Amicus Curiae Brief — Asarco Inc. v. Kadish

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Na. 87-1661

n the Supreme Court of the Hinited

OCTOBER TERM, 1988

ASARCO INCORPORATED, ET AL., PETITIONERS

Vv.

FRANK AND LORAIN KADISH, ET AL.

ON WRIT OF CERTIORARI TO THE

ARIZONA SUPREME COURT

BRIEF FOR THE UNITED STATES

AS AMICUS CURIAE SUPPORTING RESPONDENTS

CHARLES FRIED

Solicitor General

ROGER J. MARZULLA

Assistant Attorney General

LAWRENCE G. WALLACE

Deputy Solicitor General

CHRISTOPHER J. WRIGHT

Assistant to the Solicitor General

ROBERT L. KLARQUIST

J. CAROL WILLIAMS

Altorneys

Department of Justice

Washington, D.C. 20530

(202) 633-2217

QU"STION PRESENTED

Whether Section 28 of the New Mexico-Arizona Enabl-

ing Act (Act of June 20, 1910, ch. 310, 36 Stat. 557) pro-

hibits the leasing of mineral lands held in trust for the

benefit of the state’s public schools at less than the ap-

praised true value of the lease.

(I)

TABLE OF CONTENTS

Interest of the United States ........... cc cece ccc cccccees

ee ek cee nesennceenns

Argument:

This Court lacks jurisdiction because there has been no

“final judgment or decree” as required by 28 U.S.C.

Il. Because the plaintiffs lack Article III standing, this Court

Nee Ue ccc cen cceevcesecccccess

A. The plaintiffs lack standing because they have

alleged no personal injury likely to be redressed by

the relief they have requested ..................

B. This Court lacks jurisdiction if the plaintiffs do not

have standing under Article II] .................

Ill. Arizona’s school trust lands may not be leased for less

than their appraised value .......................4..

A. Section 28 plainly provides that the school trust

lands “shall be appraised at their true value” and

prohibits leases “for a consideration less than the

value sO ascertained” ........... cece cece cccees

B. The history of the Enabling Act confirms that

mineral lands are subject to the requirement that

they be appraised prior to being leased and leased at

no less than their appraised value ...............

EEE ELE SLEEP

TABLE OF AUTHORITIES

Cases:

Alamo Land & Cattle Co. v. Arizona, 424 U.S. 295

ees ow ccc ec ccccoevicote 7,

Allen v. Wright, 468 U.S. 737 (1984) ..........6.0.04..

15, 16,

Barnes v. Kline, 759 F.2d 21 (D.C. Cir. 1984), vacated as

Cox Broadcasting Corp. v. Cohn, 420 U.S. 469 (1975) ...

(III)

10, 25

9, 14,

17, 19

9, Il,

12, 13

Cases — Continued: Page

Deer Valley Unified School District No. 97 v. Superior

Court, 760 P.2d 537 (Ariz. 1988) .... 26... 65 eee eee 3, 13, 24

Doremus v. Board of Education, 342 U.S. 429(1952).... 1, 9,

15, 16, 18, 19, 20

Duquesne Light Co. v. Barasch, No. 87-1160 (Jan. 11,

POTD cnc ccccscccdcdeccdccccecccccetaccseccccece 12

Everson v. Board of Education, 330 U.S. 1 (1947) ....... 17

Flynt v. Ohio, 451 U.S. 619 (1981) .....- 6 eee eee eee 8, 11

Frothingham v. Mellon, 262 U.S. 447 PD ocecccceusse 15

Gladstone, Realtors v. Village of Bellwood, 441 U.S. 91

CIDTDD occ cccccccccccccccccccccccccccccecescoces 18

Lassen v. Arizona Highway Department, 385 U.S. 458

CIGBT) cc cccccccccccccccccccccccccccccscecerees 2, 5, 22

Minnick v. California Department of Corrections, 452

U.S. IOS CIGBE) 0 cc ccccccccccccccccscccccsccccces 8-9, 14

Murphy v. State, 65 Ariz. 338, 181 P.2d 336 (1947) ...... 3, 5

Neel v. Barker, 204 P.2d 205 (N.M. 1922) ........---+-: 25, 28

Oklahoma Education Ass’n v. Nigh, 642 P.2d 230

(Okla. 1971) ........ cece cece eee cence eee eteeeees 6

Papasan v. Allain, 478 U.S. 265 (1986) ....-..-----+++: 2

Phillips Petroleum Co. v. Shutts, 472 U.S. 797 (1985) .... 18

Radio Station WOW, Inc. v. Johnson, 326 U.S. 120 ~

CIDODD onc cccccccccccccscccccccccvcccesccosersess 11, 12

Revere v. Massachusetts General Hosp., 463 U.S. 239

CIO gowns ccccccccoccsucscesersccsseancesessses 18

Schlesinger v. Reservists Committee to Stop the War, 418

U.S. 208 (1974) ....-ccccccccccccccccccccccccccces 15

Secretary of State of Maryland v. J. H. Munson Co., 467

U.S. 947 (1984) 0... cece ccc cece cece ccc reccccvccces 18

Simon v. Eastern Kentucky Welfare Rights Organization,

426 U.S. 26 (1976) .....-. cece cc ccc cece creccccvees 17

Smith v. Graham County Community College, 123 Ariz.

431, 600 P.2d 44 (Ariz. App. 1979) ........-.--0055- 15

State Land Depiment v. Tucson Rock & Sand Co., 12

Ariz. App. 193, 469 P.2d 85 (1970), vacated, 107 Ariz.

74, 481 P.2d 867 (1971) .. 0... eee eee eee eee eee 6

United States v. Richardson, 418 U.S. 166 (1974) ....... 15

United States v. Sweet, 245 U.S. 563 (1918) ..........-. 3

Valley Forge Christian College v. Americans United for

Separation of Church & State, Inc., 454 U.S. 464

GED bon wcesncescesiasdesvsdascccegeesetns 9, 14, 15, 18

Cases — Continued: Page

Wyoming v. United States, 255 U.S. 489 SE 3, 25, 26

Constitutions and statutes:

U.S. Const.:

RE ea eee ae ees Rees 1,9, 14

15, 16, 18, 19, 20

Amend. I (Establishment Clause) ................. 17

Ariz. Const.:

IO ake eS et Pr NT She lon 2, 10, 23-24, 25, 29

hE edie onddak kviidau@edel Gddne Cosco 3

i aviied bard sberdeteedy due en oe 3, 24

SESE RAN aes ee em = aE OR em a AA See 24

Nr SE Os aR ae eae Pe ae ee 3, 29

Act of June 20, 1910, ch. 310, 36 Stat. 557 (New Mexico-

Arizona Enabling Act):

Pe SS eee 2

§ 28, 36 Stat. $74-575.....................,

§ 28 (para. 3), 36Stat. $74... SG

21, 22, 23, 25, 29

§ 28 (para. 4), 36 Stat.574................... 2, 4, 9, 10

11, 21-22, 24, 25, 2

§ 28 (para. 8), 36 Stat. 575 ........................ :

FP 8 a 8, 12, 13

Act of Jan. 25, 1927, ch. 57, 44 Stat. 1026 (Jones A 25,

’ »ch. 5/7, , a) ..3, @&.

fee 4 se , >

§ 1(b), 44 Stat. 1026-1027....................... 3,25

Act of June 5, 1936, ch. 517, 49 Stat. 1477.............. 3,4

Act of June 2, 1951, ch. 120, 65 Stat. 51.......... 4

RRS eat ae iia 21

65 Stat. 52 pid batt cece oee Rte ee eg ae +. 4, 6,7

Ariz. Rev. Stat. Ann. § 27-234(B) (1976 & Supp. 1988)... 4,5

ck a De 10

ERS Sno Ra ee ee: oe 8, 10

11, 12, 13, 14

ES NR LO EA EEE Te 11

se F F ) Ff | SS eee 7

Miscellaneous:

69 Cong. Rec. 2095 (1928) ......- 6. eee rece eee neers

H.R. Rep. 2615, 74th Cong., 2d Sess. (1936) ......-----

S. Rep. 603, 69th Cong.,

Ist Sess. (1926) .......----+55-

S. Rep. 1939, 74th Cong., 2d Sess. er

L. Tribe, American Constitutional Law (2d ed. 1988) ....

13 C. Wright, A. Miller & E. Cooper, Federal Practice

and Procedure (1984)

In the Supreme Court of the Gnited States

OCTOBER TERM, 1988

No. 87-1661

ASARCO INCORPORATED, ET AL., PETITIONERS

FRANK AND LORAIN KADISH, ET AL.

