Document 129
Filed 03/05/2008
Page 1 of 51
IN THE UNITED STATES COURT OF FEDERAL CLAIMS
) ) Plaintiffs, ) ) v. ) ) THE UNITED STATES, ) ) Defendant. ) __________________________________________)
ALFRED ALOISI, et al.,
No. 95-650L Judge Lawrence S. Margolis
DEFENDANT'S OPPOSITION TO PLAINTIFFS' MOTION FOR SUMMARY JUDGMENT RONALD J. TENPAS Assistant Attorney General Environment & Natural Resources Division BRUCE K. TRAUBEN Trial Attorney Natural Resources Section Environment & Natural Resources Division U.S. Department of Justice 601 D Street, NW Washington, D.C. 20004 (202) 305-0238 (phone)/(202) 305-0506 (fax) WILLIAM J. SHAPIRO Trial Attorney U.S. Department of Justice Environment & Natural Resources Div. 501 I Street, Suite 9-700 Sacramento, CA 95814-2322 OF COUNSEL: ROSE MIKSOVSKY U.S. Department of Agriculture Office of General Counsel 33 New Montgomery St., 17th Fl. San Francisco, CA 94105-3170 Dated: March 5, 2008
Case 1:95-cv-00650-LSM
Document 129
Filed 03/05/2008
Page 2 of 51
TABLE OF CONTENTS INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 ARGUMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 I. Plaintiffs' Takings Claim Is Not Ripe . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 A. Plaintiffs Did Not Submit a Meaningful Proposal for Mine Production Activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 Plaintiffs' Claims Are Not Ripened By the Principle of "Extraordinary Delay" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
B.
II.
Plaintiffs Failed to Demonstrate the Existence of a Compensable Property Interest in the Unpatented Mining Claims and Patented Mountain Laurel Mine . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 A. Plaintiffs' Takings Claim Related to the Unpatented Mining Claims Requires Plaintiffs to Demonstrate a Discovery of a Valuable Mineral Deposit . . . . . . . . . . . . . . . . . . . . . . . . . 9 Plaintiffs' Novel Argument That Their Compensable Property Interest Arises from a "Statutory Right" Is Not Supported by Long-Established Law and Must Be Rejected . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 1. Plaintiffs' Argument that the Discovery Requirement Is Irrelevant Merely Because They Bring a Temporary, Rather than a Permanent, Takings Claim Must Be Rejected . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 Plaintiffs' Argument that Their Property Right is Established by Federal Regulation Must Be Rejected . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18 Plaintiffs' Argument that Their Property Right is Established by the Forest Service Manual Must Be Rejected . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19 Plaintiffs' Argument About a "Statutory Right" Demonstrates Why the Court Lacks Jurisdiction Over Plaintiffs' Claims . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
B.
2.
3.
4.
III.
Plaintiffs Fail to Show That The Penn Central Factors For A Regulatory Taking Are Met . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22 - ii -
Case 1:95-cv-00650-LSM
Document 129
Filed 03/05/2008
Page 3 of 51
A.
Plaintiffs Fail to Show Extraordinary Delay and Fail to Meet Their Burden of Showing Bad Faith by Clear and Convincing Evidence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22 1. Plaintiffs' Taking Claim Is Grounded Upon the False Premise that the Fish and Wildlife Service's July 23, 1990 Biological Opinion Would Allow Liberty Mining's Plans of Operations to Go Forward . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24 Forest Service Personnel Met with Mr. Aloisi to Discuss the Biological Opinion and Its Mitigation Requirements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26 The Alleged Delay Was Not Extraordinary . . . . . . . . . . . . . . . . . 27 Plaintiffs Fail to Show Bad Faith . . . . . . . . . . . . . . . . . . . . . . . . . 33
2.
3. 4. B.
Plaintiffs Fail to Show the Economic Impact of the Alleged Delay . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36 Plaintiffs Fail to Show the Interruption of Reasonable Investment-Backed Expectations Caused by the Alleged Delay . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
C.
CONCLUSION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
- iii -
Case 1:95-cv-00650-LSM
Document 129
Filed 03/05/2008
Page 4 of 51
TABLE OF AUTHORITIES CASES Almota Farmers Elevator & Warehouse Co. v. United States, 409 U.S. 470 (1973) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 Am. Pelagic Fishing Co. v. United States, 379 F.3d 1363 (Fed. Cir. 2004) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 Am-Pro Protective Agency, Inc. v. United States, 281 F.3d 1234 (Fed. Cir. 2002) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31, 34 Appolo Fuels, Inc. v. United States, 318 F.3d 1338 (Fed. Cir. 2004) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 Atlas Corp. v. United States, 895 F.2d 745 (Fed. Cir. 1990) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 Bass Enters. Prod. Co. v. United States, 381 F.3d 1360 (Fed. Cir. 2004) . . . . . . . . . . . . . . . . . . . . 21, 22, 23, 27, 28, 29, 30, 33, 36 Bass Enters. Prod. Co. v. United States, 54 Fed. Cl. 400 (2002) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43 Bayshore Res. Co. v. United States, 2 Cl. Ct. 625 (1983) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 Benson Mining & Smelting Co. v. Alta Mining & Smelting Co., 145 U.S. 428 (1892) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 Best v. Humboldt Placer Mining Co., 371 U.S. 334 (1963) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 Boise Cascade Corp. v. United States, 296 F.3d 1339 (Fed. Cir. 2002) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3, 6, 7 Bush v. United States, 58 Fed. Cl. 123 (2003) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 Cal. Coastal Comm'n v. Granite Rock, 480 U.S. 572 (1987) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3, 39 Cameron v. United States, 252 U.S. 450 (1920) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9, 12
- iv -
Case 1:95-cv-00650-LSM
Document 129
Filed 03/05/2008
Page 5 of 51
Castle v. Womble, 19 Pub. Lands Dec. 455 (1895) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 CCA Assoc. v. United States, 75 Fed. Cl. 170 (2007) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34, 35 Chrisman v. Miller, 197 U.S. 313 (1905) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 Clouser v. Espy, 42 F.3d 1522 (9th Cir. 1994), cert. denied, 515 U.S. 1141 (1995) . . . . . . . . . . . . . . . . . . 4 Cottrell v. United States, 42 Fed. Cl. 144 (1998) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20 Crocker v. United States, 125 F.3d 1475 (Fed. Cir. 1997) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20 Davis v. Nelson, 329 F.2d 840 (9th Cir. 1964) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 Deltona Corp. v. United States, 657 F.2d 1184 (Ct. Cl. 1981) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38 Fla. Rock Indus. v. United States, 45 Fed. Cl. 21 (1999) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38, 40 Freese v. United States, 221 Ct. Cl. 963 (1979) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 Freese v. United States, 6 Cl. Ct. 1 (1984) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 Good v. United States, 189 F.3d 1355 (Fed. Cir. 1999) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38 Great Basin Mine Watch, 146 I.B.L.A. 248 (Nov. 9, 1998) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 Hafen v. United States, 30 Fed. Cl. 470 (1994), aff'd, 47 F.3d 1183 (Fed. Cir. 1995) . . . . . . . . . . . . . . . . . . . . . . 11 Holden v. United States, 38 Fed. Cl. 732 (1997) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
-v-
Case 1:95-cv-00650-LSM
Document 129
Filed 03/05/2008
Page 6 of 51
