Exxon Mobil Corp. v. Babbitt

F I L E D
United States Court of Appeals
Tenth Circuit
PUBLISH
OCT 15 2003
UNITED STATES COURT OF APPEALS
PATRICK FISHER
Clerk
TENTH CIRCUIT

EXXON MOBIL CORPORATION,
f/k/a Exxon Corporation; and TOSCO
CORPORATION,

Plaintiffs - Appellants,
v. No. 02-1344
GALE NORTON, Secretary of the
Interior; DEPARTMENT OF
INTERIOR; KATHLEEN CLARKE,
Director of the Bureau of Land
Management, United States
Department of Interior; DOUGLAS M.
KOZA, Associate Director of the
Colorado State Office of the Bureau of
Land Management,

Defendants - Appellees. *

APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLORADO
(D.C. NO. 00-M-2524 (PAC))

James A. Clark, Baker & Hostetler, LLP, Denver, Colorado, for Plaintiff-
Appellant Exxon Mobil Corporation, and Donald L. Morgan, Cleary, Gottlieb,
Steen & Hamilton, Washington, D.C., for Plaintiff-Appellant TOSCO
Corporation.

*
Pursuant to Fed. R. App. P. 43(c)(2), Gale Norton is substituted for Bruce
Babbitt, Kathleen Clarke is substituted for Thomas Fry, and Douglas M. Koza is
substituted for Ann Morgan as the appellees in this action.
Ellen J. Durkee, Attorney, Environment & Natural Resources Division,
Department of Justice, Washington, D.C. (Thomas L. Sansonetti, Assistant
Attorney General, Washington, D.C.; Katherine Hazard, Attorney, Environment &
Natural Resources Division, Department of Justice, Washington, D.C.; Lyle
Rising, Office of the Solicitor, Lakewood, Colorado; and Karen Hawbecker,
Office of the Solicitor, Washington, D.C., with her on the briefs), for Defendants-
Appellees.

Before TACHA, Chief Judge, and ANDERSON and BRISCOE , Circuit Judges.

ANDERSON , Circuit Judge.

Plaintiffs Exxon Mobil Corporation and TOSCO Corporation appeal the

district court’s judgment affirming the Interior Board of Land Appeals (“IBLA”)

decision invalidating their thirty-two unpatented oil shale mining claims. The

IBLA concluded that the claims were null and void because plaintiffs had failed

to substantially perform the assessment work required by statute. We affirm.

BACKGROUND

Exxon has twenty and TOSCO has twelve unpatented oil shale mining

claims located in the Piceance Creek Basin in Garfield County, Colorado. Exxon

and TOSCO acquired these claims from their previous owners, who had located

them prior to February 25, 1920, in accordance with the General Mining Law of

1872, 30 U.S.C. §§ 21-54.

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 That law, “premised on a policy of encouraging exploration of valuable

mineral deposits in the western United States . . . . provides that one who claims a

mineral deposit is known as a ‘locator’ and is required to perform a certain

amount of work each year in prosecution of the claim site, known as the

‘location.’” Cliffs Synfuel Corp. v. Norton , 291 F.3d 1250, 1252-53 (10th Cir.

2002). That annual work requirement, called assessment work, is described in the

1872 Law as follows:

On each claim located after the 10th day of May 1872, and until a
patent has been issued therefor, not less than $100 worth of labor
shall be performed or improvements made during each year.

30 U.S.C. § 28. The Mining Law further contained a provision stating that if a

claimant failed to perform the required assessment work for a period of time but

later resumed such work before someone else asserted a claim to the same land,

the original claimant did not lose his claim. This provision became known as the

“resumption doctrine”:

[U]pon a failure to comply with these conditions, the claim or mine
upon which such failure occurred shall be open to relocation in the
same manner as if no location of the same had ever been made,
provided that the original locators, their heirs, assigns, or legal
representatives, have not resumed work upon the claim after failure
and before such location.

Id. ; see also Cliffs Synfuel , 291 F.3d at 1253.