ON WRIT OF CERTIORARI TO THE

ARIZONA SUPREME COURT

BRIEF FOR THE UNITED STATES

AS AMICUS CURIAE SUPPORTIN’; RESPONDENTS

INTEREST OF THE UNITED STATES

The question presented is whether Congress, by Section 28 of

the New Mexico-Arizona Enabling Act, Act of June 20, 1910,

ch. 310, 36 Stat. 557, prohibited the leasing of the mineral lands

it granted Arizona, which are held in trust for the benefit of the

state’s public schools, at less than appraised value. Section 28

expressly provides that the Attorney General is charged with en-

forcing the Act. Accordingly, the United States has a strong in-

terest in the resolution of the question presented.

In addition, in the submission we made at the Court’s inyita-

tion prior to the granting of the petition, we noted that, in our

view, the plaintiffs do not satisfy the standing requirements of

Article III. Under Doremus v. Board of Education, 342 U.S.

429, 434 (1952), this Court therefore lacks jurisdiction even

though the plaintiffs have standing under state law. The United

States also has an interest in the resolution of these recurring

questions of Article III jurisprudence.

(1)

STATEMENT

| he New Mexico-Arizona Enabling Act (Act of June

= en, - 310, 36 Stat. 557), Congress granted Arizona

tain numbered sections of every township within the —. :

the support of public schools. Enabling Act § 24, “ tat.

§72-573. Known mineral lands were specifically exclud —

the grant, but Arizona was authorized to select other oy “

equal acreage in lieu of those specified sections nes ‘

mineral in character (ibid.). By the Act, Arizona receiv —

than eight million acres for the support of its pong :

Lassen v. Arizona Highway Department, 385 U.S. 458, n.

. App. 4a.

et a Arizona would use the granted lands mare e

Congress provided that the lands were to be held in trust, a

set forth explicit terms of the trust in the Enabling Act. Papasa

v. Allain, 478 U.S. 265, 270 (1986). In Paragraph 3 of em

28 of the Act, Congress provided that the lands may not —

or leased except to the highest bidder at a public auction og

ing notice by advertisement in two newspapers once a wee ~

ten weeks. 36 Stat. 574. That paragraph originally provided t “

only leases for a term of five years or less were exempt from t 1 ~

advertising requirement. Paragraph 4 further provided ’ lg

provides that, before any of the land may be sold or i

must be appraised, and the sale or lease “shall [not] ” eo or

a consideration less than the value so ascertained. 36 Stat.

574. Congress directed in Paragraph 8 of Section 28 ae : oa

manent segregated fund must be established for all pro.eeds =

rents derived from the land, and that only the intere.t from the

fund, and not the principal, is to be made available for the sup-

port of the schools.” Pet. App. 52a; see 36 Stat. 575.

| Paragraph 4 of Section 28 provides, in full: “All lands, eneare —

and other products of land, before being offered, shall be appr a “sa

true value, and no sale or other disposal thereof shall be made for “ oe >

tion less than the value so ascertained, nor in any case less thant Swen on

price hereinafter fixed, nor upon credit unless accompanied by amp o a

and the legal title shall not be deemed to have passed until the conside

shall have been paid.” | | 7

2 Arizona has adopted and extended the conditions imposed in the a . “

Act. Article 10 of its Constitution is practically a rescript of Section 28 of the

As noted, the original 1910 grant did not include any known

mineral lands. However, under United States v. Sweet, 245 U.S.

563, 572-573 (1918), and Wyoming v. United States, 255 U.S.

489, 500-501 (1921), unknown mineral lands—i.e., lands con-

taining minerals that were not known to contain minerals at the

time of the grant — were conveyed to the State. The distinction

that this Court drew between known mineral lands and

unknown minerai !ands led to numerous land title disputes in

many of the western States to which Congress had granted lands

to be held in trust for the benefit of public schools. In order to

settle such disputes, Congress in 1927 passed the Jones Act (Act

of Jan. 25, 1927, ch. 57, 44 Stat. 1026), which extended the

Original grants to cover mineral lands as well. Congress pro-

vided, however, that any disposition of the lands must contain a

reservation of the minerals to the State. § 1(b), 44 Stat.

1026-1027). The Act also empowered each State to lease the

mineral lands “as the State legislature may direct,” and provided

that any proceeds, rents, or royalties from these lands are “to be

utilized for the support or in the aid of the common or public

schools” (ibid.).

Section 28 of the Enabling Act has been amended subsequent

to the enactment of the Jones Act to provide specific mineral

leasing rules applicable to Arizona’s school trust lands. In 1936,

Congress struck the clause of Section 28 that had excluded

leases for a term of five years or less from the Act’s advertising

requirements. Act of June 5, 1936, ch. 517, 49 Stat. 1477. In its

place, Congress distinguished between leasing for grazing and

agricultural purposes and leasing for mineral purposes. It

Enabling Act. See Deer Valley Unified School District No. 97 v. Superior

Court, 760 P.2d 537 (Ariz. 1988). Section 3 of Article 10 incorporates the

Enabling Act’s bidding and advertising requirements for sales and leases, and

Section 4 incorporates the requirement that “{aJll lands, lease-holds, timber,

and other products of land, before being offered, shall be appraised at their

true value, and no sale or other disposal thereof shall be made for a considera-

tion less than the value so ascertained * * *.” By Sections 1 and 9 of Article 10

of the Arizona Constitution, the restrictive provisions of the Enabling Act are

extended to cover “all lands otherwise Acquired by the State.” Thus, Arizona

has decided to apply the restrictions of the Enabling Act to all the land it ac-

quires for the school trust. See Murphy v. State, 65 Ariz. 338, 181 P.2d 336

(Ariz. 1947). —

authorized leases for grazing and agricultural purposes for ve

years and leases for mineral purposes for 20 years, and ~— .

that the leasing was to be conducted “in a manner oe -—

legislature may direct” (49 Stat. 1477). The 1936 amen oer “a

not amend the language in Paragraph 4 of Section om -

Enabling Act requiring that “fajll lands, leaseholds, timber, vee

other products of land before being offered, shall be — -

at their true value, and no sale or other Capen Caevee s on

made for less than the value so ascertained ** * ” 36 Stat. i :

In 1951, the Enabling Act was again amended to esta S

special rules for mineral leases for the exploration, develop-

ment, and production of oil, gas, and other goatee =

of June 2, 1951, ch. 120, 65 Stat. 51. Congress provi oe

such leases could be for a term of 20 years or less. As un ert :

1936 amendment regulating other mineral leases, ogre

Section 28 provides that oil and gas leases may be made “in —"

manner as the Legislature of the State of Arizona may ayers

***” 65 Stat. 52. Unlike the provision relating to other

mineral leases, the provision relating to oil and gas "or ex-

plicitly exempts them from the advertisement, bidding, and ap-

praisal restrictions of the Enabling Act.* '

2. The Arizona statute governing mineral leasing on oe ;

land requires that every mineral lease “provide for er

the state by the lessee of a royalty of five per cent of t 7 ne

value of the minerals produced for the claim.” Ariz. Rev. -

Ann. § 27-234(B) (1976 & Supp. 1988). Net value is furt “

defined as gross value after processing minus certain eyes

as production costs, transportation costs, and taxes. /bid. Un

3 Section 28, as revised by the 1951 amendments, authorizes “the wees »

any of said lands, whether or not also leased for other purposes, - the a

ploration, development, and production of oil, gas, and other hy soma -

substances on, in, or under said lands for an initial term of twenty ye -

and as long thereafter as oil, gas, or other hydrocarbon substances} — -

procured therefrom in paying quantities, the leases to be made in any _ on

with or without advertisement, bidding, or appraisement, and under va

terms and provisions as the Legislature of the State of Arizona me age =

the terms and provisions to include a reservation of royalty to said State

less than 12'4% per centum of production * * *. 65 Stat. 52.

this scheme, the value of a claim is never individually deter-

mined and, therefore, there is no guarantee that the State will

receive, at the least, the value ascertained by an appraisal.

Rather, a flat royalty is applied in every case and, where deduc-

tible costs exceed gross value, no royalty at all is paid.

Several individual taxpayers who claim that their taxes sup-

port public education in Arizona and the Arizona Education

Association, which represents approximately 20,000 public

school teachers throughout the state, brought suit in state court

against the pertinent state officials and a mining company seek-

ing a declaration that Ariz. Rev. Stat. § 27.234(B) (1976 &

Supp. 1988) is void and related relief. On cross-motions for

summary judgment, the trial court found that Ariz. Rev. Stat.

