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Freeman v. United States Department of Interior

United States District Court, D. Columbia.

March 17, 2015

WALTER B. FREEMAN, Plaintiff,
v.
UNITED STATES DEPARTMENT OF INTERIOR, et al., Defendants

For WALTER B. FREEMAN, Plaintiff: Richard M. Stephens , LEAD ATTORNEY, GROEN STEPHENS & KLINGE LLP, Bellevue, WA.

For UNITED STATES DEPARTMENT OF THE INTERIOR, INTERIOR BOARD OF LAND APPEALS, BUREAU OF LAND MANAGEMENT, Defendants: Ruth Ann Storey, LEAD ATTORNEY, U.S. DEPARTMENT OF JUSTICE, Environmental & Natural Resources Division, NRS, Washington, DC.

MEMORANDUM OPINION

BERYL A. HOWELL, United States District Judge.

The plaintiff, Walter Freeman, purchased an interest in approximately 5,000 acres of Federal land located in southern Oregon from a mining and exploration firm. The price was $10. See United States v. Freeman, OR-48970A (March 27, 2009) (" ALJ Decision" ) at 12-13; AR 1926-27. Prior to the sale, Inspiration Development Corporation (" IDC" ), conducted extensive research regarding the land and explored the viability of potential mining operations. At the conclusion of its exploration, rather than attempt to develop the land, IDC was prepared to abandon the claim altogether. Id. Instead, IDC sold its interest to the plaintiff. Id. Thereafter, the plaintiff unsuccessfully attempted to market the nickel ore to a nearby smelter, the only nickel smelter in the United States. The smelter " concluded that [the plaintiff's] ore did not have a high enough nickel content to be worthy of processing" and instead decided to import ore from Australia. Id. Undeterred, the plaintiff attempted to develop his own mining operation on the land, but the Bureau of Land Management (" BLM" ) denied the plaintiff's proposal and a congressional moratorium prevented the plaintiff from patenting his claim on the land. Accordingly, in 2001, the plaintiff filed suit in the Court of Federal Claims seeking compensation for the alleged taking of his rights in the land, which the plaintiff claims " would have made in excess of $146 million." Pl.'s Mot. Partial Summ. J. & Mem. Supp. (" Pl.'s Mem." ) at 4, ECF No. 25.

The Court of Federal Claims stayed the plaintiff's action to permit the United States Department of Interior (" DOI" ) to determine whether the plaintiff had established the discovery of a valuable mineral deposit on the land and, thus, whether the plaintiff maintained a valid property interest in the Federal land as of the time of the alleged taking. After a lengthy mineral examination, an Administrative Law Judge (" ALJ" ) for the DOI ruled in a detailed 88-page opinion that the plaintiff had " failed to establish . . . a discovery of a valuable mineral deposit." ALJ Decision at 88; AR 2002. The ALJ's decision was affirmed in a thorough 48-page opinion by the Interior Board of Land Appeals (" IBLA" ). See United States v. Freeman, 179 IBLA 341 (2010) (" 2010 IBLA Decision" ); AR 05805.[1]

The plaintiff now brings this action under the Administrative Procedures Act (" APA" ), 5 U.S.C. § 706(2), against the DOI and two of its components, the IBLA and the BLM (collectively, the " Federal Defendants" ), seeking to set aside two decisions of the IBLA relating to the plaintiff's mining rights, on the grounds that the decisions were arbitrary, capricious, and lacked substantial evidence. See Compl. at 19 (" Prayer for Relief" ), ECF No. 1. Pending before the Court is the plaintiff's Motion for Partial Summary Judgment on his second cause of action, challenging the 2010 IBLA Decision, which upheld the ALJ's determination that the plaintiff failed to make a discovery of a valuable mineral deposit as of the dates of the alleged government taking.[2] See generally Pl.'s Mem.[3] Also pending before the Court is the Federal Defendants' Cross-Motion for Summary Judgment, ECF No. 27. For the reasons explained below, the plaintiff's motion is denied, the Federal Defendants' motion is granted, and the 2010 IBLA Decision stands.

I. BACKGROUND

The background of this case, and the applicable law, has been summarized in great detail by the Court previously in Freeman v. United States Department of the Interior, 37 F.Supp.3d 313 (D.D.C. 2014), which addressed the plaintiff's first cause of action. Accordingly, the relevant background is summarized only briefly below.

A. Statutory and Regulatory Framework

Under the General Mining Law of 1872 (Mining Law), 30 U.S.C. § § 22 et seq., " citizens may stake, or 'locate,' claims to extract minerals [on federal public land] without prior government permission and without paying royalties to the United States." See Orion Reserves Ltd. Partnership v. Salazar, 553 F.3d 697, 699, 384 U.S.App.D.C. 268 (D.C. Cir. 2009). Before a Congressional moratorium was enacted in 1994, claimants could " apply for purchase of a deed, or 'patent,' conveying full legal title to the land on which their claims are located." Id. at 699 (citing 30 U.S.C. § 29). To qualify for a patent, an applicant must establish that their mining claim is valid.[4]

An unpatented mining claim is valid against the United States only upon discovery of a valuable mineral deposit within the limits of the claim, and compliance with all statutory and regulatory requirements relating to the location, recordation, and filing of the claim. See 30 U.S.C. § § 22, 26, 28, 28e; see also Best v. Humboldt Placer Mining Co., 371 U.S. 334, 336, 83 S.Ct. 379, 9 L.Ed.2d 350 (1963) (unpatented mining claims are " valid against the United States if there has been a discovery of mineral within the limits of the claim, if the lands are still mineral, and if other statutory requirements have been met" ). As the Supreme Court explained almost a century ago, " no right arises from an invalid claim of any kind . . . otherwise they work an unlawful private appropriation in derogation of the rights of the public." Cameron v. United States, 252 U.S. 450, 460, 40 S.Ct. 410, 64 L.Ed. 659 (1920). Thus, although a claimant may explore for mineral deposits before perfecting a mining claim, without a discovery, the claimant has no right to the property against the United States or an intervenor. 30 U.S.C. § 23 (mining claim perfected when there is a " discovery of the vein or lode" ).

