United Nuclear Corp. v. United States

17 Cl. Ct. 768, 1989 U.S. Claims LEXIS 265, 1987 WL 58054
CourtUnited States Court of Claims
DecidedJuly 27, 1989
DocketNo. 223-84L
StatusPublished
Cited by4 cases

This text of 17 Cl. Ct. 768 (United Nuclear Corp. v. United States) is published on Counsel Stack Legal Research, covering United States Court of Claims primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
United Nuclear Corp. v. United States, 17 Cl. Ct. 768, 1989 U.S. Claims LEXIS 265, 1987 WL 58054 (cc 1989).

Opinion

OPINION

NAPIER, Judge:

This case involves a suit filed under 28 U.S.C. § 1491 (1982) by plaintiff, a corporation organized under the laws of the State of Delaware. The complaint alleges a [769]*769Fifth Amendment “taking” by inverse condemnation in the Grants Mineral Belt in northwest New Mexico.

FACTS

The Grants Mineral Belt covers an area measuring roughly 100 miles longitudinally, and 10 to 15 miles latitudinally. Three hundred thirty (330) million pounds of uranium, or approximately 55 percent of all uranium produced in the United States, has come from the Grants Mineral Belt. It is the premier uranium-producing area in the country.

In the late 1960s, the Kerr-McGee Corporation had acquired uranium leases in the Grants Mineral Belt which were located on the Navajo Indian Reservation. Kerr-McGee had undertaken significant exploratory work on its leases. The type of exploratory drilling being conducted by Kerr-McGee made it clear to other uranium companies that a sizable discovery had been made. The exploration efforts by Kerr-McGee and other companies in the area strongly suggested that there was a significant potential for uranium to be discovered on areas of the Navajo reservation not covered by the Kerr-McGee leases.

The Navajo Tribe recognized this potential. On November 18, 1970, the Advisory Committee of the Navajo Tribal Council, by an unanimous vote, authorized the Secretary of the Interior to conduct public bidding for the lease of specified tribal lands. These leases were for the purpose of uranium mining..

In April and May 1971, the Secretary of the Interior and his agents determined to lease various tracts of land on the Navajo Reservation in New Mexico on behalf of the Tribe. To this end, the Secretary issued an invitation for sealed bids. UNC was the successful bidder for two tracts of land, and on June 29, 1971, entered into two leases with the Navajo Indian Tribe which permitted the plaintiff to mine for certain minerals including uranium ore on lands of the Tribe near Gallup, New Mexico. The primary term of the leases extended for “a term of 10 years from the date of * * * approval and as long thereafter as the minerals specified are produced in paying quantities.” On July 7, 1971, pursuant to statutory authority,1 the Secretary of the Interior approved the mineral leases entered into between UNC and the Navajo Tribe.2

UNC was a major participant in the uranium mining industry in the 1970s. The company was the second or third largest domestic uranium producer in 1977 and 1978. UNC’s Churchrock mine, located in New Mexico just off the Navajo Reservation, was the largest underground uranium mine in the United States in 1978. Besides the Northeast Churchrock mine, UNC had uranium mining operations at several other locations in the Grants Mineral Belt: an underground mine and an open pit mine on the Cebolleta Grant; 5 or 6 mines in the Ambrosia Lake District; and the Black Jack I and Black Jack II mines in the Smith Lake District.

UNC had as much experience in uranium mining as any producer in the United States. The company had 2,690 employees involved in uranium operations in fiscal year 1979. UNC had net earnings of $21.5 million in 1977, $31.8 million in 1978, and $43.8 million in 1979.

[770]*770UNC paid the Navajo Tribe an initial bonus of seventy-nine thousand ($79,000) dollars for the leases. The Tribe still retains this money. In addition, UNC agreed to pay royalties to the Tribe ranging from 12 percent to 25 percent, depending upon the richness of the ore. Further, the lease agreements committed UNC to paying rental fees annually and minimum royalties annually beginning in the fourth year of the leases. As of June 1981, UNC had paid the Navajo Tribe over $220,000 under these lease provisions. Under both statutory and regulatory authority, UNC’s leases could not become effective until approved by the Secretary of the Interior. See 25 U.S.C. § 396a; 25 C.F.R. § 171.2 (1971).

By regulation, UNC could not commence exploration on the subject lands until the Secretary approved its exploration plan. 25 C.F.R. § 177.6 (1970), now designated § 216.6. By regulation, approval of UNC’s exploration plan was delegated to the Regional Mining Supervisor of the United States Geological Survey. Subsequent to the approval of the leases by the Secretary of the Interior, UNC submitted and received approval from the Secretary of an exploration plan as required by regulation.3 UNC explored for and discovered valuable deposits of uranium ore on the leased lands. The total expenses incurred by UNC for exploration and related activities ultimately reached $5,366,835. This is exclusive of the amount spent by UNC’s co-venturer, the Tennessee Valley Authority. As a result of this exploration, UNC discovered sizable uranium reserves.

UNC’s exploration efforts resulted in the discovery of more than 20 million pounds of uranium reserves on the subject lands. UNC therefore determined to conduct mining operations that would result in the production of uranium in paying quantities, and UNC’s continued ownership of its leasehold interest. There was a great potential for additional uranium reserves on the subject lands. Substantial areas of the subject lands were not explored because the surface topography made drilling impractical. UNC believed that there was a potential for 20 million additional pounds of uranium on these unexplored portions of the subject lands. UNC’s intention to engage in mining operations on the subject lands was conveyed to its stockholders. In its 1977 Annual Report, UNC informed its stockholders that the “deposit [on the subject lands] has been determined to be economically minable and has been turned over to [UNC’s] Mining and Milling Division for development.”

On February 24, 1977, as required by regulation,4 UNC explored for and discovered valuable deposits of uranium ore on the leased lands. UNC submitted to the United States Geological Survey (USGS), a Bureau of the Department of the Interior, for approval, a mining plan for mining operations on the leased lands. The mining plan satisfied each of the requirements set forth in the mining plan regulations.5 However, the Department of the Interior withheld approval of the mining plan for a period of more than 4 years, deferring to the Navajo Tribe approval of the plan. UNC alleges that tribal approval for mining plans on lands leased by an Indian tribe was not required or authorized by statute, regulation, or the lease agreements.

On either April 4 or April 7, 1978,6 a meeting took place between UNC and Inte[771]*771rior Department officials. At this meeting and without forewarning, UNC was informed that the Department of the Interior was giving the Navajo Tribe a veto power over the mining plan and that the Department and USGS were refusing to take any action on the mining plan until the Tribe approved it.

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Related

NRG Co. v. United States
30 Fed. Cl. 460 (Federal Claims, 1994)
NRG Co. v. United States
24 Cl. Ct. 51 (Court of Claims, 1991)
United Nuclear Corporation v. The United States
912 F.2d 1432 (Federal Circuit, 1990)

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17 Cl. Ct. 768, 1989 U.S. Claims LEXIS 265, 1987 WL 58054, Counsel Stack Legal Research, https://law.counselstack.com/opinion/united-nuclear-corp-v-united-states-cc-1989.