When Utah became a State, the Utah
Enabling Act of 1894 said that the
Federal government would divvy up Utah's land into townships,
and that each township would be further divvied into numbered lots. Utah
would take title to lots 2, 16, 32, and 36 of each township in order to build schools, jails, city halls,
etc. and the rest would remain in Federal hands.
The Federally-owned lots
would be sold to private individuals, or retained by the Federal
government for military bases, national forests, etc.
This sort of deal was
standard for most States as they entered the Union.
The Utah Enabling Act further stipulated that if any of the lots due
to the State had already been sold off to someone else (or were needed by
the Federal government for something), then the State could take an equal
amount of other land "to be selected within the State in such a
manner as its legislature may provide with the approval of the Secretary
of the Interior.
That is known as indemnity
lands (or in lieu lands).
Utah didn't get around to
deciding which lands it wanted until 1965. They chose 194 lots in an area
that was a Federal grazing district.
'Grazing districts' were
created by the Taylor Grazing Act
(43 U.S.C. §315).
The Taylor Grazing Act gave the Secretary of the Interior
significant discretion on how Federal lands were to be sold or otherwise
disposed of. It required all Federal lands to have a
designation, and required people to have a permit in order to enter
It was a response to the
environmental problems caused by overgrazing on Federal lands.
The land Utah wanted just
also happened to contain a lot of oil, and was worth a lot of money. Way
more money that the 194 lots Utah had given up was worth.
What a coincidence!
The Secretary of the Interior
rejected Utah's application. Utah sued.
The Secretary argued that §7 of the Taylor Grazing Act prevented him from approving land transfers
that were of "grossly disparate value."
The Trial Court found for Utah
and told DOI to approve the transfer. DOI appealed.
The Appellate Court affirmed.
The Appellate Court found
that Utah had a right to select indemnity land of equal acreage without regard to the
relative values of the original school land grants and the indemnity
The US Supreme Court reversed.
The US Supreme Court found
that §7 gave DOI the authority to
use broad discretion, and "grossly disparate value" was a valid
ground for refusing to accept Utah's selections.
That's pretty broad
The Court found that Congress'
purpose in authorizing indemnity lands was to give States a rough equivalent of the school land grants
in place that were lost through preemption or private entry prior to
The Court found that the Utah
Enabling Act used the word equivalent.
That could be interpreted as meaning "equivalent size" or
"equivalent value". Since it was ambiguous, the Secretary of
Interior was allowed to interpret it.
See Chevron U.S.A. Inc.
v. Natural Resources Defense Council
(467 U.S. 837 (1984)).
In a dissent it was argued
that the bilateral compact under which Utah joined the Union was a big
deal and a binding contract, and there was no way that Congress meant to
breach that compact with minor legislation such as the Taylor Grazing