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UNITED STATES v. MIDWEST OIL COMPANY

February 23, 1915

UNITED STATES
v.
MIDWEST OIL COMPANY



APPEAL FROM THE CIRCUIT COURT OF APPEALS FOR THE EIGHTH CIRCUIT

White, McKenna, Holmes, Day, Hughes, Van Devanter, Lamar, Pitney, McReynolds

Author: Lamar

[ 236 U.S. Page 466]

 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, c. 216, 29 Stat. 526; R. S. 2319, 2329.

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 enclosures, 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

[ 236 U.S. Page 467]

     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 field 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

[ 236 U.S. Page 468]

     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, ยง 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

[ 236 U.S. Page 469]

     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 withdrawn land which Congress, by general statute, had thrown open to acquisition by citizens. And while it is not known when the first of these orders was made, it is certain that "the practice dates from an early period in the history of the government." Grisar v. McDowell, 6 Wall. 381. Scores and hundreds of these orders have been made; and treating them as they must be (Wolsey v. Chapman, 101 U.S. 769), as the act of the President, an examination of official publications will show that (excluding those made by virtue of special congressional action, Donnelly v. United States, 228 U.S. 255) he has during the past 80 years, without express statutory authority -- but under the claim of power so to do -- made a multitude of Executive Orders which operated to withdraw public land that would otherwise have been open to private acquisition. They affected every kind of land --- mineral and nonmineral. The size of the tracts varied from a few square rods to many square miles and the amount withdrawn has aggregated millions of acres. The number of such instances cannot, of course, be accurately given, but the extent of the practice can best be appreciated by a consideration of what is believed

[ 236 U.S. Page 470]

     to be a correct enumeration of such Executive Orders mentioned in public documents.*fn1

They show that prior to the year 1910 there had been issued

99 Executive Orders establishing or enlarging Indian

Reservations;

109 Executive Orders establishing or enlarging Military

Reservations and setting apart land for water,

timber, fuel, hay, signal stations, target ranges

and rights of way for use in connection with

Military Reservations;

44 Executive Orders establishing Bird Reserves.

In the sense that these lands may have been intended for public use, they were reserved for a public purpose. But they were not reserved in pursuance of law or by virtue of any general or special statutory authority. For, it is to be specially noted that there was no act of Congress providing for Bird Reserves or for these Indian Reservations. There was no law for the establishment of these

[ 236 U.S. Page 471]

     Military Reservations or defining their size or location. There was no statute empowering the President to withdraw any of these lands from settlement or to reserve them for any of the purposes indicated.

But when it appeared that the public interest would be served by withdrawing or reserving parts of the public domain, nothing was more natural than to retain what the Government already owned. And in making such orders, which were thus useful to the public, no private interest was injured. For prior to the initiation of some right given by law the citizen had no enforceable interest in the public statute and no private right in land which was the property of the people. The President was in a position to know when the public interest required particular portions of the people's lands to be withdrawn from entry or location; his action inflicted no wrong upon any private citizen, and being subject to disaffirmance by Congress, could occasion no harm to the interest of the public at large. Congress did not repudiate the power claimed or the withdrawal orders made. On the contrary it uniformly and repeatedly acquiesced in the practice and, as shown by these records, there had been, prior to 1910, at least 252 Executive Orders making reservation for useful, though non-statutory purposes.

This right of the President to make reservations, -- and thus withdraw land from private acquisition, -- was expressly recognized in Grisar v. McDowell, 6 Wall. 364 (9), 381, where (1867) it was said that "from an early period in the history of the Government it has been the practice of the President to order, from time to time, as the exigencies of the public service required, parcels of land belonging to the United States to be reserved from sale and set apart for public uses."

