U.S. v. Union Oil Co. of California

• Citation: 549 F.2d 1271
• Decision Date: 31 January 1977
• Docket Number: No. 74-1574,74-1574
• Parties: , 7 Envtl. L. Rep. 20,214 UNITED STATES of America, Plaintiff-Appellant, v. UNION OIL COMPANY OF CALIFORNIA et al., Defendants-Appellees.
• Court: U.S. Court of Appeals — Ninth Circuit

Page 1271

549 F.2d 1271

40 A.L.R.Fed. 799, 7 Envtl. L. Rep. 20,214

UNITED STATES of America, Plaintiff-Appellant, v. UNION OIL COMPANY OF CALIFORNIA et al., Defendants-Appellees.

No. 74-1574.

United States Court of Appeals Ninth Circuit.

Jan. 31, 1977.

Rehearing and Rehearing En Banc Denied March 23, 1977.

John E. Lindskold, Atty., Dept. of Justice (argued), Washington, D. C., for plaintiff-appellant.

Dennis B. Goldstein, Deputy Atty. Gen., State of Cal. (argued), San Francisco, Cal., as amicus curiae for plaintiff-appellant.

David J. Wynne, Brobeck, Phleger and Harrison, George B. White, (argued), San Francisco, Cal., for defendants-appellees.

Before BROWNING and WALLACE, Circuit Judges, and TURRENTINE, ^* District Judge.

BROWNING, Circuit Judge.

This is a quiet title action brought by the Attorney General of the United States pursuant to section 21(b) of the Geothermal Steam Act of 1970, 30 U.S.C. § 1020(b), to determine whether the mineral reservation in patents issued under the Stock-Raising Homestead Act of 1916, 43 U.S.C. § 291 et seq., reserved to the United States geothermal resources underlying the patented lands. The district court held that it did not. 369 F.Supp. 1289 (N.D.Cal.1973). We reverse.

Various elements cooperate to produce geothermal power accessible for use on the surface of the earth. Magma or molten rock from the core of the earth intrudes into the earth's crust. The magma heats porous rock containing water. The water in turn is heated to temperatures as high as 500 degrees Fahrenheit. As the heated water rises to the surface through a natural vent, or well, it flashes into steam. ¹

Geothermal steam is used to produce electricity by turning generators. In recommending passage of the Geothermal Steam Act of 1970, the Interior and Insular Affairs Committee of the House reported: "(G)eothermal power stands out as a potentially invaluable untapped natural resource. It becomes particularly attractive in this age of growing consciousness of environmental hazards and increasing awareness of the necessity to develop new resources to help meet the Nation's future energy requirements. The Nation's geothermal resources promise to be a relatively pollution-free source of energy, and their development should be encouraged." H.R.Rep. No. 91-1544, 91st Cong., 2d Sess., reprinted at 3 U.S.Code Cong. & Admin.News 5113, 5115 (1970).

Appellees are owners, or lessees of owners, of lands in an area known as "The Geysers" in Sonoma County, California. Beneath the lands are sources of geothermal steam. Appellees have developed or seek to develop wells to produce the steam for use in generating electricity. The lands were public lands, patented under the Stock-Raising Homestead Act. All patents issued under that Act are "subject to and contain a reservation to the United States of all the coal and other minerals in the lands so entered and patented, together with the right to prospect for, mine, and remove the same." Section 9 of the Act, 43 U.S.C. § 299. The patents involved in this case contain a reservation utilizing the words of the statute. ² The question is whether the right to produce the geothermal steam passed to the patentees or was retained by the United States under this reservation.

There is no specific reference to geothermal steam and associated resources in the language of the Act or in its legislative history. The reason is evident. Although steam from underground sources was used to generate electricity at the Larderello Field in Italy as early as 1904, ³ the commercial potential of this resource was not generally appreciated in this country for another half century. No geothermal power plants went into production in the United States until 1960. ⁴ Congress was not aware of geothermal power when it enacted the Stock-Raising Homestead Act in 1916; it had no specific intention either to reserve geothermal resources or to pass title to them.

It does not necessarily follow that title to geothermal resources passes to homesteader-patentees under the Act. The Act reserves to the United States "all the coal and other minerals." All of the elements of a geothermal system magma, porous rock strata, even water itself ⁵ may be classified as "minerals." When Congress decided in 1970 to remove the issue from controversy as to future grants of public lands, it found it unnecessary to alter the language of existing statutory "mineral" reservations. It simply provided that such reservations "shall hereafter be deemed to embrace geothermal steam and associated geothermal resources." Geothermal Steam Act of 1970, 30 U.S.C. § 1024. ⁶ Thus, the words of the mineral reservation in the Stock-Raising Homestead Act clearly are capable of bearing a meaning that encompasses geothermal resources.