In Re S. Utah Wilderness Alliance, 125 I.B.L.A. 175 (1993) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 Lara v. Sec'y of Interior, 820 F.2d 1535 (9th Cir. 1987) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 Loveladies Harbor, Inc. v. United States, 28 F.3d 1171 (Fed. Cir. 1994) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39, 40 MacDonald, Sommer & Frates v. Yolo County, 477 U.S. 340 (1986) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 Martinez v. United States, 333 F.3d 1295 (Fed. Cir. 2003), cert. denied, 540 U.S. 1177 (2004) . . . . . . . . . . . . . . . 20 Mineral Policy Center v. Norton, 292 F.Supp.2d 30 (D.D.C. 2003) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4, 11 Morris v. United States, 392 F.3d 1372 (Fed. Cir. 2004) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 Mulkern v. Hammitt, 326 F.2d 896 (9th Cir. 1964) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 Palazzolo v. Rhode Island, 533 U.S. 606 (2001) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 Patton v. United States, 64 Fed. Cl. 768 (2005) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 Penn Central Transp. Co. v. New York City, 438 U.S. 104 (1978) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20, 21, 35, 38, 40 Reynolds v. Army & Air Force Exch. Serv., 846 F.2d 746 (Fed. Cir. 1988) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 Rith Energy, Inc. v. United States, 270 F.3d 1347 (Fed. Cir. 2001) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3, 38 Ronald A. Pene, 147 I.B.L.A. 153 (1999) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18 Ruckelshaus v. Monsanto, 467 U.S. 968 (1984) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
- vi -
Case 1:95-cv-00650-LSM
Document 129
Filed 03/05/2008
Page 7 of 51
Seiber v. United States, 364 F.3d 1356 (Fed. Cir. 2004) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38 Skaw v. United States, 13 Cl. Ct. 7 (1987) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 Stone Forest Indus., Inc. v. United States, 973 F.2d 1548 (Fed. Cir. 1992) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19 Sw. Center for Biological Diversity v. USFS, 100 F.3d 1443 (9th Cir. 1996) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19 Swanson v. Babbitt, 3 F.3d 1348 (9th Cir. 1993) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 Tabb Lakes, Ltd. v. United States, 10 F.3d 796 (Fed. Cir. 1993) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20, 33 Tahoe-Sierra Pres. Council, Inc. v. Tahoe Reg'l Planning Agency, 216 F.3d 764 (9th Cir. 2000) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28 Tenn. Valley Auth., v. Hill, 437 U.S. 153 (1978) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34 United States v. Bagwell, 961 F.2d 1450 (9th Cir. 1992) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 United States v. Coleman, 390 U.S. 599 (1968) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11, 12 United States v. Mobley, 45 F.Supp. 407 (S. D. Cal. 1942) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 United States v. Riverside Bayview Homes, Inc., 474 U.S. 121 (1985) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20 United States v. Weiss, 642 F.2d 296 (9th Cir. 1981) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18 Western Radio Servs. Co., Inc. v. Espy, 79 F.3d 896 (9th Cir. 1996) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19 Williamson County Reg'l Planning Comm'n v. Hamilton Bank of Johnson City, 473 U.S. 172 (1985) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
- vii -
Case 1:95-cv-00650-LSM
Document 129
Filed 03/05/2008
Page 8 of 51
Wyatt v. United States, 271 F.3d 1090 (Fed. Cir. 2001) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8, 28, 33, 40 STATUTES 16 U.S.C. § 470 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 30 U.S.C. §§ 21-54 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9, 18 30 U.S.C. § 28 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27 30 U.S.C. § 612 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 33 U.S.C. § 1151 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 REGULATIONS 36 C.F.R. Part 228 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18 36 C.F.R. § 228 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18 36 C.F.R. § 228.3 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26 36 C.F.R. § 228.4(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 36 C.F.R. § 228.4(d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19, 20 36 C.F.R. § 228.5 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19, 20 36 C.F.R. § 228.5(a)(5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20 36 C.F.R § 228.8 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 36 C.F.R. §§ 228.8(a)-(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 36 C.F.R. § 228.8(d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 36 C.F.R. § 228.8(e) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39 36 C.F.R. Part 252 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18 36 C.F.R. § 800.1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 36 C.F.R. § 800.1(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 39 Fed. Reg. 31317 (Aug. 28, 1974) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18 - viii -
Case 1:95-cv-00650-LSM
Document 129
Filed 03/05/2008
Page 9 of 51
OTHER AUTHORITIES Lawrence G. McBride, Inverse Condemnation Issues in Revising the Mining Law, 38 Rocky Mtn. Min. L. Inst. § 7.02[7][e] (1992) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 Michael Graf, Application of Takings Law to Regulation of Unpatented Mining Claims, 24 Ecology L.Q. 57 (1997) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
- ix -
Case 1:95-cv-00650-LSM
Document 129
Filed 03/05/2008
Page 10 of 51
LIST OF EXHIBITS
Exhibit No. 1
Exhibit Description Lawrence G. McBride, Inverse Condemnation issues in Revising the Mining Law, 38 Rocky Mtn. Min. L. Inst. § 7.02[7][e] (1992) Thomas Ferrero, excerpts of Jan. 13, 1998 and Nov. 1, 2007 Deposition Transcripts Kathleen Granillo, excerpts of Oct. 2, 1997 Deposition Transcript Marc Williams, excerpts of Oct. 11, 1997 Deposition Transcript Plaintiffs' Answers to Defendant's Second Set of Interrogatories and Requests for Production of Documents, Sept. 24, 2007, excerpts Quarterly Joint Status Reports, dated Jan. 3, 2006, March 31, 2006, July 5, 2006, and Sept. 29, 2006
2
3 4 5
6
-x-
Case 1:95-cv-00650-LSM
Document 129
Filed 03/05/2008
Page 11 of 51
INTRODUCTION Plaintiffs fail to meet their burden of proof to with respect to every element courts consider when determining whether the government is liable for a taking. Accordingly, their motion for summary judgment should be denied. As a preliminary matter, Plaintiffs fail to show that their takings claim is ripe for review. Plaintiffs bear the burden of proof of showing that their claim is ripe, but they make no attempt to do so. As Defendant discusses below, and in Defendant's Memorandum in Support of Its Motion to Dismiss or, Alternatively, for Summary Judgment ("Def.'s Mem."), Plaintiffs' takings claim is not ripe because they never submitted a proposed plan of operations for the production phase of mining that the Forest Service could consider. Accordingly, Plaintiffs' takings claim is not ripe for review and should be dismissed. Plaintiffs also fail to show the most basic elements for a takings claim. First, Plaintiffs must show that they had a compensable property interest in the mining claims at issue as of the date of the alleged taking, July 23, 1990. However, they fail to present any evidence that shows that they had a property interest in the patented Mountain Laurel Mine as of that date. Indeed, the evidence they point to supports the government's position that they did not have a property interest in the Mountain Laurel Mine until March 1991, well after the alleged date of taking. Further, to show that they had a compensable property interest in the unpatented mining claims, Plaintiffs must show that they had made a discovery of valuable mineral deposits as of the date of taking. Plaintiffs attempt to show that their mining claims were valid by relying upon documents that plaintiffs' expert, Mr. Ferrero, recently created based upon assumptions and speculation that find no support in the record. Mr. Ferrero's speculative conclusions are not supported by the documents in the
