ASARCO INC. v. KADISH
Legal provision: Article 3, Section 2, Paragraph 1: Case or Controversy Requirement
ORAL ARGUMENT OF DANIEL M. GRIBBON ON BEHALF OF THE PETITIONERS
Chief Justice William H. Rehnquist: We'll hear argument next in No. 87-1661, Asarco, Incorporated v. Frank Kadish.
You may proceed whenever you're ready.
Mr. 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.
Unidentified Justice: Strictly speaking, you mean lease the mineral lands, rather than lease the minerals.
Mr. 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.
It... they further allege in the complaint that had Arizona provided for appraisal and appraising at the... leasing at the appraised value, more revenues would have come in from the mineral lands... from the leasing of the mineral lands, and that those revenues would have either or both reduced the taxes that the taxpayers were paying for the support of the schools, or improve the quality of education by infusing more money into the public school system.
I shall first address two contentions the Solicitor General has made as to why the Court should let the decision below stand and not review it.
The first suggestion is that the Respondents, on whose side the Solicitor General appears, lack standing in an Article III sense.
So far as the teachers are concerned, there does not seem to be any real question that these teachers have a particularized interest in the public school system of which they are such an integral part, and that if they are right in their complaint, they have been injured by an improper failure of the state to put more money into the schools.
The claim, as far as the teachers are concerned, seems to be that they are unable to claim with the requisite certainty that the redress they ask... that is, invalidation of the statute... will give them the relief that would take care of the quality of education.
In this respect, we believe that the Solicitor General misconceives the basic principle which, as was recently stated in Bryant v Yellen, is not that someone who has been injured need to established with certainty that the relief he seeks is going to give him what he wants, but that there must merely be a reasonable expectation of that relief.
And we would submit that from the teachers' point of view, there is that reasonable expectation that if they're right and if more money comes in, the quality of education is going to be improved in the State of Arizona.
Unidentified Justice: Well, that's pretty--
--Well, right now, does Arizona only use the... the amount that comes from these lands?
Is that all that Arizona spends on education, or is there--
Mr. Gribbon: No.
Unidentified Justice: --are general tax funds expended as well?
Mr. Gribbon: There is a general tax fund of substantial proportions which is spent.
Unidentified Justice: Well then I see... I see no necessary connection between this at all.
You... you assume that when more money comes in from the lands, the state is going to continue to devote the same amount from general revenues?
Mr. Gribbon: Your Honor, I don't--
Unidentified Justice: Why is that a reasonable assumption?
Mr. Gribbon: --Let me say I don't believe there has to be a necessary connection.
I think there was a--
Unidentified Justice: I don't see--
Mr. Gribbon: --reasonable expectation that if more money comes in from the lands, it is either going to be used for education or it's going to be used to reduce taxes, or being a political problem--
Unidentified Justice: --Well, but reducing taxes doesn't help you.
Reducing taxes doesn't help you.
I mean, you--
Mr. Gribbon: --It doesn't help the teachers.
Unidentified Justice: --You have to say there's at least a plausible belief that if you get more money from this... from these lands, more money will go to education even though a sizable portion... most of what now goes to education is out of general revenues, or how much of it?
Mr. Gribbon: I think that the education gets more from general revenues than--
Unidentified Justice: Than from the lands.
Mr. Gribbon: --from the school lands.
But everything that comes from the school lands has to go to support education.
And it seems to me there is a reasonable expectation that... that if they can increase by $5 million, for example, the amount coming from school lands, that's going to go to education.
Unidentified Justice: Don't you think it is more reasonable to think that the legislature sets a figure, we need this much for education, and whatever shortfall there is in the amount that we get from... from... from the lands, we'll make up out of general revenues.
That seems to me almost--
--Your Honor, I'm not clear that either of us knows just exactly what the revenue... what the legislature does or what it might do in the future.
But if they get more money there, the teachers are going to be saying put that into the... into the school system.
We need it for computers, books, et cetera.
Whereas the taxpayers are going to be saying you've met your burden there.
Let's reduce the taxes.
I suggest there's a good probability that some or both of that will happen.
They would split the difference, and that both the teachers would get something on the quality of education and the taxpayers, who are the other claimants here, would get something or have a reasonable expectation of something in the way of taxes.
Well, what if you're right?
What if you're right, Mr. Gribbon, and the money were put into... into a better supply of books?
Is that a sort of benefit to the teachers that would give them standing?
I can see how a benefit that would increase their salaries would give them standing, but just better books or a better looking campus, do you think those are the kind of benefits that would confer standing?
Mr. Gribbon: I think on the books for certain it would better able the teachers to carry out their professional duties, give them greater satisfaction and give them a greater ability to help the students, which is what they're trying to do anyway.
I would say that that kind of a benefit is... or an injury that they're getting now is certainly comparable to the students around Washington in the scrap case who were deprived of the pleasures of walking in the parks here by too much recyclable material being present.
Unidentified Justice: Well, I fully agree with you about the scrap case.
Mr. Gribbon: It's still, as I understand, good law, Your Honor.
But I do think the teachers have a keen professional interest here, just as citizens in the Gladstone, Realtors case had an interest in living in a segregated area.
It may not be strictly a financial interest.
It's a professional, a social, and a cultural interest.
On... on the taxpayers, it is true that many taxpayers have been held to lack to standing under Section 3, but I submit it is where they have brought what might be called good government or generalized grievances or have attempted to... to validate certain interests that they might have.
This I think is the pocketbook case, the dollars and cents case, that was referred to in Doremus.
There is even a separate tax involved here in these royalties where these taxpayers can legitimately claim that they are paying too much because the state is getting too little.
