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John D. Leshy
Professor of Law
Arizona State University
Tempe, AZ 85727

May 5,

1988

The Honorable John Melcher
Chairman, Subcommittee on Mineral

Resources Development and Protection
Committee on Energy and Natural Resources
United States Senate
Washington DC 20510-6150

Dear Senator Melcher:

In response to your letter of April 26 transmitting additional questions regarding s. 2089 and H.R. 1039, I offer the following:

1.

Does the Property Clause of the Constitution figure into your analysis of the constitutinnality of s. 2089, and if so, how?

In my view, the constitutionality of s. 2089 is assured without regard to any special powers the Congress has under the Property clause of the Constitution. The bill's restrictions on whatever property rights might exist in oil shale mining claims are fully justified as an exercise of Congress' other constitutional powers. For example, Congress' regulatory power under the commerce clause permits it to substantially diminish the value of private property interests, yet the courts have had no difficulty sustaining such actions against "takings" attacks. See, e.g., Hodel v. Indiana, 452 U.S. 314, 333-35 (1981) lupholding the constitutionality of the Surface Mining Control and Reclamation Act of 1977). The Supreme Court has also made clear, in the specific context of dormant mineral rights, that statutes extinguishing private property rights for failure to perform certain acts pose no takings problems. See, e.g., Texaco v. Short, 454 U.S. 516 (1984). The fact that these oil shale mining claims are (to the extent they are valid) constitutionally protected private interests in federal property can only strengthen the already quite clearcut case for constitutionality. The Supreme Court has made clear in numerous cases dating back a century and a half that the power of Congress over federal property is essentially "without limitations." See, e.g., United States v. city and County of San Francisco, 310 0.s. 1629-30 (1940). Even conceding that the

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The Honorable John Melcher
May 5, 1988
Page 2

fifth amendment's protection for private property puts some limit on Congress' power over federal property, there is no doubt that the property clause power adds force to the argument for s. 2089's constitutionality. See, e.g., United States v. Locke, 471 U.S. 84, 104 (1985) (Congress' power is "particularly broad" with respect to unpatented mining claims). Nevertheless, whatever extra oomph the property clause furnishes Congress' regulatory power here is not crucial, because the constitutionality of s. 2089 would be clear even if federal property were not involved. The fact that the United States still retains title to the land covered by these oil shale claims simply makes an already plain case of constitutionality even more unassailable.

2. Is a legislatively determined cutoff date for patent

applications constitutional, and if so, is the February 5,

1987 date defensible? The patent feature of the Mining Law is not a core property right. It is, rather, a mere frill, and therefore Congress could eliminate it at any time prior to the actual issuance of a patent, so long as some reasonable opportunity remains available to mine the claim. Stated another way, the claimant's basic, constitutionally protected property interest is that opportunity to mine, and s. 2089's closing off the patent option, no matter how abrupt or retroactive, does not interfere with that opportunity. As the Court of claims observed in the Freese case, no right to a patent under the Mining Law comes into existence "until there has been full compliance with the extensive procedures set forth in the federal mining laws for the obtaining of a patent." 639 F.2d 754, 758 (ct. cl. 1981) (citing two opinions of the Supreme Court).

3.

Was the Court of Claims' reasoning in freese v. United
States sound?

I was somewhat startled by the government witness's suggestion that Freese was a questionable decision. I ascribe it primarily to the fact that the witness was not a lawyer, and was, as he admitted, not fully conversant with the substantial judicial teachings on the question of takings. As far as I am aware, no judge or scholar has ever questioned the correctness of this decision.

The Honorable John Melcher
May 5, 1988
Page 3

Several features of the Freese decision bear special mention here. First, the government was the defendant in that case, and argued vigorously in defense of Congress' action in terminating the right to patent.mining claims in the Sawtooth National Recreation Area. To the extent the government is now questioning the decision, it is questioning a result it had previously asked the Court to reach.

