# Petition — Andrus v. Shell Oil Co. > Briefs, arguments, decisions, and more. URL: https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385006_0285%3A1 ## Record - **Collection:** Supreme Court brief - **Document type:** Petition - **Published:** January 1, 1980 - **Citation:** 446 U.S. 657 ## Text 98-1815 In the Supreme Court of the Anited States OcToBER TERM, 1978 Ceci. D. ANprus, SECRETARY OF THE INTERIOR, PETITIONER Vv. SHELL Om CoMPANY AND D. A. SHALE, INC. UNITED STATES COURT OF APPEALS | PETITION FOR A WRIT OF CERTIORARI TO THE FOR THE TENTH CIRCUIT Wave H. McCrer, Jr. | Solicitor General JAMES W. MoorMAN Assistant Attorney General SarA SuN BEALE Assistant to the Solicitor General Dirk D. SNEL Rosert L. KiLarguisr Attorneys Department of Justice Washington, D.C. 20530 Pages i tee a eet eh EAs 1 i eA ena oe | 2 a 2 Ee, ee er 2 I EE A 4 Reasons for granting the petition .......... 12 ted Vokes tad ke hAes 0 19 aD Tale a aa as RD la is ak ak he ass d ancensians 21a ny fad 7 ue See oes ek es 22a aa aie oe da db ain wi 5.8 5a aics 57a et hci Se Re gal ee er nae is Civ bcc WR bye 6 oa. 122a CITATIONS Cases: Barrows v. Hickel, 447 F.2d 80 ........... 14 Castle v. Womble, 19 L.D. 455............. 10, 14 Chrisman v. Miller, 197 U.S. 313 ......... 5, 14 Cole v. Ralph, 252 U.S. 286 .............. H) Davis’s Administrator v. W eibbold, 139 U.S. a ae Wii a lia es wk ph k's | 14 Freeman v. Summers, 52 L.D. 201 ........ 2,6 Tron Silver Mining Co. v. Mike and Starr Gold and Silver Mining Co., 143 U.S. 394 14 PII D MGEM UR occ wk cc cc eeades 14 Magalia Gold Co. v.Ferguson, 6 L.D. 218 .. 14 Roberts v. Morton, 549 F.2d 158 .......... 14 SEC v. Sloan, 436 U.S. 108 .............. 17 ge i & © gis Sie 17 United States v. Coleman, 390 U.S.599 .... 5,13 United States v. Estate of Alvis F. Denison, ivcthn sh einen aknceounss 14 United States v. Iron Silver Mining Co., 128 of | PEARS Ee a Pe 14 il Statutes : Pages Act of July 9, 1870, ch. 235, 16 Stat. 217, 30 of i Serer rrr Ts tees 3 Act of July 20, 1956, ch. 652, 70 Stat. 592, amending the Act of July 17, 1914, 30 ey haeng cab eeus bp eee* 4 Act of May 10, 1872, ch. 152, 17 Stat. 91, 30 ip Tg a arr eer 4-5 Section 1, 30 U.S.C. 22 .............. 2,13 Section 4, 30 U.S.C. 35 .............. 3 Section 11, 30 U.S.0. 37 ............- 13 Federal Land Policy and Management Act of 1976, Pub. L. No. 94-579, Section 314, 90 Stat. 2769, 43 U.S.C. 1744 ........... 13 Mineral Leasing Act of 1920, ch. 85, 41 Stat. aBy, SO UG: BEE 06-008. «= 056. eee oe: 4) Section 37, 30 U.S.C. 193 ............ 3,5 Miscellaneous: H.R. Rep. No. 2537, Tist Cong., 3d Sess. (1 epee oar ree ter hy Creer ce 16 In the Supreme Court of the Anited States OctToBER TERM, 1978 No. Ceci. D. ANprRus, SECRETARY OF THE INTERIOR, PETITIONER Vv. SHELL Om. Company ANp D. A. SHaALg, Inc. PETITION FOR A WRIT OF CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE TENTH CIRCUIT The Solicitor General, on behalf of the Secretary of the Interior, petitions for a writ of certiorari to review the judgment of the United States Court of Appeals for the Tenth Circuit. OPINIONS BELOW The opinion of the court of appeals (App. A, infra, la-20a) is reported at 591 F.2d 597. The opinion of the district court (App. C, infra, 22a-56a) is reported at 426 F. Supp. 894. The opinion of the Interior Board of Land Appeals (App. E, infra, 60a-121a) is reported 1 2 at 16 I.B.L.A. 112. The opinion of the administrative law judge (App. F, infra, 122-204a) is not reported. JURISDICTION The judgment of the court of appeals (App. B, infra, 21a) was entered on January 25, 1979. On April 16, 1979, Mr. Justice White extended the time for filing a writ of certiorari to May 25, 1979, and on May 16, 1979, he further extended the time for filing to June 4, 1979. The jurisdiction of this Court is invoked under 28 U.S.C. 1254(1). QUESTION PRESENTED Whether Congress ratified the administrative deci- sion in Freeman v. Summers, 52 L.D. 201 (1927), and the subsequent grant of numerous oil shale patents, thereby excepting oil shale claims from the discovery requirement of the general mining laws. STATUTES INVOLVED Section 1 of the Act of May 10, 1872, ch. 152, 17 Stat. 91, 30 U.S.C. 22, provides: Except as otherwise provided, all 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 and those who have declared their intention to become such, under regulations prescribed by law, and according to the local customs or rules of miners in Mg the several mining districts, so far as the same are applicable and not inconsistent with the laws of the United States. The Act of July 9, 1870, ch. 235, 16 Stat. 217, 30 U.S.C. 35, provides in pertinent part: Claims, usually called ‘‘placers,’’ including all forms of deposit, excepting veins of quartz, or other rock in place, shall be subject to entry and patent, under like circumstances and conditions, and upon similar. proceedings, as are provided for vein or lode claims * * *. Section 37 of the Mineral Leasing Act of 1920, ch. 85, 41 Stat. 451, 30 U.S.C. 193, provides: That the deposits of coal, phosphate, sodium, oil, oil shale, and gas, herein referred to, in lands valu- able for such minerals, including lands and de- posits described in the joint resolution entitled ‘‘ Joint resolution authorizing the Secretary of the Interior to permit the continuation of coal mining operations on certain lands in Wyoming,’’ ap- proved August 1, 1912 (Thirty-seventh Statutes at Large, page 1346), shall be subject to disposition only in the form and manner provided in this Act, except as to valid claims existent at date of the passage of this Act and thereafter maintained in compliance with the laws under which initiated, which claims may be perfected under such laws, including discovery. 4 The Act of July 20, 1956, ch. 652, 70 Stat. 592, amend- ing the Act of July 17, 1914, 30 U.S.C. 122, provides: Be it enacted by the Senate and House of Repre- sentatives of the United States of America in Con- gress assembled, That the first sentence of section 2 of the Act entitled ‘‘An Act to provide for agri- cultural entry of lands withdrawn, classified, or reported as containing phosphate, nitrate, potash, oil, gas, or asphaltic minerals’’, approved J uly 17, 1914 (38 Stat. 509; 30 U.S.C. 122), is hereby amended by striking out ‘‘such deposits to be sub- ject to disposal by the United States only as shall be hereafter expressly directed by law’’ and insert- ing in lieu thereof, ‘“‘such deposits to be subject to disposal by the United States only as shall be hereafter expressly directed by law: Provided, however, That all mineral deposits heretofore or hereafter reserved to the United States under this Act which are subject, at the time of application for patent, to valid and subsisting rights acquired by discovery and location under the mining laws of the United States made prior to the date of the Mineral Leasing Act of February 25, 1920 (41 Stat. 437), shall hereafter be subject to disposal to the holders of those valid and subsisting rights by patent under the mining laws of the United States in force at the time of such disposal. STATEMENT 1. To perfect a claim under the general mining law (the Act of May 10, 1872, 17 Stat. 91, 30 U.S.C. 22 4) et seq.), a claimant must establish that he has dis- covered a valuable mineral deposit within the limits of each claim. Cole v. Ralph, 252 U.S. 286, 295 (1920). The test for value is the ‘‘prudent man test,’’ Chrisman v. Miller, 197 U.S. 313, 322 (1905), augmented by the marketability test, United States v. Coleman, 390 U.S. 599, 602-603 (1968). The combined tests require evi- dence of a mineral deposit of such character that a person of ordinary prudence would be justified in the further expenditure of time and money with a reason- able expectation that the minerals from the claims could be marketed at a profit. The question here is whether these criteria apply to claims in respect of oil shale, a fine grained laminated sedimentary rock con- taining kerogen, organic matter that will produce oil upon destructive distillation (App. F, infra, 127a). The issue remains important despite the enactment of the Mineral Leasing Act of 1920, ch. 85, 41 Stat. 437, 30 U.S.C. 181 et seq., which withdrew oil shale and certain other minerals (including coal, oil and gas) from location under the general mining laws and estab- lished a new system of development by leasing rather than by the location of placer claims. Section 37 of the 1920 Act provided that ‘‘valid claims existent at date of the passage of this Act and thereafter main- tained in compliance with the laws under which initi- ated’’ could be ‘‘perfected under such laws, including discovery.’’ 30 U.S.C. 193. And a large number of oil shale claims remain outstanding. 6 2. In 1927 the Secretary issued a decision in F'ree- man v. Summers, 52 L.D. 201, upholding a placer claim for oil shale in a contest proceeding involving a home- stead claim to the same land. The Secretary observed that there had been as yet ‘‘no considerable production of oil from shales, due to the fact that abundant quan- tities of oil have been produced more cheaply from wells * * *.’’ 52 L.D. at 206. But he nevertheless held that oil shale could be located as a valuable mineral, reasoning (ibid.) : [T]here is no possible doubt of its value and of the fact that it constitutes an enormously valuable re- source for future use by the American people. It is not necessary, in order to constitute a valid discovery under the general mining laws sufficient to support an application for patent, that the min- eral in its present situation can be immediately disposed of at a profit. Following this rationale, between 1920 and 1960 the Department of the Interior issued 523 patents for 2,326 oil shale claims (App. E, infra, 108a). 3. In 1964 the Secretary initiated two complaints contesting the validity of nine placer oil shale claims in Colorado (App. F, infra, 123a).* Both complaints alleged first, there had been no discovery of a valuable mineral deposit on the claims prior to February 25, 1920 (the date shale oil was withdrawn from location under the general mining laws) ; second, if there had 1 The claims were the Mountain Boys Nos. 1, 6, and 7, Harold Shoup Nos. 1, 2, 3, and 4, and K. C. Schuyler Nos. 2 and 3 (App. F, infra, 122a-123a). 7 been a valid discovery, the discovery was subsequently lost; and third, there was no valuable mineral deposit within the limit of the claims at the time of the contest proceedings (App. F, infra, 124a). The complaints re- quested that the claims be declared null and void (App. F, infra, 125a). Because of the identity of the issues and the proximity of the claims, the cases were con- solidated (App. F, infra, 125a). The administrative law judge found (App. F, infra, 176a, 179a, 184a) that the locators had made a ‘‘physi- cal finding’’ of oil shale within the limits of only six of the nine claims by February 25, 1920. As to the six claims where oil shale had been physically located, the ALJ considered whether they met the traditional dis- covery test, 1.e., whether ‘‘ ‘a person of ordinary prud- ence would be justified in the further expenditure of his labor and means,’ on the contested claims, ‘with a reasonable prospect of success, in developing a valuable mine,’ and whether the product of the mines could be marketed at a profit’? (App. F, infra, 138a-139a; cita- tions omitted). After reviewing the uniformly unsuc- cessful efforts to mine oil shale profitably anywhere in the United States during the half-century since the location of the six claims (App. F, infra, 145a-165a), the ALJ observed (App. F, infra, 165a) that ‘‘[t]he very fact that, in the more than half a century of in- terest in oil shale claims of the Green River Forma- tion, not one profitable mine has been developed is a compelling reason for concluding that expenditure of money to that end would be imprudent.’’ The ALJ rejected respondents’ contention that ‘‘money spent or 8 obligated in the acquisition of oil shale claims’’ proved that the claims included valuable mineral deposits, reasoning that in order to establish a valuable discov- ery for purposes of the general mining laws, ‘‘[t]he mineralization must be such, not to justify the purchase of the mining claim, for possible future development, but to justify present expenditures with a reasonable prospect of developing a profitable mine’’ (App. F, infra, 166a). The ALJ nevertheless upheld the claims. He ex- plained (App. F, infra, 166a-167a) that ‘‘[i]f this were a case of first impression [he] would, for the foregoing reasons, find that both before and after February 25, 1920 oil shale was not a valuable mineral.’’ But he concluded (App. F, infra, 167a-170a) that he was bound by Freeman v. Summers, and the decisions following it, which held ‘‘that oi] shale is a valuable mineral subject to appropriation under the mining laws.’’ The ALJ acknowledged that the decision in Freeman v. Summers ‘twas poorly conceived,’’ but he stated he was never- theless bound by it (App. F, infra, 170a). 3. The Interior Board of Land Appeals (IBLA) re- versed, overruling Freeman v. Summers (App. E, infra, 60a-121a). The Board adopted the portion of the ALJ’s opinion reviewing the history of the unsuccess- ful attempts to develop foreign and domestic oil shale (App. E, infra, 75a), adding the following comments (App. E, infra, 105a) : First, as a historical fact, the commercial produc- tion of oil from oil shale has never been competitive with the liquid petroleum industry. Second, the 9 hypothetical studies at best confirm that the com- mercial exploitation of oil shale would not be com- petitive with the liquid petroleum industry. Third, without exception, every oil shale operation that has been attempted in this country has failed to show profitable production. Fourth, [respondents ] have held these claims for half a century without attempting to exploit them. In sum, the Board found it ‘‘unlikely that any oil shale operation could have operated at a profit at the time these claims were located or at any time up to and in- cluding the time of these contest proceedings’’ (ibid.). The Board recognized that with a breakthrough in tech- nology or a change in the economic situation the pro- duction of oil from shale might in the future become profitable, but it held that ‘‘speculation that oil shale m. y someday be valuable in an economic sense is not evidence of its present value as of 1920 or 1966’’ (App. K, infra, 107a). Accordingly, since the oil shale deposits on these claims could not have been mined and marketed at a profit at the time of location or the date of contest, the Board held those deposits ‘‘never have been a valu- able mineral deposit within the meaning of the general mining law”’ (ibid.). The Board acknowledged (App. E, infra, 108a) that ‘‘Tb]etween 1920 and 1960 the Department consistently recognized oil shale as a valuable mineral deposit’’ on the basis of the analysis of the Freeman v. Summers decision. In the Board’s view (App. E, infra, 109a), ‘*T t]he basic substantive error in Freeman is its under- lying assumption that possible future value for mining 10 meets the requirement of present value.’’ Though the Freeman decision relied upon Castle v. Womble, 19 L.D. 455, 457 (1894), that case held that ‘‘the require- ment relating to discovery refers to present facts, and not to the probabilities of the future.’’ The Board found that the Freeman decision was ‘‘clearly contrary to the mining law,’’ and accordingly that it must be overruled (App. E, infra, 112a). The Board rejected respondents’ contention that if Freeman v. Summers were overruled, the decision must be given only prospective effect (App. E, infra, 112a- 121a). The Board pointed out (App. E, infra, 114a) that ‘‘the only rule in effect at the time these claims were located and on February 25, 1920, was the prudent man test of Castle v. Womble, supra, requiring present marketability,’’ and it concluded (App. E, infra, 115a) that ‘‘[n]Jeither [respondents] nor their predecessors in interest could have relied on the Department’s policy in 1920-1960 in locating the claims herein.’’ It found (App. E, infra, 117a) no evidence that respondent D. A. Shale had ‘‘invested more than a minimal amount’’ in its claims, and that respondent Shell Oil Company had purchased its claims after the Secretary initiated the contest proceedings. The Board concluded (App. E, infra, 121a) that the continued application of the Free- man v. Summers decision, which excepted oil shale claims from the requirement of present discovery, would be ‘‘contrary to law and in derogation of the Secretary’s responsibility as trustee of the public lands for the people of the United States.’’ 11 4. Respondents sought judicial review of the IBLA’s decision in the United States District Court for the District of Colorado (App. C, infra, 23a, 26a). The dis- trict court granted summary judgment for respondents, holding that the ‘‘pre-1920 oil shale claims were dis- coveries of valuable mineral deposits and are valid claims’? (App. ©, infra, 55a). The court concluded (App. C, infra, 38a) that the ‘‘Congressional and ad- ministrative involvement in the disposal of oil shale lands demonstrates Congressional approval of the F'ree- man rule of discovery,’’ which the courts ‘‘should re- spect and apply * * * in the absence of Congressional action to the contrary.’’ Alternatively, the court held that ‘‘[e]ven if the Congressional treatment of the Freeman rule is considered merely as an interpretative aid, and not as hardening the Freeman rule into an act of law, * * * the Interior Department is estopped from challenging the validity of the pre-1920 oil shale claims involved in this case,’’ since ‘‘[p]rudent in- vestors detrimentally relied upon the deliberate actions and statements of high government authorities’’ (App. CO, infra, 40a ; footnote omitted ). 5. The court of appeals affirmed (App. A, infra, 1la- 20a). The court acknowledged (App. A, infra, 3a) that the ‘‘ ‘valuable mineral deposit’ standard or re- quirement was not met as to oil shale claims of the type here considered before 1920 as the standards were applied to the metallic minerals,’’ but it held (App. A, infra, 20a) that the Freeman v. Summers standard had become ‘‘an addendum to the mining law whi: : cannot be removed short of Congressional action.”’ 12 The court noted that in 1930 Congress conducted an investigation of charges of impropriety in connection with the Department of the Interior’s policies of issu- ing patents for oil shale claims and more particularly the decision in Freeman v. Summers (App. A, infra, 9a). The court concluded (App. A, infra, 12a) ‘*Con- gress made an intense investigation into Interior’s in- terpretation of the mining laws as to a very specific and narrow circumstance, and approved it.’”” The court also noted (App. A, infra, 13a-14a) that in 1956 Congress had acted on the assumption that oil shale located prior to 1920 were valid claims when it eased one of the restrictions for taking oil shale claims to patent. In sum, the court held (App. A, infra, 17a) ‘“Tt}he different treatment afforded all oil shale claims as to the valuable mineral deposit element of a location became a part of the general mining laws by reason of its adoption and approval by both Houses of Congress during the intensive investigations of this very ques- tion and their affirmative resolution of the issue.”’ Accordingly, the court held that the Department of the Interior has no authority to ‘“‘change the application of the general mining laws”’ to these oil shale locations (ibid.). REASONS FOR GRANTING THE PETITION This decision, if permitted to stand, may require the United States to patent more than 5 million acres of federal land within the Tenth Circuit’ for $2.50 per 2 The number of oil shale claims cannot be precisely determined at the present time because claims located prior to February 25, 1920 were filed locally, with no requirement that the federal govern- 13 acre under the general mining laws,’ despite the fact that none of the claimants has established the discovery of a valuable mineral deposit. The principal basis for this unprecedented decision is the court’s conclusion (App. A, infra, 20a) that the investigation of two con- gressional committees—which resulted in no legisla- tion, nor, indeed, even a committee report—constituted the enactment of a relaxed discovery standard for oil shale as ‘‘an addendum to the mining law.’’ The issue presented here is important to the administration of the public lands, and it warrants review by this Court. 1. The general mining laws permit the location and extraction of ‘‘valuable mineral deposits in lands be- longing to the United States.”’ 30 U.S.C. 22. As this Court explained in United States v. Coleman, 390 U.S. 599, 602 (1968) (footnote omitted ) : Under the mining laws Congress has made public lands available to people for the purpose of min- ing valuable mineral deposits and not for other purposes. The obvious intent was to reward and encourage the discovery of minerals that are valu- able in an economic sense. Minerals which no pru- ment be notified. However, Section 314 of the Federal Land Policy and Management Act of 1976, Pub. L. No. 94-579, 90 Stat. 2769, 43 U.S.C. 1744, now requires that all unpatented claims existing as of October 31, 1976, be recorded with the Department of the Interior by October 31, 1979. Even assuming that oil shale met the discovery test, some of the claims would be subject to challenge on the ground that the claimant had not substantially satisfied the assessment requirement. See Hickel v. Oil Shale Corp., 400 U.S. 48, 57 (1970). ’'The land on which a valid placer claim is located may be pat- ented by the mining claimant for $2.50 per acre. See 30 U.S.C. 37. 14 dent man will extract because there is no demand for them at a price higher than the cost of extrac- tion and transportation are hardly economically valuable. Thus, profitability is an important con- sideration in applying the prudent-man test * * *. See Chrisman v. Miller, 197 U.S. 318, 322 (1905). Both this Court and the Secretary held in a number of early decisions that marketability must be shown as a present fact, not by speculation about value in the future. See, e.g., Castle v. Womble, supra, 19 L.D. at 457; John Downs, 7 L.D. 71, 73 (1888) ; Magalia Gold Co. v. Fer- guson, 6 L.D. 218, 220 (1887) ; Davis’s Administrator v. W eibbold, 139 U.S. 507, 522, 523 (1891) ; ef. Tron Silver Mining Co. v. Mike and Starr Gold and Silver Mining Co., 148 U.S. 394, 404-405 (1892); United States v. Tron Silver Mining Co., 128 U.S. 673, 683-684 (1888). See also Roberts v. Morton, 549 F.2d 158, 163 (10th Cir. 1976); Barrows v. Hickel, 447 F.2d 80, 83 (9th Cir. 1971); United States v. Estate of Alvis F. Denison, 76 L.D. 233, 239-240 (1969). The present holding is wholly at odds with this salutary rule. The requirement that the claimant show present marketability is one of the most essential elements of the mining laws. If claims could be sustained solely upon a showing of possible future profitability, it is doubtful that any claim showing any mineralization whatsoever could be ruled invalid, for no matter how ‘‘low-grade’’ the mineral deposit might be, there would always be the possibility that exploitation might some day become profitable when better quality deposits be- come exhausted or new technology makes exploitation WS icie 15 feasible. Recognition of claims based upon possible future profitability would not serve the purpose of the mining laws, which is to encourage the development of actual mining operations, not to enrich speculators. 2. Although correctly conceding (App. A, infra, 3a) that since oil shale could not in 1920, and eannot now, be marketed at a profit, ‘‘it must be concluded that the ‘valuable mineral deposit’ standard or requirement was not met as to oil shale claims of the type here considered before 1920 as the standards were applied to the metal- lic minerals,’’ the court of appeals upheld the present claims. This was justified on the premise that Congress had been apprised of the decision in Freeman v. Sum- mers and the Secretary’s subsequent grant of numer- ous Oil shale patents, and had acquiesced in and adopted an exception to the discovery requirement. The court’s conclusion that Congress ratified a spe- cial exception to the mining laws for oil shale claims is founded principally on the fact that in 1931 both houses of Congress conducted investigations into the charges made by Ralph Kelley, a former employee of the General Land Office, who publicly ‘‘attacked the decision in Freeman v. Summers’’ and ‘‘asserted that there had been fraud and favoritism in the issuance of patents’? (App. A, infra, 9a). The court found that the Freeman v. Summers decision ‘‘was the center of attention of the House and Senate Committees,’’ and that as a result of the committees’ investigation, Con- gress ‘‘was thus fully informed on Interior’s view and handling of the ‘valuable mineral deposit’ element of locations for oil shale.’? Although Congress took no action at the conclusion of the committees’ investiga- 16 tions, and neither committee issued a report stating its findings,‘ the court noted that the chairman of the Senate committee wrote the Secretary that ‘‘there is no reason why your Department should not proceed to final disposition of the pending applications for patents to oil shale lands in conformity with the law’’ (App. A, infra, lla). The court of appeals concluded (App. A, infra, 12a) that ‘‘we have what appears to be a unique situation where Congress made an intense investigation into Interior’s interpretation of the mining laws as to a very specific and narrow circumstance, and approved it,’’ making ‘‘an express determination that the prac- tice had indeed become part of the mining laws and properly so.’’° In our view, the court of appeals made too much of wholly inadequate evidence. The conclusion that a sub- *The House Committee on Public Lands did recommend legisla- tion placing a deadline on the filing of applications for patent of oil shale claims, H.R. Rep. No. 2537, 71st Cong., 3d Sess. (1931), but the committee report did not address the decision in Freeman v. Summers or the discovery requirement. Indeed, the report quotes the Secretary’s comment that “other phases” of the “general prob- lem as to oil shale lands,” such as “questions of discovery” might require legislative clarification. Jd. at 8. The bill recommended by the Committee was not enacted. ° The court also noted what it viewed as a more recent indication of Congress’ belief that oil shale claims were valid, the adoption in 1956 of an amendment to the mining laws making it easier for a locator with a pre-1920 claim to minerals now covered by the Mineral Leasing Act to take his claim to patent. The Act of July 20, 1956, ch. 652, 70 Stat. 592, amending 30 U.S.C. 122. In fact, however, as the district court recognized (App. C, infra, 36a), in enacting this legislation “Congress did not specifically address the problem of discovery at all,” and moreover the amendment dealt with all the minerals withdrawn by the Mineral Leasing Act, not merely oil shale. 17 stantive amendment to the mining laws was accom- plished when Congress simply took no action at the close of committee investigations is squarely at odds with this Court’s analysis in recent cases such as TVA v. Hill, 437 U.S. 163 (1978), and SEC v. Sloan, 436 U.S. 103 (1978). In Hill, TVA demonstrated that both the House and Senate Appropriations Committee Reports ‘generally reflected the attitude of the Committees either that the [Endangered Species] Act did not apply to Tellico or that the dam should be completed regardless of the pro- visions of the Act.’’ 437 U.S. at 189 (emphasis in original). But, in the absence of a statement in legis- lation passed by the Congress that the Tellico dam was to be completed regardless of compliance with the En- dangered Species Act, this Court was ‘‘unable to con- clude that the Act has been in any respect amended or repealed.’’ Ibid. The Court recognized, 437 U.S. at 191, that both committees had ‘‘expressly stated their ‘understanding’ that the earlier legislation would not prohibit the proposed expenditure’’ to complete the Tellico dam. But it observed that, despite the inclusion of these views in the committees’ reports, ‘‘there is no indication that Congress as a whole was aware of TV A’s position,’ 437 U.S. at 192. Accordingly, the Court held, quoting the Regional Rail Reorganization Cases, 419 U.S. 102, 132 (1974), that the committees’ state- ments, ** ‘however explicit, * * * cannot serve to change the legislative intent of Congress expressed before the Act’s passage.’ ’’ 437 U.S. at 193. Similarly, in SEC v. Sloan this Court rejected. the contention that Congress had adopted a longstanding Sl 18 Commission construction that the Court concluded was ‘‘inconsistent with a statutory mandate.’’ 436 U.S. at 118. The Court refused ‘‘to presume general congres- sional awareness of the Commission’s construction’’ (436 U.S. at 121), even though Congress had reenacted the summary suspension authority ‘‘without disapprov- ing the Commission’s construction,’’ when the Com- mission had ‘‘on at least one occasion made its views known to Congress in Committee hearings,’’ and ‘‘at least one Committee [had] indicated on one occasion that it understood and approved of the Commission’s practice.’’ 436 U.S. 119, 120 (footnotes omitted). More- over, the Court also stated that even if it were to assume Congress as a whole was aware of the Commission’s construction of its summary suspension authority, it was questionable whether ‘‘such general awareness at the time of reenactment would be tantamount to amend- ment of what we conceive to be the rather plain mean- ing’’ of the statutory language. 