Unidentified Justice: Didn't we say in the Valley Forge case that the taxpayer standing of... under Flast v. Cohen was going to be limited to First Amendment establishment clause claims?
Mr. Gribbon: Your Honor, I didn't think it went quite that far.
In addition to Flast, there was the Grand Rapids v. Ball recently which... which did give standing in... in Flast.
But I would think--
Unidentified Justice: Except Grand Rapids was an establishment clause claim.
Mr. Gribbon: --Yes.
Unidentified Justice: And this isn't.
Mr. Gribbon: But these taxpayers are claiming that the state has violated the specific strictures in the solemn compact between the United States and the Federal Government.
And I would think that those strictures would be the substantial equivalent to the constitutional prohibitions that gave standing in Flast and in Grand... Grand Rapids.
Unidentified Justice: All you need to win on is one.
Mr. Gribbon: I'm sorry, Your Honor?
Unidentified Justice: All... all you need to win on is either the teachers--
Mr. Gribbon: Either one or the other.
That's correct, Your Honor.
Finally, or the question of standing, we would submit that in the event the Court feels there is no standing which, of course, we think there is, the proper course of action, as it has done in the case where there is intervening mootness, would be to... to remand with directions to vacate so that these Respondents, who are the ones lacking the standing who have the defect, would not get the benefit of what will be a final judgment on a very important question of Federal law.
This is more than just an advisory opinion, an opinion of the Justices or the Attorney General.
This opinion is binding on the state legislature.
Unidentified Justice: --But that's true of the opinion in Doremus too, and we just dismissed certiorari, didn't we, in Doremus?
Mr. Gribbon: In Doremus it was this... the... the holding was against the people who lacked standing.
It was not in their favor.
We have found no case, despite the suggestions in Doremus... and none has been cited to us... where respondents who lack standing were able to retain a decision below.
What you have suggested in Doremus might make that possible, but it would seem here where we're not going to get the second chance to contest this, which was one of the things that led you where you were in Doremus that it would not be too much--
Unidentified Justice: But I have some difficulty with that problem.
If you assume we have no jurisdiction because of a lack of standing, why is it different than if the case... say the case was moot at the time it reached the Arizona Supreme Court.
And they said, well, we realize this is moot, but we don't have to follow the Article III rules that the Federal courts follow.
We think it would nice to enter a judgment here that will be binding on our... our government, and we're going to do it even though we may not have judicial power in the Federal sense.
Could we vacate such a judgment?
Mr. Gribbon: --Oh, I don't--
Unidentified Justice: And they had no... no jurisdiction as a matter of Federal... I mean, there is no Federal case or controversy, but they enter some kind of an order that the state... that gives benefits to people like this.
How can we vacate that?
And what you are assuming here is that even there is no standing and, therefore, no jurisdiction, we have... nevertheless have the power to vacate that judgment.
Mr. Gribbon: --I don't see any real difference between that and the situation where mootness has intervened between the decision below and what you are doing now.
You no longer... you don't have any jurisdiction, but nonetheless you will vacate.
Unidentified Justice: No, not in a... from a state court.
Not from a--
Mr. Gribbon: Not... not from a state court.
I think you're right.
But I would suggest that what we're suggesting to you here, while there may not be precedent for it, is really a very, very minimum... has a minimum potential for invasion of the state authority.
This doesn't happen and isn't going to happen very often where respondents who are lacking, as is alleged here, are going to prevail below in a definitive way which is going to prevent the petitioners, who have lost below, from ever getting a ruling by this Court on an important Federal question.
But I... I go back to the standing question.
We do think that there is standing for both of these people and, as Justice White has said, only one of them needs to have the standing in order to be properly in this Court.
The second suggestion of the Solicitor General is that the decision of the state court lacks finality to permit this Court to review.
In that... as to that, we believe that that represents a misconception as to what was decided below and what remains to be decided now.
The Solicitor General says there remains to be cited the... whether the leases that Petitioners have are void.
Now, that was not an issue that was presented to the court below.
Respondents, in bringing their suit, never asked for any kind of a determination as to the voidability of these leases.
It is not a decision... it is not an issue that should come up before the court below on remand.
When the... when the Arizona Supreme Court held in Respondents' favor, it gave them everything they asked for, a declaratory judgment that the royalty provision was invalid, and said they could have an injunction against further leases.
Now, on remand, the Superior Court has entered the injunction holding that the leasing statute... the royalty provision is bad.
It has not gone further and enjoined further leases presumably because the state has said they are not going to issue and they have not issued any new leases.
And the state... and the court has held up action pending a... an attempt by all the parties to work out legislation which would take care of what the Arizona court has done.
And the holders of the... of the present leases are continuing to operate the mines.
They are continuing to pay money, to pay the royalties of the 5 percent.
And there is an agreement with the state that if and when the legislature acts pursuant to this Arizona statute, any new financial arrangements will be made retroactive to January 1, 1988, which is essentially the date of the decision below.
But no proposal was made to the lower court on remand that the leases be voided.
We, therefore, think that this is within the exceptions spelled out in Cox Broadcasting where the Court will hear... review state court judgments even though some ministerial or pre-ordained things need to be... happen such as you decided in the Duquesne Light case here a couple of weeks ago.
I turn now to the substantive issues.
The validity of this statute depends upon a proper interpretation of four Federal statutes which were passed between 1910 and 1951.
The first of these is the Enabling Act to which I have referred.
It does not include a grant of minerals.
We believe that there was no occasion for Congress to consider whether the dispositional restrictions that it imposed in 1910 were appropriate and should be applied to minerals simply because Congress, in accordance with its practice since 1985, had not granted any minerals and did not have any occasion to consider what, if any, kind of procedures should follow the leasing of minerals.
Unidentified Justice: --The Enabling Act reserved the mineral rights.