The substantial question is whether it would further Congress's purposes to interpret the words as carrying this meaning. The Act's background, language, and legislative history offer convincing evidence that Congress's general purpose was to transfer to private ownership tracts of semi-arid public land capable of being developed by homesteaders into self-sufficient agricultural units engaged in stock raising and forage farming, but to retain subsurface resources, particularly mineral fuels, in public ownership for conservation and subsequent orderly disposition in the public interest. The agricultural purpose indicates the nature of the grant Congress intended to provide homesteaders via the Act; the purpose of retaining government control over mineral fuel resources indicates the nature of reservations to the United States Congress intended to include in such grants. The dual purposes of the Act would best be served by interpreting the statutory reservation to include geothermal resources. ⁷

Events preceding the enactment of the Stock-Raising Homestead Act contribute to an understanding of the intended scope of the Act's mineral reservation. Prior to 1909, public lands were disposed of as either wholly mineral or wholly nonmineral in character. United States v. Sweet, 245 U.S. 563, 567-68, 571, 38 S.Ct. 193, 62 L.Ed. 473 (1918). This practice led to inefficiencies and abuses. In 1906 and again in 1907, President Theodore Roosevelt pointed out that some public lands were useful for both agriculture and production of subsurface fuels, and that these two uses could best be served by separate disposition of the right to utilize the same land for each purpose. The President called the attention of Congress "to the importance of conserving the supplies of mineral fuels still belonging to the Government." 41 Cong.Rec. 2806 (1907). To that end, the President recommended "enactment of such legislation as would provide for title to and development of the surface land as separate and distinct from the right to the underlying mineral fuels in regions where these may occur, and the disposal of these mineral fuels under a leasing system on conditions which would inure to the benefit of the public as a whole." Id. ⁸

In 1909 the Secretary of the Interior returned to the same theme, arguing that "inducements for much of the crime and fraud, both constructive and actual, committed under the present system can be prevented by separating the right to mine from the title to the soil. The surface would thereby be open to entry under other laws according to its character and subject to the right to extract the coal. The object to be attained in any such legislation is to conserve the coal deposits as a public utility and to prevent monopoly or extortion in their disposition." 1909 Dep't Interior Ann.Rep. pt. I, at 7 (emphasis omitted). ⁹ The Secretary made the same suggestion with respect to "oil and gas fields in the public domain." Id.

In the same year "Congress deviated from its established policy of disposing of public lands under the nonmineral land laws only if they were classified as nonmineral in character and enacted the first of several statutes providing for the sale of lands with the reservation to the United States of certain specified minerals. These statutes were soon followed by statutes providing for the sale of lands with the reservation to the United States of all minerals. . . ." 1 American Law of Mining § 3.23, at 532 (1976).

The first of these statutes "separating the surface right from the right to the underlying minerals" was the Act of March 3, 1909 (35 Stat. 844), 30 U.S.C. § 81, followed shortly by the Acts of June 22, 1910 (36 Stat. 583), 30 U.S.C. §§ 83 et seq., April 30, 1912 (37 Stat. 105), 30 U.S.C. § 90, and August 24, 1912 (37 Stat. 496). See The Classification of the Public Lands, 537 U.S.Geological Survey Bull. 45, Department of Interior (1913). In the latter report, the Geological Survey pointed out that where lands were valuable for two uses, both uses could be served by "a separation of estates." The report urged adoption of legislation embodying "the extension of the principle of the separation of estates," plus the leasing of natural resources, as means of protecting such resources without delaying agricultural development. ¹⁰

In 1914, within a year of this appeal, Congress began consideration of a forerunner of the Stock-Raising Homestead Act. The bill was referred to the Department of Interior for comment, revised by the Department, and reintroduced. H.R.Rep. No. 626, 63d Cong., 2d Sess., reprinted at 52 Cong.Rec. 3986-90 (1915). It was enacted into law the following year.

This background supports the conclusion, confirmed by the language of the Stock-Raising Homestead Act, the Committee reports, and the floor debate, that when Congress imposed a mineral reservation upon the Act's land grants, it meant to implement the principle urged by the Department of Interior and retain governmental control of subsurface fuel sources, appropriate for purposes other than stock raising or forage farming. ¹¹

We turn to the statutory language. The title of the Act "The Stock-Raising...