Free Response to Motion [Dispositive] - District Court of Federal Claims - federal

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EXHIBIT 1

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Chapter'?
INVERSE

CONDEMNATION ISSUES IN REVISING THE MINING LAW Lawrence G. McBride
Freedman, Levy, Kroll & Simonds
Washington, D.C.

Synopsis
§ 7.01

Introduction
Surveying the Developing Law of Inverse

§ 7.02

Condemnation
(1) Background Case Law
(2) The Absence of Bright-Line Rules

(3) The Three Inquiries

(4) The Nature of the Governent Action
(Inquiry One) (a) Approximating the Effect of Direct Condemnation "Nuisance" or Noxious Use Defense (b) The
(5) Economic Impact of the Government Action

(Inquiry Two)
(a) Loss of All Viable Economic Use
(b) Mere Diminution of

Value Cases

(6) Interference with Reasonable Investment-

Backed Expectatiòns (Inquiry Three)
(7) Recent Minerals Case Law
(a) United Nuclear, Inc. v. United States

~~. 'j: ,',

7-1

"

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/:' .~"
;2--

MINERAL LAW INSTITUTE

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(b) Whitney Benefits, Inc. v. United States (c) Rybachek v. United States (d) Florida Rock Industris, Inc. v. United States
(e) Conclusionsffom the Cases

§ 7.03

Rights Under the General Mining (1)

Pre-discovery Rights

Law

(2) Claims Validated by Discovery

(a) Ownership Interest in the Minerals
(b) The Right to Mine
(c) The Right to Patent

§ 7.04

The General Mining Law RepeaIJeform Bils
(1) Rights Under a New Claim
(2) "Conversion" of Existing Claims
(a) The Constitutionality of Forfeiture

Provisions
(b) Absence of (3) New Restrictions on the Right

any Savings Clause
to Mine

ø
,

(a) Right to Say No for Land Management

Reasòns

(b) Applying Whitney and United Nuclear

§ 7.05

Claim '
(4J Loss òf the Righ,t to Patent
(4), Assignent of

Issues in Litigating an Inverse Condemnation

(1) A Legislative or an Executive Taking Action?

(2) Ripeness and Premature Suit versus Statute of Limtations (3) Claims Cour or District Cour?
Claims Prohibition

(5) Traps for the Wary
§ 7.06
"j
'1

Conclusion
r'

.j

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7-3

INVRSE CONDEMNATION

§ 7.02(2)

§ 7.01 Introduction
This paper examines the developing case law defining the
nature of an inverse condemnation claim - the cause of action

to recover the fair market value of property condemned by governmental regulatory action. Next, it explores several cases applying this precedent in the context of mining rights and mining properties. It then describes more specifically the nature of the rights asserted by claimants under the General
Mining Law.1 Finally, it examines the rights held by a new or
"converting" claimant under the primary bils to change the

General Mining Law, and evaluates the types of claims that such legislation would spawn under the inverse condemnation precedent~
§ 7.02

Sureying the Developing Law of Inverse

Condemnation (1) Background Case Law
Inverse condemnation law has grown out of the prescription in the Fifth Amendment, "nor shall private property be taken
for public use, without

just compensation."1.1 Not only does di-

-',

rect condemnation take property, so also does government legislative and regulatory action not directed at substituting a
specific public use on specific private property. The case law, of which First English Evangelical Lutheran Church v. County of
Los Angeles2 is a recent example containing a detailed discus-

sion, is clear that inverse condemnation can occur either by legislative action or by executive regulatory actioIl under leg-

islative authority, and can occur without governmental intrusion onto the property or physical dispossession of the owner.

(2) The Absence of Bright-Line Rules

Beyond establishing that inverse condemnation can occur in the context of diverse governmental actions, the United States

Supreme Court has resisted "bright-line" rules about when in
fact inverse condemnation has actually taken place. The only

constant in the cases is the reiteration that such an adjudica1General Mining Law of 1872, 30 U.S.C. §§ 22 et seq. (1988) (General Mining Law).
1.1U.S. Const. amend. V.
2482 U.S. 304, 316-17 (1987).

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§7.02(3)

MINERA LAW INSTITUTE

J~

I

7-4

.'~

tion is heavily fact-dependent.3 Instead, the Court has at dif-

ferent times and with different emphases disclosed three "inquiries" to be made or "factors" to be considered in this factdependent adjudication. This fundamental'looseness in the jurisprudence is important - there are cases that do not appear to undertake all three inquiries, and those where a taking has been found although not all three inquiries militate toward a taking conclusion.4 Careful analyses have concluded
j !

i

I
';;
;~

"~~

~:¡

that the case law discloses inverse condemnation standards
dierent from the "three inquiry" formulation.

-~

~

5

(3) The Thee Inquies
Even with these qualifications, however, this paper focuses
on the three inquiries because they are quite uniformly employed in the jurisprudence of the Claims Court and the U.S. Court of Appeàls for the Federal Circuit. This is where the

l' !,oÍ
:1

J., . '.~f,
-.,'.,I'..:.f. .,,'.:.:.~,'~',~' .~~

Tucker Act6 clais on which this paper focuses would be litigated. The three inquiries are:
1) the nature of the government action;

-~t
:~ -

2) the econommc impact of the governent action on the

property; and
3) interference with reasonable investment-backed ex-

pectations.7
(4) The Nature of the '~

Governent Action

(Inquir One)
"

(a) Approxiating the Effect of Direct
Condemnation
The focus of the first inquiry is the extent to which the nature of the governmental, action approximates direct C9n~e;:p.-

, ~.: -

nation. Is the property appropriated for public uSß?'-~*.:tlfØ're physical interference with or intrusion onto the,i?~'¡nfirty?
Lack of governmental intrusion onto the propertY4j¥aáiot
Benefit Guaranty Corp., 475 U.S. 211, 224-25 cl986J. 4E.g., Agns v. City ofTiburon, 447 U.S. 255, 260 (1980)3Connolly v. Pension

sE.g., Jan G. Laitos, "Regulation of Natural Resources Use and Development in
Light of

the 'New' Takgs Clause," 34 Rocky Mt. Min. L. Inst. 1-1, § 1.07(2) (1988).

628 U.S.C. §§ 1491 et seq. (1988).

7E.g., Keystne Bituminous Coal Ass'n v. DeBenedictis, 480 U.S. 470, 495 (1987).

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7-5

INVRSE CONDEMNATION

§7 .02( 4)

foreclose the claim; rather, proof of physical intrusion may assure the claim's success.B

(b) The "Nuiance" or Noxious Use Defense

The more important aspect of inquiry into this subject is the defense to a takng claim the govern1ent asserts when it characterizes the governmental action as reguating between con-

flcting land uses, or regulating a harmful or noxious use,
rather than initiating a "public use" of the property. "As

against reasonable state regulation, no one has a legally pro-

tected rightto use property in a manner that is injurious to the
safety of

the general public.''! The leading case, or origial case

on which this argument has turned, is Mugler v. Kansas,10 the unsuccessful challenge to a statute that prohibited the use of a distilery for the manufacture of intoxicating beverages.
This "nuisance" defense has returned to the fore because of its use by the Supreme Court of South Carolina in upholding

the state's new construction ban on the Atlantic barrer beach property at issue in Lucas v. South Carolina Coastal Council.11 The South Carolina Supreme Court legitimized the au'1:t"is necessary to prevent a great public harm" - the erosion ææddestruction of the beach/dune area and the "nuisance" or

tbority to bar construction through the legislative finding that

hazard that would be caused if a storm destroyed the housethat-couldn't-be-built and the debris damaged otherlandward buildings or property. The state supreme court's decision and certiorari galvanized the property rights
Lucas' petition for

bar, and at least two important amicus briefs offered the U. S.