Mr. Gribbon: Reserved the mineral rights, as did practically all of the enabling acts of the other states in the previous five or six decades.
So, we believe that we have to look elsewhere to the three other Acts, or principally to the Jones Act, to determine whether these restrictions... and I might note that these restrictions were... were more rigorous than those imposed on any of the other states because prior to 1910, some of the states, and New Mexico when it was a territory, had behaved in a way that the Congress thought was irresponsible, either negligent or possibly fraudulent in disposing of resources.
So, they took it out on New Mexico and Arizona and imposed these three dispositional restrictions on them in 1910.
We come to 1927, the Jones Act, which was a landmark change on the part of Federal policy.
For the first time, the Federal Government gave up the mineral wealth in 12 western states and gave it to each state.
And it provided at that time that, first, the states could not sell the mineral wealth, but they could lease them as the individual state legislatures would provide.
Now, there was in 1927, unlike 1910, no concern about states' responsibility.
The western states had grown up.
They had achieved maturity.
They had political muscle.
It was all a question of how right it was to transfer this mineral wealth to the western states because the eastern states already had it right from the beginning.
Our opponents take... take the position that four or five words in the granting clause of the Jones Act, these words being these grants
"shall be of the same effect. "
as the 1910 Act... that those words incorporate by reference all of the dispositional restrictions in the 1910 Act.
We believe that that puts much too great a load on those four or five words.
In the first place, this paragraph, Section A in which these words appear, was not even in the bill until after both Houses of Congress had agreed on the substance of the legislation.
It was put in at the suggestion of the Secretary of the Interior who was concerned that there might be a necessity for patents or some other procedures, and wanted to have it made clear that the title would pass ipso facto, so to speak, when the legislation was passed.
Furthermore, this is a granting section.
It isn't a restriction section.
The restrictions are in the next section.
And if these words mean what the court below and Respondents say they mean, there will be a... a real conflict with the following section which does contain restrictions.
Those restrictions are that all of the money that is obtained be used for the support of the public schools.
"shall be of the same effect. "
means what the Respondents say it does, that was already taken care of because that was provided in the 1910 Act.
There was no need to put it in again.
Secondly, Subsection A contains a very important restriction... restriction that the minerals may not be sold by the state.
Now, that isn't to the same effect of the 1910 Act because the 1910 Act and all of the enabling acts permitted sales under various conditions.
So, this is in direct contrast to the same effect meaning that the Respondents and the court below would ask for.
Now, in addition, we--
Unidentified Justice: Subsection A doesn't... doesn't have that, does it?
You say Subsection A prevents... that--
Mr. Gribbon: --Subsection A has the "shall have the effect".
It is Subsection B--
Unidentified Justice: --That prevents the sale.
Mr. Gribbon: --which has the restrictions.
A being the granting provision, and B being the provision of restrictions.
Unidentified Justice: Could... could you tell me what... what your interpretation of the effect of "of the same effect" is?
What... what does "of the same effect" mean?
Mr. Gribbon: --I think it is confined entirely to the passage of title, that the title to these lands, unlike the title to some other lands, mineral lands, for example, under the mineral law where you did have to go through patents, would pass automatically just as the 1910 granted lands did pass automatically.
Unidentified Justice: I see.
Mr. Gribbon: Now, we believe that the... the proponents of the decision below also err in giving--
Unidentified Justice: Excuse me.
Then, in other words, it's just a redundancy because the last half of the clause says that,
"and titles to such numbered minerals shall vest in the states at the time and in the manner. "
Mr. Gribbon: --It may be a redundancy.
The Secretary of Interior put in the entire Section A.
And his only concern, as near as could be [inaudible], had to do with the passage of title.
Unidentified Justice: Whether you need a patent.
Mr. Gribbon: It's entirely possible he might have done it in two sentences instead of one, which would have been a more careful way.
But this was not legislation.
This was... it... it was his... his reasoning as to why this ought to go in.
But there was no suggestion by him or anybody else that those words would carry with it an incorporation by reference not only of the restrictions in Arizona-New mexico, but all other 12 states.
Unidentified Justice: Thank you.
Mr. Gribbon: The... the Respondents also give insufficient meaning to this specific grant to the states to lease the minerals.
They say that all that it means is that the states will establish leasing forms and procedures, sort of a ministerial thing.
We submit that that was unnecessary.
Leases were provided for in the 1910 Act.
There was no specific reference to the state governing leasing forms or doing anything.
So, it must have been assumed, quite naturally, that the legislature would have, through its sovereign powers, the inherent power to take care of these minor details which, the Respondents say, is all that is covered by the specific leasing authority granted in the 1927 Act.
In summary, we submit that it is the Jones Act that is the principal act that should be looked to.
And that's an Act which gets very little attention in the brief of Respondents.
But it was the Act wherein the Congress finally showed confidence in the states and a willingness to give them very substantial authority over leasing and showed no disposition to limit that authority by reiterating anything about the dispositional restrictions that had been imposed many years later under quite different circumstances.
Unidentified Justice: Did they ever remove the restrictions on non-mineral lands?
Mr. Gribbon: They removed them on... on grazing... grazing lands and on mineral, both types of mineral lands, but they have not been removed on the others.
Unidentified Justice: That is sort of strange, isn't it, if they have confidence in the states about minerals which are so much more valuable?
Mr. Gribbon: Well, it may have been that the other was working all right.
The... the land law legislation, as you can see here, has not been entirely logical on a year-to-year basis.
It goes in fits and starts.
And all of these acts aren't congruent.
It just may be that nobody from Arizona or any other state ever came and said these are burdensome.
They were able to live with them.