With the passage of the Mineral Leasing Act in 1920, Congress “completely

changed the national policy over the disposition of oil shale lands.” Hickel v. Oil

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Shale Corp. , 400 U.S. 48, 51 (1970). Those lands “were no longer open to

location and acquisition of title but only to lease.” Id. The Act contained a

savings clause, however, which provided that oil shale claims in existence as of

February 25, 1920, remained intact, and could pass into private ownership as

before, as long as they were “thereafter maintained in compliance with the laws

under which initiated . . . .” 30 U.S.C. § 193. “Thus, if one had a claim that

existed prior to February 25, 1920, the claimant would not be required to lease the

claimed land from the government, but could perfect title to it so long as the

claim was maintained pursuant to pre 1920 law.” Cliffs Synfuel , 291 F.3d at

1254.

With that general background in mind, we turn to the particular facts of

plaintiffs’ claims. Exxon’s twenty claims were located by its predecessor-in-

interest on December 1, 1919. Exxon purchased those twenty claims and fifty-

two others on February 2, 1966, for $100.00. TOSCO’s twelve claims were

located by its predecessor-in-interest on December 16, 1917. TOSCO purchased

them on April 23, 1979 for $9,562.10.

Exxon filed a patent application for its claims in January 1984. TOSCO

filed its patent application in June 1985. On June 15, 1989, the Department of the

Interior (“DOI”) determined that Exxon had complied with the initial paperwork

requirements of the Mineral Leasing Act and issued First Half of Mineral Entry

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Final Certificates (“FHFC”s). 1
On July 27, 1988, DOI issued FHFCs for

TOSCO’s claims. Issuance of those FHFCs relieved plaintiffs of the obligation to

perform further assessment work. See Silver Crystal Mines, Inc. , 147 I.B.L.A.

146, 149 (1999). DOI continued to investigate the validity of the claims,

however, and on May 3, 1995, the Bureau of Land Management (“BLM”) initiated

a contest of Exxon’s claims and on May 25, 1995 initiated a contest of TOSCO’s

claims.

The two contest complaints were consolidated for a hearing before an

Administrative Law Judge (“ALJ”). The ALJ issued a decision on January 9,

1998, holding, inter alia , that plaintiffs’ claims were invalid because plaintiffs

failed to comply substantially with the annual assessment work requirement of 30

U.S.C. § 28. 2
More specifically, the ALJ concluded that TOSCO had failed to

perform the required assessment work on its claims for the years 1929 through

1931, 1933 through 1957, and 1960 through 1974, with the exception that no

assessment work was required for six of the claims in 1935 because a notice of

1
The issuance of an FHFC is “the DOI’s administrative recording of an
applicant’s compliance with the initial paperwork requirement of the Mining Law.
But, a patent is not issued until there has been a determination that the claim is
valid.” Independence Mining Co. v. Babbitt, 105 F.3d 502, 506 (9th Cir. 1997).
2
The BLM complaints also charged that plaintiffs’ claims were invalid
because none of them contained a discovery of a valuable mineral deposit, a
necessity for a valid mining claim. See 30 U.S.C. § 22. The ALJ rejected the
BLM’s challenge, finding that plaintiffs’ claims satisfy the discovery test.

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intent to hold those claims was filed for that year. The ALJ found that TOSCO

did satisfy the assessment work requirement for the years 1975 through 1987.

The ALJ found that, with respect to Exxon’s claims, annual assessment

work was required from 1919 to 1988, with the exception of 1932. The ALJ

concluded that assessment work had been done for each of Exxon’s claims in

1957, 1958, 1964 and 1966, and that assessment work had been done for a one-

year period on approximately ten claims sometime between 1967 and 1972.

Except for those time periods, the ALJ determined that no other assessment work

had been done on Exxon’s claims between 1920 and 1972. Exxon filed affidavits

stating that it had performed assessment work for the years 1973 through 1988,

but the ALJ determined that it was non-qualifying road maintenance work.

Exxon and TOSCO appealed the ALJ’s decision to the IBLA. The IBLA

affirmed the ALJ’s decision, for substantially the same reasons as the ALJ. Thus,

the IBLA concluded that plaintiffs had failed to substantially satisfy the

assessment work requirement of 30 U.S.C. § 28. 3

Plaintiffs sought review of the IBLA’s decision in the federal district court.