Case 1:95-cv-00650-LSM
Document 129
Filed 03/05/2008
Page 12 of 51
record, are without merit, and should be given little weight.1/ At the least, genuine issues of material fact regarding the validity of the Plaintiffs' unpatented mining claims prevent the Court from granting Plaintiffs' motion for summary judgment. Plaintiffs assert a novel argument that they still had a compensable property interest in the unpatented mining claims, because they assert only a temporary taking of mining claims that are located in open lands. Plaintiffs' argument, however, ignores over 100 years of precedent and may be rejected out of hand. The inability to establish a compensable property interest warrants rejection of Plaintiffs' motion and dismissal of Plaintiffs' complaint. However, even assuming that they could demonstrate a compensable property interest, Plaintiffs fail to show any of the elements necessary to establish a temporary taking. They fail to show extraordinary delay, bad faith, economic impact or any interference with reasonable investment-backed expectations. Rather, all of the elements courts consider to determine whether a temporary taking occurred support the government's cross motion for dismissal. ARGUMENT I. Plaintiffs' Takings Claim Is Not Ripe As a preliminary matter, Plaintiffs bear the burden of showing by a preponderance of the evidence that the Court has jurisdiction over its takings claim. See Patton v. United States, 64 Fed. Cl. 768, 773 (2005) (quoting Reynolds v. Army & Air Force Exch. Serv., 846 F.2d 746, 748 (Fed. Cir. 1988)). Plaintiffs, however, fail to address in their motion papers whether their takings claim is
1/
Mr. Ferrero's opinions have not been tested by discovery, as expert discovery has been deferred until after motions practice. Arguably, Plaintiffs' motion is premature because it relies heavily upon Mr. Ferrero's untested opinions. Nevertheless, Defendant believes that the Court should consider the merits of Plaintiffs' motion for summary judgment, and deny it. -2-
Case 1:95-cv-00650-LSM
Document 129
Filed 03/05/2008
Page 13 of 51
ripe for adjudication and, therefore, within the Court's subject matter jurisdiction. See Morris v. United States, 392 F.3d 1372, 1375 (Fed. Cir. 2004). Because Plaintiffs fail to meet their burden of showing that their takings claim is ripe for review, their motion for summary judgment must be denied, and this action should be dismissed as Defendant shows in its motion to dismiss. See Def.'s Mem. at 22-27. A. Plaintiffs Did Not Submit a Meaningful Proposal for Mine Production Activities
Even if Plaintiffs had a compensable property interest in these unpatented and patented mining claims, Plaintiffs' takings claim is not ripe for review. A regulatory takings claim is not ripe until the agency charged with implementing the regulation has reached a final decision to restrict some aspect of ownership. See Palazzolo v. Rhode Island, 533 U.S. 606, 620 (2001); MacDonald, Sommer & Frates v. Yolo County, 477 U.S. 340, 349-51 (1986). A takings claim is ripe, therefore, only after a claimant has submitted a meaningful permit application and the agency has reached a final decision on that application. See Boise Cascade Corp. v. United States, 296 F.3d 1339, 1351-52 (Fed. Cir. 2002). The Court lacks jurisdiction over unripe claims. See Morris, 392 F.3d at 1375. Plaintiffs' failure to submit a meaningful application for mining these claims means Plaintiffs' takings claims are not ripe and, therefore, must be dismissed. A claimants' mining rights may be limited by a variety of federal, state, and local regulations. See Cal. Coastal Comm'n v. Granite Rock, 480 U.S. 572, 584 (1987) (mining activities are subject to regulation to protect the environment); see also Rith Energy, Inc. v. United States, 270 F.3d 1347, 1351 (Fed. Cir. 2001) (mining is highly regulated); Appolo Fuels, Inc. v. United States, 318 F.3d 1338, 1349 (Fed. Cir. 2004) (same). In the present case, one of the most important preexisting limitations is the Forest Service's duty to manage National Forest System lands in order to protect surface resources from unreasonable and undue degradation. The Forest -3-
Case 1:95-cv-00650-LSM
Document 129
Filed 03/05/2008
Page 14 of 51
Service accomplishes this goal by imposing terms and conditions on an operator's conduct of mining activities in national forests. See 30 U.S.C. § 612; Clouser v. Espy, 42 F.3d 1522, 1531 (9th Cir. 1994), cert. denied, 515 U.S. 1141 (1995). As part of this regulatory authority, the Forest Service requires potential miners to submit for approval operating plans for their proposed operations. See id. at 1530 (citing cases); see also Freese v. United States, 6 Cl. Ct. 1, 11 (1984) ("With regard to unpatented claims, therefore, the Government retains the right to regulate disturbance of surface resources, as well as the right to permit uses of the surface area of the claim for purposes other than mining."). Forest Service regulations provide that "a notice of intent to operate is required from any person proposing to conduct operations which might cause disturbance of surface resources." 36 C.F.R. § 228.4(a). "If the District Ranger determines that the proposed operations are likely to cause a `significant disturbance of surface resources,' the operator must file a proposed plan of operations." Clouser, 42 F.3d at 1532 (citing 36 C.F.R. § 228.4(a)). A claimant has no right to have a specific project approved by governmental authorities. See Great Basin Mine Watch, 146 I.B.L.A. 248, 256 (Nov. 9, 1998) (holding that "the mere filing of a plan of operations by a holder of a mining claim invests no rights in the claimant to have any plan of operations approved"); see also Mineral Policy Center v. Norton, 292 F.Supp.2d 30, 35 (D.D.C. 2003) (BLM may deny a mining permit because of the area's environmental sensitivity). In addition to the need for an approved plan of operations, a proposed mining plan must be evaluated under the National Historic Preservation Act, 16 U.S.C. § 470, et al. ("NHPA"), which requires Federal agencies to take into account the "effect of their undertakings on historic properties and afford the [Advisory Council on Historic Preservation] a reasonable opportunity to comment on
-4-
Case 1:95-cv-00650-LSM
Document 129
Filed 03/05/2008
Page 15 of 51
such undertakings." 36 C.F.R. § 800.1(a).2/ In addition, depending on the nature of activity proposed, a proposal must comply with (1) Federal and State water quality standards, including the Federal Water Pollution Control Act, see 33 U.S.C. § 1151, et seq.; (2) Federal and State standards for the disposal and treatment of solid wastes, see 36 C.F.R. §§ 228.8(a)-(c); (3) the Endangered Species Act, see 36 C.F.R. §§ 228.8(d)-(e); (4) the National Environmental Protection Act; and (5) county and state regulations. See 36 C.F.R. § 228.8. Before and during the alleged temporary takings period, Plaintiffs proposed to the Forest Service only non-income producing preliminary activities (such as road-building and sampling activities), and conceptual outlines of production activities, not actual production activities themselves.3/ Morever, Plaintiffs' intended plans frequently changed. 4/ And, the parties agree that the Forest Service asked for additional information related to Plaintiffs' plans during the alleged
2/
The NHPA contemplates a coordinated effort among the relevant federal agency (in this case, the Forest Service) the Advisory Council on Historic Preservation, the State Historic Preservation Officer ("SHPO"), and the public. See 36 C.F.R. § 800.1.
