formulations.”). In April 1987, DL Laboratories conducted additional testing, indicating that
“Reoforce pumicite” could be used as a filler in paint and replace between 5–10% Ti02, without
decreasing opacity. PX-42. As a result, Mr. Simonson scheduled mining operations to
commence in May 1987 that were expected to yield an annual production of 100,000 tons by
1989. JX-06.
On May 20, 1987, the BLM issued an Environmental Assessment concluding that
Reoforce’s proposed mine development would not “result in a significant adverse impact to the
environment, and therefore . . . that an Environmental Impact Statement [was not] . . . required
under [NEPA.]” PX-21.
On May 28, 1987, the BLM, however, conditionally approved Reoforce’s POO and
addendum, subject to twenty stipulations, including that the “material, pumicite, approved for
extraction under this [POO] is suspected by [the BLM] as not being subject to location under the
General Mining Laws” but that a determination of that question would be made at an unspecified
time. PX-22. Mr. Simonson specifically was advised that, although “[y]our [POO] . . . has been
approved,” Stipulation 1 states that, at some later time, the BLM will determine “whether the
mining and removal of [pumicite] is permitted under the authority of the General Mining Law[.]”
17
The BLM requires claimants to submit a POO “before beginning operations greater
than casual use.” 43 C.F.R. § 3809.11(a). The BLM may revoke an approved POO, if an
operator violates provisions in the POO. Generally, the BLM will not approve a POO until a
mineral examination is conducted to determine whether a mining claim is valid.
10
PX-22. In addition, the BLM advised that if pumicite is not locatable under the General Mining
Law, but was mined under an approved POO, Mr. Simonson would be required to pay a per-ton
royalty rate to the BLM based on prevailing market conditions. PX-24 (explaining that,
regardless of the outcome of the uncommon/common variety determination, Mr. Simonson “will
in no way [be] preclude[d] or prevent[ed]” from mining his claims). Mr. Simonson decided it
would be prudent not to begin mining until the BLM completed its common/uncommon variety
determination. 9/16/13 TR 105–06 (Simonson).
On June 26, 1987, the BLM conducted a field examination of the Reoforce mining claims
to ascertain whether the pumicite was a common variety and not “locatable.” PX-42. But, on
July 2, 1987, the BLM sent a letter to Mr. Simonson to clarify “some confusion, misconception,
and anxiety,” arising from Stipulation 1 in the May 28, 1987 approval and advise that, “[t]o put it
simply, your mining plan of operation has been approved[.]” PX-24. But, the July 2, 1987 letter
also stated that the BLM would, at some time in the future, “make a common/uncommon variety
determination.” PX-24. 19
On September 4, 1987, Mr. Simonson received preliminary test results from Dr. Steven
Blazey of A. Schulman Inc. (“Schulman”), an international supplier of high-performance plastic
compounds and resins. Dr. Blazey indicated that “Reoforce pumicite” was a “high quality
specialty silicate which imparts very good antiblock properties 20 to high quality polyolefin
films,” and asked whether “Reoforce pumicite” was approved by the United States Food and
Drug Administration (“FDA”) for consumer use. DX-74.
19
An undated memorandum from BLM’s California Desert District Manager to the
BLM’s California State Director that appears to be of contemporaneous origin, explained that
this situation placed Mr. Simonson in precarious position:
Unfortunately, this puts the operator in a predicament since the feasibility of his
operation rests [on] being able to access this material under some form of
appropriation. In addition, the operator is claiming that the use and qualities of
the pumicite warrants an “uncommon variety” determination. . . . If the operator
proceeds under his plan, he risks a possible adverse determination and possible
trespass action.
PX-28. Accordingly, the District Manager recommended that a BLM mineralogist be assigned
to “expedite a determination of the common variety of the subject pumicite.” PX-28.
20
Antiblocking agents, also known as antiblock, are additives commonly used in plastic
films and are designed to “create[] space between 2 plastic layers (surface roughness), preventing
so-called blocking.” A. Schulman Europe, Additive Antiblock, http://www.aschulman.com/
Europe/Masterbatch/CategoryPlusFunctionality/84096/3/Additive-Antiblock.aspx (last visited
Sept. 30, 2014); see also PX-111 (August 1994 paper written by Dr. Steven Blazey and Dr.
Valerie A. Hill, describing antiblock as “inorganic mineral or organic particles (of certain
particle size) which are compatible with [low-density polyethylene] and are added into films to
roughen the surface and permit air to enter to allow easy separation of the film layers.”).
11
In October 1987, Mr. Simonson also decided to develop an underground pumicite mine
on the twenty-three placer mining claims previously located (El Paso 1 through El Paso 23) and
started the Rheoforce Filler Company, subsequently incorporated as the Rheoforce Corporation.
JSF ¶ 2. At this time, “Mr. Simonson was the company’s sole officer and shareholder.” Id. In
October 1987, Mr. Simonson also hired Abel Banhov as a consultant to complete a Business
Plan for Reoforce focused on generating investor interest to obtain “financing of $4,000,000 to
bring [Reoforce] to commercial reality.” PX-3. The Business Plan outlined strategic steps that
Reoforce needed to take to compete in select markets and synthesized testing results obtained to
date, including information pumicite deposits on the twenty-three unpatented placer mining
claims. PX-3. The Business Plan also included information and analysis suggesting that
“Reoforce pumicite” could be used as a substitute for 5% to 10% of the Ti02, that was used, at
the time, as a “hiding pigment [to increase opacity] . . . in paint, ink, rubber, paper and plastics.”
PX-3.
Sometime in 1987, Mr. Simonson also began discussing the potential sale of Reoforce to
Placer Dome US, a large commercial mining company. 9/16/13 TR 161–63 (Simonson). At that
time, Placer Dome US allegedly offered Mr. Simonson $100,000 to purchase the Reoforce
deposit that Mr. Simonson refused. 9/16/13 TR 163 (Simonson).
In February 1988, DL Laboratories also performed other tests to evaluate “Reoforce
pumicite” as a replacement for calcined clay in ceiling paint and concluded:
1. Based upon the results of this study, [Reoforce] 16 Micron Glass Filler is
essentially equivalent in performance to Huber 70C to the extent tested.
2. [Reoforce] 16 Micron Glass Filler exhibits slightly higher opacity and re-
wetted opacity.
PX-26.
In March or April 1988, Mr. Simonson and Carl Engelhardt, a retained consultant,
formulated four different paints using “Reoforce pumicite” in the 16 micron size, to reduce the
use of Ti02. DX-94; PX-32. In an April 13, 1988 letter to Imperial Chemical Industries P.L.C.,
Mr. Engelhardt estimated that using “Reoforce pumicite” could save between 10 and 17 pounds
of Ti02/100 gallons. PX-29. But, he clarified that, to obtain the maximum Ti02 savings using
“Reoforce pumicite,” it was necessary to add the pumicite “in the letdown [phase] at slow speed
for 5 minutes[.]” PX-29.
In June or July 1988, Mr. Simonson had preliminary discussions with Engelhard
Corporation about a partnership with “respect to future commercial development of [Reoforce]
as a company, and [“Reoforce pumicite”] as a product line.” PX-30. Thereafter, John Thies, a
Fidelity Management employee with responsibility for overseeing investments in the plastics
field and an “adviser” to Mr. Simonson, explained to Engelhard Corporation that any partnership
with Reoforce must have two non-negotiable requirements: (1) Mr. Simonson and Mr. Thies had
to maintain majority ownership of Reoforce and “control of the reserves through early
commercial development;” and (2) Mr. Simonson and Mr. Thies required project financing. PX-
30; 9/16/13 TR 118–21 (Simonson); PX-31 (July 14, 1998 letter from Mr. Simonson to
12
Engelhard Corporation). Engelhard Corporation responded that successful development of
Reoforce would take several years of testing, analysis, and market development, and that Mr.
Simonson would need to “cede control of all aspects of the project at the outset.” PX-30. Mr.
Simonson decided not to pursue a partnership with Engelhard Corporation. 9/16/13 TR 122
(Simonson). In an unaddressed August 1, 1988 marketing letter, Mr. Engelhardt explained that
“testing has shown that [“Reoforce pumicite”] will produce equal or better paint quality and
depending upon the [pigment volume concentrate (“PVC”)] an 8 to 20% of additional savings of
Titanium Dioxide with lower raw material costs.” PX-32. Thereafter, Mr. Engelhardt promoted
“Reoforce pumicite” as an extender and partial replacement for Ti02 to various paint companies.
PX-29; PX-32; PX42; DX-94 (all letters from Engelhardt describing positive attributes of
“Reoforce pumicite”).
During the summer of 1988, Mr. Simonson also sent a batch of “Reoforce pumicite” to
Suntec Paint Inc. (“Suntec”), a paint company that had been searching “for an extender which
would provide [them] with further savings of Ti02 without affecting the physical properties of
[their] latex flat [paint] formulations.” PX-34. In August 1988, Suntec tested “Reoforce
pumicite” to make a “one hundred (100) gallon plant batch of [the] popular P.V.A. Latex Flat
White Base [paint] at 65 PVC.” PX-34. Typically, the formula for this paint contained 125
pounds of Ti02 and 50 pounds of Silica. PX-34. In this batch, however, Suntec used 110 pounds
of Ti02 and 50 pounds of “Reoforce pumicite,” in place of the silica, and concluded that the
batch made with “Reoforce pumicite” was equal in performance to the standard formula and
produced “a savings of 15 lbs. of Ti02 and a savings of 5 cents per gallon (with Rheolite 16M at
.25/lb.).” PX-34. Subsequently, Suntec inquired when “Reoforce pumicite” in the 16 Micron
size would be available to commercial paint manufacturers. PX-34.
On September 23, 1988, Mr. Engelhardt wrote a letter to the Engelhard Corporation
estimating that using “Reoforce pumicite” in paint formulations could save a paint company
approximately 5 to 40 cents per gallon, assuming that the price of “Reoforce pumicite” was 25
cents per pound and Ti02 was 99 cents per pound. PX-42.
In December 1988, Dr. Blazey of Schulman advised Mr. Simonson that “Reoforce
pumicite” perhaps could be used as an “antiblock in polyolefin film packaging,” and requested to
be apprised of the continued development and production capabilities of Reoforce. DX-69.
In a January 10, 1989 letter, Suntec Paint explained that it was willing to purchase
“Reoforce pumicite” (16 Micron size) at $400 per ton (20 cents per pound), because it could save
seven cents per gallon if “Reoforce pumicite” could be purchased at that price. PX-37. But,
Suntec subsequently withdrew its interest in Reoforce. DX-189.
On February 24, 1989, PRA Laboratories performed tests that showed “Reoforce
pumicite” could save 15% of Ti02 per gallon of flax white latex base paint. PX-38; PX-39.
By April 1989, Mr. Simonson located and claimed title to 23 additional unpatented placer
mining claims (known as the El Paso placer claims) and one unpatented lode mining claim
(known as the Big Jim Lode claim). PX-42.
13
On May 10, 1989, Lindsay Finishes Inc. advised Mr. Simonson that “Reoforce pumicite”
could save paint manufacturers approximately 28 to 30 cents per pound by using less Ti02. PX-
41.
On May 20, 1989, based on a geological field examination, BLM finalized a Mineral
Report about “Reoforce pumicite” deposits on the El Paso and Big Jim Lode claims (“1989
Mineral Report”). PX-42. The 1989 Mineral Report stated that “Reoforce pumicite” was “an
uncommon variety and that its proposed use, and all of the potential uses, except soil
conditions . . . clearly fall within a category of uncommon uses,” and a locatable mineral under
the General Mining Law. PX-42. It also determined that “Reoforce pumicite” could be used as
a pigment-extender for latex flat paints, potentially serving as a partial replacement for Ti02.
PX-42 (reporting that this pumicite “will replace Ti02 for about 5 to 10% by weight and 35 to
40% by volume, maintain a low luster (sheen) in contrast to Si02, enhance scrubbability, reduce
weight, maintain opacity and whiteness, and cost less than Ti02”); PX-42 (listing the unique
properties of “Reoforce pumicite,” as “light weight, small grain size, low luster, opacity,
durability, scrub resistance, whiteness, and so forth,” and that it also could be used as an abrasive
additive). But the 1989 Mineral Report did not conclude that Mr. Simonson made a discovery of
a valuable mineral deposit under the General Mining Law and was not a validity determination. 21
PX-42:012 (“The purpose of this study and report is to document the particulars of the common
variety aspects of pumicite for use in latex flat paints. This is a common variety determination
report and not a mining claim validity report.” 22 (emphasis added)); JSF ¶ 9. 23
On October 20, 1989, Mr. Simonson wrote to the FDA to ascertain whether “Reoforce
pumicite” could be used as a filler and antiblocking agent for certain kinds of polyolefin films
used for packaging food. On March 12 and April 25, 1990, that inquiry was supplemented. PX-
49; 9/16/13 TR 109, 148 (Simonson).