They didn't need to do that on the minerals because Congress from the beginning recognized, largely on its own experience, that the minerals did deserve a certain kind of treatment, a different kind of treatment.
The next act that one would look to is the 1936 amendment to the Enabling Act.
The Jones Act was not an amendment to the Enabling Act.
It was a freestanding Act.
In 1936 it was brought to the attention of Congress, Justice White, that the leasing of minerals, so-called hidden minerals, on lands which were not known to be mineral at the time of the grant, but were later discovered in minerals, was not covered by any kind of legislation.
The Jones Act didn't cover them.
The Jones Act was limited to the numbered mineral sections.
And nothing covered the states of... the... Arizona's authority to lease these hidden minerals.
Now, Arizona and New Mexico had, ever since the time of the 1910 Act, been leasing these hidden minerals, and they had been doing it without appraisal, without advertising, without auction, basically in accordance with established Federal procedures.
Unidentified Justice: These were the non-school land sections?
Mr. Gribbon: Yes.
These were not covered by the Jones Act and were held by decisions of this Court to have passed under the 1910 Act.
Unidentified Justice: Mr. Gribbon, may I ask?
Did... the Arizona Supreme Court, I think, said that both the Enabling Act and the state constitution were violated by... by the... the statute.
Mr. Gribbon: Yes, Your Honor.
Unidentified Justice: And I noticed the states abandoned the statute, but it supports the brief for the Respondents and argues that that's a independent state ground.
Mr. Gribbon: Your Honor, I don't understand that either the Solicitor General or the Attorney General of Arizona, who has come in as amicus, argues that there is an existing, independent and adequate state ground to support this decision.
What they suggest rather is that the Arizona constitution has been interpreted in a subsequent case down in Arizona, Deer Valley, which doesn't involve minerals and doesn't involve leasing, as going further than the enabling acts.
Now, that is somewhat contrary to the perceived learning which was the Enabling Act which was... which required the constitution provisions meant the same thing.
But what they're saying is not that this decision has an adequate state ground, but maybe sometime in the future, if the Arizona court ever gets around to this, they might apply in the mineral leasing situation the kind of reasoning they did in Deer Valley.
But that is sheer speculation as to what they are going to apply.
Unidentified Justice: Well, in any event, do you think they've satisfied the requirement of Michigan and Long and--
Mr. Gribbon: No, they have not, and I don't think... I'm sure the Solicitor General even does not assert that they have done that.
And the reason for it I think is plain.
There is no statement in here.
The court... the Arizona court reasoned entirely from the legislative history and the Federal legislation as to what the meaning of both the Enabling Acts and the Arizona constitution was.
I mention it with respect to the 1936 Act.
New Mexico's right to lease minerals in such manner as its legislature has seen fit had been confirmed by the Congress way back in 1928 at about the time Congress was passing the Jones Act.
A case had been decided in... in the New Mexico Supreme Court, Neel v. Barker, which said that the dispositional restrictions of the 1910 Act did not affect mineral leasing on the hidden lands.
And the Congress of 1928 passed a resolution saying, yes, that's all right.
We'll send it back and let New Mexico decide by a plebiscite whether it wants to have its legislature do that.
So, New Mexico had been freed since 1928 from any of these restrictions in the... in the Mineral Leasing Act... in so... in the 1910 Act insofar as mineral leasing was concerned.
The 1936 Act was directed only at freeing Arizona in the same way... not in the same way, but to the same extent that Arizona had already been freed.
Unidentified Justice: --Mr. Gribbon, you... you... you assert, if I... if I understand your analysis correctly, a dual regime for mineral lands then in Arizona.
Mr. Gribbon: xxx.
Unidentified Justice: Some, those that contained unknown minerals in 1910, are... continue to be subject to the regime of the 1910 Act, and the other ones that were granted in 1927 are not.
Mr. Gribbon: That is right, Your Honor.
Now, the Arizona legislature has accommodated those two rather modest differences by providing in its statute that... that all Federal lands, however they came about, shall be leased in a way that would take care of the requirements of the Jones Act and the Enabling Act.
They cannot be sold, and the leases are limited to 20 years.
But there are those two regimes.
I will mention finally the 1951 Act on which the Respondents rely importantly.
The important thing about that Act is that it did not impose any dispositional restrictions either on hard rock minerals, which are what we're talking about here, or on hydrocarbon minerals which, for the first time, were set up as a separate regime.
And, therefore, it is improper to make any kind of an inference from that act of legislation.
Unidentified Justice: Thank you, Mr. Gribbon.
Mr. Baron, we'll hear from you now.
ORAL ARGUMENT OF DAVID S. BARON ON BEHALF OF THE RESPONDENTS
Mr. Baron: Mr. Chief Justice, and may it please the Court.
Before I address the merits, I'd like to turn to a jurisdictional issue that was raised before the recess, namely, the presence of an independent and adequate state law grounds for the decision below.
As was noted, the Arizona Supreme Court based its decision not only on the Federal Enabling Act, but also on the Arizona constitution.
And while we realize that under Michigan v. Long, there is a presumption that the Federal ground is controlling, presumptions can be rebutted.
And there are several factors that we think do rebut that presumption in this case.
First of all, the decision below by the Arizona Supreme Court refers to the Arizona constitution on at least nine separate occasions.
The remand order states specifically that the trial court shall enter a judgment declaring the statute "unconstitutional and invalid".
And we then have the subsequent decision that was mentioned by Mr. Gribbon, the Deer Valley decision, by the Arizona Supreme Court where that court declared that in its view the Arizona constitution imposes trust restrictions independent of and more stringent than those in the Enabling Act.
