Copar Pumice Co., Inc. v. Tidwell

FILED
United States Court of Appeals
Tenth Circuit

April 19, 2010
PUBLISH Elisabeth A. Shumaker
Clerk of Court
UNITED STATES COURT OF APPEALS

TENTH CIRCUIT

COPAR PUMICE CO., INC.,

Plaintiff-Appellant,
v. No. 07-2211
TOM TIDWELL, Chief of the United
States Forest Service; UNITED
STATES FOREST SERVICE;
GILBERT ZEPEDA, Appeal
Reviewing Officer, Deputy Regional
Forester, United States Forest Service;
DANIEL J. JIRON, Forest Supervisor,
United States Forest Service.

Defendants-Appellees.

APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEW MEXICO
(D.C. No. 1:06-CV-00097-WJ)

Joseph E. Manges of Comeau, Maldegen, Templeman & Indall, LLP, Santa Fe,
New Mexico, for Plaintiff-Appellant.

Elizabeth Ann Peterson, Attorney, Environment and Natural Resources, United
States Department of Justice, Washington, D.C. (John C. Cruden, Acting
Assistant Attorney General, Environment & Natural Resources Division, United
States Department of Justice, Washington, D.C.; William B. Lazarus, Attorney,
Department of Justice, Washington, D.C.; Patricia Leigh Disert, Of Counsel,
Office of General Counsel, United States Department of Agriculture,
Albuquerque, New Mexico; Andrew R. Varcoe, Of Counsel, Office of the General
Counsel, Litigation Division, United States Department of Agriculture,
Washington, D.C., with her on the brief), for Defendants-Appellees.
Before HENRY, Chief Judge, HOLLOWAY, and BRISCOE, Circuit Judges.

BRISCOE, Circuit Judge.

Petitioner-Appellant Copar Pumice Company, Inc. (“Copar”), proceeding

under the Administrative Procedure Act, 5 U.S.C. § 500 et seq. (“APA”), appeals

the district court’s denial of its petition for review concerning the Notice of

Noncompliance that the United States Forest Service (FS) issued to Copar

concerning its pumice mining activities. Exercising jurisdiction under 28 U.S.C.

§ 1291, we affirm.

I

Copar operates the El Cajete pumice mine on four unpatented mining

claims located within the Jemez National Recreation Area in New Mexico.

Pursuant to a written settlement agreement with the FS, Copar may extract pieces

of pumice in excess of 3/4 inches in size (“+3/4" pumice”), “subject to all

pertinent statutes and regulations.” Aplt. App. at 74. Copar’s +3/4" pumice is an

“uncommon variety” of pumice that has a distinct and special value as a

stonewashing agent in the garment finishing industry: the pumice “abrade[s]

denim fabric, especially jeans, by creating a worn look on new denim fabric.”

Aple. Supp. App. at 53. Copar acknowledged in the settlement agreement that it

2
could not dispose of any common variety pumice produced from these claims.

After El Cajete mining operations began, the FS learned that Copar was not

exclusively selling its +3/4" pumice to the garment finishing industry; rather,

Copar was selling some of its +3/4" pumice to other industries for common

variety uses. The FS claimed that this practice violated the applicable

regulations, as well as the settlement agreement. According to the FS’s

interpretation of its regulations, +3/4" pumice not used in an application that

utilized its distinct and special value was nothing more than common variety

pumice that Copar could not extract from El Cajete. Copar disagreed, and the FS

eventually issued Copar a Notice of Noncompliance.

Statutory and Regulatory Background

The “cornerstone of federal legislation dealing with mineral lands” is the

General Mining Law of 1872, Act of May 10, 1872, 17 Stat. 91 (1872) (codified

as amended at 30 U.S.C. § 22 et seq.). United States v. Coleman, 390 U.S. 599,

600 n.1 (1968). The General Mining Law declared that “all valuable mineral

deposits in lands belonging to the United States . . . shall be free and open” to

United States citizens, 30 U.S.C. § 22, and allowed citizens “to go onto

unappropriated, unreserved public land to prospect for and develop” these mineral

deposits, United States v. Locke, 471 U.S. 84, 86 (1985). After discovering a

valuable mineral deposit, and complying with minimal procedures to formally

locate the deposit, citizens have the right of exclusive possession of the land for

3
mining purposes. See 30 U.S.C. § 26; Locke, 471 U.S. at 86. These unpatented

claims are “fully recognized possessory interest[s].” Locke, 471 U.S. at 86.

Citizens can also patent their claims under the General Mining Law, which allows

them to acquire ultimate title to the land. 30 U.S.C. § 29; Freese v. United States,

639 F.2d 754, 755 (Ct. Cl. 1981).

Two tests have been applied for determining what qualifies as a “valuable

mineral deposit” under the General Mining Law: (1) the “prudent man test,” and

(2) the “marketability test.” A mineral deposit is valuable under the “prudent

man test” if the deposit is “of such a character that a person of ordinary prudence

would be justified in the further expenditure of his labor and means, with a

reasonable prospect of success, in developing a valuable mine.” Coleman, 390

U.S. at 602 (quotation and citation omitted). The “marketability test” is the

“logical complement” to the prudent man test: it requires a mining operator to

show “that the mineral can be extracted, removed and marketed at a profit.” Id. at

600, 602 (quotation omitted).

Because “[c]ertain very common minerals, such as common earth and

common clay, were never disposable under either the mining law or the mineral

leasing acts,” Congress enacted the Materials Act of 1947, 61 Stat. 681 (1947)

(codified as amended at 30 U.S.C. § 601 et seq.), to provide a method for their

disposal. 1-4 American Law of Mining § 4.16 (2d ed. 2008). Congress later

amended the Materials Act when it enacted the Surface Resources Act of 1955

4
(also known as the Common Varieties Act), 69 Stat. 367 (1955) (codified at 30

U.S.C. § 601 et seq.). Together, these Acts provide that the Secretary of the

Interior and the Secretary of Agriculture, “under such rules and regulations as

[they] may prescribe, may dispose of mineral materials (including but not limited

to common varieties of the following: sand, stone, gravel, pumice, pumicite,

cinders, and clay) . . . on public lands of the United States.” 1 30 U.S.C. § 601

(emphasis added). Generally, the disposal of these mineral materials occurs “by

contract let through competitive bidding.” 1-7 American Law of Mining

§7.03[2].

Crucial to the issues in this case, the Common Varieties Act removed

certain “common varieties” of minerals from the General Mining Law’s definition

of “valuable mineral deposit.”

No deposit of common varieties of sand, stone, gravel, pumice,
pumicite, or cinders and no deposit of petrified wood shall be deemed
a valuable mineral deposit within the meaning of the mining laws of the
United States so as to give effective validity to any mining claim
hereafter located under such mining laws . . . .

30 U.S.C. § 611 (emphasis added). Disposal of these “common varieties” was

now “permissible only under the Materials Act of 1947.” Watt v. W. Nuclear,

462 U.S. 36, 57 n.15 (1983). However, as its title makes clear, the Common

1
The statute authorizes the disposal of mineral materials so long as it “(1)
is not otherwise expressly authorized by law, . . . and (2) is not expressly
prohibited by the laws of the United States, and (3) would not be detrimental to
the public interest.” 30 U.S.C. § 601.

5
Varieties Act only removed certain “common varieties” of minerals, such as

pumice, from the application of the General Mining Law.

“Common varieties” as used in this subchapter and sections 601 and
603 of this title does not include deposits of such materials which are
valuable because the deposit has some property giving it distinct and
special value and does not include so-called “block pumice” which
occurs in nature in pieces having one dimension of two inches or more.

