Petitioners Brief — Andrus v. Shell Oil Co.

No. 78-1815 ‘

Kir 1A %

Gu the Supreme Court of the

OCTOBER TERM, 1979

CECIL D. ANDRUS, SECRETARY OF THE INTERIOR,

PETITIONER

V .

SHELL OIL COMPANY AND D.A. SHALE, INC.

ON WRIT OF CERTIORARI TO THE UNITED STATES

COURT OF APPEALS FOR THE TENTH CIRCUIT

BRIEF FOR THE PETITIONER

WADE H. MCCREE, JR.

Solicitor General

JAMES W. MOORMAN

Assistant Attorney General

LouIs F. CLAIBORNE

Deputy Solicitor General

MARK I. LEvy

Assistant to the Solicitor General

DirK D. SNEL

ROBERT L. KLARQUIST

Attorneys

Department of Justice

Washington, D.C. 20530

IN a.ciisscissiiccessatiseenlicainienbitinnoniaiiesanswennions

Ee ee eI

IE MIS seciecenncrnnceninnindennvcsnntusihicoecncone

SID, MIU ioiveceieccssnocncdbarctenonbennsnnsinessossintinn

RE AS ea ee

| aan

Argument:

I,

Il.

Il.

I

Respondents failed to make a discovery

of a valuable mineral deposit within the

meaning of the mining laws ..................

Congress has not excepted oil shale

claims from the discovery requirements

of the general mining law .....................-

The Secretary is not estopped from chal-

lenging respondents’ oil shale claims as

invalid under the discovery standard of

the general mining law ..........................

A. Equitable estoppel does not apply

against the government, and the Sec-

retary cannot be estopped from re-

vising a legally erroneous interpreta-

tion of a statute regarding the pub-

lic lands to comport with the correct

meamiae @f the IAW-.........0......2..00.4001

B. The Secretary cannot be estopped in

the circumstances of this case ..........

1. Affirmative misconduct ..............

2. Serious injustice ..........................

S. Pwpine interes? .............cccccccccese--.

Pa

annnres

15

18

26

42

44

51

52

54

59

62

II

CITATIONS

Cases: Page

Andrus v. Charlestone Stone Products Co.,

I PR SP oeinescicotenecniceces 6, 20, 41-42, 55, 60

Atlantic Richfield Co. v. Hickel, 432 F.2d

OEE ASE OMe en owen roc ban el wee 43, 51

Automobile Club v. Commissioner, 353

0 ME SRIBRSNCSR OAR ede rteel e se Ne Ma 45, 47, 57

Barrows v. Hickel, 447 F.2d 80 ................ 22

Barton v. Morton, 498 F.2d 288 .............. 30

Best v. Humboldt Mining Co., 371 U.S.

REPRE NONI an 7 Or cae Pee 20, 22, 27, 48, 49, 58

Boesche v. Udall, 373 U.S. 472 ............-.---- 6, 59

Boys Market, Inc. v. Retail Clerks Union,

ea Rit ee ee nerenmaennee 37

Cabellos v. Shaughnessy, 352 U.S. 599... 4-5

Calbeck v. Travelers Insurance Co., 370

Ee EE ses ised tats een tomeninnpenteiioes 57

Cameron v. United States, 252 U.S. 450.... 20, 28,

48, 49, 58

Cammarano v. United States, 358 U.S.

____ SENET ra Sarco SUS eC MRS CROC CO RO 37

Castle v. Womble, 19 L.D. 455 ................. 19, 21

Chrisman v. Miller, 197 U.S. 318 .............. 19

Cole v. Ralph, 252 U.S. 286 ..............2....- 21, 23

Commisison v. Glenshaw Glass Co., 348

Ne unis 35

Converse v. Udall, 399 F.2d 616, cert. de-

a RS). ae 20

Cramer v. United States, 261 U.S. 219...... 44

Davis’s Administrator v. Weibbold, 139

A I iat i cla et eiakunideciiatnsianaibols 21

Ill

Cases—Continued Page

Diamond Coal and Coke Co. v. United

SO, Te tits I inc ici ctcecctirsiorcncesacee 19, 21

Dixon v. United States, 381 U.S. 68......46, 47, 57

Enfield v. Kleppe, 566 F.2d 1139 -....... 43, 50, 58

Federal Crop Insurance Corp. v. Merrill,

BE I I sib ineatcntivinrnatenssidemmreasedinens 45

Foster v. Seaton, 271 F.2d 886 .................. 22

Freeman v. Summers, 52 L.D. 201....9, 11, 12, 18,

14, 16, 17, 29-81, 32, 33,

34, 36, 42, 52, 55, 56, 57

Girouard v. United States, 328 U.S. 61.... 37

Goldberg v. Weinberger, 546 F.2d 477,

cert. denied, 431 U.S. 987 -...000000.. 43

Hallenbeck v. Kleppe, 590 F.2d 852 .......... 22

Hankerson v. North Carolina, 482 U.S.

___ gee eS He ERI oe ne a 44

Harisiades v. Shaughnessy, 342 U.S. 580.. 45

Hart v. United States, 95 U.S. 316 -......... 44

Helvering v. Hallock, 309 U.S. 106 .......... 37

Helvering v. Reynolds, 313 U.S. 428 ........ 36

Henault Mining Company v. Tysk, 419

F.2d 766, cert. denied, 398 U.S. 950... 30

Hickel v. Oil Shale Corp., 400 U.S. 48...... 6-7

Hodgson v. Lodge 851, Int’l Assn. of

Mach. & Aerospace Workers, 454 F.2d

RRA ay AAAS A Rar oe oe 38

Houghton v. Payne, 194 U.S. 88 -............. 37

ine ¥. ee 688 Uae 8 ii 45, 48, 51

Iron Silver Mining Company v. Mike and

Starr Gold and Silver Mining Company,

BS eR erence een 21

Jeems Bayou Club v. United States, 260

Bi RN caleli ce coaciablinncananedlansnaiieiibbscueioaaisidde 44

Cases—Continued Page

Jones v. Liberty Glass Co., 332 U.S. 524.. 36

Kendall v. San Juan Silver Mining Co.,

I I i oseriesssenesensimiopiiccainntincaabebonten 6

Knight v. United States Land Association,

BI MR EI icc si ccpien hecsepieceenetinccaninntscncnennenei 49

Laden v. Andrus, 595 F.2d 482 ................ 19

Larson v. Domestic & Foreign Commerce

a MI, NG ME ine etectteneeneceaceces 46

Lee v. Munroe & Thornton, 11 U.S. (7

I i 44

Manhattan General Equipment Co. v.

Commissioner, 297 U.S. 129 -......220........ 57-58

Massachusetts Trustees v. United States,

gal EBERLE ee ee a A 36

Melluzzo v. Morton, 534 F.2d 860 ........ 20, 22, 23

Montana v. Kennedy, 366 U.S. 308 .......... 45, 51

Morris v. Andrus, 593 F.2d 851, cert. de-

nied, No. 79-7, Oct. 1, 1979 -................... 43, 52

Moseley v. Hickel, 442 F.2d 1080 .............. 30

Moser v. United States, 341 U.S. 41 _....... 45

Mulkern v. Hammit, 326 F.2d 896 ............ 22

NLRB v. Plasterers’ Union, 404 U.S. 116.. 37

NLEB vy. Weingarten, Inc., 420 U.S. 251.. 57

Ou Shale Corp. v. Morton, 370 F. Supp.

108, vacated and remanded, Oil Shale

Corp. v. Morton, Nos. 74-1344 to 74-

1347 (10th Cir. Sept. 22, 1975), cert.

denied, 426 U.S. 949 ooo 9

Oul Shale Corp. v. Udall, 261 F. Supp. 954,

aff’d, 406 F.2d 759, rev’d sub nom.

Hickel v. Oil Shale Corp., 400 U.S. 48... 8-9

Oklahoma Tax Commission v. Texas Co.,

OT I I ed tit ccersccninseeiessedececsiasiaisboseeicns 37

Cases—Continued Page

Oregon Basin Oil and Gas Co., 50 L.D.

244, aff’d, Oregon Basin Oil and Gas

Co. v. Work, 6 F.2d 676, aff’d, 273 U.S.

A earl ACO TT NEON I HO CT 26

Oscar Mayer & Co. v. Evans, No. 78-275

CRI BEI sinccscprcrernnsiecccsemneatitnmninte 40

Pine River Logging Co. v. United States,

I i IIE libieiceec a intpisnncrenscuchbnccacsssvascs 44

Guern v. Mandley, 436 U.S. 725 ...............- 40

Regional Rail Reorganization Act Cases,

yah aaa a aeceRt Sostret ae ON 39

Ree ¥. Conertt, 364. US. FY os 45

Roberts v. Morton, 549 F.2d 158 .............- 20, 22

Santiago v. INS, 526 F.2d 488, cert. de-

eB : Re, eee 52

SEC v. Sloan, 486 U.S. 108 .................... 38, 39, 40

Snyder v. Buck, 340 U.S. 16 ...................... 45, 46

Standard Oil Co. of California v. United

States, 107 F.2d 402, cert. denied, 309

Re eine: MUNN -ccencdenilsientn today btsipsiationbciplainieiiamsitonen 19

State of Arizona, 71 I.D. 49 ...................... 19

State of Washington v. McBride, 18 L.D.

BN iisendicia eiceesaidtaintndathichcntieliseasblareesnetcibhensanaitianti 21

Sutton v. United States, 256 U.S. 575...... 44,47

‘gf ee. Sik Ge |: SRnoeenemeeee 38, 39

Union Oil Co. of California v. Morton, 512

gg RR ee One mT OEM 54, 60

Union Oil Company, 28 L.D. 222 -............. 26

United States v. Aetna Casualty & Surety

Ci IID Fe SUE Marth hisictecpecanicndatietstenst 55

United States v. Board of Commissioners

of Sheffield, Alabama, 435 U.S. 110..35, 37, 38

United States v. California, 382 U.S. 19.... 36,

45, 48

Cases—Continued Page

United States v. Coleman, 390 U.S. 599.... 18,

20, 57

United States v. Estate of Alvis F. Deni-

sires hn Ee SOEUR Dean eee Ponce nan 22

United States v. Haskins, 505 F.2d 246.... 6

United States v. Iron Silver Mining Com-

POMY, 1ZS UB. CTS .ccnccccccccscseccersomsncene 21

United States v. ITT Continental Baking

ig: UO Rls I adesdieaec ene eateries 44

United States v. Lazy FC Ranch, 481 F.2d

DUE. citar petemningaceimere tech nee 52

United States v. Minnesota Mutual Invest-

ment Co., 271 US. 333 2................... 46

United States v. Neustadt, 366 U.S. 696.... 46

United States v. New York Telephone Co.,

PE AE SE siiaiatinaunvanidiadaa et ck, 44

United States v. Ruby Co., 588 F.2d 697,

cert. denied, No. 78-1484, June 4, 1979.. 43,

52, 53

United States v. San Francisco, 310 U.S.

I. sikisladiabeeaibthenokie ae ecto oak ia 45, 46, 47, 49-50

United States v. Stewart, 311 U.S. 60 ...... 45

United States v. Testan, 424 U.S. 392...... 46

United States v. Union Pacific R.R., 353

SPUR: OUT nicannndaitiicn simile teri Se gic 42

United States v. Wharton, 514 F.2d 406.... 52, 59

United States v. Zweifel, 508 F.2d 1150,

cert. denied, 423 U.S. 829 6, 23

Utah v. United States, 284 U.S. 584 _..... 45

Utah Power & Light Co. v. United States,

Se Se satibccicbioetniicn ites ox 44, 48, 49

West v. Standard Oil, 278 U.S. 200 ...... 46, 47, 59

VII

Cases—Continued Page

Wilber National Bank v. United States,

ERE oN ee 45

Wilbur v. Krushnic, 280 U.S. 306 ............ 31, 32

Winters v. Bliss, 14 L.D. 59 ..................... 21

Constitution:

United States Constitution, Art. IV, Sec.

RRR en eaten Se el On ee 47

Statutes:

Act of July 9, 1870, ch. 235, 16 Stat. 217,

Rev. Stat. 2329, 30 U.S.C. 35 ................ 3, 19

Act of May 10, 1872, ch. 152, 17 Stat. 91,

Rev. Stat. 2819 et seqg., 30 U.S.C. 22

FN chiSiceetasperie entaettanatackaanasantn 18

Rev. Stat. 2319, 30 U.S.C. 22 _........... 2, 6,19

Rev. Stat. 2320, 30 U.S.C. 23 0000... 6, 19

Rev. Stat. 2324, 30 U.S.C. 28 ............ 6

Rev. Stat. 2325, 30 U.S.C. 29 0.000... 6

Rev. Stat. 2331, 30 U.S.C. 35 000... 19

Rev. Stat. 2333, 30 U.S.C. 87 ........... 56

Act of February 11, 1897, ch. 216, 29

I UII sips les ot a ae 6

Act of July 17, 1914, ch. 142, 38 Stat.

my Pe a, BN sce 19

Act of July 20, 1956, ch. 652, 70 Stat.