They argued that 30 U.S.C. § 28, which created the assessment work obligation,

3
The IBLA set aside the ALJ’s decision with respect to the discovery issue,
on the ground that it was unnecessary to reach it given its determination that the
claims were void for failure to substantially comply with the assessment work
requirement.

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also included the resumption doctrine and that their asserted resumption of

assessment work prior to the government’s challenge cured their prior lapse in

assessment work. Plaintiffs also argued that the DOI’s own regulations at the

time had recognized the resumption doctrine and that the government is estopped

from retroactively denying them the benefit of those regulations. The district

court rejected this argument. Exxon Mobil Corp. v. Norton , 206 F. Supp. 2d

1085, 1089 (D. Colo. 2002). The court further found that there was sufficient

evidence in the record supporting the IBLA’s holding that there was a substantial

lapse in assessment work. Finally, the district court rejected plaintiffs’ estoppel

claim, as well as their arguments that their due process and equal protection rights

were violated. It declined to rule on the ALJ’s decision regarding discovery.

Plaintiffs appeal, arguing, as they did below, that, despite the non-

performance of assessment work decades earlier, they resumed assessment work

prior to the government’s challenge to the validity of their claims, in reliance

upon two Supreme Court decisions and DOI regulations following those decisions

which: (a) provided that such resumption preserved the validity of a claim and

(b) until 1972, provided that the United States “had no interest in whether

assessment work was performed at all.” Plaintiffs-Appellants’ Br. at 2. Thus,

they argue that the IBLA’s decision violates due process and equal protection

principles “in view of settled law . . . enunciated in unanimous Supreme Court

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decisions, Interior’s regulations, and Interior’s practices in patenting other oil

shale claims with similar apparent lapses in work.” Id. Plaintiffs also allege that

DOI failed to establish by clear and convincing evidence that assessment work

had not been done in prior decades and failed to establish that plaintiffs did not in

fact substantially comply with the assessment work requirement. Finally, they

argue that DOI erred in determining that certain road maintenance work

performed by Exxon was not qualifying assessment work; that their performance

of at least $500 worth of work per claim satisfies the substantial compliance

requirement; and that the IBLA decision was erroneously premised on the idea

that the resumption doctrine no longer exists.

DISCUSSION

“‘[I]n reviewing a district court’s review of an agency decision, the

identical standard of review is employed at both levels; and once appealed, the

district court’s decision is accorded no particular deference.’” Cliffs Synfuel , 291

F.3d at 1256-57 (quoting Valley Camp of Utah, Inc. v. Babbitt , 24 F.3d 1263,

1267 (10th Cir. 1994)) (further quotation omitted). Further, the Administrative

Procedure Act applies, under which:

in reviewing the underlying agency decision denying [plaintiffs’]
application[s] for . . . patent[s], the standard is whether the agency’s
decision was “arbitrary, capricious, an abuse of discretion, or
otherwise not in accordance with law.” 5 U.S.C. § 706(2)(A). “The

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 duty of a court reviewing agency action under the ‘arbitrary or
capricious’ standard is to ascertain whether the agency examined the
relevant data and articulated a rational connection between the facts
found and the decision made.”

Id. at 1257 (quoting Olenhouse v. Commodity Credit Corp. , 42 F.3d 1560, 1574

(10th Cir. 1994) (footnote omitted)). When we review the agency’s explanation,

we must decide “‘whether the agency considered all relevant factors and whether

there has been a clear error of judgment.’” Id. (quoting IMC Kalium Carlsbad,

Inc. v. Interior Bd. of Land Appeals , 206 F.3d 1003, 1012 (10th Cir. 2000))

(further quotation omitted). The Supreme Court has cautioned that “the ultimate

standard of review is a narrow one.” Citizens to Preserve Overton Park, Inc. v.

Volpe , 401 U.S. 402, 416 (1971); see also Cliffs Synfuel , 291 F.3d at 1257. In

sum, “we review the IBLA’s decision to determine whether it was supported by

substantial evidence and was not arbitrary or capricious,” or was not in

accordance with the law. IMC Kalium Carlsbad , 206 F.3d at 1010.