On October 24, 1989, BLM’s Area Manager of the Ridgecrest Office advised Mr.
Simonson of the 1989 Mineral Report and approved Reoforce’s 1987 POO that would expire in
five years, i.e., by October 24, 1994. PX-42.
21
The General Mining Law “authorizes American citizens to ‘locate’ valid mining claims
after ‘discovery’ of valuable mineral deposits and compliance with applicable legal
requirements.” Vane Minerals (US), LLC v. United States, 116 Fed. Cl. 48, 55 (2014) (citing
Chrisman v. Miller, 197 U.S. 313, 322–23 (1905)).
22
One of the ways that the BLM determines whether a mining claimant has made a
discovery of a valuable mineral deposit is through a “valid existing rights determination.” Vane
Minerals, 116 Fed. Cl. at 57. Such a determination also is referred to as a “validity examination”
or “a mining claim validity report.” PX-42.
23
On July 6, 1989, the 1989 Mineral Report was “reviewed and acknowledged” by the
BLM’s Associate District Manager, California Desert District, and was considered finalized.
PX-42.
14
On February 20, 1990, English China Clay, Inc. (“English Clay”) also tested “Reoforce
pumicite” and concluded that:
The [“Reoforce pumicite”] gives a slight dirty and yellow cask to the paint.
Because of this, the amount of [“Reoforce pumicite”] that can be used to replace
the Ti02 has to be limited to ~10% or lower.
DX-94.
Around this time, the Technical Service Manager for English Clay also wrote several
letters or communicated with Mr. Simonson and Placer Dome U.S., that it also was analyzing the
characteristics of “Reoforce pumicite” to determine the potential value of a business relationship
with Reoforce. DX-94.
On August 16, 1990, the FDA advised Mr. Simonson that “Reoforce pumicite” was
“relatively inert,” so that it was not necessary for him to submit additional information or file a
“food additive petition.” PX-49.
On May 30, 1991, Sovereign Gold Ltd. (“SG”), an Australian mining company proposed
a joint venture with Mr. Simonson to develop “Reoforce pumicite,” but stated that a successful
commercial mining operation “requires much effort to carry from inception to the commercial
stage.” PX-55. Specifically, SG proposed to: (1) develop “a comprehensive business plan for
the project” that included technical and business details, mining and processing plans, marketing
plans, and a five year capital and operating budget that would be used to “develop financing for
the project;” (2) allow Mr. Simonson to be “principally involved” in the marketing efforts, but
SG would be responsible for “developing mine and construction plans, executing those plans,”
and managing the project prior to its commercial stage; and (3) manage the entire “pre-
commercial” phase of the project through a management committee, but allow Reoforce
“complete input,” if SG’s decision would be “final and binding on both parties in the event of
dispute.” PX-55. In exchange, Mr. Simonson needed to grant SG a two-year option on 50%
interest of the project. PX-55. Mr. Simonson rejected that proposal. See 9/16/13 TR 154
(Simonson).
In June 1991, Edward F. McCarthy, a well-known executive in the industrial minerals
business, completed a report analyzing potential markets for products utilizing “Reoforce
pumicite” (“the McCarthy Report”). PX-56. 25 The McCarthy Report concluded that:
(1) milled 26 “Reoforce pumicite” had the potential to capture approximately 55,000 tons per year
25
It is unclear whether Mr. Simonson commissioned the McCarthy Report or whether it
was a project conducted for Cyprus Minerals. Compare 9/18/13 TR 849 (Davis) (“Q. “And it’s
your assumption that [the McCarthy Report] was an independent report, correct? A. [Mr.
McCarthy] told me it was an independent report.”), with 9/16/13 TR 156–58 (Simonson)
(explaining that he paid Mr. McCarthy $2,000 to obtain “his honest opinion about the [pumicite]
and what he felt he would do as a marketing person”).
26
In this context, “milled” means products “finer than 50 mesh and does not include
construction aggregates, brick clays or glass sands.” PX-56.
15
“at an average realization ex mill of close to $200 per ton;” (2) major market opportunities for
“Reoforce pumicite” were in coatings, but “Reoforce pumicite” could compete successfully in
niche markets in plastics, rubber, and friction materials; and (3) based on the foregoing, Reoforce
could generate an estimated annual revenue of $10.9 million dollars. PX-56. But, the McCarthy
Report cautioned that these conclusions would require that Reoforce engage in a “significant
sales effort,” undertake “significant technical and developmental support,” and sell competitively
priced products, assuming no significant changes in the regulatory atmosphere vis-à-vis
crystalline silica and Volatile Organic Carbon. PX-56.
On July 8, 1991, English Clay observed that “Reoforce pumicite” would “primarily
compete with crystalline silicas, feldspar, and (possibly) barytes as an extender for paint and
other coatings. While [Reoforce pumicite’s] brightness is not extraordinary in its natural form, it
is quite acceptable for use in primers and intermediate coats.” PX-436. In addition, English
Clay observed that” Reoforce pumicite” potentially could compete with other types of fillers and
extenders, such as talcs, wallastonites, nepheline syenite, and diatomaceous earth. PX-436. But,
it also warned that the “carcinogenicity of crystalline silica has not become a major issue in the
mineral filler/extender market place” and, although “Reoforce pumicite’s” amorphous structure
was a “major selling point” in the past, “[t]oday, it is relatively unimportant.” PX-436.
On October 9, 1991, Norwegian Talc sent a letter to Mr. Simonson stating that “[a]ll
parties agree in principle that your amorphous silica is unique in its properties and geological
composition, and represent[s] a unique opportunity in the ever-increasing need to replace
crystalline silica in a variety of end applications[.]” PX-67. But, the letter cautioned that the
potential applications of “Reoforce pumicite” “need to be studied in more detail in order to
quantify the amounts of material that can be sold in the next 5–10 years.” PX-67. Further, this
letter outlined several “steps to introduce and commercialize” “Reoforce pumicite,” including
custom grinding of the material in 6, 15, 45, and 60 plus micron sizes for uses as an antiblock, a
filler in paints and plastics, and as a “purging compound.” PX-67. And, the letter further
explained that Norwegian Talc’s interest in “Reoforce pumicite” was conditioned on several
assumptions and revisions to Mr. Simonson’s business plan. PX-67 (explaining that Norwegian
Talc’s interest was “under the assumption that [Mr. Simonson had] adequate resources, that you
have met all legal requirements, that you comply with all prevailing laws and regulations, and
that the material meets all relevant safety standards[.]”); id. (“In our view, the investment figures
you presented in your business plan . . . should be critically reviewed and updated.”). 27
On October 20, 1991, the Technical Service Manager for English Clay sent another letter
to Placer Dome U.S. describing the “Reoforce pumicite” deposit as “unique,” with market
potential, because it had a very low level of crystalline silica and “will have an application in the
paint and plastics markets. . . . , probably be useful in caulks and sealants. . . . , [and] possibly be
usable in inks, textiles, [and] fiberglass reinforced polyester (FRP) applications.” PX-68. But,
“Reoforce pumicite” “would compete on a segmental basis with products that [Placer Dome
was] currently involved in selling/developing.” PX-68.
27
Sometime in 1991, Placer Dome resurrected its interest in exploring a joint venture
with Reoforce. PX-66 (describing interest by Placer Dome in jointly developing Reoforce
mining claims with Norwegian Talc Minerals).
16
On November 12, 1991, Placer Dome forwarded to Mr. Simonson “an analysis of two
different ways in which [Reoforce] can be established from marketing, production and technical
viewpoints.” PX-70. First, Reoforce should focus its initial marketing endeavors on
opportunities in the commercial coatings market, as the development work necessary to succeed
in that market is “relatively straight forward; the required testing equipment is relatively
inexpensive; and sales aids can be easily prepared for this market.” PX-70. Second, a
partnership was proposed with Reoforce. PX-70 (explaining that working with Reoforce on a
“partnering basis . . . would be a good example of an approach that could be taken once
specifications were established for a product that could be produced consistently”).
On December 5, 1991, Mr. Simonson submitted an amendment to the approved May 20,
1987 POO to increase tonnage to 200,000 tons per year. JX-22.
On January 10, 1992, Placer Dome proposed a detailed arrangement to jointly “go
forward with development of the [Reoforce] property as soon as possible” as it “holds the best
chance for resolving land title issues” relating to the Reoforce mining claims. PX-76. The
proposal explained that, “from [Placer Dome’s] viewpoint, numerous uncertainties surround the
project, not least of which is the apparent serious inadequacy of [Reoforce’s] title to the
claims . . . [which] is a serious obstacle to making a substantial investment with confidence.”
PX-76 (emphasis added). It also provided that Placer Dome would “stake string lode
claims . . . along the outcrop of the pumicite bed in order to secure extralateral rights,” have 20
acre placer claims staked over Mr. Simonson’s existing 40 acre claims to “negate any possible
future challenge” to Reoforce claims, and, when “the title issues are resolved, [all] claims will be
assignable to [Placer Dome], or to Simonson if [Placer Dome] later withdraws.” PX-76. Placer
Dome also indicated that it might, at some unidentified time, initiate a quiet title action to
Reoforce mining claims but require that Mr. Simonson indemnify Placer Dome for any “possible
adverse outcome” from that action. PX-76. In addition, if Placer Dome was “satisfied with [Mr.
Simonson’s] title to the property,” then it would have the option to explore and develop the
property in return for an 80% equity interest in the property. PX-76. After Placer Dome
obtained title to the Reoforce mining claims, it agreed to “retain [Mr.] Simonson’s services as
consultant and contractor for the marketing and sale of [the] product” for a period of three years
at an annual rate of $100,000, with the option to renew for additional years. PX-76. And, on
commencement of commercial production, Placer Dome agreed to:
[m]ake a one-time payment to [Mr.] Simonson of $100,000 for every 10,000 short
tons of annual production (based upon the annual production as recommended in
[a] feasibility study ) capped at a sum of $500,000. In the event of an increase in
annual production beyond the initial production for which [Mr.] Simonson
received payment under this provision, [Mr.] Simonson shall receive an additional
one time payment of $100,000 for every incremental 10,000 annual tons of
production, still subject to the same total cap of $500,000.
PX-76. In addition, Placer Dome agreed that Mr. Simonson would retain a 20% working interest
in the property, if he provided Placer Dome with a right of first refusal and agreed to sell his
interest. PX-76. Mr. Simonson declined that offer. 9/16/13 TR 164 (Simonson). Thereafter, the
President of Placer Dome contacted Mr. Simonson to express an interest in coming to San
17
Francisco, California to discuss Placer Dome’s continuing interest in Reoforce. 9/16/13 TR 165
(Simonson). Mr. Simonson refused. 9/16/13 TR 165 (Simonson).
On February 19, 1992, the BLM informed Mr. Simonson that a New Environmental
Assessment was required “because of the proposed increase in the scale of operation[.]” PX-78.
Around March 1992, General Electric Silicones (“GE Silicones”) inquired whether it
could perform a plant evaluation of “Reoforce pumicite” and requested a minimum of 500
pounds (maximum of 750 pounds) to “verify the physical property profile, including shelf life
and application testing” of the pumicite. DX-61. GE Silicones indicated that if this testing were
successful, it may require “around 10,000lbs of [“Reoforce pumicite”] per week, rising to 20,000
lbs. per week within 1 year.” DX-61. This interest was based on the carcinogenic nature of
crystalline silicas. DX-61 (“Based on the . . . known health problems with crystalline silicas,
[General Electric Silicones is] interested in evaluating these volcanic glasses.”). In response, Mr.
Simonson extracted approximately 750 pounds of “Reoforce pumicite” from the portal area
using a compressor as a jackhammer. 9/16/13 TR 88 (Simonson) (“So we went out physically,
and we bagged [the pumicite] up again . . . . [and] I supplied 750 pounds of a precise
material[.]”). After testing how “Reoforce pumicite” could repel the absorption of water, GE
Silicones subsequently created a finished silicone spray, using pumicite in lieu of Min-U-Sil, a
fine ground silica product used by GE Silicones. 9/16/13 TR 91 (Simonson); see also US Silica,
Fine Ground Silica, http://www.ussilica.com/products/fine-ground-silica (last visited Sept. 29,
2014) (describing the benefits of silica). But, GE Silicones never executed any purchase orders
from Mr. Simonson. 9/17/13 TR 513–14 (Simonson).