592, amending Act of July 17, 1914,

BP Rae I icidicesilvsdecctndo ge snsinsicmsles neta 4, 33

Mineral Leasing Act of 1920, ch. 85, 41

Stat. 437, 30 U.S.C. 181 et seq. -.. 7, 26-27

Section 37, 30 U.S.C. 198........ 3, 7, 27, 28, 41

Statutes—Continued

National Environmental Policy Act, 42

ean

Oil Placer Act, ch. 216, 29 Stat. 526 -.......

I ad

Miscellaneous:

1 American Law of Mining (1979 ed.)....

Application for Patent on Oil-Shale

Lands: Consolidated Hearings Before

the House Comm. on Public Lands, 71st

Eb a nee reeme

Hearings on S. Res. 379 Before the Senate

Comm. on Public Lands and Surveys,

71st Cong., 3d Sess. (1931) ....................

H.R. Rep. No. 563, 65th Cong., 2d Sess.

RUIN. cals seni caciacnnstidascdbaidiasblaiasrubhdecisananld

H.R. Rep. No. 2537, 71st Cong., 3d Sess.

SINNED -cseckisoteersincnnigicheoeshdemistbarisatsiiinlacbjnbacnehiows

Instructions, 47 L.D. 548 (May 10,

ERE RN see ae 2 ee aE

S. Res. 379, 71st Cong., 3d Sess., 74 Cong.

Rec. 1079-1080 (1930) ..........................

R. Stern & E. Gressman, Supreme Court

Practios (Gth ed. 1978) ..............:..........

28-29

32-33

Iu the Syren Court of the United States

OCTOBER TERM, 1979

No. 78-1815

CECIL D. ANDRUS, SECRETARY OF THE INTERIOR,

PETITIONER

Vv.

SHELL OIL COMPANY AND D.A. SHALE, INC.

ON WRIT OF CERTIORARI TO THE UNITED STATES

COURT OF APPEALS FOR THE TENTH CIRCUIT

BRIEF FOR THE PETITIONER

OPINIONS BELOW

The opinion of the court of appeals (Pet. App.

la-20a) is reported at 591 F.2d 597. The opinion

of the district court (Pet. App. 22a-56a) is reported

at 426 F. Supp. 894. The opinion of the Interior

Board of Land Appeals (Pet. App. 60a-121a) is re-

ported at 16 I.B.L.A. 112 and at 81 I.D. 370. The

opinion of the administrative law judge (Pet. App.

122a-204a) is not reported.

(1)

2

JURISDICTION

The judgment of the court of appeals (Pet. App.

21a) was entered on January 25, 1979. On April 16,

1979, Mr. Justice White extended the time for filing

a petition for a writ of certiorari to and including

May 25, 1979, and on May 16, 1979, he further ex-

tended the time for filing to and including June 4,

1979. The petition was filed on June 4, 1979, and

was granted on October 1, 1979 (App. 167). The

jurisdiction of this Court rests upon 28 U.S.C. 1254

1).

QUESTIONS PRESENTED

1. Whether Congress effectively amended the gen-

eral mining law to exempt oil shale claims from the

customary discovery requirement when it failed to

take any action after becoming aware of the admin-

istrative practice of applying a different standard in

such cases.

2. Whether the Secretary was equitably estopped

to correct the Department’s prior, legally erroneous

interpretation of the general mining law and to

apply the corrected standard to oil shale claims that

had not proceeded to patent.

STATUTES INVOLVED

Section 1 of the Act of May 10, 1872, ch. 152, 17

Stat. 91, Rev. Stat. 2319, 30 U.S.C. 22, provides:

Except as otherwise provided, all valuable min-

eral deposits in lands belonging to the United

States, both surveyed and unsurveyed, shall be

3

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 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, Rev.

Stat. 2329, 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. 1938, provides:

That the deposits of coal, phosphate, sodium,

oil, oil shale, and gas, herein referred to, in lands

valuable for such minerals, including lands and

deposits 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,”

approved August 1, 1912 (Thirty-seventh Stat-

utes 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

4

which initiated, which claims may be perfected

under such laws, including discovery.

The Act of July 20, 1956, ch. 652, 70 Stat. 592,

amending the Act of July 17, 1914, 30 U.S.C. 122,

provides:

Be it enacted by the Senate and House of

Representatives of the United States of America

in Congress assembled, That the first sentence

of section 2 of the Act entitled “An Act to pro-

vide for agricultural entry of lands withdrawn,

classified, or reported as containing phosphate,

nitrate, potash, oil, gas, or asphaltic minerals”,

approved July 17, 1914 (38 Stat. 509; 30 U.S.C.

122), is hereby amended by striking out “such

deposits to be subject to disposal by the United

States only as shall be hereafter expressly di-

rected by law” and inserting 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.

5

STATEMENT

1. Oil shale is a sedimentary rock containing an

organic material called kerogen which, upon destruc-

tive distillation, will produce a substantial amount

of oil (Pet. App. 127a). Oil shale is widely distrib-

uted throughout the United States and the world,

although the quality and quantity of the deposits

vary widely (id. at 128a-129a). One of the most

extensive and richest deposits is found in the Green

River Formation, which covers in excess of 16,000

square miles of northwestern Colorado and adjacent

portions of Utah and Wyoming (id. at 129a-130a).

The Green River Formation is not a homogeneous

mass of oil shale; rather, it is composed of various

units or members in which the oil shale is inter-

spersed with sandstone and other rock that cannot be

used to produce oil (id. at 172a-174a).

Although it has been known for many years that

oil can be produced from oil shale, numerous attempts

commercially to develop the resource in this country

have met with failure. A nascent oil shale industry,

based on eastern deposits, emerged in the 1850’s but

was abruptly abandoned following completion of the

first successful natural petroleum well in 1859 (Pet.

App. 145a). Thereafter, oil shale attracted little

attention until approximately 1910, when rising de-

mand for petroleum products, coupled with inaccu-

rate predictions that American petroleum reserves

would soon be exhausted, generated a renewed inter-

est in oil shale. The advent of World War I greatly

intensified this renewed interest.

6

During this period, oil shale found on the public

lands, like petroleum, was deemed to be a locatable

mineral subject to discovery under the general min-

ing laws. See Act of February 11, 1897, ch. 216, 29

Stat. 526." In the years immediately preceding 1920,

there occurred what this Court has characterized as

a “speculative fever” in oil shale claims, Hickel v.

1 The discovery requirement of the general mining law

is central to the issues in this case and will be discussed in

detail below. In brief, federal law provides that a person

who discovers a valuable mineral deposit that has not been

withdrawn under the Mineral Leasing Act may locate a claim

to those valuable minerals and seek a patent to the lands on

which they were found. Each such claim, in addition to

meeting the substantive standards of the general mining law,

must satisfy state location requirements that are not incon-

sistent with federal law, and “must be distinctly marked on

the ground so that its boundaries can be readily traced.” 30

U.S.C. 28; Kendall v. San Juan Silver Mining Co., 144 US.

658 (1892); United States v. Zweifel, 508 F.2d 1150, 1153

(10th Cir.), cert. denied, 423 U.S. 829 (1975). A locator

whose claim complies. with all requirements of the general

mining law is entitled to obtain a patent to the lands em-

braced in the claim, which divests the government of title

and transfers it to the patent holder. 30 U.S.C. 22, 29; Andrus

v. Charlestone Stone Products Co., 486 U.S. 604, 609 (1978) ;

Boesche v. Udall, 373 U.S. 472, 477 (1968).

The general mining law refers to two categories of mineral

claims. A “lode” claim involves “veins or lodes of quartz or

other rock in place bearing gold, silver, cinnabar, lead, tin,

copper, or other valuable deposits * * *.” 30 U.S.C. 23.

Claims involving all other forms of mineral deposits are

denominated as “placer” claims. 30 U.S.C. 35. See United

States v. Haskins, 505 F.2d 246, 251 (9th Cir. 1974); 1

American Law of Mining §§ 5.9A, 5.20 (1979 ed.). Oil shale

claims are considered to be placer claims. Oil Placer Act,

ch. 216, 29 Stat. 526.

7

Oil Shale Corp., 400 U.S. 48, 54 (1970), and tens of

thousands of oil shale claims were purportedly lo-

cated on the public lands of northwestern Colorado

and adjacent portions of Utah and Wyoming.

The location of oil shale claims ended on February

25, 1920, with the enactment of the Mineral Leasing

Act, ch. 85, 41 Stat. 487, 30 U.S.C. 181 et seg. Sec-

tion 37 of the Act, 30 U.S.C. 193, withdrew oil shale

and several other minerals from further location

under the general mining law and provided that fu-

ture access to oil shale deposits on the public lands

could be obtained only under the leasing provisions

of the new statute. However, Section 37 preserved

“valid claims existent at date of the passage of this

Act and thereafter maintained in compliance with

the laws under which initiated, which claims may be

perfected under such laws, including discovery.”

Thus, only claims satisfying the requirements of

those applicable laws, “including discovery,” were

preserved. :

Not one of the tens of thousands of oil shale claims

located before enactment of the Mineral Leasing Act

was ever carried forward to successful commercial

production (Pet. App. 102a-105a). Numerous ex-

perimental operations were undertaken over the years

by private promoters and by the federal government,

but these experiments succeeded only in demonstrat-

ing that shale oil could not yet commercially compete

with the natural petroleum industry (7d. at 78a-

8

95a).* As summarized by the Interior Board of Land

Appeals in this case (id. at 105a) :

First, as a historical fact, the commercial pro-

duction of oil from oil shale has never been

competitive with the liquid petroleum industry.

Second, the hypothetical studies at best confirm

that the commercial exploitation of oil shale

would not be competitive with the liquid petro-

leum industry. Third, without exception, every

oil shale operation that has been attempted in

this country has failed to show profitable produc-

tion.

Despite repeated predictions over the last 50 years

that a technological breakthrough or rising energy

prices would make shale oil competitive with pe-

troleum, even today, with high energy prices a fa-

miliar reality, commercial production of shale oil still

remains in the future.

Notwithstanding this history, the Department of

the Interior between 1920 and 1960 consistently recog-

nized oil shale as a valuable mineral deposit locatable

under the general mining law, and accordingly it

issued patents to holders of oil shale claims who filed

applications.* During this period, 523 patents were

2 We use the term “oil shale” to refer to the rock itself,

while the term “shale oil” refers to the oil extracted from

the oil shale.

8’ During the late 1920’s and the 1930’s, the Secretary can-

celled thousands of oil shale claims for failure to perform

the assessment work required by the mining laws. The

validity of these contests is at issue in a related series of

cases. See Oil Shale Corp. v. Udall, 261 F. Supp. 954 (D. Colo.

9

granted covering 2,326 oil shale claims and 349,088

acres of the public lands (Pet. App. 108a). These

claims were patented under the Department’s inter-

pretation of the general mining law, best illustrated

by the Secretary’s decision in Freeman v. Summers,

52 L.D. 201 (1927), that oil shale was subject to a

different discovery standard than was applicable to

all other minerals. Although no other mineral could

be patented in these circumstances, the Secretary

allowed oil shale claims to proceed to patent notwith-

standing that no commercial production had then

occurred and none could be expected in the immediate

future. In the early 1960’s the Department re-

examined this interpretation of the general mining

law and determined that it was inconsistent with the

statute. Concluding that oil shale claims could not

lawfully be patented, the Secretary rejected respond-

ent’s patent applications, and this litigation followed.

2. This action involves two distinct groups of oil

Shale claims on the public lands in Garfield County,

Colorado, all of which were located before the Mineral

Leasing Act withdrew oil shale from further location

under the general mining law. The location cer-

tificates for the first group of claims, designated as

the Mountain Boy Nos. 6 and 7, were recorded on

February 6, 1918, showing location on January 8,

1918 (Pet. App. 63a). Thereafter, the claims passed

1966), afi’d, 406 F.2d 759 (10th Cir. 1969), rev’d sub nom.

