BedRoc Ltd. & Western Elite, Inc. v. U.S. (03/31/2004)

Questions presented: Whether sand and gravel are "valuable minerals" reserved to the United States in land grants issued under the Pittman Underground Water Act of 1919?

LYDIA SARGENT, MEDILL NEWS SERVICE

To most people, sand and gravel are hardly considered valuable. Sand and gravel are everywhere, mostly considered nuisances to shake out of shoes or vacuum out of carpets.

However, to BedRoc Limited, LLC, a small family business outside of Las Vegas, Nevada, sand and gravel is the basis of their survival. BedRoc has been selling sand and gravel to builders since 1995. But the legacy of the land they now own with another small family business, Western Elite, Inc., dates back to a couple named Newton and Mabel Butler.

On March 12, 1940, the Butlers received 560 acres of land in Lincoln County, Nevada under the Pittman Underground Water Act. The Pittman Act, passed in 1919, was a government attempt to encourage private citizens to settle and search for underground water in the dry lands of Nevada. If citizens were successful at finding and developing underground water sources, they were granted up to 640 acres of land, with one stipulation.

The Act contained a provision which said that all the land issued to citizens carried with it "a reservation to the United States of all the coal and other valuable minerals in the lands."

Whether sand and gravel are considered "valuable minerals" under the Pittman Act is the issue now before the U.S. Supreme Court.

In the early 1990s, as Las Vegas began to grow in size, there was a sudden market for sand and gravel and a lessee of the Butler land began taking the minerals from the property. In 1993, the Butler land was purchased by Earl Williams, who continued to remove sand and gravel from the land. In March of that same year, the Bureau of Land Management issued a trespass notice to Williams, claiming that the sand and gravel he was extracting from the land belonged to the government. Williams challenged the claims in the Bureau of Land Management and the Interior Board of Land Appeals (IBLA), both of which rejected his challenges.

BedRoc acquired the property in 1995 through a family of Williams.

On July 2, 1998, Williams, BedRoc and Western Elite (which also owned a portion of the land by this time) filed an action to review the IBLA decision and asking for title ownership of the sand and gravel of the land.

Bedrocs primary argument to the district court was that sand and gravel could only be reserved as valuable if they had economic value at the time the patent for the land was issued, in 1919.

However, the district court upheld the IBLA decision, ruling that under the Pittman Act, sand and gravel are considered "valuable minerals."

BedRoc appealed to the 9th Circuit Court of Appeals, which, on Dec. 30, 2002, affirmed, relying on the 1983 Supreme Court opinion in Watt v. Western Nuclear. In Western Nuclear, the Court held 5-4 that sand and gravel were considered reserved minerals under the Stock-Raising Homestead Act of 1916. The decision affected 33 million acres of land in the west, mostly in Wyoming, Montana and New Mexico.

The 9th Circuit concluded that although the Pittman Act was ambiguous about whether sand and gravel were "valuable minerals," the Supreme Court's decision in Western Nuclear could be interpreted that all sand and gravel on land acquired through patents was valuable, and therefore belonged to the United States.

"Based on the text, purposes, and legislative history of the Pittman Act, we hold that sand and gravel are 'valuable minerals reserved to the United States,"' concluded Judge Susan Graber for the unanimous panel.

In its petition for review to the U.S. Supreme Court, BedRoc argued that the 9th Circuit had misconstrued Western Nuclear. BedRoc said that "valuable minerals" under the Pittman Act are distinguishable from the valuable minerals of the Homestead Act because, unlike the Pittman Act, the economic value of the gravel mentioned in the Homestead Act had been determined at the time of the Act.

The petition states: "BedRoc introduced undisputed evidence that the sand and gravel at the Butler property had no economic value until the 1990s."

BedRoc also argued that Western Nuclear "did not address the important question presented here: whether a statutory reservation of minerals encompasses all gravel, regardless of value at the time of the patent."

R. Timothy McCrum, counsel for BedRoc, said that though this case is only about a small amount of land in Nevada, the outcome could potentially affect the 33 million acres of western land included in the Homestead Act of 1916.

"Examination of this case calls into question the soundness of the ruling in Watt v. Western Nuclear," McCrum said.

In its response, the U.S. Solicitor General argued that "this case does not present an opportunity to reconsider Western Nuclear because this case involves interpretation of a different (and geographically much more limited) statute."

The response also argued that the Supreme Court had made a decision in Western Nuclear in which they had "carefully reviewed and correctly ascertained Congresss intent in enacting the reservation in the Stock-Raising Homestead Act."

The Court accepted the case on Sept. 30, 2003, one week before the start of its 2003-2004 term.

Whether the Court would address the ruling of Western Nuclear was unknown, but McCrum said after the Court took the case that the family members of BedRoc would be happy just to see their case settled.

Since 1995, BedRoc had placed money in escrow from the sale of each cubic yard of sand and gravel, waiting for the final resolution of the ownership dispute before they could legally claim ownership of the money they had been earning.

On March 31, 2004, the Court reversed, holding 6-3 for BedRoc that sand and gravel are not "valuable minerals" reserved to the United States in land grants issued under the Pittman Act.

Writing for the majority, Chief Justice William Rehnquist concluded that resolution of the issue begins with the statutory text of the Pittman Act, and ends there, because the text is unambiguous. Since the Pittman Act applied only to Nevada, the ultimate question, he wrote, was whether the States sand and gravel were commonly regarded as "valuable minerals" in 1919.

Common sense says no, Rehnquist reasoned. Sand and gravel were, and are, abundant throughout Nevada; they have no intrinsic value; and they were commercially worthless in 1919. Thus, even if they were regarded as minerals, no one would have mistaken them for valuable minerals.

In concluding, Rehnquist stated that because the statutory text clearly excludes sand and gravel, there was no occasion for the Court to resort to legislative history.

Justices Clarence Thomas and Stephen Breyer concurred. Justice John Paul Stevens wrote a dissent for himself and Justices David Souter Ruth Bader Ginsburg.