And finally, we have the amicus brief now from the State of Arizona itself taking the position that they believe... the State of Arizona now believes that the Arizona constitution prohibits this royalty statute and... as an independent basis, and that any decision by this Court under the Enabling Act on this statute would, in the state's words, be "purely academic".
Unidentified Justice: Well, sometimes when something has happened between the time we've granted or noted jurisdiction that indicates the decision might be different, we vacate and remand for reconsideration in light of some... that subsequent event.
And you think the subsequent event is the decision in another case?
Mr. Baron: Well, Your Honor, in Michigan v. Long, the Court--
Unidentified Justice: Is that... how about my question?
Is there something that has happened since we... since the decision in this case that indicates that there's a state ground?
Mr. Baron: --Yes, Your Honor.
Unidentified Justice: What is it?
Mr. Baron: --The Supreme Court... Arizona Supreme Court decision in the Deer Valley case where--
Unidentified Justice: Why shouldn't we remand for reconsideration in light of that decision?
Mr. Baron: --Well, Your Honor, if... if that decision... that is certainly one option, but if that decision does, indeed, indicate, as we think it does, that there's an independent and adequate state law grounds, then under this Court's precedent, this Court would not have jurisdiction to... to address the issue at all.
Unidentified Justice: Excuse me.
When you say that... that there is an independent state law ground, that isn't our law.
It... our law is that the... the decision below must have been rested upon an independent state law ground--
--not that an independent one existed in the abstract which might have been used but was not.
Do you have any case of ours that... that even suggests that?
Mr. Baron: --No, Your Honor.
There have been no cases since Michigan v. Long that we have been able to find suggesting this--
Unidentified Justice: Or before, or in Michigan v. Long.
Mr. Baron: --Well, Your Honor, in Michigan v. Long, this Court did indicate that the determination of whether an independent ground existed was generally going to be presumed against such a finding, but it left open the possibility specifically that the Court might find in specific circumstances that it would be more prudent and... and wise to... to defer to the state ground.
Unidentified Justice: Yes, but the inquiry was always whether this state court rested its decision on the ground, not whether it might have--
Mr. Baron: That's--
Unidentified Justice: --not whether such a ground was available, but whether it was used.
Mr. Baron: --That's... that's true, Your Honor, and I guess what--
Unidentified Justice: --And was it used here?
Is there any... any suggestion at all that it was used here, any basis for thinking it was used by the lower court here, by the Arizona Supreme Court, in this case?
Mr. Baron: --Well, as I mentioned, Your Honor, the Arizona constitution was mentioned nine times in the opinion, and this court relied on both state law precedent as well as Federal law precedent.
Unidentified Justice: But, Mr. Baron, it seemed to me the... almost 98 percent of the discussion in the opinion of Justice Feidman was of the Enabling Act and the other statutes, and there's just almost no discussion of the Arizona constitution.
Mr. Baron: That's true, Your Honor.
And I guess what we're arguing for is something of a modification or... or a... or a clarification of Michigan v. Long to suggest that subsequent development prior to the time this Court decides a case might make clear to the Court that the jurisprudence of the state has established an independent state ground.
Unidentified Justice: Well, that would be a change, I think as Justice Scalia suggests.
It would be a change from saying did the opinion in this case rest on an adequate state ground to could it have rested on an independent state ground.
Mr. Baron: Well, Your Honor, I... I suppose you could characterize it as a change or simply as a... as a clarification of what Michigan v. Long meant when it said that other factors might be considered.
Unidentified Justice: Do you care whether you prevail on the Federal ground or the state ground?
Mr. Baron: Well, Your Honor, I suppose we would prefer to prevail on both, but--
Unidentified Justice: Yes, you would like the benefit of this decision below without having it reviewed here.
Mr. Baron: --Well, that's... that's certainly true.
Unidentified Justice: That's like an independent state ground is I suppose.
Mr. Baron: Yes, that's certainly--
Unidentified Justice: Except that it wasn't used in this case.
Well, Mr. Baron, suppose we... we disagreed with you and thought that Michigan and Long had not been satisfied here and that when it hadn't decided the Federal grounds.
And then we sent it back under our usual form of remand for further proceedings not inconsistent with our opinion.
Would the state court be free then to say, all right, if we can't have... we're not going to look at the state ground and say that we'll reinstate our judgment on the basis of the holding of unconstitutionality under the state constitution?
Could that be done?
Mr. Baron: --Your Honor, if I understand the question, if... if this Court dismissed and remanded for further consideration--
Unidentified Justice: Yes.
Mr. Baron: --or vacated and remanded for further consideration, I... I believe the state would be perfectly free to make very clear that it did rely on an independent and adequate state ground in this case.
Unidentified Justice: Even though we... we here found that we can't say that Michigan and Long have been satisfied in respect of a holding that it was... rested on a state law ground.
Mr. Baron: Well, if the remand from this Court was broad enough to allow such a finding, then certainly they could make such a--
Unidentified Justice: Well, it doesn't matter what we say.
They have the power to enforce their own constitution.
We couldn't prevent them.
The courts have done that several times, and this Court has taken jurisdiction, reversed on the Federal court.
The Opperman case... there are three or four of those cases where we managed to write advisory opinions by following this procedure.
But that's perfectly within their power.
Mr. Baron: --That's... we would certainly agree with that, Your Honor.
Unidentified Justice: Sure.
Mr. Baron: Now, turning to the merits, this Court 22 years ago unanimously held that under the Arizona Enabling Act, the schools of Arizona were to receive the full benefit and the most substantial support possible from the school land grant to that state.
And the broad exemption that the mines are asking for here completely files in the face of those goals.
It would allow the State of Arizona to continue to sell off school trust minerals at one of the lowest royalty rates in the Nation and to, in some cases, literally give them away, and that is... cannot be what Congress had in mind when it granted these lands in express trust to the state for the sole and... and exclusive benefit of the public schools.
