Petition for Writ of Certiorari — Kinross Copper Corp. v. Oregon

Bi orriv:. OF THE CLERK

In the Supreme Court

of the United States

October Term, 2000

KINROSS COPPER CORPORATION, a foreign

corporation,

Petitioner,

Vv.

STATE OF OREGON,

Respondent.

ON PETITION FOR WRIT OF CERTIORARI

TO THE OREGON COURT OF APPEALS

PETITION FOR WRIT OF CERTIORARI

Phillip D. Chadsey*

Jerry R. Fish

Michael R. Campbell

David E. Van’t Hof

James N. Westwood

*Counsel of Record

STOEL RIVES tip

900 SW Fifth Avenue, Suite 2600

Portland, OR 97204-1268

(503) 294-9376

Counsel for Petitioner

September 14, 2000

i

QUESTIONS PRESENTED

1. When an unpatented mining right protected

by federal law is abrogated by a state regulation prohibiting

discharge of nonpolluting mine waters, does a taking occur

under the Fifth Amendment’s Takings Clause?

2. Is a state regulation that prohibits the

discharge of nonpolluting mine waters, and thus prevents an

unpatented mining claim on federal lands from being

developed, preempted by federal law?

a Does takings jurisprudence require a property

owner to show that it has a property interest in the very

thing the state seeks to regulate, rather than merely showing

that the effect of the regulation as applied to the petitioner

denies it all economic use of a federally recognized property

right?

4. Can a state court, under the guise of stating

that the holder of an unpatented mining claim never had the

right to appropriate water for the mine and, therefore, never

had the right to discharge it as a part of its property right,

thus avoid a “taking,” when at common law it was not a

nuisance for a miner to discharge nonpolluting mine waters

into streams?

li

PARTIES TO THE PROCEEDING

The caption contains the names of all parties to this

proceeding.

lll

CORPORATE DISCLOSURE STATEMENT

Petitioner Kinross Copper Corporation is Nevada

corporation and is a wholly owned subsidiary of Kinross

Gold USA, Inc., which is also a Nevada corporation.

Kinross Gold USA, Inc. is a wholly owned subsidiary of

Kinross Gold Corporation, which is an Ontario, Canada

corporation that is publicly held.

iV

TABLE OF CONTENTS

Page

QUESTIONS PRESENTED ... 0... 2c cece cence i

PARTIES TO THE PROCEEDING ............. il

CORPORATE DISCLOSURE STATEMENT ....... ill

TABLE GP COINTEINGS 6 sc oe 6 ewe 0 oe ie ee iv

TABLE OF APPENGMGCES «occ sete reece vi

TABLE OF AUTHORITIES ...... Tere ee ee oe Vii

PETITION FOR WRIT OF CERTIORARI .......... l

CRUG BAP ca ev ee ke eee ae teen 1

STATEMENT OF JURISDICTION .............. 2

CONSTITUTIONAL PROVISIONS INVOLVED ..... 3

STATUTORY AND ADMINISTRATIVE

PROVISIONS ENVOL VER? oc oss sie eee 4

STATEMENT OF Tite CASE 2. cos 6 ie on sass 5

A. Provedetss MUEY ..... 5 6 be A eee 5

B. ;:; 2c Perera eee Pe ere ea 9

REASONS FOR GRANTING THE PETITION ...... 11

I. This Case Involves Four Important

Constitutional Questions That Should

Be Resolved by This Court.......... 12

Page

Il. The Petition Should Be Granted

Because the Decision Below Conflicts

with Decisions of This Court and

Cher Foceral Comms... cc ce ees 15

CONCLUSION

Appendix

v1

TABLE OF APPENDICES

Document

5/19/99 Oregon Court of Appeals’ Opinion,

Kinross Copper Corp. v. State of Oregon,

981 P.2d 833 (1999)

10/13/99 Oregon Court of Appeals’ Opinion

on Reconsideration (affirming prior

decision), Kinross Copper Corp. v. State of

Oregon, 988 P.2d 400 (1999)

2/29/00 Oregon Supreme Court’s Order

Denying Review (No. S46982)

6/20/00 Oregon Supreme Court’s Order

Denying Reconsideration (No. $46982)

6/9/97 Multnomah County Circuit Court

Letter Opinion (No. 9609-06900)

6/26/97 Multnomah County Circuit Court

Order of Dismissal and Judgment

(No. 9609-06900)

Appendix

Vii

Document

11/17/99 Kinross Copper Corp.’s Petition

for Supreme Court Review

3/14/00 Kinross Copper Corp.’s Petition for

Supreme Court Reconsideration

3/27/97 Multnomah County Circuit Court

Stipulated Statement of Facts

40 C.F.R. § 440.104(b)(2)(i) (1999)

43 U.S.C.A. § 1712(c)(8) (West 1986)

Three Basin Rule, Oregon Administrative

Rule, OAR 340-041-470 (as originally

adopted)

Three Basin Rule, OAR 340-04 1-0470(1)-(7)

as amended

Vili

TABLE OF AUTHORITIES

Page

CASES

Armstrong v. United States, 364 U.S. 40 (1960) ..... 12

Atchison v. Peterson, 87 U.S. (20 Wall.) 507

SPE 2s WI eS eS Pees Cock ic 11, 13

Belk v. Meagher, 104 U.S. (14 Otto) 279 (1881) ..... 13

Benson v. City of Portland, 850 P.2d 416 (Or.

App.), rev. denied, 862 P.2d 1304 (Or.

