AMOCO PRODUCTION COMPANY v. SOUTHERN UTE INDIAN TRIBE
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.
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?
Legal provision: 30 U.S.C. 81
No. In a 7-1 opinion delivered by Justice Anthony M. Kennedy, the Court held that, "[t]he term 'coal' as used in the 1909 and 1910 Acts does not encompass CBM gas;" therefore, CBM gas is not included in the reserved coal rights. Justice Kennedy wrote for the Court that "[t]he common understanding of coal in 1909 and 1910 would not have encompassed CBM gas, both because it is a gas rather than a solid mineral and because it was understood as a distinct substance that escaped from coal as the coal was mined, rather than as part of the coal itself." Dissenting, Justice Ruth Bader Ginsburg expressed the view that Congress, at the time the Acts were passed, would have assumed that the coal owner had dominion over and responsibility for the CBM gas. Justice Stephen G. Breyer did not participate in the case.
Argument of Carter G. Phillips
Chief Justice Rehnquist: We'll hear argument next in Number 98-830, Amoco Production Company v. Southern Ute Indian Tribe.
Mr. Phillips: Thank you, Mr. Chief Justice, and may it please the Court:
The issue in this case is the meaning of the word coal, as used by Congress in reserving the right to mine and remove coal in the 1910 and 1909 Coal Lands Act.
The court of appeals held that coal also includes methane gas that happens to reside within the coal bed, and that in addition to the right to mine the coal, that the United States and its assignees also have the right to mine and to remove the gas from the coal bed, the rationale here being that you can not only essentially take out all of the coalbed methane, but that you can leave all of the coal behind.
It seems to me that this counterintuitive description of the rights of the United States and its assignees is absolutely wrong, and that the judgment of the court of appeals ought to be reversed.
Justice Souter: Mr. Phillips, you already brought up just implicitly in what you said an issue that I was going to ask you to speak to, and I'll ask you now.
You spoke of mining and removing.
The acts involved here, both 1909 and 1910, referred to, I think it was, what, prospecting mining and removing the coal?
Mr. Phillips: That's correct, Justice Souter.
Justice Souter: Was the usage at the time such that it would make sense to speak of mining gas?
Mr. Phillips: Not typically, although to be honest with you, I wish I could make more of that argument, Justice Souter, but if you look at the 1914 act and its description of dealing with gas and oil, phosphate, and the other minerals that it identifies there, it uses essentially the same language.
Justice Scalia: They used it generically.
Mr. Phillips: So while I'd like to take advantage of that particular language, I can't.
On the other hand, it is still absolutely clear, I think, to go back to the word coal, which is the pivotal term in this particular statute, that you would hardly find a word that is more commonly understood by the average individual in 1909 and 1910.
It was the source of energy for 75 percent of this Nation's energy, and Congress, according to this Court, at that time acted in a practical way and defined the rights in practical terms that could be understood by average homesteaders.
Justice Scalia: Well, I mean, as I understand it, you assert the right not only to take out the methane that... the gas that happens to be in the coal when you mine the coal, you assert the right to by whatever means drill a hole and take out just the gas and leave the coal, right?
Mr. Phillips: Well, I don't have the right to take the coal, you're right, Justice Scalia.
All I have is the right to the natural gas.
Justice Kennedy: Right.
Mr. Phillips: It's my opponents who claim that they have the right to... that based on their right to the coal, that they in fact can take out all the gas, leave all the coal behind, and that, what is to me...
Justice Souter: What if... what if...
Mr. Phillips: Justice Scalia, is the counterintuitive nature of the argument of the holding below.
Justice Scalia: there's some water that adheres to the coal as well, I mean, a certain... that is, in its composition.
Suppose somebody had water rights to this land.
Would they be able to extract the water from the coal?
Mr. Phillips: There is a fundamental difference between water and coalbed methane, Justice Scalia, both chemically and as a matter of law.
First of all, as you well would understand, out in Colorado and in the West, the rights to water are essentially held by the States and the relationship between the States and private parties are fundamentally different than the relationships involved in a litigation like this one.
But second of all, the coal... excuse me, the water that is in the coal is chemically bonded, or at least some of it is chemically bonded to the coal, and it is not our position that chemically bonded elements which are in fact constituents of the coal are subject to removal by those who have rights to other minerals that may exist.
Our basic point here is that coalbed methane is essentially a physically separate item that just happens to reside within the coal bed.
Justice O'Connor: Well, what if the coal miner digs into the coal and in the process releases this gas that you say the petitioner owns?
Is the coal miner liable to the petitioner for the release of that gas?
Mr. Phillips: Well, it's going to depend on the, essentially the State tort law, or the tort law that would be applied to it.
In ordinary circumstances, under the rule of accommodation, each party with respective rights, when they conflict with respect to particular minerals, has a certain amount of right to get at their property, and so the coal miner is allowed to...
Justice O'Connor: But as a practical matter, what would happen to the coal miners who are trying to take out the coal and at the same time releasing gas, if your position is correct?
Mr. Phillips: Well, I think if they release the gas and we don't assert any rights to the gas, we have no basis to come in after...
Justice O'Connor: Well, let's say you do assert the rights to the gas.
That's why you're here.
Mr. Phillips: Right.
Then the solution to that problem is to say to the coal miner, if you go ahead and waste the gas under those circumstances, you do so on notice of the claim, of our claim to that gas, and that claim is one that ought to be respected by the courts...
Chief Justice Rehnquist: It's the...
Mr. Phillips: and there is an accommodation then that would be worked out between the coal rights owner and the gas rights owner.
Justice Kennedy: The same accommodation problem arises when oil and gas rights are owned by different parties at different levels.
Mr. Phillips: Exactly.
It is precisely the same, Justice Kennedy.
And Justice O'Connor, it's no different from the surface owner's rights and the coal rights owners.
Justice Scalia: Well, except that the gas doesn't adhere to the oil the way it adheres to the coal.
I mean, you can say he's taken away your methane if he just fills up a truck with coal and carts it off.
It isn't just that there are pockets of gas, as I understand it.
There is gas that adheres to the coal when he carts it away, and indeed, some of the energy that is derived from burning the coal is, in fact, derived from burning the methane.
Mr. Phillips: Well, the amount that's derived from burning the methane is negligible as a scientific matter, so that's not likely to be particularly important.
But second of all, I mean, the point of this, I think, is to step back and say, what did Congress understand by all of this when it made the reservation of coal?
Did Congress mean to say that we were going to engage in an extended chemical or chemistry analysis of this problem, or did Congress say, look, we know coal when we see coal, and we know...
Justice Breyer: Right, but...
Mr. Phillips: coalbed methane when we know that because it comes out and gets vented as a part of the process of mining the coal.