On May 8, 1992, the BLM informed Mr. Simonson that, based on the level of disturbance
associated with the Reoforce mines, a SMARA Reclamation Plan and bond were required. JX-
21. The BLM also explained that, because of an “access road . . . recently constructed on the Big
Jim Lode Claim,” Reoforce was not in compliance with Stipulations 3 and 7 of the 1987 POO,
but did not issue a Notice of Non-Compliance. JX-21.
On May 18, 1992, the BLM issued a supplemental Environmental Assessment of
Reoforce’s 1991 proposed modification to the 1987 POO. PX-85. BLM explained that the
proposed modification would increase the authorized production tonnage to 200,000 tons,
resulting in an increase in the number of truck trips from 16 to 32. PX-85. Nevertheless, the
BLM determined that the “direct and indirect of the proposed action are not significantly
different than those identified in the [Environmental Assessment].” PX-85. Therefore, the BLM
concluded that Reoforce’s amended POO would have no significant adverse impact on the
environment, so that no Environmental Impact Statement was required under the NEPA. PX-85.
On May 21, 1992, the BLM approved the BLM’s supplemental environmental
assessment, and informed Mr. Simonson that he was required to abide by the May 28, 1987 POO
and five new stipulations to minimize impact on the desert tortoise. JX-22. Several of these
stipulations, however, required “approval from BLM before any enlargement of the portal area,
road construction, or underground mining may begin.” JX-22.
On August 6, 1992, the Kern County Planning and Development Services Department
informed Mr. Simonson that the Reoforce mining claims “would not come under the
18
requirements of [SMARA] as [they] did not disturb more than an acre of surface area.” JX-23.
Kern County advised, however, that if the project expanded in scope, a reclamation plan would
be necessary. JX-23.
On November 18, 1992, Dr. Blazey of Schulman wrote Mr. Simonson a letter to express
preliminary interest in using “Reoforce pumicite” as an antiblocking agent based on “some
preliminary investigation,” because the small micron size of “Reoforce pumicite”
works very well as an antiblock in oriented propylene films. These[] results are
promising in lieu of the current use of synthetic silica which is priced at between
$1.60 and $2.00 per pound. The market for synthetic silica in oriented propylene
films is several million pounds per year. Although [“Reoforce pumicite”] may
not completely overtake this market, the use of this material offers a definite
cost/performance advantage over current synthetic silica.
PX-96.
Mr. Blazey also indicated that “Reoforce pumicite” had potential in other applications in
paints and plastics. PX-96. Although natural silica was the “industry standard,” in Dr. Blazey’s
opinion, the non-carcinogenic characteristics of “Reoforce pumicite” placed it in an
advantageous market position. PX-96 (explaining that “Reoforce pumicite” showed “some
initial promise” as an antiblocking agent, because “natural silica . . . contains high levels of
crystalline quartz and crystabolite which are potential carcinogens”).
On January 8, 1993, the BLM inspected the Reoforce mining claims to determine
whether the mine portal area and adjacent roads negatively impacted the desert tortoise. DX-17.
On February 1, 1993, the BLM informed Mr. Simonson that he needed to submit
“information required by Stipulations No. 5 and 8 of [Reoforce’s May 28, 1987] approved plan
[of operations] to [the BLM] as a proposed mine plan modification.” DX-17. Specifically,
Stipulation 5 required that Reoforce submit detailed engineering plans “prior to enlargement of
the portal area and road construction” and Stipulation 8 required that Reoforce’s POO was
subject to approval of a “comprehensive road maintenance program,” if and when Reoforce
began commercially to mine its claims. PX-22.
In March and April 1993, approximately six years after the BLM approved Reoforce’s
POO on May 28, 1987, Mr. Simonson cleared the “portal area” or “staging area” on the south-
easterly end of the El Paso 6 claim (later relocated as El Paso 6A), portions of the Big Jim Lode
claim, and the El Paso 22 placer claim (later relocated as El Paso 22A). JSF ¶ 11. This work
included blasting and grading. JSF ¶ 11.
In May 1993, a Mining Engineer and Professor at the Colorado School of Mines,
completed an Underground Pumicite Mine Conceptual Design Report, commissioned by Mr.
Simonson (the “1993 Colorado Mining Report”). PX-103. Based on the 1993 Colorado Mining
Report, Mr. Simonson decided to mine the Reoforce claims, using a “room and pillar” method 29
29
Room and pillar mining is a system where material is extracted across a horizontal
plane, creating an array of horizontal rooms and pillars. “Pillars” of untouched mined material
19
that previously was used on the Cudahy or the Old Dutch Cleanser Mine. 9/16/13 TR 147–48
(Simonson). The 1993 Colorado Mining Report explained that this method was “designed to
produce a high purity, uncontaminated, product by mechanically mining excavations entirely
within the pumicite.” PX-103. Mr. Simonson decided instead to use a large-scale cleaner to
“vacuum the material out so it would never be exposed to quartz crystalline. It would go directly
into the vacuum cleaner and then drop down into a 70-ton hopper[,]” several thousand feet from
the mine. 9/16/13 TR 197, 348–49 (Simonson).
On July 18, 1994, Dr. Blazey sent Mr. Simonson a fax to follow-up on the progress of the
mining and grinding of “Reoforce pumicite.” PX-109. Therein, Dr. Blazey stated that although
a competitor of Schulman, Techmer PM, expressed an interest in “Reoforce pumicite,” Dr.
Blazey “want[ed] A. Schulman to be the first to advertise and get this material on the market for
sale.” PX-109; see also 9/19/13 TR 1072 (Blazey).
On August 4, 1994, Mr. Simonson renamed Rheoforce Corporation as Reoforce, Inc.
under the laws of the State of Delaware. JSF ¶ 15. Later that month, Kern County informed Mr.
Simonson that, should the Reoforce mines disturb in excess of one-acre, a reclamation plan was
required under SMARA. JX-28. Mr. Simonson did not submit a reclamation plan. 9/16/13 TR
189 (Simonson).
Between August 10 and 11, 1994, Dr. Blazey, in collaboration with Dr. Valerie Hill of
Schulman, presented a paper to the Clemson University Technical Conference (“the 1994
Paper”) on the potential for replacing crystalline silica in polyethylene films. PX-111. This
paper analyzed the performance characteristics of different antiblocking substances, including an
unnamed “natural silica (volcanic glass).” It concluded that an unidentified “natural silica
(volcanic glass)” exhibited equal antiblocking performance to the industry standard crystalline
silica and was not hazardous. PX-111. 31
On August 31, 1994, however, Mr. Simonson failed to pay the BLM statutorily-mandated
maintenance fees for the El Paso placer claims, Big Jim Lode claim, and mill site claims, so that
the BLM declared these claims were forfeited by operation of law. JSF ¶ 12.
On September 26, 1994, Mr. Simonson and Ronald Stehn re-identified and relocated
twenty-three placer mining claims that they named “El Paso 1A” through “El Paso 23A.” JSF
¶ 13. Each “A” claim corresponded with the original El Paso mining claims that Mr. Simonson
are left in place to support the roof of mine, while the “rooms” are extracted before the pillars are
partially extracted. See Kentucky Geological Survey, Methods of Mining, http://www.uky.edu
/KGS/coal/coal_mining.htm (last visited Sept. 29, 2014).
31
At trial, Dr. Blazey could not recall whether the “natural silica,” referenced in the 1994
Paper was “Reoforce pumicite.” 9/19/13 TR 1074. Dr. Blazey admitted, however, that the 1994
Paper was prepared at the time that Schulman was testing “Reoforce pumicite.” 9/19/13 TR
1074 (Blazey).
20
located between 1983 and 1985. JSF ¶ 13. 33 These claims occupied “the identical location as
the lapsed claims, consisting of approximately 920 acres.” PX-439. 34
On January 25, 1995, Schulman sent Mr. Simonson a purchase order for 5,000 pounds of
“Reoforce pumicite,” size R-100, at a price of $330/ton. PX-116. On March 17, 1995,
Schulman sent another purchase order for 5,000 pounds of “Reoforce pumicite” size R-106, at a
price of $475/metric ton. PX-121. These purchase orders were issued to perform batch testing
and generate sample formulations of plastic compounds using “Reoforce pumicite” to send to A.
Schulman’s customers. 9/19/13 TR 1063–64 (Blazey). In the Spring of 1995, Reoforce mined
approximately 200 tons of the pumicite, in part to fulfill orders from Schulman. 9/17/13 TR 426
(Simonson). At trial, however, neither Mr. Simonson nor Dr. Blazey could remember if
Schulman ever conducted testing on “Reoforce pumicite.” 9/17/13 TR 433 (Simonson).
Sometime in early 1995, Mr. Simonson decided that “Reoforce pumicite” would have to
be ground to particular micron sizes for different potential applications. 9/16/13 TR 228
(Simonson). To accomplish this objective, Mr. Simonson purchased ball mill, refurbished the
engines, cleaned out the lines and processing area, and purchased ceramic balls to crush material
into a uniform size. 35 9/16/13 TR 212–15 (Simonson). Mr. Simonson also arranged to transport
“Reoforce pumicite” to the ball mill in Victorville, California. 9/16/13 TR 217 (Simonson).
Thereafter, Mr. Simonson entered into a contractual arrangement with ProTech Minerals,
33
Although those claims had different numbering than predecessor claims, the BLM
treated the May 28, 1987 POO as “fully applicable” to the “El Paso A” claims. PX-439 (“The
parties agree that the previously approved [POO] are fully applicable to the [new El Paso “A”]
claims[.]”).
34
In November 1994, the BLM prepared to transfer title of certain designated lands to the
State, but the State declined to accept title of any pre-existing mining claims. JSF ¶ 17; see also
62 FED. REG. at 26324-01 (withdrawing lands on which the Reoforce mining claims are located
“[s]ubject to valid existing rights”). The BLM canceled existing patents on the land, and issued a
new patent to the State in November 1996, but it omitted all lands encumbered by unpatented
mining claims. JSF ¶ 17.
On May 18, 1995, the BLM proposed to withdraw lands designated by Section 701 of the
California Desert Protection Act (“Withdrawal Area”) from settlement, sale, location, or entry
under the existing land and mineral laws. See Proposed Withdrawal; California, 60 FED. REG.
26736 (May 18, 1995) (“Proposed Withdrawal”). The purpose of the Proposed Withdrawal was
to protect values of the designated area until they could be conveyed to California. Id.
Accordingly, the Proposed Withdrawal “segregated” lands within the area of the Proposed
Withdrawal, i.e., “close[d] the lands for up to two years from all the public land and mineral laws
except conveyances under [Section] 701 of the California Desert Protection Act of 1994 (108
Stat. 4471).” Id.. But, the BLM again emphasized, “[e]xisting rights are not affected by this
withdrawal.” 60 FED. REG. at 26736.
35
A ball mill is a device where material is loaded into a large drum that rotates, moving
ceramic balls to crush the material into a fine powder.
21
whereby he agreed to pay a fixed fee per-ton of pumicite that was processed or milled at the
plant. 9/16/13 TR 213−14 (Simonson).
In the spring of 1995, Mr. Simonson mined approximately 200 tons of pumicite from the
Reoforce claims in order to fulfill the January and March 1995 Schulman purchase orders.
9/16/13 TR 212, 218; 9/17/13 TR 425−26 (Simonson).
In June 1995, Mr. Simonson requested that Micromeritics Instrument Corporation
conduct an analysis of two different sizes of the milled “Reoforce pumicite,” one known as R-
106 and the other as R-100, to determine whether these samples were uniformly sized and
suitable for Schulman orders. PX-128; 9/16/13 TR 228 (Simonson). The test was positive.
9/16/13 TR 229–30 (Simonson). Thereafter, Mr. Simonson milled 100 tons of the mined
pumicite over a two day period at the Victorville mill into uniform sizes. 9/16/13 TR 218, 228
(Simonson); 9/17/13 TR 426–27 (Simonson). Mr. Simonson then sold five tons of the processed
and milled pumicite to Schulman to fill the January and March of 1995 orders, and put the
remaining 195 tons in a warehouse. 9/17/13 TR 427 (Simonson).
B. On August 7, 1995, The Bureau Of Land Management Entered Into A
Memorandum Of Understanding With The State Of California.