Ph Bik ek ee ah an Gua eat dg A re a « 14

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

COREE Was COM ee aa we ee Rs 13

Boise Cascade Corp. v. State of Oregon, 991

Fae ee Oe, PA, BE oc ea ade ci ous 14

Bowles v. United States, 31 Fed. Cl. 37 (1994) ...... 19

California Coastal Comm’n v. Granite Rock

CO:, SEP US, SIC) nk ee ewes 12, 20, 21

Carson v. Hayes, 65 P. 814 (Or. 1901) ........ 13, 18

Dodd v. Hood River County, 855 P.2d 608 (Or.

le ae Gl ae eee eee oe ss le All 14

Dolan v. City of Tigard, 832 P.2d 853 (Or. App.

1992), aff'd, 854 P.2d 437 (Or. 1993),

POV GE, Sak Wes PR ob ik ee ws 14, 25

First English Evangelical Lutheran Church v.

County of Los Angeles, Cal., 482 U.S.

PE oe a a As 22

ix

Page

Florida Rock Indus., Inc. v. United States, 791

F.2d 893 (Fed. Cir. 1986), 18 F.3d 1560

ee Gl Oe a cee ee eS 20

Garbarino v. Van Cleave, 330 P.2d 28 (Or.

PE 5 eRe oe ey Sere a, ee

GTE Northwest, Inc. v. Public Util. Comm ‘n,

883 P.2d 255 (Or. App. 1994), rev'd,

900 P.2d 495 (Or. 1995), cert. denied,

DET Was RUPP OID ode vo kn wk x ov en. 14

Harbison v. City of Hillsboro, 204 P. 613 (Or.

WR dg SPOR Gia e Sic i ke es 18

Hughes v. State of Washington, 389 U.S. 290

PN ear Se he 15

Kinross Copper Corp. v. State of Oregon, 981

P.2d 833 (Or. App. 1999) .. . 1-3, 10, 11,15, 16, 19

Kinross Copper Corp. v. State of Oregon, 988

P.2d 400 (Or. App. 1999) .............. 1, 11

Lambert v. City & County, 120 S. Ct. 1549

REPRE Cy es a ae 15

Lincoln City Chamber of Commerce v. City of

Lincoln City, 991 P.2d 1080 (Or. App.

1999), petition for review denied, 330

We I ck ee nce ccc ny 14

Lucas v. South Carolina Coastal Council,

mae Um, 1005 (i9e2) 2... 5... 3, 13-16, 18, 25

Penn Central Transp. Co. v. City of New York,

og a Es: Se ic 12, 19

Page

Provolt v. Bailey, 121 P. 961 (Or. 1912) ....... 13, 18

Robinson v. Ariyoshi, 753 F.2d 1468 (9th Cir.

1985), rev'd on other grounds, 477 U.S.

OOS CER kh SW A PESO ERS 15

Skaw v. United States, 740 F.2d 932 (Fed. Cir.

1984), cert. denied, 488 U.S. 854 1988) ... 19, 20

State v. Campbell, 705 P.2d 694 (Or. 1985) ......... 2

Stevens v. City of Cannon Beach, 835 P.2d 940

(Or. App. 1992), aff'd, 854 P.2d 449 (Or. 1993),

cert. denied, 510 U.S. 1207 (1994) .......... 14

Tahoe-Sierra Preservation Council, Inc. v. Tahoe

Reg’! Planning Agency, 34 F. Supp. 2d

ee Foe SS Pe Pee eter re 25

United States v. Locke, 471 U.S. 84 (1985) ........ 13

United States v. Riverside Bayview Homes,

Bee... SPS U.S. 823 CSR sk 4s ew a 12, 19, 20, 24

STATUTES AND RULES

28 U.S.C.A. § 1257(a) (West 1993) ... 2... wees 2

53 CP. Gaeta CHRO «cas CARR Sw es 6

33 U.S.C.A. § 1341 (West 1986) ..... ooo ert. 7

33 U.S.C.A. § 1344 (West 1986 & Supp. 2000) ...... 6

36 C.F. 8 SAR. GD ck wie eee Sanita. 21

40 C.F.R. § 440.104(b)(2)(i) (1999)... 2. ee ee. 4

xi

Page

43 U.S.C.A. § 1712(c)(8) (West 1986) ......... 4, 21

Clean Water Act, 33 U.S.C.A. § 1251, et seq.

(West 1986 & Supp. 2000)................ 19

Mining and Mineral Policy Act of 1970, § 2, 30

Soe ek” 6 23

Mining Law of 1872, 30 U.S.C.A. § 22, et seq.

(West 1986 & Supp. 2000)......... 5, 12, 20, 23

Or. Admin. R. 340-041-0470(1)-(7) (2000)... 4-9, 18, 20-

22, 24

Supreme Court Rule 10%)... ................. 11

Supreme Court Rule 10(c).................... 11

U.S. Const., amend. V........... 2, 3, 9, 13, 14, 18

.m. Comet, SE. FV www www unan 2,9

aps Sree. Oa. HAV, 6-9 cca. kv vce weeaden 3

ame Geel. OM. TV, OB, ab Bo i hc ckvvveiks. 3

OTHER AUTHORITIES

2 Samuel C. Wiel, Water Rights in the Western

States § 1140 (3ded. 1911) ..............., 17

Barton H. Thompson, Jr., Judicial Takings, 76

oe St. eer 15

Xil

David J. Bederman, Zhe Curious Resurrection

of Custom: Beach Access and Judicial

Takings, 96 Colum. L. Rev. 1375 (1996) ...... 15

James P. Karp, A Private Property Duty of

Stewardship: Changing Our Land Ethic,

0 Me ee ee ree 24

Jan G. Laitos, Law of Property Rights Protection:

