Amoco Production Company v. Southern Ute Indian Tribe

PETITIONER: Amoco Production Company
RESPONDENT: Southern Ute Indian Tribe
LOCATION: Alden's Workplace

DOCKET NO.: 98-830
DECIDED BY: Rehnquist Court (1986-2005)
LOWER COURT: United States Court of Appeals for the Tenth Circuit

CITATION: 526 US 865 (1999)
ARGUED: Apr 19, 1999
DECIDED: Jun 07, 1999

ADVOCATES:
Carter G. Phillips - Argued the cause for the petitioners
Jeffrey P. Minear - Argued the cause for the United States
Thomas J. Davidson - Argued the cause for the amici States
Thomas H. Shipps - Argued the cause for the Souther Ute Indian Tribe

Facts of the case

Land patents issued pursuant to the Coal Lands Acts of 1909 and 1910 (the Acts) reserve all rights to the coal contained in the subject properties to the United States. The Southern Ute Indian Tribe has equitable title to coal within its reservation lands. These lands contain large quantities of coalbed methane gas (CBM gas), now considered a valuable energy source, within the coal formations. In 1981, the Department of the Interior issued an opinion that concluded that the reservation of coal under the Acts did not encompass CBM gas. Energy companies then entered into leases with landowners holding title under the Acts to produce CBM gas. The Tribe field suit against the Amoco Production Company and others, royalty owners and producers under the oil and gas leases covering that land, and various federal entities, seeking a declaration stating CBM gas to be coal reserved by the Acts and therefore belonging to the Tribe. The District Court disagreed and concluded that the plain meaning of the term "coal" was limited to the solid rock substance and did not include the CBM gas. In reversing, the Court of Appeals held that the Acts' use of the term "coal" was ambiguous, and ambiguities in land grants must be resolved in favor of the sovereign. Therefore, the Acts' reservation of coal included the CBM gas.

Question

Does the reservation of coal under the land patents issued pursuant to the Coal Lands Acts of 1909 and 1910 include the coal-bed methane gas found within the coal formation?

Media for Amoco Production Company v. Southern Ute Indian Tribe

Audio Transcription for Oral Argument - April 19, 1999 in Amoco Production Company v. Southern Ute Indian Tribe

Audio Transcription for Opinion Announcement - June 07, 1999 in Amoco Production Company v. Southern Ute Indian Tribe

William H. Rehnquist:

The opinion of the Court in No. 98-830, Amoco Production Company versus Southern Ute Indian Tribe will be announced by Justice Kennedy.

Anthony M. Kennedy:

The industrial revolution needed fuel and in the second half of the 19th century the principle fuel, the principle energy source, was coal, coal bed, as everyone knows, were in great abundance in the United States.

The early Land-Grant Program by which federal lands were granted to homesteaders, made a distinction between lands with coal and lands without it and different terms and conditions applied to those who wanted to settle and acquire ownership in the two sorts of lands.

Then there occurred two events: One was what was thought to be in any event a coal famine in the Western States; the second was the disclosure of widespread fraud and abuse in which some lands obtain by entry and settlement under the representation that no coal existed, really did have coal.

To correct the widespread fraud the government ordered withdrawal from the public lands of some 64 million acres and this affected even some lands where settlers and homesteaders had already made entry.

This outraged the settlers -- many perhaps most of them had entered the lands in good faith and who were seeking the perfect title.

After three years of inconclusive or congressional debates and various legislative proposals which failed of adoption, the Coal Acts of 1909 and 1910 were adopted by the Congress and signed by the President.

The Acts provided for purposes of this brief explanation that is to lands granted and lands yet to be granted, the United States reserve to itself the ownership of the coal.

Now the Acts did not mention the gas within the coal beds, most coal beds have gas and are commonly known as coal bed methane or CBM, as the opinion uses the phrase.

In early days the gas was considered nuisance and indeed all to have frequently there were explosions that were caused by the gas, but in later years it became clear that the gas was itself a valuable fuel resource.

This case presents the issue whether the statutes which reserved coal and that’s the word used in statutes to the United States by necessary extension or influence also reserved the coal bed methane.

Some 20 million acres of lands were granted pursuant to the reservation of coals, so these cases have some consequences.

The petitioner here is Amoco, a class representative, Amoco and here the petitioners abought the right to explore for gas on the assumption that it had not been reserved.

The government and in this case successor in interest the Southern Ute Indian Tribe say, that the gas belongs to the government or to the Tribe and not to Amoco because it was retained under the Coal Clause.

The Court of Appeals for the Tenth Circuit held that the reservation of coal was effective to reserve the gas as well.

We disagree, and we rule in favor of the petitioners.

In today’s opinion we point out that an interpreting statutory mineral reservations like the on at issue here Congress was dealing with a practical subject in a practical way and that it intended the terms of the reservation to be understood in their ordinary and popular sense.

Now, we are persuaded that their common conception of coal at the time Congress passed the 1909 and 1910 Acts was the solid rock substance that was the country’s primary energy resource.

Respondents say we should not create or interpret the Acts to create a split estate with one owner of gas and another owner of coal, but split estates were already common at the time of the 1909 and 1910 Acts.

There is an established common law right of the owner of one mineral estate to use and sometimes even to damage and neighboring a estate as necessary and reasonable on the extraction of the owners own minerals.

The common law has proved adequate to the task of resolving the resulting conflicts between the estates and there is no reason they think that the prospect of the split estate would have deterred Congress from reserving only the coal and not the gas.

Even were we to construe the Coal Clause to include coal bed methane gas, that is the savings fuel to adopt the government’s position, a split estate would result in any event.

Now, the methane gas often migrates to surrounding rock formations with natural gas and the split gas estate would be at least difficult to administer as a split coal and gas State.

For these and other reasons given in the opinion, we reserve the judgment of the Court of Appeals.

Justice Ginsburg has filed a dissenting opinion.

Justice Breyer took no part in the consideration or decision of the case.