United States v. Union Oil Company of California

• Decision Date: 30 October 1973
• Docket Number: Civ. No. 72-1866 GBH.
• Citation: 369 F. Supp. 1289
• Parties: UNITED STATES of America, Plaintiff, v. UNION OIL COMPANY OF CALIFORNIA, a California corporation, et al., Defendants.
• Court: U.S. District Court — Northern District of California

369 F. Supp. 1289

UNITED STATES of America, Plaintiff, v. UNION OIL COMPANY OF CALIFORNIA, a California corporation, et al., Defendants.

Civ. No. 72-1866 GBH.

United States District Court, N. D. California.

October 30, 1973.

James L. Browning, Jr., U. S. Atty., and David E. Golay, Asst. U. S. Atty., San Francisco, Cal., for plaintiff.

Gregory A. Harrison, Atherton Phleger, David J. Wynne, Brobeck, Phleger & Harrison, San Francisco, Cal., Lyman A. Garber, Beverly Hills, Cal., Albert D. Elledge and George B. White, Vernon W. Humber and Xenophon Tragoutsis, San Francisco, Cal., for defendants.

MEMORANDUM OF DECISION

GEORGE B. HARRIS, District Judge.

I. INTRODUCTION

This matter is before the court on the motion of certain defendants to dismiss for failure to state a claim upon which relief can be granted, and on the counter-motion of plaintiff United States for summary judgment in its favor. The defendants joined in the motion to dismiss are as follows: Union Oil Company of California; Magma Power Company; Thermal Power Company; Alex C. Beigel; Helen V. Dillingham; Frances W. Vought; Louis W. Pellegrini; Ione J. Ottoboni; Patricia Ottoboni; Louis Ottoboni; James Ottoboni; Emma Ottoboni; Albert Ottoboni; Peter Mazzanti; Mrs. Louis Ottoboni Johnson; Ceasar Gianecchini; John Giampaoli; Ilva Giampaoli; Elmer Ferrari; and David Ferrari.

The case arises from a complaint filed herein on October 13, 1972, by which the United States seeks a declaration of its ownership rights in the geothermal steam and associated geothermal resources presently being produced by certain defendants under leases from other defendants. The United States also seeks injunctive relief and damages in the amount of the reasonable rental value of such leased lands for geothermal steam and associated geothermal resources and of the reasonable royalty of the geothermal steam and associated geothermal resources produced therefrom in accordance with the provisions of the Geothermal Steam Act of 1970, 30 U.S.C. § 1001 et seq. The leased lands in question, all of which lie in Sonoma County, California, were granted to defendants' predecessors in interest by patents issued under the Stock Raising Homestead Act of 1916, 43 U.S.C. § 291 et seq. hereinafter sometimes called the "Act", and thereafter devolved to certain of the defendants by mesne conveyances.

The claim of the United States is based upon the following language in § 9 of the Stock Raising Homestead Act (43 U.S.C. § 299):

All entries made and patents issued under the provisions of sections 291-301 of this title 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. * * *

It is the position of the United States that the reservation of "all the coal and other minerals" contained in § 9 and in the patents granted thereunder to defendants' predecessors in interest severed the subsurface estate in its entirety from the surface estate, reserving the former to the United States and granting only the latter, thus reserving to the United States the right to "prospect for, mine, and remove" geothermal steam and associated geothermal resources.

Because of uncertainty over whether a mineral reservation such as that cited above encompassed geothermal resources.¹ Congress included § 21(b) in the Geothermal Steam Act of 1970 (30 U.S. C. § 1020(b)) to test its title thereto:

Geothermal resources in lands the surface of which has passed from Federal ownership but in which the minerals have been reserved to the United States shall not be developed or produced except under geothermal leases made pursuant to this chapter. If the Secretary of the Interior finds that such development is imminent, or that production from a well heretofore drilled on such lands is imminent, he shall so report to the Attorney General, and the Attorney General is authorized and directed to institute an appropriate proceeding in the United States district court of the district in which such lands are located, to quiet the title of the United States in such resources, and if the court determines that the reservation of minerals to the United States in the lands involved included the geothermal resources, to enjoin their production otherwise than under the terms of this chapter: Provided, That upon an authoritative judicial determination that Federal mineral reservation does not include geothermal steam and associated geothermal resources the duties of the Secretary of the Interior to report and of the Attorney General to institute proceedings, as hereinbefore set forth, shall cease.

The instant case is such an "appropriate proceeding."

