Rosette Inc. v. United States
United States Court of Appeals for the Tenth Circuit
277 F.3d 1222 (2002)
Commercial rose-grower Rosette Incorporated (plaintiff) owned the surface rights to property in New Mexico pursuant to land patents issued under the Stock-Raising Homestead Act of 1916 (SRHA). Consistent with the SRHA’s requirements, the land patents contained a reservation of mineral rights by the United States (defendant). In the 1940s and 1950s, a well on a section of Rosette’s property encountered hot water, and Rosette began using the heat from the water to heat its greenhouses. In 1970, Congress enacted the Geothermal Steam Act, which provided that the United States secretary of the interior (the secretary) could lease geothermal resources (i.e., steam or hot water produced from a geothermal process involving magma, porous rocks, and water) that were owned or reserved by the United States. Acting pursuant to that statute, the secretary leased the geothermal rights to Rosette’s property to outside companies. The leases named Rosette as a designated operator, required Rosette to pay royalties, and prohibited Rosette from drilling deeper than 1,000 feet without prior written consent. In 1993, Rosette filed a quiet-title action against the United States in federal district court, asserting that the geothermal resources on Rosette’s property were not reserved minerals for the United States under the SRHA. The United States counterclaimed for past-due royalties. The court dismissed Rosette’s claims as time-barred. Rosette subsequently reopened and installed a pump on a previously capped well on its property, planning to use the well’s water to heat the greenhouse. However, the well extended deeper than 1,000 feet, and Rosette had not sought permission from the geothermal leaseholder or the United States to use the well. The United States amended its counterclaim, seeking to enjoin Rosette from using geothermal resources that were deeper than 1,000 feet. Rosette answered the counterclaim and again asked the district court to quiet title the geothermal resources in Rosette’s favor. The court found that the United States had title to the geothermal resources and issued an injunction preventing Rosette from using geothermal resources located deeper than 1,000 feet. Rosette appealed. On appeal, Rosette asserted that (1) the geothermal resources were not minerals for purposes of the SRHA, and (2) even if the geothermal resources were minerals, Rosette had the right as surface-holder to use those resources in connection with raising crops (i.e., roses) on its homestead.
Rule of Law
Holding and Reasoning (Briscoe, J.)
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