On August 7, 1995, the BLM State Office Director and the Director of the California
Department of Parks and Recreation signed a Memorandum of Understanding (“MOU”) to
provide for the management and administration of public lands within Red Rock Canyon State
Park that were designated under Section 701 of the California Desert Protection Act other than
unpatented mining claims. JX-034 (“The purpose of this MOU is to provide for the management
and administration of public lands within the Red Rock Canyon State Park that are not conveyed
to the State [of California] pursuant to Section 701 of the California Desert Protection
Act . . . due to being encumbered by unpatented mining claims.”). The August 7, 1995 MOU
explained that the BLM would conduct validity examinations of the mining claims located in the
proposed Withdrawal Area “prior to review and approval of any [plan of operations],” in
accordance with the following procedures:
Group one – Claims and Sites with no POOs.
This group is defined as claims and sites with no current activity, and no existing
plan. BLM action on these claims and sites will commence when the operator or
claimant comes forward with a POO under 43 CFR 3809. At that time, a validity
examination will be performed by a certified mineral examiner, to determine if
[validity] exists. If it does, the State of California will be notified of the results of
the examination, and BLM will proceed to review the POO. If no [validity]
exists, the plan shall be denied and a mineral contest issued against the claims
[will be initiated], through the BLM State Office.
22
Group Two – Claims and Sites with Existing POOs for Exploration
Activities.
Existing POOs issued pursuant to 43 CFR 3809 for exploration activities (not for
producing mines) are to be suspended until a [validity] determination can be
completed by a certified mineral examiner. This suspension is necessary as rights
against the United States cannot accrue on or after the date of the CDPA, October
31, 1994.
Group Three – Claims and Sites with Existing POOs for Producing Mines
This group is restricted to operating mines under existing POOs, those diligently
and continuously extracting and marketing ores and related commodities from
their mining claims and sites. In these circumstances, [the validity determination]
will be preliminarily presumed on an interim basis, by evidence of continuous
extraction and marketing of the mineral commodity. These producing mines will
be allowed to continue operating, pending final determination of [validity].
JX-34 (MOU) (emphasis added).
The MOU also outlined the responsibilities of BLM and California for the lands within
the proposed Withdrawal Area. JX-34.
In a July 12, 1995 letter, the BLM’s Acting Director of the Ridgecrest Office informed
Mr. Simonson that a formal MOU with the State was forthcoming and “for every existing
operation and every proposed operation to occur on unpatented federal mining claims within the
[Red Rock State] Park, BLM must complete a validity exam of the claims(s) prior to approval of
the mining [POO].” DX-19. But the letter stated that “[f]or operations such as yours, you will be
allowed to continue in accordance with your approved mining [POO] while the validity exam
process is completed for your claims.” DX-19 (emphasis added). 40
On August 10, 1995, a form letter was sent to all mining claimants with unpatented
mining claims within the Withdrawal Area, wherein the BLM California State Director advised
claimants “how BLM and the State are working cooperatively to meet the intent and spirit of
Congress to convey [lands covered by the CDPA] to the State, and to detail how lands covered
with unpatented mining claims will be managed.” JX-34; 9/16/13 TR 230 (Simonson). The
letter emphasized that mining claims located in the Withdrawal Area prior to October 31, 1994
“may have valid existing rights (VER) . . . predicated on the discovery by that date of a valuable
mineral deposit[.]” JX-34. But, to have valid existing rights, “a miner must at least demonstrate
that he or she is mining or could have been mining for a profit before . . . October 31,
1994. . . . [so that the] mere location of a mining claim, and filing of annual assessment work or
fees is not sufficient to demonstrate that a discovery mining has been made.” JX-34 (emphasis
40
According to Mr. Simonson, he did not receive a copy of that letter until approximately
ten years later through discovery in this case. 9/17/13 TR 355 (Simonson).
23
added). The BLM also enclosed a copy of the MOU to explain how “valid existing rights will be
evaluated.” JX-34; 9/16/13 TR 230 (Simonson).
At trial, Mr. Simonson testified that, when the August 7, 1995 MOU issued, he believed
that the Reoforce mining claims fell into Group 2.
MR. SIMONSON: In my reading, I was in group two [of the MOU], with my
plan of operation [being previously approved] and [the
Reoforce mines] not in full production.
Q. So, why did you think you were in group two?
MR. SIMONSON: I wasn’t in full production.
9/16/13 TR 231; PX-34 (describing requirements for Group 2).
* * *
Q. Mr. Simonson, did you continue mining after August 10th,
199[5]?
MR. SIMONSON No. . . .
THE COURT: You didn’t take samples out or anything else after that?
MR. SIMONSON: No.
THE COURT: Okay. Why?
MR. SIMONSON: Well, I had plenty [of samples] . . . . And also, I felt
strongly that I could not mine.
THE COURT: Because?
MR. SIMONSON: A validity exam had to be done.
9/16/13 TR 232−33; JX-34 (explaining, in Group Two, existing plans of operations “issued[,]
pursuant to 43 C.F.R 3809 for exploration activities (not for producing mines) are to be
suspended until a [validity] determination can be completed by a certified mineral examiner”).
At trial, Mr. Simonson acknowledged that he received a copy of the August 7, 1995
MOU, but stated that the BLM never advised him that he could not continue to mine under the
existing POO. 9/17/13 TR 439–42 (Simonson). 41
41
An August 1995 internal memorandum from the California BLM State Director
reflects that: “Verbal direction from California Minerals Deputy State Director to reprioritize the
Simonson case to a delayed status.” PX-334.
24
C. Activities Regarding Plaintiffs’ Unpatented Mining Clams After The August
7, 1995 Memorandum Of Understanding Was Operational.
On October 18, 1995, Reoforce received a permit to use underground diesel engines from
the California Division of Occupational Safety Office (“Cal OSHA”). PX-142. On October 19,
1995, Cal OSHA issued a report classifying the Reoforce mine as “Nongassy with Special
Conditions,” i.e., requiring Reoforce to develop testing of the underground environment at the
start of each working shift “to detect for adequate oxygen and toxic and explosive gases or
vapors before anyone enters said environment;” and to ventilate the mines to meet “respirable
dust requirements.” PX-144. On October 19, 1995, Reoforce became subject to other oversight
and additional requirements imposed by the Cal OSHA. PX-144 (Cal OSHA Underground
Classification Report).
On October 21, 1995, Cal OSHA conducted an inspection at the Reoforce site, and issued
a Notice of No Violation, because Reoforce “filled out and . . . implemented” the required Injury
and Illness Prevention Program model plan. PX-145.
On November 13, 1995, the BLM informed Reoforce that, because it exceeded the one-
acre disturbance threshold under SMARA, a reclamation plan and reclamation bond were
required, but failed to notify Mr. Simonson that the prior May 28, 1987 POO was suspended.
DX-131; DX-21. 42 Mr. Simonson thought the BLM required a reclamation plan, but he was
unable to finalize a completed plan at that time or in 1996. 9/17/13 TR 482–83 (Simonson)
(describing multiple but failed attempts to submit a SMARA reclamation plan).
Between January 17 and January 20, 1996, Hackworth Drilling Company, Mr. Simonson,
and Peter Milne drilled two exploratory holes on El Paso 7 (now 7A) at the Reoforce mining
claims. DX-156; 9/17/13 TR 491–92 (Simonson). On January 20, 1996, Reoforce also
convened a first annual shareholders meeting where a Board of Directors (the “Reoforce Board”)
and corporate officers were elected, and financial planning, organization, and future business
was discussed, including “pending orders, pending legal actions, [and] expected expenditures.”
DX-177. The meeting notes showed cash on hand was $14,000. DX-177. There is no mention
that Reoforce’s May 28, 1987 POO had been suspended. DX-177. Mr. Simonson was forced to
step down as the President of Reoforce Inc., and another shareholder, John Foggan, assumed that
position. DX-148; DX-177; 9/16/13 TR 253−55 (Simonson). Thereafter Reoforce began to use
the name “the Foggan Group.” 9/17/13 TR 414 (Simonson).
In 1997, the company entered into a joint venture with IMV-Nevada, Bill Wahl, the
owner and President of the Lime Mountain Company, and a geologist, David Klise, of LOK
Environmental, Inc. JX-40 (proposed joint venture agreement); DX-150 (describing the
42
Mr. Simonson estimated that between 1984 and 1995, he spent around $500,000 to
$550,000 to develop the mining claims for the commercial production of pumicite as a filler and
extender in paints and plastics. 9/17/13 TR 405–06 (Simonson). Some of that money was raised
by Reoforce investors and the rest was Mr. Simonson’s personal money. 9/17/13 TR 496
(Simonson). But by August 1995, “most of that money had been spent” and no new investors
were on the horizon. Id.
25
“contractual arrangement”). The objective of the joint venture was to obtain permits for, and
begin to develop, Reoforce mining claims to facilitate “commercial production of [“Reoforce
pumicite”].” On January 12, 1997, Mr. Simonson and Mr. Stehn transferred their interests in El
Paso 1A through El Paso 23A placer claims, via a quitclaim deed, to Reoforce, Inc. JSF ¶ 21.
On February 4, 1996, the Reoforce Board discussed a plan “to extract approximately 200
more tons of product sometime in late March or April.” DX-187. Again, there was no mention
that Reoforce’s POO was suspended at that or any other Board meeting. DX-188 (March 2,
1996, minutes); DX-189 (April 2, 1996 minutes); DX-190 (Jan. 4, 1997 minutes); DX-191 (Jan.
29, 1998 minutes); DX-176 (Sept. 16, 2002 minutes). 43 Instead, the notes reflect a company in
decline and diminishing business prospects. DX-188 (listing the cash on hand, as of March 2,
1996, as $8,500); DX-189 (listing the cash on hand, as of April 2, 1996, as $7,500, and the “sale
of some assets [was required] to maintain corporation while awaiting sale of product” was
required); DX-191 (“No other leads at this time.”).
D. On May 13, 1997, The Bureau of Land Management Withdrew Certain
Public Lands, “Subject To Valid Existing Rights” And Subsequent Activities
Regarding Plaintiffs’ Unpatented Mining Claims Until March 2006.
As anticipated by the August 7, 1995 MOU, on May 13, 1997, BLM finally withdrew the
lands designated by Section 701 of the CPDA from settlement, sale, location, or entry under the
United States land and mineral laws. See PUBLIC LAND ORDER NO. 7620; WITHDRAWAL OF
PUBLIC LANDS FOR RED ROCK CANYON STATE PARK; CA, 62 FED. REG. 26324 (May 13, 1997)
(“This order withdraws 8,896 acres of public lands from all public land and mineral laws[,]
except conveyances under Section 701 of the [CDPA] of 1994, for a period of 20 years to protect
the park resources of the lands until they can be conveyed to the State of California as mandated
by Congress.”). The withdrawal, however, was “subject to [any] valid existing [mineral] rights.”
Id. Although the August 7, 1995 MOOU anticipated conducting a validity determination on all
mining claims located in the Withdrawal Area, Plaintiffs’ mining claims were never noticed for a
validity hearing. Likewise, the August 7, 1995 MOU anticipated that the validity determinations
would be conducted before the BLM would approve of any POO, but Plaintiffs’ May 28, 1987
approved POO was never rescinded and did not undergo any additional review of Plaintiffs’
claims.
On October 9, 1997, Bill Swanson submitted a Mining Operation Annual Report to the
California Department of Conservation that listed the status of the Reoforce mines as “Active.”
DX-195.
In late 1997, Kern County informed Reoforce that the total acreage of surface disturbance
affected by the Reoforce mines was 1.25 acres. DX-195. Thereafter, Reoforce “submitted the
first of what would become several reclamation plan applications to Kern County for review.”
DX-131.
43
A March 22, 1996 letter from the BLM to Kern County “regarding Mr. Simonson’s
operations in Red Rock State Park” also made no mention that the Reoforce POO was
suspended. DX-151.
26
The January 29, 1998 notes of the Reoforce Board reflect that “Bill Wahl . . . told [Mr.]
Foggan that the BLM is satisfied with the mining plan and has allowed mining to begin at any
time.” DX-191. In April 1998, Mr. Wahl submitted a SMARA application to Kern County on
behalf of “the Foggan Group.” DX-143 (SMARA application); DX-145 (letter transmitting
SMARA application on April 29, 1998). The Foggan Group submitted a SMARA application
stating the proposed starting date of mining operations as late 1999. DX-144. Mr. Klise and Mr.
Wahl also submitted a new POO to BLM’s Ridgecrest Field Office on behalf of the Foggan
Group. JX-041. The proposed plan anticipated underground bulk sampling and testing of
“Reoforce pumicite.” JX-041.