Justice Scalia: But that's the point I was making, at least as to the methane that is not in a pocket.
In a pocket, I think you make a strong point that Congress couldn't have intended that, but I think on the other hand, as to that methane that is not in a separate pocket but has really been... I guess it isn't absorbed, but it just adheres to the coal, I can't imagine that Congress thought that when somebody loaded up a truck with coal from his coal mine he was stealing your methane.
Mr. Phillips: I don't doubt that they don't... that there's no notion that we have a right to make an argument along those lines.
Once the coal's been removed and out, I don't see that we have any basis for going in there, but the more fundamental question is, do they have the right, when we own the gas inside the coal, whether it is absorbed or held in a free state, to go in, drill into that coal and release all of the gas that otherwise belongs to us, and our argument there is clearly no, you can't.
That cannot be the rule.
Justice Ginsburg: Mr. Phillips, you said what... when Congress used the word coal, it had a meaning, and in 1910, if I were to put the question, who has dominion over this gas... as I understand it, it was bad gas in 1910, and wouldn't the answer be, of course the coal miner is responsible, has the care of, the guard of that gas, has dominion over it, and if there's an explosion, the coal owner is going to be responsible?
Wasn't that the understanding that Congress had in 1910...
Mr. Phillips: Well...
Justice Ginsburg: when this gas was not considered any kind of an asset?
Mr. Phillips: No.
There's... I mean, there's no evidence that Congress had an understanding that the coal miner had, quote, dominion over the gas.
What Congress knew in 1909 and '10, just as we do today, is that there is such a thing as coal, and there's such a thing as gas, and that Congress had the authority to reserve either coal or gas or all of the minerals or none of the minerals.
Justice Ginsburg: There had to be some control over this when it was a hazardous waste.
Mr. Phillips: Yes.
Justice Ginsburg: Didn't someone in 1910 have responsibility for handling that bad gas?
Mr. Phillips: Yes.
The coal miners had to vent the gas in order to allow the mining to go forward, that's absolutely correct.
Justice Ginsburg: So they had the control over the gas to see that it didn't cause injury.
Mr. Phillips: Well, you describe it, Justice Ginsburg, as control.
I describe it as, they were permitted to waste the gas in order to exercise their rights over the coal.
It didn't have anything to do with their, quote, rights over the gas.
There are lots of situations where you have conflicting property interests, where your right is to waste or otherwise injure somebody else's property rights in order, effectively, to protect your own ability to use your own property.
But what that doesn't give you is then the title to the other property, so if I go through the... to get coal, and go through the surface, in injuring the surface I don't get title to the surface.
I'm responsible to a certain extent, but I don't get title to it.
And the point here is that Congress was dealing with a practical subject in a practical way, trying to decide who should get title to what element, to what minerals, and in 1909 and 1910, Congress took a baby step in depriving the patent holders of their rights to a full-fee property, and it said, we're going to take back the coal, and the reason it did that was for a very specific problem.
There was a coal famine in the West, and Congress needed the coal.
Justice O'Connor: Now, later...
Justice Scalia: Why doesn't it make sense to say that that methane which has been absorbed, as you put it, is coal, but that methane which is in pockets, and separate under the ground, is not coal?
But that's not your argument.
Mr. Phillips: No, Justice Scalia.
Justice Scalia: Your argument is that all of it, whether it's...
Mr. Phillips: Exactly.
And the reason for that, Justice Scalia, is that the method of extraction is identical.
The point of this is, once I decrease the pressure, all of the gas moves, not just the gas that's in a free form, but the gas that's absorbed.
The adsorption is van der Waals forces, which I'm 100 percent sure Congress never thought about in 1909, and...
Justice Stevens: Well, I certainly didn't, I know.
Mr. Phillips: they'd break immediately upon the reduction of pressure, and then the gas flows out.
That's why it's meaningless to distinguish one from the other, because the extraction process is identical.
Justice Stevens: May I just follow up on one of Justice Scalia's questions, because I think I under... it's a tough case.
It's a tough case, there's no doubt about that.
But supposing your extraction method allowed you to take large lumps of coal out.
I know often it's pulverized, but you had large lumps of coal where you use a pick ax, the old-fashioned way.
You load it on a truck, you put it out in the yard, and you sell it to a wholesaler.
Those large lumps of coal still have some methane within them.
Am I right on that, factually?
Mr. Phillips: There will be, at least for a few days.
Justice Stevens: Who owns that methane?
Mr. Phillips: We own that methane, but there's nothing we can do about it.
Justice Stevens: You still own that, even though it's...
Mr. Phillips: Sure.
We own that methane, but there's nothing we can do about that methane, because again, in order to get methane anywhere, just like... because methane's natural gas.
It's like every other natural gas in the world.
It's no different if it's in coal, or if it's in limestone or sandstone.
It's all chemically the same.
Justice Stevens: And if a large piece of coal happened to have some foreign object in it, whatever it might be, a piece of gold, an old shoe, or whatever it was, you would own that old shoe, too?
Mr. Phillips: [Laughter]
Mr. Phillips: As I understand it, I mean, the reservation of rights is quite clear here.
Congress meant only to reserve the coal, and that's what it reserved, and the rest of it, whatever it happens to be...
Justice Stevens: But not whatever might be within a piece of coal.
Mr. Phillips: That's correct, and if you go back to the Smoot case, for instance, the Illinois court of appeals decision that was rendered at or around the early part of the 20th Century, talking about pyrite and coal, and they were both removed, and one was a waste product for the coal, and the Illinois court of appeals, relying on general common law principles, said the owner of the pyrite is different from the owner of the coal.
They are separate estates.
Justice Kennedy: Was there ever a commercial practice of taking the coal, in the ordinary sense that we think of a lump of black stuff, and refining it or processing it to get gas?
Mr. Phillips: There was a very early stage process.
There's some literature on that.
Justice Kennedy: If that had happened, would you have said that they were mining coal or extracting gas?
Mr. Phillips: They were mining coal, because that, you have to take the coal, you have to work on it.
Justice Kennedy: Just like if you take timber and make it paper, you're taking timber, not paper.
Mr. Phillips: Exactly.
We are not saying that we are allowed to use solvents, which the Government relies upon as part of its argument that this is a constituent of coal.
We're not saying we're allowed to use heat in order to get gas out of it.
All we're saying is that we're allowed to use the same simple extraction process that we would use if we were trying to get the gas underneath the coal.
Justice Breyer: Do you know...
Mr. Phillips: We can go right through the same coal seam.
Justice Kennedy: Do you know whether or not in the West Virginia and Pennsylvania area... maybe you don't know the answer to this question... did the common lease say that the lessee is entitled to extract coal, reserving to the owner all other minerals?