Limitations on Governmental Powers

§ 10.07[A] § 10.07[A][2] (Supp. 2000). .... 19, 24

Joseph Novak, The Legal Dilemma in Dewatering

Mines, 17 Rocky Mtn. Min. L. Inst. 657

EE 66 CS WRN RE ek aS 17

Michael Graf, Application of Takings Law to

the Regulation of Unpatented Mining

Claims, 24 Ecology L.Q. 57 (1997) .......... 25

]

PETITION FOR WRIT OF CERTIORARI

Petitioner Kinross Copper Corporation (“Petitioner”

or “Kinross”) respectfully petitions for a writ of certiorari

to review a judgment of the decision of the Oregon Court of

Appeals, affirming the Judgment of the Circuit Court for

Multnomah County by the Honorable Henry Kantor, Judge.

OPINIONS BELOW

The decision of the Oregon Court of Appeals of

Kinross Copper Corp. v. State of Oregon, is reported in 981

P.2d 833 (Or. App. 1999), and is reproduced as Appendix

A (“App. A”). That court’s opinion granting

reconsideration and affirming its prior decision is reported

in 988 P.2d 400 (Or. App. 1999) and is reproduced as

Appendix B (“App. B.”). The Oregon Supreme Court’s

order (SC No. $46982) denying Petitioner’s petition for

review, with two judges dissenting, is reproduced as

Appendix C (“App. C”). The Oregon Supreme Court’s

order denying Petitioner’s petition for reconsideration is

reproduced as Appendix D (“App. D”). The letter opinion

of the circuit court denying Petitioner’s motion for summary

judgment and granting the State of Oregon’s cross-motion

for summary judgment is reproduced as Appendix E

(“App. E”). The circuit court’s judgment and order of

dismissal is reproduced as Appendix F (“App. F”).

Fe

2

Petitioner’s petition seeking review by the Oregon Supreme

Court is reproduced as Appendix G (“App. G”).

Petitioner’s petition for reconsideration by the Oregon

Supreme Court is reproduced as Appendix H (“App. H”).

The stipulation of facts entered into by the parties and a part

of the record for the cross-motion for summary judgment is

reproduced as Appendix I (“App. I”).

STATEMENT OF JURISDICTION

The order of the Oregon Supreme Court denying

Petitioner’s petition for reconsideration of its refusal to

review the decision of the Oregon Court of Appeals was

entered on June 20, 2000. (App. D.) This Court has

jurisdiction in this matter pursuant to 28 U.S.C.A.

§ 1257(a) (West 1993), because the Oregon regulatory

scheme as enforced by the Oregon court is repugnant to the

Fifth and Fourteenth Amendments to the U.S. Constitution.

The Oregon Court of Appeals has held that Kinross

has no entitlement to compensation under the takings

Clauses of either the state or federal constitutions. 981 P.2d

at 834, 836. (App. A.) The court of appeals considered the

state constitutional claim first. See State v. Campbell, 705

P.2d 694, 703 (Or. 1985). Having decided the claim

adversely to Kinross, the court of appeals then had to

address and decide the federal constitutional questions,

3

which had become dispositive of the action and which are

the basis for this Court’s jurisdiction. '

CONSTITUTIONAL PROVISIONS INVOLVED

The federal constitutional provisions at issue in this

matter are the Property Clause and Fifth Amendment to the

U.S. Constitution. U.S. Const., article IV, § 3, cl. 2, of

the Property Clause provides: “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... .”

The Fifth Amendment provides, in pertinent part, as

follows: “[N]Jor shall private property be taken for public

use, without just compensation.” U.S. Const. amend. V.

The Fourteenth Amendment provides, in pertinent

part, as follows: “[N]or shall any State deprive any person

of life, liberty, or property, without due process of

law ....” U.S. Const., amend. XIV, § 1.

' The court of appeals concluded that a water

discharge right, and not the right to mine, is the “property”

interest in this case (981 P2d at 837). Kinross has both

rights, but complete removal of either one by state

regulation effects a justiciable taking of property. See

Lucas v. South Carolina Coastal Council, 505 U.S. 1003,

1030 (1992).

4

STATUTORY AND ADMINISTRATIVE

PROVISIONS INVOLVED

The water discharged from the mine would meet

federal and state instream water quality standards, as well as

discharge limits for mines promulgated by the U.S.

Environmental Protection Agency under the federal Clean

Water Act, see 40 C.F.R. § 440.104(b)(2)(i) (1999). “This

regulation is reproduced as Appendix J (“App J”). Federal

law allows states to impose water quality standards for

discharge on federal lands. 43 U.S.C.A. § 1712(c)(8)

(West 1986). A copy of this statute is reproduced as

Appendix K (“App. K”). However, the Oregon

administrative rule at issue, Or. Admin. R.

340-04 1-0470(1)-(7) (2000) (known informally as the

“Three Basin Rule”), prohibits all water discharges from

any industrial source, regardless of water quality, to the

North Santiam River Subbasin, in which the proposed mine

would be located. A copy of the Three Basin Rule as

originally adopted is reproduced as Appendix L

(“App. L”), and a copy of that rule as amended is

reproduced as Appendix M (“App. M”).