30 U.S.C. § 611 (emphasis added). Thus, an ordinarily common variety mineral,

such as pumice, would remain locatable under the General Mining Law as an

“uncommon variety” if it had “some property giving it distinct and special value.”

The Department of Agriculture has promulgated regulations, contained in

36 C.F.R. Part 228, that regulate mining operations conducted on National Forest

System lands. Subpart C of these regulations governs the “Disposal of Mineral

Materials” (i.e. those minerals that fall within the ambit of the Materials Act and

the Common Varieties Act). Subpart C’s regulations set forth the procedures for

disposing of “mineral materials” on National Forest Service lands. See generally

36 C.F.R. §§ 228.47-.67.

Subpart A of these regulations governs the removal of “Locatable

Minerals” (i.e. those minerals subject to location under the General Mining Law,

including the “uncommon varieties” of minerals exempt from the Common

Varieties Act) from National Forest Service lands. These regulations require that

mining operations “shall be conducted so as to minimize adverse environmental

impacts on National Forest System surface resources.” 36 C.F.R. § 228.1.

6
Mining operators must submit a plan of operations for approval, which must

include a description of mining operations, “the period during which the proposed

activity will take place,” and the environmental protection measures the mining

operator will undertake to comply with the regulations. Id. § 228.4(c)(3). “Forest

Officers shall periodically inspect operations to determine if the operator is

complying with the regulations in this part and an approved plan of operations.”

Id. § 228.7(a). When a mining operator fails to comply with its plan of operations

or with the regulations, and that noncompliance “unnecessarily or unreasonably

caus[es] injury, loss or damage to surface resources,” the FS “shall serve a notice

of noncompliance upon the operator.” Id. § 228.7(b).

The controlling regulation in this case is 36 C.F.R. § 228.41, which defines

the “Scope” of the Subpart C regulations. This regulation sets forth a system of

classification that determines whether a mineral qualifies as a common variety

such that it is subject to Subpart C’s regulations, or whether a mineral qualifies as

an “uncommon variety” such that it is subject to Subpart A’s regulations.

Subsection (c) of § 228.41 describes the types of minerals considered to be

common variety.

Mineral materials to which this subpart applies. This subpart applies to
mineral materials which consist of petrified wood and common varieties
of sand, gravel, stone, pumice, pumicite, cinders, clay, and other similar
materials. Such mineral materials include deposits which, although they
have economic value, are used for agriculture, animal husbandry,
building, abrasion, construction, landscaping, and similar uses.

7
36 C.F.R. § 228.41(c) (underlining emphasis added). Subsection (d) describes the

types of minerals considered to be “uncommon variety.”

Minerals not covered by this subpart. Mineral materials do not include
any mineral used in manufacturing, industrial processing, or chemical
operations for which no other mineral can be substituted due to unique
properties giving the particular mineral a distinct and special value; nor
do they include block pumice which in nature occurs in pieces having
one dimension of two inches or more which is valuable and used for
some application that requires such dimensions. Disposal of minerals
not covered by this subpart is subject to the terms of the United States
Mining Laws, as amended (30 U.S.C. 22 et seq.), on those portions of
the National Forest System where those laws apply.

Id. § 228.41(d) (underlining emphasis added). Subsection (e) indicates that the

“use” of a common variety mineral could potentially transform it into a

“uncommon variety:” “[a] use which qualifies a mineral as an uncommon variety

under paragraph (d) overrides classification of that mineral as a common variety

under paragraph (c) of this section.” Id. § 228.41(e)(2).

The central legal question in this case is whether the FS’s interpretation of

its regulations is arbitrary and capricious. The FS contends that under §

228.41(c), (d), and (e), Copar’s +3/4" pumice is an uncommon variety of pumice

only if it is actually used in the garment finishing industry – i.e., an application

that utilizes its distinct and special value. Thus, the FS contends that under its

regulations, the end-use of the mineral determines whether it is common or

uncommon variety. Copar instead argues that its +3/4" pumice is an uncommon

variety simply because it is suitable for use in the garment finishing industry.

8
 Procedural Background

In the late 1980s, Kelly Armstrong, Debbie Cantrup, Richard P. Cook, and

Shirley A. Cook (collectively “Cook family”) located 23 mining claims within the

Santa Fe National Forest. Aple. Supp. App. at 51. The claims were called the

Brown Placer Mining Claims; the El Cajete mining operation is situated on the

claims numbered 9-12. All claims were leased to Copar, and the Cook family

filed a patent application with the Bureau of Land Management (“BLM”) in

September 1989. Id. On January 16, 1991, the BLM issued a first half final

certificate, which is “an administrative recording of an applicant’s compliance

with the initial paperwork requirement” of the General Mining Law.

Independence Mining Co., Inc. v. Babbitt, 105 F.3d 502, 506 (9th Cir. 1997).

The BLM never patented the claims. On October 12, 1993, Congress

enacted the Jemez National Recreation Area Act, 16 U.S.C. §§ 460jjj to jjj-5

(“JNRAA”), which designated approximately 57,000 acres of the Santa Fe

National Forest as the Jemez National Recreation Area, which included the Brown

Placer Mining Claims. 16 U.S.C. § 460jjj(a)-(b). Under the JNRAA, “no patents

shall be issued after May 30, 1991, for any location or claim made in the

recreation area under the mining laws of the United States,” id. § 460jjj-2(a)(1),

and “[s]ubject to valid existing rights, after October 12, 1993, lands within the

recreation area [were] withdrawn from location under the general mining laws and

from the operation of the . . . mineral material disposal laws,” id. § 460jjj-2(b).

9
The Act directed “any party claiming to have been deprived of any property right”

to file a claim against the United States in the Court of Federal Claims. Id. §

460jjj-2(a)(2). The Act also directed the Secretary of Agriculture “to examine all

unpatented mining claims, including those for which a patent application has been

filed, within the recreation area. Upon determination by the Secretary of

Agriculture that the elements of a contest are present, the Secretary of the Interior

shall immediately determine the validity of such claims.” Id. § 460jjj-2(d).

Finally, “[n]o mining activity involving any surface disturbance of lands or

waters within [the recreation area] . . . shall be permitted except in accordance

with requirements imposed by the Secretary [of Agriculture], including

requirements for reasonable reclamation” that would restore lands as close as

possible to their “premining condition.” Id. § 460jjj-2(c).

The Cook family filed a takings claim in the Court of Federal Claims,

contending that the JNRAA deprived them of their vested property interest in the

mining patents they expected to receive. Cook v. United States, 37 Fed. Cl. 435,

438 (1997); Cook v. United States, 42 Fed. Cl. 788, 789 (1999). In January 1999,

the Court of Federal Claims granted the Cook family partial summary judgment

on the takings claim for Brown Pacer Mining Claims numbered 9-12 (the El

Cajete mine). The court concluded the patent application “claim[ed] discovery of

a locatable mineral” (“valuable and marketable” +3/4" pumice, “‘unique’ because

of its size, purity, and lack of discoloration or staining qualities”) and the

10
Government could not prove that the Cook family failed to comply with the

“terms and conditions entitling them to a patent.” Cook, 42 Fed. Cl. at 793, 795.

Meanwhile, pursuant to § 460jjj-2(d), the FS examined the validity of the

Cook family’s 23 unpatented mining claims. The FS did not contest the validity

of the claims that formed the El Cajete mine. The FS issued a mineral report in

1995 that concluded that +3/4" pumice from claims 9-12, “used in the garment

finishing industry, is locatable under the 1872 Mining Law . . . and should be

administered under regulations at 36 CFR 228 Subpart A.” Aplt. App. at 27.