Ann. § 27-234(B) does not violate the Enabling Act or the

Arizona Constitution. Pet. 37a-39a. |

3. The Supreme Court of Arizona reversed. Pet. App.

la-36a. It first noted the “sad experience” that led Congress to

enact the strict trust terms of the New Mexico-Arizona Enabling

Act. Pet. App. Sa-6a (quoting Murphy, 65 Ariz. at 351, 181

P.2d at 344). Of the 23 states that had previously been granted

lands, the “ ‘dissipation of the funds by one device or another,

sanctioned or permitted by the legislatures of the several States,

left a scandal in virtually every state’ ” by 1910 (id. at Sa).

Through the New Mexico-Arizona Enabling Act, Congress in-

tended “to severely circumscribe the power of state government

to deal with the assets of the common school trust” (id. at 6a).

The court noted (id. at 20a) that in Lassen, 385 U.S. at 463, 466,

this Court observed that “[t}he central problem which con-

fronted the [Enabling] Act’s draftsmen was * * * to devise con-

straints which would assure that the trust received in full fair

compensation for trust lands,” and they solved this problem by

* The originally named defendants were the Arizona State Land Depart-

ment, the State Land Commissioner, and Cyprus Pima Mining Company.

Magma Copper Company, Asarco, Inc., James Sullivan, Eisenhower Mining

Company, and Can-Am Corporation were permitted to intervene as defend- ~

ants. The trial court subsequently certified the case as a defendant class action,

the class consisting of all present and future mineral lessees of state land.

“unequivocally demand{ing] * * * that the trust receive the full

value of any lands transferred from it.” .

The court below rejected the mining companies’ « »ntention

that the Jones Act and the 1936 amendment of Section <8 of the

Enabling Act—which, like the Jones Act, authorized non-

hydrocarbon mineral leasing “in such manner as the Legislature

of the State of Arizona may prescribe”—free the Arizona

legislature, in making mineral leases, from the terms of the trust

established by the 1910 Enabling Act. That contention, the

court held, “is completely contrary to the objectives sought by

the restrictive wording of other portions of the Enabling Act”

(Pet. App. 14a). As did the courts in State Land Department v.

Tucson Rock & Sand Co., 12 Ariz. App. 193, 195, 469 P.2d 85,

87 (1970), vacated on other grounds, 107 Ariz. 74, 481 P.2d 867

(1971), and Oklahoma Education Association v. Nigh, 642 P.2d

230, 237 (Okla. 1982), the Arizona Supreme Court concluded

that that language “is not an unbridled grant of power that

would allow the legislature to avoid the trust restrictions and

duties imposed by the entirety of the Enabling Act,” but instead

grants authority to set lease terms not in conflict with the ex-

press terms of the Enabling Act (Pet. App. 15a).

The court further stated that the amendment of Section 28 of

the Enabling Act in 1951 reinforced its conclusion that the 1936

amendment of the Enabling Act did not give the legislature

authority to avoid the appraisal requirement. The 1951 amend-

ment added the provision stating that oil and gas leases (but not

other mineral leases) could be “made in any manner, with or

without advertisement, bidding, or appraisement, and under

such terms and provisions as the Legislature of the State of

Arizona may prescribe.” 65 Stat. 52. By that amendment, the

court stated, “Congress showed that when it intended to free the

state from the dispositional restrictions, it would do so explicit-

ly” (Pet. App. 19a). “Moreover,” the court added (id. at 20a),

“if Congress did not regard the dispositional restrictions of the

original Enabling Act as effective against mineral leases, why

did it bother to create specific exemptions in 1951 for oil, gas,

and other hydrocarbon leases?”5

The Arizona Supreme Court also noted that this Court’s deci-

sion in Alamo Land & Cattle Co. v. Arizona, 424 U.S. 295

(1976), supported its decision. In that case, the federal govern-

ment had condemned school trust lands, and a company that

had leased some of the condemned lands from Arizona sought

an award to compensate it for the fact that the rent it owed the

State was less than the fair rental value of the property. In

remanding the case for further determinations, the Court ques-

tioned the validity of the company’s claim, even though Section

28 of the Enabling Act provides that grazing lands, like mineral

lands, may be leased “in such manner as the Legislature of the

State of Arizona may prescribe.” 65 Stat. 52. The Court relied

on the fact that, notwithstanding that provision, Section 28 “has

a protective provision against the initial setting of lease rentals

at less than fair rental value” that “provides that a leasehold

before being offered, shall be appraised at ‘true value’ ” (424

U.S. at 305, 306).* The decision in Alamo, the Arizona Supreme

Court stated, “seem{s] fully dispositive of the issue” presented in

this case (Pet. App. 22a).

* The Arizona Supreme Court also found support for its construction of

Section 28 in Joint Resolution No. 7 (S.J. Res. 38, ch. 28, 45 Stat. 58), a 1928

congressional resolution relating to New Mexico. The resolution stated that

New Mexico could amend its constitution to provide that mineral leases on

school lands “may be made under such provisions relating to the necessity or

requirement for or the mode and manner of appraisement, advertisement, and

competitive bidding, and containing such terms and provisions, as may be pro-

vided by act of the legislature.” If Congress had generally intended through the

Jones Act to authorize the state legislatures to avoid the appraisal, advertise-

ment, and competitive bidding requirements, then, the court concluded, “it

would have used explicit language to accomplish that result, just as it did for

New Mexico in Joint Resolution No. 7” (Pet. App. 17a).

* The Court in Alamo Land & Cattle Co. further explained that a difference

between the “rental specified in the lease and the fair rental value” could arise

in one of two ways (424 U.S. at 304). First, it could be that “the lease rentals

were set initially at less than fair rental value” (ibid.), in which case the lease

would be void under Section 28 of the Enabling Act. Second, the lease might

Having concluded that “the Enabling Act and its rescript in

art. 10 of the Arizona Constitution * * * forbid the state from

making nonhydrocarbon mineral leases without appraisal or for

less than their true value” (Pet. App. 24a), the court then con-

sidered the validity of the state’s mining statute. Because the

statute provides that the royalty due is five percent of the net

value of the minerals produced, and the deductible costs used to

calculate net value may exceed the gross value of the minerals,

the court concluded that “under § 27-234(B) it is possible for a

lessee to extract minerals from school trust lands and pay no

royalty whatsoever” (id. at 26a). After adding that “we have no

way of knowing from this record whether such circumstances

have existed” (ibid.), the court remanded with instructions that

the trial court enter a judgment declaring the statute unconstitu-

tional and take further evidence to determine “what further

relief is appropriate” (id. at 29a).

SUMMARY OF ARGUMENT

1. This Court lacks jurisdiction because 28 U.S.C. 1257

authorizes review only of “[flinal judgments or decrees” of state

courts, and this case is in an interlocutory posture. On remand,

the trial court. will first need to determine whether the State has

received “true value,” or any value, for mineral leases on the

school trust lands. It will then have to decide what “substantial

conformity” in Paragraph 9 of Section 28 of the Enabling Act

means, an issue of federal law, because that Paragraph provides

that leases not made in substantia! conformity with the re-

quirements of the Enabling Act are void. Finally, it will have to

apply its legal determination on that issue to the facts that it

finds in order to determine whether any leases are void. In that

situation, where important federal legal issues and key factual

questions must be addressed on remand, this Court lacks

jurisdiction. Flynt v. Ohio, 451 U.S. 619, 620 (1981); Minnick

initially have been set at the fair rental value, but that value might have in-

creased during the term of the lease (id. at 305), in which case the company

might be entitled to an award to compensate it for the loss of the lease. The

Court remanded with instructions that the lower courts determine how the dif-

ference between the rental specified in the lease and the fair rental value arose

and enter judgment accordingly (id. at 311).

: 9

penn pac op ni of Corrections, 452 U.S. 105, 127

; see Cox Broadcasti

peg a Bn casting Corp. v. Cohn, 420 U.S. 469,

2. The plaintiffs lack standing under Article III to bri i

challenging Arizona’s mineral leasing statute. The por oe

plaintiffs claim standing merely as taxpayers, and this Court has

repeatedly rejected claims that a person may bring suit under

Article III based on his status as a citizen or taxpayer. Rather, a

plaintiff “must allege personal injury fairly traceable to the

defendant’s allegedly unlawful conduct and likely to be re-

dressed by the requested relief.” Allen v. Wright, 468 U.S. 737

751 (1984); Valley Forge Christian College v. Americans United

for Separation of Church & State, Inc., 454 U.S. 464, 472

(1982). The individual plaintiffs have not alleged such injury;

their claim that their tax rates will be lowered by the relief they

request is, as Asarco itself argued in the trial court, “wholly

speculative.” Asarco’s Reply to Pitf. Response to Asarco’s First

Mot. to Dismiss, Aug. 13, 1981, Memo. at 9. The Arizona

Education Association likewise has failed to show that its

members are likely to benefit from the relief requested.