STATEMENT OF THE CASE

A. Procedural History.

Petitioner is the lessee of an unpatented mining

claims on U.S. Forest Service (the “USFS”) lands that were

obtained pursuant to the Mining Law of 1872, 30 U.S.C.A.

§ 22, et seq. (West 1986 & Supp. 2000). Petitioner’s lessor

in 1975 staked a number of mining claims in the Willamette

National Forest (the “WNF”), and the following year it

discovered a valuable copper (“Bornite”) deposit on some

of these claims. (App. I-1-2.) In 1977 the Oregon

Environmental Quality Commission (the “EQC”) adopted

an administrative regulation, known as the Three Basin

Rule, that prohibited all water discharges into streams

within the North Santiam, McKenzie and Clackamas River

Subbasins in western Oregon. (App. I-2.)

In June 1991, Petitioner, under its former name,

submitted a Plan of Operations for the Bornite Project (the

“Plan”) to the USFS to develop the claims. (App. I-2-3).

While the Plan was undergoing review by the USFS,

Petitioner also submitted an application to the Oregon

Department of Environmental Quality (the “~DEQ”) for a

National Pollutant Discharge Elimination System

(“NPDES”) permit that would allow the Bornite Project to

discharge groundwater pumped from the mine and other

wastewaters into a surface stream adjacent to the Bornite

6

Project. (App. I-3.) (It is stipulated that all of the waters to

be discharged from the mine would meet federal and state

water quality standards and would otherwise comply with

the federal Clean Water Act. (App. I-6.) Within the North

Santiam River Subbasin, however, the Three Basin Rule

prohibits all new industrial discharges, including discharges

from mining operations, regardless of the quality of the

water discharged. )

On April 22, 1993, the USFS Supervisor of the

WNF adopted a Record of Decision and Final

Environmental Impact Statement that approved the Bornite

Project and recognized that the mine would be required to

obtain an NPDES permit from the State of Oregon (the

“State”) to discharge mine waters into Cedar Creek, which

is adjacent to the mine site. (App. I-3.)

On May 17, 1993, the U.S. Department of the

Army, Corps of Engineers issued Petitioner a nationwide

7 permit (the “NWP”) pursuant to 33 C.F.R. part 330 (1999)

and section 404 of the Clean Water Act, 33 U.S.C.A.

§ 1344 (West 1986 & Supp. 2000), authorizing placing fill

material in two tributaries of Cedar Creek on the Bornite

Project. The NWP was issued based upon the DEQ

representation that the proposed Bornite Project would not

violate state water quality standards. The DEQ found that if

the conditions required by the Corps of Engineers were

satisfied, the Bornite Project would comply with the

requirements of the federal Clean Water Act and state water

NL ET

7

quality standards. The DEQ also issued Petitioner an

NPDES permit to discharge storm water from construction

activities at the proposed mine and had issued a certification

pursuant to section 401 of the Clean Water Act, 33

U.S.C.A. § 1341 (West 1986), that the mine would meet

state water quality standards. However, at some point the

issue was raised internally at the DEQ whether an NPDES

permit to discharge any water from the mine would violate

the Three Basin Rule, because on its face it prohibited all

discharges without regard to water quality. The DEQ then

sought an opinion from the Oregon Attorney General, who

opined that the Three Basin Rule prohibited an NPDES

permit for discharges within the three watersheds covered

by the rule. The DEQ had previously issued approximately

75 NPDES permits for facilities within the three river

basins, including the one to Petitioner for the discharge of

storm water.

By December 1993, the DEQ had determined that an

NPDES permit for the Bornite Project could be issued

under which “there would be no measurable impact on the

North Santiam River or the Little North Santiam River” but

that it was prohibited from doing so because of the Three

Basin Rule contained in Or. Admin. R. 340-041-0470(1).

(App. I-4.) The director of the DEQ advised the EQC that

Kinross required an NPDES permit in order to proceed with

the mining project but that it could not do so under a literal

reading of the Three Basin Rule. The DEQ recommended

that the EQC amend Or. Admin. R. 340-041-0470(1)

because

the [Three Basin] rule language is broad and

effectively prevents the issuance of permits

for any new facilities (including new facilities

requiring storm water permits) regardless of

the impact of the discharge. The rule may

effectively preclude development and other

activities in these areas that were not

intended to be affected by the rule.

(App. I-4-5.) The EQC was further advised that the Three

Basin Rule “prohibits development requiring a discharge

permit, regardless of the impact on water quality. No

exceptions are allowed. This rule, together with the

requirements for storm water permits, may have the effect

of precluding activities and land uses in these subbasins that

were never intended to be precluded.” (App. I-5.)

However, the EQC refused to change the Three

Basin Rule to allow the DEQ to issue NPDES permits for

new industrial waste discharges that did not adversely

impact water quality, and the DEQ ultimately denied

Petitioner’s application for an NPDES permit on March 21,

1995. (App. I-8.) The EQC did amend.the rule to allow

nonindustrial discharges. The sole ground for denial was

that Or. Admin. R. 340-041-0470(1) prohibits the issuance

of NPDES permits for new industrial discharges within the

North Santiam River Subbasin. Petitioner then took an

administrative appeal of that order to the EQC.

|

9

On August 30, 1996, the EQC issued a final order

adopting the hearings officer-recommended Findings of

Fact, Conclusions of Law and Final Order denying Kinross

an NPDES permit. (App. I-8.) The denial of an NPDES

permit by the EQC was a final administrative action that

prevented Petitioner from discharging groundwater and

other mine waters into a surface stream.

