CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE TENTH CIRCUIT.
Stevens, J., delivered the opinion of the Court, in which Brennan, Stewart, White, and Marshall, JJ., joined. Powell, J., filed a dissenting opinion, in which Burger, C. J., and Blackmun and Rehnquist, JJ., joined, post, p. 520.
MR. JUSTICE STEVENS delivered the opinion of the Court.
The State of Utah claims the right to select extremely valuable oil shale lands located within federal grazing districts in lieu of and as indemnification for original school land grants of significantly lesser value that were frustrated by federal pre-emption, or private entry, prior to survey. The question presented is whether the Secretary of the Interior is obliged to accept Utah's selections of substitute tracts of the
same size as the originally designated sections even though there is a gross disparity between the value of the original grants and the selected substitutes. We hold that the Secretary's "grossly disparate value" policy is a lawful exercise of the broad discretion vested in him by § 7 of the Taylor Grazing Act of 1934, 48 Stat. 1272, as amended in 1936, 49 Stat. 1976, 43 U. S. C. § 315f, and is a valid ground for refusing to accept Utah's selections.
Utah became a State in 1896. In the Utah Enabling Act of 1894, Congress granted Utah, upon admission, four numbered sections in each township for the support of public schools. The statute provided that if the designated sections had already "been sold or otherwise disposed of" pursuant to another Act of Congress, "other lands equivalent thereto . . . are hereby granted." The substitute grants, denominated "indemnity lands" were "to be selected within the State in such manner as [its] legislature may provide with the approval of the Secretary of the Interior."*fn1
Because much of the State was not surveyed until long after its admission to the Union, its indemnity or "in lieu" selections were not made promptly. On September 10, 1965,
Utah filed the first of 194 selection lists with the Bureau of Land Management of the Department of the Interior covering the land in dispute in this litigation. The 194 indemnity selections include 157,255.90 acres in Uintah County, Utah, all of which are located within federal grazing districts created pursuant to the Taylor Grazing Act.
In January 1974, before Utah's selection lists had been approved or disapproved, the Governor of Utah agreed that the Secretary of the Interior could include two tracts comprising 10,240 acres of selected indemnity lands in an oil shale leasing program, on the understanding that the rental proceeds would ultimately be paid to the State if its selections were approved. The proceeds of the leases are of substantial value.*fn2
In February 1974, the Secretary advised the Governor that he would not approve any indemnity applications that involved "grossly disparate values."*fn3 He wrote:
"As you know, the Department of the Interior has not as yet acted upon the State's [indemnity] applications. The principal question presented by the applications is whether pursuant to Section 7 of the Taylor Grazing Act, 48 Stat. 1272 (1934), as amended, 43 U. S. C. § 315f (1972), the Department may refuse to convey applied-for lands to a State where the value of those lands greatly exceeds the value of the lost school lands for which the State seeks indemnity. In January 1967, the then Secretary
of the Interior adopted the policy that in the exercise of his discretion under, inter alia, Section 7 of the Taylor Grazing Act, he would refuse to approve indemnity applications that involve grossly disparate values. That policy remains in effect.
"In the present case, although the land values are not precisely determined, it appears that the selections involve lands of grossly disparate values, within the meaning of the Department's policy. While the Department is not yet prepared to adjudicate the State's applications, I feel it is appropriate at this time to advise you that we will apply the above-mentioned policy in that adjudication."*fn4
The State promptly filed this action in the United States District Court for the District of Utah. The facts were stipulated, and Judge Ritter entered summary judgment in favor of the State. He held that if Utah's selections satisfy all of the statutory criteria governing indemnity selections when filed,*fn5 the Secretary has no discretion to refuse them
pursuant to a "grossly disparate value" policy. The Court of Appeals for the Tenth Circuit affirmed, Utah v. Kleppe, 586 F.2d 756 (1978), holding that § 7 of the Taylor Grazing
Act gave the Secretary no authority to classify land as eligible for selection and that the State had a right to select indemnity land of equal acreage without regard to the relative values of the original grants and the indemnity selections.
Because the dispute between the parties involves a significant issue regarding the disposition of vast amounts of public lands,*fn6 we granted certiorari. 442 U.S. 928. We believe that the Court of Appeals and the District Court failed to give proper effect to the congressional policy underlying the provision for indemnity selection, and specifically misconstrued § 7 of the Taylor Grazing Act as amended in 1936. We therefore reverse.