Supreme Court the opportunity to clarify, limit, or destroy the

nuisance, or noxious use, defense. First, the United States' amicus would limit the defense to those exercises of property rights constituting nuisance to other property owners at common law. This formulation expressed the principle that no one
BSee Hendler v. United States, 952 F.2d 1364 (Fed. Cir. 1991). 9Alled-General Nuclear Servces v. United States, 839 F.2d 1572, 1576 (Fed, Cir.
1988 ).

10123 U.S. 623 (1887).

11404 S.E.2d 895, 898 (S.C. 1991), rev'd, 112 S. Ct. 2886 (1992) (a 6 to 2 decision involving one conCUITence in the judgement, two separate dissents, and a "statement"

by Justice Souter). '

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§ 7.02(5)

MINERA LAw INSTITUTE

7-6

has a property right to use his or her property in a manner that harms, i.e., at common law causes nuisance to, others.
Second, the American Mining

Congress, joined by other natur-

al resource industry associations, argued that the nuisance defense is simply wrong, and Mugler should either be overruled,
distinguished,. or left as a derelict.12

The Supreme Court's decision in Lucas, reversing the state
supreme court decision, adopts these arguents substantially,

and may well have rendered the first inquiry irrelevant to regulatory takings cases. As will be developed below, the noxious
use issue is used by

the Supreme Court inLucas not in ana-

has been diminished or constrained.
(Inqui Two)

lyzing the nature of the governmental action but in analyzing the nature of the propert right, the value or exercise of which

(5) Economic Impact of the Governent Action
(a) Loss of Al Viable Economic Use
The second economic impact of .~~. '...- ~judicial inquiry has been the government action.

the factual one into the

The Supreme

Cour has recited in Keystone, for examplß, that taking occurs when

a regulatory the governmental action deprives the

owner of all economically viable use of the property, or when

tive-inquiry formula

the regulation does not substantially advance legitimate state interests.13 It is this recital that appeared to create an alternafor takgs,14 and that the majority cites
the idea that loss of all use

in Lucas,14.1 although the South Carolina Supreme Court

specifically found that in the Keystone opinion the U.S.
Supreme Court majority or value alone was sufcient to rejected,

prove a takng.15

".- --,"

12Reserved.
13Keystone, 480 U.S. 470, 486 (1987).

-.,

14See Agns v. City of Tiburon, 447 U.S. 255 (1980), as analyzed in Laitos, supra
note 5.

14.1Lucas, 112 S. Ct. at 2894 n.7.
15Lucas, 404 S.E.2d at 900. Both of

the dissents in the U.s. Supreme Court decision

press the same view. Lucas, 112 S. Ct. 2886 (disent of J. Blackmun at 2894 n.7; dissent of J. Stevens at 2895 n.8).

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INVRSE CONDEMNATION

§ 7.02(5)

The Lucas decision states, "we have found categorical treatment appropriate. . . where regulation denies all econommcally

beneficial or productive use ofland."1s.t The opinion construes, around this principle. clarifies, and harmonizes the case law
(b) Mere Diminution of

Value Cases

The factual defense within this second or, post-Lucas, cen-

tral inquiry is that a "mere diminution" of value shows that a taking did not occur. !tis in part on this priciple that zoning
laws, allowing some economic use(s) but denying the highest

or more valuable uses, are grounded.16 There is no "brightline" test establishing where the extent of diminution ceases being "mere" diminution (a value reduction not requirig compensation) and where it crosses over to unacceptable, compensable loss of all vvable economic use.16.1
In makng this inquiry into partial or total ing legal facts are found in the nature of

loss, the underlythe property right(s)

at issue. One must examine the relevant property láw to char-

acterize and define those rights properly. The legal facts are usually found in state law, such as the subsidence right estate
in Pennsylvania Coal Co. v. Mahon.17 But law. In an inClawson v. United States,18 the Claims Court examined
in Keystone and they maybe fouIld as well directly and solely in federal '.

~..

verse condemnation challenge by the holder of unpatented
mining claims to a federal statutorydredge-miniiig prohibition. The Claims Court looked directly at the General Mining Law for definition of the unique species of property at issue.

,l
''''','" '. .,.':';'o;::;.~::,-"","ì
11

I
1S.1Lucas, 112 S. Ct. at 2893, defining categorical treatment as fiding "regulatory

action. . . compensable without case-specific inquiry into the public interest advanced
in sup~ort of 16yilage of

the restraint." ¡d.

. .1
rr:~

~

Euclid v. Ambler Realty Co., 272 U.S. 365 (1926).

16.1 Diminution of value issues are being tested in the context of CW A § 404 permt

denials in: Loveladies Harbor, Inc. v. United States, 21 Cl. Ct. 153 (1990), appeal
pending; and Formanek v. United States, No. 764-86L, 1992 U.S. CL Ct. LEXIS 217 (May 14, 1992).

17260 U.S. 393,414 (1922). Accord Ruckelshaus v. Monsanto Co., 467 U.S. 986,

1001 (1984) (Missour trade secrets law). 1824 Cl. Ct. 366 (1991).

rJ

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§ 7.02(6)

MINERA LAw INSTITUTE

7-8
"

(6) Interference with Reasonable Investment-Backed

Exectations (Inqui Thee)
The third judicial inquiry has been whether the prohibition or restriction interferes with' reasonable investment-backed
expectations. The classic situation is where the purchase and

investment immediately precede the newly-imposed regulatory prohibition. Lucas presents these facts: most of the duneshore lots were built up; Lucas bought one of the remaining
unbuilt lots; South

ing the defendant Council to deny building permits on the dune-shore area. The relevance of this inquiry after Lucas is unclear. Clearly Lucas "passed" this test; investment-backed expectations were
not at issue factually. But the majority opinion's

Carolina then passed its statute authoriz-

to the inquiry is in the court;e of supporting its disposition of

only reference

the noxious use issue - an owner with "reasonable expecta-

tions" of the prohibited use has solid evidence that the use was lawful and within the bundle of common law rights held in the
property. 19

There is no reference to the "investment-backed"
it will be raised by the gov-

aspect of this inquiry at all in Lucas.
If this inquiry remains relevant,

,'

ernmental assertion that "fallow" or unexercised property rights may be put under prohibition -without takngs liability. As an example, one of the Department of the Interior's (Interior) proposéd reguatory defiitions of

purposes of exception from the coal mining prohibitions in section 522(e) of

valid existing rights20 for

the Surace Mining Control and Reclamation Act

(SMCRA)21 would require the coal owner to have made good

faith efforts to obtain the relevant mining permits at the time the statutory prohibition was enacted.22 One can understand the government's not wanting to reward with compensation an
19Lucas, 112 S. Ct. at 2894 n.7.
20See Stephen P. Ruffatto & Carolyn S. Ostby, "Gohabitation of

Wilderness and Minig: Can this Marage be Saved?" 38 Rocky Mt. Min. L. Inst. 11-1, § 11.02 (1992)
wheTe this phrase is treated in detaL.

2130 U.S.C. §--272(e) (1988). See Proposed Rules for 30 C.F.R. pts. 740, 761, & 772
at 56 Fed. Reg. 33,152, 33,153 (July 18, 1991).