The FS contested the validity of the remaining 19 claims. The agency

contended that the pumice on these remaining claims was not a “valuable mineral

deposit” because it was not marketable: any pumice from these claims would

exceed the already declining demand for pumice in the garment finishing

industry. In August 1999, an administrative law judge from Department of the

Interior’s Office of Hearings and Appeals agreed with the FS and concluded these

remaining 19 claims were null and void for failure to discover a valuable mineral

deposit within the limits of each claim. Aple. Supp. App. at 50-68.

On April 4, 2002, the Cook family and Copar entered into a settlement

agreement with the FS that resolved the takings claim. The FS agreed to pay

nearly $4 million in compensation, which “include[d] just compensation, all

interest, attorneys fees and costs, and any other litigation expenses.” Aplt. App.

at 73. Had the Cook family’s mining claims been patented, both common and

11
uncommon variety pumice could have been mined; therefore, part of the $4

million payment was compensation for “any right [Copar] may have had to

dispose of common variety pumice from Brown Placer Mining Claims 9-12.”

Aple. Br. at 12. The parties withdrew all pending litigation, and the Cook family

and Copar relinquished the other 19 unpatented claims. The FS agreed that the

Cook family and Copar “will retain Brown Placer Mining Claims Nos. 9-12 as

unpatented mining claims subject to all pertinent statutes and regulations,” and

the Cook family and Copar acknowledged they were “prohibited from the disposal

of the common variety pumice produced from Brown Placer Mining Claims Nos.

9-12 pursuant to 16 U.S.C. § 460jjj-2(b).” Aplt. App. at 74.

El Cajete Mining Operations and the “Use” of +3/4" Pumice

The parties began developing plans for operating the El Cajete mine while

this prior litigation was ongoing. In December 1996, Copar submitted a “Plan of

Operations for Mining Activities on National Forest Lands” for FS approval. Id.

at 60. The plan of operations provided a detailed overview of the mining

activities as well as the environmental protection measures that Copar would

undertake. The plan stated that “[f]or the total life of the project, approximately

10 years, it is anticipated that 1,000,000 tons of +3/4 inch pumice will be mined.”

Id. at 64. “The common variety pumice that will not be removed from the pit”

would be used to “contour the pit to a less than 30% slope as mining progresses

westward.” Id. at 63. On November 20, 1997, the FS approved the plan of

12
operations “for a period of 10 years or until Nov. 19, 2007.” Id. at 71.

Copar also submitted an “El Cajete Pumice Mine Monitoring Plan.” Id. at

56. Among other requirements, the monitoring plan detailed how FS personnel

would ensure that only +3/4" pumice left the El Cajete mine for processing,

“check pumice trucks to inspect haul tickets to verify their origination and

destination of haul,” and “verify that pumice trucks are covered properly.” Id. at

58. As the district court noted, neither the plan of operations nor the monitoring

plan expressly required that all of the +3/4" pumice produced from the El Cajete

mine be used exclusively in the garment finishing industry.

The dispute in this case originated less than one year into production. In

September 1998, the FS advised Copar that “selling pumice from the El Cajete

mine for common variety purposes has significant implications regarding the

locatability of the mineral and future administration of the El Cajete Mine.”

Aple. Supp. App. at 49. “In the past” the FS “had no specific indications from

Copar that there was any plan to use the +3/4" pumice for use other than in the

garment finishing market.” Id. at 48. Recent events, however, caused the FS to

believe that Copar was operating under the belief that the +3/4" pumice “could be

sold for any purpose.” 2 Id. The FS warned Copar that this was not the case, and

requested “from Copar some means of verification that the pumice removed from

2
One event was Mr. Cook’s testimony during an administrative hearing
that “if the Guaje mine were depleted, he would ‘probably’ sell the El Cajete
pumice to supply his (common variety) customers.” Aple. Supp. App. at 48.

13
the El Cajete mine is currently and continually selling for garment finishing uses,

at a value above that of construction grade pumice in general.” Id. at 49.

In subsequent correspondence with Copar during October 2002 and March

2003, the FS stressed that “any pumice removed which does not go to the laundry

industry is common variety, and the removal is a violation of the Jemez National

Recreation Act and the 36 CFR part 228 regulations.” Aplt. App. at 78. Copar

had recently lost access to its Guaje Canyon mine, which placed Copar “in a

bind” for common variety pumice. Aple. Supp. App. at 73. Although the FS was

processing Copar’s application for alternate access to the Guaje Canyon mine “as

expeditiously as possible,” the FS reminded Copar that it was prohibited from

removing common variety pumice from El Cajete. Id. The FS was also unwilling

to “consider any application to expand the El Cajete mine until [it had] received

verifiable evidence of the amount of pumice Copar . . . [was] selling into the

laundry industry.” Aplt. App. at 79. “Confirming the final use of the pumice is

of utmost importance, and to date, Copar . . . has not cooperated in providing any

documentation showing the pumice is going for the laundry industry.” Id. at 78.

Copar met with the FS in early May 2003, and agreed to develop a

proposed method for verifying that its +3/4" pumice was being sold for a

locatable use. Aple. Supp. App. at 76. However, Copar failed to provide the FS

with any proposed system of verification, and on October 31, 2003, the FS sent

Copar another letter that gave Copar fifteen days to provide the FS with a

14
“verifiable method of proving all of the pumice produced from the El Cajete Mine

since April 4, 2002 (the date of the settlement agreement) has been used only in

the stonewash laundry industry and the pumice continuing to be mined today is

being used only in the stonewash laundry industry.” Id. at 83. After Copar

disagreed with the FS’s interpretations of its regulations and did not comply, the

FS issued the Notice of Noncompliance on December 23, 2003.

The Notice of Noncompliance declared that Copar’s “failure to provide

verifiable proof of the stonewash laundry industry use of the pumice removed

from the El Cajete Mine as requested in our letter of October 31, 2003 is

noncompliance with the U.S. Forest Service regulations,” and concluded that

“[t]he removal of pumice in excess of the stonewash laundry industry pumice is

unnecessarily causing injury, loss or damage to surface resources by causing

surface disturbance exceeding what is necessary to extract stonewash laundry

industry pumice.” Id. at 90. “To correct this noncompliance,” the Notice

required Copar to produce “complete records since April of 2002 showing how

much pumice was removed each month (total production, not just stonewash

laundry industry pumice), and the names and contact information for the

purchasers of the pumice.” Id. at 91. In accordance with 36 C.F.R. § 228.4(e),

the Notice also required Copar to submit a modification to its plan of operations

that would essentially restrict the company to mining only the +3/4" pumice it

could prove “is being used in the stonewash pumice industry.” Id.

15
 Copar filed an administrative appeal challenging the Notice of

Noncompliance. The FS affirmed its decision to issue the Notice of

Noncompliance on November 21, 2005, and declined to conduct a discretionary

review on December 6, 2005.

Copar then filed a “Petition for Review and Reversal of Agency Decision”

in the United States District Court for the District of New Mexico, seeking

“review and a reversal” of the “decision to issue and subsequently affirm the

Notice of Noncompliance.” Id. at 155. Copar sought a declaration that these

agency actions were an unconstitutional taking, in violation of the APA because

of their “numerous and significant violations of the principles of reasoned

decision making,” “in excess of statutory jurisdiction and authority and without

observance of procedure,” and arbitrary and capricious. Copar also sought to

enjoin the enforcement of these agency actions and to enter a stay “prohibiting

modifications to El Cajete Plan of Operations until this present case is resolved

and for such other relief as this Court deems just and proper.” Id. at 170-71. The

district court denied Copar’s petition for review in a memorandum opinion.

Following the district court’s decision, Copar produced its records for FS

inspection. 3 Aplt. Reply at 25; see also Aple. Br. at 41 n.7.