But notwithstanding this decision and the continuity of this practice, the absence of express statutory authority was the occasion of doubt being expressed as to the power

[ 236 U.S. Page 472]

     of the President to make these orders. The matter was therefore several times referred to the law officers of the Government for an opinion on the subject. One of them stated (1889) (19 Op. 370) that the validity of such orders rested on "a long-established and long-recognized power in the President to withhold from sale or settlement, at discretion, portions of the public domain." Another reported that "the power of the President was recognized by Congress and that such recognition was equivalent to a grant" (17 Op. 163) (1881). Again, when the claim was made that the power to withdraw did not extend to mineral land, the Attorney General gave the opinion that the power "must be regarded as extending to any lands which belong to the public domain, and capable of being exercised with respect to such lands so long as they remain unappropriated." (17 Op. 232) (1881).

Similar views were expressed by officers in the Land Department. Indeed, one of the strongest assertions of the existence of the power is the frequently quoted statement of Secretary Teller made in 1881:

"That the power resides in the Executive from an early period in the history of the country to make reservations has never been denied either legislatively or judicially, but on the contrary has been recognized. It constitutes in fact a part of the Land Office law, exists ex necessitati rei, is indispensable to the public weal and in that light, by different laws enacted as herein indicated, has been referred to as an existing undisputed power too well settled ever to be disputed." 1 L. D., 338 (1881-3.)

2. It may be argued that while these facts and rulings prove a usage they do not establish its validity. But government is a practical affair intended for practical men. Both officers, law-makers and citizens naturally adjust themselves to any long-continued action of the Executive Department -- on the presumption that unauthorized acts would not have been allowed to be so

[ 236 U.S. Page 473]

     often repeated as to crystallize into a regular practice. That presumption is not reasoning in a circle but the basis of a wise and quieting rule that in determining the meaning of a statute or the existence of a power, weight shall be given to the usage itself -- even when the validity of the practice is the subject of investigation.

This principle, recognized in every jurisdiction, was first applied by this court in the often cited case of Stuart v. Laird, 1 Cranch, 299, 309. There, answering the objection that the act of 1789 was unconstitutional in so far as it gave Circuit powers to Judges of the Supreme Court, it was said (1803) that, "practice and acquiescence under it for a period of several years, commencing with the organization of the judicial system, affords an irresistible answer, and has indeed fixed the construction. It is a contemporary interpretation of the most forcible nature. This practical exposition is too strong and obstinate to be shaken or controlled."

Again, in McPherson v. Blacker, 146 U.S. 1 (4), where the question was as to the validity of a state law providing for the appointment of Presidential electors, it was held that, if the terms of the provision of the Constitution of the United States left the question of the power in doubt, the "contemporaneous and continuous subsequent practical construction would be treated as decisive" (36). Fairbank v. United States, 181 U.S. 307; Cooley v. Board of Wardens, 12 How. 315; The Laura, 114 U.S. 415. See also Grisar v. McDowell, 6 Wall. 364, 381, where, in 1867, the practice of the Executive Department was referred to as evidence of the validity of these orders making reservations of public land, even when the practice was by no means so general and extensive as it has since become.

3. These decisions do not, of course, mean that private rights could be created by an officer withdrawing for a Rail Road more than had been authorized by Congress in the land grant act. Southern Pacific v. Bell, 183 U.S. 685;

[ 236 U.S. Page 474]

     as it did when the valuable privilege of grazing cattle on this public land was held to be based upon an "implied license growing out of the custom of nearly a hundred years." Buford v. Houtz, 133 U.S. 326. So too, in the early days the "Government, by its silent acquiescence, assented to the general occupation of the public lands for mining." Atchison v. Peterson, 20 Wall. 512. If private persons could acquire a privilege in public land by virtue of an implied congressional consent, then for a much stronger reason, an implied grant of power to preserve the public interest would arise out of like congressional acquiescence.

The Executive, as agent, was in charge of the public domain; by a multitude of orders extending over a long period of time and affecting vast bodies of land, in many States and Territories, he withdrew large areas in the public interest. These orders were known to Congress, as principal, and in not a single instance was the act of the agent disapproved. Its acquiescence all the more readily operated as an implied grant of power in view of the fact that its exercise was not only useful to the public but did not interfere with any vested right of the citizen.

