Kerr-McGee Corp. v. United States

32 Fed. Cl. 43, 1994 U.S. Claims LEXIS 183, 1994 WL 496787
CourtUnited States Court of Federal Claims
DecidedSeptember 12, 1994
DocketCong. Ref. No. 92-718 X
StatusPublished
Cited by3 cases

This text of 32 Fed. Cl. 43 (Kerr-McGee Corp. v. United States) is published on Counsel Stack Legal Research, covering United States Court of Federal Claims primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Kerr-McGee Corp. v. United States, 32 Fed. Cl. 43, 1994 U.S. Claims LEXIS 183, 1994 WL 496787 (uscfc 1994).

Opinion

HEARING OFFICER’S REPORT

WIESE, Hearing Officer:

Introduction

The plaintiffs in this congressional reference case come before us after a protracted journey. Thirty years ago, Kerr-McGee Corporation and Kerr-McGee Chemical Corporation (collectively referred to as “Kerr-McGee”) and Global Exploration and Development Corporation (“Global”) first filed applications for phosphate prospecting permits on acquired lands in the Osceola National Forest in Florida. Following plaintiffs’ discovery of phosphate deposits on those lands in the late 1960s, the question of whether plaintiffs were entitled to mine the deposits has been raised in countless fora. This question has been the subject of numerous lawsuits by plaintiffs, environmental groups, and officials of the State of Florida; it has been [44]*44the focus of intense political pressure on both the executive and legislative branches; in Congress, it has prompted bills, hearings, a Wilderness Act, and ultimately this congressional reference itself.

Legal Framework

To fully appreciate the facts of this case as they unfold, it is necessary to begin with some basic understanding of the laws and regulations governing the issuance of mineral leases on government lands. The Mineral Leasing Act of 1920, as amended, 30 U.S.C., §§ 181-263 (1988 & Supp. IV 1992), sets forth the statutory scheme for phosphate leasing:

Where prospecting or exploratory work is necessary to determine the existence or workability of phosphate deposits in any unclaimed, undeveloped area, the Secretary of the Interior is authorized to issue, to any applicant qualified under this chapter, a prospecting permit which shall give the exclusive right to prospect for phosphate deposits ...; and if prior to the expiration of the permit the permittee shows to the Secretary that valuable deposits of phosphate have been discovered within the area covered by his permit, the permittee shall be entitled to a lease for any or all of the land embraced in the prospecting permit.

30 U.S.C. § 211(b) (emphasis added).

The Mineral Leasing Act applies on its face only to lands in the public domain, that is, lands that have been continuously in federal ownership. However, its provisions are also applicable to acquired lands — those purchased by the United States. Acquired lands are subject to the Mineral Leasing Act for Acquired Lands, as amended, 30 U.S.C. §§ 351-360 (1988 & Supp. IV 1992), which states that such lands are to be leased by the Secretary of Interior “under the same conditions” as specified in the Mineral Leasing Act for public domain lands. 30 U.S.C. § 352.

Under the Mineral Leasing Act, a permit-tee is entitled to a lease if it has found a “valuable deposit” of phosphate. The standard was elucidated in a May 7,1976 regulation issued by the Department, of Interior:

A permittee has discovered ... a valuable deposit ... if the mineral deposit discovered under the permit is of such a character and quantity that a prudent person would be justified in the further expenditure of his labor and means with a reasonable prospect of success in developing a valuable mine. The permittee must present sufficient evidence to show that there is a reasonable expectation that his revenues from the sale of the mineral will exceed his costs of developing the mine, and extracting, removing, and marketing the mineral.

41 Fed.Reg. 18,845, 18,847. The regulation states further that “[t]he standard . shall apply to all future applications for leases by prospecting permittees, and to applications pending on the effective date of this regulation [May 7, 1976].” 43 C.F.R. § 3520.1-1 (1976).

It is important to note that the authority to issue a mineral lease is not vested solely in the Department of Interior. The Mineral Leasing Act for Acquired Lands provides that no lease may issue “except with the consent of the head of the executive department ... having jurisdiction over the lands ... and subject to such conditions as that official may prescribe to insure the adequate utilization of the lands for the primary purposes for which they have been acquired or are being administered.” 30 U.S.C. § 352. Thus, lands that fall outside of Interior’s exclusive jurisdiction cannot be leased without the other agency’s consent.

Facts

Permits and Lease Applications

In 1964 and 1965, plaintiffs filed applications for phosphate prospecting permits on acquired lands in the Osceola National Forest. On the basis of these applications, the Department of Interior decided that it would be appropriate to issue prospecting permits to both Kerr-McGee and Global. The Forest Service — an agency within the Department of Agriculture — concurred in the decision, on the condition that use stipulations could be imposed at a later date if plaintiffs were to apply for leases. Accordingly, each prospecting permit contained the following lan[45]*45guage: “In the event the permittee makes application for mining lease on any lands under this permit, the Forest Service reserves the right to include in such mining lease special stipulations to protect surface values.”

Following issuance of the permits, Kerr-McGee and Global pressed forward with their prospecting work. Both located phosphate deposits on the lands in question. As a consequence, between 1S69 and 1972 each filed applications for phosphate leases, asserting that they had discovered “valuable deposits” of the mineral.

Showings and Stipulations

Having reached the lease application stage, Kerr-McGee and Global were instructed to submit mining and reclamation plans for the lands they wished to lease. The content of these plans was affected by the 1976 regulation defining “valuable deposit.” This regulation required each lease applicant to “present sufficient evidence to show that there is a reasonable expectation that his revenues from the sale of the mineral will exceed his costs of developing the mine, and extracting, removing, and marketing the mineral.” 48 C.F.R. § 3520.1-1.

In the course of fulfilling this requirement, plaintiffs were told to submit their mining and reclamation plans in two increments: the “initial showing” and the “final showing.” In the initial showing, plaintiffs had to demonstrate the extent of minerals discovered. In the final showing, they were obliged to show the economic viability of a mining operation, taking into account costs of compliance with environmental regulations and lease terms.

Kerr-McGee submitted its “initial showing” on August 11, 1978. This plan stated that Kerr-McGee would be using a sand/clay reclamation technique that had been developed at Brewster Phosphates, a company in which Kerr-McGee is a partner. The Bureau of Land Management (BLM) accepted Kerr-McGee’s initial showing on May 19, 1981;1

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32 Fed. Cl. 43, 1994 U.S. Claims LEXIS 183, 1994 WL 496787, Counsel Stack Legal Research, https://law.counselstack.com/opinion/kerr-mcgee-corp-v-united-states-uscfc-1994.