3
After reviewing those records, the FS issued Copar a Notice of
Indebtedness in June 2009, which declared that Copar and its president, Kelly
Armstrong, owed the FS $8,743,416.49. The FS claimed this amount represented
the value of pumice that Copar removed from El Cajete from April 2002 through
(continued...)

16
 It is undisputed that Copar has sold a portion of its +3/4" pumice for

common variety uses. FS correspondence indicates that Copar’s president, Kelly

Armstrong, and its Operations Manager, Richard Bell, “stated the pumice was not

all going for locatable uses.” Aplt. App. at 78, 111. FS meeting notes indicate

that Armstrong admitted Copar was “crushing El Caj[e]te pumice to meet their

common variety needs and it makes her sick to crush the valuable pumice.” Aple.

Supp. App. at 79. Finally, Richard Bell explained in an affidavit that Copar’s

Guaje Canyon mine “provided the primary source . . . of common variety pumice

for alternate markets.” Aplt. App. at 111. Copar’s “decision to sell processed

materials from El Cajete Mine was largely made necessary” when the FS revoked

“Copar’s use of Forest Road 57 to access [its] Guaje Mine.” Id. Copar became

“unable to fulfill its ongoing obligations to supply its customers,” and would not

“abandon its established commercial relationships.” Id.

3
(...continued)
November 2007 without authorization or legal right.
We previously denied Copar’s “Motion to Supplement [the] Administrative
Record” with this Notice of Indebtedness, but Copar has asked us to reconsider.
Mindful that judicial review of agency action “generally focuses on the
administrative record in existence at the time of the agency’s decision,” Forest
Guardians v. U.S. Forest Serv., 579 F.3d 1114, 1131 (10th Cir. 2009), we
nonetheless consider the Notice of Indebtedness as relevant “background
information” that informs our understanding of the factual context in this case,
e.g., Asarco, Inc. v. U.S. E.P.A., 616 F.2d 1153, 1160 (9th Cir. 1980) (explaining
that reviewing courts can go outside the administrative record to “consider
evidence relevant to the substantive merits of the agency action only for
background information”). We therefore GRANT Copar’s Motion to Supplement
the Administrative Record.

17
 II

Before addressing the merits of this case, we first consider whether the

expiration of Copar’s plan of operations moots Copar’s challenge to the

requirements the FS imposed in the Notice of Noncompliance.

The FS approved Copar’s plan of operations on November 20, 1997 “for a

period of 10 years or until Nov. 19, 2007.” Aplt. App. at 71. The plan expired

while this case was pending in this court. Days before the scheduled oral

argument in this case, the FS filed a “Suggestion of Mootness” arguing that this

case “must be dismissed” as moot. Fed. Aples’ Suggestion of Mootness at 3.

“Because the plan has expired,” the FS reasoned, “Copar cannot operate its mine,

and its activities therefore can no longer be affected by the order that Copar

challenged.” Id. at 5. The motion filed by the FS was taken under advisement,

and the case proceeded to oral argument.

During oral argument, we questioned the FS about the existence of a live

controversy concerning the Notice of Noncompliance’s requirements that Copar

produce its mining and sales records and that Copar submit a modification to its

plan of operations. While the FS insisted that a live controversy did not exist

with the modification requirement, the agency acknowledged that a live

controversy potentially existed over the agency’s authority to demand mining and

sales records. Copar had produced its records, but the FS considered those

records incomplete. The FS also explained that it expected Copar to demonstrate

18
that it disposed of its pumice into a qualifying market, and a showing by Copar

that it sold its +3/4" pumice to wholesalers at a price reflective of the mineral’s

distinct and special value as a stonewashing agent would be a step towards

compliance.

Copar filed a “Response to Suggestion of Mootness” that argued this case

was not moot because the FS “still insists that the Notice is valid,” and our

determination that the FS improperly imposed its “end-use limitation and

verification requirements” would “alter the ‘real world’ legal relationship”

between the parties. Aplt.’s Resp. to Suggestion of Mootness at 2, 5, 6.

Article III of the United States Constitution limits the jurisdiction of

federal courts to actual cases or controversies, U.S. Const. art. III, § 2, cl. 1;

therefore, “[t]o qualify as a case fit for federal-court adjudication, an actual

controversy must be extant at all stages of review, not merely at the time the

complaint is filed,” Arizonans for Official English v. Arizona, 520 U.S. 43, 67

(1997) (citation and quotations omitted). When changed circumstances extinguish

a plaintiff’s legally cognizable interest during the pendency of a case, the case

becomes moot and may require dismissal. Kan. Judicial Review v. Stout, 562

F.3d 1240, 1245 (10th Cir. 2009). “[A] case properly brought in the first instance

only becomes moot where ‘interim relief or events have completely and

irrevocably eradicated the effects of the alleged violation.’” Building & Constr.

Dep’t v. Rockwell Int’l Corp., 7 F.3d 1487, 1491 (10th Cir. 1993) (quoting

19
County of Los Angeles v. Davis, 440 U.S. 625, 631 (1979)). “The core question

in mootness inquiry is whether granting a present determination of the issues

offered will have some effect in the real world.” Kennecott Utah Copper Corp. v.

Becker, 186 F.3d 1261, 1266 (10th Cir. 1999) (citation, quotation, and alteration

omitted). Demonstrating mootness is a “heavy” burden, Davis, 440 U.S. at 631,

and that burden “lies with the party asserting mootness.” Finstuen v. Crutcher,

496 F.3d 1139, 1150 (10th Cir. 2007) (quotation and citation omitted).

Applying these principles, we conclude that the expiration of Copar’s plan

of operations has “completely and irrevocably eradicated the effects” of the plan

modification requirement set forth in the Notice of Noncompliance. Davis, 440

U.S. at 631. Were we to determine that the FS improperly required Copar to

modify its plan of operations, that ruling would have no effect on the parties’

relationship because that plan has already expired. Copar’s challenge to that

requirement is therefore moot.

However, we conclude that the expiration of the plan of operations does not

moot Copar’s challenge to the Notice of Noncompliance’s record production

requirement. Unlike the modification requirement, the record production

requirement did not expire with the plan of operations; as the FS indicated during

oral argument, the parties dispute the completeness of the records Copar produced

to the FS. This dispute not only concerns the FS’s authority to demand Copar’s

records, an authority that is predicated upon the FS’s interpretation of its

20
regulations, but also concerns the extent to which the FS can require Copar to

verify the end-use of its pumice. Because determining these issues will affect the

parties’ relationship, Copar’s challenge to this requirement is not moot.

Having concluded that Copar’s challenge to the Notice of Noncompliance’s

record production requirement is not moot, we now consider the merits of this

challenge.

III

Years of litigation concerning the JNRAA’s impact on the Cook family’s

23 mining claims ended with a settlement agreement on April 4, 2002. Copar and

the Cook family retained their unpatented claims comprising El Cajete “subject to

all pertinent statutes and regulations,” and acknowledged that the JNRAA

prohibited them from “dispos[ing] of the common variety pumice produced” from

those claims. Aplt. App. at 74. But despite this settlement agreement, and

despite repeated admonitions by the FS that +3/4" pumice not destined for the

garment finishing industry was merely common variety pumice, Copar has

essentially circumvented the settlement agreement by selling a portion of its

+3/4" pumice for common variety uses, and has been largely unresponsive to the

FS’s repeated requests for a proposed method of verifying the end-use of El

Cajete pumice. Now, in the face of final agency action demanding mining and

sales records as a means of verifying end-use, Copar assails the FS’s Notice of

Noncompliance, and the underlying interpretation of FS regulations, as arbitrary

21
and capricious, an abuse of statutory and regulatory authority, and an

unconstitutional taking. Having reviewed the applicable statutes, pertinent

regulations, and the entire administrative record, we reject each of these

challenges and affirm the district court’s denial of Copar’s petition for review.