Hickel v. Oil Shale Corp., 400 U.S. 48 (1970) ; Oil Shale Corp.

v. Morton, 370 F. Supp. 108 (D. Colo. 1973), vacated and re-

manded, Oil Shale Corp. v. Morton, Nos. 74-1344 to 74-1347

(10th Cir. Sept. 22, 1975), cert. denied, 426 U.S. 949, (1976).

10

through several ownerships until they were acquired

by Frank W. Winegar in 1956, who in turn con-

tracted to convey them to the respondent Shell Oil

Company. Winegar applied for patents on these and

other claims on August 7, 1958, and subsequently

conveyed his interests to Shell in 1964 for $30,000

(id. at 63a-64a). No patents were issued. Instead, on

September 8, 1964, the government issued an ad-

ministrative complaint alleging that the claims were

invalid for lack of discovery and other grounds (id.

at 64a-65a).

The second group of claims, known as the Harold

Shoup Nos. 1, 2, 3 and 4, were located in 1917. In

1923 the claims were acquired by Karl C. Schuyler,

who bequeathed them to his spouse in 1933. In 1960,

Mrs. Schuyler incorporated respondent D.A. Shale,

Inc., and transferred title of the claims to the cor-

poration. The corporation filed patent applications

for these and other claims on September 29, 1960

(Pet. App. 64a). On September 8, 1964, the govern-

ment issued an administrative complaint alleging the

claims to be invalid (ibid.).

The complaints were consolidated and extensive

contest proceedings were heard by an Administrative

Law Judge in 1967. The ALJ entered his decision on

April 17, 1970 (Pet. App. 122a-204a). Based on a

thorough consideration of the evidence regarding the

commercial feasibility of oil shale since the claims

had been located, the ALJ concluded that only ex-

penditures for research and development or for pur-

chase of oil shale claims could be considered to be

sw

11

prudent. The ALJ further found that “[u]ntil a

research program had demonstrated that shale oil

could be produced at a cost competitive with pe-

troleum, no prudent person would attempt to develop

an oil shale mine” (id. at 165a).

Having determined that at no time did oil shale

“justify present expenditures with a reasonable pros-

pect of developing a profitable mine” (Pet. App.

166a), the ALJ stated that “[i]f this were a case of

first impression I would * * * find that both before

and after February 25, 1920, oil shale was not a

valuable mineral deposit” (id. at 166a-167a). How-

ever, the Administrative Law Judge deemed him-

self bound by the Secretary’s prior decision in Free-

man v. Summers, 52 L.D. 201 (1927), even though

he viewed that decision as “poorly conceived’ (Pet.

App. 170a). Accordingly, the ALJ concluded that

patents should issue for the Mountain Boy Nos. 6

and 7 claims and the four Harold Shoup claims except

for a portion of the No. 3 claim.‘

3. The government appealed to the Interior Board

of Land Appeals ({BLA), which reversed the ALJ’s

decision on June 28, 1974 (Pet. App. 60a-121a).

The IBLA concluded from the evidence in the record

that “[i]t is 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” (id.

at 105a). While acknowledging that oil shale

4Certain other oil shale claims were declared null and

void on grounds not relevant here.

12

might become commercially profitable if there were

a dramatic improvement in the technology or an

alteration of customary economic factors, the IBLA

emphasized that “speculation that oil shale may some- —

day be valuable in an economic sense is not evidence

of its present value as of 1920 or 1966” (Pet. App.

107a). Thus, under the discovery standard applicable

to all other minerals, oil shale did not qualify as a

“valuable mineral deposit” within the meaning of

the mining law (zbid.). The IBLA recognized that

under Freeman v. Summers a showing of future value

for oil shale was sufficient and that the Department

of the Interior had for 40 years consistently issued

patents on the theory that oil shale was a “valuable”

mineral (id. at 108a-112a). However, the IBLA

concluded that Freeman v. Summers had incorrectly

interpreted the mining law by assuming “that pos-

sible future value for mining meets the requirement

of present value” (id. at 109a). Accordingly, the

IBLA overruled Freeman v. Summers as inconsistent

with the statute and held that the claims at issue

were null and void.

4. Respondents sought judicial review of the

IBLA’s decision in the United States District Court

for the District of Colorado. Both sides filed motions

for summary judgment (App. 164-165, 166). On

January 17, 1977, the district court granted respond-

ents’ motion, holding that the “pre-1920 oil shale

claims were discoveries of valuable mineral deposits

and are valid claims” (Pet. App. 55a). The district

court observed that Freeman v. Summers was at

13

variance with the traditional discovery standard of

the mining laws applied by the Interior Department

and by this Court because {‘[t]hose cases speak in

terms of the present expeniture of labor and re-

sources in order to develop a presently profitable

mine, rather than the future development value of

the mineral deposit” (id. at 29a-30a). Nevertheless,

the district court distinguished these decisions on the

ground that oil shale occupied a “unique position”

(id. at 30a-81a). The court concluded (id. at 38a)

that the “Congressional and administrative involve-

ment in the disposal of oil shale lands demonstrates

Congressional approval of the Freeman rule of dis-

covery,” which the courts “should respect 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 interpretive aid, and not

as hardening the Freeman rule into an act of law,

* * * the Interior Department is estopped from chal-

lenging the validity of the pre-1920 oil shale claims

involved in this case,” since “[p]rudent investors

detrimentally relied upon the deliberate actions and

statements of high government authorities” (id. at

40a; footnote omitted).

5. The court of appeals affirmed the judgment of

the district court (Pet. App. la-20a). The court ac-

knowledged (id. at 3a) 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

14

minerals,” but it held (id. at 20a) that oil shale

presented a “unique situation” in which the Freeman

v. Summers standard had become “an addendum to

the mining law which cannot be removed short of

Congressional action.” In reaching this result the

court noted (id. at 9a-10a) that in 1930 Congress con-

ducted an investigation into charges of impropriety

in connection with the Department of the Interior’s

issuance of patents for oil shale claims, and par-

ticularly the decision in Freeman v. Summers. The

court concluded (id. at 12a) that “Congress made an

intense investigation into Interior’s interpretation of

the mining laws as to a very specific and narrow

circumstance, and approved it.”” The court also noted

(id. at 18a-14a) that in 1956 Congress had acted

on the assumption that oil shale claims located prior

to 1920 were valid claims when it eased one of the

restrictions for taking mineral claims to patent. In

sum, the court determined (id. at 17a) that “[t]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 question and their affirmative resolution of the

issue.” Accordingly, the court held that the Depart-

ment of the Interior has no authority to “change the

application of the general mining laws’’ to these oil

shale locations (ibid.).

15

SUMMARY OF ARGUMENT

Pursuant to the general mining law of the United

States, a private individual who discovers a valuable

mineral deposit on public lands may, upon prescribed

conditions, claim those minerals and obtain a patent

to the lands. In the Mineral Leasing Act of 1920,

Congress withdrew certain specified minerals, includ-

ing oil shale, from further location under the gen-

eral mining law, and provided that future access by

private parties to such minerals be governed by the

leasing provisions of the Act. However, Congress

preserved “valid claims existent at date of the pas-

sage of this Act and thereafter maintained in com-

pliance with the laws under which initiated, which

claims may be perfected under such laws, including

discovery.”

Under the mining laws, a patent can be issued

by the Secretary only if the claimant has made a dis-

covery of a valuable mineral deposit. To satisfy this

standard, it is well established that a claimant must

show, based on present facts, that a prudent person

would be justified in currently expending resources

to develop the minerals with a reasonable prospect of

successful operation. A key measure in applying this

discovery standard is whether the minerals on the

claim can presently be extracted and marketed at a

reasonable profit. However, as the record in this case

persuasively demonstrates, oil shale in this country

has not been capable of profitable commercial develop-

ment for at least the last 100 years. Thus, as the

court of appeals, the district court, the Interior Board

of Land Appeals,-and the Administrative Law Judge

16

all agreed, respondents’ oil shale claims fail to meet

the customary discovery standard under the general

mining law.

Despite both the settled legal standard for dis-

covery and the clear recognition that oil shale did

not meet that standard, the Department of the In-

terior had consistently issued oil shale patents be-

tween 1920 and 1960. These patents were issued

on the theory, best expressed in the Secretary’s |

decision in Freeman v. Summers, that oil shale pre-

sented a unique situation and could be patented under

the general mining law based solely on its potential

future marketability. In the early 1960’s the Depart-

ment re-examined the rule of Freeman v. Summers

and determined that it was inconsistent with the

mining statute. Accordingly, the Department’s in-

terpretation of the discovery requirements for oil

shale was corrected to conform with the general min-

ing law. Thereafter, respondents’ oil shale claims

were invalidated and their patent applications denied

on the ground of lack of discovery.

Contrary to the holding of the courts below, Con-

gress has never adopted the Freeman v. Summers

rule for discovery of oil shale as an addendum to the

general mining law, so as to bar the Secretary’s re-

consideration and abandonment of the rule. An

amendment to the statutory discovery standard was

not effected by the mere failure of Congress to change

an established, but legally erroneous, administrative

interpretation of the mining laws. Since the Depart-

ment’s earlier construction was inconsistent with the

17

statute, only an affirmative enactment by Congress

could suffice to ratify that erroneous construction. Al-

though congressional committees in 1930-1931 con-

ducted an investigation into alleged improprieties in

the issuance of oil shale patents, this investigation

ci not lead to the passage of legislation, and any

inferences from the actions of the committees or the

views of individual congressman cannot alter the

meaning of the general mining law. Nor does a

1956 amendment to the statute, which dealt with an

issue wholly unrelated to discovery and did not focus

upon oil shale in particular, indicate an intention by

Congress to make a substantive change in the stand-

ard for discovery in the special case of oil shale by

silently adopting the Freeman v. Summers rule.

In addition, the Secretary is not, as the district

court held, equitably estopped to correct the Depart-

ment’s prior, legally erroneous interpretation of the

statutory discovery requirements or to deny respond-

ents’ oil shale patents on that basis. It has long been

established that the government cannot be estopped.

This principle has special force where, as here, the

asserted estoppel would preclude the Secretary from

rectifying an earlier mistake of law and would result

in the transfer of public lands to private interests in

contravention of an Act of Congress. Such an estoppel

would constitute an unconstitutional infringement of

the sovereign immunity of the United States and an

unconstitutional usurpation of Congress’ legislative

authority. Moreover, even if equitable estoppel can

be invoked against the government in some situations,

18

the Secretary cannot be estopped in the circumstances

of this case. Here, there was no affirmative miscon-

duct by the government, serious injustice to respond-

ents would not occur if the Secretary is not estopped,

and the public interest would be unduly harmed by

the imposition of estoppel. In these circumstances,

the doctrine of equitable estoppel does not foreclose

the Secretary from denying, in conformity with the

statute, the oil shale patents sought by respondents.

ARGUMENT

I. RESPONDENTS FAILED TO MAKE A DISCOVERY

OF A VALUABLE MINERAL DEPOSIT WITHIN

THE MEANING OF THE MINING LAWS

The general mining law permits a private individ-

ual to claim for himself such valuable minerals as

he may find on the public lands. The mining laws

also permit him to obtain a patent for the lands on

which such minerals are discovered. These laws are

designed to encourage actual development of the Na-

tion’s mineral resources, and they are not intended

merely to confer a private benefit or to allow convey-

ance of public lands for nonmining use. ‘Under the

mining laws Congress has made public lands avail-

able to people for the purpose of mining valuable

mineral deposits and not for other purposes.” United

States v. Coleman, 390 U.S. 599, 602 (1968). To

assure the furtherance of this objective, a mining

claim, to be valid, must strictly comply with the re-

quirements of the mining laws as set forth in the

Act of May 10, 1872, ch. 152, 17 Stat. 91, Rev. Stat.

2319 et seg., 30 U.S.C. 22 et seg.

19

One of the principal requirements of the mining

laws is that the claimant must make a “discovery” of

a “valuable mineral deposit” within the limits of each

claim. Rev. Stat. 2319, 2320, 2329, 2331, 30 U.S.C.

22, 23, 35; Cole v. Ralph, 252 U.S. 286, 295 (1920).°

Although these terms are not defined in the statute,

they have gained a well-defined meaning in the field

of mining law through the decisions of the courts and

the Secretary. Chrisman v. Miller, 197 U.S. 313,

321 (1905). The classic statement of the test for

establishing a discovery of a valuable mineral de-

posit was made by the Secretary in Castle v. Womble,

19 L.D. 455, 457 (1894):

[W]here minerals have been found and the evi-

dence is of such a character that a person of

ordinary prudence would be justified in the fur-

ther expenditure of his labor and means, with

a reasonable prospect of success, in developing

a valuable mine, the requirements of the statute

have been met.