3/
See JSOF ¶¶ 19, 20 (Phase II activities in May 2, 1989 were described as being dependent on the outcome of "test results from Phase I and NEPA"); JA36 at 449 (Plaintiffs' September 1989 Plan, describing production activities as contingent on positive results from earlier phases); PE-2 at ¶ 16 (Mr. Ferrero stating that the Forest Service could only evaluate the "early plan segments of Plaintiffs' September 1989 Plan); JA40 at 465 (Plaintiffs' October 1989 Supplemental Plan, explaining that details of future production activities "will depend on many factors, and cannot be accurately projected at this time"); JA84 (Plaintiffs' statement that "milling process will be determined in the next two years as exploring progresses"); JA94 at 906 (Plaintiffs' March 1991 "outline plan," describing that details of a variety of issues "will be forthcoming"); JA114 at 1108 (Plaintiffs' April 1992 Plan, lacking details of production activities because those activities would depend on the results of future exploratory work).
4/
See, e.g., JA65 at 594 (Plaintiffs' March 16, 1990 proposal for cyanide vat recovery); JA84 (Plaintiffs' September 1990 elimination of cyanide milling); Nov. 1, 2007 Ferrero Tr. at 66:3-7 (Mr. Ferrero's confirmation that Plaintiffs raised the possibility of using cyanide in a May 9, 1991 meeting with the Forest Service) (attached hereto as Ex. 2). -5-
Case 1:95-cv-00650-LSM
Document 129
Filed 03/05/2008
Page 16 of 51
takings period, but that Plaintiffs did not, or could not, provide the requested information.5/ Plaintiffs, therefore, never submitted a fully-formed plan for mining production activities. Thus, the Forest Service did not, and could not, reach a final decision on any proposals for actual gold production. Plaintiffs' takings claim, therefore, is not ripe for review and must be dismissed for lack of jurisdiction. B. Plaintiffs' Claims Are Not Ripened By the Principle of "Extraordinary Delay"
Although Plaintiffs do not discuss the question of ripeness in their opening brief, Plaintiffs cite Boise Cascade for the proposition that "extraordinary delay in permit processing or bad faith on the part of the agency can give rise to a ripe takings claim notwithstanding the failure to deny the permit." See Pls.' Mem. at 15 (citing Boise Cascade, 296 F.3d at 1347 n.6). Plaintiffs do not argue, however, that their takings claim is ripe due to extraordinary delay. That argument should be rejected, nevertheless, because the concept that extraordinary delay might ripen a takings claim is irrelevant here. Extraordinary delay might ripen a regulatory takings claim when an applicant has submitted a meaningful permit application and the agency takes an extraordinarily-long amount of time reviewing that application. The principle prevents the agency from unnecessarily dragging out its review of an application (during which time the applicant is restricted from using his property) by allowing a claimant to bring a takings claim after the delay becomes extraordinarily
5/
See JA38 at 458 (October 1989 letter from Forest Service requesting a "firm plan"); JA69 (April 1990 letter from Forest Service repeating verbal request for a "written proposal describing the specific plans"); JA82 at 778 (August 1990 letter from Forest Service requesting information about milling process); JA88 (November 1990 letter from Forest Service stating "[a]t this time we do not have a complete proposed Plan of Operations to encompass these [operational phase] activities"); JA90 (December 1990 letter from Forest Service stating "we would need to know more about your proposal in detail before an accurate resopnse could be made"); JA108 (August 1991 letter from Forest Service requesting information); JA111 (March 1992 letter from Forest Service requesting information); JA137 (November 1992 letter from Forest Service requesting additional information); JA142 (December 1992 letter from Forest Service repeating request for additional information) -6-
Case 1:95-cv-00650-LSM
Document 129
Filed 03/05/2008
Page 17 of 51
long. In such a situation, it is clear what activities the applicant intends to undertake; the agency has had a meaningful opportunity to evaluate that proposal; and it is possible to evaluate the economic impact on the applicant caused by the unreasonably-long delay. The principle clearly does not obviate the claimant's need to submit a meaningful application, since the length of an agency's review can never become extraordinary if there is no meaningful application for the agency to review. See Boise Cascade, 296 F.3d at 1351-52 (citing numerous cases so holding).6/ II. Plaintiffs Failed to Demonstrate the Existence of a Compensable Property Interest in the Unpatented Mining Claims and Patented Mountain Laurel Mine Recognizing their burden to show that they have a compensable property interest (see Pls.' Mem. at 13), Plaintiffs argue that their "core" mining claims were validated by a discovery under the Mining Law.7/ See Pls.' Mem. at 19-24. According to Plaintiffs, Messrs. Aloisi and Goodman "determined that the dump and apex deposits they had identified on the property contained `$40/ton material.'" Pls.' Mem. at 20. In addition to the opinions of Mr. Aloisi and the hearsay opinion of Mr. Goodman (who is now deceased), Plaintiffs also rely upon the opinions of Mr. Ferrero in support of their argument that their mining claims are valid. As Defendant discusses below, however, Plaintiff Aloisi's opinions are wholly unsupported, and Mr. Ferrero's opinions are based upon speculation and are not support by the facts. Indeed, Mr. Ferrero ignores his own prior, contemporaneous conclusions to reach the conclusions he now asserts. Moreover, Defendant's expert Mineral Examiner, James W.
6/
In addition, it is clear that had Plaintiffs submitted a fully-formed plan of operations, it is very possible that some activities would have been permitted. See JA90 at 828 (December 1990 letter from the Forest Service to Plaintiffs stating that a proposal for underground mining "could probably occur," but that "we would need to know more about your proposal in detail before an accurate response could be made"). Because Plaintiffs never submitted such a proposal, it is impossible to know how far the agency's regulations reached in order to evaluate a Fifth Amendment claim.