It follows for Article III purposes that the decision of the

Arizona Supreme Court is, in effect, an advisory opinion. In

Doremus v. Board of Education, 342 U.S. 429, 434 (1952), this

Court held that while a state court may “render an opinion on a

federal constitutional question even under such circumstances

that it can be regarded only as advisory, * * * because our own

jurisdiction is cast in terms of ‘case or controversy,’ we cannot

accept as the basis for review, nor as the basis for conclusive

disposition of an issue of federal law without review, any pro-

cedure which does not constitute such.” As that holding makes

rage this Court lacks power to review a decision, such as

plese mg below, where the plaintiffs lack standing under

3. If this Court concludes that it has jurisdiction, it should

affirm the decision below. Paragraph 4 of Section 28 of the

Enabling Act provides that the school trust lands must be ap-

praised before being leased, and further provides that the school

trust must receive, at the least, the appraised value for any lease.

Paragraph 3 of Section 28 excepts oil and gas a a

other mineral leases, from the appraisal requirement. —

this Court held in Alamo Land & Cattle Co., pence - p

the Enabling Act plainly requires that, “before being 0 — .

school trust land other than that na for oil and gas produc-

ion “ appraised at ‘true value.’ ” |

— caine argument that the unknown mineral

lands that passed to Arizona in 1910 were not covered by 7

praisal requirement, Paragraph 4 of Section 28 express y

jects all leaseholds of lands granted by the Enabling Act to : s

restrictions. Nor is there merit to petitioners’ contention oa os

known mineral lands that passed under the Jones Act ~ a

passed free of the appraised requirement. Nothing in that Ac

explicitly so provides, and, since the appraisal pany seme =

“{uJndoubtedly the most important restriction (Pet. —_. >

there is no basis for concluding that Congress intend 4 :

away with that restriction in the absence of clear evidence t r: z

so intended. Moreover, the 1951 amendment to Section 28,

which freed oil and gas leases, but not other mineral leases,

from the appraisal requirement, shows that Congress did —

tend to do away with that requirement with respect to pe “

tioners’ leases. Furthermore, petitioners’ contention a

mineral lands are not subject to any restrictions is comp ete y

undercut by the terms of Article 10 of the Arizo na eared

which specifically incorporates the restrictions in Section o

the Enabling Act and extends them to all the land Arizona ac-

quires.

ARGUMENT

ION BECAUSE

I. THIS COURT LACKS JURISDICT

THERE HAS BEEN NO “FINAL JUDGMENT OR

DECREE” AS REQUIRED BY 28 U.S.C. 1257

28 U.S.C. 1254 allows interlocutory review of deci-

Pea 2 oo courts, 28 U.S.C. 1257 provides that this Court

may review only “{flinal judgments or decrees of state —

“In general, the final-judgment rule has been interpret a

preclude reviewability . . . where anything further remains to

determined by a State court, no matter how dissociated from

the only federal issue that has been finally adjudicated by the

highest court of the State.’ ” Flynt v. Ohio, 451 U.S. 619, 620

(1981), quoting Radio Station WOW, Inc. v. Johnson, 326 U.S.

120, 124 (1945). There is much to be determined on remand

here. Section 28 provides that leases “not made in substantial

conformity with the provisions of this Act shall be null and

void” (emphasis added), and the state courts here have not yet

decided what criteria will be used to determine whether a lease is

in “substantial conformity” with the terms of the Act. In addi-

tion, the court below stated that it had “no way of knowing

from this record” whether mineral lessees had paid “true value”

(or any amount), as required by Paragraph 4 of Section 28, and

ordered further factfinding. Thus, it is not clear whether any

leases will be declared void. Accordingly, this Court lacks

jurisdiction at this time to review the Arizona Supreme Court’s

decision under 28 U.S.C. 1257(3), the basis of jurisdiction on

which petitioners rely.

To be sure, there are “four categories of * * * cases in which

the Court has treated the decision on the federal issue as a final

judgment for the purposes of 28 U.S.C. § 1257 and has taken

jurisdiction without awaiting the completion of the additional

proceedings anticipated in the lower state courts.” Cox Broad-

casting Corp. v. Cohn, 420 U.S. 469, 477 (1975). By and large,

those cases involved situations where the “additional pro-

ceedings would not require the decision of other federal ques-

tions that might also require review by the Court” (ibid.). This

case is not one of those. The key legal decision to be made on re-

mand, what “substantial conformity” in Section 28 of the

Enabling Act means, is plainly a question of federal law.

Moreover, it is a question that may be crucial to the ultimate

resolution of this lawsuit, since the courts below may conclude

that any lease for which the State has received or is likely to

receive true value will be held to be valid despite the absence of

an appraisal. Accordingly, review at this time would be

premature.

More detailed consideration of the four exceptions listed in

Cox to Section 1257’s rule that only final judgments of state

courts are reviewable confirms that review is not proper. The

first category includes case where “the outcome of further pro-

ceedings [is] preordained” (420 U.S. at 479). That is obviously

not the case here. While Paragraph 9 of Section 28 provides that

leases “not made in substantial conformity with the provisions

of this Act shall be null and void,” it is not yet clear, as we have

stated, whether petitioners’ leases substantially conform to the

requirements of the Enabling Act. Only if petitioners were will-

ing to concede that their leases are null and void would the out-

come on remand be preordained and review be proper now.’

The second exception to Section 1257’s finality requirement

involves cases where “ ‘the federal questions that could come

here have been adjudicated by the State court,’ ” and the state _

court issues that remain to be decided are essentially ministerial.

Cox, 420 U.S. at 480, quoting Radio Station WOW, 326 U.S. at

127. This exception is plainly inapplicable here since, as noted,

important federal issues remain to be decided on remand. The

third exception, cases where “later review of the federal issue

cannot be had, whatever the ultimate outcome of the case”

(Cox, 420 U.S. at 481), is likewise plainly inapplicable. If peti-

tioner’s leases are declared void on remand, the federal question

they seek to resolve now would not be moot and no disability

7? By contrast, in Duquesne Light Co. v. Barasch, No. 87-1160 (Jan. 11,

1989), the Pennsylvania Supreme Court, reversing a decision of the state’s

public utilities commission, decided that a state statute prohibited a utility

from recovering the costs of a nuclear power plant that never went into serv-

ice, rejected the utility’s argument that the state law thus interpreted con-

stituted a taking of property without just compensation under the federal

Constitution, and remanded for the issuance of a rate order giving effect to its

conclusion (slip op. 5). This Court held that the Pennsylvania Supreme

Court’s decision, while not final because of the remand for a corrected rate

order deleting the allowance of recovery for the costs expended in building the

canceled nuclear power plant, fell into the first exception listed in Cox. The

Court explained that the “Pennsylvania Supreme Court has finally adjudicated

the constitutionality of [the state statute] in the context of otherwise com-

pleted rate proceedings and so has left ‘the outcome of further proceedings

preordained.’ ” Slip op. 6 (quoting Cox, 420 U.S. at 479). Here, however, the

answer to the question whether petitioners’ leases are valid, the ultimate issue

in this case, is not preordained.

that does not presently exist (see pages 14-20, infra) would bar

them from seeking review.

The final exception consists of cases where “the party seeking

review here might prevail on the merits on nonfederal grounds,

thus rendering unnecessary review of the federal issue by this

Court, * * * reversal of the state court on the federal issue

would be preclusive of any further litigation on the relevant

cause of action, * * * [and] a refusal immediately to review the

State-court decision might seriously erode federal policy.” Cox,

420 U.S. at 482-483. While the court below could, following re-

mand, amend its decision so that it is based entirely (rather than

alternatively) on state law grounds, which would preclude

review by this Court, this final exception to Section 1257 is also

inapplicable here. First, petitioners, “the party seeking review

here,” cannot moot the federai issue by prevailing on state

grounds. While the restrictions on disposal of the school trust

lands in the Arizona Constitution may be more or less stringent

than the restrictions in the Enabling Act, if they are /ess

stringent Arizona (and petitioners) must nevertheless abide by

the federal restrictions as well. Second, reversal of the decision

below by this Court would not “preclud{e] * * * further litiga-

tion” because the requirements of Article 10 of the Arizona

Constitution may well be more restrictive than the requirements

of the Enabling Act; so that question would remain and the

litigation would continue. Cf. Deer Valley Unified School

District No. 97 v. Superior Court, 760 P.2d 537, 541 (Ariz.