Mr. Phillips: I don't know the answer to that, Justice Kennedy.
Justice O'Connor: Mr. Phillips, after the legislation you're talking about, 1909, 1910, subsequently Congress enacted other laws, I believe, in subsequent land grant legislation to reserve gas estates, did it?
Mr. Phillips: Yes, Justice O'Connor, and I think that reveals plainly Congress' ability to distinguish gas from...
Justice O'Connor: Well, what is the best indication that in those subsequent legislation, in the subsequent legislation reserving gas to the Government, that it intended the gas to include the coalbed methane?
Mr. Phillips: Well, if you look at the regulatory definition of gas as it's implemented in the coal... I mean, excuse me, the Mineral Leasing Act of 1920... and in the Mineral Leasing Act, remember, Congress decides how it's going to obtain moneys for the rights that it reserved under both the 1909 and 1910 acts, and the 1914 acts.
The definition of gas in that statute absolutely is dead on with coalbed methane, because all it's talking about is a substance that in ordinary circumstances will expand infinitely, and that is exactly what coalbed methane will do.
Justice O'Connor: So Congress did later have legislation that reserved gas that you think can persuasively be shown to include coalbed methane.
Mr. Phillips: Not only can it be persuasively shown to do that, but the Solicitor of the Interior in 1991 took precisely that position and concluded that coalbed methane is a gas deposit within the meaning of the Mineral Leasing Act of 1920.
That decision has never been challenged.
That decision is absolutely correct today, and that's the reason.
Congress has always known the difference between coal and gas, and has treated them fundamentally differently.
Justice Kennedy: Mr....
Justice Ginsburg: Mr. Phillips, could you explain to me a little more about this accommodation, because am I right in thinking that the coal miner still must exercise dominion over that gas, at least to the extent of preventing hazardous conditions in the mine?
Mr. Phillips: Yes, but that doesn't come from ordinary property concepts.
That comes from Federal and State regulatory requirements for the protection of the mine workers.
Justice Ginsburg: Yes, but in doing that, some of it may escape.
Mr. Phillips: Oh absolutely, and we don't have any claim to that.
The truth is, we... the accommodation doctrine will clearly never give us the opportunity to get recovery for that.
I mean, we can make an argument about it, but you won't recover for that.
But what we're talking about is the right to actually mine and remove the natural gas.
Justice Ginsburg: And how does it determine who goes first?
The coal miner says, I want to get out the coal, and you say, well, we want to get the methane out first?
Mr. Phillips: Well, you're going to have to get the methane out before you can mine the coal, otherwise it's a safety hazard.
Remember, the fundamental point here is, if you take the coalbed methane out of the coal, what you have left is coal.
That's why you know that this is not a constituent of coal.
Justice Ginsburg: In other words, you would be saying, you can't mine until we do our thing first.
Mr. Phillips: That's correct.
Justice Souter: Mr. Phillips, I think you contrasted the clear advertence of Congress in 1920 to coalbed methane as at least against the language that it used in the time we're concerned with here.
Was there any technological advance during that period of time?
In other words, was there a way of extracting coalbed methane in 1920 that was not known, or at least had not been developed and was not familiar in 1909 and 1910?
Mr. Phillips: No.
The basic technology hasn't changed.
My only point is that it became economically feasible...
Justice Souter: But they knew it just as well in 1909...
Mr. Phillips: It was exactly the same information.
Justice Stevens: as they did in 1920.
Mr. Phillips: That's correct.
I'd like to reserve the balance of my time, Mr. Chief Justice.
Argument of Thomas J. Davidson
Chief Justice Rehnquist: Mr. Davidson.
Mr. Davidson: Thank you, Mr. Chief Justice, and may it please the Court:
As you know, I'm here on behalf of the amici States.
There are five amici States which represent one-tenth of the Union.
We're here on behalf of our citizens and ourselves.
We're here as friends of the Court because we believe the decision was inherently wrong, but we're also here in our own interests.
We, as amici States, we as States, are owners of lands that are subject to these very same acts.
Upon our admission to Statehood for the creation of the States and for the benefits of our public schools we were granted lands specifically for the purpose of funding education, and we were constitutionally in our enabling acts required to dedicate the proceeds from those lands to the purpose of our State educational systems.
In 1906, with the presidential withdrawal of the coal lands, we were not allowed to select in lieu lands.
Now, in lieu lands... first of all, upon admission to the States, the States were granted specific sections of land within each township, but oftentimes those lands had already been homesteaded or withdrawn, so we were entitled, then, to take in lieu lands instead of those lands, but with the 1906 reservation, that also applied to in lieu lands.
So the States were in the position of not being able to select in lieu lands until a 1912 act came along, which is referenced in our brief, that specifically incorporated the provisions of the 1909 and 1910 acts, so that's how the States are here.
That's why we are here as property owners as well as on behalf of our citizens.
In these acts, the States received title to everything but the coal on our subsequent school selections in lieu lands.
The amici States here are holders of tens of thousands of acres for the benefit of our public schools.
Again, they're constitutionally required for school funding.
We also have regulatory authority, and given time, I'm going to get to that.
We have regulatory agencies that are responsible for oil and gas production, and the regulation of oil and gas production, as well as separate entities that are responsible for mineral production, such as coal production.
So anyway, we're here both as the owner and regulators today.
Now, as the Court recognized in the Andrus case, Andrus v. Utah, and it's cited in all of the briefs, I believe, these lands were granted to the States under a solemn agreement for the support of our public schools.
It was an inducement for the States to come into the Union, and in inducing the States to come into the Union, they granted the lands for the purpose of our public schools.
Justice Stevens: Do you think the States would have reacted differently whether they knew how this case would be decided?
Mr. Davidson: Your Honor, I don't believe I can accurately answer that, but I do believe that the States took into account that they were getting everything in under these acts but coal, and making...
Justice Stevens: Everything except the coal, but did they know exactly what the coal was?
Mr. Davidson: The States knew what the coal was at the time, Your Honor.
I submit that everyone knew what coal was at the time, and the acts that had preceded the 1906 reservation had been acts under which, if there was a coal seam that actually appeared on the surface, or if there was active mining, then those particular lands would be reserved, because then the States or the private parties would know that there was coal, because it was physically there, physically present, something that was tangible.
Justice Stevens: No, but isn't it at least conceivable they might have thought, well, we get everything except whatever's in the coal seam?
Mr. Davidson: Your Honor, that was not the understanding I believe of the States at the time.
It was not the understanding of the parties.
It hasn't been... and Your Honor, if I might, it hasn't been the subsequent administration.