220r at a later time when the statutory prohibition became applicable to that coal,
such as by a change in the statu of

the federally-owned surace over the private coaL.

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7..9

INVRSE CONDEMNATION

§ 7.02(7)

owner that had shown no effort to undertake a newly prohib-

ited use. But in some cases this appears really to be a diminution of value assertion - the owner likely had some other continuing use of the land notwithstanding the new prohibition. In the case of reserved or severed mineral rights, however, if the new prohibition denies all economically viable use, the property rights are equally "lost" whether there was a recent attempt

to exercise them or not. The absence of recent development efforts may be relevant to valuation, but not to whether the gov-

ernmental imposition caused a taking. This brief excursion away from reporting into analysis shows how unsettled and
uncertain the cours are regarding the signifcance and relative
importance of

these three judicial inquiries.23

(7) Recent Mierals Case Law
Although the three inquiries are in major ways stil unexplained and unrationalized by the case law, there are at least
four highly instructive applications of these inquiries orfac".

tors in specific cases involving mineral properties and mining rights.

(a) United Nuclear, Inc. v. United States24 United Nuclear involved Interior's refusal to approve the lessee's mining plan on an Indian uranum lease. Absent this
approval the lessee had no chance to

be producingprior to and at the end of the primary term of the lease, so the lease expired. The Federal Circuit found (two to one) that the United

States took United Nuclear's lease by its reguatory (in)action,
and the case has been remanded for the damages triaL. The court's opinion engaged in each of the three inquiries. On the first, the court of appeals found that the nature of the government action was to assist the Trbe in its goal of re-leasing the

tract with an attendant new bonus payment. This was not
clearly for a "public use," but it was certainly not reguation of
fiding that

a nuisance. The Federal Circuit overred the Claims Court's (drinking water supply and worker influx) reasons for the failure to approve. On the
there were environmental

23Reserved. 2417 Cl. Ct. 768 (1989), rev'd & remanded, 912 F.2d 1432 (Fed. Cir. 1990). .

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§ 7.02(7)

MINERA LAW INSTITUTE

7-10

second inquiry, the court found that the property was wholly taken; there was no residual value. On the third inquiry, the court noted that the lessee had spent over $5 milion to prove up the uranium deposit on the lease, and about $300,000 in payments under the lease. This investment and the expectation of profits in mining the discovered uranium were destroyed by the action. The second and third (if not all three) inquiries militated toward liability, and no "defenses" applied. The court therefore found inverse condemnation.

(b) Whtney Benefits, Inc. v. United States25
In Whitney Benefits, the Federal Circuit affrmed the Claims
Court's finding of governmental private coal land, subject to a private coal

liability. The case involved
lease, that was sub-

ject to the alluvial valley floor mining prohibition in section
510(b)(5) of SMCRA.26 Regarding the nature of the govern-

ment action, the court found that the statutory provision itself

was a legislative taking, because of legislative history that
Congress understood it was prohibiting mining

on that very property. In the second inquiry, the cour found the prohibition

left the property with little residual value. In the third inquiry, it found that over $2 milion had been spent toward development, including

half a milion on advance royalties to

maintain the lease.27 These investments supported the conclu-

sion that there were reasonable investment-based expectations of development absent the statutory prohibition.
--'-

(c) Rybachek v. United States28
vironmental Protection Agency imposed on the

In Rybachek, the plaintiffs assert that the conditions the EnClean Water

-'.-. ,~'.

25926 F.2d 1169 (Fed. Cir.), cert. denied, 112 S. Ct. 406 (1991), affg 18 Cl. Ct. 394
(1989).
2630 U.S.C. § 1260(b)(5) (1988).
27Both the ~oal owner-lessor and coal

lessee are plaintiffs, and payments under

.:.

that lease demonstrate iILvestment-backed expectations. New Federal Circuit caselaw and governent questions about the petitioners' relationship, however, have led to a
, , federal motion for relief

judgment under 28 D.S.C. § 2515, now pending, on from grounds includig the pendency of a concurent action for relief in district court and

assignment of the claim against the United States. See 28 U.S.C. § 1500 and 31
D.S.C. § 3727 (1988).

2823 Cl. Ct. 222 (1991)

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7-11

INVRSE CONDEMNATION

§ 7~02(7)

Act discharge permit for their placer operations29 have taken their Alaskan placer gold property, which consisted of both patented and unpatented minnng claims. The plaitiffs argue
that operating in compliance with the effuent standards and

management practices conditions can only be done at a loss. Liability has not been determined, but the Claims Court denied the governent's motion to dismiss for failure to state a

claim, and the case wil proceed to triaL. Note that the plaintiffs have possession and use of their property, even

for mining

purposes, but allege they are operating at a loss and that their

property has no other economic use. One way to read the ruling is that a taking may stil be found when only the second and third inquiries militate in favor of compensation of the plaintiffs.

(d) Florida Rock Industries, Inc. v. UnitedStates30 In Florida Rock, the Corps of Engineers denied a Clean
Water Act section 404 permit as contrary to the public interest. This was found to have taken the limestone-bearing wet-

land parcel the company had applied to "dredge." In makng these findings, the Claims Court found that the proposed rock mining has never been considered a nuisance, and that the le.~.~.. '..

gitimacy of the Corps' goal to preserve the wetland from development does not of

defeat the inverse condemnation consequence permt rejection.31 Regarding the second inquiry, the Claims

Court found a nóminal post-prohibition value for ''fture recre-

minmg.32 relying on the fact that the property had been bought prior value solely for the now impossible purpose

ational/water management" purposes. To find that the reduction in value from $10,500 per acre to $500 per acre support:. ed the taking conclusion, the court turned to the third inquiry,
at the
"..,

of limestone

29laintifs had earlier lost a challenge to the ';alidity and propriety of the EPA's

Clean Water Act placer mining rules themselves. Rybachek v. E.P.A., 904 F.2d 1276
(9thCir. 1990).

3021 Cl. Ct. 161 (1990), on remand from 791 F.2d 893 (Fed. Cir. 1986).
3121, Cl. Ct. at 167-68.

32Id. at 174-75.

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§ 7.03(1)

MINERA LAW INSTITUTE

7-12

(e), Conclusions from the Cases From these cases some observations flow. Regarding the
first inquiry, note that the clearly environmental nature of the
prohibition in Whitney and Florida Rock, and of

the regulation
lease). On

;~ ..-' .""

in Rybachek, did not defeat liability. On the second inquiry,
United Nuclear especially endorses working from the nåturè
of the mmneral Tights held (in that case a mineral

) :;.
!J

the third inquiry, both exploration and permitting expenditures clearly carr weight in determining the owner's reason-

able expectations, and in Florída Rock the acquisition cost was

highly relevant.

§ 7.03 Rights Under the General Minig Law
(1) Pre-discovery Rights

The holder of a clai located under the General Mining Law

that is not supported by a discovery does not, under current case law, have a compensable property interest. In Best v.
Humboldt Placer

Mining CO.33 the governent initiated a cøn-

den;ation action to clear title to and secure possession of the land for its dam project, but in the complaint reserved the right to initiate an administrative contest against the mmnig
claims of record on federal

lands in the project area. The

claimants' attempt to have claim validity detennned in court,

under what they described as less onerous procedures and
'-'.

substantive standards, failed when their motion to enjoin the initiation of administrative contests was denied. Upon winning the contests, the

claims were administratively declared

null and void and no compensation was owed.

This interpretation of Best was confirmed in the Claims
Court in a Tucker Act (inverse condemnation) suit in Skaw v.