1988), where the Arizona Supreme Court declined to interpret

language in the state Constitution as this Court had interpreted

identical language in the Enav!ing Act because it concluded that

this Court’s decision was not sufficiently protective of the

school trust fund. And third, there is no basis for a contention

that federal policy would be “seriously erode[d]” if this Court

does not review the decision below now.

Since no exception to the plain language of Section 1257 ap-

plies here, this Court lacks jurisdiction. Moreover, this case

presents a situation where a difficult question of federal law (the

meaning of “substantial conformity” in Paragraph 9 of Section

28) remains to be decided on remand and there is no good

reason not to wait for a final judgment. To the contrary, there

are important reasons to await a final judgment because, along

with the legal issue that will need to be addressed on remand,

important factual findings will be made as well. At this stage, as

the court below stated (Pet. App. 26a), the record discloses very

little about the value that Arizona has received in exchange for

mineral leases on the school trust lands, and that information,

which is to be supplied on remand, will inform any subsequent

judgment on the importance and merits of the legal issues

presented. Cf. Minnick v. California Department of Correc-

tions, 452 U.S. 105, 127 (1981) (“because of significant am-

biguities in the record concerning both the extent to which race

or sex has been used as a factor in making promotions and the

justifications for such use, we conclude that we should sot ad-

dress the constitutional issues until the proceedings in the trial

court are finally concluded”). Here, moreover, resolution of the

issues remaining to be determined on remand may obviate any

need for this Court to address federal constitutional questions in

this case (see Point II, infra). Thus, the normal policy disfavor-

ing unnecessary decision of constitutional questions further sup-

ports application of Section 1257’s plain terms here. |

il. BECAUSE THE PLAINTIFFS LACK ARTICLE Ill

STANDING, THIS COURT LACKS JURISDICTION

A. The Plaintiffs Lack Standing Because They Have

Alleged No Personal Injury Likely To Be Redressed By

The Relief They Have Requested

If this Court determines that the judgment below is final

under 28 U.S.C. 1257, it should nevertheless dismiss for lack of

jurisdiction because the plaintiffs lack Article III standing. The

“core component” of standing under Article III is that the plain-

tiff “must allege personal injury fairly traceable to the defend-

ant’s allegedly unlawful conduct and likely to be redressed by

the requested relief.” Allen v. Wright, 468 U.S. 737, 751 (1984);

Valley Forge Christian College v. Americans United Sor Separa-

tion of Church & State, Inc., 454 U.S. 464, 472 (1982). The

plaintiffs here, individual citizens of Arizona and an association

es ee eee

that represents Arizona teachers, falter under each aspect of

that test.

The individual plaintiffs — — —_ Poel

their own

sy oon cones I. Under Arizona law, tax-

injured. Complaint para. Il - Un i

pont ne standing to seek to enjoin pecuniary toss _

ublic fisc. Smith v. Graham County Community -- :

Dist » ae ; . ae = a ae + 0 federal

Although the courts of the sta : =

ituti izi ding on such a theory,

Constitution from recognizing stan > pen

i son does not satisfy

Court has consistently held that a per —

i i icle III based on nothing mor

standing requirement of Artic a.

i tus as a citizen or taxpayer who is in

preg government. rng ns ce and aie :

the War, 418 U.S. 208, 215- ;

pace Pt 418 U.S. 166, 171-175 (1974); Doremus v. a of

Education, 342 U.S. 429, 433-435 (1952); or “ -

Mellon, 262 U.S. 447 (1923); cf. Allen, 468 U.S. piven ~ ve

n.21; Valley Forge, 454 U.S. at 482, 489-490 n.20. c 0 3

the individual taxpayers lack standing to invoke the jurl

icle III court. . 2

a Arizona has liberal standing rules, =

Asarco, after intervening “ the me yr peng —_ too

dismiss the complaint on the ground: og dene

i i he individual plaintiffs,

standing.* With respect to t : "erg

o ” their claim that they ha

described as “wholly speculative” t petra tan “A

i g scheme

from higher taxes because the mineral ‘

rasa by Arizona statute conflicts with Section 28 of eee

ing Act. Asarco’s Reply to Pitf. Response to Asarco . ~~ a

ny“ Aug. 13, 1981, Memo. at 9. Asarco explain og

even if a different leasing scheme generated pr a =

islature, rather than lowering taxes, mi

art so the state’s general revenues that 1s currently =

a education and spend it on other programs. Even a

Arizona law, Asarco contended, the plaintiffs lack standing

tag! h

* The superior court denied the motion without opinion by Order of Marc

30, 1982.

“because a prediction of legislative behavior is pure conjecture”

(ibid.).

In arguing that the individual plaintiffs lack standing, Asarc

was right, at least under federal law. Although petitioner

argued in this Court in their supplemental brief in support o

their petition for a writ of certiorari, without acknowledging

their prior inconsistent position, that the individual plaintiffs’

brought “a good-faith pocketbook action” (Supp. Br. 3), any

claim that the plaintiffs have suffered economic injury as a

result of Arizona’s mineral leasing law is far too tenuous to sup-

port standing under Article III. As an initial matter, it is not

clear that a mineral leasing law requiring prior appraisal of the

value of the leasehold would generate additional funds. Amicus

Clinton Campbell Contractor, Inc., suggested in its brief filed

prior to the granting of the petition (at 9) that “mineral ex-

plorers will shun Arizona’s trust land” if appraisal is required,

preferring “land in other states or jurisdictions” where such a re-

quirement, which that amicus predicts will be very burdensome,

is not mandated. Whatever the merits of that prediction, it is

clear that, if the mining companies’ leases are declared void, as

the plaintiffs have requested (Pet. App. 38a), then state

revenues from mineral leases will decline in the short term. And

even if a revised leasing law would thereafter generate addi-

tional revenue, it is not clear that lower taxes would follow, as

Asarco argued in the superior court. Moreover, the likely effect

of any tax adjustment on each of the millions of individual tax-

Payers across the State would be very slight. That is all the more

reason to give dispositive weight to the fact that it is “wholly

speculative” whether tax rates will be affected at all.

Thus, while this Court has stated that taxpayers have Standing

where they seek “to restrain unconstitutional acts which result in

direct pecuniary injury” (Doremus, 342 U.S. at 434 (emphasis

added)), the plaintiffs have established no such injury here.

Rather, “[t}he links in the chain of causation between the

challenged Government conduct and the asserted injury are far

too weak for the chain as a whole to Sustain respondents’ stend-

ing” (Allen, 468 U.S. at 759). Petitioners have cited no case

comparable to this one where taxpayers have been found to

ding.

ae ma also correct, under federal law at least, when it

argued to the superior court that the Arizona sn a

pre Bil lacks standing.'® While the Association wo t -

“(t]he failure of the defendants to collect the true value on =

of State mineral lands * * * imposes an adverse onan

pact on the Association and its members” i nk aamel a

ich i hat the teachers 1

by which it presumably means t argentino 5 rao

ive more pay if it prevails in this suit, it is 1

rey would be “ ‘likely’ to follow from a favorable

sion.” Allen, 468 U.S. at 751 (quoting Simon v. ee se

tucky Welfare Rights Organization, 426 U.S. 26, 38, - ( _

There has been no showing that, if the State er we

iti leasing mineral lands fo

additional revenues as a result of van

i ‘ hers will receive pay raises y

an appraisal, the state’s teac - Aree

i i seem at least as y

otherwise would not receive. It wou oat

i iti ed from mineral leases,

that. if additional revenues are receiv phen

t on education wi p

then general funds currently spen ir <a

i iti funds from mineral leases

other uses. Even if additional ~

it i all clear that the benefi

to benefit the schools, it is not at

= in the form of increased teacher “ore |

“li in the chain of causation” (Allen, S.

a 7 revised mineral leasing statute and a pay raise for

* Petitioners primarily rely (Supp. Br. 3) on Everson v. _ - poe seed

330 U.S. 1 (1947), where the Court rejected a challenge to ve he fend coer

funds for the transportation of parochial school page= ate have cited are

whether the plaintiffs had standing. The other cases peti ‘: decision tn Valley

lishment Clause cases, and, prior to this Court's siento

- — ial hospitality [was] shown to standing to advance Esta ishm :

yond dan ” 13 C. Wright, A. Miller & E. Cooper, Federal Practice an

Procedure 654 (1984). ro ee

10 While Asarco previously agreed that the oe Pe fy en

adverse economic impact which is not remote and specu -_ yp ge

itf. Response to Asarco’s First Mot. to Dismiss, Aug. , 1981, nl

Pg titi now argue, without explaining or acknowledging their cha g

oper the Association has made “an acceptable allegation of direct

oO ’

injury” (Supp. Br. 4).

teachers are extremely weak.'' Accordingly, like the individual

plaintiffs, the Association lacks standing because it has failed to

allege personal injury fairly traceable to th

e pe e defendants’ conduct

that is likely to be redressed as a result of the lawsuit.