I. Due Process/Retroactivity/Equal Protection

Plaintiffs’ first argument is that the IBLA’s decision violated their due

process rights by retroactively barring them from relying upon valid Supreme

Court decisions and DOI regulations following those decisions when they invoked

the resumption doctrine to preserve their claims prior to the government’s

challenge to the validity of those claims. As indicated, the General Mining Law

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of 1872 required “[o]n each claim located . . . not less than $100 worth of labor

. . . or improvements . . . each year . . . .” 30 U.S.C. § 28. Under the savings

clause of the 1920 Act, claims, like those of plaintiffs, located prior to the

enactment of the Act could be subject to patent and therefore private ownership

rather than only leasehold if “thereafter maintained in compliance with the laws

under which initiated.” 30 U.S.C. § 193.

Initially, the Supreme Court suggested that, while a claimant is required to

perform the $100 of annual assessment work, “failure to do so does not ipso facto

forfeit the claim, but only renders it subject to loss by relocation.” Wilbur v.

United States ex rel. Krushnic , 280 U.S. 306, 317 (1930 ). However, the Court

stated that “the law is clear that no relocation can be made if work be resumed

after default and before such relocation.” Id. ; see also Cliffs Synfuel , 291 F.3d at

1258 (noting that “even after the enactment of the Mineral Leasing Act, an owner

of a pre 1920 oil shale claim was under no obligation to perform the requisite

assessment work on an annual basis so long as they were able to avail themselves

of the resumption doctrine before the claim was relocated by a subsequent

claimant”) (citing Krushnic , 280 U.S. at 317). The Court further suggested that

the annual assessment work requirement “‘was not necessary to preserve the

possessory right . . . as against the United States, but only as against subsequent

relocators. So far as the government was concerned, failure to do assessment

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work for any year was without effect.’” Ickes v. Virginia-Colorado Dev. Corp. ,

295 U.S. 639, 645 (1935) (quoting Krushnic , 280 U.S. at 317). Thus, as of 1935,

it appeared that the United States had no interest in enforcing the assessment

work requirement, and resumption of assessment work before a challenge could

“cure” any default in the performance of such work. Plaintiffs argue that they

relied upon those decisions, and DOI regulations following them, in failing to

perform annual assessment work for decades.

As we observed in Cliffs Synfuel , “[t]he Court radically altered these two

concepts in re-examining the Leasing Act’s effect on pre-1920 oil shale claims”

in Hickel v. Oil Shale Corp. , 400 U.S. 48 (1970):

The Court first rejected its earlier formulations that had declared the
government to be a disinterested party, unable to assert rights to a
pre-1920 oil shale claim upon which assessment work had been
discontinued. It stated that “if we assume, arguendo , that failure to
do assessment work as provided in the 1872 Act concerned at the
time only the claimant and any subsequent relocator, the United
States, speaking through the Secretary of the Interior, became a
vitally interested party by reason of the 1920 Act.”

Cliffs Synfuel , 291 F.3d at 1258-59 (quoting Hickel , 400 U.S. at 53). As the

Hickel Court further explained:

If we were to hold to the contrary that enforcement of the assessment
work of § 28 was solely at the private initiative of relocators, the
“maintenance” provision of § 37 becomes largely illusory, because
relocation of oil shale claims became impossible after the 1920 Act.
So if enforcement of the assessment work requirement of § 28 were
dependent solely on the activities and energies of oil shale relocators,
there was no effective enforcement device.

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Hickel , 400 U.S. at 56.

In reviewing its prior decisions in Krushnic and Virginia-Colorado , the

Court in Hickel largely confined them to their facts, agreeing with their specific

holdings that “every default in assessment work does not cause the claim to be

lost.” 4 Id. at 57. Stating that “[d]efaults . . . might be the equivalent of

abandonment[,]” however, the Court specifically held “that token assessment

work, or assessment work that does not substantially satisfy the requirements of

30 U.S.C. § 28, is not adequate to ‘maintain’ the claims within the meaning of

§ 37 of the Leasing Act.” Id. Characterizing the broad language of Krushnic and

Virginia-Colorado as dicta, the Court concluded that “they must be confined to

situations where there had been substantial compliance with the assessment work

requirements of the 1872 Act, so that the ‘possessory title’ of the claimant,

granted by 30 U.S.C. § 26, will not be disturbed on flimsy or insubstantial

grounds.” Id. Further, the Court made it clear that upon default in the

performance of assessment work, the United States was the beneficiary: “While

the objective of the 1872 Act was to open the lands ‘to a beneficial use by some

4
Both Krushnic and Virginia-Colorado involved brief defaults in the
performance of assessment work. In Krushnic, the claimant defaulted for one
year and then resumed work before the United States challenged the claim. In
Virginia-Colorado, the claimant had defaulted for a similar time period, but had
stated its intention to resume assessment work and had made plans to do so when
the United States challenged claim.