The Enabling Act of each of the public-land States admitted into the Union since 1802 has included grants of designated sections of federal lands for the purpose of supporting public schools.*fn7 Whether the Enabling Act contained words of present
or future grant, title to the numbered sections did not vest in the State until completion of an official survey. Prior to survey, the Federal Government remained free to dispose of the designated lands "in any manner and for any purpose consistent with applicable federal statutes."*fn8 In recognition of the fact that the essentially random grants in place might therefore be unavailable at the time of survey for a variety of reasons,*fn9 Congress authorized grants of indemnity or "lieu" lands of equal acreage.
As Utah correctly emphasizes, the school land grant was a "solemn agreement" which in some ways may be analogized to a contract between private parties. The United States agreed to cede some of its land to the State in exchange for a commitment by the State to use the revenues derived from the land to educate the citizenry.
The State's right to select indemnity lands may be viewed as the remedy stipulated by the parties for the Federal Government's
failure to perform entirely its promise to grant the specific numbered sections. The fact that the Utah Enabling Act used the phrase "lands equivalent thereto" and described the substituted lands as "indemnity lands" implies that the purpose of the substitute selections was to provide the State with roughly the same resources with which to support its schools as it would have had had it actually received all of the granted sections in place.*fn10 Thus, as is typical of private contract remedies, the purpose of the right to make indemnity selections was to give the State the benefit of the bargain.
The history of the general statutes relating to land grants for school purposes confirms this view. Thus, for example, in 1859, when confronted with the fact that many settlers had occupied unsurveyed lands that had been included in school grants, Congress confirmed the settlers' claims and granted to the States "other lands of like quantity." Ch. 58, 11 Stat. 385. The substitution of an equal quantity of land provided the States a rough measure of equal value.
The school land grants gave the States a random selection of public lands subject, however, to one important exception. The original school land grants in general, and Utah's in particular, did not include any numbered sections known to be mineral in character by the time of survey. United States v. Sweet, 245 U.S. 563. This Court so held even though the Utah Enabling Act "neither expressly includes mineral lands nor expressly excludes them." Id., at 567. The Court's opinion stressed "the practice of Congress to make a distinction between mineral lands and other lands, to deal with them
along different lines, and to withhold mineral lands from disposal save under laws specially including them." Ibid. Mineral lands were thus excluded not only from the original grants in place but also from the indemnity selections.*fn11 Since mineral resources provide both the most significant potential source of value and the greatest potential for variation in value in the generally arid western lands, the total exclusion of mineral lands from the school land grants is consistent with an intent that the States' indemnity selections of equal acreage approximate the value of the numbered sections lost.
In 1927, some nine years after the decision in United States v. Sweet, supra, Congress changed its policy to allow grants of school lands to embrace numbered sections that were mineral in character.*fn12 But the 1927 statute did not expand the kinds of land available for indemnity selections.*fn13 Thus, after 1927 even if the lost school lands were mineral in character, a State was prohibited from selecting mineral lands as indemnity. It was not until 1958 that Congress gave the States the right to select mineral lands to replace lost school lands, and that right was expressly conditioned on a determination that the lost lands were also mineral in character. 72 Stat. 928, 43 U. S. C. § 852. See n. 5, supra. For 30 years, then, States
were not even permitted to select lands roughly equivalent in value to replace lost mineral lands. The condition in the 1958 statute, that the lost lands be mineral in character before mineral lands could be selected as indemnity, rather clearly reflects an intention to restore the character of the indemnity selection as a substitute of roughly equal value.*fn14
Throughout the history of congressional consideration of school land grants and related subjects -- a history discussed at great length in the voluminous briefs submitted to us -- we find no evidence whatever of any congressional desire to have the right to select indemnity lands do anything more than make the States whole for the loss of value resulting from the unavailability of the originally designated cross section of lands within the State. There is certainly no suggestion of a purpose at any time, including 1958, to allow the States to obtain substantially greater values through the process of selecting indemnity land.
Thus, viewing the program in this broad historical perspective, it is difficult to identify any sensible justification for Utah's position that it is entitled to select any mineral lands it chooses regardless of the value of the school sections lost. Nevertheless, Utah is quite correct in arguing that the Secretary has no power to reject its selections unless Congress has given it to him. We have no doubt that it has.
Prior to the 1930's, cases in this Court had made it perfectly clear that the Federal Government retained the power to appropriate public lands embraced within school grants for other
purposes if it acted in a timely fashion. On the other hand, it was equally clear that the States' title to unappropriated land in designated sections could not be defeated after survey, and that their right to indemnity selections could not be rejected if they satisfied the statutory criteria when made, and if the selections were filed before the lands were appropriated for other purposes. The authority of the Secretary of the Interior was limited to determining whether the States' indemnity ...