To determine whether a mining claim is valid, BLM conducts a mineral examination.[5] If the examination indicates the lack of discovery of a valuable mineral deposit or that the applicant failed to meet other administrative requirements under the Mining Law, the BLM may initiate an administrative mining contest proceeding to challenge the validity of the claim, since either of those examination results, if substantiated, may render the mining claimant ineligible for a patent.[6]

The OHA provides two levels of review to resolve mining contests: ALJs in the Hearing Division have authority to hold evidentiary hearings and issue decisions concerning the validity of mining claims; and the IBLA decides appeals from ALJ rulings. 43 C.F.R. § § 4.452-4-8; 43 C.F.R. § 4.452-9. In contest proceedings before the ALJ, the BLM bears the initial " burden of going forward with sufficient evidence to establish a prima facie case" that the claim is invalid. Foster v. Seaton, 271 F.2d 836, 838, 106 U.S.App.D.C. 253 (D.C. Cir. 1959). " The government presents a prima facie case where a governmental mineral examiner offers expert testimony, based on probative evidence that the discovery of a valuable mineral deposit has not been made within the boundaries of a contested claim." Ernest K. Lehmann & Assocs. of Mont., Inc. v. Salazar, 602 F.Supp.2d 146, 150 (D.D.C. 2009), aff'd, 377 F.App'x 28 (D.C. Cir. 2010) (citing United States v. Pass Minerals, Inc., 168 IBLA 115, 123 (IBLA 2006)). Once the government has made a prima facie case, the burden shifts to the claimant to establish by a preponderance of the evidence sufficient proof of validity. Id. The claimant bears the ultimate burden of persuasion and must produce evidence to rebut the government's case and establish the validity of the mining claim. Lara v. Sec'y of Interior, 820 F.2d 1535, 1542 (9th Cir. 1987); see also Ernest K. Lehmann & Assocs., Inc., 602 F.Supp.2d at 150 (citing United States v. Rannells, 175 IBLA 363, 380 (2008)); Reoforce, Inc. v. United States, 119 Fed.Cl. 1, 7-8 (2013).

B. Administrative Hearings

The instant dispute stems from the plaintiff's original 161 unpatented mining claims, located by his predecessors-in-interest between 1940 and the early 1970s, on approximately 4,968 acres of Federal land administered by BLM and the United States Forest Service (" USFS" ), mostly found in the Siskiyou National Forest in southern Oregon.[7] Freeman, 179 IBLA at 342-43 & n.1; AR 5806. Litigation over the validity of the plaintiff's claims has been ongoing for over two decades before the United States Court of Federal Claims, in DOI administrative proceedings, and before this Court. See Freeman, 37 F.Supp.3d at 322.

On September 9, 1992, the plaintiff filed an application seeking to patent 151 of the 161 mining claims. Freeman, 179 IBLA at 343; AR 5806. Before the application was acted on by BLM, a congressional moratorium took effect on October 1, 1994, halting the processing of patent applications for unpatented mining claims. See Department of the Interior and Related Agencies Appropriations Act of 1995 § 112. Due to this moratorium, BLM has not processed the plaintiff's application. Freeman, 179 IBLA at 343; AR 5806. On December 17, 1992, the plaintiff filed a " plan of operations" (" POO" ) with the USFS, proposing to sample and mine his claims, which was ultimately denied in October 2000. Id. On January 22, 2001, the plaintiff filed suit in the Court of Federal Claims, alleging that the United States had, " by refusing to approve his patent application and by effectively denying approval of his POO, engaged in a taking of his property rights," in violation of the Fifth Amendment. Freeman, 37 F.Supp.3d at 323; see also AR 10699-712 (Court of Federal Claims Complaint). The plaintiff's claim before the Court of Federal Claims turns on whether he possesses a compensable property right against the United States. To facilitate this determination, on October 10, 2001, the Court of Federal Claims stayed proceedings and remanded the matter to the DOI " for determination of the validity of plaintiff's mining claims." AR 10728 (Order at 1, Freeman v. United States, No. 01-0039 (Fed. Cl. Oct. 10, 2001)). As of this Opinion, the Court of Federal Claims proceeding has been stayed for nearly fifteen years during the course of the administrative proceedings in this case.

To determine the validity of the plaintiff's mining claims, DOI retained Western Mine Engineering to produce two reports regarding the economic viability of the plaintiff's claims. The first report concerned the economic viability of the plaintiff's claim as of October 1994 (the date of the Congressional moratorium), while the second report concerned the economic viability of the plaintiff's claim as of October 2000 (the date of the rejection of plaintiff's POO). See Freeman, 179 IBLA at 344; AR 5808. In light of the reports, " BLM concluded that none of the [plaintiff's] claims contained minerals of sufficient quality or quantity to constitute a discovery, that the minerals could not have been marketed at a profit, and that the land embraced by such claims was nonmineral in character." Id. As a result, BLM issued a contest complaint challenging the validity of the plaintiff's claims. Id .

The ALJ presided over contest proceedings spanning 25 days, 400 exhibits, and 3,400 pages of transcript. Freeman, 179 IBLA at 342, 345; AR 5806, AR 5809. As noted, the ALJ issued a detailed 88-page opinion, concluding that the plaintiff " failed to establish that a discovery of a valuable mineral deposit" by either the October 1994 or October 2000 marketability dates. See ALJ Decision at 88, ...


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