B. This Court Lacks Jurisdiction If The Plaintiffs Do Not

Have Standing Under Article III .

If the plaintiffs lack standing under Article Ill, then this

Court lacks jurisdiction to review the Arizona Supreme Court’s

judgment, even though the mining companies may well be in-

jured by the relief to be granted on remand. In Doremus this

Court held that while a state court may “render an opinion on a

federal constitutional question even under such circumstances

that it can be regarded only as advisory, * * * because our own

jurisdiction is cast in terms of case or controversy, we cannot ac-

cept as the basis for review, nor as the basis for conclusive

disposition of an issue of federal law without review any pro-

cedure which does not constitute such” (342 U.S. at 434) See

also Phillips Petroleum Co. v. Shutts, 472 U.S. 797, 804 (1985);

Secretary of State of Maryland v. J. H. Munson Co., 467 US.

947, 954 & n.4 (1984); Revere v. Massachusetts General

Hospital, 463 U.S. 239, 243 (1983). That holding is controlling

here if, as we have argued, the decision below constitutes. at this

juncture, an advisory opinion for Article III purposes. '2

'' Petitioners also note that, in addition to suggesting that ;

pensation would be increased if the plaintiffs are saan the et oon me

the Association alleges that “the ‘quality of education in Arizona’ has been

adversely affected by the state’s failure to require an appraisal before leasin

mineral rights (Supp. Br. 4 (quoting Compl. para. IV)). That general alle :

tion fails to show that the Association “ ‘personally has suffered some ne

or threatened injury as a result of the putatively illegal conduct of the defen-

dant.’” Valley Forge, 454 U.S. at 472 ( i

, ». quoting Gladstone,

of Bellwood, 441 U.S. 91, 99 (1979)). 8 Stone, Realtors v. Village

it has been suggested that Doremus could be read to mean that dismissal

of a petition for a writ of certiorari is appropriate only if a state supreme court

rejected the plaintiff's challenge in a proceeding in which the plaintiff did not

satisfy Article III's standing requirements, and that this Court properly could

vacate a state court decision that sustained the challenge in such a proceeding

ee ee Oe oo a oe

ene mt

The conclusion that this Court lacks jurisdiction if the plain-

tiffs lack standing under Article III is the only conclusion that

comports with the constitutional basis for the requirement that

plaintiffs must allege that they have suffered personal injury

fairly traceable to the defendant’s conduct that is likely to be

redressed by the lawsuit. Where the plaintiffs lack Article III

standing, this Court lacks authority to decide their claim, and

the Arizona Supreme Court cannot confer jurisdiction on this

Court simply by addressing a question of federal law. Peti-

tioners have not attempted to explain what gives this Court

jurisdiction over this case if the plaintiffs lack standing under

Article III. Rather, they argue that it would be more convenient

for them if this Court reviewed their challenge to the merits of

the Arizona Supreme Court’s decision now. Convenience,

however, does not confer power to resolve lawsuits where there

is no case or controversy, since “Article III of the Constitution

confines the federal courts to adjudicating actual ‘cases’ and

‘controversies’ ” (Allen, 468 U.S. at 750).'?

See Barnes v. Kline, 759 F.2d 21, 63 n.16 (D.C. Cir. 1984), vacated as moot,

479 U.S. 361 (1987) (Bork, J., dissenting), vacated as moot, 479 U.S. 361

(1987); L. Tribe, American Constitutional Law 114 n.20 (2d ed. 1988). We

disagree. Doremus appears to make clear that a federal court will not give

preclusive effect to the unreviewed state court decision in a future case, not

that this Court could vacate a state court decision on review in the same case

because of the absence of a case or controversy. The latter suggestion would

have been inconsistent with the Court’s explicit disclaimer (342 U.S. at 434) of

any suggestion that a state court is barred from rendering an advisory opinion

on a federal constitutional question where Article III standing is lacking.

Moreover, there would be an additional step from the proposition that this

Court could vacate a state court decision construing federal law where the

plaintiffs lacked Article III standing to the conclusion that this Court may

review the decision on the merits, despite the absence of a case or controversy.

The fact that the plaintiffs have obtained a judgment in their favor and are

now respondents does not, in our view, transform them into proper Article III

adversaries with a different stake in the underlying controversy.

'3 Although petitioners now state that “[bJoth sides believed that they were

asking the Arizona courts to resolve a genuine dispute, and those courts would

be surprised to learn that they had rendered a mere advisory opinion” (Supp.

Br. 4-5 (emphasis added)), Asarco told the superior court that, “[njo matter

how genuinely felt or loudly proclaimed, general dissatisfaction with

Moreover, the practical problems petitioners face are not as

difficult as they suggest. Petitioners first state that they would

have “an uphill battle” avoiding the collateral estoppel effect of

the decision below in a subsequent action they might bring in a

federal court challenging any relief that may be granted on re-

mand (Supp. Br. 5).'* But if, as we submit, the plaintiffs lack

Standing under Article III and the decision below therefore

amounts to no more than an advisory opinion that cannot pro-

vide the basis “for conclusive disposition of an issue of federal

law” (Doremus, 342 U.S. at 434), the lower federal courts clear-

ly would not be bound by it.

Petitioners also note that the fact that the decision below is,

for Article III purposes, an advisory opinion, “is small solace”

to them since “the whole issue may be concluded by conforming

legislative action” (Supp. Br. 6). That, however, is merely a

species of the classic argument for advisory opinions to inform

legislative action—an argument incompatible with Article III.

Indeed, petitioners’ situation would be entirely comparable if

the Arizona Attorney General had issued an advisory opinion

concluding that the state’s mineral leasing scheme violated Sec-

tion 28 of the Enabling Act. In that circumstance the legislature

might also amend the statute to cure the defect, but petitioners

could not suggest that this Court somehow had jurisdiction to

review an advisory opinion if a state attorney general, rather

than a state supreme court, had issued it.

legislative action, which has no direct adverse impact upon the Parties seeking

to invoke the judicial machinery, is no substitute for the jurisdictional pre-

requisite of standing to sue. * * * (Plaintiffs) may not seek what would

amount to an advisory opinion from the courts.” Asarco’s Reply to Pitf.

Response to Asarco’s First Mot. to Dismiss, Aug. 13, 1981, at 3 (emphasis

added).

'* If the superior court ultimately invalidates any lease, then the injured

mining company would have Standing to bring a declaratory judgment action

in federal court seeking an order that nothing in the Enabling Act required

that invalidation. Indeed, in light of the decision below, they may now have

Standing to bring such an action.

oes

: ne ee

MOO OOD on mann cle A ye hen

Oe Oe ae

ANDS MAY NOT BE

. ARIZONA’S SCHOOL TRUST L

. LEASED FOR LESS THAN THEIR APPRAISED

VALUE

A. Section 28 Plainly Provides That The School Trust

True Value” And

Lands “Shall Be Appraised At Their

Prohibits Leases “For A Consideration Less Than The

Value So Ascertained”

i jurisdiction to review peti-

is Court concludes that it has jurisdiction

aan then it should affirm the gee “ 7 “pegs

, luded, ion

Supreme Court. As that court concl ~be dppen

i i i f school trust lands

bling Act plainly requires that, i

ee “A mineral purposes other than the production of 7 and

gas, they must be leased at their true value as determined by an

ag ol 3 of Section 28 provides generally wr ——

" t to the highest an

lands may not be sold or ry" excep

i i f which public auction

idder at a public auction, * * * notice o | c

oa first a been duly given by nage gla =

; j ine

establishes certain detailed rules concern Sab

isi i ediately following the lengthy

advertising and the auction. Imm ia

ishi and auction rules,

sentence establishing the advertising Bh ms

i i lating to leasing, two 0

Paragraph 3 lists four provisos re ‘Penge eda

i The first of the two provisos g |

patie ee ayn 7 hing herein contained” prohibits

mineral leases states that “[njot ing Sag coe

i les governing leasing

te legislature from prescribing ru

se other than for perp stags Sneha

i i and other hy

ment, and production of oil, gas, . '

substances, for a term of twenty san ag» eee a

vides that “{njothing herein containe —~

i i drocarbon substances “1

tion of oil, gas, and other hyd sub ,

neh with or without pcm ta . =

provision

isement, and under such | terms an hago !

rps ov ton of the State of Arizona may prescribe ee yr

added). 65 Stat. 51-52. A separate paragraph, apes -

Section 28, states the requirement at ot rs mag bag oo

dln ore .

i that “fajll * * * leaseholds,

oa be ecahiel at their true value, and no sale or other

disposal thereof shall be made for a consideration less than the

value so ascertained.” 36 Stat. 574.