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other party,’ once the original claimant defaulted, the defeasance inevitably

accrued to the United States, owner of the fee.” Id. at 55. Indeed, “§ 37 of the

1920 Act makes the United States the beneficiary of all claims invalid for lack of

assessment work or otherwise.” Id. at 57. 5

In Cliffs Synfuel , we discussed and applied Hickel to a case very similar to

this case. Claimants in Cliffs Synfuel had performed assessment work from 1918

until 1930 and had resumed such assessment work from 1977 until 1992, prior to

any challenge by the United States, but “no assessment work was performed

5
Prior to Hickel, applicable regulations tracked the Krushnic and Virginia-
Colorado language that defaults in performance of the annual assessment work
were a matter of concern only to third parties or rival locators, not the United
States. In 1972, DOI amended its regulations to reflect Hickel’s holding. Thus,
they provide that a mining claimant’s failure “to comply substantially with the
requirement” of the annual assessment work “will render the claim subject to
cancellation. ” 43 C.F.R. § 3851.3(a). In 1993, the Department added that
“failure to perform the assessment work . . . causes the interest of the claimant(s)
in the minerals subject to the mining laws to revert back to the public domain.”
43 C.F.R. § 3851.3(b).
In the Energy Policy Act of 1992, Congress modified the annual assessment
work requirements for oil shale applicants who, unlike plaintiffs here, had not
received FHFCs. The holder of a valid unpatented oil shale claim may retain an
unpatented claim “by complying with the general mining laws of the United States
. . . except that the claim holder shall no longer be required to perform annual
labor, and instead shall pay to the Secretary $550 per claim per year . . .
commencing with calendar year 1993.” 30 U.S.C. § 242(c)(3), (e)(2).
Additionally, the applicant may only receive a patent for the oil shale and
associated minerals, while title to the surface and all other minerals remains in the
United States. 30 U.S.C. § 242(c)(1).

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during the 46-year period stretching from July 1, 1931 to September 1, 1977.”

Cliffs Synfuel , 291 F.3d at 1260. We explained our view of Hickel as follows:

From the Court’s statement “that every default in assessment
work does not cause the claim to be lost,” it logically follows that in
each case we must consider the quantum of the actual assessment
work performed and the length of time the claimant failed to meet the
annual assessment work required by the Mining Act of 1872.

Id. at 1259 (quoting Hickel , 400 U.S. at 57). We compared the facts of Hickel ,

where the Court found the claimants had not substantially complied with the

assessment work requirement, with those of Krushnic and Virginia-Colorado ,

where the Court found the claimants had substantially complied with the

assessment work requirement. Noting that in Hickel , “[a]nnual assessment work

had basically ceased prior to the 1930’s as well as in the twenty years thereafter,”

id. , as compared with the brief, one-year defaults in Krushnic and Virginia-

Colorado , we concluded that the facts in Cliffs Synfuel “are decidedly more

similar to the situation which confronted the Court in Hickel , rather than in

Krushnic or Virginia-Colorado .” Id. at 1260. We concluded that “[u]nder these

circumstances our decision is driven by the facts and reasoning set forth in

Hickel .” Id.

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 Significantly, while we did not hold that the resumption doctrine is

completely inapplicable to oil shale claims, we explained its limits. 6
The claimant

in Cliffs Synfuel had argued that its resumption of assessment work in 1977, after

a 46-year period of inactivity, but prior to any challenge to the validity of its

claim by the United States, had revived its claim. We held it did not:

On the basis of Hickel ’s teachings, we conclude that the 46
years of inaction on Appellee’s claims reflects “token assessment
work, or assessment work that does not substantially satisfy the
requirements of 30 U.S.C. § 28. . . .” Therefore, in this case, “the
1920 Act makes the United States the beneficiary of all claims
invalid for lack of assessment work or otherwise.”