436 U.S. at 121. Thus, in Hill and Sloan the Court rejected the argu- ment that Congress had in effect ratified an adminis- trative construction as an amendment to previous legis- lation even though Committee reports recommending subsequent legislation adopted the agency’s interpreta- tion. Here, in contrast, the court of appeals found that Congress had effectively amended one of the principal requirements of the mining laws by its failure to take action after investigating Interior’s actions. It is un- disputed that no legislation was enacted, and no com- mittee reports dealing with the discovery requirement were issued; the sole action taken was a letter to the Secretary from the chairman of one of the congres- 19 sional committees which did no more than state that the Department could ‘‘ proceed to final disposition of the pending applications * * * in conformity with the law’’ (App. A, infra, 11a). 3. The court of appeals’ decision clears the way for the patenting of an estimated 5 million acres of federal land in Colorado, Wyoming, and Utah to oil shale min- ing claimants. These lands, which include the richest oil shale deposits in the continental United States (see App. E, infra, 77a-78a), are also valuable for uses in- cluding grazing, recreation, and wildlife preservation. Before the Secretary is required to patent these lands to claimants who have not met the discovery require- ment of the general mining laws, this Court should grant review. CONCLUSION The petition for a writ of certiorari should be granted. Respectfully submitted. Wave H. McCreg, JR. Solicitor General JAMES W. MoorMAN Assistant Attorney General Sara Sun BEALE Assistant to the Solicitor General Dirk D. SNEL Rosert L. KLArQuIst Attorneys J UNE 1979 APPENDIX A PUBLISH United States Court of Appeals TENTH CIRCUIT No. 77-1346 SHELL Or. Company AND D. A. SHALE, INC., Plantiff's-Appellees, Vv. Crecm. D. ANDRUS, SECRETARY OF THE INTERIOR, Defendant-A ppellant. Appeal from the United States District Court for the District of Colorado (D.C. # 74-F-739) Before SETH, Chief Judge, LOGAN, Circuit Judge, and STANLEY, District Judge.” SETH, Chief Judge. The Secretary of the Interior issued in September of 1964 an administrative complaint asserting that the shale oil placer mining claims here in issue were in- valid. The grounds advanced for the contest were that they did not contain valuable minerals on February 25, 1920, nor do such minerals now exist on the claims. There were also applications for patent then pending. The contest proceedings were heard over a five-month * Of the District of Kansas, Sitting by Designation. (la) 2a e period by Administrative Law Judge Dalby in 1967, and he announced his decision in 1970. Twenty-six witnesses appeared; there were some 1,700 exhibits, and over 5,000 pages of transcript. The Administrative Law Judge concluded that the claims were valid, and that patents should issue. The Government took an appeal to the Interior Board of Land Appeals (IBLA) in the Department which reversed in 1974 and held the claims to be in- valid. (16 IBLA 112). The Secretary of the Interior then ordered the claims to be cancelled. The owners then obtained review of the Secretary’s order in the United States District Court for the District of Colo- rado by these proceedings. The trial court on cross- motions for summary judgment entered judgment for the owners of the claims, and thus held the claims to be valid. This appeal was then taken by the Government on the administrative record and the judgment of the trial court. | What constitutes a ‘‘discovery’’ and what may be a ‘‘valuable mineral deposit’’ has been the subject of many administrative proceedings and litigation. The ‘‘valuable’’ element has been considered under many interrelated ‘‘tests’’ including intrinsic value, prudent man, and marketability. It would not seem necessary to discuss the many variations. Reference should be made however to the early ‘‘prudent man”’ decision, Castle v. Womble, 19 L.D. 455 (1894), to United States v. Coleman, 390 U.S. 599; Enfield v. Klepee, [sic] 566 F.2d 1139 (10th Cir.); United States v. Zweifel, 508 of we ee 3a F.2d 1150 (10 Cir.) ; United States v. Adams, 318 F.2d 861 (9th Cir.) ; United States v. Strauss, 58 I.D. 567 (1943) ; Jefferson-Montana Copper Mines Co., 41 L.D. 320 (1912) ; United States v. Black, 64 1.D. 93 (1957) ; United States v. Heirs of Stack, A-28157 (1960). See also 7 Rocky Mountain Mineral Law Institute 263; 1 American Law of Mining § 4.31; and 1 Lindley Mines § 98 (3d Ed.). Under the mining laws, Act of July 4, 1866, Act of May 10, 1872, and Act of June 22, 1874, now generally 30 U.S.C. § 22, public lands of the United States not withdrawn from entry and containing valuable mineral deposits are open for location with some exceptions not here concerned. Nonmineral entries cannot be made on public lands deemed valuable for minerals. 30 U.S.C. § 23 relates to lode claims and § 35 provides that placer claims should be located under like circumstances and conditions and upon similar proceedings as are pro- vided for lode claims. For lode claims there must be a discovery of a vein or lode and also a discovery of a valuable mineral deposit. For a placer claim there need only be a discovery of a valuable mineral deposit. We are here concerned with placer claims located for oil shale before the Mineral Leasing Act of 1920, 30 U.S.C. § 181. Everything considered, it must be concluded that the ‘valuable mineral deposit’’ standard or requirement was not met as to oil shale claims of the type here considered before 1920 as the standards were applied to the metallic minerals. The lack of conformance came about as to the immediate saleability of the oil 4a shale or profitability as compared to other minerals. The shale was obviously different in this regard, and for the claims here concerned to be valid as found by the District Court and the Administrative Law Judge, it must be established that oil shale deposits were treated differently by the then General Land Office and the Secretary for the location of placer claims for oil shale. The record before us does demonstrate that the value element attributed to substantial oil shale deposits to support claims was expressly treated differently than for metallic minerals by the Department of the Interior for the period 1915 to 1960. This was clearly the case as to the Green River Formation on which the subject oil shale claims are located. The mining laws were thus interpreted differently for oil shale by departmental practice, official instructions and decisions. The record shows the ebb and flow of interest in oil shale during the period 1915 to the present time. It shows the intense interest in it as a source of oil for the Navy and to replace ‘‘foreign’’ oil in 1918. This was a period of decline in domestic crude oil production relative to demand, and dependence on foreign oil in- creased. The Department of the Interior by its pub- lications and policies strongly encouraged the locatiou of claims on oil shale deposits in the pre-1920 period. In 1913 there was a USGS Bulletin published on the Green River Formation oil shale, and others followed. It was a period of the creation of Naval reserves for oil, and for oil shale. The oil shale reserves for the Navy were created in Colorado and Utah by presiden- ——— — — Abstain x eA ee SE | ali te ee a ae et ate Medilitay Metaen tS puta Ale saat + teat ae es 5a tial order in 1916. There was then in Great Britain a method in use for extracting oil from the shale, and no problems were contemplated. During the period 1918 to 1920 Congress was hold- ing hearings on what became the Mineral Leasing Act of 1920, and eventually placed oil and gas and oil shale under a system of leasing rather than by placer loca- tions. This Act made special reference to existing oil shale claims and did nothing to impair their validity. 30 U.S.C. § 193. The Department by 1920 had thus determined that oil shale deposits, if demonstrated to contain sufficient oil, were ‘‘valuable mineral deposits’’ although there was no immediate market. The Government in these proceedings has acknowl- edged that these claims met the discovery requirements under the 1916 to 1920 standards applied by the De- partment of the Interior. This was because there had been an administrative determination that valid loca- tions could then be made on the Green River Formation oil shale beds if all other elements of a proper loca- tion were present. The geology was obviously well known, uncomplicated, and the beds were conspicuous. After 1920 the Department of the Interior continued to patent pre-1920 oil shale claims, and the record shows that there was a careful examination of patent applications for compliance with the mining laws and to determine whether substantial oil reserves were pres- ent. There is nothing in the record before us to in- dicate any routine approval of such claims. In 1927 the departmental decision in a contest be- 6a tween a homestead entry and an oil shale claim was issued, captioned in part Freeman v. Summers, 52 L.D. 201. This decision referred to Castle v. Womble, 19 L.D. 455, and held in substance what had been the prior administrative determination that oil shale could be considered a valuable mineral deposit. Freeman v. Summers, in part says: ‘‘While at the present time there has been no considerable production of oil from shales, due to the fact that abundant quantities of oil have been produced more cheaply from wells, there is no pos- sible doubt of its value and of the fact that it constitutes an enormously valuable resource for future use by the American people. ‘It is not necessary, in order to constitute a valid discovery under the general mining laws sufficient to support an application for patent, that the mineral in its present situation can be im- mediately disposed of at a profit.”’ And also: ‘‘The evidence in this case shows that in this particular area of Colorado the lands contain the Green River formation, and that this formation carries oil shales in large and valuable quantities ; that while the beds vary in the richness of their content, the formation is one upon which the miner may rely as carrying oil shale which, while yield- ing at places comparatively small quantities of oil, in other places yields larger and richer quantities of this valuable mineral. Ta **In other words, having made his initial dis- covery at or near the surface, he may with assur- ance follow the formation through the lean to the richer beds. ‘There can be no question whatever as to the greater value of the lands for their oil-shale de- posits than for other purposes. Their agricultural value is negligible; their value for grazing pur- poses is nominal, and the real and principal value is the mineral deposit.’’ This determination as to value continued from 1916 to 1960, and patents were issued for oil shale claims. Some 2,326 patents were so issued. The Freeman deci- sion was not particularly significant at the time, but in 1930 became the center of attention. The 1931 Report of the Secretary of the Interior stated that by then some 195,000 acres had been patented. He also estimated that the ‘‘oil shale area’’ in Colorado consisted of 1,496,027 acres, in Utah 2,754,950 acres, and in Wyoming 4,006,- 805 acres. There were also ‘‘Instructions’’ of general applica- tion issued by the Secretary of the Interior relative to the handling of applications to patent oil shale claims, dated May 10, 1920. See 47 L.D. 547-551. This was in response to a request for instructions from the Com- missioner of the General Land Office in April 1920 relative to the first oil shale patent to be issued after the Mineral Leasing Act—the La Paz claims. These Instructions said in part: ‘‘Oil shale had long been recognized as a valuable mineral deposit and for many 8a years the mining of such deposits and distillation of petroleum and other mineral substances therefrom has been an extensive industry in Scotland, ... While there are no oil shale operations in the United States that have reached that point of commercial develop- ment or production ... ,’’ there are publications as to processes and some experimental plans. The Instruc- tions also refer to the requirement that homestead entries are subject to restrictions as to oil shale. The Instructions then concluded : ‘‘Oil shale having been thus recognized by the Department and by Congress as a mineral deposit and a source of petroleum, and having been demon- strated elsewhere to be a material of economic im- portance, lands valuable on account thereof must be held to have been subject fo valid location and appropriation under the placer mining laws, to the same extent and subject to the same provisions and conditions as if valuable on account of oil or gas. Entries and applications for patent for oil shale placer claims will, therefore, be adjudicated by your office in accordance with the same legal pro- visions and with reference to the same require- ments and limitations as are applicable to oil and gas placers.”’ There were before and after the time we have men- tioned several instances of similar administrative de- terminations that entries could be made for specified minerals. These included in 1883 lands containing borax, sulphur, alum, and nitrates of soda, and Con- 9a gress in 1892 had declared that lands containing build- ing stone were subject to placer location. Also Congress changed the law in 1955 so that sand, gravel, and other common varieties were no longer ‘‘valuable mineral de- posits’’ to permit locations. Thus from time to time certain minerals or substances were declared subject to location, and also changes made when the need arises. Thus the Department continued to examine applica- tions, and, if approved, to issue patents for oil shale claims in accordance with the Instructions and the Freeman opinion as any other patents, and some 2,326 oil shale patents were issued. There was a period of time from about September 30, 1930, to the middle of 1931 when the issuance of oil shale patents was sus- pended. This period will be considered hereinafter. The departmental standards for the examination of applications for patent of oil shale claims continued in the manner described above until the end of Septem- ber 1930. By that time some 1,171 patents had issued on oil shale claims. The processing of patent appli- cations stopped because a Mr. Kelley, who was Chief of the Field Division of the General Land Office in Denver, then published his letter of resignation. This letter attacked the departmental policies as to the is- suance of patents for oil shale claims, and attacked the © decision in Freeman v. Summers. It also asserted that there had been fraud and favoritism in the issuance of patents. This raised a cry of scandal in the press. The New York World paid Mr. Kelley some $12,000.00 for his story, and the matter became something of a sensation. There was thus great publicity, and Mr. Wil- 10a bur, the then Secretary of the Interior, answered the charges. There was thus great interest in the matter largely because the Teapot Dome scandal had but re- eently quieted down. The Teapot Dome scandal was, of course, of nationwide interest and involved several leading business figures, and resulted in the conviction of the Secretary of the Interior Fall. The matter con- cerned bribes for the issuance of oil and gas leases in Teapot Dome and Elk Hills. Congress began an investigation into the charges made by Mr. Kelley. The Senate Committee was headed by Senator Walsh, who had been a leading figure in the Teapot Dome investigations which had, of course, centered on the Interior Department’s oil and gas leas- ing practices. We are only concerned because the interest of Con- gress was intense, and the investigation was very sig- nificant for the problem before us for the reason that it centered directly upon the standards used to examine oil shale patent applications, and because it was spe- cifically directed to the decision of Freeman v. Sum- mers. In fact, the first day of the Senate hearings, Solicitor Finney who had drafted the Freeman v. Sum- mers opinion (52 L.D. 201) appeared and was ques- tioned abeut it. The opinion in Freeman would not otherwise be of much significance, but it became im- portant by reason of the fact it was the center of atten- tion of the House and Senate Committees. The investigations by Congress were thus intensive upon the very matters concerned in this case, and Con- gress was thus fully informed on Interior’s view and lla handling of the ‘‘valuable mineral deposit’’ element of locations for oil shale described above. We must con- clude that Congress approved the departmental stan- dards as set out in the Freeman case and in the Instruc- tions as proper application of the mining laws. There were, of course, many things Congress could have done to change the practice as this was a matter of inter- pretation of the mining laws, and wholly within Con- gressional authority to change. The House Committee concerned with the investiga- tion recommended some legislation which would have put a deadline on filing applications for patent of oil shale claims (H.R. 2547, Tist Cong., 3d Sess.). Senator Nye, then Chairman of the Senate Committee, wrote a letter, at the conclusion of the hearings, to the Secre- / tary of the Interior. This letter of April 1931 in part said: ‘‘Responding now to your letter of April 10, I have conferred with Senator Walsh and beg to ad- vise that there is no reason why your Department should not proceed to final disposition of the pend- ing applications for patents to oil shale lands in conformity with the law.’’ After the above advice, the Department resumed the examination of oil shale patent applications per the Instructions and Freeman v. Summers, along with all the other patent applications. There were about 1,149 oil shale patents issued thereafter until issuance was abruptly stopped in 1961. The record shows also that the Department of Justice 12a conducted in 1930 an investigation of the same matters, and a report was filed in October 1930, and Secretary Wilbur was advised. Thus we have what appears to be a unique situation where Congress made an intense investigation into In- terior’s interpretation of the mining laws as to a very specific and narrow circumstance, and approved it. This indeed bears no resemblance to the many Congres- sional silence cases, and removes any uncertainty as to whether the matter actually received attention, and also constitutes an express determination that the prac- tice had indeed become part of the mining laws and properly so. As mentioned above, the Department continued after the Congressional investigation to handle the patent- ing of oil shale claims, and the discovery-value element as before. This appears to be what Congress intended. There was another interaction between Interior and Congress some twenty-five years after the investigation relating to oil shale claims. This arose in 1955 and 1956. There had developed during the previous years some conflicts between shale claims going to patent and homestead entries. The Act of July 17, 1914, 30 U.S.C. § 121, permitted homestead entries to be patented al- though there might be valuable minerals thereon, in- cluding ‘‘oil,’’ if the minerals were reserved to the United States. This problem is described in our opin- ion in Brennan v. Udall, 379 F.2d 803 (10th Cir.). We there said: ‘‘Although the position of the Department of the Interior has varied over the years as to the form 13a of the reservation in patents embracing oil shale lands, it is abundantly clear that for fifty years it has consistently construed the 1914 Act to au- thorize the classification of lands containing oil shale deposits as a valuable source of petroleum and nitrogen and to require the reservation of such deposits where patents are issued. The Depart- ment’s construction of the statute has been made a matter of public record on numerous occasions. ? * e The other side of the homestead-shale claim con- flict concerned patents sought by shale claim locators whose claims included land within the 1914 Act home- stead patents. The Department’s practice was to re- quire the person seeking the oil shale patent to pur- chase the surface within the claim boundaries and convey it to the United States. Legislation was sought to change this requirement to permit the claim to go to patent although the surface was not owned by the United States. Interior supported this legislation and submitted a response to a request by Senator Murray for comment. This statement of the Secretary in part said: ‘‘. . . The problem which S. 2115 is presumably intended to clear up concerns the valid and subsisting rights acquired by discovery and location under the mining laws made prior to the enactment of the Min- eral Leasing Act of February 25, 1920... .’’ The statement continued : ‘‘Though we heartily endorse the purpose of S. 2115 we believe certain amendments... .”’ Thus again Congress and the Department acted to per- mit the patenting of oil shale claims. This was to make l4a the patenting less burdensome on the locators and to recognize the rights acquired by the pre-1920 discovery ‘*under the mining laws.”’ The Mountain Boy Claims 6 and 7 were located in 1918, and a second application for patent was filed in 1958 after a series of title problems was resolved. The final certificate was issued for patent and the file was sent to Washington for review and issuance of a patent. Assessment work had been done through the years. The Shoup Claims 1, 2, 3, and 4 were located in 1917. There was development work performed, including construc- tion of a plant. There were some accidents, and a long period of litigation. The claims were challenged in’ 1928 and they were held to be valid by the Department in 1935 after hearings. The two groups of claims are contiguous, are located in Garfield County, Colorado, in Section 14 and Section 23, of Township 7 South, Range 97 West, 6th Principal Meridian. The claims were considered to be properly located under the 1916-1920 standards by the parties. The hear- ings herein as to current conditions included testimony by the Interior witnesses that there were large deposits of Green River Formation oil shale on the claims. The record shows there was a thickness of 500 to 600 feet of shale which would yield 96,000,000 barrels of oil per claim, and an additional 95 feet of shale which would yield some 20,000,000 more barrels of oil per claim. An Interior witness testified that shale from these claims could have been marketed at a profit when they were located, and at present. Dr. Vogelz testified for In- 15a terior that oil shale has had a value from 1917 to the present. The cost studies prepared by the Department also showed that a profitable operation was possible. It is apparent under Cole v. Ralph, 252-U.S. 286, that a locator or owner of an unpatented claim, properly located, has a vested property interest therein. This has beeu universally recognized by the courts. Thus, if we recognize that the Department has acknowledged that there was a valuable mineral deposit in 1920, and at the time the claims were located, there is no discovery defect as to the locations. Since this was the only de- fect asserted in the contest, we must assume that the claims were valid as unpatented claims under depart- mental standards up until the 1961 change of policy by the Department which was sought to be applied retro- actively. The owners of the claims thus had a vested property interest in the claims, unless in 1961 oil shale was not a valuable mineral deposit in 1920. As mentioned at the outset, the Department filed pro- ceedings to contest the claims described in the preced- ing paragraph. The Administrative Law Judge con- eluded they were valid; the Department of the Interior held them to be void; and the District Court decided that they were valid and should not have been cancelled. The contest of these claims in 1961 marked a com- plete departure by the Department from the rules, the instructions, and the standards of the Department which had prevailed without exception, departure, or variation from 1915. It is also apparent from the de- partmental position expressed in 16 IBLA 112 (1974) that the decision of the Department reversing the Ad- 16a ministrative Law Judge represented a complete aban- donment and reversal of everything which had gone before as to ‘‘discovery’’ on oil shale claims. Thus the Department concluded : ‘«. , . Accordingly, we are not concerned with the assessment work requirements of 30 U.S.C. § 28 (1970), but with the question of discovery within the meaning of the mining laws. We hold that no discovery of a valuable mineral deposit has been established on the claims at issue herein.”’ The IBLA opinion is quite long. It discussed Castle v. Womble, and the prudent man test for ‘‘valuable,’’ and the marketability test. It also reviews the history of oil shale. It recites that: ‘‘ Between 1920 and 1960 the Department consistently recognized oil shale as a valu- able mineral deposit,’’ and refers to Freeman v. Sum- mers. It asserts that there could have been no reliance on departmental policy. The substance of the opinion is that the Department no longer considers oil shale to be a valuable mineral deposit under the mining laws. No reason is given for the complete departure from the previous holdings. It is apparent that no changes in circumstances relative to oil shale and its development have come about. It is purely a change in departmental policy which came about by a change in the philosophy of the personnel. Thus in 1920 the Department said oil shale was ‘‘valuable’’ then, and in 1961 and 1974 the Department says oil shale was not ‘‘valuable”’ in 1920. The question is whether such a policy change can bring about the consequences sought to be obtained by the iva Department, considering all that has taken place in the forty-year period. It must be pointed out that the De- partment since 1920 has been seeking to lease oil shale under the Mineral Leasing Act to persons who would undertake development and was able to obtain in 1974 a 210-million dollar bid on a tract offered for lease. We must hold that the Department is not free to so change the application of the general mining laws as to the oil shale locations here under consideration. The different treatment afforded all oil shale claims as to the ‘‘valuable mineral deposit’? element of a location became a part of the general mining laws by reason of its adoption and approval by both Houses of Congress during the intensive investigations of this very ques- tion and their affirmative resolution of the issue. The general mining laws were thus adjusted to accommodate the then very important practical and legal problem. We do not put this in the category of Congressional reenactment after an administrative interpretation. There are, of course, a large number of cases in a variety of circumstances which relate to reenactments. As indicated, we are of the view that the circumstances here present take the case far beyond the doctrine set forth in these cases, and into something quite different, but they demonstrate the variety of circumstances and show the firm basis for the presumptions arising from reenactment alone. These cases were referred to by the trial court (426 F. Supp. 894), and include NLRB v. Bell, 416 U.S. 267, concerning ‘‘managerial employ- ees’’; Cammarano v. United States, 358 U.S. 498, ‘‘or- dinary and necessary’’ business expenses; Corn Prod- 18a ucts Refining Co. v. Comm’r, 350 U.S. 46, purchase of ‘‘futures”’; and see NLRB v. Gullett Gin Co., 340 U.S. 361, and Brennan v. Udall, 379 F.2d 803 (10th Cir.). Instead of reenactment, and silence on the issue, as an acceptance of interpretation, we regard the events hereinabove described as an affirmative adoption of the very basic application of the mining laws to make it part of the statutory method for development of the oil shale reserves. It was obviously considered to be part of such an exploitation as the reserves were considered very essential. It is equally apparent that other events transpired to forestall the use of oil shale as a source of oil. These events included a large increase in domes- tic oil production and cheap foreign oil. Some of these events and the subsequent variations thereon came about through the actions of the Government. Thus Congress may have been wrong in its estimate as to the timing of oil shale development, but that is no reason to now change the mining laws without the benefit of Congressional consideration. In short, the changes here sought to be made by the Department as to 1920 stan- dards incorporated in the mining laws are well beyond executive authority. This is no more than an application of the doctrine developed over the years in the reenactment cases but in the presence of the added significant element de- scribed above at some length,—the extensive participa- tion by Congress in the specific issue. Thus in Corn Products Refining Co. v. Comm ’r, 350 U.S. 46, the Court said after referring to three reen- actments of the Tax Code and recognition for twenty ee ei a s RL Owe. OTe Ee EO SIE a OS ee ae ee 19a years: ‘‘This bespeaks congressional approval. Helver- ing v. Winmill, 305 U.S. 79, 83.’ The Court then added the other element: ‘‘Furthermore, Congress has since specifically recognized the hedging exception here un- der consideration in the short-sale rule of § 1233(a) of the 1954 Code.”’ In United States v. Leslie Salt Co., 350 U.S. 388, the Court considered Treasury’s long-standing construc- tion of what a ‘“‘debenture’’ was and what was a ‘‘cer- tificate of indebtedness.’’ The Court referred to the Corn Products case, and the importance therein given to contemporaneous construction; then it said of the department’s sudden change in definition: ‘| Against the Treasury’s prior longstand- ing and consistent administrative interpretation its more recent ad hoc contention as to how the statute should be construed cannot stand. More- over, that original interpretation has had both express and implied congressional acquiescence, 9 The Court also in Leslie Salt refers to its opinion in Norwegian Nitrogen Products Co. v. United States, 288 U.S. 294. The importance given to ‘‘eontemporaneous’’ con- struction by the administrative officials must not be overlooked, and reference must be made again to Leshe Salt. Thus the officials in Interior from top to bottom considered the application of the mining laws to shale oil. This was ‘‘new,”’ not, of course, as a new law but | a new mineral. It was a ‘‘contemporaneous”’ construc- | _—— 20a tion also in the sense of an application of the law to a new situation, an application calling for a standard to be applied. It was in 1920 a ‘contemporaneous con- struction’’ to be given the specifie consideration sug- gested by the Court. It is even more significant because of the attempted retroactive application to 1920 of this new and totally different position. We do not reach the retroactive aspect as a separate issue. The doctrine relating to retroactive application of policy changes and statutory construction by agencies with the need for a ‘compelling reason”’’ is considered in Logan v. Davis, 233 U.S. 613; Rough Rider, 41 L.D. 242, and in James v. Bell, 52 L.D. 197. The combination of circumstances we have before us presents a unique situation which, as we have said above, constituted an addendum to the mining law which cannot be removed short of Congressional action. It is simply an application of the doctrine arising in the reenactment cases referred to above with special emphasis on the added element of affirmative action by Congress. The affirmative action by Congress on the point here is overwhelming. Thus the judgment of the District Court is AF- FIRMED. a dan NS la ot a Soe nn oh a, —— APPENDIX B ona Unitep States CourRT OF APPEALS | For THE TENTH CIRCUIT January Term—January 25, 1979 Before Honorable Oliver Seth, Chief J udge, Honorable James K. Logan, Circuit Judge, Honorable Arthur J. Stanley, Jr., Sr. District Judge. SHELL On. CoMPANY and D. A. SHatg, INc., Plaintiffs-A ppellees, JUDGMENT vs. No. 77-1346 Crom, D. Anprus, Secretary of (D.C. No. the Interior, 74-F-739 ) Defendant-A ppellant, Srate oF UTAH, Amicus Curiae. This cause came on to be heard on the record on appeal from the United States District Court for the ere ree District of Colorado, and was argued by counsel. Upon consideration whereof, it is ordered that the judgment of that court is affirmed. /s/ Howard K. Phillips Howarp K. Putters, Clerk 2la APPENDIX C SHELL OIL COMPANY and D. A. Shale, Inc., Plaintiffs, V. Thomas 8S. KLEPPE, Secretary of the Interior, Defendants. Civ. A. No. 74-F-739,. United States District Court, D. Colorado. Jan. 17, 1977. FINESILVER, District J udge. This matter is before the Court on cross-motions for summary judgment. This case is another installment of the long-enduring and multi-faceted litigation over oil shale, a mineral principally located in the Western states. For the ten year history of oil shale litigation, see The Oil Shale Corp. v. Udall, 261 F.Supp. 954 (D. Colo.1966), aff’d, 406 F.2d 759 (10th Cir. 1969), rev’d sub nom., Hickel v. Oil Shale Corp., 400 U.S. 48, 91 S.Ct. 196, 27 L.Ed.2d 193 (1970), conformed to, The Oil Shale Corp v. Morton, 370 F.Supp. 108 (D.Colo.1973), remanded Sept. 22, 1975 (10th Cir.), cert. denied, The Oil Shale Corp. v. Kleppe, 426 U.S. 949, 96 S.Ct 3169, 49 L.Ed.2d 1185 (1976), dec’n pending, No. 8680 (D. Colo.).’ * Other oil shale cases have recently been before this Court. United States v. Eaton Oil Co., C-4139 (Complaint filed July 11, 1972) ; U. 8. Mobil Oil & Equity Oil Co., C-4135 (Settled Nov. 1, 1976) ; Amerada Hess Corp. v. Morton, C-4361 (Complairt filed September 26, 1972). 22a | = , . i 4 : i x < : ; . 23a In the instant litigation, Plaintiffs seek judicial re- view of a decision of the Board of Land Appeals in the Department of Interior, United States v. Frank W. Winegar, et al., [BLA 70-549, June 28, 1974, reported at 16 [BLA 112, 81 I.D. 370 (hereinafter Winegar), in which plaintiffs’ oil shale placer mining claims were held invalid on the ground that these claims did not constitute discoveries of a valuable mineral deposit pursuant to 30 U.S.C. § 22 et seq. We have reviewed the Winegar decision, the voluminous briefs, the extensive administrative record, and have undertaken our own independent research. Plaintiffs’ Motion for Summary Judgment is GRANTED. I The factual background of this litigation is set out in Winegar. The six oil shale placer mining claims in dispute, Mountain Boy Nos. 6 and 7 and Harold Shoup Nos. 1, 2, 3, and 4, were located in 1917 under the Act of May 10, 1872, 30 U.S.C. § 22 et seq. The Mineral Lands Leasing Act, 30 U.S.C. § 181 et seq., subsequently withdrew oil shale from location but preserved ‘*valid claims existent on February 25, 1920, and thereafter maintained in compliance with the law under which initiated, which claims may be perfected under such laws, including discovery.’’ 30 U.S.C. § 193. By vari- ous mesne conveyances, the plaintiffs acquired title to the claims. The instant controversy began on September 8, 1964, when the Manager, Colorado Land Office, Bureau of 24a Land Management, issued complaints on behalf of the United States alleging the invalidity of the claims due to a failure to discover a valuable mineral deposit. The traditional standard for determining that a valuable mineral deposit had been discovered is whether or not a prudent person would be justified in believing the de- posit could be developed, extracted, and marketed at a reasonable profit. Freeman v. Summers, 52 L.D. 201 (1927) (hereinafter Freeman), held that present de- velopment and marketability at a reasonable profit is not necessary for deposits of oil shale. Rather, the claimant must only establish that the oil shale deposits constitute a valuable resource for future use and de- velopment. Administrative Law Judge Dent D. Dalby found that the claimants did not meet the standard mining law test for a valuable resource. If he had been ruling as a matter of first impression, he would have determined the claims to be invalid. However, he found that the claimants had established that the oil shale deposits constituted a valuable resource for future use and development. Under the Freeman standard, he held all six claims to be valid, except for 35.4 acres of Harold Shoup No. 3 which were non-mineral in character, and are not before us on appeal. The United States appealed the ruling to the Interior Board of Land Appeals (hereinafter the Board). The Board reversed the administrative law judge, and held the six claims to be null and void, explicitly overruling Freeman. The Board held that in order to satisfy the biiRD i cad AOE St ate Aton dae ash wip rns —I eet 25a requirement of discovery of a valuable mineral deposit, it must be shown that the deposit could have been de- veloped, extracted, and marketed at a reasonable profit on February 25, 1920 (the date of the withdrawal of oil shale lands from location), and at all subsequent times without substantial interruption, up to the time of the contest proceedings. The Board adopted Administra- tive Law Judge Dalby’s factual findings that despite considerable investment over the years in various tech- niques of extracting oil from oil shale, no prudent per- son was justified in believing the deposits could be presently developed, extracted and marketed at a rea- sonable profit. The Board held that the claims here in issue had been filed not on the basis of their then current value—oil shale could not then be developed—but in anticipation that the oil shale would someday become a valuable mineral. The 1872 Mining Act had opened further land to exploration and purchase of ‘‘valuable mineral de- posits”. The overall effect of the Board’s ruling was to invalidate 50,000 old mining claims. The Board’s ruling expressly invalidated only six claims filed before 1920, but its precedent endangers all other pre-1929 oil shale claims covering at least 500,000 acres of Federal land in Colorado, Utah and Wyoming. One news article commented on the ruling in these words: But the board’s ruling; unless appealed and re- versed in court, would mean that no pre-1920 oil shale claim can be patented and these old claims 26a would be open to department action invalidating them. ‘Board Ruling Imperils Oil-Shale Claims,’’ Denver Post (July 2, 1974). The claimants seek review of the decision of the De- partment of Interior declaring their oil shale claims invalid. They contend that (1) the rule of discovery set out in Freeman is a proper application of the tra- ditional and long-established requirements of the min- ing laws; (2) this rule has received Congressional re- view and approval; (3) the Interior Department is estopped from applying any other rule to the plaintiffs’ claims; and (4) the United States Government has recognized oil shale deposits as valuable mineral de- posits under the mining laws. These and other conten- tions are discussed in Parts III and VI below. II [1,2] Final decisions of the Board of Land Appeals within the Department of Interior denying the validity of mining claims are clearly reviewable under the Ad- ministrative Procedure Act, 5 U.S.C. § 701 et seq.; Nickol v. United States, 501 F.2d 1389 (10th Cir. 1974), The issues raised by the parties in this case are within the scope of review, namely, whether the agency’s ruling is supported by law and by substantial evidence. 0 U.S.C. § 706; Citizens to Preserve Overton Park, Inc. v. Volpe, 401 U.S. 402, 414, 91 S.Ct. 814, 28 L.Ed. 2d 136 (1971); Universal Camera Corp. v. National Labor Relations Board, 340 U.S. 474, 71 S.Ct. 456, 95 ‘4 sega Aaa Ab in th hk 27a L.Ed. 456 (1951); Henrikson v. Udall, 350 F.2d 949; 950 (9th Cir. 1965), cert. demed, 384 U.S. 940, 86 &.Ct. 1457, 16 L.Ed.2d 538 (1966). Ill [3] Mining laws require the discovery of a valuable mineral deposit prior to the location of a valid claim. 30 U.S.C. §§ 22, 23, 25 and 29; Best v. H umboldt Placer Mining Co., 371 U.S. 334, 83 S.Ct 379, 9 L.Ed.2d 350 4 (1963) ; Cameron v. United States, 252 U.S. 450, 40 S.Ct. 410, 64 L.Ed. 659 (1920). The traditionai defini- « tion of discovery is embodied in Castle v. Womble, 19 L.D. 455, 457 (1894) ; In this case the presence of mineral is not based ‘ upon probabilities, belief and speculation alone, 4 but upon fact, which . . . show that with further work a paying and valuable mine, so far as human foresight can determine, will be developed. After a careful consideration of the subject, it is my opinion that where minerals have been found and the evidence 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 develop- ing a valuable mine, the requirements of the statute have been met. This definition has been consistently affirmed. United States v. Coleman, 390 U.S. 599, 88 S.Ct. 1827, 20 L.Ed. 2d 170 (1968) ; Best, supra; Cameron, supra; Chrisman 28a v. Miller, 197 U.S. 313, 25 S.Ct. 468, 49 L.Ed. 770 (1905). The ‘‘prudent-person test”’ in Castle v. Womble has been elaborated upon by the ‘marketability test,’’ that is, whether the mineral can be removed and extracted at a profit: Under the mining law Congress has made public lands available to people for the purpose of mining valuable mineral deposits and not for other pur- poses. The obvious intent was to reward and en- courage the discovery of minerals that are valuable in an economic sense. Minerals which no prudent man will extract because there is no demand for them at a price higher than the costs of extraction and transportation are hardly economically valu- able. Thus, profitability is an important considera- tion in applying the prudent-man test, and - the marketability test which the Secretary has used here merely recognizes this fact. (Footnotes omitted ) United States v. Coleman, supra, 399 U.S. at 602-603, 88 S.Ct. at 1330. The Coleman opinion points out that the prudent-person test and the marketability test are essentially the same; the latter is simply a logical ex- tension of the former. The parties agree upon this basic definition. Thus, the pivotal issue of the dispute lies in whether it was correctly applied to oil shale in the Freeman case. Free- man deals with two issues relating to the discovery of oil shale: (1) the extent to which a discovery of an apa 45 od ah apts Kis, on - - Ba hy On tat te Aah S* Latte ARE 29a outcropping of oil shale on the surface indicates to a prudent person the existence of a bed of oil shale below the surface substantial enough in size to warrant devel- opment; and (2) whether oil shale need be presently disposable at a profit. Since it is eoneeded by the government that the plaintiffs’ claims contain substan- tial amounts of very rich oil shale, it is only the latter issue in Freeman which concerns us now. Freeman held that the claimants did not have to prove that they could presently profit from the develop- ment of their oil shale claims: While at the present time there has been no con- siderable production of oil from shales, due to the fact that abundant quantities of oil have been produced more cheaply from wells, there is no possible doubt of its value and of the fact that it constitutes an enormously valuable resource for future use by the American people. It is not necessary, in order to constitute a valid discovery under the general mining laws sufficient to support an application for patent, that the mineral in its present situation can be immediately disposed of at a profit. (Emphasis added ) Freeman at 206. This case appears to extend the doc- trine of discovery beyond the traditional limits of the paying and valuable mine test in Castle v. Womble and subsequent Supreme Court opinions adopting that principle. Those cases speak in terms of the present expenditure of labor and resources in order to develop a presently profitable mine, rather than the future 30a developmental value of the mineral deposit. Roberts v. Morton, 549 F.2d 158 (10th Cir. 1976) re-affirmed the present marketability test for alumina deposits located in oil shale land. The claimants argue that ‘‘the present value of a mineral deposit is usually dominated by the present appraisal of the future,”’ in other words, the estimated future worth of the oil shale should be discounted to current values. Plaintiffs’ Opening Brief at 130-131. The administrative law judge in