Occidental Geothermal, Inc. v. Simmons

• Decision Date: 15 July 1982
• Docket Number: No. C-81-0510,C-82-0911.,C-81-0510
• Citation: 543 F. Supp. 870
• Parties: OCCIDENTAL GEOTHERMAL, INC., a corporation, Plaintiff, v. Charles T. SIMMONS, Individually, and as Conservator of the Estate of Octavia Simmons, Conservatee, and Robert M. Curtis, Trustee of the Marital Trust under the Will of William W. Simmons, Jr., Defendants, The United States; James Watt, in his capacity as Secretary of the Interior; and William French Smith in his capacity as Attorney General of the United States, Additional Defendants Aligned in Interest With Plaintiff, Binkley Ranch Club, Frank Palmieri, Hummingbird West, a California corporation, Thomas E. Binkley and Robert W. Binkley, Carolyn M. Henderson, Henry P. Spaletta, Jr. and Nancy Spaletta, and Charles Gates, Intervenors. CALIFORNIA DEPARTMENT OF WATER RESOURCES, Plaintiff, v. BINKLEY RANCH CLUB, a corporation, Defendant, United States of America, Defendant Aligned in Interest with Plaintiff.
• Court: U.S. District Court — Northern District of California

543 F. Supp. 870

OCCIDENTAL GEOTHERMAL, INC., a corporation, Plaintiff, v. Charles T. SIMMONS, Individually, and as Conservator of the Estate of Octavia Simmons, Conservatee, and Robert M. Curtis, Trustee of the Marital Trust under the Will of William W. Simmons, Jr., Defendants, The United States; James Watt, in his capacity as Secretary of the Interior; and William French Smith in his capacity as Attorney General of the United States, Additional Defendants Aligned in Interest With Plaintiff, Binkley Ranch Club, Frank Palmieri, Hummingbird West, a California corporation, Thomas E. Binkley and Robert W. Binkley, Carolyn M. Henderson, Henry P. Spaletta, Jr. and Nancy Spaletta, and Charles Gates, Intervenors.

CALIFORNIA DEPARTMENT OF WATER RESOURCES, Plaintiff, v. BINKLEY RANCH CLUB, a corporation, Defendant, United States of America, Defendant Aligned in Interest with Plaintiff.

Nos. C-81-0510, C-82-0911.

United States District Court, N. D. California.

July 15, 1982.

Tony J. Tanke, Lombardi & Lombardi, Knudson, Tanke & Scholz, Berne Reuben, Griffinger & Levinson, San Francisco, Cal., for Occidental Geothermal, Inc.

Philip C. Fullerton, Fullerton, Lang, Richert & Patch, Fresno, Cal., for Robert M. Curtis.

Peter F. Windrem, Lakeport, Cal., for Binkley Ranch Club, Frank Palmieri, Hummingbird West, Thomas E. Binkley, Nancy Spaletta, Charles Gates, Robert W. Binkley, Carolyn H. Henderson and Henry P. Spaletta, Jr., intervenors.

David E. Golay, Asst. U. S. Atty., San Francisco, Cal., Susan V. Cook, Dept. of Justice, Washington, D. C., for Federal defendants.

Michael L. McQueen, James N. Barkeley, Los Angeles, Cal., for Union Oil Co. of California — amicus curiae.

N. Gregory Taylor, Asst. Atty. Gen., Dennis M. Eagan, Joseph Barbieri, M. Anne Jennings, Deputy Attys. Gen., San Francisco, Cal., for Cal. Dept. of Water Resources.

OPINION

PATEL, District Judge.

I. THE PROPHECY

In the early 1900s Congress enacted a number of statutes opening up public lands for agricultural and homestead settlement, subject to a reservation of mineral rights to the United States. One of those statutes was the Stock-Raising Homestead Act of December 29, 1916, 43 U.S. §§ 291-301 (hereinafter the "1916 Act").

In the long debates that preceded this legislation one congressman predicted that "this bill will encourage litigation. I cannot imagine a more fruitful source of lawsuits than this bill as it is now worded." 45 Cong.Rec. 6045 (1910).

II. THE PROPHECY FULFILLED

The congressman's predictions have come true. This court now considers two cases, consolidated for pretrial purposes,¹ which arise under the 1916 Act. They are not the first fruits of the Act, but yet another yield from this bountiful source.

In Occidental Geothermal, Inc. v. Simmons, et al., No. C-81-0510-MHP, plaintiff Occidental Geothermal sued Charles Simmons and Robert Curtis, owners of surface interests in land in the Geysers area of Lake and Sonoma Counties in Northern California, a region rich in subsurface geothermal steam. Simmons' and Curtis' surface rights were patented to their predecessors in interest by the United States pursuant to the 1916 Act, subject to a reservation of mineral rights to the United States. Occidental Geothermal holds a geothermal resources lease issued in 1979 by the Bureau of Land Management of the United States Department of the Interior pursuant to the Geothermal Steam Act of 1970, 30 U.S.C. §§ 1001-1025 (hereinafter the "1970 Act"). Section 1 of this lease purports to grant to Occidental Geothermal the right to "drill for, extract, produce, remove, utilize, sell and dispose of geothermal steam and associated geothermal resources" in or under the lands patented to the predecessors of Simmons and Curtis,

together with ... (b) The right to construct or erect and to use, operate and maintain within the leased area, together with ingress and egress thereupon all wells, pumps, pipes, pipelines, buildings, plants, sumps, brine pits, reservoirs, tanks, waterworks, pumping stations, roads, electric power generating plants, transmission lines, industrial facilities, electric, telegraph or telephone lines, and such other works and structures and to use so much of the surface of the land as may be necessary or reasonably convenient for the production, utilization and processing of geothermal resources or to the full enjoyment of the rights granted by this lease....