5’ The general mining laws should not be confused with

various land laws, such as the Act of July 17, 1914, ch. 142,

88 Stat. 509, 30 U.S.C. 121, which authorize the Secretary

to classify and reserve from disposal those public lands that

are “reported as valuable” for minerals or are “mineral”

in character. Under such laws, the Secretary may properly

classify and withdraw lands even if there has been no actual

discovery of any mineral that could be presently extracted

and marketed at a reasonable profit. Diamond Coal and Coke

Co. v. United States, 2383 U.S. 236, 239-240, 249 (1914);

Laden v. Andrus, 595 F.2d 482, 487-488 (9th Cir. 1979);

Standard Oil Co. of California v. United States, 107 F.2d

402, 414-415 (9th Cir.), cert. denied, 309 U.S. 654, 673

(1940) ; State of Arizona, 71 I.D. 49, 52-53 (1964).

20

This “prudent person” test has been endorsed by

this Court on numerous occasions. See, e.g., Andrus

v. Charlestone Stone Products Co., 436 U.S. 604, 607

n.4 (1978); United States v. Coleman, 390 U.S. 599,

602 (1968); Best v. Humboldt Mining Co., 371 U.S.

334, 335-336 (1963); Cameron v. United States, 252

U.S. 450, 459 (1920).

In United States v. Coleman, supra, 390 U.S. at

602, the Court recognized that “profitability is an

important consideration in applying the prudent-man

test * * *.” Under this “marketability” criterion, it

must be shown that the minerals on the claim can

be extracted, removed and marketed at a profit. Cole-

man, supra, 390 U.S. at 600; Melluzzo v. Morton,

534 F.2d 860, 862 (9th Cir. 1976). As the Court

explained in Coleman, supra, 390 U.S. at 602:

[T]he marketability test is an admirable effort

to identify with greater precision and objectivity

the factors relevant to a determination that a

mineral deposit is “valuable.” It is a logical

complement to the “prudent-man test” * * *.

The obvious intent [of the general mining

law] was to reward and encourage the discov-

ery of minerals that are valuable in an economic

sense. Minerals which no prudent man will ex-

tract because there is no demand for them at a

price higher than the cost of extraction and

transportation are hardly economically valuable.

The “marketability” test is applicable to all minerals.

Roberts v. Morton, 549 F.2d 158, 163 (10th Cir.

1976); Converse v. Udall, 399 F.2d 616 (9th Cir.

1968), cert. denied, 393 U.S. 1025 (1969).

21

To satisfy the “prudent person” and “marketabil-

ity” test for discovery of a valuable mineral deposit,

it must be shown that present circumstances justify

the expenditure of resources for the current develop-

ment of the mineral. The standard is whether a

claimant can show, based on present facts, that a

prudent person would be justified in making current

expenditures of resources to develop the claim with

a reasonable prospect of a profitable operation. While

there need not be a showing of actual profitable oper-

ations, this standard for discovery does require a

claimant to demonstrate that it would be prudent

currently to attempt to exploit the claim. It is not

sufficient to show that the claim has present market

6 This rule was established by numerous decisions of this

Court rendered early in the development of the mining laws.

See, e.g., Davis’s Administrator v. Weibbold, 139 U.S. 507,

523 (1891):

Rulings to the same effect upon applications for min-

eral patents are found in decisions of the department

for many years. They are that such applications should

not be granted wnless the existence of mineral in such

quantities as would justify expenditure in the effort to

obtain it is established as a present fact. [Emphasis

added. ]

See also Deffeback v. Hawke, 115 U.S. 392, 405-406 (1885) ;

United States v. Iron Silver Mining Company, 128 U.S. 673,

683-684 (1888); Iron Silver Mining Company v. Mike and

Starr Gold and Silver Mining Company, 143 U.S. 394, 404-

405, 412, 424 (1892); Diamond Coal and Coke Co. v. United

States, 283 U.S. 286, 240 (1914); Cole v. Ralph, 252 US.

286, 299 (1920). Likewise, the early decisions of the Sec-

retary required a claimant to show the value of the claim

based on present facts. See Castle v. Womble, supra, 19 L.D.

at 457; Winters v. Bliss, 14 L.D. 59, 62 (1892); State of

Washington v. McBride, 18 L.D. 199, 202 (1894).

22

value based on the possibility of future development

of the mineral or that it was a sound business deci-

sion to obtain the claim for its potential future oper-

ation, and courts and the Secretary have consistently

invalidated claims based on speculation that at some

future date there may be a market for those miner-

als. See, e.g., Hallenbeck v. Kleppe, 590 F.2d 852,

859 (10th Cir. 1979) ; Roberts v. Morton, supra, 549

F.2d at 168; Barrows v. Hickel, 447 F.2d 80, 83

(9th Cir. 1971); Foster v. Seaton, 271 F.2d 836, 838

(D.C. Cir. 1959); United States v. Estate of Alvis

F.. Denison, 76 I.D. 233, 239-240 (1969).”

7 Frequently, as happened here, the issue of discovery does

not arise until a patent application is filed, which may occur

long after the claim was originally located. In such cases,

the claimant must demonstrate not only that the claim was

valuable when located but also that the claim remains valu-

able at the time the patent is sought. Claims that were once

valuable but are so no longer will not be recognized. See

Best v. Humboldt Mining Co., 371 U.S. 334, 336 (1963) ;

Mulkern v. Hammit, 326 F.2d 896, 898 (9th Cir. 1964). In

addition, where a contest involves a mineral or land that has

been withdrawn from further entry after the claims were

originally located, the claimant must show that the claims

were also valuable on the date the mineral or land was with-

drawn. See Hallenbeck v. Kleppe, 590 F.2d 852, 856 (10th

Cir. 1979) ; Melluzzo v. Morton, 534 F.2d 860, 862 (9th Cir.

1976) ; Barrows v. Hickel, 447 F.2d 80, 82 (9th Cir. 1971).

Thus, in the present case, respondents must show not only

that their claims were valuable at the time they were lo-

cated, but also that they remained valuable both on February

25, 1920, when the Mineral Leasing Act withdrew oil shale

from further location, and at the time of the contest. Since

respondents’ claims were not valuable at the time of location

or in 1920, it is unnecessary to consider their later status.

However, we note that the IBLA (Pet. App. 105a) and the

ALJ (id. at 165a) concluded that respondents’ claims were

not valuable at the time of the contest proceedings.

23

In applying this standard, the absence of actual

development of the claim is significant evidence of

what a prudent person would do in the circumstances.

While not conclusive, the claimant’s failure to develop

the claim over a substantial period of time will raise

an inference that no discovery was made. See Cole

vy. Ralph, 252 U.S. 286, 299 (1920); Cameron v.

United States, supra, 252 U.S. at 457; Melluzzo v.

Morton, supra, 534 F.2d at 863; United States v.

Zweifel, 508 F.2d 1150, 1156 n.5 (10th Cir) cert.

denied, 423 U.S. 829 (1975). Likewise, the fact that

the claimant and others with similar claims have un-

dertaken development is an indication that a valuable

deposit has been discovered.

To require proof that a claim could currently be

exploited at a reasonable profit is soundly based and

serves several important objectives. As discussed

above (pageS18-20, supra), the basic purpose of the

mining laws is to promote actual development and

operation of the Nation’s mineral resources. This

statutory policy is not fostered by recognizing claims

that will remain idle for the indefinite future and

may never be exploited. It is also doubtful, if claims

could be sustained solely upon a showing of possible

future profitability, that any claim containing any

mineralization whatsoever could be ruled invalid. No

matter how poor the quality or how small the quan-

tity of the deposit, there is always the possibility that

exploitation might someday become profitable as the

better deposits are eventually depleted. If such specu-

lative claims could be sustained, the public lands

24

would be severely encumbered and could not freely

be devoted to other uses. Such a profligate waste of

resources surely was not envisioned by the Congress.

Finally, as the IBLA recognized in this case (Pet.

App. 72a), adoption of a “future value” rule would

reduce a mining contest to a speculative exercise

turning upon the most tenuous of evidence regarding

necessarily imponderable questions of fact.

In this case, the Administrative Law Judge deter-

mined that all of the claims at issue failed to comply

with the discovery requirements of the general min-

ing laws as of the dates of location, the date of with-

drawal, and the date of contest (Pet. App. 165a):

Many millions have been spent on oil shale

since the revival of interest in this mineral in

the early 1900’s. But substantially all of the

expenditures that could be considered prudent

were for (1) research and development of a

technically and economically feasible mining and

retorting process, or (2) purchase of mining

claims. Until a research program had demon-

strated that shale oil could be produced at a cost

competitive with petroleum, no prudent person

would attempt to develop an oil shale mine. He

would have no market for his product. The very

fact that, in the more than half a century of

interest in oil shale claims of the Green River

Formation, not one profitable mine has been de-

veloped is a compelling reason for concluding

that expenditure of money to that end would be

imprudent. '*!

8In addition, although acknowledging the possibility that

oil shale might be profitably developed in the future and that

25

This determination was sustained by the IBLA (Pet.

App. 105a-107a) :

We conclude as follows. First, as a historical

fact, the commercial production of oil from oil

shale has never been competitive with the liquid

petroleum industry. Second, the hypothetical

studies at best confirm that the commercial ex-

ploitation of oil shale would not be competitive

with the liquid petroleum industry. Third, with-

out exception, every oil shale operation that has

been attempted in this country has failed to show

profitable production. Fourth, appellees have

held these claims for half a century without

attempting to exploit them.

* * * * *

* * * Therefore, the oil shale deposits found on

these claims never have been a valuable mineral

deposit within the meaning of the general min-

ing law.

The courts below (Pet. App. 3a-4a, 29a-3la) ac-

cepted these findings of fact and recognized that the

oil shale claims at issue here could not be patented

under the discovery standard applicable to all other

minerals.

In sum, the record amply demonstrates, and the

court of appeals, the district court, the IBLA, and

the ALJ all agreed, that respondents’ claims do not

satisfy the customary requirements of the general

shale oil might someday be competitive with petroleum, the

ALJ concluded that the market value of oil shale claims based

on such future events could not satisfy the discovery stand-

ard of the general mining law (Pet. App. 166a).

26

mining law. Thus, unless oil shale is subject to a

different standard than other minerals, the conclu-

sion is inescapable that respondents failed to make

a valid discovery of a valuable mineral deposit.

II. CONGRESS HAS NOT EXCEPTED OIL SHALE

CLAIMS FROM THE DISCOVERY REQUIRE-

MENTS OF THE GENERAL MINING LAW

In the latter half of the nineteenth century, con-

siderable deposits of petroleum began to be discov-

ered on the public lands in the western United States.

During this period, the Department of the Interior

was not entirely certain that petroleum and related

minerals were locatable under the provisions of the

general mining law. See Union Oil Company, 23

L.D. 222 (1896). However, in 1897 Congress removed

all doubts on the matter by enacting the Oil Placer

Act, ch. 216, 29 Stat. 526, which provided that oil-

bearing lands could be located and patented “under

the provisions of the laws relating to placer mineral

claims.” Thus, claims for petroleum and similar

minerals were to be judged under the same discovery

standards as were applicable to all other minerals.

See Oregon Basin Oil and Gas Co., 50 L.D. 244

(1923), aff’d, Oregon Basin Oil and Gas Co. v. Work,

6 F.2d 676 (D.C. Cir. 1925), aff'd, 273 U.S. 660

(1927).

In the ensuing years, however, Congress grew in-

creasingly dissatisfied with the general mining law

as it applied to oil and certain other minerals, and,

in 1920, the Mineral Leasing Act, ch. 85, 41 Stat.

27

437, 30 U.S.C. 181 et seg., was passed. That statute

withdrew oil and oil shale, as well as various other

minerals, from further location under the general

mining law, and provided that, henceforth, deposits

of these minerals on the public lands would be avail-

able to private interests only under leases.

At the time the Mineral Leasing Act was passed,

there were in existence numerous unpatented mining

claims involving deposits of the recently withdrawn

minerals on public lands. These unpatented claims

constituted a form of property right that could not

be extinguished. See Best v. Humboidt Mining Co.,

371 U.S. 334, 337-338 (1963). Therefore, in Section

37 of the Mineral Leasing Act (30 U.S.C. 198),

Congress preserved “* * * valid claims existent at

date of the passage of this Act and thereafter main-

tained in compliance with the laws under which ini-

ated, which claims may be perfected under such

laws, including discovery.” Thus, although expressly

providing that valid existing claims for the with-

drawn minerals would continue to be recognized, Con-

gress insisted that such claims meet all of the re-

quirements of the general mining laws, “including

discovery.”