II. DISCUSSION

The central issue here concerns the meaning and scope of the mineral reservation in the Stock Raising Homestead Act and in the patents granted thereunder. In order to properly construe such reservation, the intent of Congress at the time of the enactment of the Act and under the circumstances then present must be ascertained. See Moor v. County of Alameda, 411 U.S. 693, 709, 93 S.Ct. 1785, 36 L.Ed.2d 596 (1973); United States v. Stewart, 311 U.S. 60, 69, 61 S.Ct. 102, 85 L.Ed. 40 (1940). Although the clear meaning of statutory language is not to be ignored, "`words are inexact tools at best,' . . . and hence it is essential that we place the words of a statute in their proper context by resort to the legislative history." Tidewater Oil Co. v. United States, 409 U.S. 151, 157, 93 S. Ct. 408, 413, 34 L.Ed.2d 375 (1972).

Such intent may be gleaned from several factors, including pertinent committee reports,² statements from its sponsors,³ floor debates,⁴ the act's title,⁵ successive drafts,⁶ and the general purpose of the legislation.⁷

In addition, it is the accepted rule of construction that when a grant of land is made by a public body, such as the United States, the language of such grant (and of any reservations therein), if ambiguous, is to be construed strictly against the grantee and broadly in favor of the public body.⁸ This rule is the reverse of the normal rule of construction which requires strict construction against the draftsman of the instrument in question (generally the grantor).⁹

The Stock Raising Homestead Act grew from Congressional desire to give homesteaders title to substantialsized tracts of land in the semi-arid states of the West where they could raise livestock and engage in agriculture, thus promoting the settlement and prosperity of such states.

In 1914, a forerunner of the Act was submitted to the House of Representatives, 63d Cong., as H.R. 9582. This bill contained a section reserving to the United States "all the minerals and coal in the lands so entered." 52 Cong.Rec. 3987 (63d Cong., 3d Sess., 1915). The bill was submitted to the Department of the Interior for comment. The Department, through the First Assistant Secretary, commented on H.R. 9582 and on related bill H.R. 6637 and submitted the draft of a proposed revised bill. This substitute, which became H.R. 15799, provided for a reservation "of all the coal and other minerals." Id. at 3988.

Representative Raker of California made the following remarks on H.R. 15799:

One of the purposes of the bill is to restore and improve the grazing capacity of the lands, and therefore stock raising and meat-producing capacity of the semiarid lands of the West, and at the same time to furnish homes thereon for the people of this country who are desirous of acquiring a home in the semiarid country. 52 Cong.Rec.App. 520 (63d Cong., 3d Sess., 1915).

* * * * * *

We want homes and not tenants even if the Government of the United States should be that landlord. If water should be later discovered by boring deep wells, then so much the better. The pioneer, who has gone through all the hardship and privations, will be the man to be benefited. We hope he may. Id. at 521.

This bill passed the House, but was not, however, passed by the Senate. Representative Taylor of Colorado explained why as he introduced an identical bill to the next session of Congress:

This bill H.R. 407 has been before Congress for two years. This is almost an exact copy of the bill on this subject which passed this House a year ago next Tuesday, January 18, 1915. * * *

* * * * * *

As stated by the commissioner, it was favorably reported by the Senate Public Lands Committee, but owing to the long debate upon the shipping bill, and there being a large number of other important measures upon the Senate calendar ahead of it, the bill failed of passage.

The present bill as introduced is an identical copy of the bill as it passed the House during the last congress. 53 Cong.Rec. 1126 (64th Cong., 1st Sess., 1916).

In debate, Representative Moore of Pennsylvania asked whether the mineral reservation clause in § 10 of the proposed act covered the Government's interest in oil lands. Representatives Moore and Ferris of Oklahoma then engaged in the following colloquy:

MR. FERRIS. It would. We believe it would cover every kind of mineral. All kinds of minerals are reserved . . . .

MR. MOORE of Pennsylvania. If any oil should be discovered on these lands later on, the Government's right to that oil would be preserved under the mineral clause, would it?

MR. FERRIS. Yes; and further, this act authorizes the reentry upon these lands to extract oil and coal and anything else in the way of minerals that may be on it.

MR. MOORE of Pennsylvania. The gentleman does not think it is necessary to specify oil?

MR. FERRIS. No. That is a mineral. But I have no objection to it being mentioned specifically if it is at all thought necessary. I feel doubly sure, however, it is not.

MR. MOORE of Pennsylvania. It has been called to my attention that the word "mineral" would not include oil.

MR. FERRIS. I do not think it is necessary; but if the gentleman thinks there is any conceivable doubt about it we will put it

...