United States.34 As an element of proving his inverse condemnation claim (arising out of a federal statutory dredge
mining prohibition for certain riverbeds and banks in Idaho),
': . .--- ." . ~~._..~, ' ~...~. ,.

Skaw had to prove the validity of his claims. Failing that proof, through what was essentially a judicial validity con33371 U.S. 334 (1963).

3413 Cl. Ct. 7 (1987), affd, 847 F.2d 842 (Fed. Cir.), cert. denied, 488 U.S. 854
(1988).

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7-13

INVRSE CONDEMNATION

§ 7.03(2)

test hearing, Skaw had invalid claims and no claim for inverse condemnation.
(2) Clais Validated by Discovery

(a) Ownership Interest in the Mierals
In contrast to a claim not supported by discovery, a claim

supported by discovery is "property in the highest sense of that term. "35 The conjunction of location and discovery does
vest rights in the claimant against

the United States. The ex-

clusive right of possession of the land fór mining purposes is secured against all others,36 and there is an ownêrship interest in the mineralresource.37 This ownership interest is subject to maintenance obligations: chiefly the anual assessment work38 and annual filing3 requirements, and the risk ofloss if

the validity of the claims is not maintained. This ownership
interest, as reward for discovery, is not by law subject to any

royalty interest, or rental or other payment obligation to the United States while the claim remains unpatented.40

(b) The Right to Mine
The second right inerent in a claim valdated by discovery
-', '.

right to mine the discovered resource. This is expressed in the statute41 and reflected in the mine permitting regulais the

tions and programs of both agencies, the Forest Servce and the Bureau of Land Management (BLM). The Forest Servce regulations clearly do not reserve the right to

say no, for land man-

35Belk v. Meagher, 104 U.S. 279, 283 (1881).
3630 U.S.C. § 26 (1988).

locator"), citedSee Wilbur v. United States ex rel. Krhnic, 280 U.S."306 in Skaw, 13 Cl. Ct. at 29. 3830 U.S.C. § 28 (1988).
(1930).

37E.g., St.Louis Mining & Miling èo. v. Montana Minng Co., 171 U.S. 650,655 domai and the property of the (1898) ("the area becomes segregated from the public

D.S.C. § 1744 (1988). '
the right to a flow of

39Sec, 314 of

the Federal Land Policy and Management Act of 1976 (FLPMA), 43

4OE.g., Locke v. United States, 471 U.S. 84, 105 (1985) ("the propert right here is

income from production of the claim"). See also' Freese v. United

States, 639 F.2d 754 (Ct. Cl. 1981), discussed in § 7.04(4) infra.

4130 U.S.C. § 22 (1988) ("valuable mineral deposits in (unwithdrawn public domain)

lands. . . shall be free and open. . . to exploration. . . and occupation"); 30 U.S.C. § 26 (1988) ("exclusive right of possession and enjoyment (of surface and mierals)". '

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§ 7.03(2)

MINERAL LAW INSTITUTE

7-14

"

agementor discretionary reasons, to a plan of operations that meets the regulatory requirements for completion, disclosure, impact analysis, and mitigation.42 Even the cases upholding
the Forest Servce right to enjoin operators who refuse to com-

ply with the plan of operations rues make clear that the For-

est Servce does not ultimately have the authority to say no to
the plan of an operator who does seek approval.43 Rather the

Forest Servce operates .under a reguatory land management
standard that "operations shall be conducted so as, where fea-

'.

sible, to minimize adverse environmental impacts. . . ."44 As

was evident in United States v. Richardson,45 the Forest Service can enjoin, or prevent through temporary proval; inappropriate methods ofop~ration that

plan disap-

cause more
rights must be allowed.

damage or impact thai is reasonablycnecessary for the type of
mining activity, but the ,exercise of

The BLM rues closely parallel those of the Forest Servce in these respects, reservng no ultimate or discretionary right to
disapprove operations that wil be conducted in conformity

with the operative land managementstandard.46 The operathe Interitive management standard is that the Secretary of or (Secretary) prevent "unnecessary

and undue degradation of

the public lands. "47 What is key in this formulation is the implicit recogntion that there can be "due and necessary degradation of lands by mining (as well as

any other lawful use48 of

public lands), and that the Secretar aûthorizes such degradation by issuing licenses, permits, and leases for lawful uses Of

multiple use land.

In the hardrock mining context, the Secretary authorizes
the possibility of such degradation by managing the lands as

open and unwithdrawn public domain lands, on which prospectors, by self-initiation, location, and discovery acquire this
4236 C.F.R § 228.5 (1991).

43nited States v. Weiss, 642 F.2d 296,299 (9th Cir. 1981). 4436 C.F.R § 228,8 (1991).
45599 F.2d 290

(9th Cir. 1979), cert. denied, 444 U.S. 1014 (1980).

,4643 C.F.R §§ 3809.1-6& 3809.2-2 (1991) 47Sec. 302(b) ofFLPMA 43 U.S.C. § 1732(b) (1988).

48The term "principal or major uses" is defied in § 103(1 ofFLPMA 43 U.S.C. §
"

1702(1 (1988).

L

j.

--'.-

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7-15

INVRSE CONDEMNATION

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set of rights., The relationship of this land management situa-

tion to the status of the land as withdrawn or unwithdrawn (i.e., subject to the operation of the general mining laws) is made clear for BLM lands in land use planning provisions of
FLPMA: "The Secretary may issue management decisions to implement land use plans. , . in accordance with the following: . . . (3) . . . public lands shall be removed from or restored to the operation of the (general mining laws) . . . only by withdrawal action pursuant to section 204. . . ."49
In effect the Forest Servce operates under the same

regie,
50 The operative land

although this is because the Forest Service's planning mandates do not mention minerals expressly.

management standard, as discussed above, is to "where feasi-

ble, minimize adverse environmental impacts,"51 and the Department of Agrculture lacks any authority to withdraw land. The open status of Forest Service-managed public domain land can be changed only by withdrawal action by the Secre~
tary of the Interior under section 204 of FLPMA,5~ Taken in
conjunction, these authorities add up to a system like that of
the BLM, in which the land manager mitigates

, '

and reguates

-.

..-.~ .~.

'..

but does not ultimately have the authority to prohibit the exercise of the right to mine for reasons grounded in his discretion as a land manager. These principles are at work in the BLM field instructions

on the issue of "the right to say no." The BLMInstruction Memorandum (IM) on this issue53 using a question and answer format, says: 29. Under what conditions should the BLM approve
a plan of operations?
49Sec. 202(e) ofFLPMA 43 U.S.C. § 1712(e) (1988).

50National Forest Management Act and Forest and Rangeland Renewable Resources Planning Act, 16 U.S.C. §§ 1601-1614 (1988), and Multiple-Use SustainedYield Act, 16 U.S.C. §§ 528-531 (1988).

5136 C.F.R. § 228.8 (1991).
5243 U.S.C. § 1714 (1988), which applies to "Federal lands," not

just BLM-adminis-

tered "public lands."

5~"BLM 1M No. 90-632, Questions and Answers Concernng Resource Management

Planning and Environmental Review Requirements in the Locatable Minerals Program," Attachment 1-12, Question 29 (Sept. 25, 1990).

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§ 7.03(2)

MINERA LAW INSTITUTE

7-16

The BLM should approve a plan of

not:

operation if it will

a. Cause "unnecessary or undue degradation. "53.1

b. Conflict with or violate substantive environmental laws (e.g. Clean Air Act, Clean Water Act, Endangered Species Act, Solid Waste Management Act)
and executive actions.53.2

Where conficts exist the BLM wil modify the plan to eliminate the conflict and require the operator to accept the modifications as a condition of approvaL.