Prior to the enactment of the Mineral Leasing Act,

the Department of the Interior had not issued any

patents for oil shale claims. Shortly after the Act

was passed, the General Land Office of the Depart-

ment of the Interior requested legal guidance con-

cerning certain pending patent applications for oil

shale claims. In response to this inquiry, the Secre-

28

tary published the Instructions of May 10, 1920 (47

L.D. 548). The Instructions stated that although no

oil shale operations in this country had reached the

point of commercial development, there was currently

“* * * great activity, particularly in the States of

Colorado, Utah [and others], looking to such devel-

opment and production * * *” and several small

experimental plants were already completed or under

construction. The Jnstructions then noted (47 L.D.

at 549-550) :

The Department has had numerous inquiries

as to the locatability and patentability of such

deposits under the mining laws and in response

thereto, while disclaiming any intention of ex-

pressing a binding opinion in the premises, it has

nevertheless declared itself as favorable to the

view that such deposits, if valuable, are subject

to location and purchase under the mining laws.

[Emphasis added. ]

Finally, after quoting Section 37 of the Mineral

Leasing Act (30 U.S.C. 193), the Instructions con-

cluded (47 L.D. at 551):

Oil shale having been thus recognized by the

Department and by Congress as a mineral de-

posit and a source of petroleum, and having been

demonstrated elsewhere to be a material of eco-

nomic importance, 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. Entries and applica

tions for patent for oil shale placer claims will

29

therefore, be adjudicated by your office in accord-

ance with the same legal provisions and with

reference to the same requirements and limita-

tions as are applicable to oil and gas placers.

[Emphasis added. ]

Although the Jnstructions did not state that oil shale

claims could proceed to patent regardless of whether

oil shale could be currently extracted and marketed

at a reasonable profit, the Department immediately

began to issue patents to holders of oil shale claims.

In 1927, the Secretary of the Interior decided the

contest in Freeman v. Summers, 52 L.D. 201. The

contest arose when several oil shale claimants pro-

tested Summers’ applications for homestead patents.

The Department initially overruled the protests on

the ground that the claimants had only discovered

lean outcroppings of oil shale and had not physically

exposed any rich oil shale deposit. However, the Sec-

retary vacated this decision and granted rehearing.

At the rehearing the claimants argued that their oil

shale claims were valid because, given the geologic

structure of the Green River Formation, a finding of

lean surface deposits meant that the claim also con-

tained rich deposits below. The Secretary agreed,

finding that “* * * having made his initial discovery

at or near the surface, [the claimant] may with

assurance follow the formation through the lean to

richer beds.” *® In so deciding, the Secretary consid-

® Despite the outcome of Freeman v. Summers, the claim-

ants’ argument concerning the nature of the Ureen River

Formation was based on an erroneous interpretation of the

30

ered it irrelevant that oil shale could not presently

be marketed at a profit:

While at the present time there has been no

considerable production of oil from shales, due

to the fact that abundant quantities of oil have

been produced more cheaply from wells, there

is no possible doubt of its value and of the fact

that it constitutes an enormously valuable 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 mineral in its present situation can be

immediately disposed of at a profit. As stated

by the department in the case of Narver v. East-

man (34 L.D. 123, 125)—

* * * Tt does not follow that because there is

no clear profit arising from the sale of an article

that has been manufactured or produced that it

therefore has no commercial value. Take for

example the farmer. In the course of husbandry

it frequently happens that different crops raised

by the farmer when put in market do not

sell for enough to pay the costs of their produc-

tion and transportation, but can it be truly said

that crops have no commercial value simply

because after the same have been sold and all

expenses incident to their production and ship-

mining laws. Under the general mining law, a claimant must

physically expose a vein or lode of mineral-bearing rock, and

claims founded on geological inference will be struck down.

Barton v. Morton, 498 F.2d 288, 290-291 (9th Cir. 1974);

Moseley v. Hickel, 442 F.2d 1030 (9th Cir. 1971); Henault

Mining Compeny v. Tysk, 419 F.2d 766 (9th Cir. 1969),

cert. denied, 398 U.S. 950 (1970).

$1

ment deducted, there is no clear gain te the

farmer, and therefore, as a corollary, that the

lands are not valuable for agricultural purposes?

And the same may be said as to the entry under

this act of land valuable “chiefly for stone.”

Could not the land be valuable chiefly for stone

even though, because of its remoteness from mar-

ket or other causes, the stone could not then be

sold for a remunerative price? [52 L.D. at 206.]

The Freeman decision became the target of an at-

tack by Mr. Ralph S. Kelley, who was then the General

Land Office Division Inspector in Denver. When the

Department’s response to Kelley’s protests concerning

the Freeman case failed to satisfy him, Kelley au-

thorized a series of newspaper articles charging that

the Department was engaged in an oil scandal similar

to the recently-disclosed Teapot Dome incident (Pet.

App. 9a-10a)."° The first in the series of Kelley’s

articles was published in October 1930, and the ar-

ticles received wide publicity.

At the time Kelley’s articles were published, the

House Committee on Public Lands was considering

the problems relating to patents for oil shale mining

claims that had been raised by this Court’s decision

in Wilbur v. Krushnic, 280 U.S. 306 (1930). In early

10 Much of Kelley’s accusation was directed against Assist-

ant Secretary E. C. Finney, who had written the Freeman

decision and submitted it to Secretary Work for signature

after Finney had rejected two draft decisions unfavorable

to the mining claimants that had been prepared by the Solici-

tor’s staff. Finney had been Assistant Secretary under Sec-

retary of the Interior Albert B. Fall at the time the Teapot

Dome leases were issued.

82

1931, the Committee held hearings at which both

Kelley and Secretary of the Interior Wilbur testified.

Although most of the testimony concerned various

aspects of the assessment work issue that was the

subject of the Wilbur v. Krushnic decision, certain

witnesses, including Kelley and Secretary Wilbur,

noted that oil shale could not currently be exploited

at a profit. See Application for Patent on Oil-Shale

Lands: Consolidated Hearings Before the House

Comm. on Public Lands, 71st Cong., 3d Sess. 99,

156 (1931). Following conclusion of the hearings,

the Committee recommended legislation placing a

deadline on the filing of applications for oil shale

patents. H.R. Rep. No. 2537, 71st Cong., 3d Sess.

(1931). However, the Committee Report did not

address the decision in Freeman v. Summers or the

discovery issue. Indeed, the Report quoted the Sec-

retary’s comment that “other phases” of the “gen-

eral problem as to the oil shale lands,” such as ‘‘ques-

tions of discovery,” might require legislative clari-

fication. 7d. at 9. The bill recommended by the Com-

mittee was not enacted.

The Senate inquiry concerning the Kelley charges

was more extensive. On December 19, 1930, the

Senate, taking note of the allegation that oil shale

lands “* * * have been improvidently, erroneously,

and unlawfully, if not corruptly, transferred to in-

dividuals and private corporations * * *,” passed a

resolution authorizing the Senate Committee on Pub-

lic Lands and Surveys to undertake an investigation

into the accusations. S. Res. 379, 71st Cong., 3d

33

’

Sess., 74 Cong. Rec. 1079-1080 (1930). That Com-

mittee held hearings on February 3, 6, 10, 12, 26

and 27, 1931. See Hearings on S. Res. 379 Before

the Senate Comm. on Public Lands and Surveys,

71st Cong., 3d Sess. (1931). However, although

the Freeman v. Summers decision and related issues

concerning the patenting of oil shale lands were dis-

cussed before it, the Committee failed to submit any

recommendations to Congress or to issue a report.

Rather, after the hearings had concluded, Senator

Nye, the Committee Chairman, informed the Secre-

tary by letter that there was no reason why the De-

partment “* * * should not proceed to final disposi-

tion of the pending applications for patents to oil shale

lands in conformity with the law” (Pet. App. lla).

Thereafter, the Department, which had suspended

issuance of oil shale patents pending the investiga-

tion, resumed the patenting of oil shale lands.

In 1956 Congress amended the mining laws by

eliminating the requirement that locators had to ob-

tain and convey to the United States any existing

homestead patents for the surface lands in order to

receive a patent on their pre-1920 claims to minerals

withdrawn under the Mineral Leasing Act. Act of

July 20, 1956, ch. 652, 70 Stat. 592, 30 U.S. 122. The

conflict between homestead and mineral patents had

arisen in a number of cases, including some that

involved applications for oil shale patents. The 1956

amendment applied to all withdrawn minerals and

was designed to facilitate the patenting of pre-1920

claims that were otherwise valid under the mining

34

laws. Nothing in the 1956 amendment specifically

related to oil shale claims or the issue of discovery

in general; at most, Congress may have assumed,

based on the Department’s position, that oil shale

could be patented and took no steps to override that

administrative construction.

Relying on the congressional activities in 1930-

1931 and 1956, the court of appeals in this case held

that Congress had enacted “an addendum to the min-

ing law” (Pet. App. 20a) embodying the concept, as

expressed in Freeman v. Summers, that oil shale

claims may be patented regardless of whether the

claims could be currently exploited at a reasonable

profit. In effect, the court concluded that Congress’

failure to enact legislation expressly reversing the

Secretary’s known practice of issuing patents to

holders of oil shale claims effected an implied repeal

of the established discovery requirements of the gen-

eral mining law in the special case of oil shale.

As the court of appeals recognized (Pet. App. 3a),

“Te]verything considered, it must be concluded that

the ‘valuable mineral deposit’ standard or require-

ment was not met as to oil shale claims of the type

here considered before 1920 as the standards were

applied to the metallic minerals.” This view—that

oil shale claims are not patentable under the stand-

ards of the general mining law—was unanimously

shared in this case by the district court (id. at 29a-

30a), the Interior Board of Land Appeals (id. at

109a, 112a), and the Hearing Examiner (7d. at 166a-

167a). As discussed above (pages 18-26, supra),

this conclusion was clearly correct. In light of the

35

“lack of conformance” of oil shale claims to the

general mining law (Pet. App. 3a), the court of ap-

peals’ holding—that Congress’ failure to disapprove

the Department’s issuance of patents for oil shale

claims constituted an amendment to the statute—

attributes to congressional inaction the intent to al-

low the conveyance of public lands to private inter-

ests in a manner that is unauthorized under the

statute as written and enacted.

We are unaware of any decision of this Court, or

of any legal doctrine or sound reason of policy, that

infers from congressional silence the affirmative in-

tention to alter an existing statute in order to permit

that which is impermissible under the statute. This

is not a case in which an administrative agency has

exercised its discretion to choose one among several

courses thought to be available under a statute. In

appropriate circumstances, congressional acquiescence |

may be probative in confirming that the agency has

indeed properly construed the statute and made an

allowable choice.'' Here, however, there can be no

11 The court of appeals (Pet. App. 17a-20a) and the district

court (id. at 37a-39a) relied on a series of cases holding that

Congress is presumed to approve the known administrative

construction of a statute when it either re-enacts or deliber-

ately declines to amend the statute. However, congressional

re-enactment is a more probative guide to the meaning of a

statute than is congressional inaction. See United States v.

Board of Commissioners of Sheffield, Alabama, 435 U.S. 110,

185 (1978). Moreover, even “re-enactment * * * is an unre-

liable indicium at best.’”’ Commissioner v. Glenshaw Glass Co.,

848 U.S. 426, 431 (1955). “[T]he doctrine of legislative

acquiescence is at best only an auxiliary tool for use in

36

doubt that the patenting of oil shale claims was not

authorized under the general mining law, and it is

an altogether different matter to infer from congres-

sional inaction the positive design to amend the

statute. Such an inference surely should not be in-

dulged where, as here, the result would be the re-

linquishment to private interests of public lands that

“Tt]he [g]overnment * * * holds * * * in trust for all

the people.” United States v. California, 332 U.S.

19, 40 (1947).

interpreting ambiguous statutory provisions” (Jones Vv.

Liberty Glass Co., 382 U.S. 524, 533-534 (1947)), and this

“interpretative aid[]”’ could not lead to a contrary conclu-

sion “if it were clear that the [Department’s] action contra-

dicted the requirements of the [general mining law]”

(Massachusetts Trustees v. United States, 377 U.S. 235, 242

(1964)). “[T]hat rule [of congressional re-enactment] is no

more than an aid in statutory construction. While it is useful

at times in resolving statutory ambiguities, it does not mean

that the prior construction has become so embedded in the

law that only Congress can effect a change.” Helvering Vv.