And just to illustrate how this statute depletes the trust, I'd like to cite an example from the record... and... and this is undisputed.
Just south of Tucson, one of the Petitioners in this case, Asarco, Incorporated, operates a mine, part of which is on state school trust land and part of which is on the Tohono O'Odham Indian Reservation.
During one 10-year period recently in the 1970s on the state side of that lease, the state paid the flat 5 percent royalty on millions of dollars' worth of minerals they took out of that land.
But on the Indian side, during the same 10-year period, Asarco paid royalties ranging from 6 to 14 percent for minerals.
And beyond that, during one month in 1983, Asarco paid no royalties whatsoever on $2 million worth of trust minerals taken from the school lease because the net value of the minerals in that month was zero, and the royalties are calculated as a percentage of net value.
Now, this is just the kind of thing that Congress was trying to prevent when it adopted all of these trust restrictions.
Unidentified Justice: Excuse me.
Even... even without the specific restrictions contained, wouldn't... wouldn't there be some action if it were shown that even though you don't have to establish the value beforehand, you are not dealing responsibly with these lands?
I mean, even... even under... even under Petitioners' theory, it's acknowledged that... that these mineral rights have to be used for the benefit of the schools.
Isn't that right?
Mr. Baron: Yes.
Unidentified Justice: So, wouldn't you... wouldn't you have a cause of action of some sort against outrageous giving away of the lands without giving the money to schools at all?
Mr. Baron: That's certainly our position, Your Honor, and it's our position that there are really two kinds of restrictions in this Enabling Act.
There are the specific requirements for an appraisal in each case, and there is also the basic fiduciary duties that the state has as a trustee.
And here we have argued... and we believe the court below held... the state has violated both of those kinds of duties.
And we believe that this statute is on its face a violation of both of those kinds of duties because it limits the ability of the state as a trustee to obtain the optimal return, and it forces the state to give away these assets.
It's not simply a question of every once in a while there's a fluke and... and the state incorrectly manages the lands.
The statute forces these results.
Unidentified Justice: Does the statute set the royalty percentage?
Mr. Baron: --Yes.
It is flat 5 percent--
Unidentified Justice: Five percent.
Mr. Baron: --for all leases.
And it's the same regardless of whether it's gold or sandstone or... or any other mineral or wherever it is in the state.
Unidentified Justice: And when did that become a part of the law?
Mr. Baron: That was enacted in 1941, Your Honor.
Unidentified Justice: Nineteen forty-one.
Mr. Baron: Yes.
The first mineral royalty statute--
Unidentified Justice: It's not clear to me how these subsequent statutes bear upon the interpretation of the 1926 Act in any event.
Mr. Baron: --Your Honor, it's our position that we have to read the Arizona Enabling Act as it reads today.
And the most recent amendment to the Arizona--
Unidentified Justice: Well, correct me if I'm wrong.
I assume that if the Federal Government grants a certain ownership and prerogative with respect to its lands, it can't later make it more restrictive.
Or am I in error?
You're not saying that the subsequent statutes made more restrictive the terms on which the states held the lands, are you?
Mr. Baron: --No, no, Your Honor.
It's our position, as we stated in our brief, that these lands have always been subject to the trust restrictions, and that--
Unidentified Justice: But if that's true, then it seems to me that we have to focus on the 1926 and the 1910 statutes.
Mr. Baron: --Well, Your Honor, I... I know of no principle that says that Congress cannot modify Federal law to... to make it more--
Unidentified Justice: Well, you've just conceded it can't make it more restrictive.
Mr. Baron: --Well, if I did, I misspoke.
Unidentified Justice: And--
Mr. Baron: That... that is certainly not our position.
Unidentified Justice: --So, you think that if the states--
Mr. Baron: But I think--
Unidentified Justice: --if the states... assuming arguendo, if the states had the authority to enter these leases in 1926, could the Federal Government pass legislation depriving the states of that authority in 1941?
Mr. Baron: --I'm not sure, Your Honor, but I don't think that's what happened here.
I think what happened here is that subsequent congressional legislation simply clarified and... and confirmed what congressional intent was all along.
Congress in 1951 made very clear that it fait minerals had all along been subject to the trust restrictions.
Unidentified Justice: Well, I assume we can give that weight as congressional reading of its early statute, but it's not binding, is it?
Mr. Baron: No, but I think in the context of the 1951 amendment it is pretty significant.
In that amendment, Congress authorized the state to enter into a variety of leases all in a manner to be made... t to be determined by the legislature, grazing leases, agricultural leases, oil and gas leases, and mineral leases, all in a manner to be determined by the legislature.
But critically, it then went on and specifically exempted only oil and gas leases from the requirement for an appraisal.
No such express exemption was given for any other kind of leases, including mineral leases.
And the... the rule of construction, of course, is that when Congress specifies an exception to a general rule, other exceptions are not to be implied.
And... and so... so, in this event, in the--
Unidentified Justice: Well... well, do you agree that the most that shows is that Congress interpreted its earlier statutes as prohibiting these leases?
And it's just a question of whether Congress' interpretation is right.
Mr. Baron: --Well, Your Honor, certainly it shows that, but I'm not sure that it shows only that because in 1936 oil and gas leases were treated as a subset of mineral leases.
And, therefore, in order to exempt oil and gas leases from the appraisal requirement, Congress had to specifically and deliberately separate the treatment of those two kinds of leases.
So, I think it says more than simply what Congress thought all along.
Beyond that, what... what the mines base most of their argument on in this case is the notion that in allowing the states to determine the manner of leasing, Arizona was somehow being authorized to... to have completely free reign.