B. The Case.

In October 1996, Petitioner commenced this action

in the state circuit court alleging that the denial of the

NPDES permit violated Petitioner’s rights under the

Takings Clause of the Fifth Amendment and the Due

Process Clause of the Fourteenth Amendment because

Petitioner was prevented from developing its mining claims

as the result of the administrative denial and was thus

denied all economically viable use of those claims. In a

second count, Petitioner alleged that the Three Basin Rule

did not substantially advance any legitimate state interest.

Based on the stipulation of facts (App. I), the circuit court

granted the state’s summary judgment and dismissed

Petitioner’s claims (App. E, F).

On appeal, the Oregon Court of Appeals affirmed

the circuit court’s dismissal of the case on the basis (1) that

the denial of the NPDES permit did not deny Petitioner the

right to mine its claims, but only denied it the right to

10

discharge water (even though it is a stipulated fact that

because of heavy precipitation and high volumes of

groundwater, the mine could not operate without an NPDES

permit), and (2) that because it was never a part of

Petitioner’s bundle of property rights to appropriate water

for the mine, Petitioner never had a right to discharge water

from the mine; therefore, denying it an NPDES permit did

not “take” anything. (App. A.) The Petitioner moved the

court of appeals for reconsideration, which was granted, but

the opinion was adhered to. (App. B.) Petitioner then

petitioned for review by the Oregon Supreme Court, which

was denied, with two justices dissenting. (App. C, G.) It

then petitioned for reconsideration by that court, which was

also denied. (App. D, H.)

The trial court decided the motion for summary

judgment based on a theory that had not been argued by the

state. 981 P.2d at 835-36. The court of appeals based its

opinion on a different theory, i.e., that Petitioner did not

have the right to appropriate water for the mine as a part of

its bundle of property rights, therefore the state could

prevent it from discharging any mine waters without it

constituting a taking of Petitioner’s mining rights. This was

a theory the state had also not argued before the court of

appeals. /d. at 837. Further, the court of appeals was

disingenuous in its opinion on reconsideration by stating

that Petitioner had not contended that it had a common-law

right to discharge nonpolluting mine waters when the matter

11

was originally before that court. 988 P.2d at 401. In both

its opening and reply briefs Petitioner had cited to

Atchison v. Peterson, 87 U.S. (20 Wall.) 507, 514-15

(1874), for the proposition that a miner had a common-law

right to discharge mine water and that it had never been

considered to be a nuisance to discharge such waters, even

if it had some adverse impacts on downstream users.

Appellant’s Opening Brief at 18; Appellant’s Reply Brief at

8. The court cited, but glossed over discussing, Atchison in

its original opinion. 981 P.2d at 838.

REASONS FOR GRANTING THE PETITION

Supreme Court Rule 10(b) lists among the

considerations governing review on certiorari the

circumstance in which a state court of last resort has

decided a federal question in a way that conflicts with the

decision of a federal court of appeals. In this case the

decision was rendered by a lower appellate court and the

state court of last resort twice refused to grant review.

(App. C, D.) Under Rule 10(c), a ground for review exists

when a state court has decided an important question of

federal law that has not been, but should be, settled by this

Court or has decided a federal question in a way that

conflicts with applicable decisions of this Court. Both of

these grounds for review are present in this case.

12

I. This Case Involves Four Important Constitutional

Questions That Should Be Resolved by This

Court.

The precedent established by the decision below

opens the door wide to allow states to prevent mining on

federal lands by simply denying the miner the right to

discharge nonpolluting groundwaters and at the same time

avoid having to pay just compensation for “taking” those

mining claims. It also serves as a precedent for Claiming

that no taking occurs unless the very thing proscribed by

government is identical to the property interest in question.

This is directly contrary to this Court’s position in United

States v. Riverside Bayview Homes, Inc., 474 U.S. 121, 127

(1985), that it is “the effect of the denial” that gives rise to

a taking. The issue is one of causation. Armstrong v.

United States, 364 U.S. 40, 48 (1960); Penn Central

Transp. Co. v. City of New York, 438 U.S. 104, 124 (1978)

(“whether a particular restriction will be rendered invalid

by the government’s failure to pay for any losses

proximately caused by it depends,” etc. (emphasis added)).

As will also be discussed below, if left to stand, a

State will be able to use an environmental law to trump the

federal Mining Law of 1872 by simply refusing to issue a

water discharge permit. California Coastal Comm’n y.

Granite Rock Co., 480 U.S. 572 (1987).

This Court has long recognized that an unpatented

mining claim is an interest in real property protected by the

13

Fifth Amendment to the U.S. Constitution that vests upon

discovery of a valuable mineral deposit. Belk v. Meagher,

104 U.S. (14 Otto) 279, 283 (1881). Moreover, an

unpatented mining claim is a property interest that, if taken

by a government action, entitles the miner to just

compensation for that interest. United States v. Locke, 471

U.S. 84, 86 (1985); Best v. Humboldt Placer Mining Co.,

371 U.S. 334, 335 (1963). Because the holder of an

unpatented mining claim only has a property right to

remove minerals, if it is prevented from mining, the claim

holder is denied all economically productive use of its

property. Lucas, 505 U.S. 1003.

Under Lucas, the state can only deny a property

Owner just compensation if the proscribed use would have

been a public or private nuisance at common law. /d. at

1030.* The right of a miner to discharge nonpolluting mine

waters from unpatented mining claims on federal lands

predates statehood. Atchison, 87 U.S. (20 Wall.) 507.

