PAUL SHEARER V. DEBRA HAALAND, ET AL, No. 20-36089 (9th Cir. 2022)
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FILED NOT FOR PUBLICATION UNITED STATES COURT OF APPEALS SEP 8 2022 MOLLY C. DWYER, CLERK U.S. COURT OF APPEALS FOR THE NINTH CIRCUIT PAUL G. SHEARER, Plaintiff-Appellee, No. 20-36089 D.C. No. 3:18-cv-00035-HRH v. ORDER DEBRA ANNE HAALAND; et al., Defendants-Appellants. Appeal from the United States District Court for the District of Alaska H. Russel Holland, District Judge, Presiding Argued and Submitted February 10, 2022 Seattle, Washington Before: BYBEE, BEA, and CHRISTEN, Circuit Judges. Defendants-appellants Debra Anne Haaland (Secretary of the Interior), United States Department of the Interior, the Bureau of Land Management, and the National Park Service appeal the district court’s ruling in favor of plaintiff-appellee Paul Shearer on his Administrative Procedure Act claim regarding a patent application for the Banjo and Pass gold mining claims located within Denali National Park and Preserve. The district court ruled that the Secretary’s 2012 decisions, rescinding the First Half of the Mineral Entry Final Certificate for the claims and rejecting the patent application, were arbitrary and capricious. The district court ordered the Secretary to issue a patent for the claims in favor of Shearer. We affirm in part, and vacate and remand in part. Because the parties are familiar with the facts, we recite only those that are necessary to our order. To establish entitlement to a patent for the Banjo and Pass claims, Shearer must demonstrate that his predecessor in title, Red Top Mining Company, held title to the claims at the time it initially recorded the claims pursuant to the Federal Land Policy and Management Act of 1976 (FLPMA).1 If Red Top did not have valid title when it made its initial FLPMA filing in 1979, the Banjo and Pass claims were void and abandoned before the subject patent application was filed. During oral argument, we questioned counsel extensively about a September 1996 memorandum decision issued by Alaska Superior Court Judge Hodges. The 1996 memorandum decision was central to the response brief Shearer filed in our court and it became a focus of the government’s reply brief. The 1996 1 Congress enacted FLPMA in 1976 to establish a federal recording system for mining claims and to resolve outstanding and “stale” claims. See United States v. Locke, 471 U.S. 84, 87 (1985). FLPMA operated to extinguish claims if the owners did not file verification of their claims by October 21, 1976 and every year thereafter. See 43 U.S.C. § 1744(a). Failure to comply with the initial or subsequent annual filing requirements “constitute[s] an abandonment of the mining claim.” § 1744(c). 2 memorandum decision concluded that the 1937 “Option Agreement,” the origin of Red Top’s chain of title, was a contract for sale rather than an option. The 1996 memorandum decision concluded that Red Top held title to the Banjo and Pass claims by 1976. Accordingly, Shearer argued that the 1996 memorandum decision undermined the Secretary’s conclusion that the Banjo and Pass claims were abandoned as of 1979 for failure to comply with FLPMA’s initial recording deadline. But a 2005 state-court judgment suggested otherwise. The 2005 judgment accepted a stipulation between Red Top and Shearer characterizing the 1937 “Option Agreement” as an option that expired unexercised. At oral argument, we called the parties’ attention to entries in the record suggesting the 1996 memorandum decision may have been vacated. After argument, we ordered a limited remand for the district court to resolve whether the 1996 memorandum decision had been vacated and, if so, whether that changed the outcome of the district court’s ruling. The district court concluded on remand that the 1996 memorandum decision had been vacated, but the court also decided that the vacatur did not impact its earlier rulings because: (1) the district court has relied on a 1993 state superior court quiet-title order that vested title in the Banjo and Pass claims with Shearer’s predecessor, Michael Mark Anthony; and (2) the 1996 memorandum decision was issued in a case that involved the Doherty claim, 3 not the Banjo or Pass claim. The parties filed supplemental briefing addressing these developments. Now, having considered the parties’ briefs, arguments, and supplemental briefs, we