his findings of fact agreed with the claimants and expressly found that the future value of oil shale has a certain economic worth, even a substantial economic worth in present-day terms. The discounted future value of a mineral deposit may well be a significant factor to the prudent person in determining whether he can profitably develop the deposit. However, the discounted future value of a mineral deposit is by itself insufficient to meet the marketability and prudent person tests of Coleman and Castle v. Womble. [4] For purposes of these pre-1920 oil shale claims, however, Freeman does not represent an unwarranted extension of the traditional tests for discovery. Merely speculative claims are not discoveries of valuable min- eral deposits under the Freeman standard. Freeman only extended the prudent person test to a mineral that the prudent person justifiably believed would inevi- tably become valuable, or would become marketable by the time the oil shale deposits could be sufficiently de- veloped, and not only if the demand for the ultimate product were changed. Roberts, supra, Coleman, and Tags Me OD ee ne ee ee ene eS eet . ill aia Sie nite Cikon sat ad ntti seed Xo haiti tt ihe SAS ae A 3la Castle v. Womble are distinguishable because they did not have to consider the unique position of oil shale. Of most significance to our decision is the fact that because oil shale deposits contain a potential domestic source of energy, the Government itself has acted to create a market and to encourage prudent investors to stake claims in oil shale deposits. Part V, ifra. IV Claimants contend that Freeman is in effect an ex- pression of Congressional intent to establish special rules of discovery for oil shale, and that to overrule it would be an interference with Congress’ legislative authority. They point specifically to the legislative his- tory of the Miner: Lands Leasing Act of 1920, an administrative ruling shortly thereafter, a general executive and congressional review of oil shale claims in 1930-31, and the enactment in 1996 of an amendment to the mining laws relating to the patenting of oil shale claims. This argument raises two issues: whether Con- gress did in fact approve the rule of discovery in Freeman and, if so, whether the nature and form of the approval warrants giving it such force that only Con- gress itself can repeal or overrule it. The legislative history of the Mineral Lands Leasing Act of February 25, 1920 is unclear concerning the Congressional policy for the requirements of discovery of oil shale. As early as 1916, the Department of In- terior proposed the withdrawal of oil shale lands from entry, location, and patenting under the Act of May 10, 1872, 30 U.S.C. § 22 et seqg., and the placement of the 32a lands under a leasing program. Hearings on H.R. 406 Before the Senate Committee on Public Lands, 64th Cong., Ist Sess., at 301, 320-321 (1196). The motivation for this and subsequent proposals was Congressional perception of the significant value of oil shale as an important source of petroleum to replace other rapidly dwindling supplies. The general view of witnesses and Congressmen was that development of oil shale was at that time not commercially feasible but would be in the near future. Hearings on H.R. 406, supra; Hearings on S. 45 Before The Senate Committee On Public Lands, 65th Cong., Ist Sess., pt. 4, at 250-253 (1917) ; Hearings on H.R. 3232 and S. 2812 Before the House Committee on Public Lands, 65th Cong., 2nd Sess., at 811 et seg. (1918) ; 56th Cong. Rec. 6984-6987 (1918). Although the Mineral Lands Leasing Act of 1920 indicated a sharp change in the government’s policy of disposing of its material resources, § 37 of that act, now 30 U.S.C. § 193, preserved existing, valid claims to oil shale. Few comments were made concerning this sec- tion, and even fewer were directed to the requirements of a valid discovery of oil shale. The remarks of Con- gressman Taylor of Colorado, one of the managers of the bill in the House, are typical: Yet the Senate and the House have both always retained in every bill of this kind the provisions ~ of section 37 and expressly recognized and legal- ized and attempted to affirmatively protect the property and legal rights under the laws as they are now and have for over 40 years been on our a oe a Te _— 7 en mm RS mE et —_ in Bs 9 si ha st wk a ABO es Deal Nal CEE Arias — 33a statute books of the honest prospectors, the bona fide locators in good faith, and holders of rightful claims, claims that are valid and existing under existing laws at the date of the passage of this act. Those claimants, even though they may not have perfected a legal discovery under the laws are entitled to go ahead and maintain and perfect their claims under the present existing laws and obtain a patent to their lands just as though this bill had never been passed, and I hope no court or Federal department will ever attempt to deny to these people the rights which Congress looks upon as vested and is attempting in section 37 to guarantee to them. 59 Cong. Rec. 2711-2712 (1920). See also 59 Cong. Ree. 2709 (1920) ; 58 Cong. Rec. 4444 (1919) ; 58 Cong. Rec. 457-4584 (1919). The rule of discovery at that time was the prudent person test of Castle v. Womble. That would indicate that oil shale was subject to the same rigorous stand- ards of profitability and commercial development as all other locatable minerals. However, as the extensive hearings make clear, Congress was fully aware that commercial development of oil shale was not yet tech- nologically feasible. Despite this knowledge, expres- sions in Congress were all in the direction and belief that oil shale lands were of tremendous value and, as Congressman Taylor’s remarks indicate, that valid oil shale claims did exist. On May 10, 1920, shortly after the passage of the 34a Mineral Lands Leasing Act, the Department of In- terior issued Instructions relating to oil shale placer claims. 47 L.D. 548 (hereinafter Instructions). These Instructions were in response to the first application for patent of 14 oil shale placer mining claims under the 1920 Act. The purpose was to provide guidelines as to what constituted a discovery of oil shale under the new law. The Instructions held that consistent with the Department’s prior position, oil shale was a valuable and, therefore, locatable mineral : The Department has had numerous inquiries as to the locatability and patentability of such de- posits under the mining laws and in response thereto, while disclaiming any intention to express- ing a binding opinion in the premises, it has never- theless declared itself as favorable to the view that such deposits, if valuable, are subject to location and purchase under the mining laws... Oil shale having been thus recognized by the Department and by Congress as a mineral deposit and a source of petroleum, and having been demon- strated elsewhere to be a material of economic im- portance, lands valuable on account thereof must be held to have been subject to valid location and appropriation under the placer mining laws, to the same extent and subject to the same provisions and conditions as if valuable on account of oil or gas. Td. at 549-551. The Instructions, therefore, determined that oil shale was sufficiently valuable to be discover- able. Only questions such as the size and richness of the Se a 35a deposits would appear to remain. That this is the cor- rect interpretation of the Instructions is indicated by the fact that the 14 claims which occasioned the In- structions were granted patents. The next Congressional action came in 1930-31, sub- sequent to the Freeman decision which reaffirmed the principle of the 1920 Instructions that oil shale was valuable for discovery purposes even though not pres- ently profitable. The immediate cause of the Congres- sional review was the accusation by Ralph S. Kelly, Chief of the Field Division of the Department of Interior in Denver before his resignation in 1930, that the mining laws were being improperly administered with respect to oil shale. Among other things, he pointed to what he felt was a clearly erroneous decision in the Freeman case. 74 Cong. Rec. 7080-7083 (1931) ; Hearings on S. Res. 379 Before the Senate Committee on Public Lands and Surveys, Tist Cong. 3rd Sess. (1931); Consolidated Hearings on H.R. 3754, H.R. 12802, H.R. 13191, H.R. 15002, H.R. 15130, H.R. 15131, and H.R. 15132 Before the House Committee on Public Lands, T1st Cong., 2nd and 3rd Sess. (1931). The discovery rule of Freeman was thoroughly ex- plored by Congress. It was clearly understood that although commercial development of oil shale was not yet feasible, claimants were nevertheless receiving patents under Freeman based on oil shale’s future value as a source of petroleum. Hearings on S. Res. 379, supra at 22-27. The hearings revealed that the Instructions and Freeman had already resulted in the patenting of 184,000 acres of oil shale lands, and that 36a an additional 85,000 acres could be disposed of through pending patent applications. Consolidated Hearings on H.R. 3754, supra at 181; H.R. Rep. No. 2537, T1st Cong., 3rd Sess., 4, 9 (1931) ; 74 Cong. Rec. 4100-4101, 4104 (1931). Despite this thorough knowledge of the legal aspects and practical consequences of the Freeman doctrine, the oil shale legislation reported to the House did not modify the Freeman rule of discovery. H.R. Rep. No. 2537, supra; 74 Cong. Rec. 4102-4104 (1931). Further- more, the Chairman of the Senate Committee on Public Lands, Senator Gerald P. Nye, wrote to Secretary of Interior Wilbur that patenting should continue. Ex- hibit C-699 in the Administrative Record. The failure of Congress even to propose legislation that would alter the requirements of discovery under Freeman mani- fests its approval of that rule. The most recent significant Congressional action affecting the patenting of oil shale claims was the passage of the Act of July 20, 1956, 70 Stat. 592, 30 U.S.C. § 122. This Act facilitates the patenting of oil shale claims preserved under 30 U.S.C. § 193 by elimi- nating the requirement that the applicant must also obtain any outstanding patent to the surface rights. However, Congress did not specifically addres the problem of discovery at all. [5] In summary, a review of the legislative history and subsequent administrative and Congressional ac- tion under the Mineral Lands Leasing Act of 1920 indicates that Congress intended and did, in fact, ratify a liberalized version of the traditional rule of dis- 37a covery, as embodied in Freeman. Although it is diffi- cult to discern the Congressional intent from the de- bates preceding the enactment of the Mineral Lands Leasing Act of 1920, the 1920 Instructions, promul- gated only three months later, disclose that oil shale was regarded as sufficiently valuable to be a legally discoverable mineral despite the lack of prospects for immediate profitable development. This administrative ruling should be accorded considerable weight (espe- cially in view of the otherwise ambiguous Congressional intent), since it is a contemporaneous construction by those who are presumably intimately familiar with the legislative history and who are charged with the en- forcement of the act. United States v. Leslie Salt Co., 350 U.S. 383, 396, 76 S.Ct. 416, 100 L.Ed. 441 (1956) ; Norwegian Nitrogen Products Co. v. United States, 288 U.S. 294, 315, 53 S.Ct. 350, 77 L.Ed. 796 (1933) ; United States v. Shreveport Grain and Elevator Co., 287 U.S. 77, 84, 53 S.Ct. 42, 77 L.Ed. 175 (1932) ; United States v. Philbrick, 120 U.S. 52, 59, 7 S.Ct. 413, 30 L.Ed. 559 (1887); Brennan v. Udall, 379 F.2d 803, 806-807 (10th Cir. 1967), cert. denied, 389 U.S. 975, 88 S.Ct. 477, 19 L.Ed.2d 468. As noted, in 1930-1931, a major investigation was conducted by Congress into the Department of Interi- or’s patenting of oil shale lands, including an evalua- tion of the discovery rule of Freeman and the implica- tions it held for further patenting of oil shale lands. The failure of Congress to modify or overrule the F'ree- man doctrine when presented with an opportunity to do so is a further indication of Congress’ intent. Corn 38a Products Refining Co. v. Commissioner of Internal Revenue, 350 U.S. 46, 53, 76 S.Ct. 20, 100 L.Ed. 29 (1955) ; United States v. Leslie Salt Co., supra 350 U.S. at 397, 76 S.Ct. 416; Norwegian Nitrogen Products Co. v. United States, supra 288 U.S. at 313, 53 S.Ct. 350; Kay v. FCC, 143 U.S.App.D.C. 223, 443 F.2d 638, 646- 647 (1970). As was contemplated by Congress, the Department of Interior resumed patenting oil shale lands under Freeman. That Congress should take a special attitude toward oil shale lands and ratify in Freeman an exception to the traditional discovery rule is explained by the un- usual role of oil shale as a natural resource in contrast to other locatable minerals. As the Congressional hear- ings and debates have disclosed, oil shale was perceived as highly valuable and crucial to the national security and welfare. Congress believed that commercial devel- opment of oil shale would soon be feasible, because of its perception of the rapid depletion of existing sources of oil. That attitude has persisted, in varying degrees, to this day. Consequently, various means have been sought to foster the development of oil shale. One such technique was to liberalize the rules of discovery. [6,7] This long, stormy, and somewhat complicated Congressional and administrative involvement in the disposal of oil shale lands demonstrates Congressional approval of the Freeman rule of discovery. Conse- quently, the Courts should respect and apply the ap- proved rule, in the absence of Congressional action to the contrary. An attempt by the Board of Land Ap- peals or this Court to overrule Freeman would be viola- ER ae nell ste te. tee Ne er eee en ed Ae Ae eae ey eee Eee ee Pe ete aT A ee ee 39a tive of Congressional legislative authority, and there- fore improper. NLRB v. Bell Aerospace Co., 416 US. 267, 275, 94 S.Ct. 1757, 40 L.Ed.2d 134 (1974); Fribourg Navigation Co., Inc., v. Commissioner of Internal Revenue, 383 U.S. 272, 283, 86 S.Ct. 862, 15 L.Ed.2d 751 (1966) ; Cammarano v. U. S., 358 U.S. 498, 511, 79 8.Ct. 524, 3 L.Ed.2d 462 (1959) ; Service v. Dulles, 354 U.S. 363, 380, 77 S.Ct. 1152, 1 L.Ed.2d 1403 (1957); Corn Products Refining Co. v. Commissioner, supra; Na- tional Labor Relations Board v. Gullett Gin Co., 340 U.S. 361, 365-366, 71 S.Ct. 337, 95 L.Ed. 337 (1951) ; Wilmette Park District v. Campbell, 338 U.S. 411, 417- 418, 70 8.Ct. 195, 94 L.Ed. 205 (1949) ; Crane v. Com- missioner, 331 U.S. 1, 7-8, 67 S.Ct. 1047, 91 L.Ed. 1301 (1947); Brooks v. Dewar, 313 U.S. 354, 360-361, 61 S.Ct. 979, 85 L.Ed. 1399 (1941); Helvering v. R. J. Reynolds Tobacco Co., 306 U.S. 110, 116, 59 S.Ct. 423, 83 L.Ed. 536 (1939); Brennan v. Udall, supra The ‘‘ye-enactment rule’’ enunciated in these cases should not be used in the absence of clear evidence that Con- gress was aware of the administrative regulation at the time of its review of the rules of discovery. Rothenberg v. U. S., 233 F.Supp. 864, 866-867 (D.Kan.1964), aff’d., 350 F2d 319 (10th Cir 1965) ; see also Davis, Adminis- trative Law § 5.07 (1958). Here, it is clear that Con- gress refused to modify the Freeman rule despite full knowledge of its existence and meaning. Vv [8] For years, top administrators in the Interior Department have recognized the energy potential of 40a oil shale. They themselves generated financial and other interest in its mining. Even if the Congressional treatment of the Freeman rule is considered merely as an interpretive aid, and not as hardening the Freeman rule into an act of law,’ we hold that the Interior De- partment is estopped from challenging the validity of the pre-1920 oil shale claims involved in this case. ‘‘The doctrine of equitable estoppel binds the Government for the conduct of its agents while they are acting within the scope of their employment.’’ Atlantic Rich- field Co. v. Hickel, 432 F.2d 587, 591 (10th Cir. 1970). See United States v. Wharton, 514 F.2d 406, 412-413 (9th Cir. 1975); Fox v. Morton, 505 F.2d 254, 256 (9th Cir. 1974) ; C. F. Lytle Co. v. Clark, 491 F.2d 834, &38 (10th Cir. 1974) ; Brandt v. Hickel, 427 F.2d 53, 56- o7 (9th Cir. 1970); United States v. Georgia-Pacific Co., 421 F.2d 92 (9th Cir. 1970); McKay v. Wahlen- mater, 96 U.S.App.D.C. 313, 226 F.2d 35, 43 (1955) ; Chapman v. El Paso Nat. Gas. Co, 92 U.S. App.D.C. 154, 204 F.2d 46, 53-54 (1953) ; Davis, Administrative Law of the Seventies, §17.01 (1976); Comment, ‘*EKmergence of an Equitable Doctrine of Estoppel Against the Government—The Oil Shale Cases,’’ 46 Colo.L.Rev. 433 (1975) ; Berger, Estoppel Against the Government, 21 U.Chi.L.Rev. 680 (1954). Prudent investors detrimentally relied upon the deliberate ac- tions and statements of high government authorities. Such government encouragement was clearly under- taken in an official capacity, and comports with the subsequent treatment of oil shale both by the Depart- ment of the Interior in its Instructions of 1920 and by * See Davis, supra at § 5.07. 4la Congress. This is a clear case for the application of equitable estoppel against the government. A review of public announcements and events through the years will set the proper factual perspec- tive for oil shale development and its potential in 1920. ‘‘Interest in the commercial development of oil shale has varied directly with the need for hydrocarbon fuels and inversely with . . . the availability of shale oil's chief competitor—conventional crude oil.’’ Thomas A. Sladek, ‘‘Recent Trends in Oil Shale—Part 1: History, Nature, and Reserves,’’ 17 Mineral Industries Bulletin 1,3 (Nov. 1974). Until shortly after the discovery of oil at Titusville in 1859, the ‘‘U.S. shale oil industry .. . was a vital part of the American economy.”’ Id. For half a century thereafter, the oil shale industry lay dormant. At the beginning of the twentieth cen- tury, oil shale was regarded even by the speculator only as an indication of the existence of a nearby oil field: The tunnel stopped in shale, which is certainly what is known as oil shale, but nobody imagined that it contained oil . . . No tests have yet been made of the oil, but it is probable that a sample will be sent to some expert, and possibly the oil may be developed and piped down to the city before another year has passed. ‘Oil Oozing from Breast of Cowenhoven Tunnel,”’ The Denver Times at 11 (February 7, 1902).° ’ Local newspapers are an invaluable source for determining whether the ‘‘prudent person’’ prior to February 25, 1920 thought that an investment in oil shale deposits was mere speculation or was presently. capable of being developed at a reasonable profit. The 42a ‘fan expert operator ... says he has never seen better indications for the development of a first class field, the shale encountered even in croppings is so thoroughly impregnated with oil that it burns readily and the indications of gas are to be found everywhere.”’ ‘*Oil in Rio Blaneo,’’ Jd. at 6 (May 21, 1907). See also, ‘Irrigation Project,’’ Id. at 6 (May 23, 1902); ‘‘Oil Excitement in Slate Creek District,’’ Jd. at 9 (Feb. 23, 1903). However, during World War I, officials of the Fed- eral government actively encouraged Westerners to invest in Colorado’s oil shale deposits: ‘‘I plead with you, men and women of the West . . . Develop your vast resources on a sound business basis . . . Let every investor get a run for his money.’’ Speech by Dr. David T. Day, Chief of the United States Division of Petroleum Research, United States Bureau of Mines, delivered to delegates from Colorado mining associa- tions and the public in the chamber of the Colorado House of Representatives, ‘‘Colorado’s Oil Shales to Save World—Day,”’ Id. at 2 (Jan. 24, 1918). ‘‘The future of the oil industry is in the hands of the people of Colorado and Utah . . . If the people of those states do not take hold and develop their resources, Eastern people will come in and reap the benefits.’’ Speech by impact upon the beliefs of prudent persons can be determined from informative statements in newspaper articles. We do not consider them for the truth of the facts therein asserted, but only for their impact on the prudent mining investor. Rules 201 and 902(6). Fed. R.Evid. permit us to take notice of statements in newspaper articles without the necessity of authentication. EERE LR bores Det ah BA 43a Day to the Colorado Civic Association ‘‘ Expert Tells of Shale Riches,’’ Jd. (June 26, 1918). Both Dr. Day and Interior Secretary Lane em- phasized the fact that Colorado’s oil shale deposits would ‘‘save the world’’ when the oil fields were ex- hausted : It is but a question of years—and not many of them, at that—until the oil fields of the world will be exhausted to the point where gasoline and other products of crude oil must be secured from another source and—the rich oil shales of Colorado will be - that source. ‘*Save the World,”’ supra. Investment in oil shale, which had been scorned by prudent persons at the turn of the century, gained the interest of the financial world: The financial world began to regard him [an early forecaster who preached that oil shale would save the world] as anything but ‘cracked’ on the sub- ject . . . until today [when] people are giving serious attention to those treasure vaults that the world up to only yesterday said contained only debris instead of untold wealth. ‘*Colorado’s Oil Shales to Save World,”’ supra. The following announcement by Secretary Lane of the Department of the Interior helped trigger the filing of thousands of claims prior to 1920: The most important single act during the month of December in connection with the classification of 44a mineral lands was the creation of two Naval oil shale reserves, one of 45,440 acres in western Colorado, and one of 86,584 acres in northeastern Utah. The lands thus set apart for the use of the Navy contain bodies of shale which, when mined and distilled in properly constructed retorts, yield oil of good quality. Thus far oil has not been ex- tracted from shale in the United States in com- mercial quantities since the discovery of crude oil developed by wells, because oil can be secured in the latter way much more cheaply than thru the more complex process of extracting 1t from shales. But the oil shale industry has existed in Scotland for half a century in spite of the competition of the oil fields of the world, and the time will doubtless come when the large oil shale deposits of western United States will also be developed in a com- mercial way. The Naval oil shale preserves have been created to provide for the needs of the Navy during that future time when the ordinary oil fields have been so reduced that it becomes practicable and profit- able to distill the more expensive oil shale. “Colorado Shale Reservations Are Held Important.” The Denver Post at 1 (Jan. 21, 1917). In fact, the Federal government informed Colorado’s interested citizenry that its oil shale could be mined at a sub- stantial profit, and by a simple process: Based on figures from the Scotch and French shale operations, shale in Colorado and her sister states 45a can be mined on a large scale and give the investor better than 50 percent profit. Shale to be mined at a profit should be in veins not less than three feet thick. ‘¢Colorado’s Oil Shales to Save World,”’ supra. Fancy processes are not needed. Just tear a leaf out of the Seotch book. They have been making profiits out of shales since 1869, and their methods are good. The industry requires manufacturers and miners. This oil shale is very tough and not easy to mine, but Colorado people are past masters of mining and will solve all such problems . . . Dr. Day stated the government thought enough of the shale deposits to create a reserve of 145,000 acres’ in Colorado and Utah for the future use of the Navy, but that this reserve did not by any means include the richest shales, and there is enough left unreserved for all. ‘*Expert Tells of Shale Riches,’’ supra. Geologists reinforced the view of Federal officials that the oii shale deposits ought to be mined, and could be mined at a reasonable net profit. See ‘‘ Possibilities of State’s Shale Outlined By Professor George,’’ The Rocky Mountain News at sec. one (Jan. 1, 1918); ‘‘Natural Oil Running Short, But State Shale Will Produce For 800 Years,’’ The Denver Times at 8 (Jan. 1, 1920). [9,10] Thus, the Government stressed the fact that oil shale deposits would inevitably become commercially marketable. This inevitably removed the pre-1920 46a claims in existing oil shale deposits from the realm of mere speculation, and gave them sufficient present value to constitute a valuable mineral deposit pursuant to 30 U.S.C. § 22 et seq. While we agree with the Board that speculative future value is not a sufficient showing of present value to make oil shale a ‘‘ valuable mineral,”’ certain (or apparently certain) value in the near future is sufficient evidence of present value. In the Govern- ment’s encouragement of early investment in oil shale, there was no suggestion that ‘‘dramatic technological breakthroughs’? or unexpected ‘‘market changes”’ would be necessary in order to develop the oil shale deposits and make them profitable. The Board also stated that ‘‘in the 102 years since enactment of the general mining law, value has always been determined upon present facts, not upon possibilities of the future.’? Winegar, 16 IBLA at 168. This is incorrect in that the value of oil shale deposits has always been determined in accordance with its future potential. Among those early prudent investors was Karl C. Schuyler, Sr., an authority on mining law, who became a United States Senator from Colorado in 1932. His partners included George A. Taff, an engineer who had been instrumental in the construction of the Pike’s Peak hydroelectric plants, and Eugene D. Milliken, United States Senator from Colorado from 1941 to 1957. Reports made by mineral examiners of the General Land Office concluded that: Whether or not to lessee is successful in his attempt to solve the shale question, there is no question 47a but that the attempt that he is making is made on a basis sufficiently large and is done under the direc- tion of sufficiently competent technical men to insure the belief that the men who are financing the attempt have every confidence in its success. Mention is made of these last facts to make clear the fact that in our opinion, the entire system of development work on which the applicant relies for patent, when viewed in connection with the present operations of the lessee, establishes beyond any doubt the bona fides of the work. General Land Office Field Examiners, Mineral Report at p. 16 (Nov. 9, 1920). The fact that these early prudent investors were persons of prudence and mining experience who reasonably believed that a valuable mine could be developed is persuasive authority to satisfy the ‘‘valuable mineral’ test, even under Castle v. Womble, supra, and United States v. Coleman, supra. The excitement of thousands of investors who staked claims in oil shale deposits prior to passage of the Mineral Leasing Act of 1920 was fueled by a com- bination of factors: the supply of crude oil from domestic fields fell below demand, and increasing amounts of crude were imported from the new fields in Mexico. The U.S. Geological survey [sic] estimated that a nine- year supply of domestic natural petroleum re- mained in the United States. No additional dis- coveries were anticipated, and it appeared that the automobile, which was already a major element in 48a American life, would soon fall idle for lack of fuel. At about the same time, the USGS announced that fantastic quantities of potential fuels were con- tained in the western oil shales. When combined with the predictions of a coming fuel shortage, this announcement produced an oil shale boon. Sladek, supra at 3. Interest in oil shale was dampered in the 1920’s as a result of (a) lack of technology, because the industry had stagnated for a half-century, (b) widespread pro- motional fraud, which weakened public confidence in the industry, and (c) the discovery of abundant oil reserves in Texas, which was the single most significant factor that diminished interest in oil shale. Jd. During World War II, the United States became more dependent on imported oil. In response to this need, Congress passed the Synthetic Fuels Act of 1944 ‘‘which acknowledged the importance of a reliable domestic supply of fuels and which provided the Bu- reau of Mines with a charter to establish such a supply from the domestic oil shale deposits. The Bureau began a research program that has continued to the present day.” Id. Once again, the discovery of oil in the Middle East, on the ccntinental shelf of the United States, and in Alaska, crushed public interest in oil shale until the ‘fenergy crisis’’ of 1973. Id. In the aftermath of the fuel embargo, public interest in oil shale and in other energy alternatives has re- mained high. Even today, when the Alaskan pipeline is nearly completed, reports on oil shale and synthetic 49a fuels are given significant treatment by the press. See, e. g., “‘Oil-Shale Funds Blocked,’ The Denver Post 1 (Sept. 23, 1976); ‘‘Interior Predicts Competitive Shale,’’ The Rocky Mountain News 27 (Sept. 13, 1976) ; ‘*Colorado: Tomorrow, the West,’’ The Denver Post (Sept. 5, 1976); ‘‘Is Oil Shale Dead?,’’ The Straight Creek Journal 6 (Sept. 2, 1976); ‘‘Kleppe ‘Stumped’ On Oil Shale,’’ The Denver Post (Aug. 30, 1976); *‘Oil-Shale Loan Plan Back,’’ Id. (Aug. 29, 1976) ; ‘‘Dead Oil Shale Project Revived,’’ Id. at p. 1 (Dee. 1, 1976). In November 1974, the Federal Energy Administra- tion published its Final Task Force Report, Project Independence: Potential Future Role of Ow Shale: Prospects and Constraints. The FEA noted that esti- mates of oil shale resources have greatly increased since the 1920’s, and that Colorado has 84% of the higher grade reserves, which are among the finest and most easily mined in the world. Jd. at 1. The Federal government owns 80% of the known resources, al- though there were thousands of claims filed on this public land prior to 1920, ‘‘when oil shale was a locat- able mineral under the mining laws.’’ Id. at 96. The Report urges that the Government lease or sell its land to private industry at a fair market value and in a manner that would achieve efficient resource allocation by approximating a perfectly competitive market. Because the Government has refused to lease or sell its land, which contains the most valuable oil shale re- sources, private enterprises are unwilling to develop their privately held deposits. Id. at 101-102: 50a a private developer will continue to be reluctant to develop private lands first so long as the possibility exists that at some future date, as a result of leasing public lands, the high grade resources would be available to potential competitors as well as whatever information the pioneering company had already developed. The situation has been assessed by the National Petroleum Council which has concluded that without the availability of public lands, development may be limited to one or possibly two plants with a combined production of 100,000 barrels per day by 1985, even though the potential is probably closer to 400,000 daily barrels. Id. at 102. Even the upwardly revised cost estimates of shale oil production ($12 to $18 per barrel) indicate that shale oil could be presently competitive with oil imported from OPEC, especially if world oil prices rise. Report of the Department of the Interior, Mining and Min- erals Policy 72 (July 1976). This report notes that the time required to determine the validity of claims filed on public lands when oil shale was a locatable mineral may impede commercial development. Id. at 73. See Project Independence, supra at 39. The Secretary of the Interior urged that a synthetic fuel commercial- ization bill be passed by Congress in 1976, in order to ‘“‘encourage the developinent of the industry and pro- vide an incentive for accelerated leasing and produc- tion of shale oil,’’ Jd. At about the same time, the GAO released a report to Congress entitled, An Evaluation of Proposed Federal 5la Assistance for Financing Commercialization of Emerg- ing Energy Technologies (Aug. 1976), wherein it recommended that the synthetic fuel commercialization bill not be passed : Synthetic fuels production—while technically feasible with first generation technologies—is not cost effective in that the total cost of outputs is not price competitive with foreign oil. Nor does it look as attractive when compared to other technologies, which we examined, on an incremental price basis. We believe synthetic fuels technologies would receive a high priority for Government research, development and demonstration efforts designed to develop more advanced and efficient production technologies, but we question whether assistance should be given to commercialization of synthetic fuels at the present time. Id. at 48. Faced with these polarized positions, on September 23, 1976, the House of Representatives defeated a pro- posed $4 billion loan guarantee as an incentive to pro- duce synthetic fuel by a one-vote margin. Multiple eco- nomic, aesthetic, environmental, engineering, and political uncertainties throughout the field of energy resource development have led to this intense divisive- ness within the federal government itself. Yet, the nation requires a stable, long-term policy regarding the development of oil shale deposits. Such a coherent energy resource policy is especially important today, when we have become much more reliant than before 52a the ‘‘energy crisis’’ of 1973 upon foreign oil, when the future of nuclear energy remains unclear, and when other energy alternatives are technologically and eco- nomically more unrealistic than oil shale. Reliance on imported energy requires acceptance of a worsening of the balance of payments. In addition to the bleak monetary picture, a certain insecurity is inevitable when the operation of the nation depends to a large extent on a steady supply of fuel from an area of the world which has been in an almost continuous state of war for over 25 years. In the long run, the United States and its neigh- bors will need many other sources of energy besides petroleum, and oil from the abundant reserves of oil shale will probably be one of the alternative sources. There is certainly much current interest and involvement in the oil shale business. How- ever, at the present time oil shale is at the mercy of many political and economic elements, and it is un- certain that the current efforts will be of sufficient duration to produce a mature shale oil industry. Sladek, supra, at 3-4; See Hon. Wayne N. Aspinall ‘‘Oil Shale Development Handicapped by Government In- decision,’’ 59 Quarterly of the Colorado School of Mines 91 (July 1964). Because of the instability of the Government’s energy policy, it has appeared prudent, at times, to invest in oil shale, while at other times, such investment has appeared merely speculative. While the courts can- not prevent the Government from having an unstable 53a energy policy, the courts must prevent the Govern- ment from altering legal standards that have been relied upon by investors for the past half-century. Since World War I, prudent mining investors and industrial giants have purchased oil shale land in the reasonable expectation that future profits would justify such purchases. See Winegar, supra at 134-138. The Standard Oil Company of California began to purchase Colorado land bearing oil shale in 1943 ‘‘for their oil shale resources,’’ which Standard considered valuable. (Deposition of W. S. Svenson at 28). Since 1927, Texaco has acquired nearly 30,000 acres of oil shale land in Colorado and Utah in the belief that such an acquisition has been prudent. (Deposition of C. E. Moser at 47). Since 1955, Mobile Oil Co. has acquired about 20,000 acres of oil shale _.nd, and holds an option to purchase about 12,000 other acres ‘‘in the expectation of eventually returning a profit justifying the pur- chase’’ (deposition of T. W. Nelson at 40). Since 1952, Cities Service has acquired about 10,000 acres of Colorado oil shale land, and considers that investment to have been prudent (deposition of D. M. Anthony at 30-32). Since 1961, TOSCO has acquired about 30,000 acres of oil shale land in Colorado and Utah, and regards this as a prudent investment: ‘‘a viable indus- try cannot exist without the ownership of these re- serves’’ (testimony of H. Koolsbergen, Tr. 5033). Apart from the fact that the Board’s reversal of the Freeman standard has ignored a century of reliance on the prudent man standard as it' applies to the pecu- liar situation of oil shale, such action could jeopardize 54a the future of our nation. It is apparent that world crude oil prices can only continue to rise. With con- stantly depleting oil reserves, there must come a time when the recovery of oil from shale will be competitive with crude oil. At this critical juncture, the future of oil shale investment ought not te be tied up in decades of litigation. As with every other industry, the tech- nology would improve during competitive private development. Prudent investors might be those who recognize that we cannot wait until the next severe shortage of crude oil (which may be the final shortage). In our view, United States v. Coleman, supra, did not superimpose the requirement that shale oil be presently competitive with crude oil. Prudent investors can fore- see a time in the not-too-distant future when it will be cheaper to supply more of this country’s energy needs with the vastly greater amount of shale oil. VI The Tenth Circuit and this Court have recently con- sidered the applicability of the ‘‘prudent man’’ test in the area of mining claims. United States v. Zwetfel, 508 F.2d 1150, 1157 (10th Cir. 1975); Hallenbeck v. Kleppe, No. 75-786 (D.Colo., Aug. 31, 1976). The government must go forward with sufficient evidence to establish prima facie the invalidity of contested claims, and the burden then shifts to the claimant to show by a preponderance of the evi- dence that his claim is valid Zweifel, supra at 1157; Hallenbeck, supra at 7. [11-13] In view of the Federal Government’s own 2 Pee eee 55a statements which encouraged prudent investors to stake claims in oil shale deposits, we find that the Government has not established a prima facie case of invalidity. We do not hold that an administrative agency cannot over- rule its own long-standing precedents. However, be- cause of subsequent Congressional approval, the F’ree- man standard can only be overruled by legislative ac- tion. Even if we were to hold that the Board itself eould overrule Freeman, and that it could determine that oil shale can no longer be regarded as a valuable mineral under the prudent investor test, the Govern- ment cannot assert that the very oil shale claims it had encouraged are not valid. The reversal of the original intention of the Interior Department and of Congress requires application of estoppel against the Govern- ment. See Vassiliou v. District Director of Immigra- tion & Nat. Serv., 461 F.2d 1193, 1195 (10th Cir. 1972). Moreover, where an established rule has long been relied upon by investors, an administrative agency should not reverse its position on a retroactive basis. See NDRB v. Majestic Weaving Co., 355 F.2d 854, 859- 861 (2d Cir. 1966) (Judge Friendly). We hold that the six pre-1920 oil shale claims were discoveries of valuable mineral deposits and are valid claims. Vil Accordingly, IT IS HEREBY ORDERED that Plaintiffs’ Motion for Summary Judgment is GRANTED. Defendant’s Motion for Summary Judg- ment is DENIED. IT IS FURTHER ORDERED that by February 1, 56a 1977, Plaintiffs are to submit an Order and Form of Judgment setting forth their claims with particularity and description and implementing the Court’s ruling herein. 57a APPENDIX D In THE UNITED States District Court FOR THE DISTRICT OF COLORADO SHELL Om Company AND D. A. | SHALE, INC., Plaintiffs, Civil Action vs. > No. 74-F-739 Ceci. D. Anprus, Secretary of J UDGMENT the Interior, Defendant. [ Filed Feb. 1, 1977, James R. Manspeaker, Clerk ] This action having come before the Court on cross motions for summary judgment and the issues having been duly considered and a decision having been duly rendered, IT IS ORDERED AND ADJUDGED that Judg- ment enter for Plaintiffs, Shell Oil Company and D. A. Shale, Inc., and against Defendant, Cecil D. Andrus, Secretary of the Interior, as follows: 1. The decision of the Board of Land Appeals in the Department of the Interior in United States v. Frank W. Winegar, et al., IBLA 70-549, June 28, 1974, re- ported at 16 [BLA 112, 81 I.D. 370, is reversed. The oil shale mining claims owned by the respective plaintiffs and involved in this action and their legal descriptions, as set forth in the location certificates, are as follows: Shell Oil Company Claims Legal Descriptions Mountain Boy 6 Section 14, northwest quarter Mountain Boy 7 Section 14, southwest quarter D. A. Shale, Ine. Claims Harold Shoup 1 Section 23, southeast quarter Harold Shoup 2 Section 23, northeast quarter Harold Shoup 3 Section 23, NE 1/4 NW 1/4, EK 1/2 SW 1/4 NW 1/4, and SE 1/4 NW 1/4 Harold Shoup 4 Section 23, southwest quarter, all within Township 7 South, Range 97 West, 6th Prin- cipal Meridian, in Garfield County, Colorado. 2. The applications to patent plaintiffs’ claims are remanded to the Department of the Interior. The de- fendant and his subordinates shall expeditiously process those applications consistent with the Order granting summary judgment. Absent good cause shown, such processing shall be based on the existing administrative record. 3. The Court retains jurisdiction for the purpose of entry of such further orders and directions as may be necessary or appropriate for the construction or carry- ing out of this judgment or this Court’s Order of January 17, 1977, granting summary judgment for plaintiffs in this action. ——eEeEeEeEeEeEeEeEeEeEeEeEEEErorOoeEeEeEeEeEeEeEe—————— 59a 4, Each party to pay its own costs. Dated at Denver, Colorado, this 10th day of Feb- ruary, 1977. FOR THE COURT: JAMES R. MANsPEAKER, Clerk By: Stephen P. Ehrlich STEPHEN P. EHRLICH, Chief Deputy Approved: Sherman G. Finesilver SHERMAN G. F'INESILVER, United States District Judge 60a APPENDIX E UNITED StaTEs DEPARTMENT OF THE INTERIOR OFFICE OF HEARINGS AND APPEALS INTERIOR Boarp oF LAND APPEALS 4015 Wilson Boulevard Arlington, Virginia 22203 UNITED STATES Vv. FraNK W. WINEGAR, et al. IBLA 170-549 Decided June 28, 1974 Appeal from a decision of Administrative Law Judge Dent D. Dalby, holding that five and a portion of a sixth oil shale placer mining claims are valid and can proceed to patent. (Colorado Contest 359, 360) Reversed. Mining Claims: Determination of Validity—Mining Claims: Discovery: Marketability To satisfy the requirement of discovery of a valu- able mineral deposit within the boundaries of an oil shale placer claim located prior to February 25, 1920, it must appear that at that time the mineral deposit could have been developed, ex- tracted, and marketed at a reasonable profit; it must also appear that such marketability has continued without substantial interruption from that time to the time of the contest proceedings. Where it has been shown that at no time would a 6la prudent man have expended further labor or means in order to develop actual mining opera- tions, discovery of a valuable mineral deposit has not been made, and the claims must be declared null and void. Mining Claims: Determination of Validity—Mining Claims: Discovery: Marketability In order for an oil shale deposit to be considered valuable within the meaning of the general min- ing law, it must appear as a present fact, as of February 25, 1920, and at all times thereafter that the deposit could be developed, extracted, and marketed at a reasonable profit. The possi- bility of dramatic technological breakthroughs or changes in market conditions at some future date has no bearing on value as a present fact. Mining Claims: Determination of Validity— Mining Claims: Disecovery—Rules of Practice: Evi- dence What men have or have not done over a period of years is proper evidence as to the conduct of a prudent man in the same or very nearly the same cir [Text truncated at 120,000 characters. The full text is on the page linked above.] --- Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385006_0285%3A1. Public record. Not legal advice.