A

“We review de novo the district court’s decision in a case brought pursuant

to the APA.” Wyoming ex rel. Crank v. United States, 539 F.3d 1236, 1244 (10th

Cir. 2008). Under the APA, a “reviewing court shall . . . hold unlawful and set

aside agency action . . . found to be . . . arbitrary, capricious, an abuse of

discretion, or otherwise not in accordance with law.” 5 U.S.C. § 706(2)(A). In

performing arbitrary and capricious review, we accord agency action a

presumption of validity; the burden is on the petitioner to demonstrate that the

action is arbitrary and capricious. Sorenson Commc’ns, Inc. v. F.C.C., 567 F.3d

1215, 1221 (10th Cir. 2009). Agency action is arbitrary and capricious if the

agency “has relied on factors which Congress has not intended it to consider,

entirely failed to consider an important aspect of the problem, offered an

explanation for its decision that runs counter to the evidence before the agency,”

or if the agency action “is so implausible that it could not be ascribed to a

difference in view or the product of agency expertise.” Motor Vehicle Mfrs.

Ass’n of the U.S. v. State Farm Mut. Auto. Ins. Co., 463 U.S. 29, 43 (1983).

Though probing and in-depth, arbitrary and capricious review is “narrow in

22
scope.” Sorenson Commc’ns, 567 F.3d at 1221. We do not “substitute [our]

judgment for that of the agency,” and we do not “supply a reasoned basis for the

agency’s action that the agency itself has not given.” State Farm, 463 U.S. at 43

(quotation and citation omitted).

The Notice of Noncompliance’s record production requirement is

predicated on the FS’s interpretation that under its regulations, “a mineral is [an]

uncommon variety only if it both has special value and is used for an application

that requires the unique qualities that give it distinct and special value.” Aple.

Br. at 23 (italicized in original). Copar argues that this interpretation is arbitrary

and capricious because it is inconsistent with the Common Varieties Act, FS

regulations, and mining law precedent. Copar also argues that the record

production requirement is arbitrary and capricious because it is a radical

departure from prior practice, it is vague, and compliance is impracticable. We

reject each of these challenges in turn.

1

Our review of an agency’s interpretation of its own regulations is

“substantially deferential.” St. Anthony Hosp. v. U.S. Dep’t of Health & Human

Servs., 309 F.3d 680, 691-92 (10th Cir. 2002). Rather than “decide which among

several competing interpretations best serves the regulatory purpose,” we give the

agency’s interpretation “controlling weight unless it is plainly erroneous or

inconsistent with the regulation.” Thomas Jefferson Univ. v. Shalala, 512 U.S.

23
504, 512 (1994) (citations and quotations omitted); see also Fed. Express Corp. v.

Holowecki, 552 U.S. 389, 397 (2008); Auer v. Robbins, 519 U.S. 452, 461

(1997). Therefore, we “must defer to the Secretary’s interpretation unless an

alternative reading is compelled by the regulation’s plain language or by other

indications of the Secretary’s intent at the time of the regulation’s promulgation.”

Thomas Jefferson Univ., 512 U.S. at 512 (citations and quotations omitted).

The FS’s interpretation centers on the meaning of subsections (c), (d), and

(e) of 36 C.F.R. § 228.41, which became effective on January 16, 1991. 55 Fed.

Reg. 51700 (Dec. 17, 1990). The Department of Agriculture promulgated these

additions, among others, “to end the long standing confusion and

misinterpretation of what is a common variety of mineral,” and to “bring

consistency to classification of mineral materials.” 55 Fed. Reg. at 51700. In the

Final Rule statement, the Department of Agriculture’s response to a public

comment illustrated how these regulatory additions classify minerals as common

or uncommon variety based on their “actual use.”

One respondent raised a concern about the requirement that minerals
must be actually used for the purposes stated and indicated that if a
“[c]laimant can demonstrate the likelihood of profitability penetrating
the market for (uncommon varieties), the deposit will support a valid
mining claim despite (present) ‘common variety’ use.” In support of
this view, the respondent made an analogy to how the discovery test is
employed in dealing with locatable minerals. We disagree. As discussed
later, we believe the use of a mineral should play a determinative role
in establishing whether or not it is considered to be a common variety.
As many minerals may be suitable for both common and uncommon
variety uses, actual use must be the basis of a classification, and this is

24
 confirmed by administrative and court decisions.

55 Fed. Reg. at 51703 (emphasis added) (alterations in original).

Consistent with a classification system based on the actual use of the

mineral, subsections (c), (d), and (e) of § 228.41 provide a sort of field guide for

determining whether a mineral qualifies as a common or uncommon variety.

Subsection (c) of this regulation indicates that the “Disposal of Mineral

Materials” regulations contained in Subpart C, which implement the Materials Act

of 1947 and the Common Varieties Act of 1955, apply to “common varieties of . .

. pumice, . . . and other similar materials. Such mineral materials include deposits

which, although they have economic value, are used for agriculture, animal

husbandry, building, abrasion, construction, landscaping, and similar uses.” 36

C.F.R. § 228.41(c) (emphasis added). For each of the categories listed in

subsection (c), the regulation provides “representative examples” of uses that

would qualify a mineral as a common variety. See, e.g., id. § 228.41(c)(3)

(“Abrasive materials. This category includes . . . minerals used for: Filing;

scouring; polishing; sanding; and sandblasting.” (underlining emphasis added)).

Subsection (d) identifies the minerals that are not subject to Subpart C’s

regulations, and are instead subject to location according “to the terms of the

United States Mining Laws, . . . on those portions of the National Forest System

where those laws apply.” Id. § 228.41(d). “Mineral materials do not include any

mineral used in manufacturing, industrial processing, or chemical operations for

25
which no other mineral can be substituted due to unique properties giving the

particular mineral a distinct and special value . . . .” Id. § 228.41(d) (emphasis

added). Subsection (d) includes seven examples of minerals that would qualify

under this subsection; the regulation employs similar phraseology in describing

each example that emphasizes how actual use, and not the mere suitability for

use, governs this classification. See, e.g., id. § 228.41(d)(5) (“Gypsum suitable

and used for wallboard, plaster, or cement.” (emphasis added)). Because these

“uncommon variety” minerals are subject to location under the General Mining

Law, the “Locatable Minerals” regulations contained in Subpart A govern their

extraction from National Forest System Lands.

Finally, Subsection (e) explains how the particular use of a mineral can

transform an otherwise common variety mineral into an uncommon variety. “A

use which qualifies a mineral as an uncommon variety under paragraph (d)

overrides classification of that mineral as a common variety under paragraph (c)

of this section.” Id. § 228.41(e)(2).

In light of this regulatory language, and in light of the Department of

Agriculture’s intent in promulgating § 228.41(c)-(e), it was not plainly erroneous

or inconsistent for the FS to conclude from its regulations that an “uncommon

variety” mineral becomes a common variety mineral when it is no longer used in

an application that emphasizes its distinct and special value. To qualify as an

uncommon variety mineral under subsection (d), a mineral must be “suitable and

26
used” in an application “for which no other mineral can be substituted due to the

unique properties giving the particular mineral a distinct and special value.” Id. §

228.41(d). The portion of +3/4" pumice that Copar has sold for common variety

uses does not meet this definition because it is not being used in an application

that emphasizes its distinct and special value. In this situation, this particular

+3/4" pumice becomes a common variety mineral – i.e., a deposit with some

economic value that is used in a generic application – that Copar acknowledged it

has no authority to mine.