The first of these reasons stands in the context of BLM's de-

fiÌlition of unnecessary and undue degradation in the
hardrock management rules.54 The definition provides that technically competent engineering practices and appropriate
facilîties design iii light of the

tion, result in necessary degradation, which is to be allowed. this important ramificamanagement concerns - esthetics, desires to devote the land to another use, conflcting reThe sectic)l 302(b) standard carries tion for miners. Other land

ore, the processes and the loca-

sources (not protected hy any police power, EPA-style law Öf

for saying no to necessary and due impacts of mining on these lands open to the operation of the mining law.

general applicability) - are not a basis

55

The second of the reasons the IM asserts for BLM not to approve a plan is if mental

the plan would violate an EPA-style environ-

law of general applicability. Obviously, plans of operations are designed and submitted to show compliance with such laws. Equally, agency action on the plan of operations assumes that the designed compliance will occur, either because
53.1See § 302(b) ofFLPMA and 43 C.F.R. 3809.1-6(a)(l991).
53.2See 43 C.F.R. § 3809.2-2 (1991)

5443 C.F.R. § 3809.0-5(1 (1991). ,
55Ifthis is not clear ITom the meanng and history of

.',

is confed by the directive in § 701(h) ofFLPMA that "(aJl actions by the Secretary
. . . under this Act shall be subject to valid

the statutory phrase itself, it

1701 note. See Rufatto & Ostby, supra note 20, § 11.02 for an explanation of that term's protection of property rights.

existing rights." 90 Stat. 2786, 43 U;S.C. §

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INVRSE CONDEMNATION

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the permits from the other agencies are in hand when BLM acts, or because they are not yet required (e.g., National Pollu-

tion Discharge Elimination System permits for later facilities) but the plan of operations provides that they will be obtained when required.
If the cost of compliance with these requirements dissuades

56 If the rest of the claims 'are invalid, under Skaw and Best they are not compensable property interests. It could be argued that this is true even if the reason the claims are invalid is that regulatory action has
into the determination of discovery.

the operator from proceeding with development, this might demonstrate, from the agency's perspective, that the claims were not valid. This is based on the agency view that the costs law are factored
of compliance with applicable environmental

rendered mining prohibitively expensive (i.e., règuation effectively prQhibits mining). This argument may well be joined in
the further proceedings in Rybachek, where plaintiffs

that it was the EPA Clean Water Act rules that rendered mining unprofitable, with respect to the Rybacheks' unpatented
claims. Against this argument, note that in Skaw and Clawson the Claims Court

assert

','

determined the validity of the claims

without reference to the statutory mining prohibition giving

rise to the possible taking. Had the mining claims been valid absent the prohibitions, the Claims Court would have undertaken the three inquiries to determine taking liability.

When one compares these two stated grounds for disapproving a plan of operations, note that neither contains any au-

thority for disapproval based on discretionary land management reasons. A land manager's judgment that "due
degradation" (the unavoidable impacts of a plan

that is de-

signed to comply with all relevant, generally-applicable air and water quality laws) is unacceptable cannot under current law result in disapproval of the plan. As long as the land was not withdrawn when discovery occurred, the valid claim carries the right to mine.
,.), ,:'J' . .'.' ,~-.' . . .

56United States v. Pittsburgh Pacific Co., 30 IBLA 388,84 LD. 282, GFS(MIN)

30(1977), reviewed on other issues sub nom. South Dakota v. Andrus, 614 F.2d 1190 (8th Cir.), cert. denied, 449 U.S. 822 (1980).

h ':,'~,""- ,.;:- -'~'~"'-'~.':"--,\~.~ ",:'~-, ';X":""~,'-:-c.'--' , -~-~:"~'. -~',..-,;'::,. ,-.;-""' .--:-' ., -.-,

'. -:-~"~. - "",' " . -~ .

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§ 7.04(1)

MINERA LAW INRTITUTE

7-18

(c) The Right to Patent
The third tight inherent in a valid claim is that of patent.57

This is the. right, on application and after a non-discretionary

adjudication of entitlement,58 to receive from the United
States its quitclaim deed in recognition of compliance with the provisions of the mining law.

The nature of the right was treated in Freese v. United
States,59 in which the Claims Court held tha:t Freese suffered no compeIiable inverse condemnation when Congress prohibited further issuance of mineral patents for lands in the Sawtooth N átional Recreation Area in Idaho. Freese's claims, were
valid, per Forest Service determination,

but he had not ap-

plied for patent prior to Congress' legislative prohibition on

doing so. The Freese case has been criticized by the mining bar, in part for its failure to treat expressly certain apparently
inconsistent case law On the rights inherent in a valid claim: "The claim was thenceforth their property. They needed only a

patent of the Uiiited States to render their title perfect, and
that they could obtain at any time upon proof of what they

had done. . . . Until the patent issued the governent held the
title in trust for the locators. . . ."60

§ 7.04 The General Ming Law Repealform Bils (1) Rights Under a New Claim
-"-

The followig analysis discusses the "Bumpers Bil" (S. 433)
and the "Rahall Bil" (H.R. 918), the former as introduced in

the 102d Congress, and the latter as reported by the House Interior Commttee, in relation to potential inverse condemnation claims.61 First, both bills establish a claim location system in which the locators' rights are not dependent on discovery.

At the same time the bils make it clear that the rights inher5730 U.S.C. §§ 29 & 35 (1988).

58See Marathon Oil Co. v. Lujan, 751 F. Supp. 1454 (D. Colo. 1990), affd in part,
rev'd in part, 937 F.2d 498 (10th Cir. 1991). 59639 F.2d 754 (Ct. Cl. 1981).
~oyes v. Mantle, 127 U.S. 348,351 (1888).

618. 433 and H.R. 918, 102d Cong., 1st Sess. (1991). The Rahal Bil was reportd
by the House Interior and Insular Afairs Comm. on June 24, 1992. H.R. Rep. No. 711,

pt. I, 102d Cong., 1st Sess. (1992) (hereinafr Reform BiIsJ.

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INVRSE CONDEMNATION

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ent in alocation, while more secure vis-a-vis other locators during exploration, are not more secure vis-a-vis the United rights to the
States. Both bills clearly subordinate the locators'

land managers' authority under titles of the bils that change under which operations may be
in major ways the standards

approved.62 The design ofthe bils makes it clear thatexercis-

es of authority to disapprove operations wil not be in derogation of the rights of locators of "new" claims under either bil.
(2) "Conversion" of Exiting Claims

Second, both Reform Bils require the "conversion" of existing
claims into claims under the new provvsions of the bils.63 This
conversion wil extinguish

those rights inerent in an existing

claim but not provided for in "new" claims. The central three
rights - right to mine, right to patent, and ownership of the
mineral- are all affected by conversion, and each will be ex-

amned in turn. Failure to corivertan existing clai durg the

period provided renders the existing claim,void, apparently by
operation oflaw, at that moment. While the law abhors a forfei-

ture, the mining bar knows it does not abhor all forfeitures.
(a) The Constitutionalty of Forfeiture Provisions
In Lockev. United States,64 the Supreme Court upheld

the

constitutionality of the "conclusive abandonment" law applica-

ble upon failure to file either initial recordation of a cl~m or
one's annual claim filing under section 314.65 In upholdig section 314, the Supreme Court cited and applied Texaco, Inc. v.
Short,66 which itself

upheld the Indiana statute escheating severed mineral interests that either were notbemg exercised or
were not re-recorded during a statutory grace period. Locke

may be heavvlY relied upon by those seeking to restrict or elim-

inate rights held by claimants under existing law, because of its language: "This power to qualify existing property iights is particularly broad with respect to the 'character' of the proper;,? ~

62S. 433, § 102(d); H.R. 918, § 102(b).

