ASARCO Inc. v. Kadish

PETITIONER: ASARCO Inc.
RESPONDENT: Kadish
LOCATION: Hammond Police Station

DOCKET NO.: 87-1661
DECIDED BY: Rehnquist Court (1988-1990)
LOWER COURT: Arizona Supreme Court

CITATION: 490 US 605 (1989)
ARGUED: Feb 27, 1989
DECIDED: May 30, 1989

ADVOCATES:
Christopher J. Wright - as Amicus Curiae in Support of Respondents
David S. Baron - on behalf of the Respondents
Daniel M. Gribbon - on behalf of the Petitioners

Facts of the case

Question

Media for ASARCO Inc. v. Kadish

Audio Transcription for Oral Argument - February 27, 1989 in ASARCO Inc. v. Kadish

William H. Rehnquist:

We'll hear argument next in No. 87-1661, Asarco, Incorporated v. Frank Kadish.

You may proceed whenever you're ready.

Daniel M. Gribbon:

Mr. Chief Justice, and may it please the Court.

We turn in this case from hard rock music to hard rock metals.

At issue is the validity of an Arizona statute which provides that minerals in federally granted lands shall be leased upon payable... upon payment of a royalty of 5 percent on the net value of the minerals actually extracted.

The court below held that that statute was invalid because it failed to provide for prior appraisal of the properties and leasing at appraised value, which procedures the court below held were required by the Enabling Act of 1910 pursuant to which Arizona was admitted to the Union.

The issue is not, I hasten to say, whether Arizona shall be permitted to give away its minerals or to lease them on fire sale basis such as is alleged in some of the briefs, nor is it a matter of invoking basic trust principles in support of the decision below.

That decision, which was made on cross motions for summary judgment, contain no finding that Arizona had been profligate or wasteful in its handling of its minerals.

There could have been no finding because there was no evidence.

The court found purely as a matter of statutory construction that the Enabling Act of 1910 required that mineral leasing be done on the basis of prior appraisal and leasing at appraised value.

The issue arises in these circumstances.

In 1910, Congress granted to Arizona substantial acreage of Federal land when it entered the Union.

It provided in that grant that Arizona and New Mexico, who was party to the same Act, could not dispose of the federally granted lands except after advertising, auction and appraisement.

That grant in 1910 excluded mineral lands, which was the custom of all of the Federal grants with one exception at that time.

No mineral lands were granted.

They were reserved and administered under the Federal leasing program.

Some 17 years later, Congress provided in the Jones Act that not only Arizona, but the other 11 western states should now receive the numbered mineral sections that had been withheld from them in the original 1910 Act.

The Jones Act said nothing about dispositional restrictions.

It did provide that the minerals could not be sold, but they could be leased as the state legislature would direct.

In 1936, Congress amended the Enabling Act of 1910 to provide that Arizona could lease the minerals, the so-called hidden minerals, in lands which were not known to be mineral at the time of the grant.

Strictly speaking, you mean lease the mineral lands, rather than lease the minerals.

Daniel M. Gribbon:

Minerals.

Lease the mineral land, yes, Your Honor, for... for the use the minerals.

And the 1936 Act, as I say, provided that Arizona could lease the mineral lands which were given to it somewhat inadvertently by the 1910 Act.

These were lands which were not known to be mineral at the time and, therefore, were not excluded, but which this Court in a series of decisions in the 1920s said had passed to Arizona and New Mexico, nonetheless.

Now, Arizona and New Mexico both had adopted basically the Federal leasing procedures for the hidden minerals and had not provided for appraisement, advertising and auction.

In 1941, pursuant to the authorizations that had been given it by these two earlier Federal Acts, Arizona enacted the statute that is attacked here which provides for a flat 5 percent royalty on extracted minerals and does not provide for auction, advertising and appraisal.

This action... I might say at this point that that statute passed in 1941 has ever been attacked by the Attorney General of the United States who has the duty under the Act to enforce it and has what this Court has referred to as an ongoing oversight responsibility.

This action was brought by three taxpayers in Arizona and by the Arizona Teachers Association which consists of... whose members are 20,000 public school teachers in Arizona.

The claim is that the dispositional restrictions, at least the appraisal restriction, in the 1910 Act limit Arizona's authority to lease minerals since the statute does not provide it is invalid.