7/
Plaintiffs do not define which mining claims they consider to be "core," but presumably they comprise a subset of their mining claims. Accordingly, Plaintiffs' argument on the validity of their mining claims apparently applies only to certain, unspecified mining claims. -7-
Case 1:95-cv-00650-LSM
Document 129
Filed 03/05/2008
Page 18 of 51
DeMaagd, identifies in his declaration (filed herewith) significant inconsistent statements and assumptions made by Mr. Ferrero in his affidavit, as discussed below. Plaintiffs, therefore, fail to show a valid discovery of a valuable mineral deposit, and their motion for summary judgment should be denied. Plaintiffs' novel argument that they had a compensable property interest in the mining claims regardless of whether they had made a valid discovery of any valuable mineral deposit is without merit, and should be rejected, as discussed below. See Pls.' Mem. at 24-29. Finally, Plaintiffs argue that they had a compensable property interest in the patented Mountain Laurel Mine, contending that it was held under a "lease-purchase agreement by Aloisi and his associates from the estate of Patterson" (Pls.' Mem. at 17), but they fail to provide a copy of the leasepurchase agreement. The only documents that Plaintiffs point to in support of their contention that they had a property interest in the Mountain Laurel Mine at the time of the alleged taking the Notice of Trustee's Sale, dated April 7, 1992, and attached Grant Deed dated March 22, 1991 support Defendant's argument that Mr. Aloisi did not acquire an interest in the Mountain Laurel Mine until 1991, after the alleged taking occurred.8/ See Pls.' Mem. at 17 (citing JA115 at 1117). A. Plaintiffs' Takings Claim Related to the Unpatented Mining Claims Requires Plaintiffs to Demonstrate a Discovery of a Valuable Mineral Deposit
"It is axiomatic that only persons with a valid property interest at the time of the taking are entitled to compensation." Wyatt v. United States, 271 F.3d 1090, 1096 (Fed. Cir. 2001) (quoting Almota Farmers Elevator & Warehouse Co. v. United States, 409 U.S. 470, 473-74 (1973)). In the
8/
Because Defendant shows in its opening brief in support of its motion to dismiss that Plaintiffs did not have a property interest in either the Mountain Laurel Mine or the Rollins Mill Site (Mineral Lots 45A and 45B, respectively) at the time of the alleged taking, Defendant does not argue the issue further in this brief but refers the Court to Defendant's opening brief in support of its motion to dismiss. See Def.'s Mem. at 32. -8-
Case 1:95-cv-00650-LSM
Document 129
Filed 03/05/2008
Page 19 of 51
instant case, the majority of Plaintiffs' allegations relate to unpatented mining claims.9/ See Compl. ¶¶ 9-12 (identifying various unpatented mining claims). As discussed below, Plaintiffs fail to show that they had a compensable property interest in the unpatented mining claims at the time of the alleged taking. The Court therefore must deny Plaintiffs' motion for summary judgment. The General Mining Law of 1872, 30 U.S.C. §§ 21-54 ("Mining Law"), provides citizens the right "to explore, discover, and extract valuable minerals from the public domain and to obtain title to lands containing such discoveries." Although an unpatented mining claim may be a property interest subject to the just compensation clause of the Fifth Amendment, it is well-settled that an individual does not obtain a private property interest in an unpatented mining claim unless and until he makes a "valuable discovery," physically marks the location of his discovery, and properly records the claim. See Cameron v. United States, 252 U.S. 450, 456 (1920) ("To make the claim valid, or to invest the locator with a right to the possession, it was essential that the land be mineral in character and that there be an adequate mineral discovery within the limits of the claim as located"); Best v. Humboldt Placer Mining Co., 371 U.S. 334, 336 (1963). The discovery requirement is a fundamental principle of mining law, and has been well-settled since before enactment of the Mining Law itself. As the Ninth Circuit stated,
In contrast, a patented mine is private property. An individual who possesses a valid mining claim may obtain a patent and "thereby purchas[e] from the Federal Government the land and minerals and obtain[] ultimate title to them." Swanson v. Babbitt, 3 F.3d 1348, 1350 (9th Cir. 1993). A patent provides the individual with fee simple title in the land. See Benson Mining & Smelting Co. v. Alta Mining & Smelting Co., 145 U.S. 428, 430 (1892). A patent will not be issued, however, until the claim is determined to be valid i.e., a mineral examiner determines that a discovery of a valuable mineral deposit has been made. The mineral examiner must collect and analyze samples, estimate the value of the mineral deposit and the cost of extracting, processing and marketing the minerals, including the costs of complying with any environmental and reclamation laws. See id. at 506-07. Only upon completion of the mineral report confirming the existence of a valuable mineral deposit may a patent issue. There is only one patented mine at issue in this case the Mountain Laurel Mine which Mr. Aloisi acquired in March 1991, after the alleged taking occurred. See Def.'s Mem. at 32. -9-
9/
Case 1:95-cv-00650-LSM
Document 129
Filed 03/05/2008
Page 20 of 51
[f]rom earliest times in the history of mining, the courts have uniformly held that a discovery of valuable mineral must coincide with compliance with the legal requirements for locating a claim before valid ownership of the property has been established. Whenever such coincidence does occur, the locator has acquired a vested property right enforceable and defendable against the United States as well as third persons. Davis v. Nelson, 329 F.2d 840, 845 (9th Cir. 1964) (emphasis added) (stating further that the discovery requirement is the "sine qua non of an entry to initiate vested rights against the United States"); accord Lara v. Sec'y of Interior, 820 F.2d 1535, 1537 (9th Cir. 1987) ("A mining claimant has the right to possession of a claim only if he has made a mineral discovery on the claim."); In Re S. Utah Wilderness Alliance, 125 I.B.L.A. 175, 194 (1993) ("It is well settled that the mere location of a mining claim, unsupported by the discovery of a valuable mineral deposit, affords the claimant no rights as against the government.").10/ Without a valid discovery, a plaintiff lacks a property right upon which to base a takings claim. See United States v. Bagwell, 961 F.2d 1450, 1456 (9th Cir. 1992) (agreeing that the uncompensated taking of a valid unpatented mining claim would violate the Constitution, but holding that "the Fifth Amendment does not require compensation to be paid for divestment of an invalid mining claim"); Holden v. United States, 38 Fed. Cl. 732, 735 (1997) (citing cases and stating that "[t]o have a compensable interest in unpatented mining claims sufficient to bring a takings action in this Court, there must have been a determination as to the validity of those mining claims"); Skaw v. United States, 13 Cl. Ct. 7, 28 (1987) ("Until there has been a determination that there has been a valuable discovery,
10/
See also Lawrence G. McBride, Inverse Condemnation Issues in Revising the Mining Law, 38 Rocky Mtn. Min. L. Inst. § 7.02[7][e] at 7-12 (1992) (Plaintiffs' counsel acknowledging that "[t]he holder of a claim located under the General Mining Law that is not supported by a discovery does not, under current case law, have a compensable property interest"). Tellingly, the same article includes a description of Plaintiffs' current argument that a compensable right does not require a valuable discovery as part of a proposed bill that was never enacted. See id. § 7.04[1]. A courtesy copy of Mr. McBride's article is attached hereto as Ex. 1. - 10 -
Case 1:95-cv-00650-LSM
Document 129
Filed 03/05/2008
Page 21 of 51
