Kerr-McGee Corp. v. Hodel

Section 352 of the Mineral Leasing Act for Acquired Lands, 30 U.S.C. §§ 351 et seq., subjected mineral leases on federally acquired lands to the consent of and conditions prescribed by the head of the executive department with jurisdiction over those lands. In addition, section 211(b) of the Mineral Leasing Act (Act), 30 U.S.C. §§ 181 et seq., required phosphate-lease applicants to demonstrate the discovery of valuable deposits of phosphates on their lands. In the 1960s, the Kerr-McGee Corporation (Kerr) (plaintiff) obtained phosphate-prospecting permits from the Department of the Interior (Department) (defendant) for mining activities in the Osceola National Forest (Forest). Between 1969 and 1972, Kerr submitted preference-right lease applications to the Department, alleging the discovery of valuable deposits of phosphates under section 211(b). The United States Geological Survey (USGS) certified that the deposits were valuable based on their physical characteristics. The Department promulgated regulations in 1976 requiring lease applicants, in order to satisfy the valuable-deposit test, to demonstrate a reasonable expectation that mineral-sale revenues would exceed mining development and marketing costs. In February 1982, the United States Forest Service (USFS) submitted lease stipulations that required the reclamation of plant and aquatic resources. The Department’s 1974 environmental impact statement (EIS) and 1979 EIS supplement expressed doubt about the success of reclamation, due in part to the state of technical knowledge. In 1982, an interagency task force found that the Department’s technology was still insufficient to reasonably ensure successful reclamation. In January 1983, the secretary of the interior (secretary) (defendant) rejected all pending lease applications for the Forest, finding that Kerr had not discovered valuable deposits because of the technology-related costs of reclamation. Kerr sued the secretary and the Department, claiming that the denial of its applications had deprived Kerr of its vested phosphate-mining rights. Both parties moved for summary judgment.