Copar argues that the FS’s interpretation is contrary to the Common

Varieties Act. Copar contends that 30 U.S.C. § 611 “constitutes a legislative

declaration that deposits of the minerals listed . . . which are valuable because of

some ‘distinct and special value’ are ‘valuable mineral deposits’ within the

meaning of the General Mining Law.” Aplt. Reply at 5-6 (quoting 30 U.S.C. §

611) (italicized in original). According to Copar, the FS’s interpretation is

therefore “inconsistent with th[is] legislative declaration[]” because the agency

“seeks to exclude a portion of the otherwise unique, uncommon El Cajete deposit

from the operation of the General Mining Law.” Id. at 5. This argument is

misplaced because it ignores how the regulations, and the FS’s interpretation of

those regulations, require an uncommon variety mineral to possess “a distinct and

special value.” 36 C.F.R. § 228.41(d). This argument is also misplaced because

it ignores the posture of this case. Acting pursuant to its delegated authority, see

27
30 U.S.C. § 601, the Department of Agriculture has promulgated regulations that

identify the circumstances in which a common variety mineral on National Forest

System lands remains locatable under the General Mining Law. Copar does not

challenge the regulations themselves, only the FS’s interpretation of them.

Because we have already determined that the FS’s interpretation was not clearly

erroneous or inconsistent with its regulations, we reject this argument.

Copar also argues that subsections (c) and (d) of § 228.41 are “simply a

guide,” and that because the regulations do not expressly define the term

“uncommon variety,” we should focus on Subpart C’s definition of mineral

materials, which “excludes entire deposits of minerals according to their ‘distinct

and special value’ – and not according to the end use.” Aplt. Reply at 6-8

(italicized in original). Subpart C defines “mineral materials,” in pertinent part,

as “common varieties of . . . pumice, . . . and other similar materials,” but notes

that “[c]ommon varieties do not include deposits of those materials which are

valuable because of some property giving them distinct and special value . . . .”

36 C.F.R. § 228.42. We also reject this argument because the regulatory

definition of “mineral materials” does not decide the interpretative issue in this

case. Though § 228.41(d) is not a formal definition of “uncommon variety,” that

subsection identifies the circumstances in which a mineral on National Forest

System lands remains subject to location under the General Mining Law, and is

therefore controlling in this case. Moreover, the regulations refer to § 228.41(d)

28
as the de facto definition of uncommon variety. See id. § 228.41(e)(2) (“A use

which qualifies a mineral as an uncommon variety under paragraph (d) overrides

classification of that mineral as a common variety under paragraph (c) of this

section.” (emphasis added)). 4

Copar contends that two Interior Board of Land Appeals decisions

(“IBLA”), United States v. Multiple Use, Inc., 120 I.B.L.A. 63 (1991), and Mid-

Continent Res., Inc. Pitkin Iron Corp., 148 I.B.L.A. 370 (1999), “refute the

argument that the government may regulate or restrict the actual end-uses of

uncommon variety materials.” Aplt. Br. at 23. These decisions are not

persuasive because neither of them interprets the FS regulations contained in 36

C.F.R. Part 228. Instead, each decision cites and discusses the BLM’s prior

regulation that defined common variety minerals, e.g., 43 C.F.R. § 3711.1(b)

4
Copar contends the FS’s interpretation is inconsistent with another
Subpart C regulation which states that “[t]itle to the mineral materials vests in the
purchaser or permittee immediately before excavation . . . .” 36 C.F.R. §
228.43(d) (emphasis added). This regulation is irrelevant because it only applies
to “mineral materials;” it does not indicate when title would vest for uncommon
variety minerals.
Copar also contends the FS’s interpretation conflicts with 36 C.F.R. §
228.43(f). This regulation is also irrelevant because it simply addresses how the
end-use classification system in § 228.41(c)-(e) impacted mining claimants when
the system was promulgated. The Department of Agriculture promulgated §
228.43(f) alongside § 228.41(c)-(e). 55 Fed. Reg. at 51706. For mining
claimants holding claims located for mineral materials, § 228.43(f) granted these
claimants the option of “maintaining that the mineral is locatable and filing for
patent.” Otherwise, “[a]ll mining claimants holding mining claims located in
good faith on or before January 16, 1991” for mineral materials “may accept the
classification and, if appropriate,” dispose of the “mineral material” under
Subpart C by “receiv[ing] a sale by negotiated contract.” Id. § 228.43(f).

29
(2001), which provided that “[m]ineral materials which occur commonly shall not

be deemed to be ‘common varieties’ if a particular deposit has distinct and special

properties making it commercially valuable for use in a manufacturing, industrial,

or processing operation.” See Mid-Continent Res., 148 I.B.L.A. at 376-77;

Multiple Use, 120 I.B.L.A. at 76-79. The IBLA has often applied this regulation

with a standard that the Ninth Circuit articulated in McClarty v. Sec’y of Interior,

408 F.2d 907 (9th Cir. 1969), which set forth five guidelines for distinguishing

between common and uncommon variety minerals. 5 See David Q. Tognoni, 138

I.B.L.A. 308, 312 (1997) (citing examples). As Copar repeatedly emphasizes in

its briefings, the IBLA in Multiple Use engaged in a lengthy discussion of the

uncommon variety nature of pumice under the BLM’s regulation and the

McClarty analysis. Multiple Use, 120 I.B.L.A. at 76-79, 96-104. However, the

important distinction in this case is that here we are analyzing the interpretation

of a different regulation that does not wholeheartedly embrace the McClarty

standard. In promulgating its classification system based on actual use of the

mineral, the Department of Agriculture recognized that McClarty “has been

5
Those guidelines are (1) “there must be a comparison of the mineral
deposit in question with other deposits of such minerals generally;” (2) “the
mineral deposit must have a unique property;” (3) “the unique property must give
the deposit a distinct and special value;” (4) “if the special value is for uses to
which the ordinary varieties of the mineral are put, the deposit must have some
distinct and special value for such use;” and (5) “the distinct and special value
must be reflected by the higher price which the material commands in the market
place.” McClarty, 408 F.2d at 908.

30
regarded as definitive and . . . has provided a broad framework.” 55 Fed. Reg. at

51700. Nevertheless, the FS concluded that “[u]se of the standards established in

the McClarty decision leaves a number of unanswered questions for the operator

and the Forest Service.” 6 Id. (underlining added).

Finally, Copar also argues that the FS’s interpretation is contrary to the

“elementary tenet of mining law that the locatability of a mineral deposit . . . is

determined as of the date of withdrawal of the land from location or as of the date

of a contest hearing and in certain cases, both.” Aplt. Reply at 14 (italicized in

original). Each of the cases Copar cites answers the factual question of whether a

mining operator had discovered a valuable deposit of common variety minerals

before Congress withdrew those minerals from the public domain when it enacted

the Common Varieties Act on July 23, 1955. 7 The IBLA decisions Copar cites

acknowledge that “the question of present marketability must be determined by

6
As further support for the dissimilarity between the BLM’s and the FS’s
standard, we note that the BLM recently codified the McClarty guidelines. 43
C.F.R. § 3830.12(b); see also 68 Fed. Reg. 61046, 61048 (Oct. 23, 2003)
(incorporating the former § 3711.1 into the new § 3830.12). In expressly
adopting the McClarty standard, the BLM indicated how the agency “modified the
language in some sections from the proposed rule so that they more closely match
the language and intent of applicable case law. For example, to define uncommon
varieties of mineral materials, we rely on the court’s decision in McClarty.” 68
Fed. Reg. at 61048.
7
See Rawls v. United States, 566 F.2d 1373, 1375-76 (9th Cir. 1978);
Charlestone Stone Prods., Inc. v. Andrus, 553 F.2d 1209, 1214-15 (9th Cir. 1977),
rev’d on other grounds, 436 U.S. 604 (1978); Clear Gravel Enters., Inc. v. Keil,
505 F.2d 180, 181 (9th Cir. 1974) (per curiam); Barrows v. Hickel, 447 F.2d 80,
82-84 (9th Cir. 1971); Palmer v. Dredge Corp., 398 F.2d 791, 795 (9th Cir. 1968).