It hasn't been the subsequent administration either under the States' own regulatory schemes or under the practice of any of the parties.
As was alluded to earlier, the coalbed methane is obtained by normal drilling techniques, not by coal removal techniques that were known to the parties at the time.
Those removal techniques, as Mr. Justice Scalia I think pointed out, those were, when you took a chunk of coal, and you took a chunk of coal, or several chunks of coal, and you loaded them into a wagon or subsequently a truck, and you hauled them away.
Now, in response to Justice Scalia's question regarding ownership, the gas, the natural gas, the very faint remnants of natural gas that would remain in that coal, under normal mining law practices would belong to the owner of the gas estate, but the mining practices have always followed the rules of reasonable development, reasonable diligence, and in following the rules of reasonable development and reasonable diligence at this point in time, even now in 1999, it's not reasonable to extract the methane gas from those chunks of coal that are removed from a coal mine.
But while they're in the ground, and you can use normal gas-drilling techniques to produce those, produce the gas, then that is reasonable in some circumstances.
There are still many coal beds throughout the country to which no coalbed methane is ever going to be produced, probably, at least under present technology.
Justice Souter: But I take it... I want to make sure I understand one thing.
You're claiming that the gas that is to be distinguished from the coal is not only the gas that has formed or collected in a pocket in the ground, but the gas that can be extracted from the coal while the coal still is in the ground, is that correct?
Mr. Davidson: Your Honor...
Justice Souter: You're talking about both kinds of... you're talking about gas in both those aspects, is that correct?
Mr. Davidson: In the simplest of terms, Your Honor, what I'm talking about is what can be removed with drilling techniques, and in the instance of coal, while there may be some pockets, typically what forms is cleats, where you've got a layer of coal and another somewhat layer of coal, and then you've got interspersed, there's little tiny particles that respondents have referred to, and when the water is extracted, these cleats allow the gas that's absorbed in there to come up through, because the pressure is released, come up through the hole, the drilling hole and then be escaped either into the atmosphere...
Justice Souter: And you say that's yours.
Mr. Davidson: That would belong to...
Justice Stevens: Yes, okay.
Mr. Davidson: whoever is the owner of the remainder of the estate.
Justice Scalia: You say the gas even in the lump of coal that's on the cart is technically yours, although there's nothing you can do about it, but you say that's yours, too.
Mr. Davidson: That's correct, Your Honor.
Justice O'Connor: But the doctrine of reasonable accommodation takes account of that, presumably...
Mr. Davidson: Your Honor, that's...
Justice O'Connor: and protects the miner of the hard coal.
Mr. Davidson: That's exactly right, Your Honor, and the doctrine of accommodation is something that the States and State court systems, and particularly State regulators, have had to deal with ever since mineral activity has... had ever commenced.
When oil drilling was first started, the natural gas that was associated with oil drilling, and the first oil well in Wyoming, anyway, I believe was prior to Statehood, 1884, but the natural gas that comes up with the oil well was flared initially, because it wasn't valuable for anything.
But as was pointed out in an earlier question, where the oil and gas estates are separate, that can't be done anymore, and in fact the oil and gas, the State oil and gas regulators ensure that that kind of flaring doesn't happen, because the States have an interest.
Even where it's not their own property, as such, the States have an interest because of severance taxes and other interests that the States have in taxing those products that there be conservation, that the mineral resources, whatever they may be, be conserved, and so therefore the oil and gas commissions don't allow flaring, and don't allow wasting of natural gas products.
Justice Ginsburg: Mr. Davidson, am I right in thinking, in relation to your opening remarks, that the States, when they came into the Union, as this was an inducement, could not have been contemplating the asset of this gas, because practically there was no way economically that it could be extracted?
Mr. Davidson: Your Honor, with specific respect to coalbed methane gas, I believe that answer, that that is correct, that they could not have specifically been thinking about coalbed methane gas because it was not a valuable resource.
There was no value.
There was no ability to get the pipelines in and get the gas developed and get it out.
It just was not a valuable commodity at that time.
But just as natural gas that's associated with oil production has now become a valuable commodity, so has the natural gas associated with coal production, and so the States, as owner of everything but what was specifically reserved... and keep in mind, Wyoming v. United States establishes a standard that only what is specifically reserved for the Federal Government can apply to the States, and the legislation is to be construed liberally for the benefit of the State.
Contrary to the presumption that the respondents would like to raise with respect to States in particular, who took under the very same acts as the private parties, with respects to States in particular, grants, land grants to the States have to be construed liberally.
Well, there was no reservation to the U.S. of gas, and the U.S. at the time of passing these lands to the States certainly knew the existence of gas.
Thank you, Your Honor.
Argument of Thomas H. Shipps
Chief Justice Rehnquist: Thank you, Mr. Davidson.
Mr. Shipps, we'll hear from you.
Mr. Shipps: Mr. Chief Justice, and may it please the Court:
When Congress passed the 1909 and 1910 acts, the substance it reserved for subsequent disposition was the same substance that we know today, coal, and common descriptions of coal in 1909 and 1910 made reference to the occluded gaseous constituents of coal dissolved within the mass or body of coal.
Justice Kennedy: If the methane comes out in drilling, as in gaseous form, and I'm a chemistry student, is the formula for the methane gas the same as the formula for, say, hard anthracite coal?
Mr. Shipps: Well, there is no specific formula for coal.
It's a heterogenous substance.
The formula for gas, once it's removed to the surface, CH4 would be the formula for methane, would be the same formula as the methane molecule located as an integral component of the coal...
Justice Kennedy: But if you're describing the coal in chemical terms, you'd have to add a lot of other chemical descriptions.
Mr. Shipps: But there is no chemical description for coal.
Coal, other... the... coal's a generic term.
Coal talks about inorganic material, organic material, definitionally it's based upon the relative volume or weight of those very heterogenous materials versus organic materials.
Justice Scalia: It's always hard, though.
Mr. Shipps: It... well, it's...
Justice Scalia: look at a glass of fluid and say that's coal, or, you know, a balloon filled with some gas and say it's filled with coal.
Mr. Shipps: Well...
It does pass the hit in the head and hurt test.
Justice Kennedy: But that's an important point.
If black acre has coal in the hard form, and it's right next to white acre, and white acre does not have any coal in extractable solid form, and you drill on white acre, and you begin draining gas from the adjacent coal field, are you in white acre?
Are you taking coal?
That's your position, it seems to me.
Mr. Shipps: No, our position is that if you own the property, the measurable boundaries, whether they be adjacent property boundaries or subsurface boundaries, and you complete a well into the property that you own, then the rule of capture makes clear that you have no liability from draining coal... from draining gas or a fugacious substance...
Justice Kennedy: Well, but in common sense terms, under your theory you are taking coal.
