United States v. Midwest Oil Company 12, 1914

• Decision Date: 20 April 1914
• Docket Number: No. 278,278
• Citation: 59 L.Ed. 673,35 S.Ct. 309,236 U.S. 459
• Parties: UNITED STATES v. MIDWEST OIL COMPANY et al. Argued January 9 and 12, 1914. Ordered for reargument before full bench
• Court: U.S. Supreme Court

236 U.S. 459

35 S.Ct. 309

59 L.Ed. 673

UNITED STATES

v MIDWEST OIL COMPANY et al.

No. 278.

Argued January 9 and 12, 1914.

Ordered for reargument before full bench April 20, 1914.

Reargued May 7, 1914.

Decided February 23, 1915.

ON A CERTIFICATE from the United States Circuit Court of Appeals for the Eighth Circuit, presenting the following questions:

1. Prior to the act of June 25, 1910 (36 Stat. at L. 847, 848, chap. 421, Comp. Stat. 1913, §§ 4523, 4525), did the President (or the Secretary of the Interior) have the lawful power, 'in aid of proposed legislation affecting the use and disposition of the petroleum deposits on the public domain,' to withdraw public lands containing petroleum, and chiefly valuable therefor, from all forms of location, selection, filing, entry, or disposal under the public mineral-land laws?

2. Did petroleum withdrawal No. 5, of date September 27, 1909, have the effect of preventing the lawful location or acquisition of lands (described in said withdrawal order No. 5), which contained petroleum or other mineral oils, and were chiefly valuable therefor, by persons authorized to enter lands under the mining laws of the United States, under the provisions of the act of Congress entitled, 'An Act to Authorize the Entry and Patenting of Lands Containing Petroleum and Other Mineral Oils under the Placer-Mining Laws of the United States,' approved February 11, 1897 (29 Stat. at L. 526, chap. 216, Comp. Stat. 1913, § 4635).

3. Must the efficacy of the order of September 27, 1909, to reserve the land in controversy from the subsequent initiation and acquisition of rights under the act of February 11, 1897, supra, be held to depend upon the nature of the purpose or purposes for which it was made?

4. If question No. 3 be answered in the affirmative, then was it essential to the validity of the reservation or withdrawal that the purpose or purposes be expressed in the order itself?

5. If there were specific purposes actuating the order of September 27, 1909, sufficient in law to sustain it, and consistent with, but not appearing in, its language, was it incumbent on the plaintiff to allege such specific purposes in

Page 459-Continued.

its bill in order to have the advantage of them as against the defendant's motion to dismiss?

6. Assuming that the general purposes expressed in the order of September 27, 1909, do not suffice alone to determine its validity or invalidity, and that there might have been another consistent purpose sufficient to sustain it, should the order be presumed to be valid in the absence of any allegation or proof that such other purpose did not exist?

This suit originated in a bill in equity filed by the United States in the District Court of the United States for the District of Wyoming, seeking to recover certain tracts of petroleum lands and to obtain an accounting for petroleum alleged to have been illegally extracted therefrom. The court sustained the defendant's demurrer and dismissed the bill, whereupon the government took the case to the Circuit Court of Appeals, which rendered no decision, but certified the above questions to the Supreme Court. Case remanded to the District Court, with directions to reverse the decree dismissing the bill.

The facts are stated in the opinion.

Solicitor General Davis and Assistant Attorney General Knaebel for the United States.

Messrs. Joel F. Vaile, Henry McAllister, Jr., William N. Vaile, Karl C. Schuyler, Walter F. Schuyler, A. M. Stevenson, and Lee Champion for the Midwest Oil Company et al.

[Argument of Counsel from pages 460-465 intentionally omitted] Messrs. Aldis B. Browne, Alexander Britton, Evans Browne, Francis W. Clements Frederic R. Kellogg, E. S. Pillsbury, Oscar Sutro, and Frank H. Short as amici curioe.

Mr. Justice Lamar delivered the opinion of the court:

All public lands containing petroleum or other mineral oils, and chiefly valuable therefor, have been declared by Congress to be 'free and open to occupation, exploration, and purchase by citizens of the United States . . . under regulations prescribed by law.' Act of February 11, 1897, 29 Stat. at L. 526, chap. 216, Comp. Stat. 1913, § 4635; Rev. Stat. §§ 2319, 2329, Comp. Stat. 1913, §§ 4614, 4628.