the locator has only a gratuity from the United States."), aff'd, 847 F.2d 842 (Fed. Cir. 1987), cert. denied, 488 U.S. 854 (1988); see also Mineral Policy Center, 292 F.Supp.2d at 47-48 (stating that a claimant "has no property rights against the United States" before perfecting a valid mining claim); Bush v. United States, 58 Fed. Cl. 123, 125 (2003) (stating that a claimant may establish a property interest in an unpatented mining claim, only if there has been an administrative determination that the mining claim is valid).11/ Plaintiffs' takings claim must be dismissed, therefore, unless Plaintiffs demonstrate that their unpatented mining claims were valid at the time of the alleged taking that is, that they had made a discovery of a valuable mineral deposit. A "discovery" is defined as having occurred in circumstances: Where minerals have been found, and the evidence is of such a character that a person of ordinary prudence would be justified in the further expenditure of his labor and means, with a reasonable prospect of success, in developing a valuable mine. . . . Chrisman v. Miller, 197 U.S. 313, 322 (1905) (citing Castle v. Womble, 19 Pub. Lands Dec. 455, 457 (1895)) (internal quotation marks omitted). Pursuant to Supreme Court precedent, a discovery is determined by the prudent man test as refined by the marketability test, meaning that a discovery is valid only when (1) a prudent man would be justified in further expenditure of his labor and means and (2) the mineral deposit can be extracted, removed, and marketed at a profit. See United States v. Coleman, 390 U.S. 599, 602 (1968). "Mere outcroppings, whether appearing on the surface or in shallow works near the surface, do not satisfy the quantum of discovery." United States v. Mobley, 45 F.Supp. 407, 409 (S. D. Cal. 1942) (citing cases). It is important to recognize that the discovery obligation is an ongoing requirement. Because
Hence, where the Interior Board of Land Appeals (IBLA) has made an administrative decision that a mining claim is invalid and that decision is upheld by any subsequent challenge, a claimant's takings claim is foreclosed. See Hafen v. United States, 30 Fed. Cl. 470, 473 (1994) (rejecting takings claim), aff'd, 47 F.3d 1183 (Fed. Cir. 1995); Bayshore Res. Co. v. United States, 2 Cl. Ct. 625, 628 (1983) (same); Freese v. United States, 221 Ct. Cl. 963 (1979) (same). - 11 -
11/
Case 1:95-cv-00650-LSM
Document 129
Filed 03/05/2008
Page 22 of 51
"discovery" turns, in part, on profitability, a valid claim may become invalid if the cost-benefits balance of a mining operation tips away from marketability. See Coleman, 390 U.S. at 600; Cameron, 252 U.S. at 460; Mulkern v. Hammitt, 326 F.2d 896, 897-98 (9th Cir. 1964). "This means that a oncevalid, unpatented mining claim may be extinguished as a property interest whenever an increase in operating costs or decrease in the mineral's market price reduces the mining operation below the level of profitability." Michael Graf, Application of Takings Law to the Regulation of Unpatented Mining Claims, 24 Ecology L.Q. 57, 114 (1997); see also Atlas Corp. v. United States, 895 F.2d 745, 757-58 (Fed. Cir. 1990) (affirming dismissal of takings claim where reclamation requirements were imposed on the project even if the costs of such reclamation requirements rendered the mining project uneconomical). In the instant case, Plaintiffs allege that their takings claim accrued on July 23, 1990 (the date upon which the FWS issued its Biological Opinion and, Plaintiffs allege, the Forest Service failed to inform them of that fact), and ended in February 1994 (when the FWS completed the second Biological Opinion). Plaintiffs fail to show a discovery of a valuable mineral deposit with respect to any unpatented mining claim as of the alleged date of taking. In fact, Plaintiffs' allegation that the Forest Service prevented them from undertaking certain preliminary activities, including road-clearing and exploration (see Compl., ¶ 23) is inherently inconsistent with their argument that they had made a discovery of valuable mineral resources. Plaintiffs designed these preliminary activities to investigate the existence and extent of valuable mineral ore, and determine whether mining might be profitable in the future. See JA26 at 421 (June 1989 plan of operations stating that Phase II operations "will depend on such things as the test results from Phase I and NEPA"); see also JA36 at 449 (September 1989 proposed plan of operations stating that activities beyond road improvements and preliminary sampling would be "[c]ontingent on positive results" and that the "description of the overall exploratory and
- 12 -
Case 1:95-cv-00650-LSM
Document 129
Filed 03/05/2008
Page 23 of 51
mining plan presented in this letter is incomplete due to the fact that preliminary feasibility studies have not been completed"); JA40 at 465 (October 1989 proposed plan of operations stating that details about mining activities "will depend on many factors, and cannot be accurately projected at this time"). Because Plaintiffs had not undertaken the preliminary exploratory work necessary to make a valuable mineral discovery, however, Plaintiffs cannot show that they made a discovery of a valuable mineral deposit by July 23, 1990 (or at any other point during the alleged temporary takings period). Documents generated during the late 1980s and early 1990s show that Plaintiffs had not made a discovery of a valuable mineral deposit before the alleged taking. In a 1985 report on these claims, for example, Mr. Ferrero stated that "[t]he economic feasibility of mining . . . would depend upon many factors yet to be determined, such as tonnage, grade, milling factors, gold price, and others." JA6 at 157. In his 1986 report, Mr. Ferrero reported that the "data is spotty," and that additional "field mapping and sampling will define more targets." JA7 at 184. After conducting further studies in spring of 1986, Mr. Ferrero concluded that mining certain claims would be unprofitable and that the data was insufficient to reach any conclusion with respect to others. See, e.g., JA8 at 185 ("surface samples on Incline Ridge do not support the theory of a possibly profitably [sic] surface mineable, disseminated gold deposit . . ." and the data gathered on vein deposits was inadequate "to project grade or tonnage"); id. at 186 ("A great deal of work would be required in order to determine whether the projected reserves could be profitably mineable, since essential factors such as stripping ratios, reserve volume, ore grade, haul distances, milling methods, and milling recovery have not yet been adequately studied."). In a February 23, 1990 report, Mr. Ferrero stated that "drilling and dump testing so far suggest that there may be surface mineable gold ore reserves along the vein apex corridors," but "[m]uch systematic exploration work must be completed in order to determine the distribution of gold in the apexes, potential gold recovery from ore, environmental and archeological factors, etc." JA56
- 13 -
Case 1:95-cv-00650-LSM
Document 129
Filed 03/05/2008
Page 24 of 51