Mr. Shipps: You...
Justice Kennedy: I read your brief.
Mr. Shipps: No.
What we are saying is, coal is defined by the location of the material within it, and when Congress was passing these statutes, it clearly intended to reserve the entire coal estate, the entire coal resource, and it intended to reserve a resource that was located in nature, and found in nature.
Petitioner's argument is one which can prevail only if you concur that Congress intended to reserve a degasified, dehydrated lump of resource that does not exist in nature, and Congress made it clear...
Justice O'Connor: Well, the Federal Government didn't adopt your position until very recently, until this thing became valuable, and until then the Federal Government took the position urged by Mr. Phillips.
Mr. Shipps: Justice O'Connor, I respectfully disagree.
The Federal Government has taken a number of positions relative to this case...
Justice Scalia: Well, they've danced...
Mr. Shipps: and certainly the early... I'm sorry.
Chief Justice Rehnquist: They've danced all around the maypole on it.
Mr. Phillips: [Laughter]
Mr. Shipps: They have indeed, Mr. Chief Justice, but certainly earlier, when Congress...
Justice O'Connor: At the time... at the time that it became necessary to rely on alternative energy forms and it appeared that coalbed methane gas was valuable, the Government actively encouraged people to take the position that the CBM was not part of the coal, and to develop it, and gave them tax incentives to do so, and now it takes a position like yours, but it certainly didn't.
Mr. Shipps: Let me say that with respect to Congress and recent incentives for developing the resource, Congress has never... never expressed a viewpoint with respect to ownership of coalbed methane occluded in coal.
In fact, its definition is that coalbed... coal seam gas is occluded within the resource, dissolved within the resource.
Justice O'Connor: Well, the attorneys for the Federal agencies dealing with it certainly took that position.
Mr. Shipps: And we believe, and have believed throughout this litigation and expressed the viewpoint that they were sadly wrong, and in fact they were doing... they were not looking at the statutory language here.
Here, Congress reserved coal in its natural condition, coal deposits, and made it clear that's what it was reserving, and the common understanding in 1909 and 1910 by the person that held a piece of coal that he thought or she thought that he owned, or she owned, wasn't that, oh, I own everything here except the iron pyrite, I own everything here except the sulphur, I own everything here except the moisture, I own everything except the methane.
The common person in 1909 and 1910 didn't understand the details of microporocity, the complexities of adsorption, but that person certainly thought that this lump of coal that I own, when I put it in my furnace, or I put it in my stove, I'm not burning somebody else's property, and that's the... that is the position that is taken by the petitioners in this case.
Justice Kennedy: No, I don't think it is.
They acknowledge that any easement for extraction implies reasonable methods of extracting, and if you must take some gas that adheres to the coal, that's just a reasonable exercise of your right to excavate, but that's far different from saying that you own all the gas that's in free form and that remains.
That's quite different.
Mr. Shipps: Well, we're not talking about gas in free form.
We're talking about gas that's absorbed in the coal.
It's a gas... it's a component of the coal, and that's... and that, it seems to be clear and undisputed with respect to the...
Justice Kennedy: But the coal that's ultimately extracted is in no way less valuable, is it, because there has been a drilling that preceded the extraction of the coal?
It might be more difficult and expensive to extract the coal, but the coal itself is no less valuable, is it?
Mr. Shipps: Well, it... that begs the question as to what you define as coal, but it certainly no longer has the value of the coalbed methane that was absorbed within the coal, and in terms of conventional... conventional uses after the...
Justice Kennedy: I want to be very clear on this.
One case where there's no extraction of gas, and the coal is mined, and the methane is flared off, and there's a lump of black, solid coal.
Case 2, there has been drilling previously, and the black, solid coal is thereafter removed.
In your submission, the coal in the latter instance is less valuable?
Mr. Shipps: It is because it no longer contains...
Justice Stevens: Is there anything in the record...
Mr. Shipps: Potentially it no longer contains... if... it depends upon, if you're looking upon changes in mining techniques and changes in commerce, clearly, it no longer contains the heat value of the coalbed methane.
Now, in 1910 and 1910... 1909 and 1910, that was a hazard, and that wasn't of value then, but the definition of what we own doesn't change based upon improvements in mining techniques, but in fact, Justice Kennedy, the depletion of that value, which now has become under current technologies very valuable, is a loss of the coal estate that we would no longer have.
It's a loss of the coal resource that we would no longer have.
Justice Kennedy: Well, but then again, that assumes the answer on your part.
Mr. Shipps: It also incorporates what was understood in terms of the circumstances of this legislation.
What the USGS was doing in 1909 and 1910, Congress relied upon the U.S. Geological Survey to determine what was, what were coal resources, and the U.S. Geological Survey expressly looked to not just the present value of coal, but to the potential value of coal when it made its classification of lands.
And the USGS, with the encouragement and funding from Congress, investigated the science of how gas was held in coal, and the USGS looked to the potential fuel values of other gases that could be removed from coal.
The USGS was looking at, through the producer-generator, how can you... how can we obtain the gases from coal as a fuel source, and that certainly, we think, is significant in this case.
Justice Scalia: Mr. Shipps...
Mr. Shipps: Yes, Justice Scalia.
Justice Scalia: I don't know enough about mining techniques.
Suppose there's a pool of oil under my neighbor's land, and just a little bit of it comes onto my land, can I sink a well and suck out all of his oil?
Is that all my oil?
Mr. Shipps: It's all your... everything that you obtain by drilling a well on your land...
Justice Stevens: Right.
Mr. Shipps: that happens to capture migrating substances from his land, you have no liability to him for, and you own, once you reduce to possession.
But the premise...
Justice Kennedy: In every State of the Union you can drain?
Justice Scalia: Gee, I didn't think...
Mr. Shipps: I...
Justice Kennedy: That's not... some States you can drain, some States you can't.
Mr. Shipps: My understanding is that you can do that in any State, even States with a stratum theory, if they're talking about fugacious minerals.
If in Pennsylvania you drill a well on your land and your neighbor happens to have a fugacious material located in the stratum on his land, so long as you complete your well in the property that you own, you have no liability for what you recover, and that's... and actually you don't get to any different place whether you're talking about a stratum theory State or whether you're not.
Chief Justice Rehnquist: But haven't State regulators changed the common law in that regard with unitization and that sort of thing, so that you no longer can, even if the common law allows you, simply drill straight down and drain your neighbor's pool?
Mr. Shipps: Oh, no, that's frequently correct, Mr. Chief Justice.
There are rules and regulations as to how this can be done.
And in fact, rules and regulations with regard to what happened in this case made it clear that until 1988 the coal formation and neighboring sandstone formations were treated as one producing zone.