31
reference to the date on which the claimant fulfilled all of the prerequisites to the

making of the entry, i.e., no later than the date of the issuance of the final

certificate.” United States v. Whittaker (On Reconsideration), 102 I.B.L.A. 162,

166 (1988). These decisions simply do not inform the interpretative issue in this

case: whether a mineral extracted from National Forest System lands can lose its

status as an uncommon variety mineral when it is no longer used in an application

that utilizes its distinct and special value. 8

2

Copar additionally argues that we should set aside the Notice of

Noncompliance’s record production requirement as arbitrary and capricious.

Copar insists that the Notice “requires Copar to produce an ex-post facto

‘accounting’ of all the El Cajete pumice produced,” and this “‘end-use

verification’ requirement” is arbitrary and capricious because it is “a radical

departure from prior practice,” it is vague, and compliance is “impractical and

8
Copar also argues that the FS’s interpretation is arbitrary and capricious
because Copar mines “block pumice,” and the FS “simply has no statutory
authority whatsoever to regulate the ‘end-use’ of block pumice.” Aplt. Br. at 20-
21. Under the Common Varieties Act, the term “common varieties” “does not
include so-called ‘block pumice’ which occurs in nature in pieces having one
dimension of two inches or more,” 30 U.S.C. § 611, and under FS regulations,
“block pumice” is subject to location under the General Mining Law if “it is
valuable and used for some application that requires such dimensions,” 36 C.F.R.
§ 228.41(d)(6). We agree with the FS that Copar has provided no evidence
demonstrating that the pumice it sells for common variety uses is block pumice.
Copar only alleges that approximately 15% of the El Cajete deposit is block
pumice. Aplt. Br. at 20 n.6.

32
oppressive given the nature of the pumice market and industry practices.” Aplt.

Br. at 29, 32 (italicized in original). Because none of these arguments find

support in the administrative record, we accordingly reject them.

Copar’s monitoring plan and its plan of operations did not require Copar to

sell its +3/4" pumice exclusively to the garment finishing industry, or to maintain

records of its sales. In its September 9, 1998 letter, the FS explained why it never

memorialized those requirements in those documents. “In the past” the agency

“had no specific indications from Copar that there was any plan to use the +3/4"

pumice for use other than in the garment finishing market.” Aple. Supp. App. at

48. When those indications surfaced, the FS requested “some means of

verification that the pumice removed from the El Cajete mine is currently and

continually selling for garment finishing uses.” Id. at 49 (emphasis added).

In light of Copar’s admission that “the pumice was not all going for

locatable uses,” the FS in subsequent correspondence stressed that “[c]onfirming

the final use of the pumice is of utmost importance” and reminded Copar that it

“ha[d] not cooperated in providing any documentation showing the pumice is

going for the laundry industry.” Aplt. App. at 78. Copar met with the FS in early

May 2003, and agreed to develop a proposed method for verifying end-use. Later

that month, the FS told Copar that it “look[ed] forward to reviewing [Copar’s]

suggestions on how to bring this operation into compliance,” acknowledged the

difficulty in developing a proposed method of verification, and suggested

33
potential accommodations:

As mentioned during the meeting, there is no formal agency direction
on how to implement 36 CFR 228.41. On their face, the regulations
require a “mine-to-end use” accounting for uncommon variety minerals.
We recognize the laundry pumice market is very competitive and some
information must remain confidential. We also recognize many
clothing manufacturers/laundries are very sensitive to any publicity
about their use of domestic pumice in the laundry process. Copar’s use
of distributors, instead of marketing the pumice directly to the end
users, also complicates the situation because tracking the use will
require the distributors to disclose where and to whom the pumice is
sold. An accounting logically requires the operator’s cooperation,
either by providing verifiable reports of the material produced and sold,
or by opening their books to audit by the Forest Service. In Copar’s
case, the accounting would not only be of Copar’s sales to the
distributors, but the distributors’ sales to the end users. If you prefer,
we may be able to approve, after consultation with counsel, an
alternative proposal that would provide an independent third-party
certification if it could satisfy our responsibility for verification of use.

Aplt. App. at 81. E-mail communications confirm that Copar was working on a

proposal to verify the use of its pumice during the summer of 2003. Aple. Supp.

App. at 74-77.

On October 31, 2003, not having received any proposal from Copar, the FS

demanded that Copar provide the agency with “a verifiable method of proving all

of the pumice produced from the El Cajete Mine since April 4, 2002 (the date of

the settlement agreement) has been used only in the stonewash laundry industry

and the pumice continuing to be mined today is being used only in the stonewash

laundry industry.” Aplt. App. at 83 (emphasis added). When Copar did not

comply, the FS issued its Notice of Noncompliance on December 23, 2003. The

34
Notice stated that Copar’s “failure to provide verifiable proof of the stonewash

laundry industry use of the pumice removed from the El Cajete Mine . . . is

noncompliance.” Id. at 90 (emphasis added). “To correct this noncompliance,”

the FS demanded that Copar “[p]rovide . . . complete records since April of 2002

showing how much pumice was removed each month (total production, not just

stonewash laundry industry pumice), and the names and contact information for

the purchasers of the pumice.” Id. at 91.

On the record presented, we reject Copar’s argument that the record-

production requirement is a departure from prior practice. Though the plan of

operations and monitoring plan did not require Copar to sell its +3/4" pumice

exclusively to the garment finishing industry, at that time the agency was unaware

that Copar intended to sell its El Cajete pumice for common variety uses. Upon

learning that Copar intended to do so, the FS has consistently sought “some

means of verif[ying]” the end-use of Copar’s pumice. Aple. Supp. App. at 49.

We also reject Copar’s argument that by including the term “verifiable

proof” in the Notice of Noncompliance, the FS imposed a vague standard.

Copar’s “failure to provide verifiable proof” caused its noncompliance, but “[t]o

correct this noncompliance” the Notice specifically required Copar to produce its

mining and sales records, including “the names and contact information for the

purchasers of the pumice.” Aplt. App. at 91. This requirement is not vague.

Nevertheless, Copar argues that the FS is insisting “that El Cajete pumice

35
be tracked to its ultimate end use,” and that this requirement is impracticable and

oppressive given the nature of the garment finishing industry. Aplt. Br. at 29.

Copar argues that it lacked notice of this requirement because the FS never

included it within the plan of operations and monitoring plan; thus, the

“retroactive proof of end-use information” the FS seeks “is not within Copar’s

possession, custody or control, but rather, is known by third parties and end users

themselves.” Aplt. Br. at 31. Copar claims it cannot obtain this information

because it sold most of its El Cajete pumice to “brokers who will not disclose the

identity of their customers” because such disclosure “could result in the broker’s

loss of that customer or by the bypassing [of] the broker.” Id. at 30.