Reynolds, 313 U.S. 428, 482 (1941).

In any event, the issue in the cases relied on by the courts

below was whether an administrative agency had adopted a

permissible reading of the enabling statute. In answering

that question, the courts relied in part on the fact that Con-

gress had acquiesced in the agency’s construction, thereby

lending support to the conclusion that the agency’s position

was within the scope of the act. Here, on the other hand, it

is clear, even allowing due regard for congressional inaction,

that the Department of the Interior’s position in Freeman v.

Summers was not authorized under the original mining law.

Thus, rather than referring to congressional silence as an aid

in discerning the meaning of enacted legislation, the courts

in this case used it to find a substantive amendment to a

statute that, as written and passed, does not support the

Department’s position.

37

At base, the court of appeals’ decision in this case

rests on the fact that “Congress has for some period

failed affirmatively to act to change the interpretation

which the [Secretary] gives to an otherwise unam-

biguous statute.” Cammarano v. United States, 358

U.S. 498, 510 (1959). However, this Court has re-

peatedly recognized that “ ‘[i]t is at best treacherous

to find in congressional silence alone the adoption of

a controlling rule of law.’” NLRB v. Plasterers’

Union, 404 U.S. 116, 129-130 (1971), quoting

Girouard v. United States, 328 U.S. 61, 69 (1946),

and Boys Markets, Inc. v. Retail Clerks Union, Local

770, 398 U.S. 285, 241 (1970). Rather, the Court

has “refuse[d] to infer [approval] from mere con-

gressional silence” (Oklahoma Tax Commission v.

Texas Co., 386 U.S. 842, 367 (1949)) and has re-

quired “persuasive circumstances evidencing a clear

design that congressional inaction be taken as ac-

ceptance * * *.” Boys Markets, supra, 398 U.S. at

242. Courts should not “walk on quicksand * * *

[by] try[ing] to find in the absence of corrective

legislation a controlling legal principle.” Helvering

v. Hallock, 309 U.S. 106, 121 (1940). For these

reasons, as this Court recently observed, “it is

impermissible to draw inferences of approval from

the unexplained inaction of Congress * * *.” United

States v. Board of Commissioners of Sheffield, Ala-

bama, 485 U.S. 110, 185 (1978). See also Houghton

v. Payne, 194 U.S. 88, 98-100 (1904) (congressional

refusal to change longstanding administrative con-

38

struction “must yield to the positive language of the

statute”).

The court of appeals’ decision is also squarely at

odds with this Court’s analysis in recent cases such

as TVA v. Hill, 487 U.S. 153 (1978), and SEC v.

Sloan, 436 U.S. 103 (1978).

In Hill, TVA demonstrated that the Reports of

both the House and Senate Appropriations Commit-

tees “generally reflected the attitude of the Commit-

tees either that the [Endangered Species] Act did

not apply to Tellico or that the dam should be cém-

pleted regardless of the provisions of the Act” (437

U.S. at 189; emphasis in original). But, in the ab-

sence of a statement in legislation passed by the

Congress that the Tellico dam was to be completed

regardless of compliance with the Endangered Species

Act, this Court was “unable to conclude that the Act

has been in any respect amended or repealed” (2bid.).

The Court recognized (437 U.S. at 191) that both

12 As then-Judge Stevens explained in his dissent in Hodg-

son V. Lodge 851, Int’l Assn. of Mech. & Aerospace Workers,

454 F.2d 545, 562 (7th Cir. 1971), cited with approval in

United States v. Board of Commissioners of Sheffield, Ala-

bama, supra, 435 U.S. at 149 (Stevens, J., dissenting) :

Congress does not sit as a single-minded watchdog

ready to bark out a clarifying amendment at every de-

parture from its command. It is more like a slumbering

army; when aroused it has power to march where it will.

* * * An interpretation of a provision in the controver-

sial and integrated statute which finally emerged from

the legislative process in 1959 cannot fairly be predicated

on unexplained inaction by different Congresses in sub-

sequent years.

39

Committees have “expressly stated their ‘understand-

ing’ 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

TVA’s position” (487 U.S. at 192). Accordingly, the

Court held, quoting the Regional Rail Reorganization

Act Cases, 419 U.S. 102, 182 (1974), that the Com-

mittee’s statements, “ ‘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

Commission construction that the Court concluded

was “inconsistent with a statutory mandate” (436

U.S. at 118). The Court refused “to presume gen-

eral congressional awareness of the Commission’s

construction” (486 U.S. at 121), even though Con-

gress had re-enacted the underlying statutory provi-

sion ‘without disapproving the Commission’s con-

struction” after the Commission had “on at least one

occasion made its views known to Congress in Com-

mittee hearings” and “at least one Committee [had]

indicated on one occasion that it understood and ap-

proved tof the Commission’s practice (436 U.S. at

119, 120; footnotes omitted). Moreover, the Court

also stated that even if it were to assume Congress

as a whole was aware of the Commission’s construc-

tion, it was questionable whether “such awareness

40

at the time of re-enactment would be tantamount to

amendment of what we conceive to be the rather |

plain meaning” of the statutory language (436 U.S.

at 121).*

Thus, in Hill and Sloan, the Court rejected the

argument that Congress had in effect amended an

existing statute to ratify an administrative construc-

tion even though committee reports recommending

subsequent legislation adopted the agency’s interpre-

tation and Congress acted to pass the committee’s

recommended legislation. Here, in contrast, the court

of appeals accepted the argument that Congress had

effectively repealed one of the principal requirements

of the mining laws by its failure to take corrective

measures after being apprised of the Department’s

actions. With respect to the 1930-1931 congressional

hearings, it is undisputed that no legislation was

enacted and no committee reports dealing with the

discovery requirement were issued; the sole action.

13 In addition, as the Court stated in Oscar Mayer & Co. Vv.

Evans, No. 78-275 (May 21, 1979), slip op. 6-7:

[The subsequently enacted amendments to the statute

and the accompanying Committee Report were] written

11 years after the [Act] was passed in 1967 and such

“Tllegislative observations * * * are in no sense part of

the legislative history.” United Airlines, Inc. v. McMann,

434 U.S. 192, 200 n.7 (1977). “It is the intent of the

Congress that enacted [the Section], * * * that controls.”

Teamsters v. United States, 481 U.S. 324, 354 n.39

(1977). Whatever evidence is provided by the 1978 Com-

mittee Report of the intent of Congress in 1967, it is

plainly insufficient to overcome the clear and convincing

evidence [of Congress’ intent in 1967].

See also Quern v. Mandley, 436 U.S. 725, 736 n.10 (1978).

41

taken was a letter to the Secretary from the chair-

man of one of the congressional committees that did

no more than state that the Department could “pro-

ceed to final disposition of the pending applications

* * * in conformity with the law” (Pet. App. 11a).

The 1956 amendment to the statute dealt with a

problem unrelated to the discovery question at issue

here and applied to all minerals withdrawn from

future claims by the Mineral Leasing Act of 1920.

Congress did not then focus on the particular prob-

lems relating to oil shale and, as the district court

held in this case (Pet. App. 36a), “did not specifi-

cally address the problem of discovery at all.” “

In sum, Congress, in enacting Section 37 of the

Mineral Leasing Act of 1920, expressly stated that

existing claims would be preserved only if they met

all of the requirements of the general mining law,

including discovery. Nothing in the 1930-1931 com-

mittee activities or in the 1956 amendment to the

statute provides a basis for concluding that Congress

implicitly repealed, in the special case of oil shale,

one of the essential and fundamental requirements

of the general mining law. Such surmise regarding

congressional intent is especially inappropriate in

this case, for “[i]t has long been established that,

when grants to federal land are at issue, any doubts

‘are resolved for the Government, not against it.’ ”

- Andrus v. Charlestone Stone Products Co., 436 U.S.

14 Moreover, the 1956 amendment expressly stated that only

claims otherwise valid under the mining laws could be recog-

nized.

42

604, 617 (1978), quoting United States v. Union

Pacific R.R., 353-U.S. 112, 116 (1957).

Ill. THE SECRETARY IS NOT ESTOPPED FROM

CHALLENGING RESPONDENTS’ OIL SHALE

CLAIMS AS INVALID UNDER THE DISCOVERY

STANDARD OF THE GENERAL MINING LAW

The district court, in addition to finding that Con-

gress had in effect amended the mining statute to

adopt the rule of Freeman v. Summers, also held as

an independent ground for decision that the Secre-

tary was estopped from challenging respondents’

claims on the basis of the Department’s changed in-

terpretation of the discovery requirements applicable

to oil shale (Pet. App. 39a-54a, 55a). This holding

overturned the determination of the Interior Board

of Land Appeals (IBLA) that the Secretary was not

estopped (id. at 112a-119a). The court of appeals

did not reach this issue, resting its decision solely on

the ground that Congress’ consideration of the deci-

sion in Freeman v. Summers was tantamount to “an

addendum to the mining law which cannot be re-

moved short of Congressional action” (id. at 20a).

In the unusual circumstances presented here, we

submit that, if the judgment of the court of appeals

is reversed on the question of congressional adontion

of the Freeman v. Summers rule, this Court should

address the estoppel issue notwithstanding that the

court of appeals did not pass upon it. Both the

15 The issue was briefed and argued by the parties in the

court below. In addition, the court of appeals has recently

considered the estoppel issue in a closely analogous case. See

43

IBLA and the district court decided the issue of

estoppel. Moreover, this litigation, which was com-

menced in August 1964, should not be unnecessarily

prolonged. Resolution of the preceding statutory is-

sue, if favorable to the Secretary, will not answer the

fundamental question whether respondents’ oil shale

claims are lawfully subject to patent. The contro-

versy between the parties will continue, and further

proceedings will be required, unless this Court de-

cides the estoppel question.

Given the paramount public interest in securing

alternative sources of energy and the uncertainty

that this lawsuit causes for the commercial develop-

ment of oil shale as a potential domestic energy re-

source, it is obviously desirable that the case be fi-

nally resolved as soon as possible.** In our view, the

estoppel issue warrants review by this Court because

it is important and recurring. There is, moreover, a

conflict among the circuits on whether the govern-

ment can ever be estopped.” Respondents have indi-

Enfield v. Kleppe, 566 F.2d 1189 (10th Cir. 1977); see also

Atlantic Richfield Co. v. Hickel, 482 F.2d 587, 591-592 (10th

Cir. 1970).

16—In the event that the Court finds the factual record in-

adequate to dispose of the case conclusively, we submit that

resolution of the underlying legal issues will help to narrow

and expedite whatever further proceedings may be required.

17 Compare, e.g., Goldberg v. Weinberger, 546 F.2d 477

(2d Cir. 1976), cert. denied, 431 U.S. 987 (1977), with, e.g.,

Morris v. Andrus, 593 F.2d 851 (9th Cir. 1978), cert. denied,

No. 79-7 (Oct. 1, 1979), and United States v. Ruby Co., 588

F.2d 697 (9th Cir. 1978), cert. denied, No. 78-1484 (June 4,

1979), and cases cited therein.

44

cated in their Brief in Opposition (2-3, 23-24) that

they intend to urge estoppel as a ground for affirm-

ance. In these circumstances, we submit that the

Court may properly reach the question. See, e.g.,

United States v. New York Telephone Co., 434 U.S.

159, 166 n.8 (1977); Hankerson v. North Carolina,

432 U.S. 233, 240 n.6 (1977); United States v.

ITT Continental Baking Co., 420 U.S. 223, 226-227

n.2 (1975); R. Stern & E. Gressman, Supreme Court

Practice 477-487 (5th ed. 1978).

A. Equitable Estoppel Does Not Apply Against the

Government, and the Secretary Cannot Be Estopped

From Revising a Legally Erroneous Interpreta-

tion of a Statute Regarding the Public Lands to

Comport With the Correct Meaning of the Law

From the beginning of the Republic, this Court

has recognized the rule that the government cannot

be estopped even though hardship to private parties

might result in individual cases. Lee v. Munroe &

Thornton, 11 U.S. (7 Cranch) 366 (1813). This

venerable principle, founded on the view that a con-

trary rule would make it “very difficult for the public

to protect itself” (id. at 369-370), has been repeatedly

and consistently observed by the Court. See Hart v.

United States, 95 U.S. 316, 318-319 (1877); Pine

River Logging Co. v. United States, 186 U.S. 279,

291 (1902); Utah Power & Light Co. v. United

States, 243 U.S. 389, 408-409 (1917); Sutton v.