Chief Justice Rehnquist: When were those rules and regulations adopted?
Mr. Shipps: 1988, Your Honor, Mr. Chief Justice.
Chief Justice Rehnquist: Well, they scarcely, then, speak to the intent of Congress in 1910, I take it.
Mr. Shipps: That's correct.
They do not speak... but they do go to the impacts question that's been raised by counselor from Wyoming.
Justice Scalia: Well, you say that they cannot be one producing zone anymore, so that if you have, let's say, a pool of methane that is surrounded by limestone, but it is contiguous to a coal bed, you wouldn't be allowed to drain... you would say they're taking away your coal, that they have no right to that methane even though it's fugacious.
Mr. Shipps: No.
We take the position that no one can drill and complete a well in the tribe's coal deposits, which was the term that was used by Congress in 1909 and 1910...
Justice Scalia: No, but they're doing it next door.
They're doing it next door.
They drill a well, and they get out the... a pocket of methane, but as we've heard, what will happen is, that pocket will suck the methane out of your coal.
Mr. Shipps: If they think they can do that, then they're perfectly welcome to attempt to do that, subject to whatever the rules may be that have adjusted the common law relative to pooling and unitization.
Justice Scalia: But you say it's not fugacious gas.
You say it's your coal.
You say it shouldn't be treated the way oil, a pool of oil is, or a pocket of gas, that traverses two properties.
You're saying, this methane in my coal is coal.
It's my coal, it's not your gas or anybody's gas, right?
Mr. Shipps: That's correct, Justice Scalia.
Justice Scalia: So we have to have some new rules for what you do when you drill into a pocket of methane if you're sucking it off of somebody's coal.
Mr. Shipps: If... they just... they don't have the right to drill into our coal deposit in the first instance.
If for some reason...
Justice Scalia: They're not drilling into your coal deposit.
They're drilling into this pocket of methane.
Your coal deposit is next door.
Mr. Shipps: Oh.
Oh, I beg your pardon.
Justice Scalia: This methane comes up, they take the methane, but it...
Mr. Shipps: if they're able to do that, then under the rule of capture, we don't have a claim.
We're saying that they can't...
Justice Scalia: They're capturing your coal, is your theory.
They are not capturing methane.
Mr. Shipps: The location of the methane molecule is critical to our position.
If it's located in the coal deposit, if it is an integral component of the coal deposit, then it was reserved by Congress in 1909 and 1910, and is now owned by us.
Justice Kennedy: Suppose that it is commercially feasible to extract the methane without affecting the value of the coal estate.
Mr. Shipps: Justice Kennedy...
Justice Kennedy: Is it still coal under your theory?
Mr. Shipps: Yes, and they can't do that.
Notwithstanding what they said, when they drill those wells, they remove up to 100 tons of solid coal with regard to every well bore.
They acknowledge that we own even the solid coal.
They cannot remove coalbed methane from the coal and leave all the coal there.
They have to remove the solid coal.
They do remove the solid coal.
They have to inject things into the coal beds under tremendous pressure.
Hundreds of tons of sand gets injected into our coal deposits.
Justice Kennedy: Well, then, that's just a question of the law of reasonable accommodation.
Mr. Shipps: Except that the accommodation here was expressly established by Congress in the statute.
There's... this is not a common law accommodation.
The statute said that they have to...
Justice Kennedy: It would seem to me a very strange way to do it, to conflate the definition of gas and coal.
Mr. Shipps: No, there were also other provisions in the statute, Justice Kennedy, that dealt specifically with the relative rights of an agricultural patentee relative to the coal deposits, and what the owner of the coal deposits would have relative to the surface estate, and the only exception that Congress made for the agricultural patentee to have any dominion over the coal deposit, was the right to mine coal for domestic purposes until the coal deposit was disposed to a third party.
And once that took place, he gave up any right, he disclaimed any right... as a condition for even getting a patent, a limited patent to these properties, he agreed I will no longer have anything to do with that coal deposit, and that's the relative right of accommodations.
Thank you, Your Honor.
Thank you, Court.
Argument of Jeffrey P. Minear
Chief Justice Rehnquist: Thank you, Mr. Shipps.
Mr. Minear, we'll hear from you.
Mr. Minear: Thank you, Mr. Chief...
Chief Justice Rehnquist: Mr. Minear, sometime during your argument, Mr. Davidson suggested that the principle you relied on that at the point of where a grant is ambiguous it is resolved in favor of the Government does not apply where the grant is to a State, and he cited the case of Wyoming v. United States.
Sometime during your argument, could you address that?
Mr. Minear: Yes, Your Honor, I will do that.
Mr. Chief Justice, and may it please the Court:
Congress did not distinguish between coal and CBM in 1909, because a reservation of coal at that time had to include CBM.
There are four reasons why.
First, coal in its natural state always contains CBM as an inherent product of the coalification process.
Second, miners in 1909 necessarily had to remove the CBM as a part of the mined coal.
Third, the miners had no way of setting the CBM apart or leaving it behind.
Congress used the term, coal, in light of those realities, to describe what nature had deposited and what miners mined.
This usage is not only the ordinary, practical, common sense usage, but is also consistent with what science tells us about coal, both now and in 1909.
Justice O'Connor: Well, it certainly wasn't the position of the Government's lawyers back when all of a sudden it was discovered that the coalbed methane gas was valuable and its development should be encouraged.
Mr. Minear: Justice O'Connor, you're referring to the 1981 Solicitor's opinion, in which the Government took the position that the coalbed gas was not a part of the coal.
Justice Scalia: Which was withdrawn, as I recall, after this litigation began.
Mr. Minear: That is correct, and the reason why it was withdrawn is because it proved that the reasoning in that opinion was deficient.
It didn't consider...
Justice O'Connor: Well, I thought maybe it had something to do with the fact that all of a sudden it was valuable and the Federal Government thought it would like to have that value.
Mr. Phillips: [Laughter]
Mr. Minear: Justice O'Connor, that can't be the case, because it was known to be of value... valuable in 1981, when that opinion was issued.
What the Solicitor has tried to do in both 1981 and the present, and at the present, is try and resolve this rather difficult technical issue.
Its first attempt in 1981 proved to be deficient, because it did not consider what we think are all of the important considerations, including the practicalities that I just went through, the four points that I just raised with regard to mining coal in 1909.
In addition, it relied very heavily on statements in the legislative history that we think just cannot bear the weight that they were given.
And finally, it did not take into any account some of the scientific aspects of coal that were known both in 1909 and are known presently, and I'm referring to the joint appendix...
Justice O'Connor: Well, Congress, after the 1909-1910 acts, later passed legislation dealing with Federal land grants reserving gas in some circumstances to the Federal Government.