63S. 433, § 402(b); H.R. 918, § 404(a).
64471 u.s. 84 (1985). .

6543 U.S.C. § 1744(c) (1988). The ¡¡nnualfiing is either a copy of the locally-record-

I
",.

ed afdavit of assessment work or a notice of intention to hold. 43 U.S.C. § 1744(a)
(1988); 43 C.F.R. § 3833.2-2 (1991). 66454 U.S. 516 (1982).

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§ 7.04(2)

MINERA LAw INSTITUTE

7-20

ty rights at issue here. . . . Claimants thus must take their
mieral interests with the knowledge that the Government retaiiis substantial reguatory power over those interests."67

But this language must be read in light of Texaco, on which

the Locke opinon expressly relies. Both opinions depend on the
fact that hy reasonable exèrtions the property owner could have

fuZZy preserved the property; contrary rulings, the Supreme for the consequences Cour said, would "compensate the owner of his own neglect.''6 The Reform Bils canot be defended this

way. The existing claimant either loses all rights (i.e., he does not convert) Qr he loses many critical ones (if he does convert). By no exertions, rea-onable or not, can he preserve his existing "an individual's reasonrights. Locke upholds reguation when able, investment-backed expectations can continue to be reali I

ized as long as hecollplies with reasonable . . . restrictions."69 As is develQped below, existing expectations are gone when a under the proposed legislation. claim is convertd
(b) Absence of any Savings Clause
Neither of the

Reform Bils provides that the conversion
existing rights."70 Rather there is

obligation is "subject to valid no intention: to preserve existing

property rights.7o.1 Both bils

expressly impose the conversion obligation on all existing
'.

claims irrespective of its effect on existìiig rights. In this re-

spect they are unike prior legislation afecting the scope and application of the General Mining Law?1 '
67Lockev. United States, 471 U.S. 84, 104, 105 (1985), citing Best, 371 U.S. at 335,
and Cameron v. United States, 252 U.S. 450, 460 (1920).

69 '

68Te.co, 454 U.S. at

530 (quoted in Locke, 471 U.S. at 107).
supra note

Locke, 471 U.S. at 107. '

70The meaning and use of this term is developed in Rufatto & Ostby,

20, § 11.02.
70.1H.R. 918, § 204(d)(3) exempts properties on which "substantial

legal and fi-

cial commtments" have been made from certn new prohibitions, but the term is de._",-. - - ".,"--- .

'" ,"..-"'

fied in § lOl(a)(lO) to require capital investment in development. It appears to apply
, ,

only to existing mines that must be re-permittd under the bil.

71Compare this to the Mineral Leasing Act of 1920, § 37, 30 U.S.C. § 193 (1988);
and to FLPMA, § 701(h), 90 Stat. 2786. FLPMA § 701(h) applies to: withdrawals
under FLPMA § 204, 43 U.S.C. § 1714 (1988); management actions including regulations implementing FLPMA § 302(b), 43 U.S.C. § 1732(b) (1988), regardingunecessar and undue degradation; and land use planning actions under FLPMA § 202,.43 U.S.C. § 1712 (1988).
,-~. "

"
, .~. .~ :.

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i
~,

j-.
~"
::t ~-

7-21

INVRSE CONDEMNATION

§ 7.04(3)

l f¿

(3) New Restrictions on the Right to Mine
(a) Right to Say No for Land Management Reons The key loss under a converted claim is loss of the right to mine. Under the Reform Bils' plan of operations provisions72 and their land use planning provisions,73 the land manageauthority to disapFor instance, the holder of a valid claim group, with a delin-

i
.' ..' '!; -,'

ment agencies would be vested with new

prove a plan of operations for reasons that would not have
been the basis for disapproval under current law.

~.

--

eated ore body, submits a plan of operations prior to enactment of H.R. 918. During the completion of the environmental impact statement on the plan of operation, the new law becomes effective (per its section 403 effective date and issuance of section 403 rues). Section 405(a)'s transition provision makes sec~ tion 201(g)(I) applicable to the plan at that moment. Under
section 201(g)(1)(D), the Forest Servce or BLM land manager

,:.

can "prohibit. . . proposed mineral activities" because the plan
of operations wil affect, for example, a riparan area, section

-

204(e)(I)(D), or an area of critical environmental concern
(ACEC), section 204(e)(2)(A),74 neither the time of delineation of of which is (or was at the ore body) withdrawn from the operation of the General Minig Law. The land authority to prohibit necessary and due degradation BLM current

manager now has
(using

law phrase) or, it is now "feasible" for the land

the

manager to minimize by prohibition the adverse environmental impacts (using the Forest Servce curent law phrase).5

Exercise of this new land management authority to disap~f.

prove a plan of operations on claims validated by discovery at the date of enactment of either of these bils generates an in72S. 433, § 104(a) & (c); H.R. 918, §§ 201(b)(1), (g)(3), & 405(b).

73S. 433, §§ 104(c), (e), & 202(e); H.R. 918, §§ 201(b), & 204(c)(3). ,
7~he ACEC might have been designated to-manage a scenic viewshed, or to manage a locally important (but not threatened or endangered) wildlife population.

751fthe land manager merely conditions (mitigates) the proposed mineral activities,

~~:. '.

plan approval will be subject not just to procedural (i.e., NEPA) but also to substantive challenge as arbitrary and capricious for failure to prohibit the proposed activities, under § 202(e) of H.R. 918. Mter all, project opponents wil argue, one ofthe goals in passing the bil was to vest the land manager with the "right to say no" in situations where he or she did not previously have it.

. .... . - - - --..-- -. ._---'-.._. 'r-- ~---..r-.- '.~-'--,-.- -,"," - -.-.,- ,. ~ . - - . - '. ~ , ~

,... . -_. -_...-

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"-~A"" .. '. _.,.~ - ---' _: .:---'.:._-'-- -.: .,'~--~" ~'.. .0' ~--':~'::" -.:--",- ,- .,-,:'-- :_~-.. L-.: - '_... - '.,; .' c.~'~-~.'

§ 7.04f3)

MINERAL LAW INSTITUTE

7-22

verse condemnation cause of action. Under the first inquiry, the
decision wil appear to have the purose of devoting the land to

the public use that motivates the rejection, much as preservation of the wetland had a public interest basis in Florida Rock. Certainly at the date the statute was passed the mining right

was not a nuisance or noxxous use of the public land. Under the second inquiry, it wil be clear whether one looks at existing or new law that the claimant's rights are solely rights to mie ard
to use the landfor mineral purposes.76 There is no residual

value in the claims if the plan of operations wil not be approved. Under the third inquiry, the claimant wil have expended however much (possibly milions) it took to identifY and delineate the ore body, to acquire the claims and other property rights (non-federal lands, water rights) predicate to submitting the plan öf operations, and to engieer and submit the plan itself. The "reason" for rejection of the plan of operations will not

have beèn formally identified until the plan of operations is
under review, so there will have been a reasonable investmentbacked expectation of development up until the point whenei-

thertheagency formally idèntifies the new basis,77 or the
agency record of decision on the plan of operations proposes rejection for this newly asserted reason.
(b) Applyi Whitney and Unitèd Nuclear

The claim property wil have no residual value if it camiot
be mined, as was true under United Nuclear and Whitney Ben-

efits. The investment-backed expectations will likely be as substantial, and

at least as reasonable, as those that supported

the taking holding in United Nuclèar and Whitney Benefits.