at 530 (emphasis added). Significantly, Mr. Ferrero's February 23, 1990 report issued after District Ranger Lee ordered Liberty Mining to stop work on January 4, 1990, because of concerns about disturbing archaeological resources (see JA51), and just months before the alleged taking occurred. Moreover, Mr. Ferrero's opinion that Plaintiffs would achieve a 90% gold recovery rate (see Affidavit of Thomas P. Ferrero, filed Feb. 6, 2006 ("Ferrero Aff."), ¶¶ 56, 66, and 69) is inconsistent with the contemporaneous reports. Plaintiffs' February 12, 1990, assay report showed rates of only 2939% gold recovery for flotation testing, and a higher rate of recovery, 80%, using cyanide leaching. See JA53 at 510. Those results were similar to a second February 1990 report (see JA183), and a report prepared in March 1990 (see JA63). The February 28, 1990 report shows recovery rates between 29.7% and 48.2% using flotation methods, and approximately 78% recovery using a cyanide process. See JA183 at 1516 (note range of gold recovery rates under the column heading, "Au Recovery %"). The March 21, 1990 report shows only a 30-50% gold recovery rate using flotation and suggests further testing using cyanide. See JA63 at 588. Plaintiffs, however, had not sought a permit for cyanide leaching (and never have), and there is no evidence that such a permit would ever be granted by the Forest Service or allowed under existing federal, state, or local laws. Plaintiffs' use of such a high recovery rate simply is not supported by the evidence. See , DeMaagd Decl., ¶¶ 21-26. Plaintiffs offer no explanation how the recovery rates they were attaining at the time of the alleged taking a 30-50% gold recovery rate could translate into a profitable enterprise during any point during the takings period. Rather than addressing this contemporaneous evidence, Plaintiffs rely upon Mr. Aloisi's and Mr. Ferrero's affidavits, in which both witnesses state without citing any support that by 1989, Plaintiffs had "determined that the dump and apex deposits they had identified on the property contained `$40/ton material.'" Pls.' Mem. at 20 (citing PE-1 at ¶ 16; PE-2 at ¶ 14). Plaintiffs cite no
- 14 -
Case 1:95-cv-00650-LSM
Document 129
Filed 03/05/2008
Page 25 of 51
evidence (other than their self-serving statements) to support this figure, such as sampling results, testing methods, or even the price of gold. Plaintiffs do not explain how or when the $40 per ton figure was calculated and do not offer any contemporaneous writing to document that anyone associated with Plaintiffs reached that $40/ton conclusion in 1989. Nor do they indicate whether this alleged value remained applicable as of the alleged date of taking. This newly-disclosed $40/ton conclusion is also at odds with Mr. Ferrero's March 1990 calculations, in which he concluded that the "high potential apex" ore would result in no more than "$25.60 per ton of ore value." JA61 at 577.12/ Even that figure is grossly inflated, though, as it is based upon an 80% recovery rate (which Plaintiffs' own data (JA60) suggests would only be possible by cyanide leaching). See JA61 at 577.13/ In addition to their unfounded $40/ton conclusion, Plaintiffs also suggest that they knew far more about the subsurface minerals during the takings period than the written record indicates. In March 1991, for example, Plaintiffs submitted an "outline plan," which noted the need for "detailed site surveys" and that their milling plans depended upon "exploration and continued mill testing results." JA94 at 905-06. Similarly, Plaintiffs' April 1992 Plan also noted the lack of any drilling results or any information about the existence or extent of underground ore. See JA114 at 1106. Even Plaintiffs' $25.60 per ton figure was for the "high potential apex ore," not the Klamath dumps, which would have a lower per ton figure. JA61 at 577. According to own Plaintiffs' sampling, Plaintiffs might only be able to recover as little as 0.001 ounce of gold per ton of ore for the Klamath dumps, rather than the 0.08 ounce of gold per ton figure Ferrero used. See JA61 at 586.
13/ 12/
Plaintiffs' $25.60 per ton figure was also based on a $400 per ounce price for gold, which was approximately the price for gold in early 1990. See also Jan. 13, 1998 Ferrero Tr. at 42:20-24 (Mr. Ferrero stating that a miner likely would not recover 100% of the spot price when he sells the gold). During the takings period, the price fluctuated as high as $423 per ounce (February 1990) to as low as $327 per ounce (March 1993). Gold currently sells for more than $920 per ounce. Gold prices are posted by Kitco Bullion Dealers at
Case 1:95-cv-00650-LSM
Document 129
Filed 03/05/2008
Page 26 of 51
if Plaintiffs hoped that their exploratory work would eventually be profitable, the record is clear that Plaintiffs had not made a valid discovery at any point during the alleged temporary takings period. Plaintiffs now look to several new spreadsheets and documents generated by Mr. Ferrero to support their allegation that their unpatented mining claims were valid during the alleged taking period. Plaintiffs suggest, without offering any support, that this new data simply "recreates in detail the background sampling and metallurgical data available to Liberty when it determined to begin mining operations." Pls.' Mem. at 21. Plaintiffs' suggestion is not borne out by the facts. Rather than correlating with the contemporaneous documents, the new data actually conflicts with the information known prior to and during the takings period. For example, although Plaintiffs sampling data from 1990 showed 30-50% gold recovery rates, Mr. Ferrero now applies "a 90 percent average recovery to underground ore," a figure he characterizes as "conservative." PE-2 at 63, ¶ 56. Similarly, to bolster Plaintiffs' estimation of the quantity of gold in underground resources, Mr. Ferrero now relies upon historic production records that averaged 0.565 ounces of gold per ton of ore (opt). See Ferrero Aff., ¶ 56. Mr. Ferrero, however, ignores his prior warning that those historic "production records are far from complete." JA-6 at 146. Indeed, as the Forest Service's Mineral Examiner, Mr. DeMaagd makes clear in his declaration, some of the historical data that Mr. Ferrero relies upon is erroneous. See DeMaagd Decl., ¶¶ 16-19. Plaintiffs' assertion that their unpatented mining claims were valid as of the date of taking in 1990, therefore, is not supported by any reliable evidence. See DeMaagd Decl., ¶¶ 16-37. Accordingly, Plaintiffs have failed to show that their mining claims were valid, and that they had a compensable property interest in the mining claims at issue as of the date of the alleged taking. Indeed, the Forest Service's Mineral Examiners found that the mining claims examined were not valid as of the date of taking. See id., ¶¶ 38-42. Because Plaintiffs failed to show that they had a compensable property
- 16 -
Case 1:95-cv-00650-LSM
Document 129
Filed 03/05/2008
Page 27 of 51
interest, Plaintiffs' motion for summary judgment should be denied. B. Plaintiffs' Novel Argument That Their Compensable Property Interest Arises from a "Statutory Right" Is Not Supported by Long-Established Law and Must Be Rejected
Despite more than a century of legal precedent to the contrary, Plaintiffs contend that the question of claim validity is immaterial. See Pls.' Mem. at 24-29 (claiming that Plaintiffs had a property right in the unpatented mining claims "whether the claims were valid or not"). Plaintiffs' position lacks any basis in existing law. 1. Plaintiffs' Argument that the Discovery Requirement Is Irrelevant Merely Because They Bring a Temporary, Rather than a Permanent, Takings Claim Must Be Rejected
Plaintiffs first argue that discovery is irrelevant to their claims because they raise a temporary takings claim related to "open" public domain lands, rather than a permanent takings claim related to lands that are closed, or withdrawn, from the operation of the Mining Law. See Pls.' Mem. at 24. Whether a claimant pursues a permanent or a temporary takings claim is irrelevant to whether a claimant has a compensable property interest. See Am. Pelagic Fishing Co. v. United States, 379 F.3d 1363, 1371 n.11, 1372 (Fed. Cir. 2004) (stating that "[t]emporary takings are not different in kind from permanent takings," and requiring the court to determine "whether the claimant has established a property interest for purposes of the Fifth Amendment" as a separate, preliminary question before determining whether the government action amounted to a taking of that property interest). Similarly, nothing about the fundamental legal principles of discovery turns on the current status of the lands, and Plaintiffs offer no basis for such an argument. The fact that the United States has not withdrawn these lands from operation of the Mining Law means only that the lands are still available to new potential mining activities that fact, however, has no bearing on Plaintiffs' obligation to demonstrate that they have a compensable property interest in this takings claim.