Mr. Minear: Yes, Justice...
Justice O'Connor: Do you think it thought then it was reserving coalbed methane gas?
Mr. Minear: Well, we think with regard to those reservations it was probably ambiguous what Congress was reserving.
The 1914 act I think is the act that you're referring to.
In that case, those were lands that were determined not to contain coal, so the issue probably in Congress' mind never would have come up.
It's our current position that under the 1914 act, that certainly the United States did reserve the coal, the methane gas, natural gas that lies outside of the coal seams and, of course, it's not clear on this record whether there's any 1914 lands that actually do contain...
Chief Justice Rehnquist: What about the Mineral Leasing Act of 1920?
Mr. Minear: The Mineral Leasing Act of 1920 dealt with the question of disposition of what had been previously reserved, so we don't think that it actually touches upon the issue of what had been reserved 10 years before.
Chief Justice Rehnquist: But Congress did treat this sort of thing separately from coal.
Mr. Minear: It treated gas separately from coal, but it...
Chief Justice Rehnquist: It treated CBM as a gas, did it not?
Mr. Minear: It did not make specific mention of CBM.
This issue did not really come to the forefront until new technology was developed to develop the CBM and, contrary to what Mr. Phillips says, that technology was not in existence in 1909.
CBM is not developed through traditional wells.
Rather, it requires extensive so-called stimulation of the coal bed.
You have to enter the coal bed, fracture the coal bed, and inject materials and remove water in order to get the methane out, so the mining techniques for removing CBM are quite different from the techniques for removing natural gas from conventional limestone.
Justice Souter: Where do we go to read about this development in technology from 1909 to 1920?
Justice Scalia: Could you give me a good source?
Mr. Minear: Yes.
You can go to the joint appendix, and put in the joint appendix in volume 2 is a volume... a submission that was provided by Mr. Fassett, pages 553 through 578.
He describes CBM production in some detail, including CBM production in the Fruitland formation, which has some unusual aspects to it as well.
Justice Souter: But does he describe the development of the technology in this period?
Mr. Minear: I'm not sure...
Justice Souter: That's what's important to me, because if the... you know, for obvious reasons.
If the technology has developed, you're going to draw a very different inference, I think, from the use of the language in 1920 from what would be the case if there had been no development in the technology.
Mr. Minear: Yes, I think that might be right.
Now, the type of development... I think that the Fassett article...
Justice Souter: So does this... does the period... the material in the joint appendix describe that technological development in that period of roughly 11 years?
Mr. Minear: It... no, it does... I think that that technology...
Chief Justice Rehnquist: All right.
Justice Souter: Where will I find that?
Justice Scalia: where will I find that?
Mr. Minear: I don't think the technology had developed between 1909 and 1920.
The technology was actually developed as a form of removing natural gas from so-called tight sands, which came into the fore in the fifties or sixties.
I don't think there was any CBM production whatsoever before 1953.
Justice Souter: So Mr. Phillips was right, then, in his statement to me that there had been no technological change during that period of time.
Mr. Minear: But there was no way to develop CBM in 1909.
There was no way to develop CBM in 1920.
I believe that the first commercial development of CBM took place in 1953.
Now, I'd like... I think that one thing we have not discussed here this after... this morning that I think is important, and that is the response of the State courts to this problem.
Two States have had extensive experience with this matter, Alabama and Pennsylvania, and both of those courts, applying traditional mining law, concluded that CBM belongs to the owner of the coal seam, and we think that's quite important.
These are States that have dealt with the practical problems of CBM development.
I would also point out that the Solicitor's 1981 opinion did not have the benefit of those two opinions from those two courts.
Now, the Montana court...
Justice Kennedy: Did those arise because the owners attempted to dispose of the estate separately after they'd made a previous conveyance of the coal right, or...
Mr. Minear: Yes.
Those are both cases in which the coal was conveyed away, and the question was whether the surface owner continued to own the gas in the coal seam, and in both of those cases... and I think the Pennsylvania case is particularly instructive, the Hoge case... the court indicated that, well, whatever coal constituent, and it treated CBM as a coal constituent, that is in the coal seam, remains part of the ownership of that coal seam.
It's common in hard rock minerals to view the ownership of the deposit as the ownership of the strata itself, and I would like to make mention to the two cases that I think that petitioners have cited that would appear to be contrary authority.
One is the Smoot case, which involved a seam of iron pyrite...
Justice Scalia: What's the name of the case, Mr. Minear?
Mr. Minear: The case is called Smoot v. Consolidated Coal.
It was an intermediate decision from the Illinois courts in 1907.
That was a case that dealt with a seam of pyrite that was present in the coal stratum, and the pyrite actually had to be removed to make the coal marketable.
The court indicated that the owner of the surface did not give up his owner of his separate seam, or seam of pyrite, which ranged from about 1 inch thick down to about the thickness of paper, but it was clearly discernible, and the court also indicated that a different rule would apply if the iron pyrite was, in fact, intermixed within the coal, which often happens, I should add.
Justice O'Connor: Is that because of the notion of accommodation principles?
Mr. Minear: The court actually referred to the principle of appurtenances, which is the notion that if you're removing one material with another material, the two necessarily go together, and it wasn't the idea of simply accommodating, which is what we sometimes encounter in other areas, but actually that it was a part of the coal if it was truly intermingled.
Now, the court's reasoning is, I have to say here it jumps from one point to another and it requires careful reading, but I think you'll find that that's what that opinion actually stands for.
The other State court decision that is contrary to our position is the Montana supreme court decision from just a few years ago.
It dealt with a 1984 coal lease, and it distinguished the Pennsylvania case on the basis that that dealt with a 1920 coal deed, and said that, well, CBM was not recognized as valuable in 1920, so the surface owner would not have necessarily wanted to hold onto it.
That same reasoning would distinguish the 1909 and 1910 acts, so we think that actually State law is consistent with the position that we've... that we are asserting here, and that's one of the things that has led the Solicitor to change his view on this matter.
Justice O'Connor: Are all the State cases... what are the dates of them?
Are they all after 1953?
Mr. Minear: Yes.
Well, the Smoot case is 1907, and that stands for the notion that coal is... exists in a stratum, and deals with the pyrite being in a separate seam within the stratum.
The cases that directly deal with CBM are the Alabama case... I believe it's called the West case, which was decided in the early nineties...
Justice Kennedy: These are on page 36 of your brief, footnote 26?
Mr. Minear: I believe that's right, yes.
Yes, those three cases, the Montana case, which is called the Carbon County case, and then the Hoge case, which is the Pennsylvania case.