Under the first inquiry, the government canot characterize as a nuisance or noxious use what was, immediately prior to the

introduction of the new ground for rejection, a lawful and
proper use of the public domain that would have

been ap-

proved under the general mining laws and the land manage76E.g., United States v. Rizzinelli, 182 F. 675 (D.. Idaho 1910); Surface Resources
Act of 1955,30 D.S.C. §§ 611-615 (1988).

(except the purose of reguating hardrock ming under either of the Reform Bils), any land use plannng decision to protect another resoure
value would be made "subjec to valid existig rights" uuder § 701(h) of FLPMA. Under §§ 201(g)(l) & 204(c)(3) of H.R. 918, however, one hypthesizes a situation where the

77For any other purose

relevant BLM or Forest Servce land use plan has not even been amended yet.

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INVRSE CONDEMNATION

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ment standard (BLM or Forest Service) applicable to that mining. This inquiry is closely analogous to the Florida Rock facts that the Claims Court found supported inverse condemnation. This conclusion is underscored by the fact that the au-

thority to disapprove a plan of operations (prohibit mineral ac-

tivities) mayor may not be exercised in a given situation,
depending on the land manager's findings. Using the precedent of United Nuclear, Whitney Benefits,

and Florida Rock, any claimant with a right to mine at the
after enactment but prior to claim conversion,78 has a viable inverse condemnation claim if the plan of operations for that claim group is to be rejected for a reason newly minted under the
date of enactment of one of the Reform Bils, or even

new authority to say no. Each such prospective mine, of course, is a fact situation with great potential fair market
of the plan of operations, are valid claims in effect ás the min-

value - the measure of liability. Claims with delineated ore bodies that are undergoing mine design, or initial submission
ing law changes. And the greater the land managers' exercise

of the new authority to establish grounds for disapproval
(i.e.,developing the resource conflicts with newly "unaccept-

able" impacts that were formerly necessary and due degradation on land open to the mining law), the more situations will
present inverse condemnation claims.

(4) Loss of the' Right to Patent
The second major cutoff of an existing right in the Reform Bils is the absence of patenting provisions for new and converted claims, and the termination (upon enactment) of the existing claim. The inverse condemnation claim here essentially requires the relitigation of

right to apply for patent to an

Freese in the Claims Court. Although the "old", Court of Clais was transformed into the Claims Court (trial level) and part of the jurisdiction of the new Federal Circuit (appellate level) in 1982/9 Court of Claims precedent is follòwed not only by the
78The suit may survve conversion on the theory that the statute compels involunta conversion and it is in the conversion (taken together with subsequent plan of operations disapproval) that the taking occurred.

79Title I of the Federal Courts Improvement Act of 1982, Pub. L. No. 97-164, 96
Stat. 25, 37-41 (codified in scattered titles of U.S.

C.).

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~ 7.05

MINERA LAW INSTITUTE

7-24

Claims Court but also by the Federal Circuit. Thus petitioners in the Claims Court must be prepared to take the case to the level of petitioning for a writ of certiorar, unless they can persuade these courts to re-examine this precedent either in light of new takings law, or in light of different arguments under Freese, or both. than those rejected in the General Mining Law
On the merits, the two chief

holdigs of Freese must be chal~

lenged. First, the case characterizes the patent right as a peripheral or ancilary right of tae holder of a valid unpatented claim, reaching, the conclusion that the fundamental rights of
a claimant were preserved by the Sawtooth National Recre-

ation Area Act.80 The Court of Claims treated this entirely in
the context of defining the rights at issue in the case, but in
light of more recent 'cases the focus might become a governmental"mere diminution in value" defense. land case law Second, the Court of Claims relied on public

saying that the right to a public land patent vests only on pay-

ment of the purchase price. The key mining case cited in Freese determined that, after application for patent, a claim was not subject to adverse relocation for failure to do assessment work. 81 Ths is correct but not the situation at hand. The
--- ..~~~..,-...

challenge must rely on èases like Noyes v. Mantle,82 in which the Supreme Court used the previously quoted trust language even though no patent had been sought for the claim protected
by the opinion.

§ 7.05 Issues in Litigating an Inverse Condemnation Claim
There are four specific aspects of litigating an inverse con-

demnation case in the Claims Court that require description before one can fully appreciate the "trap for the wary''8 that is
"

-- '. -, --' --- .
.:"',"-' ,-.' '-' - ~- ,

, - .'"

8016 U.S.C. §§ 460aa to 460aa-14 (1988). See Freese, 639 F.2d at 758 ("(plaintiffs)

rights of use, enjoyment and disposition in his unpatented mining claims remain undiminished"). 81E.g., Benson Mining & Smelting Co. v. Alta Mining & Smelting Co., 145 U.S. 428,
430-31 (1892). 82127 U.s. 348, 351 (1888), quoted supra § 7.03(21(c) (lode claim protected from sub-

c
'f, ,',

sequent placer location)'.
83Secton 314 of FLPMA, 43 U.S.C. § 1744 (1988), was.

described by Justce Stevens

1
"~
i?:' 1:;

in his dissent in Locke as a "trap for the uD,wary." 471 U.S. 84, 123 (1985).

2

i

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INVRSE CONDEMNATION

§ 7.05(2)

created by the conversion systems of the Reform Bils when
they are laid upon the jurisprudence

of the Claims Court.

(l) A Legislative or an Executive Takng Action?
First, one must try to determine whether the taking one asserts was a legislative taking or a regulatory taking. Did the enactment of the law take the property, or did the takng occur
only upon the implemen,tation of the law through some later has held the agency? The Supreme Cour action of permitting
that the steep slQpe and

similar mining prohibitions in
in Whitney Benefits the

SMCRA were not legislative takgs," and that a facial attack
on the statute would not lie.84 Yet

Claims Court and Federal Circuit both found that the takng

caused by the alluvial valley floor miníIIg prohibition of
SMCRA85 occurred at the date of enactment, not at the later

date(s) when the regulatory authority disapproved a mining
permit application for some of

the coal.86

(2) Ripeness and

Prematue Suit versu St~tute of

Limtations
The difficulty discussed above is closely related to the next

'.

aspect of litigating an inverse condemnation suit - the ques~ tion of ripeness and the risk of premature suit. An inverse condemnation action in the Claims Court is subject to a six-year statute of limtations.87 If one waits until the agency rejects a plan of operations, and that does not occur until six and a hal
claim conversion,
years afer the legislation is enacted or after

one risks being dismissed under the statute of limitations if
the taking is later found to have occurr~d at the earlier

date(s).88 The Federal Circuit had the same initial problem with the Whitney Benefits action. The plaintiffs fied suit within six years of the passage of SMCRA, but the government persuaded the Claims Court to dismiss the acti.on be84irginia Surace Minig & Reclamation Ass'n v. Hodel, 452 U.S. 264 (1981).

"., ',-",. ~.

85Sec. 510(b)(5) ofSMCRA, 30 U.S.C. § 1260(b)(5) (1988).
86926 F.2d at 1172-74.

