United States v. Belridge Oil Co.

• Decision Date: 12 July 1926
• Docket Number: No. 4782.,4782.
• Parties: UNITED STATES v. BELRIDGE OIL CO.
• Court: U.S. Court of Appeals — Ninth Circuit

13 F.2d 562 (1926)

UNITED STATES v. BELRIDGE OIL CO.

No. 4782.

Circuit Court of Appeals, Ninth Circuit.

July 12, 1926.

Samuel W. McNabb, U. S. Atty., and John R. Layng, Asst. U. S. Atty., both of Los Angeles, Cal., and Nat M. Lacy, Sp. Asst. Atty. Gen., for the United States.

L. W. Andrews, A. V. Andrews, and Oscar Lawler, all of Los Angeles, Cal., for appellee.

Before GILBERT, HUNT, and RUDKIN, Circuit Judges.

GILBERT, Circuit Judge.

In the court below the United States brought a suit to cancel a lease to lands in Naval Petroleum Reserve No. 1 in the state of California, executed on April 24, 1922, to the appellee, by the First Assistant Secretary of the Interior, at the direction of Albert B. Fall, the Secretary of the Interior, alleging in the complaint that by the Act of June 4, 1920 (41 Stat. 812), the Secretary of the Navy was directed to take possession of the lands within the Naval Petroleum Reserves, subject to the control of the United States, for naval purposes, to be conserved, developed, used, and operated by him directly, or by contract, lease, or otherwise; that the Secretary of the Interior induced the President to issue the executive order of May 31, 1921, transferring to him the powers conferred and the duty imposed by Congress upon the Secretary of the Navy; that the lease was for a period of 20 years of 142.16 acres in section 34, township 30 south, range 24 east of the Mt. Diablo meridian, with the preferential right of renewal for successive periods of 10 years; that the lease was made without advertisement thereof, and without competitive bidding, and without requesting proposals therefor; that the executive order of May 31, 1921, was contrary to the Act of June 4, 1920, and ineffective to confer power upon the Secretary of the Interior to execute the lease.

The bill further alleged the extraction of more than 1,000,000 barrels of oil from the leased premises upon a daily average production of 2,096 barrels, and alleged that the lessee was proposing to drill additional wells on the leased land, which, unless restrained by the court, would cause irreparable injury to the land and obstruct the declared policy of the United States to conserve the oil for the use of the Navy. The bill prayed for an injunction against further operations and trespass on the land, and for the annulment of the lease. The cause was heard on the pleadings, the stipulations and admissions of counsel, and the evidence, both oral and documentary, and thereupon the court held that the affirmative defenses set up in the answer were fully sustained by the evidence, and dismissed the bill of complaint.

The primary contention of the appellant is that the executive order of May 31, 1921, was void for want of power in the President to transfer to the Secretary of the Interior the powers and duties conferred by Congress upon the Secretary of the Navy, and it is asserted that Congress alone has power to legislate concerning the disposition of the public lands and to make needful rules and regulations respecting the territory or other property belonging to the United States, and that the power is exclusive, citing Utah Power & Light Co. v. United States, 243 U. S. 389, 404, 37 S. Ct. 387, 61 L. Ed. 791; Hot Springs Cases, 92 U. S. 698, 23 L. Ed. 690; The Floyd Acceptances, 7 Wall. 666, 676, 19 L. Ed. 169; Van Lear v. Eisele (C. C.) 126 F. 823; and it is further asserted that Congress, having vested the power in the Secretary of the Navy to conserve, develop, use, and operate, directly or by contract, lease, or otherwise, unappropriated lands in the Naval Reserves, the President was without authority to confer such power upon the Secretary of the Interior, citing Norton v. Shelby County, 118 U. S. 425, 6 S. Ct. 1121, 30 L. Ed. 178, Pan-American Petroleum Co. v. United States, 9 F.(2d) 761, United States v. Pan-American Petroleum Co. (D. C.) 6 F.(2d) 43, and Lear v. United States (D. C.) 50 F. 65.

The appellee asserts the validity of the lease upon grounds wholly distinct from the question of the validity of the executive order, and rests its affirmative defense upon the following propositions: (1) That the lease was adopted, acquiesced in, and ratified by the Secretary of the Navy. (2) That it was acquiesced in and ratified by Congress.

To the proposition that, notwithstanding the alleged want of power to transfer the management of the oil reserves from the Naval Department to the Department of the Interior, Congress might ratify such transfer by acquiescence, the appellee relies upon Buford v. Houtz, 133 U. S. 320, ...