Occidental Geothermal sought, among other forms of relief, a declaratory judgment establishing its right to build and operate, on the parcel in question, the facilities described in this section of the lease, without the consent of Simmons and Curtis. Occidental Geothermal later amended its complaint to add the United States, the Secretary of the Interior, and the Attorney General as additional defendants aligned in interest with plaintiff, under the provisions of 28 U.S.C. § 2409a. A number of owners who hold surface interests originally patented under the 1916 Act in the area of the Geysers were permitted to intervene. These intervenors were Binkley Ranch Club, Frank Palmieri, Hummingbird West, Thomas Binkley, Robert Binkley, Carolyn Henderson, Henry Spaletta, Jr., Nancy Spaletta, and Charles Gates.

Various parties then made and briefed cross-motions for summary judgment. Before the date set for hearing, however, Occidental Geothermal arrived at a proposed settlement of all claims pending between it and Simmons and Curtis. The federal government defendants then moved for and were granted leave to file a cross-claim against three of the intervenors: Frank Palmieri, Thomas Binkley, and Carolyn Henderson. The United States represents in its cross-claim that "as soon as possible" it plans to sell more leases purporting to grant to lessees the right to construct geothermal electric generating plants and associated facilities on 1916 Act lands, including those in which Palmieri, Binkley, and Henderson hold surface interests. The cross-claim seeks a declaratory judgment establishing that the right to construct such geothermal power plants on the surface of the cross-defendants' lands was among the rights reserved to the United States when certain interests in the lands were originally granted to private owners. The federal defendants have now moved for summary judgment as to this cross-claim.

In California Department of Water Resources v. Binkley Ranch Club, a corporation, and the United States of America, No. C-82-0911-MHP, plaintiff Department of Water Resources holds a lease that is identical in all relevant respects to that issued to Occidental Geothermal. It purports to grant geothermal power plant siting rights on the land of the Binkley Ranch Club, one of the intervenor-landowners in Occidental Geothermal, Inc. v. Simmons, et al. The Department of Water Resources seeks declaratory and injunctive relief establishing its right to construct and operate on the Binkley Ranch Club land the facilities referred to in its geothermal resources lease, without the Binkley Ranch Club's consent. It has now moved for summary judgment. As this case and Occidental Geothermal, Inc. v. Simmons et al. turn on the same question of law, and as there appear to be no substantial factual differences between the cases relevant to that legal issue, the cases are hereby ordered to be consolidated for pretrial purposes, and the two motions will be disposed of together.²

III. THE PROPHECY BECOMES THE LAW³

The 1916 Act provided that up to 640 acres of unappropriated, unreserved public land could be homesteaded and patented to each private owner. 43 U.S.C. § 291. The Act described the homesteader's possession of the land as a "stock-raising homestead entry," and it provided that such entries could only be made on lands officially designated by the Secretary of the Interior as "stock-raising lands." Id. It authorized the Secretary to designate as "stock-raising lands subject to entry ... lands the surface of which is, in his opinion, chiefly valuable for grazing and raising forage crops, do not contain merchantable timber, are not susceptible of irrigation from any known source of water supply, and are of such character that six hundred and forty acres are reasonably required for the support of a family...." 43 U.S.C. § 292.

The 1916 Act, however, also provides that all homesteading entries made and patents issued "shall be 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." 43 U.S.C. § 299. It also provides that any person who has acquired from the United States the right to mine and remove the mineral deposits "may reenter and occupy so much of the surface thereof as may be required for all purposes reasonably incident to the mining or removal of the coal or other minerals ...," without the consent of the entryman or surface owner, upon the execution of a bond or undertaking to secure the payment of the amount of damages "to the crops or tangible improvements of the entryman or owner" occasioned by the mineral owner's occupation of the surface. Id.⁴ It is undisputed that the interests now held by Palmieri, Binkley, Henderson, and the Binkley Ranch Club were originally patented pursuant to this Act.

In the 1970 Act, Congress authorized the sale by the Secretary of the Interior of "leases for the development and utilization of geothermal steam and associated geothermal resources ... (3) in lands which have been conveyed by the United States subject to a reservation to the United States of the geothermal steam and associated geothermal resources therein." 30 U.S.C. § 1002. And, pursuant to this Act, the Secretary has promulgated regulations subject to which the Bureau of Land Management may issue geothermal leases for such lands. 43 C.F.R. §§ 3200 et seq. (1981).

In United States v. Union Oil Co. of California, 549 F.2d 1271 (9th Cir.), cert. denied, ...