8728 U.S.C. § 2501 (1988).

88See Shiny Rock Mining Corp. v. Hodel, 906 F.2d 1362, 1364-65 (9th Cir. 1990)

(case dismised under parallel statute of limitations, 28 U.S.C. § 2401(a) (1988), over
plaintiffs objection that it was not adversely afecte by the agency acton until more
than six years afr the action occurred).

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§ 7.05(3)
cause the plaintiffs had not administrátively"and any taking

MINERA LAW INSTITUTE
yet been denied the

7-26

right to mine could not be legislative. The

court of appeals reinstated the suit, les.ving open whether any

taking would be found to be legislative or administrative.89
(3) Clai Cour or Distrct Cour?

The third aspect to be considered when litigating inverse condemnation actions is that case.law has clarified the relaClaims Court and the district courts. district court for declaratory (and
tive jurisdiction of the The old practice of suing in

permanent injunctive).reliefthat the stat?te is Unconstitutional(and unettforceable) has given way. Instead one is now liti-

gating legislative construction to determine whether Congress

intended to take or not, or authorized the agency to take or
not. As the Supreme Court reiterated in the so-called "Rails to
Trails" case, Preseault V..

ICC,90 Con.gress rarely if-ever acts
as the constitutional backstop, pro-

"unconstitutionally" in the Inversecondemnation context. The
Tucker Act is always there

viding compensation if the intended congressional action inversely condemns property. The first question is whether Congress has withdrawn Tucker Act jurisdiction. If it has not, then a district court "takings" action is premature until afer
-.~ .

the Tucker Act remedy of compensation is employed.91 The
parties

must chQose courts ~nd èlect remedies. They will have

to litigate twice if the attempt to invalidate the reguatory ac-

tion, that is, attàcking disàpproval of the plan of òperations
(as arbitrary and capricious or inconsistent with statutory authority) in district court fails (as occurred in Rybachek and
Florida Rock). The second suit, after resolution of the first,92

will be brought in the Claims Court.
89wtney Benefits, Inc. v. United States, 752 F.2d 1554 (Fed. Cir. 1985).
90494 U.S. 1 (1990).
911d. at 12, 14.
'-:'. ,..- ~'. 9228 U.S.C. § 1500 (1988) renders the Claims Court case subject to dismissal if there is district court litigation of the "claim" pending at the same time. UN Ind.,

Inc. v. United States, 962 F.2d 1013 (Fed. Cir. 1992). The Federal Circuit concluded

as well that a declaratory judgement action in district cour and a monetary damages
case in the Clais Court are the same "claim" for 28 U.S.C. § 1500 purposes. This
construction of

the word "claim," which sems both needless and dysfunctional when applied to thi problem, is found in the Federal Circuit's reversal of Casman v. United
States, 135 Ct. Cl. 647 (1956) and Boston Five Cents Savings Bank v. United States,
. ~. '--. .
r ~

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§ 7.05(5)

. (4) Assignent of Clais Prohibition
The fourth aspect to consider is that the Claims Court car-

ries with it the prohibition on the assignment of claims
against the United States.93 Once the taking occurs, the property "belongs" to the United States, and the claim for fiancial

compensation cannot be assigned. Given the uncertainties
about whether a statutory restriction causes a taking upon enactment or only later upon its application to the specific min-

ing claims, this prohibition, which the United States may assert as a bar to compensation to anyone but the owner at the time oftaking,94 must be observed.

(5) Traps for the War
The overlay of either of these bils on this jurisprudence creates a legal obstacle course of remarkable complexity. This is

apparent if one examines what happens when the hypothetical plan of operation meets section 201(g)(1) of H.R. 918 (as
discussed in § 7.04(3)(a), supra).

Prior to enactment of H.R. 918, the mining company has a
discovery on an unpatented claim block. The bil is enacted whie the mining company develops a plan of operations under the current BLM rules.95 Upon eiiactment the mining compa-

ny has lost the right to patent, and the six-year statute oflimitations begins to run on the "Son of Freese" claim.96 The plan

,".., 'r;:-"-

of operations is submitted after enactment but prior to the bil's effective date. The BLM undertakes to comply with operations. One hundred and eighty days after enactnientt BLMrules under
NEPA and otherwise processes the plan of section 403 are issued, and

per section 101(a)(4) the bil is now effective. If the plan of operations did not already satisfy the

864 F.2d 137 (Fed. Cir. 1988) (see UNR, 962 F.2d at 1022 n.3). UNR is the 'f¡ksis for federal motions for dismissal or for relief from judgement, respectively, in Loveladies Harbor, 21 Cl. Ct. 153 (1990) and Whitney Benefits, 926 F.2d 1169 (Fed. Cir. 1991) (see
discussion at supra § 7.02(7J(b)).

9331 U.S.C. § 3727 (1988) (formerly 31 U.S,C. § 203); Cooper v. United States, 8 Cl.

Ct. 253 (1985). '
94Cooper, 8 Cl. Ct. at 254, citing United States v, Dow, 357 U.S. 17 (1958). 9543 C.F.R. § 3809.1-5 (1991). .
96Thìs claim appears ripe upon enactment, as there is no admnistrative remedy or

disapproval to be sought. This would be a "legislative taking" claim.

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i

l
§ 7 .05~5)

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requirements of BLM rules implementing section 201(c)
(reclamation), it

must be revvsed and reprocessed. Assume processing of the plan of operations is completed about a year after the section 403 rules are issued, so the conposed mineral activities") under section 201(b)(5) of H.R. 918. The grounds for disapproval', protection of a riparian area and

version period under section 404 is already a year open. The BLM disapproves the plan of operations ("prohibits the proan ACEC under sections 201(b)(5)(A) and (C), were not bases on which the plan of operations could have been disapproved
prior to enactment of H.R. 918.
The mining company may challenge disapproval in

the dis-

trict court, seeking a reversal that would allow mining.97 While the case proceeds, however, it may be an exclusive remedy that forecloses Claims Court relief.98 Whle the challenge

to disapproval of the plan of operations is wending its way

through the district court to the court of appeals, the threeyear conversion period under section 404(b)(2) is drawing toa
close. If one simply fails to convert, the government Will defend against any action on the basis that the claims are void,

and under Locke constitutionally so. On the other hand, if the disapproval of the plan of operations inversely condemned the right to mine that exxsts \\der current law, the taking has already occurred and there is nothig to convert. Assume the mining company sticks with its desire to mmne

and with its district court action to reverse the rejection. It
must then

convert its claims under section 404(b)(2) before the

three years expire. Under H.R. 918 a converted claim is equiv-

alent in "rights" to a new claim, ie., it is fully subject to the land manager's rights to say no to mining under Title II. By converting, does a claimant voluntarily waive the right to
mine inherent in the pre-conversion claims? Conversion is not
"

97 Query: must one pursue this judicial remedy to have a ripe inverse condemnation
action in the Clais Court? Florida Rock, 21 Cl. Ct. at 164, suggests not.

9828 V.S.C. § 1500 (1988). See supra note 92 and accompanying text. Further, the district court action cannot viably attck the land manager's constitutional authority
to disapprove the plan. Under Preseault analysis (see supra § 7.05(3)), H,R. 918 clearof operations that ly does not withdraw the Tucker Ac remedy, and any disapproval

would constitute inverse condemnation is compensable in the Claims Cour.

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§ 7.06

voluntary, and by its statutory terms rights inherent in cur-

rent-law claims are shorn away when it happens. When, then, did inverse condemnation occur: upon passage of the bil (or the "effective date" when section 404(b)(I) became applicable to existing claims); upon agency disapproval of the plan of operations; upon district court affrmance of that
rejection; or