Id. at 1261 (quoting Hickel , 400 U.S. at 57). We went on to state:

In so concluding, we perforce reject Appellee’s suggestion that its
assessment work, which took place from 1977 through 1992, offsets
the previous 46 years of dereliction and restores a legitimate right to
the claims by constituting more than “token assessment work.” The
short answer to this is that by appropriate analogy, this argument was
rejected by the Court in Hickel when it noted that a decades-long
lapse on assessment work “might be the equivalent of abandonment.
. . .” Applying the rationale of the Court, we hold that prior to 1977
Appellee’s “default in doing the assessment work . . . ma[de] the
United States the beneficiary of all claims invalid for lack of
assessment work” long before it resumed assessment work in 1977.
Appellee’s activity that began in 1977 was too little, too late.

Id. (quoting Hickel , 400 U.S. at 57).

Plaintiffs argue that we should reverse the IBLA decision because it “was
6

premised on the erroneous notion that the right to preserve a claim by resuming
work no longer exists.” Plaintiffs-Appellants’ Br. at 3. We see no such basis for
reversing the IBLA’s decision.

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 We hold that the rationale and facts of Hickel and Cliffs Synfuel compel

the same result in this case. Assuming substantial evidence supports the ALJ’s

finding that plaintiffs failed to perform the required assessment work for several

decades (in Exxon’s case, many decades), that “‘default in doing the assessment

work . . . ma[de] the United States the beneficiary of all claims invalid for lack of

assessment work’” despite any claimed resumption in the 1970s prior to the

government’s challenge to the validity of plaintiffs’ claims. Id.

Plaintiffs attempt to avoid the sweep of Hickel and Cliffs Synfuel by

arguing that those cases did not address the due process retroactivity argument

plaintiffs press upon us here. We disagree. It is implicit in both the Supreme

Court’s decision in Hickel and our court’s decision in Cliffs Synfuel that neither

court was troubled by the fact that DOI regulations suggested that resumption of

assessment work prior to a challenge preserved a claim and that, until 1972, the

United States had no interest in whether assessment work was performed. To the

extent plaintiffs argue they were entitled to rely upon Krushnic and Virginia-

Colorado , the Supreme Court in Hickel in 1970 confined those cases to their

particular facts (upholding the validity of claims where assessment work was

resumed after a one-year lapse in the performance of such work) and made it clear

that the United States was interested in the enforcement of the assessment work

requirements, and indeed was the beneficiary of an abandoned claim, as a matter

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of statutory interpretation. In short, our decision in Cliffs Synfuel , interpreting

and applying Hickel , dictates the conclusion we reach here–that plaintiffs’ claims

are invalid for failure to substantially comply with the annual assessment

requirement, and that they became invalid long before plaintiffs resumed, or

attempted to resume, assessment work, provided we find substantial evidence

supports the ALJ’s findings on the quantum of assessment work performed. 7
We

turn therefore to that issue.

II. Substantial Compliance with Annual Assessment Requirement

Plaintiffs argue: (1) DOI failed to “establish by clear and convincing

evidence that work had not been done in long-past years,” Plaintiffs-Appellants’

Br. at 3; (2) DOI erroneously disqualified as assessment work road-maintenance

work performed by Exxon; (3) plaintiffs satisfied the substantial compliance

requirement of Hickel ; and (4) plaintiffs’ performance of $500 worth of work per

Plaintiffs also argue that the determination that their claims are invalid,
7

while other claims they assert are similarly situated to theirs have gone to patent
during this same general time period, violates their equal protection rights. We
disagree. Assuming the other claimants whom plaintiffs assert have received
patents are in fact similarly situated, a fact of which we have no proof,
enforcement of the annual assessment work requirement furthers a legitimate
governmental interest. See Grigsby v. Barnhart, 294 F.3d 1215, 1220 (10th Cir.
2002).

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claim, which is required to qualify for issuance of a patent, satisfies the

assessment work requirement.