Further, the Oregon courts have also long recognized that

the discharge of nonpolluting mine waters to a stream is not

a common-law nuisance. Provolt v. Bailey, 121 P. 961 (Or.

1912); Carson v. Hayes, 65 P. 814 (Or. 1901).

* No taking occurs if “[t]he use of these properties

for what are now expressly prohibited purposes [e.¢.,

discharge of groundwater] was always unlawful... .” 505

U.S. at 1030 (emphasis in original). Here, the discharge

from unpatented mining claims was always /awful.

14

The opinion below is a part of a growing number of

state law cases that seek to circumvent this Court’s decision

in Lucas by redefining the property right in question to say

that it was not a part of the landowner’s property interest to

begin with, rather than determining whether the proposed

action could have been enjoined as a common-law public or

private nuisance. The Oregon appellate courts have

consistently displayed hostility to this Court’s Fifth

Amendment takings jurisprudence by construing this

Court’s opinions as narrowly as possible, misconstruing

them or circumventing them by reinterpreting the state’s

property law. Dolan v. City of Tigard, 832 P.2d 853, 855

(Or. App. 1992), aff'd, 854 P.2d 437 (Or. 1993), rev'd,

512 U.S. 374 (1994); Stevens v. City of Cannon Beach, 835

P.2d 940, 942 (Or. App. 1992), aff’d, 854 P.2d 449, 452-

57 (Or. 1993), cert. denied, 510 U.S. 1207 (1994) (Scalia

and O’Connor, JJ., dissenting); Dodd v. Hood River

County, 855 P.2d 608, 614-15 (Or. 1993); GTE Northwest,

Inc. v. Public Util. Comm’n, 883 P.2d 255, 257-59 (Or.

App. 1994), rev'd, 900 P.2d 495, 501-04 (Or. 1995), cert.

denied, 517 U.S. 1155 (1996); Benson v. City of Portland,

850 P.2d 416, 418-20, 425-26 (Or. App.), rev. denied, 862

P.2d 1304 (Or. 1993); Boise Cascade Corp. v. State of

Oregon, 991 P.2d 563, 569-70 (Or. App. 1999) (petition

for review by Oregon Supreme Court pending); Lincoln

City Chamber of Commerce v. City of Lincoln City, 991

P.2d 1080 (Or. App. 1999), petition for review denied, 330

15

Or. 331 (Or. 2000); David J. Bederman, The Curious

Resurrection of Custom: Beach Access and Judicial

Takings, 96 Colum. L. Rev. 1375, 1438-42 (1996). Recent

opinions by state courts circumventing this Court’s takings

jurisprudence is not limited to Oregon. Lambert v. City &

County, 120 S. Ct. 1549 (2000) (Scalia, Kennedy and

Thomas, JJ., dissenting from denial of certiorari).

State courts reinterpreting their property law in

order to avoid a taking also presents the issue of judicial

takings. Hughes v. State of Washington, 389 U.S. 290,

296-97 (1967) (Stewart, J., concurring); Barton H.

Thompson, Jr., Judicial Takings, 76 Va. L. Rev. 1449

(1990): see also Robinson v. Ariyoshi, 753 F.2d 1468 (9th

Cir. 1985), rev’d on other grounds, 477 U.S. 902 (1986).

Il. The Petition Should Be Granted Because the

Decision Below Conflicts with Decisions of This

Court and Other Federal Courts.

The decision of the Oregon Court of Appeals, which

the Oregon Supreme Court twice declined to review,

subverts this Court’s language in Lucas that no taking

occurs “‘if the logically antecedent inquiry into the nature

of the owner’s estate shows that the proscribed use interests

were not part of his title to begin with.’” 981 P.2d at 837

(quoting Lucas, 505 U.S. at 1027).

The proscribed use in this case is the discharge of

nonpolluting mine waters into a surface stream. The test in

16

Lucas is whether the proscribed use could be enjoined as a

common law public or private nuisance. If not, and if as a

result the owner is prohibited from making any

economically viable or productive use of his or her

property, he or she is entitled to compensation for a taking.

Instead of focusing upon whether the discharge of

nonpolluting mine water could be enjoined as a common

law nuisance, the court of appeals held that there had been

no taking because Petitioner’s property interest in the

mining claims did not include the right to appropriate water

for a beneficial use under Oregon law. /d. at 839-40. The

court’s analysis is seriously flawed for a number of reasons.

First, it is undisputed that Petitioner has the right to use up

to 5,000 gallons of water per day without seeking an

appropriation under Oregon law. Jd. at 840. Second, there

is no evidence that Petitioner could not obtain an

appropriation for water in excess of that amount, if it

needed one. However, an appropriation of water is not the

issue. The issue is the discharge of excess water, which has

always been governed by a different set of rules from water

appropriations.

An article on mine dewatering describes the

distinctions as follows:

The legal principles applicable to

mine dewatering cases are dependent initially

at least upon whether there are competing

claims to the proprietary use of the

percolating waters. If the interceptor asserts

a proprietary claim to such waters as against

17

other proprietors or appropriators, the rules

governing water rights will apply. If,

however, the interceptor disclaims any

interest in the waters and discharges the same

solely for the purpose of ridding the mine

workings of such waters, the rules governing

the use of one’s property will apply... .

The [latter] has been referred to as a

“drainage case” and the [former] a “water

ct.

Joseph Novak, The Legal Dilemma in Dewatering Mines,

17 Rocky Mtn. Min. L. Inst. 657, 665 (1972) (citation

omitted).