But this Court in Alamo Land and Cattle Company... the Alamo Land and Cattle Company case only about 12 years ago, applied the true value and appraisal requirements to grazing leases which, like mineral leases, are authorized in a manner as to be determined by the legislature.
And, indeed, every other court that has addressed this question has concluded that congressional directions to allow the states to determine the method or manner of leasing is not a waiver of trust restrictions, but rather an allowance for the state to set the details of leasing, things like the term and the method of appraisal and the duration of leases and other details of which there are many in these leasing situations.
Now, beyond... beyond the specifics, I think it's fair to ask, having gone to all of this trouble to put all of these explicit trust restrictions around these trust lands so that the schools would get all the benefit, why would Congress then turn around and exempt one of the most valuable resources.
And the only explanation the mines have to offer is that mineral leases are supposedly impossible to appraise.
But the simple fact is that this Court ruled in 1890 that mineral interests were appraisable although it's somewhat more difficult than other interests.
And, in fact, it used the same language to authorize other kinds of leases, none of which are claimed to be difficult to appraise.
Unidentified Justice: I thought their explanation was really quite different; namely, that it was a different Congress, which your argument doesn't seem to acknowledge.
The Congress... the 1951 Congress was not the 1926 Congress which was not the 1910 Congress.
And each of them feels quite differently about whether the states ought to have these mineral rights and what the restrictions ought to be.
I mean, you speak of Congress as though it's one continuing body there.
It's a different Congress, different people, different views about what the states ought to have.
Mr. Baron: Your Honor, I'm not sure that that's the mines' argument.
But, in any event, we think the legislative history throughout is pretty conclusive that Congress always intended these lands to be used for the schools and that... and that the grant, for example, under the Jones Act was a grant confirming and by its own terms extending the prior grants.
And the legislative history talks repeatedly about desiring to effectuate the purposes of the original grants.
Unidentified Justice: But the mines don't argue that the proceeds of these grants shouldn't be used for the schools.
It's just a question of a leasing procedure.
Mr. Baron: --That's true, Your Honor.
But if you... if you adopt the mines' view, then it's okay for the state to give these... these assets away on occasion.
And that is inconsistent not only with the specific appraisal requirement, but also with the basic trust duty that the state has as a trustee to optimize revenue and to prevent the loss of trust assets.
Unidentified Justice: Well, do you understand the Petitioners to argue there is no such duty as the one to which you... you last referred to?
Mr. Baron: No, Your Honor.
In fact, in their reply brief now they concede that they have such a duty.
Their only response on that question is that there must be some sort of a finding below in that kind of case before you can find a breach of trust.
But the cases are quite numerous in which courts have found these kinds of statutory limits on trust returns to be facially a breach of trust because they limit the ability of the trustee to maximize revenues.
And, indeed, no other state has a non-negotiable, fixed royalty rate.
And certainly no private trustee would set a cap on what he or she could collect in interest on trust investments.
That is not consistent in any way with basic trust responsibilities.
In conclusion, as I mentioned before, to say this statute is allowable is to say that the State of Arizona can literally give away trust minerals.
There is no question but that is what has happened in this case.
The statutory formula requires the state to give away minerals where the net value or the costs of production exceed the value of the minerals.
And that cannot be what Congress had in mind when it provided these lands for the purpose of benefiting the schools of Arizona.
Unidentified Justice: Thank you, Mr. Baron.
Mr. Wright, we'll hear now from you.
ORAL ARGUMENT OF CHRISTOPHER J. WRIGHT AS AMICUS CURIAE IN SUPPORT OF RESPONDENTS
Mr. Wright: Mr. Chief Justice, and may it please the Court.
In our view, all that this Court should decide is that it lacks jurisdiction under 28 U.S.C. 1257 because there has been no final judgment here.
The Arizona Supreme Court remanded this case to the Superior Court with instructions, which are reprinted at page 29 of the appendix to the petition.
And they state: "It is not possible" on this record...
"It is not possible to tell on this record just what further relief is appropriate. "
"The trial court is instructed to hear arguments and, if appropriate, take evidence on that question and to grant such relief as may be appropriate and consistent with the principles announced in this decision. "
In these circumstances, it would drain Section 1257's finality rule of all meaning to hold that there has been a final judgment.
Unidentified Justice: Well, one can argue that our cases long ago have drained it of most of its meaning I think.
Mr. Wright: This... this Court has held, though, that it... it does have meaning, that... and the only possible exception that applies here is that the proceedings to be conducted on remand are merely ministerial.
However, it is not the case that they are merely ministerial here.
There are very serious questions to be decided on remand.
Unidentified Justice: xxx.
How different is this is, Mr. Wright, from the Duquesne case where I think, in effect, we said the Pennsylvania Supreme Court decided finally it wasn't going to change its mind on a question of Federal law?
Can't you say the same thing about the Supreme Court of Arizona here?
They're not going to change their mind about the fact that the Enabling Act makes the state statute unconstitutional.
Mr. Wright: What the Court said in Duquesne, as I understood it, was that... that proceedings on remand were simply for the public utility commission to apply a mathematical formula and... in determining what relief was appropriate.
Here it's very different.
There is a very live issue as to whether Asarco and the other mining companies' leases are void.
And... and we expect that there's going to be significant litigation on remand on that issue which is an issue of Federal law because the Enabling Act says in Section... in paragraph 10 of Section 28 that leases are void unless there has been substantial conformity with... with the terms of this Act.
And... and that is what is to be decided on remand.
Now, Asarco's sole argument has been that this is final because the plaintiffs haven't sought to void the leases.
Well, that is wrong.
And I'd like to devote a couple of minutes to that point.
Unidentified Justice: The... the Respondents don't join you in this argument, do they?