On April 15, 1998, Riverfront Corporation (“Riverfront”) sent a letter to John Foggan
explaining that it was “very interested in the possibility of purchasing your company’s pumicite
claims, [and] would like an opportunity to review” information pertaining to the status and
development of the mining claims. PX-161. Mr. Simonson was bcc’d on the letter. PX-161;
9/16/13 TR 260 (Simonson). Riverfront, however, never made a formal offer to purchase
Reoforce’s mining claims. 9/16/13 TR 260 (Simonson).
On July 2, 1998, Kern County informed the Foggan Group that its POO was not
adequate, because certain “items were either not included or not sufficiently addressed.” DX-
142. Thereafter, neither the Foggan Group nor Mr. Wahl took any action to cure these
deficiencies. JX-043.
In August 1998, J.M. Huber Corporation expressed preliminary interest in Reoforce
pumicite, indicating that it “could conceivably fill a profitable niche in Huber’s family of
functional fillers and extenders.” PX-33. After conducting testing and analysis on December 8,
1988, J.M. Huber informed Mr. Simonson that “Reoforce pumicite” was not “functionally
competitive with the control material [they] studied in [a] series of tests, . . . showed no
advantage in hiding power (opacity) or scrub resistance over [other] natural ground silica,” and
created a “noticeably darker paint.” DX 207. J.M. Huber advised, however, that further
development of “Reoforce pumicite” would make sense, if it could be priced competitively, i.e.,
in the range of 5–10 cents per pound. DX-207. 44
There is no evidence in the record of any activity on the Reoforce mining claims from
1999 through 2000.
On January 8, 2001, Mr. Simonson wrote a letter to the BLM requesting an extension of
Reoforce’s POO. JX-46. Therein, Mr. Simonson stated that he intended “to begin mining and to
bring [“Reoforce pumicite”] . . . to the long waited markets” and thanked the BLM for its
patience regarding the Reoforce mining claims. JX-46 (emphasis added).
44
Mr. Simonson testified several years later that J.M. Huber displayed a renewed interest
in purchasing Reoforce. 9/16/13 TR 277–79 (Simonson). But, according to Mr. Simonson,
because J.M. Huber wanted to purchase “Reoforce pumicite” to keep it off the market to prevent
it from competing with the precipitated silica they currently sold, he refused the offer. 9/16/13
TR 280 (Simonson).
27
On January 17, 2001, the BLM determined, based on a recent inspection of the Reoforce
mining claims, “there has been no changes and no work performed [t]here for greater than two
years.” DX-27. Therefore, the BLM found that the Reoforce mine site was in “non-operation,”
but not in compliance with 43 C.F.R. § 3715.3-1(b), and instructed Mr. Simonson to remove “all
property and reclaim” the Reoforce site within ninety days. DX-27. The BLM also informed
Mr. Simonson that, if he disagreed, he could respond in writing within 30 days to Kern County
demonstrating that he was in compliance with all state-level environmental and reclamation
requirements. DX-27.
On February 22, 2001, the BLM’s Ridgecrest Field Office followed up with Mr.
Simonson, explaining that the Reoforce claims were in non-operation, “simply because [the
BLM] could see no observable development on the claim[s] since approximately 1995.” DX-30.
The BLM also asked Mr. Simonson to verify whether that observation was correct, and if not, to
describe the mining operations conducted since 1995, as the agency “had no wish to shut down a
productive mining operation,” but “if [Mr. Simonson’s] equipment is not actually being used,
then there is no reason to keep it on public lands.” DX-30. 45
On September 6, 2002, Mr. Simonson again became President of Reoforce, Inc. after
other stockholders withdrew their investments and began marketing Reoforce pumicite. 9/16/13
TR 258 (Simonson); DX-176 (Sept. 8, 2002 Agreement between Reoforce and Mr. Simonson).
On November 3, 2002, Mr. Simonson wrote a letter to the California Department of Parks and
Recreation stating that he obtained an approved POO and that the BLM’s 1989
uncommon/common variety determination had “given [him] the right to mine” the Reoforce
claims. DX-137. After filing several incomplete or deficient applications for approval of a
reclamation plan that Kern County rejected, Reoforce successfully completed an application in
“late 2002.” DX-131.
On December 16, 2002, BLM’s Ridgecrest Field Office forwarded the Kern County
Planning Department comments about Reoforce’s reclamation plan, explaining that the BLM’s
1989 approval was contingent on Reoforce complying with Stipulations 5, 9, and 10 in the 1989
approval. JX-51. In addition, when Reoforce amended its plan,
[f]ederal regulations will require BLM’s approval of these amendments per 43
CFR 3809. A corollary to that approval is BLM’s obligation to perform a validity
examination of the mining claim per 43 CFR 3809.100.
JX-51.
On February 20, 2003, Mr. Simonson asked the FDA whether “Reoforce pumicite” could
be “use[d] as an anticaking agent in food salts.” PX-216. On March 24, 2003, the FDA
responded that it did not have any “toxicological concerns” regarding the level of potassium
oxide in “Reoforce pumicite,” if it was used an anticaking agent at a “use level of 1.7%.” PX-
45
On January 10, 2001, Mr. Wahl also informed the BLM that he was no longer
interested in the joint venture, because Mr. Simonson “seems to be acting on his own, outside the
interests of Foggan’s Group. . . . [and because Mr. Simonson] wants to build a multi-million
dollar mill and start mining with little thought for product research and market analysis.” JX-47.
28
216. But, the FDA advised that because of atypically high levels of lead and arsenic in
“Reoforce pumicite,” the FDA did “not consider your material to be food grade” for use as an
anticaking agent. PX-216.
On April 21, 2003 Reoforce filed a SMARA application that proposed to commence
mining, as soon as Kern County approved Reoforce’s reclamation plan. DX-132. 46
In May 2003, Reoforce’s 1987 reclamation plan was revised to reflect comments
received from Kern County, the BLM, and the California Department of Parks and Recreation.
DX-131. For example, the California Department of Parks and Recreation stated that, based on
the information Reoforce provided, it was “somewhat difficult to envision that an annual
production level of 50,000, let alone 250,000 tons . . . could be feasibly mined per annum by six
employees, hauling through a single specified portal against gravity,” and further stated that it
was “difficult to comprehend” this level of commercial mining taking place on the existing
mining platform Reoforce excavated. DX-131. Therefore, Kern County required Reoforce to
post a $7,432.07 bond to reclaim the 1.85 acres of disturbed by the Reoforce claims. DX-131.
On July 24, 2003, the Kern County Planning Commission approved a conditional use
permit of Reoforce’s “reclamation plan for aboveground surface disturbance.” DX-131.
On July 26, 2003, Mr. Simonson wrote to the BLM’s Ridgecrest Field Office and
requested a validity exam of Reoforce’s mining claims. DX-37 (“If your office is going to
initiate a determination on my valid existing rights, it would be imperative that you start your
examination as soon as possible, for I am ready to commence my approved mining operation”).
Mr. Simonson explained that the delay in receiving approval from Kern County “hindered the
mining of this pumicite.” DX-37.
On August 12, 2003, the BLM’s Ridgecrest Field Office sent a letter to Mr. Simonson’s
counsel stating:
The Foggan Group Organization once desired to move a large bulk sample of
pumicite from the El Paso Mining Claims, presumably to evaluate its
marketability. They submitted a separate and independent proposal for this. The
BLM treated this proposal in accordance with the [MOU] signed in 1995
(enclosed). That is, that no disturbance can be approved until the validity of these
claims is determined.
PX-232 (emphasis added); DX-108 (same); DX-49 (same); DX-54 (describing the Foggan
Group’s separate proposal for bulk sampling as being “placed in suspense until completion of a
46
Although the Reoforce mining claims are located on BLM-managed federal lands,
California also retains some regulatory control over those lands. For example, the Kern County
Planning Department and Kern County Planning Commission had authority to ensure
compliance with SMARA. DX-131 (“Approval of a reclamation plan and its content as
identified by SMARA and the State Mining and Geology Board guidelines are the extent of Kern
County’s responsibilities[.]”).
29
validity examination for the affected mining claims”); DX-78 (1998 statement by BLM that
“mining cannot begin [until a] validity exam [was] done”). 47
On September 29, 2003, Mr. Simonson sent a letter to the Secretary of Interior,
complaining that Reoforce had been “hindered over the years by the Ridgecrest BLM office[.]”
PX-430.
On October 14, 2003, the BLM requested preliminary information from Mr. Simonson as
to Reoforce’s corporate status in order to begin the validity examination process. DX-40 (“Your
desire to press forward with a validity exam is suitable and appropriate. The BLM concurs that
an examination of the validity of these claims is necessary. Documenting Reoforce’s corporate
status is a necessary step in that process.”).
On November 2003, Kern County approved Reoforce’s SMARA reclamation bond. DX-
39.
On November 18, 2003, Mr. Simonson submitted a Reoforce 2002 Mining Operation
Annual Report to the BLM stating that the status of the Reoforce mines was “Active” and that
the total disturbed acreage of the mines was 1.85 acres. DX-166.
On February 17, 2004, the Supervisory Geologist at the BLM’s Ridgecrest Field Office
sent an email to another BLM official, James Hamilton, to explain the agency’s “procedural
policy” as to prioritization of validity exams for mining claims located in the Withdrawal Area:
The BLM determined that if a site was active; i.e., on-going mining and milling
were taking place on the date the CDPA was passed, we would allow them to
continue operating in the same manner until we completed a validity exam of the
operation at some future date. Any non-active operation, such as Mr. Simonson’s,
would require completing a validity exam before operations were allowed to
proceed.
PX-438.
In a March 9, 2004 letter to the BLM, Mr. Simonson requested an explanation as to when
the validity determination would be made and complained that “[a]s of October 3, 2003, there
has been no communication from you regarding the validity exam that you are in charge of for
my Reoforce Inc. Mining Claims.” PX-244. On May 26, 2004, Mr. Simonson wrote a follow-up
to the BLM, because he received no response to his March 9, 2004 letter. PX-247.
47
PX-253 (describing a “letter dated August 12, 2003 [reflecting Mr. Simonson’s view]
that my approved mining plan by the BLM is presently not valid until the validity exam is
completed”); PX-291 (referencing the August 12, 2003 letter and stating that there “could be no
development [at the Reoforce claims] since 1995[,] because I was told in writing I could not
disturb any of the property[,] until the validity exam was completed”); DX-108 (referencing the
August 12, 2003 letter and expressing confusion about recent BLM statements that “almost
impl[y] I could have continued to mine on my own plan of operation”).
30
In a June 7, 2004 letter to the BLM Ridgecrest Office, Mr. Simonson again complained
that “[d]ue to the establishing of the Red Rock Canyon Park, my mining claims were put in
jeopardy until a validity examination could be done” and stated that Reoforce was unable to
fulfill the 1995 purchase orders from A. Schulman because of the August 1995 MOU. PX-248.
On September 14, 2004, the BLM State Director advised Mr. Simonson that there was no
“[POO] for the mining claims owned by Reoforce, Inc.,” because Mr. Simonson allowed the
original El Paso mining claims to lapse by failing to pay the requisite statutory fee. PX-334.
Therefore, Reoforce’s POO “expired by its own terms in 2002.” PX-334.
On February 22, 2005, Mr. Simonson sent National Gypsum Company a sample of
“Reoforce pumicite” and a “sedigraph readout for mineral distribution.” PX-264. On May 10,
2005, Cargill Salt (“Cargill”) sent Mr. Simonson a letter regarding the potential use of “Reoforce
pumicite” as an anticaking or flow agent for salt. PX-271. At that time, Cargill was purchasing
precipitated silica from JM Huber to act as a flow agent for salt. 9/16/13 TR 368–69
(Simonson). The May 10, 2005 letter indicated that Cargill’s preliminary tests showed that
“Reoforce pumicite” “prevent[ed] caking and enhance[d] flow,” so that the company was
“prepared to enter the next phase of testing to ensure that [‘Reoforce pumicite’] functions,” and
this would entail “analytical testing, additional stability testing, and inspection of [the Reoforce]
production facility.” PX-271. But, Cargill cautioned that FDA approval likely would be
required, since the pumicite would come into contact with food. PX-271.
On March 1, 2006, Mr. Simonson sent a letter to the BLM asking when the agency would
complete a validity exam of the Reoforce mining claims. PX-291. The letter explained there
was no activity on the Reoforce mining claims in or around August 1995, because Mr. Simonson
“was told in writing [by the BLM that he] could not disturb any of the property until the validity
exam was completed.” PX-291.