We reject this argument because it is inconsistent with the administrative

record. The final agency action that Copar is challenging in this case did not

demand proof that “every single ounce of pumice removed from the El Cajete

mine was actually used in the stonewash laundry industry.” Aplt. Br. at 34

(italicized in original). Rather, the Notice of Noncompliance requested mining

and sales records and “the names and contact information for the purchasers of

the pumice.” Aplt. App. at 91. Production of these records avoids the

impracticalities and difficulties that Copar alleges. And demonstrating the price

that Copar received for its pumice also avoids these alleged concerns. As the FS

explained during oral argument, the agency expects Copar to demonstrate that it

disposed of its pumice into a qualifying market, and a showing by Copar that it

36
sold its pumice to wholesalers at a price that reflects the mineral’s distinct and

special value would be a step towards compliance. Sold as a stonewashing agent,

Copar’s +3/4" pumice commands a price significantly higher than the price it

would fetch if sold for common variety application: the 1995 mineral report

indicated that “[b]ulk shipments for garment finishing pumice sell for $20-54 per

cubic yard (f.o.b.) as compared to the range of $5.50-12.00 per cubic yard (f.o.b.)

for common variety pumice,” App. at 27, and Copar emphasized a similar price

disparity at oral argument. Given the economic realities of the pumice market,

we expect that the price Copar received for its +3/4" pumice would be a

significant, if not dispositive, step towards verifying disposition into a qualifying

market. Therefore, the degree of end-use verification the FS ultimately seeks will

likely not require Copar’s distributors to disclose the identities of their customers.

Finally, the administrative record simply does not support Copar’s assertion

that it was unaware of the FS’s requests for verification. Copar knew as early as

September 1998 that the FS wanted “some means of verif[ying]” the end-use of El

Cajete pumice. Aple. Supp. App. at 49. Moreover, the administrative record

reveals that the FS persistently requested end-use verification, and was amenable

to developing a verification method that would not upset the confidential nature

of the pumice market. Shortly after Copar agreed to develop a method of

verification in May 2003, the FS acknowledged the difficulties of this process,

and highlighted the potential for an “alternative proposal that would provide an

37
independent third-party certification if it could satisfy our responsibility for

verification of use.” Aplt. App. at 81. Though an agency acts arbitrarily and

capriciously when the agency “entirely fail[s] to consider an important aspect of

[a] problem,” State Farm, 463 U.S. at 43, here the FS did not act arbitrarily and

capriciously in consistently articulating its request for end-use verification,

attempting to work with Copar in developing a proposed verification method, and

ultimately selecting a degree of verification that will not encroach upon Copar’s

alleged concerns. Accordingly, we reject Copar’s arguments that the Notice of

Noncompliance’s record production requirement was arbitrary and capricious.

B

Copar alternatively argues that the FS lacks the authority to regulate the

end-use of its +3/4" pumice, and therefore the FS exceeded its authority in issuing

the Notice of Noncompliance. Because the APA empowers reviewing courts to

set aside agency action “in excess of statutory jurisdiction, authority, or

limitations, or short of statutory right,” 5 U.S.C. § 706(2)(C), an essential

function of our review under the APA is determining whether an agency acted

within the scope of its authority, Olenhouse v. Commodity Credit Corp., 42 F.3d

1560, 1574 (10th Cir. 1994). Having reviewed the regulations, we conclude that

the FS acted well within its authority in issuing the Notice of Noncompliance.

Copar argues that the FS has “determined, as a matter of policy, that the

scope of its regulatory authority does not extend to the disposition of minerals

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post production.” Aplt. Br. at 36 (italicized in original). Copar quotes a portion

of the FS Manual that states the FS’s “function is the management and protection

of surface resources in a manner compatible with reasonable and logical mining

operations and not the management of mineral resources.” Id. at 37 (quoting

Aplt. App. at 144) (italicized in original). Copar contends that the FS’s authority

“to inspect mining operations is for the purpose of determining if activities are

being carried out in accordance with the [p]lan of [o]perations.” Id. Because

Copar fully complied with its plan of operations, the FS therefore “overstepped

its authority” in issuing the Notice of Noncompliance and in reaching the

“nonsensical” conclusion that Copar’s mining activities were causing “irreparable

injury” to surface resources. Id. at 37, 44.

The logical flaw in Copar’s argument is the assumption that compliance

with a plan of operations equates to compliance with the FS regulations. By

mandating that FS officials inspect mining operations for compliance “with the

regulations in this part and an approved plan of operations,” the regulations

clearly indicate that compliance with a plan of operations and compliance with

the regulations are separate and distinct obligations. See 36 C.F.R. § 228.7(a)

(emphasis added). In addition, the FS explained to Copar in the agency’s May 21,

2003 letter that “a [p]lan of [o]perations does not exempt the operator from

compliance with the other mineral regulations.” Aplt. App. at 81.

Copar’s argument also ignores how the regulations explicitly task the FS

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with ensuring that mining operations “shall be conducted so as to minimize

adverse environmental impacts on National Forest System surface resources.” 36

C.F.R. § 228.1; see also 16 U.S.C. § 460jjj-2(c) (“No mining activity involving

any surface disturbance of lands or waters within [the Jemez National Recreation

Area] . . . shall be permitted except in accordance with requirements imposed by

the Secretary [of Agriculture]”). Charged with this responsibility, it was not

nonsensical for the FS to conclude, in spite of Copar’s compliance with its plan of

operations, that the “removal of pumice in excess of the stonewash laundry

industry pumice is unnecessarily causing injury, loss or damage to surface

resources by causing surface disturbance exceeding what is necessary to extract

stonewash laundry industry pumice.” Aplt. App. at 90. According to the

settlement agreement, Copar retained the unpatented mining claims comprising El

Cajete “subject to all pertinent statutes and regulations,” and acknowledged it

could not extract common variety pumice. Aplt. App. at 74. We have already

determined that it was not arbitrary and capricious for the FS to conclude that the

portion of +3/4" pumice Copar did not sell to the garment finishing industry

qualified as common variety pumice. Therefore, in carrying out its mining

operations Copar used and destroyed more surface resources than the company was

allowed to consume.

Finally, Copar’s argument ignores how the regulations permit the FS to

serve a Notice of Noncompliance upon a mine operator when that operator “fails

40
to comply with the regulations . . . and the noncompliance is unnecessarily or

unreasonably causing injury, loss or damage to surface resources . . . . Such notice

shall describe the noncompliance and shall specify the action to comply and the

time within which such action is to be completed . . . .” 36 C.F.R. § 228.7(b)

(emphasis added). In light of this provision, the FS did not exceed its authority in

issuing the Notice of Noncompliance to Copar, and in demanding that Copar

produce its mining and sales records from El Cajete.

C

Copar’s final argument for setting aside the Notice of Noncompliance is that

the FS’s interpretation of its regulations is an unconstitutional taking because it

“transform[s] locatable uncommon variety pumice into common variety pumice

through an end-use analysis.” Aplt. Br. at 43. Under the APA, reviewing courts

shall set aside agency action that is “contrary to constitutional right.” 5 U.S.C. §

706(2)(B). Because constitutional questions arising in a challenge to agency

action under the APA “fall expressly within the domain of the courts,” we review

de novo whether agency action violated a claimant’s constitutional rights. Darden

v. Peters, 488 F.3d 277, 283-84 (4th Cir. 2007).

Copar relies on Forbes v. Gracey, 94 U.S. 762, 765 (1876), in which the

Supreme Court determined that under the then-existing mining laws, title to

extracted minerals vests in the mining operator “the moment th[e] ore becomes

detached from the soil in which it is embedded.” Copar contends the FS’s

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interpretation deprives the company of its vested right in the +3/4" pumice not

destined for the garment finishing industry. But as the district court reasoned, the

rule from Forbes assumes that the extracted minerals were subject to location.

Copar acknowledged in the settlement agreement that it had no right to extract

common variety pumice from El Cajete. Because it was not arbitrary and

capricious for the FS to conclude that the portion of Copar’s +3/4" pumice that is

not destined for the garment finishing industry is common variety pumice, Copar

had no right to extract common variety pumice, and therefore no taking occurred.

IV

For the foregoing reasons, the judgment of the district court is AFFIRMED.

Copar’s Motion to Supplement the Administrative Record is GRANTED. The

FS’s Suggestion of Mootness is GRANTED in part and DENIED in part.

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