United States, 256 U.S. 575, 579 (1921); Jeems

Bayou Club v. United States, 260 U.S. 561, 564

(1923) ; Cramer v. United States, 261 U.S. 219, 234

45

(1923); Utah v. United States, 284 U.S. 534, 545-

546 (19382); Wilber National Bank v. United States,

294 U.S. 120, 128-124 (1985); United States v. San

Francisco, 310 U.S. 16, 31-82 (1940); United States

v. Stewart, 311 U.S. 60, 70 (1940); United States

v. California, 332 U.S. 19, 39-40 (1947); Federal

Crop Insurance Corp. v. Merrill, 332 U.S. 380, 384

(1947); Snyder v. Buck, 340 U.S. 15, 19 (1950);

Automobile Club v. Commissioner, 353 U.S. 180, 183

(1957); INS v. Hibi, 414 U.S. 5, 8 (1973). We are

unaware of a single case in which this Court has held

that the government was, or could be, estopped.**

18 In INS v. Hibi, supra, and Montana v. Kennedy, 366 U.S.

808, 314-315 (1961), the Court found it unnecessary to de-

cide whether affirmative misconduct might estop the govern-

ment from denying citizenship. See also Wilber National

Bank v. United States, supra (Court did not decide whether

the general rule barring estoppel against the government

was subject to modification where the government acted in

a commercial capacity).

Nor is Moser v. United States, 341 U.S. 41 (1951), to the

contrary. In Moser, the Court held that in the circumstances

of that case a Swiss national living in this country had not

knowingly and intentionally waived his right to United States

citizenship by seeking exemption from military service. In

reaching this conclusion, the Court expressly disclaimed any

consideration of the doctrine of estoppel (341 U.S. at 47).

Moreover, the Court has subsequently cited Moser on only

three occasions, none of them relating in any way to the

issue of estoppel. See Reid v. Covert, 354 U.S. 1, 18 n.34

(1957) ; Cabellos v. Shaughnessy, 352 U.S. 599, 604 n.11

(1957); Harisiades v. Shaughnessy, 342 U.S. 580, 586 n.6

(1952). We do not think that Moser, which explicitly dis-

avowed reliance on the estoppel doctrine, can be read as a

silent departure from the Court’s longstanding and uniform

adherence to the rule against estopping the government.

46

The principle that estoppel cannot be invoked

against the government reflects two fundamental pre-

cepts. First, the United States as sovereign is not

subject to liability in the absence of its consent. See,

e.g., United States v. Testan, 424 U.S. 392 (1976).

Where, as here, the effect of estoppel is to award

relief against the United States that “require[s] ac-

tion by the sovereign or disturb[s] the sovereign’s

property,” sovereign immunity serves to protect the

government from such liability. Larson v. Domestic

& Foreign Commerce Corp., 337 U.S. 682, 687-688

(1949). Second, under our constitutional system of

separation of powers, the Congress, and the Congress

alone, is vested with the legislative authority to enact

the laws of the United States. These laws are not

subject to amendment by officials of the Executive

Branch, and any action by such officials that con-

travenes the provisions of a valid statute is void.

To estop the government because of the conduct of its

Executive officials in violation of an Act of Congress

would constitute a distortion of our tripartite system

and a usurpation of congressional powers. See, e.g.,

Dixon v. United States, 381 U.S. 68, 73 (1965);

Snyder v. Buck, supra, 340 U.S. at 19; United States

v. San Francisco, supra, 310 U.S. at 29, 31-32; West

v. Standard Oil Co., 278 U.S. 200, 220-221 (1929).

19 Equitable considerations cannot serve to surmount or

defeat the sovereign immunity of the United States against

unconsented liability. See United States v. Neustadt, 366 U.S.

696 (1961); United States v. Minnesota Mutual Investment

Co., 271 U.S. 212 (1926).

47

The Court has recognized that “[t]he doctrine of

equitable estoppel is not a bar to the correction * * *

of a mistake of law.” Automobile Club v. Commis-

sioner, supra, 353 U.S. at 188. This principle is fully

applicable where the mistake of law is made by the

head of an agency, for even Cabinet members have

no authority to act in disregard of valid Acts of

Congress. See, e.g., West v. Standard Oi Co., supra,

278 U.S. at 220-221; Sutton v. United States, supra,

256 U.S. at 579. Thus, when it was determined

that the Secretary’s prior interpretation of the

discovery requirements for oil shale claims was legally

erroneous, the Department was not estopped from

correcting its position to conform to law even though a

third-party “may have relied to his detriment on the

[previous] mistake.” Dixon v. United States, supra,

381 U.S. at 73.

The importance of preserving Congress’ rightful

authority and protecting the national interest from

unauthorized Executive actions is especially great in

the area of public lands. Under Article IV, Sec. 3,

Cl. 2 of the Constitution,” Congress’ power over the

public domain “is without limitations” (United States

v. San Francisco, supra, 310 U.S. at 29), and un-

authorized Executive actions should not frustrate

that plenary power or deprive the public of its in-

terest in this unique resource. This Court has been

20 This provision reads: “The Congress shall have Power

to dispose of and make all needful Rules and Regulations

respecting the Territory or other Property belonging to the

United States.”

48

vigilant to protect the public’s interest in federal

lands, emphasizing that “no right arises from an

invalid claim of any kind. All must conform to the

law under which they are initiated; otherwise they

work an unlawful private appropriation in deroga-

tion of the rights of the public.” Cameron v. United

States, 252 U.S. 450, 460 (1920), quoted in Best v.

Humboldt Mining Co., 371 U.S. 384, 337 (1963).

Nor can a breach of duty by a federal official serve

to defeat this public interest. As the Court explained

in United States v. California, supra, 3382 U.S. at

40 (footnote omitted) :

The Government, which holds its interests [in

public lands] * * * in trust for all the people, is

not to be deprived of those interests by the ordi-

nary court rules designed particularly for private

disputes over individually owned pieces of prop-

erty; and officers who have no authority at all to

dispose of Government property cannot by their

conduct cause the Government to lose its valu-

able rights by their acquiescence, laches, or fail-

ure to act.

* * * [W]e are faced with the issue as to

whether state or nation has paramount rights

in and power over this [public land], and

that great national question is not dependent

upon what expenses may have been incurred

upon mistaken assumptions.

See also Utah Power d& Light Co. v. United States,

supra, 243 U.S. at 409, quoted in JNS v. Hibi, supra,

414 U.S. at 8. And the Secretary’s authority, like

that of all federal officials, is circumscribed by this

grave public trust:

49

The Secretary is the guardian of the people of

the United States over the public lands. The

obligations of his oath of office oblige him to see

that the law is carried out, and that none of the

public domain is wasted or is disposed of to a

party not entitled to it.

Knight v. United States Land Association, 142 U.S.

161, 181 (1891). See also, e.g., Cameron v. United

States, supra, 252 U.S. at 460, quoted in Best v.

Humboldt Mining Co., supra, 371 U.S. at 337.

In United States v. San Francisco, supra, the Court

rejected an estoppel contention quite similar to that

advanced by respondents here. In that case a federal

statute enacted in 1913 had granted the City various

public lands to develop a system for generating and

distributing electricity, subject to reversion for fail-

ure to comply with certain limitations on the sale,

assignment or transfer of such electrical power. At

the behest of the Secretary of the Interior, the United

States filed suit alleging that the City had failed to

observe these restrictions. In defense, the City as-

serted, among other things, that the Department of

the Interior had consistently construed the statute

from 1913 to 19387 to permit the activities of the

City, that this construction was correct, and that the

United States was estopped to change its position

(310 U.S. at 31). The Court quickly disposed of the

City’s assertions (310 U.S. at 31-32) :

We cannot accept the contention that administra-

tive rulings—such as those here relied on—can

thwart the plain purpose of a valid law. As to

50

estoppel, it is enough to repeat that “* * * the

United States is neither bound nor estopped by

acts of its officers or agents in entering into an

arrangement or agreement to do or cause to be

done what the law does not sanction or permit”

[quoting Utah Power & Light Co. v. United

States, 243 U.S. 389, 409 (1917) ].

Here, as in United States v. San Francisco, the

Department is asserted to be estopped to correct a

longstanding but erroneous construction of a statute,

with the result that respondents will obtain a benefit

to the public lands under an Act of Congress without

satisfying the requirements and restrictions contained

in that very Act. This effort to use estoppel to defeat

the statute should be rejected. For the Court to con-

clude that the Secretary is estopped from correcting

the prior erroneous construction of the discovery

standard for oil shale would be to sanction the con-

veyance of public lands in contravention of the statu-

tory terms and conditions set by the Congress. Such

a result would be constitutionally impermissible and

would exact too high a price from the public for the

legal errors of Executive officials.”

21In deciding that the government could be estopped, the

district court in this case relied principally on a series of

Ninth Circuit decisions (Pet. App. 40a). In our view, those

decisions, in addition to being distinguishable from the case

at bar, are fundamentally incorrect and inconsistent with

the decisions of this Court. We also note that the Tenth Cir-

cuit apparently disagrees with the Ninth Circuit’s view. In

Enfield v. Kleppe, 566 F.2d 1189 (10th Cir. 1977), a case

very similar to the instant one, an oil lessee argued that the

Department of the Interior was estopped from changing

51

\ B. The Secretary Cannot Be Estopped in the Circum-

stances of This Case

If we assume that the government can be estopped

in some circumstances, we nevertheless submit that

this is an inappropriate case for applying the doctrine.

Even under Ninth Circuit precedent, invoked by the

district court in this case (Pet. App. 40a), the Secre-

tary is not estopped here.

The Ninth Circuit has recognized that the govern-

ment cannot be estopped unless, among other neces-

sary elements, (1) the government has engaged in

“wrongful conduct” or “affirmative misconduct,” ”

regulations that did not comport with the statute and apply-

ing the new regulations to leases that were already in effect.

The court of appeals disagreed, holding that the earlier

regulation was inconsistent with the statute and that the

government was not estopped even if the prior regulation

had long been in effect and had been relied on by the lessee.

See also Atlantic Richfield Co. v. Hickel, 482 F.2d 587, 591-

592 (10th Cir. 1970) (footnotes omitted) :

The premise of appellant’s argument is built around

the rule which states that the doctrine of equitable

estoppel binds the Government for the conduct of its

agents while they are acting within the scope of their

employment. But a corollary to that rule is the estab-

lished principle that the United States may not be

estopped from asserting a lawful claim by the erroneous

or unauthorized actions or statements of its agents or

employees, nor may the rights of the United States be

waived by unauthorized agents’ acts. As harsh as the

tenet is under practical application, an administrative

determination running contrary to law will not constitute

an estoppel against the federal government.

22 See also INS v. Hibi, supra, 414 U.S. at 8-9; Montana

v. Kennedy, supra, 366 U.S. at 314-315.

52

(2) a “serious injustice” will result if the govern-

ment is not estopped, and (3) ‘the public’s interest

would not be unduly damaged by the imposition of

estoppel.” See e.g., Morris v. Andrus, 593 F.2d 851,

854 (9th Cir. 1978), cert. denied, No. 79-7 (Oct. 1,

1979) ; United States v. Ruby Co., 588 F.2d 697, 703-

704 (9th Cir. 1978), cert. denied, No. 78-1484 (June

4, 1979); United States v. Wharton, 514 F.2d 406,

412-413 (9th Cir. 1975); United States v. Lazy FC

Ranch, 481 F.2d 985, 989 (9th Cir. 1973). None

of these elements has been demonstrated here.

1. Affirmative misconduct

The Department’s earlier good-faith, but erroneous,

construction of the discovery requirements for oil

shale, and the consequent issuance of oil shale patents,

do not approach the level of “affirmative misconduct.”

Here, there has been no “wrongful conduct,” ‘“mis-

conduct,” or other “blameworthy” action. See United

States v. Ruby Co., supra, 588 F.2d at 703-704 & n.7;

Santiago v. INS, 526 F.2d 488, 493 (9th Cir. 1975)

(en banc), cert. denied, 425 U.S. 971 (1976). In-

deed, the one fact established by the congressional

investigation in 1930-1931 was that the decision in

Freeman v. Summers and the issuance of oil shale

patents were not based on misconduct. Rather, in

this case, there was at most an innocent mistake on

a question of law. If this were sufficient to establish

estoppel, the government would in effect become a

guarantor for every legal opinion it ventures, with

the consequence of potentially vast liability. Such a

53

result hardly accords with the view that estoppel

cannot be applied against the government in cases

involving title to public lands “without compelling

reasons.” United States v. Ruby Co., supra, 588

F.2d at 704.