The natural reading of the language of Section 28 is that

mineral leases, other than for the production of oil and gas,

must be made at true value as determined by an appraisal.

Paragraph 4 provides generally that all leases must be made at

that value. Paragraph 3 provides an explicit exception to the ap-

praisal requirement for oil and gas leases, but does not provide

an exception for other mineral leases. Therefore, the conclusion

seems inescapable that leases for other mineral purposes must

be made at appraised value.

Moreover, this natural reading is strongly supported by the

statutory purposes. As this Court recognized in Lassen, 385

U.S. at 463, 466, “[t]he central problem which confronted the

Act’s draftsmen was * * * to devise constraints which would

assure that the trust received in full fair compensation for trust

lands,” and they solved this problem by “unequivocally de-

mand[ing] * * * that the trust receive the full value of any lands

[or leaseholds] transferred from it.” The Arizona Supreme

Court similarly stated, with respect to the restrictions estab-

lished by the Enabling Act, “[u]ndoubtedly the most important

restriction is the appraisal/true value requirement.” Pet. App.

23a. Thus, requiring that the school trust fund receive the ap-

praised value of any disposition of minerals on the school trust

lands gives effect to the key provision and central purpose of

Section 28.'5

Petitioners’ argument that no mineral lands must be ap-

praised before being leased (Pet. Br. 21) hinges on the phrase

'* Petitioners argue (Pet. Br. 31, 43), relying on a statement made in 1921

with respect to a bill that was not passed, that it is practically impossible to ap-

praise mineral lands. That is not so. While it can be difficult, mineral lands are

regularly appraised in connection with condemnation proceedings, as peti-

tioners acknowledge (Pet. Br. 36). Moreover, as petitioners also recognize

(Pet. Br. 7), Arizona law currently provides for the granting of exclusive pros-

pecting licenses that give a preference to the Prospector in obtaining a lease if

minerals are discovered. Requiring prospecting prior to leasing would make

appraisal easier, while a preference in favor of prospectors encourages ex-

ploration, and neither is inconsistent with the requirement that the State ob-

tain true value for mineral leases.

ee ee

“(njothing herein contained shall prevent,” which — =

four provisos listed in paragraph 3 of Section 28, and the stz

ment in three of the four provisos, including the —

relating to mineral leases, that the land may be esa

Legislature of the State of Arizona may prescribe. os —

contend that the language freed the legislature from - ae

restrictions in the Enabling Act. As the court below om u -

(Pet. App. 15a), however, that language is — r - —

ing the legislature “power to regulate the overall mann oo

making of the lease, and the general terms of the ee ~ 8

as there is substantial conformity to the restrictions 0 end

The Arizona Supreme Court’s construction properly — »

that the appraisal requirement was critical to the — ,

gress established, since it was the key restriction —_

avoid the “sad experience” of other states (Pet. App. 5a). oan

The language on which petitioners rely can also be nse tg

eliminate the advertising requirement but not the — -

quirement. As originally enacted, Paragraph 3 woh. _ be

provided, immediately following the sentence establis a g ne

advertising requirement, that “nothing herein ryere > 4

prevent said proposed State from leasing any of sai ani —

ferred to in this section for a term of five years or eer -

said advertisement herein required” (Pet. Br. ~3 soon 2

phrase “nothing herein contained,” as first draft d, oe =

no restriction other than the advertising ey py “ad

did not lift the appraisal requirement. '° There is no in icati

that Congress ever intended to expand its —-. ‘ato

While subsequent amendments to Paragraph 3 oO a

have made it less clear whether the phrase nothing ere i

tained” still refers omy to the advertising requirement = 4

lished by the sentence immediately preceding the ee! agi

a reasonable way to read it. Indeed, that is how the dra —

the Arizona Constitution have read it. The —e ' . —

Enabling Act restrictions contained in Article 10 0

\6 This straightforward reading is not contradicted by petitioners’ argument

(Pet. Br. 21) that “herein,” as used elsewhere in the Enabling Act, sometimes

refers to more than the paragraph in which the word is used.

Constitution deviates from the language of Section 28 of the

Enabling Act in that the words “without advertisement” are in-

serted at the end of the exceptions relating to leases other than

for oil and gas production.'’ Thus, the parallel provision of the

State Constitution appears to authorize the legislature to avoid

the advertising requirement only. It plainly does not authorize

the legislature to avoid the appraisal requirement, which is con-

tained in Section 4 of Article 10 of the State Constitution and is

not mentioned in the provision of the State Constitution giving

the legislature authority over the manner of leasing

nonhydrocarbon mineral lands.'*®

'’ Article 10, section 3 of the Arizona Constitution provides, in pertinent

part (emphasis added):

Nothing herein, or elsewhere in article X contained, shall prevent:

1. The leasing of any of the lands referred to in this article in such

manner as the Legislature may prescribe, for grazing, agricultural, com-

mercial and homesite purposes, for a term of ten years or less, without

advertisement.

2. The leasing of any of said lands, in such manner as the Legislature

may prescribe, whether or not also leased for grazing and agricultural

purposes, for mineral purposes, other than for the exploration, develop-

ment, and production of oil, gas and other hydrocarbon substances, for

a term of twenty years or less, without advertisement * * *.

'* Petitioners have not attempted to come to grips with the fact that Article

10 of the Arizona Constitution, while similar to Section 28 of the Enabling

Act, differs in certain respects, and, even in those respects in which it does not

differ, may be given a different construction by the Arizona courts. Since the

court below relied alternatively on the Arizona Constitution (“[w]e hold,

therefore, that A.R.S. § 27-234 violates art. 10 of the Arizona Constitution

and § 28 of the Enabling Act” (Pet. App. 27a)), that defect is fatal. At most,

this Court may remand this case to the Arizona Supreme Court with instruc-

tions that it may not base its holding on the Enabling Act. Given the different

language of the State Constitution, however, and the court’s decision below

and in Deer Valley Unified School District No. 97, 760 P.2d at $41, where the

court recently declined to follow a decision of this Court construing the Enabl-

ing Act “in interpreting the identical language in the Arizona Constitution”

because the court concluded that this Court's analysis was not sufficiently pro-

tective of the school trust fund, it seems clear that the result below will not

change. For that reason, this Court may wish to decline the question presented

if it determines that it has jurisdiction.

, in Alamo Land & Cattle Co. this Court read Section

eee an appraisal before lands are leased for purposes

other than oil and gas production. The Court held that the Act

requires that grazing leases, “before being offered, shall be ap-

praised at ‘true value’ ” (424 U.S. at 306). As it does with respect

to mineral leases other than for the production of oil and gas,

Section 28 provides that “[nJothing herein contained” prohibits

grazing leases of a certain term, and states that such leases me!

be made “under such terms and provisions as the Legislature o

the State of Arizona may prescribe.” Accordingly, this _—

has already concluded that the exception clause in Paragraph

of Section 28 does not free Arizona from the appraisal restric-

tion. There is no reason in this case to depart from that reading,

which follows from the plain language of the statute and gives

effect to its key provision.