hold: 1. The district court correctly ruled that the Secretary’s 2012 decisions were arbitrary and capricious because the Secretary relied on one state-court judgment to the exclusion of other conflicting state-court rulings concerning title to the claims. See Turtle Island Restoration Network v. U.S. Dep’t of Com., 878 F.3d 725, 732 (9th Cir. 2017) (explaining that an administrative agency’s decision may be arbitrary and capricious where it “entirely failed to consider an important aspect of the problem, [or] offered an explanation for its decision that runs counter to the evidence before the agency”). Interior has repeatedly asserted that its longstanding practice is to defer to state courts to resolve disputes about mining claim ownership, “especially when a dispute requires interpretation of state law.” David J. Bartoli, 99 Interior Dec. 55, 62 (IBLA 1992). The Secretary’s 2012 decisions relied exclusively on the 2005 state-court judgment concerning title to the claims and failed to explain why the Secretary’s analysis did not include earlier state-court decisions involving title to the Banjo and Pass claims or why the Secretary deemed the 2005 state-court order superior to earlier state-court rulings. 4 2. On this record, title for the Banjo and Pass claims as of the time of the initial FLPMA filing remains unclear. Thus, the district court’s order directing the Secretary to issue a patent was premature, and we vacate the district court’s order directing the Secretary to issue a patent for the claims. We are mindful that the subject patent application has been pending for over thirty years, and the Secretary has not justified the length of this delay. Nevertheless, the Secretary retains “broad plenary powers over the disposition of public lands,” see Ideal Basic Indus., Inc. v. Morton, 542 F.2d 1364, 1367 (9th Cir. 1976), and “the government may challenge the validity of [a] mining claim” “[a]t any time prior to the issuance of a patent,” Swanson v. Babbitt, 3 F.3d 1348, 1350 (9th Cir. 1993). At oral argument held before our court on February 10, 2022, the government argued it may need time to conduct another mineral report. We reject that rationale, as there is plainly no justification for another mineral report. That said, the Secretary has an obligation to resolve title issues before issuing a patent to a parcel of public land. See, e.g., Cameron v. United States, 252 U.S. 450, 460 (1920) (explaining that the Secretary “is charged with seeing that [Interior’s] authority is rightly exercised to the end that valid claims may be recognized, invalid ones eliminated, and the rights of the public preserved”); Ideal Basic, 542 F.2d at 1368 (“So long as the legal title remains in the Government, the 5 Secretary has the power and duty upon proper notice and hearing to determine whether [a] claim is valid.”). As explained, the district court reasoned that the vacatur of the 1996 decision did not change its conclusion because it relied on a 1993 quiet-title ruling to establish that Shearer’s predecessor, Anthony, had valid title. But Shearer must also establish that Red Top complied with the FLPMA filing requirements in 1979, and the record regarding the chain of title that preceded the initial FLPMA filing deadline still consists of two conflicting state-court orders. On one hand, the 1993 quiet-title order supports Shearer’s theory that Red Top held title to the Banjo and Pass claims via the 1937 Option Agreement because Anthony’s quiet-title claim was based on a chain of title from Red Top. On the other hand, the 2005 state-court judgment contradicts the characterization of the 1937 Option Agreement in the now-vacated 1996 memorandum decision. The record also includes a stipulation between Red Top and Shearer that the Banjo and Pass claims were not part of the 1937 Option Agreement, contrary to the Agreement’s text. We leave it to the district court to fashion a procedure on remand for the parties to resolve the remaining title issue. We recognize this may necessitate a stay of the federal proceedings to allow the parties to return to state court. Mindful 6 that this dispute has already spanned decades, we urge the district court to require periodic status reports from both parties. AFFIRMED in part and VACATED and REMANDED IN PART. Each party shall bear its own costs on appeal. 7
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