Copper Valley Machine Works, Inc. v. Andrus
653 F.2d 595 (D.C. Cir. 1981)

  • Under the Mineral Leasing Act (30 U.S.C. 181) Copper Valley was granted a lease that gave them the right to drill for oil on Federal land in Alaska.
    • The lease was for 10 years "and so long thereafter as oil of gas is produced in paying quantities."
  • Copper Valley sat on the lease for 10 years without doing anything, and on the very last day they applied for a permit to drill and an extension. The Department of the Interior (DOI) granted them a one year extension and told them that they could only drill during the winter because drilling in the summer caused too much environmental degradation.
    • Driving around in the winter was ok because the ground was frozen, but in the summer it was muddy and the trucks would rip everything up.
  • Copper Valley drilled all winter but failed to find oil. They applied for a second extension, which DOI granted. Again, they drilled again all winter and found nothing. They applied for a third extension and DOI denied it.
  • Copper Valley appealed, claiming that the summer shutdowns had hampered their operations, and if they had been able to drill for the full 24 months they surely would have been able to produce paying quantities of gas or oil.
  • The Secretary of the Interior denied the extension. Copper Valley sued.
    • Copper Valley argued that the Mineral Leasing Act 209 said that if DOI "in the interest of conservation shall direct...the suspension of operations...the term of such lease shall be extended..."
    • DOI argued that their environmental restrictions were not a suspension within the meaning of 209.
      • DOI argued that 209 was only designed to cover unexpected suspensions, or suspensions to alleviate the problem of excess production.
        • "Conservation" should be read to mean conserving the supply of oil, not conserving the environment.
      • DOI argued that Copper Valley knew about the conditions of the extension when they accepted it. It was too late to complain about them now.
      • DOI argued that the same winter-only condition was written into all of the leases in Alaska, so if the courts granted Copper Valley's request, it would set a precedent that would effect a lot of leases.
  • The Trial Court denied the extension. Copper Valley appealed.
  • The Appellate Court reversed and granted the extension.
    • The Appellate Court found DOI's actions were arbitrary and capricious, so they would not defer to the Agency's judgment.
    • The Court found that 209 was broad enough to cover all kinds of suspensions, and all kinds of conservation.
    • The Court found that since all drilling in Alaska is subject to the same environmental restrictions, it is unfair to Alaskan drillers that they have only half as much time to drill as those in the rest of the US.