- 17 -
Case 1:95-cv-00650-LSM
Document 129
Filed 03/05/2008
Page 28 of 51
2.
Plaintiffs' Argument that Their Property Right is Established by Federal Regulation Must Be Rejected
Plaintiffs next argue that their takings claim is premised on a "statutory right," which Plaintiffs contend is created by federal regulation (apparently separate and apart from the Mining Law itself), and is "not dependent on claim validity." See Pls.' Mem. at 26. Plaintiffs' novel theory finds no support in the case law, and is directly contradicted by more than 130 years of precedent interpreting the 1872 Act. Simply stated, a "mining claimant's rights as against the United States are acquired only under the General Mining Law, 30 U.S.C. § 21 (1994), and unless and until the claimant meets the requirements under those laws, no rights can be asserted against the United States." Ronald A. Pene, 147 I.B.L.A. 153, 157 (1999) (emphasis added). Plaintiffs' assertion that the various federal regulations and the federal register entry cited in their brief "implement th[e] principle" that an individual can somehow obtain a compensable property right in an invalid mining claim is incorrect. Plaintiffs' argument in this regard appears to be focused primarily on 39 Fed. Reg. 31317, col. 1 (Aug. 28, 1974), which discusses enactment of the Forest Service's regulations of surface uses under the Mining Law (36 C.F.R. Part 252, redesignated as 36 C.F.R. Part 228, Subpart A). However, that regulation defined the plan of operations requirement for mining activities within national forests; it did not purport to change Supreme Court precedent regarding the nature of compensable property interests (which, as discussed above, requires a discovery of a valuable mineral deposit before a compensable property interest arises). It is inconceivable that those same regulations sub silentio amend the discovery requirement, a basic tenant of mining law. See United States v. Weiss, 642 F.2d 296, 298 (9th Cir. 1981) (discussing the Forest Service regulations). Regulations contained in 36 C.F.R. § 228, Subpart A are designed to "minimize adverse environmental impacts on the surface resources of the national forests." Id. at 298. The cited regulations are silent as to the requirements established by the Mining Law, and do not purport to create - 18 -
Case 1:95-cv-00650-LSM
Document 129
Filed 03/05/2008
Page 29 of 51
new compensable property rights. 3. Plaintiffs' Argument that Their Property Right is Established by the Forest Service Manual Must Be Rejected
Plaintiffs' suggestion that their property interest arises from the Forest Service Manual ("FSM"), see Pls.' Mem. at 28 (citing the FSM §§ 2817.23, 2818.3), is plainly without merit. The Forest Service Manual is merely a set of procedures for the conduct of Forest Service activities and does not have the independent force and effect of law. See Stone Forest Indus., Inc. v. United States, 973 F.2d 1548, 1551 (Fed. Cir. 1992) (FSM is "a general guide for use by Forest Service employees . . . [but] does not have the force and effect of law"); Western Radio Servs. Co., Inc. v. Espy, 79 F.3d 896, 901 (9th Cir. 1996) ("We hold that the [FSM] and [the FSM Handbook] do not have the independent force and effect of law."); Sw. Center for Biological Diversity v. USFS, 100 F.3d 1443, 1450 (9th Cir. 1996) (same). The FSM could not, and plainly does not purport to, create any compensable property right that could support a claim under the Fifth Amendment. 4. Plaintiffs' Arguments About a "Statutory Right" Demonstrates Why the Court Lacks Jurisdiction Over Plaintiffs' Claims
Plaintiffs' argument that their claim is based on some sort of "statutory right" provides an independent basis for rejecting Plaintiffs' takings claim. According to Plaintiffs, because their takings claim is based on a "statutory right," their takings claim "involves defendant's denial of this statutory right by unreasonable and improper actions." Pls.' Mem. at 25. The gravamen of Plaintiffs' takings claim, then, is that the United States violated the Fifth Amendment because the Forest Service allegedly violated its own regulations. E.g., Pls.' Mem. at 26 (alleging violation of the timing requirement set forth in 36 C.F.R. § 228.5); Pls.' Mem. at 27 (alleging the Forest Service's improper "demand" that Liberty submit a proposed plan of operation, allegedly in violation of 36 C.F.R. § 228.4(d)). Plaintiffs' takings claim, therefore, is nothing more than an improper collateral attack on the
- 19 -
Case 1:95-cv-00650-LSM
Document 129
Filed 03/05/2008
Page 30 of 51
agency's regulatory action. The Court lacks jurisdiction over such claims. Tabb Lakes, Ltd. v. United States, 10 F.3d 796, 802-03 (Fed. Cir. 1993) (stating that takings claimants must concede the propriety of the governmental interference with their alleged property interests). If Plaintiffs disagree with the agency's actions, their remedy is through an administrative appeal or, perhaps, by raising a claim under the Federal Tort Claims Act or the Administrative Procedures Act. It is clear, however, that Plaintiffs cannot pursue these allegations in this forum. See Cottrell v. United States, 42 Fed. Cl. 144, 149 (1998) ("Even where the claim is framed under non-tort law, the court lacks jurisdiction if the essence of the claim lies in tort."); see also Martinez v. United States, 333 F.3d 1295, 1313 (Fed. Cir. 2003) (stating that "the Court of Federal Claims lacks APA jurisdiction"), cert. denied, 540 U.S. 1177 (2004); Crocker v. United States, 125 F.3d 1475, 1476 (Fed. Cir. 1997) (stating that the Court of Federal Claims "lacks the general federal question jurisdiction of the district courts, which would allow it to review the agency's actions and to grant relief pursuant to the [APA]").14/ III. Plaintiffs Fail to Show That the Penn Central Factors for a Regulatory Taking Are Met Assuming that Plaintiffs can show both a compensable property inter
United States Free Forms
Canada Free Forms
United Kingdom Free Forms
Australia Free Forms