“[F]orfeiture of a mining claim for failure to do annual labor must be

established by clear and convincing proof that the former owner has failed to have

performed the required work or made the necessary improvements.” United

States v. Herr , 130 I.B.L.A. 349, 358 (1994). In reviewing the IBLA’s

application of that standard, we must determine whether its conclusion that there

was clear and convincing proof that plaintiffs had failed to perform the required

assessment work was arbitrary, capricious or an abuse of discretion, or is

unsupported by sufficient evidence in the record. We hold that it was not

arbitrary, capricious, or an abuse of discretion, and enjoys sufficient evidentiary

support in the record.

Plaintiffs argue the IBLA’s decision upholding the ALJ is supported by

nothing more than speculation and conjecture. After carefully reviewing the

administrative record, we disagree with that assertion. The ALJ reviewed reports

prepared by mining engineers and examiners who conducted on-site inspections,

reviews and interviews in 1928, 1931, 1984, 1986, 1993 and 1995. Mineral

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reports were prepared on both plaintiffs’ patent applications. Aerial photographs

taken at various times were examined. 8

While plaintiffs assert that the ALJ simply made unfounded speculations

about decades-old activities, we view the ALJ’s analysis, affirmed by the IBLA,

as articulating a rational connection between the facts found and the decision

made. 9

Plaintiffs argue that the possibility of erosion, revegetation, and other

natural forces makes it extremely difficult to accurately assess the condition of

the terrain, particularly any assessment work done in prior years. The ALJ

8
Aerial photographs of the Exxon claim group were taken in 1954, 1962,
1966, 1967, 1973, 1979, 1980, and 1981. ALJ Decision at 14, Deferred Jt. App.
at 2561.
9
The ALJ found as follows with respect to TOSCO’s claims:

With the exception of core hole drilling in 1958 and/or 1959,
evidence of assessment work for the period of 1929 through 1974
was not found by the examiners either in the records or on the
claims. [BLM mining engineer and mineral examiner] Mr. Ginouves
noticed surface disturbances, including trails, in a 1954 aerial
photograph of the claim group, but attributed their existence to
various grazing improvements and activities. The improvements
consisted of fencelines, stock-watering catchments, and betterments
to natural springs. The location and termination points of the trails
revealed their association with use of these improvements. A
comparison of aerial photographs from 1954, 1962, and 1978
indicated that most of the road network and many of the grazing
improvements were in place as early as 1954, and that very few
additional disturbances are visible in the 1962 and 1978 photos.

ALJ Decision at 11, Deferred Jt. App. at 2558.

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explained, however, why DOI examiners were able to accurately evaluate the

assessment work despite the undeniable influence of weather on the terrain:

While erosion, revegetation, and vegetation density are factors
adversely affecting a field examiner’s ability to locate assessment
work, the Departmental examiners were thorough in their
examination and have shown that small excavations dating back to
the 1920’s (the pits on the TOSCO claims and those nearby but
outside of the Exxon claim group) can be located with a high degree
of success.

ALJ Decision at 49, Deferred Jt. App. at 2596. Moreover, as we have stated,

“[t]he IBLA may draw reasonable inferences from the evidence.” IMC Kalium

Carlsbad , 206 F.3d at 1011. The ALJ recognized the possibility that work done

long ago on the TOSCO claims might be difficult to detect, but he concluded that

the evidence supported the conclusion that “such work, under the circumstances,

likely was not performed and would not be qualifying in nature”:

Those circumstances include the absence of any evidence of
excavations, drill holes, or other mining activity for the assessment
years ending in 1929 through 1957 and the assessment years ending
in 1960 through 1974, the lack of economic incentive to develop the
claims, and the fact that most of the trails and roads are likely
associated with improvements and activities related to grazing rather
than mining. For these periods, there is no evidence of mining
activity, and little evidence of the likelihood thereof, which might
necessitate road maintenance to allow access.

ALJ Decision at 45, Deferred. Jt. App. at 2592.