Now, I would like to touch upon the point the Chief Justice raised with regard to the question of the canon of construction that's applicable here.
We think that the better view is that CBM is a part of the coal, but even if the matter is debatable, we think that you should apply the established rule that ambiguous grants are interpreted in favor of continued public ownership for the reason that Congress has not consciously determined whether or not to give the material at issue up, and it should be allowed under the Constitution to exercise its right to make that determination.
We think that rule applies equally to the States and private persons, because the reasoning for the rule is the same in each case, and that is that Congress is vested with the authority to hand out public property, and it should be given the opportunity to make that...
Chief Justice Rehnquist: You say then, Mr. Minear, that Mr. Davidson is wrong in citing Wyoming v. United States for the proposition that he cited it for?
Mr. Minear: There are a number of different canons that come into play, and I think it's true that you'll find that there are statements that grants, for instance, for schools should be construed liberally, that grants to homesteaders should be construed...
Chief Justice Rehnquist: Well, why shouldn't they... you know, if you want to say a number of different statements, the things that you're relying on are statements also.
Why should one statement be elevated over another?
Mr. Minear: Because we think this is the statement, this is the canon that preserves the prerogatives of Congress, which were truly important here for disposing of the public property, and the States' interests are... will be reflected in the congressional decision.
If this material remains a part of public property, then Congress can determine what to do with it, and in that regard, we note that Congress has already acted under the Enzi amendment to protect the justified expectations of anyone who has drilled...
Justice Scalia: No, but it's not the Congress now that it was then.
The Congress then was giving away public lands and was giving away public minerals.
To say no harm's done if, you know, we interpret the ambiguous thing the wrong way, Congress will fix it, it's a different Congress.
It's not the same Congress.
It seems to me we ought to just take our best shot at resolving the ambiguity.
I don't know any basis for saying, you know, no harm done.
It's a 100-year-old Congress.
Mr. Minear: Well, I think that the current Congress is better-equipped than this Court to deal with some of the issues, the outstanding issues such as the safety issues arising from CBM development in conjunction...
Justice Scalia: But they won't make the same decision.
I mean, to say that they would make the same decision that a 1909 Congress would is simply false.
Mr. Minear: But they're a better-educated Congress.
They're a Congress that knows more about this resource that was not well-understood...
Chief Justice Rehnquist: Well, you're just saying that if we decide the case in your favor, maybe Congress will do something equitable, but that certainly isn't the question before us.
Mr. Minear: The question is what Congress intended, and we said...
Chief Justice Rehnquist: What the Congress in 1909 and 1910 intended.
Mr. Minear: Yes, and as I said before, I think the better view is that they viewed CBM as part of the coal because it could not be separate, it could not be separated from the coal at that time, and Congress, this Congress can deal, if that ownership is retained, with these problems, and in fact it has dealt with them in things such as the Enzi amendment, which has protected the interests, the justified expectations of the States and the individuals.
There's no reason to think that Congress cannot make these decisions wisely through the democratic process.
Justice Scalia: Can they get back the money that on the assumption that was adopted in the 1981 opinion some companies have invested in getting gas rights that now no longer exist?
Can Congress fix that up?
Mr. Minear: In fact, they have, in the sense that they have disclaimed ownership of that methane that has been developed in the past, so in fact those interests are protected.
Justice O'Connor: In the past.
Mr. Minear: In the past.
Justice Scalia: But they paid for rights to take it out in the future, as well.
Mr. Minear: It's... I think that the Enzi opinion respects future leases, any leases that will continue into the future.
If someone wants to lease, enter into a new lease for CBM development, that would be an issue that Congress would have to deal with, and I have confidence that Congress would deal with it equitably.
It would take into consideration the interests of the landowners, the coal companies, the oil companies.
This is an issue that is really of the type that requires legislative fact-finding.
It is simply an issue that is both complex and there are many different issues, and it is one that Congress has never decided and never addressed, and I believe that in our process, in our democratic process, it's quite appropriate for Congress...
Chief Justice Rehnquist: Well, if Congress never decided it, then you're saying that the 1909 things didn't... don't speak one way or the other to it?
Mr. Minear: Well, I'm saying that Congress never explicitly addressed it.
We think the better interpretation, as I said before, but it has to be an interpretation on either side by implication, is the CBM goes with the coal.
It's the tail that goes with the hide, so to speak, in this situation.
Thank you, Your Honor.
Rebuttal of Carter G. Phillips
Chief Justice Rehnquist: Thank you, Mr. Minear.
Mr. Phillips, you have 2 minutes remaining.
Mr. Phillips: Thank you, Mr. Chief Justice.
I'd like first to address Justice Scalia.
It seems to me that the questions that you asked about the fugacious nature of the gas in the coal demonstrates as plainly as it can be, they have coal, mixing with gas in three forms, adsorbed, free, and dissolved, they're all the same, they're all extracted the same, there is no basis for distinguishing one from another.
Justice Souter, with respect to the means of extracting it, all you do is drill at anything that will release the pressure.
Now, whether you can economically extract it to the maximum amount of value is a separate issue.
All that arose separately, and there was absolutely no change between 1909 and 1920.
Justice Souter: There was no economic extraction, then, in that period.
Mr. Phillips: Not at that time, no, Justice Souter.
Justice Kennedy, you asked the question, because it's important to the Government's argument, they keep saying it's a constituent of the coal.
They say it over and over again.
But if you look at 545 to 555 of the joint appendix, and you look from the macro to the micro elements of every particle of consideration that the handbook on coal identifies, you will never see CH4, because methane is not a constituent of coal.
It is found within the coal, which is why the Government then turns to say, well, it's not the coal, it's the coal deposit.
It's not the coal deposit, really, it's the coal seam and the coal bed.
The problem is, that's not the language of the statute.
The statute says, coal deposit.
Deposit was a well-understood meaning at that time.
It didn't imply an entire seam or bed.
What it meant was that you had an identifiable quantity of the coal, and that's all Congress gave it.
This Court in Western Nuclear specifically held that prior to 1916 the regime was specifically identified minerals.
It doesn't include any other associated minerals.
If Congress had wanted to do that, it could have said associated minerals, it could have said gas, it could have said anything.
What it said was coal.
That's the right it has, and that's the only right it has.
The court of appeals erred in extending that to allow these parties to drill for gas.
Thank you, Your Honors.
Chief Justice Rehnquist: Thank you, Mr. Phillips.
The case is submitted.
The honorable court is now adjourned until tomorrow at ten o'clock.
Argument of Speaker
Mr. Phillips: The opinion of the Court in No. 98-830, Amoco Production Company versus Southern Ute Indian Tribe will be announced by Justice Kennedy.
Argument of Justice Kennedy
Mr. 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.