On March 2, 2006, a BLM geologist in the California Desert District Office sent an email
to the official in charge of the California division of the BLM in Sacramento to explain that
[the BLM geologist] would question any lack of activity on the [Reoforce] mining
claim[s being] used as a basis for closing [the Reoforce] case, especially since a
latch exists because BLM did not allow the operator to occupy the property until a
[validity examination] was complete.
PX-334. 54
54
An undated memorandum that appears to have been written in 2006, from the BLM
California State Director to the Assistant Director, Minerals, Realty and Resource Protection
explained that the BLM “determined that Mr. Simonson’s situation best fit Group Two [of the
MOU],” as there was “no on-going or continuous mining activities and no producing mine” on
Reoforce’s claims. PX-353. It also reported that “BLM informed Mr. Simonson that before
mining could commence we would first have to determine if he had established any valid
existing rights, and the way to do that would be by completing a validity examination of his
mining claims.” PX-353.
31
E. On March 15, 2006, The Bureau of Land Management Instituted A Contest
Proceeding To Determine The Validity Of Plaintiffs’ Unpatented Mining
Claims.
On March 15, 2006, a Supervisory Geologist at BLM’s Ridgecrest Field Office sent an
email to other BLM employees, explaining that “BLM never rescinded Mr. Simonson’s 1987
plan of operation” and clarified that, in July of 1995, the BLM “identif[ied to Mr. Simonson] the
need to conduct a validity exam of his unpatented mining claims before he could initiate
operations.” PX-334 (emphasis added).
On May 2, 2006, the California Department of Parks and Recreation requested the
BLM’s advice after “receiv[ing] a letter from Mr. Simonson . . . of his on-going Validity Exam
and his dilemma to show physical discovery of material.” PX-334. On May 3, 2006, the
Supervisory Geologist at BLM’s Ridgecrest Field Office replied that, because the BLM’s
validity exam of Reoforce’s claims was ongoing, Mr. Simonson’s request to conduct exploratory
drilling appeared to be an “attempt to accomplish discovery after the fact,” since the purpose of
the validity exam was to determine whether Reoforce made a discovery of a valuable mineral
prior to the date the lands within the Withdrawal Area were segregated. PX-334.
Mr. Simonson is well aware that we cannot and will not permit him to conduct
any further work at these claims until the Validity Exam is completed. The result
of the Validity Exam will either be an approval for him to go to work, or a
Contest action declaring the claims not valid. That decision is totally dependent
upon the data gathered during the [2004] field examination of his unpatented
mining claims and what exposure of minerals had been made by the date of the
field examination.
PX-334 (emphasis added).
On September 7, 2006, the BLM issued another Mineral Report (“2006 Mineral Report”)
recommending that contest proceedings at the Department of the Interior be initiated, because
“[n]o discovery of a valuable mineral had been made within the limits of [Mr. Simonson’s
unpatented mining claims].” JX-69. The 2006 Mineral Report also concluded that pumicite was
exposed on only two of Plaintiffs’ 23 mining claims, there was no open exposure was present on
the other 21 claims, and no market for the exposed “Reoforce pumicite.” JX-69. In short, Mr.
Simonson did not make a discovery of a valuable mineral deposit recognized by the General
Mining Law. JX-69. Consequently, “Reoforce’s activity falls within Group Two [of the August
1995 MOU].” JX-69.
F. The Contest Proceeding And May 12, 2008 Settlement Agreement.
On February 8, 2007, the BLM initiated a contest proceeding at the Department of
Interior alleging that Mr. Simonson’s unpatented mining claims were invalid, because: (1) “[n]o
discovery of a valuable mineral has been made within the limits of [El Paso 1A through El Paso
23A] . . . the pumicite [located therein] was not actually or prospectively marketable from May
18, 1995, the date of initial segregation through present;” (2) minerals had not been “found or
exposed” within the limits of twenty-one of Plaintiffs’ unpatented mining claims in “sufficient
quantities and/or qualities to constitute a valid discovery of a valuable mineral deposit from May
32
18, 1995;” and (3) the pumicite located within the limits of El Paso 6A and El Paso 22A was “a
common variety mineral, and not a valuable mineral deposit.” JSF ¶ 24.
On October 22–26, 2007, November 26–30, 2007, and March 3–5, 2008, the BLM
conducted hearings to determine the validity of the Reoforce claims. PX-444.
On May 12, 2008, the BLM and Reoforce entered into a settlement agreement that
resolved the contest proceeding, required Reoforce to relinquish all rights, title, and interest in
twenty (El Paso claims 1A–5A, 8A–21A, and 23A) of the twenty-three challenged unpatented
mining claims, but allowed Reoforce to proceed under the 1987 plan of operations to mine on El
Paso 6A, 7A, and 22A, subject to four stipulations (the “Settlement Agreement”). PX-439. Two
of those stipulations provided that Reoforce would relinquish all rights, title, and interest in the
remaining three El Paso mining claims, if Reoforce: (1) failed to begin mining within 24 months
of execution of the 2008 Settlement Agreement; or (2) ceased mining operations for a continuous
period of twelve months. PX-439. A third stipulation provided that Reoforce had the right to
mine the El Paso claims for an initial term of 20 years from the date of execution of the 2008
Settlement Agreement, with an option to renew for an additional 20-year period, provided there
was “substantial and continuous mining operations during the first 20 years of operation.” PX-
439. The fourth stipulation provided that the three mining claims were to be treated as a single
unit for purposes of the third stipulation, so that mining on any individual claim was sufficient to
satisfy the “substantial and continuous mining” requirement of the third stipulation. PX-439. On
May 19, 2008, the Department of Interior’s Office of Hearings and Appeals dismissed the
contest proceedings. JSF ¶ 25.
G. Activities Regarding Plaintiffs’ Mining Claims After The May 12, 2008
Settlement Agreement.
On July 10, 2008, Reoforce requested that the BLM approve a Road Use POO for a road
adjacent to the mining claims to haul pumicite at a rate of 50,000 tons per-year (approximately
200 tons per-day). PX-327. The Road Use Plan was required to comply with the 1987 Reoforce
plan of operations. JX-7 (May 28, 1987 letter approving Reoforce’s POO, subject to submitting
a comprehensive road plan).
On October 28, 2008, the BLM approved the Road Use POO, explaining that “Reoforce
is free to move forward with [mining operations],” provided it complied with pertinent statutory
and regulatory requirements, as well as other stipulations previously-imposed by the BLM. PX-
330.
III. PROCEDURAL HISTORY.
On December 19, 2011, Plaintiffs filed a Complaint in the United States Court of Federal
Claims alleging that the BLM effected a temporary regulatory taking of the three unpatented
placer mining claims recognized as valid property rights in the May 12, 2008 Settlement
Agreement (“Compl.”).
On February 17, 2012, the Government filed a Motion To Dismiss, arguing that the court
did not have jurisdiction to adjudicate the claims alleged in the December 9, 2011 Complaint,
33
because it was filed outside the six-year time period required by 28 U.S.C. § 2501. On March
19, 2012, Plaintiffs filed a Response. On April 5, 2012, the Government filed a Reply.
On April 25, 2012, then-presiding Senior Judge Futey denied the Government’s February
17, 2012 Motion To Dismiss. See Reoforce v. United States, No. 11-884, 2012 WL 1427387, *3
(Fed. Cl. Apr. 25, 2012) (“Reoforce I”) (reasoning that, “[i]f [P]laintiffs had filed a claim in
1995, then they would have been required to demonstrate the existence of a compensable
property interest, but this existence was not resolved until the validity determination in 2006.”).
Therefore, Plaintiffs’ claims were not ripe in 1995 and likely would have been dismissed. The
court also determined that Plaintiffs’ claims did not accrue in 1995, “because the [MOU] . . . was
not a final governmental determination depriving [Plaintiffs] of a compensable property right.”
Id. at *3 (quoting Navajo Nation v. United States, 631 F.3d 1268, 1278 (Fed. Cir. 2011) (“In
certain situations, a claim for a temporary regulatory taking does not accrue when a regulation is
enacted[,] because the regulation itself is not a final governmental determination depriving a
plaintiff of a compensable property right.”)). Therefore, the court determined that Plaintiffs’
claims in this case accrued on September 7, 2006, when the BLM issued the 2006 Mineral
Report, finding that Plaintiffs never made a discovery of a valuable mineral deposit within the
six-year statute of limitations. Id. at *5.
On May 9, 2012, the Government filed an Answer, asserting six affirmative defenses. 56
On July 23, 2012, Plaintiffs filed a Motion For Partial Summary Judgment arguing that,
as a matter of law, the duration of the Government’s alleged temporary regulatory taking was
from August 7, 1995 to May 12, 2008. On July 30, 2012, the Government also filed a Motion
For Partial Summary Judgment, contending that Plaintiffs could pursue a temporary regulatory
takings claim only for the period September 7, 2006, i.e., the date that Senior Judge Futey
determined that Plaintiffs’ claims accrued, to May 12, 2008, i.e., when the Settlement Agreement
was entered. On August 31, 2012, both parties filed a Response. On September 21, 2012, both
parties filed a Reply.
On December 11, 2012, Senior Judge Futey denied both Partial Motions For Summary
Judgment, determining that Plaintiffs were not entitled to judgment as a matter of law, because a
plaintiff can only recover damages from the date commencing when the Government’s taking
begins. See Order, Reoforce v. United States, ECF No. 11-884, Dkt. 27 at 6–8 (Fed. Cl. Dec. 11,
2012) (“Reoforce II”). The Government’s Motion For Partial Summary Judgment also was
denied, because issues of material fact remained as to “whether plaintiffs can establish a taking
by extraordinary delay, and if so, the date such delay became extraordinary, prior to September
7, 2006.” Reoforce II, at 10. In so ruling, Senior Judge Futey determined that the valid existing
rights determination was the functional equivalent of a permitting process. Id. at 6–10.
56
Those affirmative defenses were: (1) the Complaint fails to state a claim upon which
relief may be granted; (2) that the court lacked jurisdiction to adjudicate “in whole or in part the
subject matter of this action;” (3) the claims alleged are barred by the applicable statute of
limitations; (4) the Complaint fails to allege an action undertaken by the Government that was
ripe for adjudication; (5) Plaintiffs’ lacked standing; and (6) Plaintiffs’ lacked a “compensable
property interest to pursue this claim.” Answer at 5.
34
On November 14, 2012, Plaintiffs filed a Motion For Partial Summary Judgment On
United States’ Sixth Affirmative Defense, arguing that the doctrines of equitable estoppel and res
judicata precluded the Government from arguing that Plaintiffs’ lacked a compensable property
interest in the three unpatented mining claims. On December 17, 2012, the Government filed a
Response. On January 14, 2013, Plaintiffs filed a Reply. On April 4, 2013, Senior Judge Futey
granted Plaintiffs’ November 14, 2012 Motion For Partial Summary Judgment regarding the
Government’s sixth affirmative defense. See Reoforce v. United States, 2013 WL 1405925 (Apr.
4, 2013) (“Reoforce III”). Therein, the court determined that the May 12, 2008 Settlement
Agreement was a final judgment on the merits, because the parties fully and fairly litigated
whether Plaintiffs had made a discovery of a valuable mineral deposit in the contest proceedings,
and Plaintiffs “emerged with rights to mine under a valid settlement agreement, . . . [so that] res
judicata prevents the Government from asserting [that Plaintiffs lack] a compensable property
interest” as to the three unpatented mining claims at issue. Reoforce III, 2013 WL 1405925 at
*7; see also id. at *8 (“Plaintiffs’ property interest in the unpatented mining claims has been
established as a matter of law.”).
On January 8, 2013, Plaintiffs filed a Motion For Reconsideration because of an
intervening change in the law occasioned by the United States Supreme Court’s decision in
Arkansas Game and Fish Commission v. United States, 133 S. Ct. 511 (2012). Therein,
Plaintiffs contend that Senior Judge Futey erroneously construed the December 19, 2011
Complaint as solely asserting a temporary regulatory taking claim stemming from the BLM’s
alleged extraordinary delay in the valid existing rights determination process and equating the
contest proceedings to a permitting scheme. On January 25, 2013, the Government filed a
Response, agreeing with Plaintiffs that the contest proceedings were not analogous to a
permitting process, but that the “concessions in [the] Motion [F]or Reconsideration require that
[Plaintiffs] claim be dismissed as time barred.” Dkt. 35 at 2. On February 7, 2013, Senior Judge
Futey granted Plaintiffs’ January 8, 2013 Motion For Reconsideration and determined that the
Government’s alleged taking may have occurred before Plaintiffs’ claims accrued, so that
compensation should be measured from the time of the Government’s initial interference with
Plaintiffs’ property rights, instead of when the claims accrued. See Order, Reoforce v. United
States, No. 11-884, Dkt. 37 at 2 (Fed. Cl. Feb. 7, 2013) (“Reoforce IV”) In addition, although
Plaintiffs’ claims may not have accrued until the contest proceedings were complete, “the
interference that effects a taking might begin much earlier, and compensation is measured from
that time.” Id. (quoting First English Evangelical Lutheran Church of Glendale v. L.A. Cnty.,
482 U.S. 304, 321 (1987)). Therefore, Senior Judge Futey determined that Plaintiffs “may use
the issuance of the mineral report date [on September 7, 2006] to determine that the procedural
time limit [of the statute of limitations] is met, and the date of the MOU’s issuance [on August 7,
1995] to evaluate whether a taking occurred.” Id. at 2–3.