This distinction applies in Oregon. Under Oregon

common law, and consistent with the common law of all

other state jurisdictions, Petitioner holds a right to drain

water from its property. The principle was explained by an

early commentator as follows: “The reasonable use being

use of land (and not necessarily of water if the land may be

used without the water), then drainage is a proper purpose

and a reasonable use of land where the land is thereby

benefited.” 2 Samuel C. Wiel, Water Rights in the Western

States § 1140, at 1067 (3d ed. 1911) (emphasis added). The

Oregon Supreme Court interpreted the rule to apply as

follows:

The rule that would best serve in this state,

and tend to promote the interest of the people

without causing undue hardship, would be to

allow the owner of land to turn upon the land

of an adjacent owner surface water in such

quantities as would naturally drain in that

direction by means of artificial drainage even

18

though the flow of such water upon the lower

tract is accelerated; due regard being

observed for the interest of the adjacent

owner so as to cause no unreasonable

inconvenience.

Harbison v. City of Hillsboro, 204 P. 613, 618-19 (Or.

1922).

The Oregon Supreme Court reaffirmed the foregoing

rule in Garbarino v. Van Cleave, 330 P.2d 28 (Or. 1958).

The state stipuiated in this case that Petitioner’s drainage of

water from its property would not result in any measurable

pollution (App. I-6), so the proposed discharge clearly

meets the common law test in that it will “‘cause no

unreasonable inconvenience’” to any other landowner.

330 P.2d at 30 (citation omitted). Accordingly, Petitioner,

as a-part of its property interest in unpatented mining

claims, does have a common-law right of drainage that has

been “taken” by imposition of the Three Basin Rule.

Accord Provolt, 121 P. 961; Carson, 65 P. 814. An

unpatented mining claim can only be used for one purpose;

the state’s denial of an NPDES permit has deprived the

unpatented claims of all economically productive use as a

mine, which constitutes a taking entitling Petitioner to just

compensation under the Fifth Amendment. Lucas, 505

U.S. at 1027.

The second important issue that this Court needs to

address is causation. The court below also took the position

that there had been no taking because the subject rule

19

merely proscribed the discharge of mine waters but did not

prohibit mining. 981 P.2d at 837. (It isa stipulated fact

that the mine would have to discharge excess groundwater

in order to operate (App. I-3).) That position is in conflict

with thi: Court’s opinion in Riverside Bayview, 474 U.S.

121. In that case, the landowner had been denied a permit

under the Clean Water Act, 33 U.S.C.A. § 1251, ef Seq.

(West 1986 & Supp. 2000), to fill in wetlands, and

therefore it claimed a taking of its property. This Court

Stated: “Whether the denial of a permit would constitute a

taking in any given case would depend upon the effect of the

denial on the owner’s ability to put the property to —

productive use.” Riverside Bayview, 474 U.S. at 127 n.4

(emphasis added); see also Penn Central, 438 U.S. at 124

(“proximately caused”); Bowles v. United States, 31 Fed.

Cl. 37, 49 (1994) (“but for” test); Jan G. Laitos, Law of

Property Rights Protection: Limitations on Governmental

Powers § 10.07[A], at 10-44 & § 10.07[A][2], at 10-48

(Supp. 2000).

This case also conflicts with two opinions of the

U.S. Court of Appeals for the Federal Circuit. Skaw v.

United States, 740 F.2d 932 (Fed. Cir. 1984), cert. denied,

488 U.S. 854 (1988), also involved unpatented mining

claims on federal lands. In Skaw, the Federal Circuit held

that because the newly enacted Wild and Scenic Rivers Act

prevented mining along the St. Joe River in Idaho, miners

with valid unpatented mining claims would be entitled to

20

just compensation for a regulatory taking based on the Fifth

Amendment. Florida Rock Indus., Inc. v. United States,

791 F.2d 893 (Fed. Cir. 1986), 18 F.3d 1560 (Fed. Cir.

1994), is even more analogous to the present case. As in

Riverside Bayview, the plaintiff in Florida Rock had been

denied a Clean Water Act permit, which prevented it from

mining limestone because removal of the rock left a hole in

wetlands that filled with water causing “temporary pollution

by turbidity which, however, would not be a menace to the

drinking water.” 791 F.2d at 895-96. The Federal Circuit

held in the second appeal that a taking of the quarry

property was caused by the Corp of Engineers’ refusal to

issue the permit. 18 F.3d at 1573. As in this case, the

denial of a water pollution permit did not prevent the

plaintiff in Florida Rock from mining, but it was not

feasible to mine its property without one.

Riverside Bayview, Skaw and Florida Rock were all

_ brought to the attention of both the Oregon Court of

Appeals and the Oregon Supreme Court to no avail. The

court of appeals ignored discussing them, and the Oregon

Supreme Court refused to grant review.

A third important issue involves whether the federal

Mining Law of 1872 preempts enforcement of the Three

Basin Rule. This Court’s opinion in Granite Rock, 480

U.S. at 580, 583, 593, involved a facial challenge to a state

environmentai law that imposed a state permit requirement

on the operation of unpatented mining claims on federal

21

lands. In holding that the state law on its face was not

preempted, this Court went on to state: “The line between

environmental regulation and land use planning will not

always be bright; for example, one may hypothesize a state

environmental regulation so severe that a particular land use

would become commercially impracticable.” Jd. at 587.