B. The History Of The Enabling Act Confirms That

That

Mineral Lands Are Subject To The Requirement

They Be Appraised Prior To Being Leased And Leased

At No Less Than Their Appraised Value

Contrary to petitioners’ contentions, the history of the cl

abling Act aid related enactments, including the Jones =

1927 and Article 10 of the Arizona Constitution, confirms t :

the Enabling Act, both as enacted in 1910 and as reser su :

jects all of the school trust lands, except for lands used for ne

and gas production, to the requirement, set forth in paragrap :

of Section 28, that they be appraised prior to being leased an

leased “for a consideration [no] less than the value so ascertain-

ag PaO the New Mexico Saprune Court’s analysis in rire

v. Barker, 204 P. 205 (1922), petitioners argue (Pet. Br. 2 : )

that the unknown mineral lands that passed to Arizona under

this Court’s decision in Wyoming v. United States were never

subject to the restrictions in the Enabling Act. The trial 7 =

Neel reasoned, and the New Mexico Supreme Court agreed (

P. at 207), that Congress in 1910 did not intend to convey

mineral lands under the Enabling Act, so it . did not rg

mind a mineral lease’ ” in drafting the restrictions in Section 28,

ead

and those restrictions therefore do not appl to min

That argument is severely flawed. First, the cota camemaes

in its basic assumption that Congress did not have mineral lands

in mind when it granted the school trust lands in Arizona in

1910. The rationale underlying the Court’s decision in Wyomin

v. United States, which held that unknown mineral lands “te

under school trust grants, was that Congress, while intending to

require the States to trade known mineral lands in the numbered

sections granted them for other lands, did not intend that its

grant should be rendered nugatory by any future discoveries of

mineral” (255 U.S. at 499). Since Congress undoubtedly knew

that much western land not known to contain minerals at the

time of a grant would subsequently be discovered to contain

minerals, yet it intended to grant those unknown mineral lands

to the States, Congress contemplated grants of mineral lands

fs In any event, Congress in 1910 comprehensively subjected

{ajll lands, leaseholds, timber, and other products of land” to

the appraisal requirement. Accordingly, mineral leases are

plainly subject to the requirement, and that is so whether or not

Congress specifically had mineral leases in mind. For example

Congress did not have condominiums or shopping malls in mind

when it drafted the Enabling Act in 1910, but no one would sug-

gest that the school trust lands may be sold or leased to a a.

dominium builder or a shopping mall developer without an

appraisal. Indeed, since the broad language of Paragraph 4 sub-

jecting all leaseholds to its restrictions was designed to ensure

that the trust would receive “true value” upon disposition of the

granted land, there is no reason to believe that Congress in

tended to require advertising and an appraisal before every

small tract of non-mineral land, even desert land, is sold >

ees ine simultaneously allowing the disposal of the

rp th contained in the trust lands without any restric-

Nor are petitioners correct in contendin Pet. B

ne known mineral lands that Congress oem tt Ps

oo of the Jones Act in 1927 passed without restriction.

ile the Jones Act does not itself contain restrictions com-

Oe ee ee

Se rex Pedy

parable to those found in Section 28 of the Enabling Act, Sec-

tion 1(a) of the Jones Act expressly provides that the prior

grants are “extended” to cover known mineral lands and that the

Jones Act grant was “of the same effect” as the prior school

trust land grants.'® Providing that the grant was “of the same ef- .

fect” was clearly more efficient than attempting to list all of the

restrictions in the many prior acts granting school trust lands to

the western States.?°

Nor did the language of the Jones Act authorizing mineral

leasing in the manner that the legislatures of the various States

direct free Arizona from the appraisal requirement, for the

same reasons that the parallel lagguage added to the Enabling

Act in 1936 did not have that effect (see pages 22-25, supra).

Moreover, petitioners’ interpretation of the Jones Act would

mean that the Jones Act perpetuated the very problem it was in-

tended to solve. Since, in our view, the unknown mineral lands

undoubtedly passed to Arizona in 1910 subject to the terms of

the school trust, then, if the known mineral lands passed in 1927

outside the terms of the trust, it would be necessary to deter-

mine whether each parcel of school trust land containing

minerals was known to contain minerals in 1910 in order to

\% Petitioners complain (Pet. Br. 33-34) that Congress should have treated

the western States uniformly by placing the same restrictions on each State.

However, Congress’s overriding purpose in enacting the Jones Act was to set-

tle the costly litigation over whether lands were known to contain minerals at

the time of the prior grants to the States, not to revise its prior grants to treat

the States uniformly. See, e.g., S. Rep. 603, 69th Cong., Ist Sess. 1-2 (1926).

20 Petitioners argue (Pet. Br. 32-34) that by the “same effect” language Con-

gress meant no more than that the lands granted under the Jones Act would

pass and vest in the same manner as prior grants. That, however, is not what

the Jones Act says. Section 1(a) provides that “the grant of numbered mineral

sections under this Act shall be of the same effect as prior grants for the

numbered nonmineral sections, and titled to such numbered mineral sections

shall vest in the States at the time and in the manner and be subject to all the

rights of adverse parties recognized by existing law in the grants of numbered

nonmineral sections” (emphasis added). 44 Stat. 1026. The comments of

Senater Work upon which petitioners rely (Pet. Br. 33) plainly refer to the

portion of the sentence following the word, “and,” and shed no light on the

meaning of the phrase “of the same effect.”

determine whether the restrictions of the Enabling Act applied.

That is surely not the result Congress intended.

The 1928 amendment of the New Mexico Constitution also

supports the conclusion that the restrictions in Section 28 apply

to mineral lands in Arizona. Despite the New Mexico Supreme

Court’s ruling in Neel v. Barker that the Enabling Act’s restric-

tions did not apply to the unknown mineral lands in New Mex-

ico that passed to the state pursuant to the Enabling Act in

1910, and the passage of the Jones Act, which petitioners con-

tend passed the known mineral lands to the western States free

of any restrictions, the Gov-:.4or of New Mexico, concerned

that the restrictions in the Enabling Act applied to the mineral

lands granted New Mexico, petitioned Congress to pass a joint

resolution authorizing the State to amend its Constitution to ex-

empt mineral leases from the restrictions of the Enabling Act. A

New Mexico congressman advised Congress that the resolution

was needed so that “New Mexico will be relieved from some pro-

visions of its enabling act,” including the restriction at issue. 69

Cong. Rec. 2095 (1928) (statement of Rep. Morrow). Thus,

petitioners err in suggesting (Pet. Br. 24-25) that it was

understood that the Jones Act freed the mineral lands in the

western States of the restrictions in the various enabling acts.?!

?! Contrary to petitioner’s contentions (Pet. Br. 37-39), the 1936 amend-

ment to the Enabling Act, which authorized mineral leasing in the manner

prescribed by the Arizona legislature, does not support their argument. The

committee reports described that amendment as “remov([ing} certain restric-

tions contained in the Enabling Act.” S. Rep. 1939, 74th Cong., 2d Sess. 2

(1936); H.R. Rep. 2615, 74th Cong., 2d Sess. 2 (1936) (emphasis added). Ob-

viously, the restrictions could be removed only if they applied, contrary to

petitioners’ contentions. While it is not clear exactly what restrictions Congress

removed in 1936, the statements in the legislative history are congruent with

either of our interpretations (see pages 22-24, supra) of the language added by

the 1936 amendment. If the purpose of the amendment was to remove the

advertising requirements only, as the drafters of the conforming amendment

to the Arizona Constitution concluded, then those were the restrictions that

were removed. If, as the court below concluded (Pet. App. 15a), the purpose

was to allow leasing in “substantial conformity” with the requirements of Sec-

tion 28, though not all its details, then those were the restrictions that were

removed. There is no evidence at all that Congress intended to remove the ap-

praisal requirement.

vents, Article 10 of the Arizona Constitution provides

in ah 1 that both the lands transferred to the State a

to the Enabling Act “and all lands otherwise acquired by -

State, shall be by the State accepted and held in rage to b :

disposed of in whole or in part, only in manner as in t —

Enabling Act and in this Constitution provided (emp as

added). Section 9 of Article 10 of the Arizona Constiates

reiterates that “all lands otherwise acquired by the State td

may be sold or leased by the State in the manner, and on .

conditions, and with the limitations, prescribed by the ne

Enabling Act and this Constitution” (emphasis added). ye .

is clear beyond dispute that the unknown mineral lands a

passed to Arizona in 1910 and the known mineral conan “

passed in 1927 are subject to the restrictions applicable to

school trust lands, including the appraisal requirement, un _

the Enabling Act and the Arizona Constitution — y

remove the restrictions. Since, as we have shown, neither ; :

Enabling Act nor the Arizona Constitution has been eo

to repeal the appraisal requirement, except for lands u oe

and gas production, that requirement applies to all other sc

trust mineral lands.??

22 Moreover, as the court below concluded (Pet. App. 20a), the 1951

amendment to the Enabling Act confirms that the appraisal —— ap-

plies to mineral leases other than for oil and gas production. By lifting the ap-

i ion 28 referring to

i i t in the sentence in Paragraph 3 of Section

pt pte while making no mention of the appraisal requirement in

the preceding sentence relating to leasing for other ees oo

iously intended to continue to require an apprais;

ae antes are leased for the production of minerals.other than oil and

gas.

CONCLUSION

This Court should dismiss the petition for lack of jurisdic-

tion. If it does not, the judgment of the Arizona Supreme Court

should be affirmed.

Respectfully submitted.