On May 24, 2013, Plaintiffs filed a Motion To Amend Complaint To Add A Plaintiff,
Ronald Stehn, that the court granted on June 18, 2013. That same day, Plaintiffs filed an
Amended Complaint that is substantively identical to the December 9, 2011 Complaint, other
than the addition of a new plaintiff Complaint (“Am. Compl.”). Compare Compl. ¶ 2, with Am.
Compl. ¶ 2. On June 26, the Government filed an Answer to the June 18, 2013 Amended
Complaint, reasserting the same six affirmative defenses, as were pled on May 9, 2012.
35
On June 20, 2013, then-Chief Judge Hewitt transferred this case to the undersigned judge,
pursuant to RCFC 40.1(c).
On August 14, 2013, the Government filed an Unopposed Motion To Admit Prior
Testimony Of Joseph L. Gum, Supervisory Geologist at the BLM Ridgecrest Field Office and
Plaintiffs filed an Unopposed Motion To Admit Deposition Testimony From Ronald Stehn. On
August 15, 2013, the court granted both motions.
On August 20, 2013, Plaintiffs filed a Motion In Limine, requesting that the court rule
that certain exhibits were admissible prior to trial. On August 30, 2014, the Government filed a
Response. On September 10, 2013, the court denied Plaintiffs’ August 20, 2013 Motion without
prejudice.
A trial was held in this case from September 16–23, 2013 as to liability and damages
(“TR 1−1360”).
On October 30, 2013, Plaintiffs filed a Motion To Admit Seven Additional Exhibits. On
November 6, 2013, the Government filed a Response. On November 13, 2013, Plaintiffs filed a
Reply. On November 14, 2013, the court admitted the documents Plaintiffs requested but
deferred ruling on admissibility of the evidence until issuance of the court’s Memorandum
Opinion and Final Order.
On November 27, 2013, Plaintiffs filed an Opening Post-Trial Brief (“Pl. Br.”). On
January 22, 2014, the Government filed a Post-Trial Brief (“Gov’t Br.”). On February 12, 2014,
Plaintiffs filed a Post-Trial Reply (“Pl. Reply”). On February 25, 2014, the court issued an Order
granting the Government leave to file a Surreply. On March 7, 2014, the Government filed a
Surreply (“Gov’t Reply”).
On June 9, 2014, at the court’s request, the parties filed a Joint Exhibit List with an
itemization of all exhibits proffered at trial, and reasserting the parties’ respective objections to
those exhibits.
IV. DISCUSSION.
A. Whether 28 U.S.C. § 2501 Bars Plaintiffs’ Takings Claims.
The Government requested that the court reconsider Senior Judge Futey’s prior ruling
that Plaintiffs’ claims accrued on September 7, 2006, when the BLM issued a second Mineral
Report, because a claim “first accrues when all the events have occurred that fix the alleged
liability of the [G]overnment and entitle the claimant to institute an action.” Gov’t Br. 40
(quoting Ingrum v. United States, 560 F.3d 1311, 1314 (Fed. Cir. 2009)). Plaintiffs respond that
“[r]econsideration is not proper if arguments previously made are simply reasserted.” Pl. Reply
21 n.13; see also Fru-Con Constr. Corp. v. United States, 44 Fed. Cl. 298, 301 (1999)
(explaining that reconsideration is warranted where the moving party shows “(1) that an
intervening change in the controlling law has occurred; (2) that previously unavailable evidence
is now available; or (3) that the motion is necessary to prevent manifest injustice”). Since the
Government “does not contend that any of these standards apply and they do not,” the court
should deny reconsideration of the statute of limitations issue. Pl. Reply 21 n.13.
36
As a matter of law, the statute of limitations set forth in 28 U.S.C. § 2501 is
“jurisdictional,” requiring “a court to decide a timeliness question despite a waiver,
[and] . . . forbidding a court to consider whether certain equitable considerations warrant
extending a limitations period.” John R. Sand & Gravel Co. v. United States, 552 U.S. 130,
133–34 (2008); see also Holmes v. United States, 657 F.3d 1303, 1317 (Fed. Cir. 2011)
(“Compliance with the statute of limitations [contained in Section 2501] is a jurisdictional
requirement.”). Moreover, a federal trial court always has an independent obligation to ascertain
subject matter jurisdiction at any point in the proceedings, whether raised by a party or not. See
Kontrick v. Ryan, 540 U.S. 443, 455 (2004) (“A litigant generally may raise a court’s lack of
subject-matter jurisdiction at any time in the same civil action[.]”); see also Folden v. United
States, 379 F.3d 1344, 1354 (Fed. Cir. 2004) (“Subject-matter jurisdiction may be challenged at
any time by the parties or by the court sua sponte.”). Therefore, the court has decided to
reconsider whether Section 2501 bars Plaintiffs’ regulatory taking claim. See RCFC 12(h)(3)
(“If the court determines at any time that it lacks subject-matter jurisdiction, the court must
dismiss the action.”).
As for the merits, determining when a taking accrues requires answering two related
questions. First, have all events that fix the alleged liability of the Government occurred? See
Hopland Band of Pomo Indians v. United States, 855 F.2d 1573, 1577 (Fed. Cir. 1988)
(Generally, a takings “claim ‘first accrues’ when all the events have occurred which fix the
alleged liability of the [Government] and entitle the plaintiff to institute an action.”) . Second, is
the claim ripe? See Williamson Cnty. Reg’l Planning Comm’n v. Hamilton Bank of Jefferson
City, 473 U.S. 172, 191 (1985) (holding that a regulatory taking is ripe when “the administrative
agency has arrived at a final, definitive position regarding how it will apply the regulations at
issue to the particular land in question”); see also Bayou Des Familles Dev. Corp. v. United
States, 130 F.3d 1034, 1038 (Fed. Cir. 1997) (same). In this case, the answer to both of these
questions is yes.
Typically, accrual and ripeness of an alleged takings claims are analyzed simultaneously.
See Navajo Nation v. United States, 631 F.3d 1268, 1278 (Fed. Cir. 2011). In this case, the
August 7, 1995 MOU was the first step of an administrative process to transfer federal land to
the State. And, the BLM was clear that a validity determination would need to be conducted for
all affected property before any transfer. JX-34 (MOU). Therefore, for a compensable property
right to accrue on August 7, 1995, the BLM would have needed to commence and complete a
validity determination on that date. See Navajo Nation, 631 F.3d at 1278 (recognizing that a
takings claim does not accrue unless “the regulation itself is . . . a final governmental
determination depriving a plaintiff of a compensable property right); see also Vane Minerals
(US), LLC v. United States, 116 Fed. Cl. 48, 63 (2014) (“Plaintiff failed to obtain a [validity]
determination and consequently has no property right.”). Therefore, Plaintiffs’ takings claim did
not accrue until the validity determination was made, i.e. on May 12, 2008 when the Settlement
Agreement issued and fixed liability. PX-439 (“This Agreement . . . fully resolves Mineral
Contest CACA 48717.”). Likewise, Plaintiffs’ takings claim was not ripe until May 12, 2008,
because that was the final date of BLM action. See Palazzolo v. Rhode Island, 533 U.S. 606, 618
(2001) (“[A] takings claim challenging the application of land-use regulations is not ripe unless
the government entity charged with implementing the regulations has reached a final
determination regarding the application of the regulations to the property at issue.”) (citation and
internal quotation marks omitted); see also Goodrich v. United States, 434 F.3d 1329, 1334–35
37
(Fed. Cir. 2006) (explaining that a takings claim was not ripe until the Government issued a final
directive restricting a landowner’s property rights).
For these reasons, the court has determined that Plaintiffs’ takings claim both accrued and
became ripe on May 12, 2008. Therefore, 28 U.S.C. § 2501 does not bar the court from
adjudicating the takings claim alleged in the December 19, 2011 Complaint.
B. Whether Plaintiffs Have Standing.
Article III standing is also a jurisdictional prerequisite that the court must ascertain, even
if not raised by the parties. See Fuji Photo Film Co. v. Int’l Trade Comm’n, 474 F.3d 1281, 1289
(Fed. Cir. 2007) (“Because Article III standing is jurisdictional, this court must consider the issue
sua sponte[.]”). The United States Supreme Court has instructed that the plaintiff has the burden
to establish three elements before a federal trial court may adjudicate an alleged takings claim.
First, “‘injury in fact,’ by which we mean an invasion of a legally protected interest that is
‘(a) concrete and particularized, and (b) actual or imminent, not conjectural or hypothetical[.]’”
Ne. Fla. Chapter of Associated Gen. Contractors of Am. v. City of Jacksonville, 508 U.S. 656,
663 (1993) (quoting Lujan v. Defenders of Wildlife, 504 U.S. 555, 560 (1992)). Second, “a
causal relationship between the injury and the challenged conduct[.]” Id. Third, “a likelihood
that the injury will be redressed by a favorable decision, by which we mean that the ‘prospect of
obtaining relief from the injury as a result of a favorable ruling’ is not ‘too speculative.’” Id.
(quoting Allen v. Wright, 468 U.S. 737, 752 (1984)). “These elements are the ‘irreducible
minimum’ required by the Constitution.” Id. (quoting Valley Forge Christian Coll. v. Americans
United for Separation of Church & State, Inc., 454 U.S. 464, 472 (1982)).
In this case, the “injury in fact” element is particularly problematic. See Ne. Fla.
Chapter, 508 U.S. at 663 (holding that injury in fact requires “an invasion of a legally protected
interest”) (emphasis added); see also Wyatt v. United States, 271 F.3d 1090, 1096 (Fed. Cir.
2001) (holding that the trial court does not have jurisdiction to adjudicate a takings claim unless
the plaintiff has a “valid property interest at the time of the taking”) (emphasis added). The court
is aware that unpatented mining claims are recognized as a protected property interest, but only
“if there has been a discovery of mineral within the limits of the claim[.]” Best v. Humboldt
Placer Min. Co., 371 U.S. 334, 336 (1963) (emphasis added). The 1989 BLM Mineral Report
concluded that the “Reoforce pumicite” was an uncommon variety and locatable mineral under
the General Mining Law, but emphasized that this finding was “not a mining claim validity
report.” PX 42:012; see also Holden v. United States, 38 Fed. Cl. 732, 735 (1997) (“To have a
compensable interest in unpatented mining claims sufficient to bring a taking action in [the
United States Court of Federal Claims], there must have been a determination as to the validity
of those mining claims.”) (emphasis in original). Only the BLM may determine validity. See
Cameron v. United States, 252 U.S. 450, 460 (1920) (“[T]he Secretary of the Interior . . . is
charged with seeing that . . . valid claims may be recognized, invalid ones eliminated, and the
rights of the public preserved.”); see also Best¸ 371 U.S. at 336 (same). In this case, the BLM
did not make a validity determination until the May 12, 2008 Settlement.
For this reason, the court has determined that Plaintiffs did not have standing to seek an
adjudication of a takings claim until May 12, 2008. Plaintiffs, however, did not file suit on that
date, but waited until December 19, 2011.
38
The May 12, 2008 Settlement Agreement between Plaintiffs and the BLM, however,
specifically provides:
Reoforce can proceed under its approved [POO] to mine the El Paso 6A, El Paso
7A, and El Paso 22A placer mining claims, subject to the following conditions:
(a) Reoforce shall begin mining within 24 months of execution of this settlement
agreement. If mining does not begin within 24 months, this agreement shall
terminate and Reoforce shall relinquish all of its rights, title and interest in El
Paso 6A, El Paso 7A, and El Paso 22A unpatented mining claims.
(b) If Reoforce ceases mining operations for any continuous period of 12 months,
this agreement shall terminate and Reoforce shall relinquish all of its rights, title
and interest in El Paso 6A, El Paso 7A, and El Paso 22A unpatented mining
claims.
PX-439 (emphasis added).
