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
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
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
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
should be read to mean conserving the supply of oil, not conserving the
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
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.