As these regulations permitted exploration and location without the payment of any sum, and as title could be obtained for a merely nominal amount, many persons availed themselves of the provisions of the statute. Large areas in California were explored; and petroleum having been found, locations were made, not only by the discoverer, but by others on adjoining land. And, as the flow through the well on one lot might exhaust the oil under the adjacent land, the interest of each operator was to extract the oil as soon as possible, so as to share what would otherwise be taken by the owners of nearby wells.

The result was that oil was so rapidly extracted that on September 17, 1909, the Director of the Geological Survey made a report to the Secretary of the Interior which, with inclosures, called attention to the fact that, while there was a limited supply of coal on the Pacific coast, and the value of oil as a fuel had been fully demonstrated, yet, at the rate at which oil lands in California were being patented by private parties, it would 'be impossible for the people of the United States to continue ownership of oil lands for more than a few months. After that the government will be obliged to repurchase the very oil that it has practically given away. . . .' 'In view of the increasing use of fuel by the American Navy there would appear to be an immediate necessity for assuring the conservation of a proper supply of petroleum for the government's own use. . . .' and 'pending the enactment of adequate legislation on this subject, the filing of claims to oil lands in the state of California should be suspended.'

This recommendation was approved by the Secretary of the Interior. Shortly afterwards he brought the matter to the attention of the President, who, on September 27, 1909, issued the following proclamation:

Temporary Petroleum Withdrawal No. 5.

In aid of proposed legislation affecting the use and disposition of the petroleum deposits on the public domain, all public lands in the accompanying lists are hereby temporarily withdrawn from all forms of location, settlement, selection, filing, entry, or disposal under the mineral or nonmineral public-land laws. All locations or claims existing and valid on this date may proceed to entry in the usual manner after filing, investigation, and examination.

The list attached described an area aggregating 3,041,000 acres in California and Wyoming—though, of course, the order only applied to the public lands therein, the acreage of which is not shown.

On March 27, 1910, six months after the publication of the proclamation, William T. Henshaw and others entered upon a quarter section of this public land in Wyoming, so withdrawn. They made explorations, bored a well, discovered oil, and thereafter assigned their interest to the appellees, who took possession and extracted large quantities of oil. On May 4, 1910, they filed a location certificate.

As the explorations by the original claimants, and the subsequent operation of the well, were both long after the date of the President's proclamation, the government filed, in the district court of the United States for the district of Wyoming, a bill in equity against the Midwest Oil Company and the other appellees, seeking to recover the land and to obtain an accounting for 50,000 barrels of oil alleged to have been illegally extracted. The court sustained the defendant's demurrer and dismissed the bill. Thereupon the government took the case to the circuit court of appeals of the eighth circuit, which rendered no decision, but certified certain questions to this court, where an order was subsequently passed, directing the entire record to be sent up for consideration.

The case has twice been fully argued. Both parties, as well as other persons interested in oil lands similarly affected, have submitted lengthy and elaborate briefs on the single and controlling question as to the validity of the withdrawal order. On the part of the government it is urged that the President, as Commander in Chief of the Army and Navy, had power to make the order for the purpose of retaining and preserving a source of supply of fuel for the Navy, instead of allowing the oil land to be taken up for a nominal sum, the government being then obliged to purchase at a great cost what it had previously owned. It is argued that the President, charged with the care of the public domain, could, by virtue of the executive power vested in him by the Constitution (art. 2, § 1), and also in conformity with the tacit consent of Congress, withdraw, in the public interest, any public land from entry or location by private parties.

The appellees, on the other hand, insist that there is no dispensing power in the Executive, and that he could not suspend a statute or withdraw from entry or location any land which Congress had affirmatively declared should be free and open to acquisition by citizens of the United States. They further insist that the withdrawal order is absolutely void, since it appears on its face to be a mere attempt to suspend a statute—supposed to be unwise—in order to allow Congress to pass another more in accordance with what the Executive thought to be in the public interest.

1. We need not consider whether, as an original question, the President could have withdrawn from private acquisition what Congress had made free and open to occupation and purchase. The case can be determined on other grounds and in the light of the legal consequences flowing from a long-continued practice to make orders like the one here involved. For the President's proclamation of September 27, 1909, is by no means the first instance in which the Executive, by a special order, has...