The district court also discussed at length various

statements made by Department of the Interior of-

ficials during or shortly after World War I (Pet. App.

42a-45a).> In these public statements, the officials

stated their belief that domestic petroleum supplies

would soon be depleted, that oil shale would then be-

come a viable source of energy, and that therefore

oil shale resources should now be developed.* Once

23 For the most part, the district court relied on newspaper

and periodical accounts reporting these statements and de-

scribing the oil shale business before 1920.

24 Not all governmental assessments concerning oil shale

were as sanguine as those cited by the district court. For

example, as the House Committee on Public Lands stated

(H.R. Rep. No. 563, 65th Cong., 2d Sess. 18 (1918) ):

In view of the fact that no commercial quantity or any

appreciable amount of shale oil has ever been produced

in this country, nor any standardized process of produc-

tion has yet been evolved or recommenaed or agreed

upon in this country by the Bureau of Mines or anyone

else, and it has not yet been demonstrated that the oil-

shale industry can be made commercially profitable, in

view of the location and conditions of the oil shale in

this country, and that it will require the hazard and

employment of many millions of dollars, and the long

application of expert experience and intelligence of the

highest order to develop the industry to a productive

and profitable state, for the purpose of encouraging the

54

again, none of these statements constitute “affirma-

tive misconduct.” Rather, these statements reflected

the honest beliefs of various Department officials who

projected a forthcoming energy shortage and publicly

urged the development of oil shale to meet the antici-

pated crisis. That their forecasts proved inaccurate

does not convert their good-faith statements into “af-

firmative misconduct.” Moreover, these statements

did not even advert to the requirements of the mining

law or suggest that claims could validly be located

regardless of whether oil shale could then be ex-

tracted and marketed at a profit. Thus, these state-

ments are wholly inadequate as a basis for estoppel.

2. Serious injustice

No serious injustice to respondents would result

in this case if the Secretary is not estopped. See

Union Oil Co. of California v. Morton, 512 F.2d 743,

748-749 n.2 (9th Cir, 1975).

The district court’s opinion did not address the

question whether respondents or their predecessor-in-

interest relied on the statements or actions of the De-

partment and, if so, whether such reliance was rea-

sonable. In fact, with the exception of the Secre-

tary’s announcement in 1917 of the creation of two

naval oil shale reserves, none of the statements cited

experiment upon and the development of the oil-shale

industry in this country, your committee very earnestly

recommends exceedingly liberal conditions to those who

are willing, under the supervision of the Government, to

undertake the risk and expenditure of the necessary time

and money to make the production of shale oil possible.

55

by the district court could have been relied on by re-

spondents or their predecessors in locating their

claims, since all of those statements were made after

the claims had already been located (Pet. App. 42a-

45a, 130a, 134a).” The same is true for the Jnstruc-

tions, issued in 1920, and for Freeman v. Summers,

which was not decided until 1927 (id. at 115a-

116a). And no oil shale patents were issued before

1920. Hence, location of the claims was not made in

reliance on the Department’s earlier position.”* More-

over, development of the claims was also not under-

taken in reliance on that position, for, as the Interior

Board of Land Appeals concluded (id. at 117a),

respondents “have not in fact developed them.” There-

25 In addition, a reasonable person would not have ‘relied

upon this type of statement. The statements in question

indicated only that certain Interior officials believed that oil

shale would become a commercially feasible source of energy

in the near future and that attempts should be made to de-

velop that resource. A reasonable person considering such

statements would have realized, in light of the fact that no

commercial production of oil shale had occurred in this

country for 50 years (Pet. App. 79a-80a), that the prospects

for present, profitable development were subject to serious

doubts. The doctrine of equitable estoppel does not obviate

the duty of due care. See United States v. Aetna Casualty &

Surety Co., 480 F.2d 1095, 1099 (8th Cir. 1973).

26In any event, location of a claim is a simple and in-

expensive matter. See note 1, supra; see also Andrus V.

Charlestone Stone Products Co., 486 U.S. 604, 616 (1978).

As the IBLA explained (Pet. App. 116a-117a), location “re-

quires only a minimal expenditure” and “involves no change

of position.”

56

fore, at most, respondents’ reliance was confined to

the acquisition of their claims.”

The record in this case clearly shows that respond-

ents’ expenditures for acquiring their claims were

quite limited. The Interior Board of Land Appeals

found (Pet. App. 117a) that respondent D.A. Shale,

Inc., or its predecessors did not invest “more than

a minimal amount in the purchase of [their] claims,”

and that respondent Shell Oil Co. expended less than

$19,000 before 1964 (when this contest was filed by

the Department) to perfect its title and prepare its

patent application. In exchange for those modest

expenditurés, respondents claim the right, under the

rubric of equitable estoppel, to patent substantial

tracts of public land for the nominal amount of $2.50

per acre. See 30 U.S.C. 37. To hold that the Secre-

tary is not estopped to refuse to grant these patents

to respondents surely will not work a serious injus-

tice.

Nor is it any ground of objection that other claims

were patented prior to 1960.** In general, an admin-

27 Respondent Shell Oil Co. did not acquire its claims until

1964, after the Department had repudiated Freeman v. Sum-

mers and instituted the instant contest proceedings. More-

over, the Department had not issued any oil shale patents

since 1960. In these circumstances, there is a substantial

question whether Shell in acquiring its claims reasonably

relied on the Department’s earlier interpretation of the dis-

covery standard for oil shale (Pet. App. 117a-118a).

28 Under 43 U.S.C. 1166, “[s]uits by the United States to

vacate and annul any patent shall only be brought within

six years after the date of the issuance of such patents.” No

oil shale patents have been issued since 1960.

57

istrative agency necessarily retains the flexibility to

modify its earlier positions and to apply those modifi-

cations to the case immediately before it. See NLRB

v. Weingarten, Inc., 420 U.S. 251, 265-266 (1975).

Moreover, Freeman v. Summers was overruled be-

cause it was founded upon an erroneous interpreta-

tion of the general mining law.” It is not unjust

either to abandon a position legally at variance with

the controlling statute even though there may have

been reliance on the prior construction, or to apply

the revised standard to all cases that are still before

the agency. Such a correction of an error of law is

not proscribed by the doctrine of equitable estoppel.

See Dixon v. United States, 381 U.S. 68, 74-75

(1965) ; Calbeck v. Travelers Insurance Co., 370 U.S.

114, 127 n.15 (1962); Automobile Club v. Com-

missioner, 353 U.S. 180, 188 (1957); Manhattan

29In addition, by 1964, when the instant contest proceed-

ings were begun, it had become clear that the Freeman Vv.

Summers rule was not promoting any of the congressionally

established objectives of the general mining law. Between

1920 and 1960, the Department had conveyed more than

300,000 acres of public lands to holders of pre-1920 oil shale

claims. However, although “[u]nder the mining laws Con-

gress has made public lands available to people for the

purposes of mining valuable mineral deposits and not for

other purposes,” United States v. Coleman, 390 U.S. 599, 602

(1968), the public has yet to receive the first drop of com-

mercially produced shale oil from any of these lands. In

view of this half-century of nonproduction, the Secretary

properly concluded that Freeman v. Summers should be

abandoned.

58

General Equipment Co. v. Commissioner, 297 U.S.

129, 134 (1936).”

Moreover, it is well established that “[a] locator

who does not carry his claim to patent * * * take[s]

the risk that his claim will no longer support the

issuance of a patent” at a later date. See Best v.

Humboldt Mining Co., 371 U.S. 334, 336 (1963).

Here, for over 40 years, no patent was sought on

respondents’ claims.** Until patents are issued and

title is thereby transferred from the government to

the private party, the public lands on which the claims

are located remain subject to the continuing jurisdic-

tion of the Secretary. As the Court stated in Cam-

eron v. United States, 252 U.S. 450, 460-461 (1920),

quoted in Best v. Humboldt Mining Co., supra, 371

US. at 337:

But no right arises from an invalid claim of any

kind. All must conform to the law under which

they are initiated; otherwise they work an un-

lawful private appropriation in derogation of

the rights of the public.

Of course, the land department has no power

to strike down any claim arbitrarily, but so long

as the legal title remains in the Government it

does have power, after proper notice and upon

adequate hearing, to determine whether the

* The Tenth Circuit has recently followed this analysis in

a closely analogous case involving public lands. See Enfield

v. Kleppe, 566 F.2d 1139 (10th Cir. 1977).

*1 The failure to protect these claims by obtaining patents

also suggests that respondents or their predecessors did not

consider the claims to be very valuable.

59

claim is valid and, if it be found invalid, to de-

clare it null and void. * * * ‘In other words, the

power of the department to inquire into the ex-

tent and validity of the rights claimed against

the Government does not cease until the legal

title has passed.’

See also Boesche v. Udall, 373 U.S. 472, 478 (1968) ;

West v. Standard Oil Co., 278 U.S. 200, 210 (1929).

In these circumstances, respondents would not

suffer a serious injustice if the Secretary is not

estopped from invalidating their claims.

3. Public interest

Indeed, the far greater harm that could result

from this case would fall not upon respondents but

upon the public. If the Secretary is estopped, the

public stands to lose lands reserved to it under fed-

eral statute.” This is not a case in which estoppel

of the Secretary would put respondents in the same

position they would have occupied if the alleged

wrongs of government agents had not occurred. Com-

pare United States v. Wharton, 514 F.2d 406, 412-

413 (9th Cir. 1975). Rather, having no rightful

claim to the lands under the general mining law,

32 While estimates are somewhat uncertain, we are advised

that approximately 5 million acres of federal lands in Colo-

rado, Wyoming, and Utah may be affected by the outcome of

this case. These lands include the richest oil shale deposits

in the United States (Pet. App. 77a-78a) and are also valu-

able for other uses, such as grazing, recreation, and wild-

life preservation.

60

respondents would gain a windfall at the expense of

the public.*

The conveyance of title under a patent, and the

consequent loss of governmental control over the

lands, would disadvantage the public interest in sev-

eral ways. Once a patent has been issued, respond-

ents are under no obligation to utilize the lands to

develop oil shale, but instead are free to delay devel-

opment or to dedicate the lands to any other use they

may choose. Indeed, they are under no obligation to

use the land at all. See Andrus v. Charlestone Stone

Products Co., 436 U.S. 604, 615, 616 (1978). Thus,

there would be no assurance that the oil shale de-

posits would be worked to the benefit of the public.

At the same time, any other, or additional, public

uses to which the lands might be put would be pre-

cluded by the issuance of patents to respondents. In

addition, the government’s ability to safeguard the

public from the potentially adverse environmental

impact of developing this largely undeveloped land

would also be greatly impaired by the issuance of

patents. On the other hand, if the lands are subject

to the leasing provisions of the Mineral Leasing Act,

then the National Environmental Policy Act, 42

U.S.C. 4321 et seq., and the authority of the Secre-

tary to impose appropriate terms and conditions in

the leases, will serve to ensure that development

83 Even the Ninth Circuit is “very reluctant to apply estop-

pel against the Government in cases involving rights to public

land * * *.” Union Oil Co. of California v. Morton, 512 F.2d

743, 748 n.2 (9th Cir. 1975).

61

occurs with due regard for environmental considera-

tions. Finally, estoppel against the government would

deprive the public treasury of substantial revenues.

As noted above (page 56, supra), valid claims may

be patented for $2.50 per acre. In contrast, as the

IBLA discussed (Pet. App. 107a-108a n.54), the high

bid in early 1974 for certain oil shale leases in Colo-

rado was over $41,000 per acre; the lowest winning

bid at that time among four leases for oil shale in

Colorado and Utah was approximately $9000 per

acre.* Future bids will undoubtedly be higher as

the technology to produce shale oil advances and the

price of petroleum continues to rise. Equitable es-

toppel should not be applied to allow respondents to

gain such an undeserved benefit at public expense.

We submit that the Secretary is not estopped in

this case to invalidate respondents’ oil shale claims.

84 Notwithstanding the amounts of these bids, it remains

the case even today “that oil has not yet been produced from

oil shale in paying quantities” (Pet. App. 108a n.54.)

62

CONCLUSION

The judgment of the court of appeals should be

reversed.

Respectfully submitted.

WADE H. MCCREE, JR.

Solicitor General

JAMES W. MOORMAN

Assistant Attorney General

LouIs F. CLAIBORNE

Deputy Solicitor General

MARK I. LEVY

Assistant to the Solicitor General

DIRK D. SNEL

ROBERT L. KLARQUIST

Attorneys

NOVEMBER 1979

vw ues. GOVERNMENT PRINTING OFFICE; 1979 305049 119