Plaintiffs argue further that the ALJ and IBLA were “hyper-technical” in

their approach to plaintiffs’ claim that their development of water sources and

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rights should be considered assessment work. The ALJ and IBLA rejected the

water work as qualifying assessment work:

[Plaintiffs’] efforts to develop an economically viable oil shale
industry have little, if any, relevance in determining whether
compliance with the assessment work has been sufficiently
substantial to demonstrate a diligent good faith effort to develop the
specific mining claims being contested . A claimant may show no
inclination or effort to develop a particular set of claims and yet
display a keen interest in expending time and money to develop a
viable industry for recovering the mineral which happens to exist on
those and many other claims. While some of the expenditures
relating to the acquisition and development of water sources and
rights relate more directly to these particular claims, the water is not
needed for extraction of the oil shale but for retorting and other
processes. It therefore does not qualify as assessment work. Further,
because these water expenditures benefit other nearby patented
claims held by [plaintiffs], their tendency to show the good faith of
[plaintiffs] in developing the contested claims is slight at best.

ALJ Decision at 41-42, Deferred Jt. App. at 2588-89 (citation omitted).

Having carefully reviewed the record, we cannot say that the ALJ’s careful

and thorough decision, affirmed by the IBLA, concluding that DOI had

demonstrated by clear and convincing evidence that plaintiffs had not

substantially complied with the annual assessment work requirement, is arbitrary

or capricious, and we find it has adequate support in the record.

Plaintiffs make several more specific arguments, which we address in turn.

Exxon argues the IBLA erred in disqualifying as assessment work certain road

work it performed. For the years 1973 through 1988, with the possible exception

of the year 1974, Exxon filed affidavits stating that it did assessment work of at

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least $100 per claim. It is undisputed that the work was done. It was exclusively

road maintenance work, which the ALJ and the IBLA held was not qualifying

assessment work. All parties agree that road maintenance work can qualify as

assessment work, provided it is done “for the purpose of better developing and

operating” the claim. United States v. 9,947.71 Acres of Land , 220 F. Supp. 328,

332 (D. Nev. 1963) (further quotation omitted); accord Silliman v. Powell , 642

P.2d 388, 393 (Utah 1982 ) (“Road work that directly facilitates the extraction of

minerals from claims clearly qualifies as assessment work.”). The IBLA rejected

Exxon’s road maintenance as qualifying assessment work:

There is not one shred of evidence that the purpose of the road
maintenance was to facilitate development of the claims. Unlike the
nearby oil and gas road, the poor roads leading to and traversing the
claims were not improved to allow passage of heavy equipment
necessary for drilling or other development activity, but rather, they
were merely maintained. The roads do not lead to any excavations or
other mining activity performed or planned subsequent to 1973
because there have been none.

United States v. TOSCO Corp. , 153 I.B.L.A. 205, 209 (2000) (quoting ALJ

Decision at 49, Deferred Jt. App. at 2596). That conclusion is not arbitrary or

capricious and is supported by substantial evidence in the record.

Plaintiffs also argue that their performance of $500 worth of work per

claim, which 30 U.S.C. § 29 requires for the issuance of a patent, satisfies the

annual assessment work requirement of 30 U.S.C. § 28. The ALJ, the IBLA, and

the district court all rejected this argument, as do we. As the ALJ explained,

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§§ 28 and 29 “serve two distinct purposes and have distinct minimum standards.”

ALJ Decision at 40, Deferred Jt. App. at 2587. The $100 annual assessment

requirement is “to assure that a claimant undertakes a diligent good faith effort to

develop the mining claim, and to prevent the location of mining claims for

speculative purposes.” Id. The $500 requirement before issuance of a patent

exists because “Congress believed that the expenditure of that amount of money,

whether in 1 year or 5 years, would demonstrate a claim’s value as a mine.” Id.

We have never suggested that there is a $500 cap on the annual assessment work

requirement. See Cliffs Synfuel , 291 F.3d at 1261 (implicitly requiring

assessment work totaling more than $500); see also Andrus v. Shell Oil Co , 446

U.S. 657, 658 n.1 (1980) (“The mining law also provides that until a patent is

issued a claimant must perform $100 worth of labor or make $100 of

improvements on his claim during each year . . . .”) (emphasis added). In short,

we agree that the $500 worth of work requirement is separate from and does not

satisfy the statutory obligation to perform $100 worth of work each year on each

claim.

For the foregoing reasons, we AFFIRM the district court’s decision.

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