While the USFS requires miners within national

forests to comply with state water quality standards, neither

by statute nor regulation does federal law allow states to

prohibit outright any water discharge from mining claims on

federal lands. 43 U.S.C.A. § 1712(c)(8) (App. K); 36

C.F.R. § 228.8(b) (1999). Unlike Granite Rock, this case

involves a prohibition that prevents mining of unpatented

claims on federal lands; the Three Basin Rule not only

makes mining “commercially impracticable,” it makes it

physically impossible. Such a prohibition is preempted by

federal law.

Further, when the Three Basin Rule was amended

shortly before the EQC issued its final order denying

Petitioner an NPDES permit, it ceased to be an

- environmental rule and became a land use regulation. The

amended Three Basin Rule proscribes new NPDES

wastewater discharge permits for industrial applicants, but it

expressly allows a number of other wastewater discharges, ©

many of which may have substantial adverse effects on

water quality. Nonetheless, the rule absolutely forbids

wastewater discharges from Petitioner’s mine, even though

te

it is stipulated that those discharges would meet state and

federal instream water quality standards and other

requirements under the federal Clean Water Act. It is only

because the mine happens to lie within the North Santiam

River Subbasin, one of the three basins subject to the Three

Basin Rule, that DEQ refused to issue an NPDES permit for

discharges from the mine.

Because the Three Basin Rule is preempted by

federal law, Petitioner is entitled to compensation for a

temporary taking under First English Evangelical Lutheran

Church v. County of Los Angeles, Cal. , 482 U.S. 304

(1987).

23

CONCLUSION

Mining in the western United States has played a

major role since the earliest days of settlement. Congress

enacted the Mining Law of 1872 to encourage the

development of minerals on public lands. The right to

discharge nonpolluting mine waters has always been a part

of a miner’s property interest in unpatented mining claims,

and from the earliest days it has never been considered

either a public or private nuisance to do so. The lower

courts’ holding that a property owner must have an

appropriation right in order to discharge excess water is of

special importance in the western United States and

inconsistent with more than 150 years of water law in those

States.

In enacting the Mining and Mineral Policy Act of

1970, § 2, 30 U.S.C.A. § 21a (West 1986), Congress

emphasized that an “economically sound and stable

domestic . . . industr[y]” is important to both our economy

and national security. -A state should not be allowed to

thwart that policy with impunity by preventing the discharge

of nonpolluting waters from mining claims on federal lands

and not having to pay just compensation for the minerals

that cannot be mined.

This case is closely watched by the mining industry

and other property owners that must be able to discharge

excess groundwater in order to put their land to a beneficial

24

use. The precedent established by the Oregon courts that

the state can stop all productive use of lands by simply

denying the right to discharge nonpolluting waters into a

stream can have very wide ramifications. Nor is the issue

limited to the western United States. If there is no right to

discharge nonpolluting waters, and the courts can disregard

_ the nuisance issue, then cases such as Riverside Bayview

involving the draining of wetlands also come into question.

See Laitos, supra, § 8.02[E], at 8-23 to 8-24 (Supp. 2000).

A vocal segment of the population has become

increasingly active in trying to stop all commercial activities

on federal forest lands through the use of state regulations.

The unwillingness of the EQC in this case to amend the

Three Basin Rule to allow nonpolluting water discharges,

while changing the rule to allow discharges from

nonindustrial sources, is just one example of their efforts.

That segment views mining, grazing and logging, all of

which Congress has authorized can be done on federal

__ forest lands, as harmful to nature. As one law professor has

stated: “The natural systems upon which we as a

community rely for survival must be protected, and if

private property rights must be sacrificed to achieve that

protection, so be it.’ James P. Karp, A Private Property

Duty of Stewardship: Changing Our Land Ethic, 23 Envtl.

L. 735, 737 (1993). That is also the view of the author of

the article that the trial court relied upon in granting the

State summary judgment and dismissing this case, which

25

even the state conceded and the court of appeals recognized

was “at odds with ‘traditional takings analysis.’” 981 P.2d

at 836; see Michael Graf, Application of T: akings Law to the -

Regulation of Unpatented Mining Claims, 24 Ecology L.Q.

57 (1997).

In reversing the Oregon appellate courts in Dolan,

this Court had to remind them that “the Takings Clause of

the Fifth Amendment [is] as much a part of the Bill of

Rights as the First Amendment or Fourth

Amendment... .” 512 U.S. at 392. Unfortunately it is a

lesson the Oregon courts have not heeded. They and many

other lower courts have been quick to take the words of this

Court in Lucas “that the proscribed use interests were not

part of his title to begin with” as creating new avenues for

avoiding a taking, rather than analyzing whether the

proscribed use was a common-law nuisance. 505 U.S. at

1027; see Tahoe-Sierra Preservation Council, Inc. v. Tahoe

Reg’! Planning Agency, 34 F. Supp. 2d 1226, 1251 (D.

Nev. 1999). This Court needs to refocus all of the lower

courts on the fact that if the proscribed use was not a

common-law nuisance, the owner is entitled to

compensation if he or she has been denied all economically

productive use of his or her property interest.

26

Petitioner respectfully urges the Court to grant the

Petition for Writ of Certiorari.

Dated this 14th day of

Jerry R.’Fish

Michael R. Campbell

David E. Van’t Hof

James N. Westwood

*Counsel of Record

STOEL RIVES up

900 SW Fifth Avenue, Suite 2600

Portland, OR 97204-1268

(503) 294-9376

Of Attorneys for Petitioner Kinross

Copper Corporation