Second, the Court in Freese disposed of the issue on summary judgment. In technical legal terms, this means that the Court did not believe the issue raised by the claimant deserved a full trial on the merits. It did not want to hear evidence on the extent to which the claimant's operation might be curtailed, or how much investment he had in his operation, or what kind of profit he might lose from being deprived of the opportunity to patent his claim. Instead it asked only a bare legal question did the deprivation of the patent opportunity unconstitutionally deprive him of a valuable property right? - and firmly answered it in the negative. Third, the Court that rendered the decision, the Court of Claims, is not a babe in the woods when it comes to deciding whether acts of Congress have unconstitutionally "taken" private property interests. It decides dozens of such cases every year by written opinion. Yet it did not regard the issue in Freese as particularly difficult; on the contrary, it disposed of it easily, even curtly. What else can one make of the brevity of the opinion, the fact that it was unanimous, and especially the language the Court used? The Court said that plaintiff's contention (that as the holder of an existing mining claim he had a right to patent) has "no merit. There is no maintainable legal theory in support of his view that he has suffered a deprivation of private property' as that term is used in the fifth amendment." 639 F.2d 754, 757 (emphasis added). The Court did not say that the claimant had a decent argument that, on balance, must be rejected because the public interest was stronger on the other side. Instead, the court said there is no credible theory supporting his argument. Similarly, a few paragraphs later the court relied on "common sense" to dispose of the notion that the claimant had suffered a taking. This is not the kind of language a court uses when it is troubled by a legal issue. It should also be noted that the Court of Claims is just one rung below the Supreme Court - the equivalent of the circuit Courts of Appeals - and that, finally, the claimant in Freese asked the Supreme Court to review the decision but it declined to do so.

The Honorable John Melcher
May 5, 1988
Page 4

As I pointed out in my statement of April 22, another decision, the Alaska Miners case out of the Ninth Circuit Court of Appeals, reached a similar result on a closely, but not precisely analogous issue. Its opinion was likewise brief and disparaging of the claimants' arguments, using phrases like "lwe find it unnecessary to discuss in detail the many cases" in opposition to the claimants. See 662 F.2d 577, 579. No decisions casting doubt on these results exist in any even remotely analogous context. The fact that there are such few decisions is primarily, in my judgment, because no other mining claimants who have faced denials of patents because of previous congressional actions like s. 2089 have bothered to pursue the practically hopeless quest of persuading a court that a constitutional violation exists. And genuine miners engaged in actual mineral development are not affected by the loss of patent opportunity, and are therefore indifferent to it. That is the real message of Freese and Alaska Miners; that the constitutional question borders on the frivolous, and does not require extensive discussion. To paraphrase the language the Court of Claims used in Freese, like the Sawtooth Act, s. 2089 merely "narrows somewhat the claimants' opportunities," but this is far short of depriving the claimant of a constitutional right. See 639 F.2d at 755. As I indicated in my testimony on April 22, it is time, more than 68 years after adoption of the Mineral Leasing Act, to bring this saga of grandfathered mining claims to a conclusion. S. 2089 is a reasonable compromise solution, giving these claimants an additional ten or twenty years to bring their claims into production or lose them. Any property rights the claimants have in these claims are bottomed solely on the opportunity to mine, and that opportunity is not deprived of them by s. 2089. For that reason, I see no serious constitutional problem with s. 2089 or its House counterpart, H.R. 1039.

May 24, 1988

Ms. Lisa A. Vehmas
Subcommittee on Mineral Resources
Committee on Energy and Natural Resources
United States Senate
Dirksen Senate Office Building, Room 362
Washington D.c. 20510-6150

Dear Lisa:

I had one further thought on the "takings" issue in connection with the oil shale matter. There was a later opinion in the Freese case that is worth mentioning. After the Court had ruled that the Sawtooth Act's repeal of the patenting provision of the Mining Law did not constitute a taking of the mining claimant's property rights (the decision discussed at the April 22 hearing), the claimant went on to press his argument that the Forest Service's regulation of his operation for environmental protection purposes itself constituted a taking. The United States Claims Court rejected that argument summarily, and the Court of Appeals for the Federal Circuit affirmed without opinion. Freese v. United States, 6 Ct. cl. 1 (1984); aff'd w/o op. 770 F.2d 177 (Fed. Cir. 1985). The government successfully contended that, in the words of the Court, it "enjoyled) broad discretion to regulate the manner in which mining activities are conducted on national forest lands." In this particular case, "(wlithout question, Forest Service regulation ... has, to some extent, frustrated plaintiff's plans for his mining properties. The essential attributes of plaintiff's property rights, however, have not by any means been extinguished. ..." 6 Čt. cl. at 14. And further: "By law, the only property right plaintiff has in his unpatented claims is a right to possession for purposes of developing and extracting mineral resources.

without question, that right was, and is, subject to the superior right of the United States to regulate uses of the surface resources within the (Sawtooth National Recreation Area). Although Forest Service regulation of such surface uses has affected the manner in which plaintiff may develop his claims, it has not deprived him of the ability to develop the claims," Id.

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