Mr. Wright: Respondents agree that the mineral leases are void, and they will seek to void them.
Respondents are a little bit uncomfortable with this argument because they believe it is so clear that the mining companies' leases are void that they... that they don't think that the litigation on remand will be as substantial as we think it may be.
But... but they--
Unidentified Justice: Then the... your answer to my question is, no, they do not join you in this argument.
Mr. Wright: --Yes, that is correct for a totally different reason than the mining companies believe, I may add.
They're both taking extreme positions: one, that the plaintiffs haven't asked to void the leases; and the other, that the leases are so clearly void that it won't take much on remand to hold that.
Now, obviously, they can't--
Unidentified Justice: Of course, you... you may lose on this... on this--
Mr. Wright: --Excuse me?
Unidentified Justice: --opposition and you're going to cover the merits anyway.
Mr. Wright: I intend to get to the merits, Justice Blackmun.
But I do want to state very quickly that in the notice to the defendant class, point A under the possible consequences of a judgment in favor of the plaintiffs is current state mineral leases might be invalidated.
And I would also like to note that in Asarco's motion to intervene, they said that plaintiffs seek to have the Arizona mining statute declared unconstitutional, thereby invalidating all existing mineral lease agreements.
So, it has long been understood that the plaintiffs seek to have these... these leases declared void.
And there... there can really be no argument on that point.
And, as I've said, as long as there is a dispute on this point, we don't think it can be said, as in Duquesne, that the proceedings to be conducted on remand are merely ministerial.
Turning then to the merits, I think it would be useful to look at the plain language of the statute, something that hasn't been done yet.
The key paragraph is paragraph 3 of Section 28 of the Enabling Act which says... this is on page 50A of the appendix to the petition.
It says that the leasing of any of said lands in such manner as the legislature of the State of Arizona may prescribe for mineral purposes is permissible.
And then right after that, it says the leasing of any of said lands--
Unidentified Justice: Whereabouts on page 50A are you--
Mr. Wright: --If you go down to point 2--
Unidentified Justice: --Okay.
Mr. Wright: --about two-thirds of the way down, point 2 says that the leasing of lands for mineral purposes, other than oil and gas, is permitted in such manner as the legislature of the State of Arizona may prescribe.
Now, number 3, right under that, the next clause of the same sentence says,
"The leasing of any of said lands, whether or not also leased for other purposes, for the exploration, development and production of oil, gas and other hydrocarbon substances. "
et cetera... I would like to skip down a little...
"may be made in any manner with or without advertisement, bidding or appraisement and under such terms and provisions as the legislature of the State of Arizona may prescribe. "
Looking at 2 and 3 together, we don't think it could be more clear that oil and gas leases may be made without appraisement, but other mineral leases, such as those at issue in this case, may not be made without appraisement.
And I would like to note that this 1951... the 1951 Act totally revised all of this sentence.
It didn't just tack on part 3.
It... it revised the whole thing.
Hydrocarbon and non-hydrocarbon mineral leases had previously been... been lumped together.
Unidentified Justice: Do you think, Mr. Wright, in following up Justice Kennedy's question, that the government can come along many years after the Enabling Act and impose more arduous conditions on the state's alienation than it did in the Enabling Act?
Mr. Wright: Well, we... we don't think it can, but we agree, first, that it hasn't and that Federal law makes that clear.
And it is also perfectly clear in this case that... that the Jones Act can't mean what... what Asarco says it means.
What they draw from the Jones Act is that these lands aren't in the school trust.
As we note in the last paragraph of our... of our brief, the Arizona constitution makes absolutely clear that all lands, no matter how they have been given to the state, are subject to the school trust.
So, it's absolutely clear that these lands are part of the school trust, whether the Jones Act means what they say or not.
And we disagree that Congress ever meant to do away with all these restrictions in the Jones Act as well.
Unidentified Justice: I don't... I don't understand they are saying that these lands are not subject to the school trust.
The Jones Act itself makes them subject to the school trust.
You don't have to go to the state constitution.
Mr. Wright: I'm sorry.
And the state constitution also makes clear that they are... that they are subject to all the restrictions in... in the... in the school trust.
Unidentified Justice: Well, that's very interesting, but I don't see what that has to do with whether the Federal Government has made them subject to those... to those restrictions.
Mr. Wright: Well, if in this case, the Court agreed on that Jones Act point, then the conclusion on Federal law is that the Enabling Act is... is really fairly irrelevant to this... to this case.
But it would be perfectly clear... perfectly clear... under Arizona law that... that all of the restrictions which are reprinted in the Arizona constitution apply, and... and that this Act... and that the opinion below really has no meaning except under state law.
And we think that the... the proper conclusion then would be to dismiss this case as improvidently granted.
Unidentified Justice: But leave it... leave the opinion in... intact?
Mr. Wright: We think you have to leave the opinion intact for two reasons because we think this Court lacks jurisdiction for two reasons.
Unidentified Justice: Well, I know, but suppose we disagree with you.
Mr. Wright: If you believe that the Court has jurisdiction, I would nevertheless think that it was much the better course than dismiss as improvidently granted.
Unidentified Justice: Well, certainly we have the power to... we certainly have the power to reverse it--
Mr. Wright: If you... yes, if you have jurisdiction.
Unidentified Justice: --and have the power to vacate it for some good reason, like there has been some development in Arizona law that maybe would make this constitutional decision unnecessary.
Mr. Wright: Well, if I may just respond to that briefly.
We think that the recent development in Deer Valley pins us down, but we think it is also quite clear from the court's decision below which in its holding mentions the Arizona constitution that... that it would reach this result.
Chief Justice William H. Rehnquist: Thank you, Mr. Wright.
The case is submitted.