Neither Mr. Simonson’s trial testimony (TR 32–541) nor any other evidence establishes
that Plaintiffs began mining within 24 months, as required by the May 12, 2008 Settlement
Agreement. Indeed, on October 28, 2008, after the BLM approved Reoforce’s Road Use POO
there were no federal or state regulatory impediments to Plaintiffs engaging in mining activities.
PX 330. But, there is no evidence in the record that any “mining” took place on the El Paso 6A,
El Paso 7A, or El Paso 22A claims, either after May 12, 2008 Settlement or after BLM’s October
28, 2008 approval of Reoforce’s Road Use POO.
As a matter of law, a plaintiff initially must plead some injury to have standing and the
court must accept those allegations as true when making a standing determination. See
Pennell v. City of San Jose, 485 U.S. 1, 7 (1988) (“[W]hen standing is challenged on the basis of
the pleadings, we ‘accept as true all material allegations of the complaint, and . . . construe the
complaint in favor of the complaining party[.]’”) (citation omitted). But, after trial, a plaintiff’s
obligation to establish standing is subject to a more stringent standard, particularly where the
cause of action arises from the United States Constitution. See Lujan, 504 U.S. at 561 (holding
that the party invoking federal jurisdiction bears the burden of establishing the requisite elements
and that “each element must be supported in the same way as any other matter on which the
plaintiff bears the burden of proof, i.e., with the manner and degree of evidence required at the
successive stages of the litigation”) (emphasis added). To require that a plaintiff have title to
property at the time a suit is filed or forgo the ability to obtain an adjudication of a takings claim
may be viewed as harsh. But here, where Plaintiffs voluntarily relinquished all property rights,
standing has been compromised. PX-439 (“If mining does not begin within 24 months, . . .
Reoforce shall relinquish all of its rights, title, and interest in El Paso 6A, El Paso 7A, and El
Paso 22A unpatented mining claims.”).
Therefore, in the court’s judgment, this case should be dismissed on standing grounds,
albeit not suggested by the Government. In any event, as discussed herein, even assuming,
arguendo, that Plaintiffs have standing, the record does not establish that the August 7, 1995
MOU effected a taking that warrants compensation.
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C. Whether The August 7, 1995 Memorandum Of Understanding Between The
Bureau Of Land Management And The State Of California Effected A
Taking of Plaintiffs’ Unpatented Mining Claims.
A “takings claim calls for a two-step analysis.” Karuk Tribe of Cal. v. Ammon, 209 F.3d
1366, 1374 (Fed. Cir. 2000). First, the trial court must determine whether the claimant has
established a compensable property interest. See Am. Pelagic Fishing Co. v. United States, 379
F.3d 1363, 1372 (Fed. Cir. 2004). Second, the trial court must determine whether the character
of the governmental action affected the claimant’s “bundle of property rights.” Karuk Tribe, 209
F.3d at 1374; see also Chancellor Manor v. United States, 331 F.3d 891, 902 (Fed. Cir. 2003)
(discussing whether governmental action “constitutes a compensable taking for a public
purpose”).
1. Whether Plaintiffs Had A Compensable Property Right On August 7,
1995, When The Department Of The Interior Entered Into The
Memorandum Of Understanding With The State Of California.
The United States Court of Appeals for the Federal Circuit has held that a plaintiff also
must have a “valid property interest at the time of the taking[.]” See Am. Pelagic Fishing, 379
F.3d at 1372 (citation omitted). Plaintiffs’ property interest did not vest until the May 12, 2008
Settlement Agreement. Therefore, as a matter of law, Plaintiffs did not have a compensable
property interest for purposes of the Fifth Amendment on August 7, 1995, the date the MOU
became effective. As such, the court’s “task is at an end.” Am. Pelagic Fishing Co., 379 F.3d at
1372. Nevertheless, the court will complete the two-part analysis established in Karuk Tribe.
2. Assuming, Arguendo, That Plaintiffs Had A Compensable Property
Right On August 7, 1995, Whether The Character Of The
Memorandum Of Understanding Effected A Taking.
Assuming, arguendo, that Plaintiffs had compensable property right on August 7, 1995,
the MOU had no binding legal effect on that date, because validity determinations remained to
be conducted on all unpatented mining claims. JX-34; see also Goodrich v. United States, 434
F.3d 1329, 1335 (Fed. Cir. 2006) (explaining that for a taking to occur, the government action
must be analogous to “final agency action.”). Of course, Plaintiffs assert that “the BLM’s actual
treatment of the Reoforce claims” evidences that the August 7, 1995 MOU did “alter existing
rights or regulations.” Pl. Reply 4. But, what Plaintiffs thought the legal effect of the August 7,
1995 MOU was, does not establish a legal obligation.
There are several dispositive pieces of evidence substantiating that the August 7, 1995
MOU did not effect or suspend Plaintiff’s May 28, 1987 approved POO. First, the BLM
specifically informed Mr. Simonson on July 12, 1995 that “[f]or operations such as yours, you
will be allowed to continue in accordance with your approved mining [POO] while the validity
exam process i[s] completed for your claims.” DX-19 (emphasis added). Second, after the
August 7, 1995 MOU, Plaintiffs entered into a joint venture (JX-40); obtained a diesel permit for
operation (PX-144); drilled exploratory holes on the claims (DX-156); continued to market
“Reoforce pumicite” (PX-33; PX-161; DX-183); and filed an application to comply with
40
SMARA (DX-132). As such, the evidence belies Plaintiffs’ contention that Reoforce was
prohibited from mining by the MOU as of August 7, 1995.
For these reasons, the court has determined that the August 7, 1995 MOU did not effect a
taking.
D. Assuming, Arguendo, That The August 7, 1995 Memorandum Of
Understanding Effected A Taking Of Plaintiffs’ Mining Rights,
Compensation Is Not Warranted.
Assuming, arguendo, that the August 7, 1995 MOU effected a taking of Plaintiffs’
mining claims, it is well established that not every government action that reduces a property’s
value is a regulatory taking, but some regulations can be so severe that the Fifth Amendment
requires payment of compensation. Penn Cent. Transp. Co. v. City of N.Y., 438 U.S. 104, 136
(1978) (holding that courts “must consider whether the interference with [Plaintiffs’] property is
of such a magnitude that there must be an exercise of eminent domain and compensation to
sustain [it].”) (internal quotation marks and citation omitted). “[W]hether a particular restriction
will be rendered invalid by the government’s failure to pay for any losses proximately caused by
it depends largely ‘upon the particular circumstances [in that] case.’” Id. This analysis is ad hoc
and fact-specific. The United States Supreme Court has identified three factors that a trial court
must consider the: (1) “economic impact of the regulation on the claimant”; (2) “extent to which
the regulation has interfered with distinct investment-backed expectations”; and (3) “character of
the governmental action.” Cienega Gardens v. United States, 331 F.3d 1319, 1337 (Fed. Cir.
2003). The intent of Penn Central is “to ensure that not every restraint imposed by government
to adjust the competing demands of private owners [will] result in a takings claim.” Id. at 1340
(quotation marks and citation omitted).
Not surprisingly, the parties have a different perspective of the economic impact of the
August 7, 1995 MOU: the Government asserts that the economic impact at best was $107,000;
Plaintiffs insist they suffered $46.5 million in economic harm. Compare Gov’t Br. 62 with PX-
443. The record, however, establishes that despite repeated efforts, Plaintiffs failed to achieve
market acceptance of “Reoforce pumicite” prior to the issuance of the August 7, 1995 MOU.
DX-12; DX-205; DX-180. In fact, after Plaintiffs obtained the May 28, 1987 POO until the
August 7, 1995 MOU was enacted, only two sales of “Reoforce pumicite” were made. 9/17/13
TR 429–31 (Simonson). At best, Plaintiffs were several years away from commercial-scale
mining on August 7, 1995. 9/19/13 TR 1130 (Springer) (Reoforce had not completed an
adequate exploratory drill program in August 1995); 9/19/13 TR 1131 (Springer) (as of August
1995, Reoforce did not have SMARA approval); 9/19/13 TR 1136 (Springer) (as of August
1995, Reoforce did not comply with Federal Mine Safety Health Administration’s regulatory
requirements); 9/19/13 TR 1139 (Springer) (all of these actions “made it difficult if not
impossible for Reoforce to secure the funding or financial partners necessary to develop
commercial-scale mining”). Other trial testimony estimated that, on August 7, 1995, Plaintiffs
still were at least four to eight years away from commercial viability. 9/20/13 TR 1167
(Springer). As such, Plaintiffs incurred no economic harm caused by the August 7, 1995 MOU
or any other BLM action.
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As for Plaintiffs’ “investment-backed expectations,” the barriers to entry into a
commodity market were substantial and commercial viability “highly speculative.” DX-120, at
13–17 (Dr. Frahme); 9/20/13 TR 1184–1202 (Dr. Frahme). In addition, the record is replete with
evidence of Mr. Simonson sending numerous samples of the “Reoforce pumicite” to academic
and corporate entities to ascertain whether this mineral had any commercial use or market value.
PX-7, PX-16, PX-26, PX-29, PX-31, PX-32, PX-34, PX-37, PX-38, PX-39, PX-41, PX-42; PX-
55, PX-56, PX-67, PX-68, PX-70, PX-76, PX-96, PX-103, PX-109, PX-111, PX-128, PX-264,
PX-271, PX-436, DX-69, DX-74, DX-94. Although there was some indication of potential
commercial use, no one advised Plaintiffs that “Reoforce pumicite” was “of such a 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.’”
Chrisman v. Miller, 197 U.S. 313, 322 (1905); see also Creppel v. United States, 41 F.3d 627,
632 (Fed. Cir. 1994) (holding that the investment-backed expectations element “limits recovery
to owners who can demonstrate that they bought their property in reliance of the nonexistence of
the challenged regulation”). As such, Plaintiffs failed to establish that the August 7, 1995 MOU
interfered with reasonable “investment-based expectations.”
Finally, The United States Supreme Court has held that in ascertaining whether
compensation is warranted, the courts should determine whether the government action at issue
“merely affects property interests through ‘some public program adjusting the benefits and
burdens of economic life to promote the common good.’” Lingle v. Chevron U.S.A. Inc., 544
U.S. 528, 539 (2005) (quoting Penn Central, 438 U.S. at 124). In analyzing the nature of the
government action, the United States Court of Appeals for the Federal Circuit has directed the
trial court to focus on both “the purpose of the regulation and its desired effects” and “the
relative benefits and burdens associated with the regulatory action.” Bass Enters. Prod.
Co. v. United States, 381 F.3d 1360, 1370 (Fed. Cir. 2004); see also Rose Acre Farms,
Inc. v. United States, 373 F.3d 1177, 1194 (Fed. Cir. 2004) (“[The issue] is whether there is a
nexus between the regulation and its underlying public purpose.”) (emphasis in original).
Congress authorized the BLM to manage public land. See 43 U.S.C. § 1701. The
purpose of the August 7, 1995 MOU was to manage and administer federal land located within
the Red Rock Canyon State Park, primarily to insure compliance with federal mining laws and
NEPA, which benefits the public at large. JX-43 at IIIA(1). Plaintiffs counter that the August 7,
1995 MOU “was not a nationwide change in mining regulations applicable to everyone. It only
applied to those few within the proposed addition to the Red Rock Canyon State Park.” Pl. Br.
38. As such, Plaintiffs contend that they bore the full economic impact of this regulatory
activity. But, Plaintiffs provide no authority for the proposition that a regulation issued on a less-
than-nationwide basis equates to “targeting.” Without evidence that the BLM went out of its
way to impose regulations on Plaintiffs alone, without a legitimate reason, the court must assume
that the BLM acted in good faith. See Schism v. United States, 316 F.3d 1259, 1302 (Fed. Cir.
2002) (“This presumption of regularity is the supposition that public officers perform their duties
correctly, fairly, in good faith, and in accordance with the law and governing regulations, and is
valid and binding[.]”) (internal quotation marks and citations omitted). And, the purpose
statement of the MOU demonstrates there is a “nexus between the regulation and its underlying
public purpose.” JX-43; Rose Acre Farms, 373 F.3d at 1194.
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For these additional reasons, the court has determined assuming, arguendo, that the
August 7, 1995 MOU effected a taking of Plaintiffs’ mining rights, compensation is not
warranted.
V. CONCLUSION.
For these reasons, the May 24, 2013 Amended Complaint is dismissed and any
unresolved evidentiary rulings are now moot.
IT IS SO ORDERED.
s/ Susan G. Braden
SUSAN G. BRADEN
Judge
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