4. The appellees, however, argue that the practice thus approved, related to Reservations -- to cases where the land had been reserved for military or other special public purposes -- and they contend that even if the President could reserve land for a public purpose or for naval uses, it does not follow that he can withdraw land in aid of legislation.

When analyzed, this proposition, in effect, seeks to make a distinction between a Reservation and a Withdrawal -- between a Reservation for a purpose, not provided for by existing legislation, and a Withdrawal made in aid of future legislation. It would mean that a Permanent Reservation for a purpose designated by the President, but not provided for by a statute, would be valid, while a merely Temporary Withdrawal to enable Congress to

[ 236 U.S. Page 476]

     legislate in the public interest would be invalid. It is only necessary to point out that, as the greater includes the less, the power to make permanent reservations includes power to make temporary withdrawals. For there is no distinction in principle between the two. The character of the power exerted is the same in both cases. In both, the order is made to serve the public interest and in both the effect on the intending settler or miner is the same.

But the question need not be left solely to inference, since the validity of withdrawal orders, in aid of legislation, has been expressly recognized in a series of cases involving a number of such orders, made between 1850 and 1862. Dubuque & Pac. R. R. v. Litchfield, 23 How. 66; Wolcott v. Des Moines Co., 5 Wall. 681; Wolsey v. Chapman, 101 U.S. 755; Litchfield v. Webster County, 101 U.S. 773; Bullard v. Des Moines &c. R. R., 122 U.S. 167.

It appears from these decisions, and others cited therein, that in 1846 Congress made to the Territory of Iowa, a grant of land on both sides of the Des Moines, for the purpose of improving the navigation from the mouth of the river to Raccoon Fork, 5 Wall. 681. There was from the outset a difference of opinion as to whether the grant extended throughout the entire course of the river or was limited to the land opposite that portion of the stream which was to be improved. In Dubuque & Pac. R. R. v. Litchfield, 23 How. 66, decided in 1861, it was held that the grant only included the land between the mouth of the river and Raccoon Fork. But for eleven years prior to that decision there had been various and conflicting rulings by the Land Department. It was first held that the grant included land above the Fork and certificates were issued to the Territory as the work progressed. That ruling was shortly followed by another that the grant extended only up to the Fork.

"On April 6, 1850, Secretary Ewing, while concurring with Attorney General Crittenden in his opinion that the

[ 236 U.S. Page 477]

     grant of 1846 did not extend above the Raccoon Fork, issued an order withholding all the land then in controversy from market until the close of the then session of Congress, which order has been continued ever since," (we italicize) "in order to give the State the opportunity of petitioning for an extension of the grant by Congress." Bullard v. Des Moines R. R., 122 U.S. 170.

The withdrawal was made in 1851. The hoped-for legislation was not passed until several years later. Between those dates various private citizens made settlements by which, under various statutes they initiated rights and acquired an interest in the land -- if the withdrawal order was void. But by such settlements they obtained no rights if the withdrawal order was valid. A subsequent ratification could have related back to 1851, but if the withdrawal was originally void, the ratification of course, could not cut out intervening rights of settlers. Cook v. Tullis, 18 Wall. 338.

There was litigation between settlers claiming, as here, under existing land laws, and those whose title depended upon the original validity of the withdrawals made in aid of legislation. (Riley v. Welles, 154 U.S. 578; Bullard v. Des Moines R. R., 122 U.S. 173; Wolcott v. Des Moines, 5 Wall. 681.) In those suits, the withdrawal orders were not treated as having derived their validity from the legislation subsequently passed in aid of Iowa and its assignees, but they were treated as having been effective from their dates, regardless of the fact that the land included therein had not originally been granted to Iowa. In one of them it was said that:

"This Court has decided in a number of cases, in regard to these lands, that this withdrawal operated to exclude from sale, purchase, or preemption all the lands in controversy. . ...


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