OCR Text |
Show THURSDAY, OCTOBER 7, 1971 THE DAILY RECOID - PAGE THESE ; In The Supreme Court Of The State Of Utah Mines, which has this to say: "Paradoxically, oil shale is not necessarily a shale, nor does it contain oil. d, It can be broadly defined as a compact sedimentary rock, which is and an laminated, generally containing weight mineraloid organic of indefinite composition, which is derived chiefly from aquatic organisms,1 probably of algae origin, or from waxy spores and pollen grain. This organic matter is called kerogen, from the two Greek words meaning producer of wax.. Thus, the name of kerogen shale has also been suggested as being more appropriate than oil shale. One property which is essential to all types of true oil shales is that their organic constituent is only slightly soluble, if at all, when extracted with ordinary solvents for petroleum at room temperature. Also, kerogen yields petroleum hydrocarbons only upon destructive distillation by heat (pyrolysis) and subsequent refining (Bradley, 1931; Gavin, 1924; Levorsen, 1958). It is important to note that retorting of oil shale yields shale oil, which is not petroleum, but rather a black waxy oil, which freezes at room Umperciture, and contains not only carbon and hydrogen, but also oxygen, nitrogen and sulphux. Special refining methods are required to coiweit shale oil into marketable products (Ertl. 1955). fine-graine- high-molecu- lar as amended (Chap. 183, Sec. 2, Laws of Utah 1967), also intended that oil shale was not included in a conventional "oil and gas" or its twin "bituminous sands" lease (First Morgan case). print lo a recognition that oil, shale is something different from, and the subjec t of different regulatory and taxing authority of governmental units. s Although the distinction is significant, it would seem to be Irrelevant under the clear terms of the lease. If the Land Board, under the 1967 legislation, was of the frame of mind to lease state land to someone for the purpose of prospecting for and developing petroleum in a natural liquid state, but insisted on excluding oil to be extracted from bituminous sands, as is the case here with respect to "oil shale," it would be an deal, and if a lessee acceded to such terms, but later said, as is argued here, that the bituminous sand or oil and gas state exclusion was void since it already was included in the oil of category, his lease would be worthless as lacking a manifestation mutual assent, and a representation of uncons cionability hardly in consonance with the length of the Chancellor's foot. over-the-count- take-it-or-leav- e 1 65-1-- 18 . 'Oil shales should not be confused with rocks which are actually impregnated with oil, far example, the Athbaska sandstone (tar sand) of Alberta. Canada . . . and finally, organic mineral substances. ' " Some other significant circumslaui.-e- Such a state of the record, however, reflects that two justices did not concur with the conclusion in the second Morgan case to the effect that oil shale was either a subject discussed or intended for adjudication in the first Morgan case that dealt strictly and only with 1) oil and gas andor 2) bituminous sands, nor did they concede that oil shale was identical to liquid petroleum in place in a pool or in porous or partially saturated bituminous sand formation. The author of this opinion had reservations about this aspect of the case, and concurred in the result, which seemed at the time to be somewhat meritorious' but based on questionable and debatable reasons. I am now of the studied opinion that any doubts must be resolved in favor of the "multiple use" concept which, it must be noted, specifically is referred to in the statute itself, reflecting a diversified development of different minerals found legislative intent in state lands by the issuance of more than one lease, - and we determine that the considerable preponderance of evidence favors a conclusion that a) "oil shale" is a mineral physically and chemically different than mobile petroleum in pools and bituminous sands such as to justify our further conclusion that b) the intended it to be subject to lease separately and dislegislature under tinctly from the only two materials treated in the first Morgan case, i. e. , oil pools and bituminous sands. This conclusion resolves any argument that the part of the statute saying that the board could not issue more than one lease for the same "purpose" on the same land was intended to mean some chemically processed article, perhaps of a strictly synthetic nature rather than to search for mineral in its natural state. from two others. er, Besides the concession made by plaintiffs in the first Morgan case and quoted above anent classification of oil, coal, kerogen, etc. as different minerals, we think the evidence clearly preponderates to show that the two identical minerals involved in the first Morgan case are so different in many ways from oil shale as to justify our decision that the legislature intended that oil shale should be the subject of a lease as being "any mineral notwithstanding the issuance of other lease or leases on the same land for other minerals." This conclusion is borne out by many authorities and circumstances that pattern and reflect it in the record. e-it -liquid We point out these differences, not in extenso, but simply to illus-stra- te that the first Morgan case of 1968, had to do only with the issue of whether "oil and gas" leases covered the same mineral as "bituminous sands" leases, - not whether either or both covered "oil shale" leases, which were not before the court. The records reflect, in our opinion, that it is evident that oil and gas, and bituminous sands leases have to do with a mineral in place containing an identical substance, while an oil shale lease does not cover that same substance, and that two separate minerals are involved. Gas and oil leases historically have been considered mineral, as have oil shfle leases, and we are inclined to the opinion and we conclude that each is a "license to hunt" for the minerals in their natural state and not a fishing license for an end product that might be oil, coal oil, synthetic fuel or libricants, diamonds, nylons, cosmetics or other items of a purely synthetic nature. Although plaintiffs strongly object to defendants' mentioring it in their briefs and quoting from a speech given Lo the senate by the director of the Utah State Land Board, on the grounds it was only the opinion of an employee, not and not the subject of judicial notice, 'such speech subject to was noted and referred to in the Senate Journal for 1967 .t p. 599, as having been giv$n. - which is a subject for judicial notice. The speech was electronic all v. There is no denial tnat it was given. Although it was in evidence, but only in the briefs, and the question of the electronic recording being a .novel one with respect to judicial notice, a matter we are not cauea upon to decide, we repeat a portion of it here anyway, as an aid in interpreting legislative intent, as we would look to reputable treatises or. documents authored by t eminent authorities on a particular subject. The Director said this: cross-examinati- on , It would seem that plaintiffs here who were the plaintiffs in the first Morgan case of 1968, hardly can quarrel with such a conclusion when they said: "The propriety of the Land Board's distinguishing be- tween oil and coal or gilsonite or kerogen (the organic component of oil shale) was never an issue in the lawsuit" and that "Morgan is aware of no reason why these various substances should not be classified as different minerals; each one has a different molecular structure from each of the others; no one of them occurs in close physical or chemical association with any of the others, and there is no evidence that the recovery of any one of these substances would necessarily entail recovery or destruction of the others."' We believe and hold that the quoted statement made in plaintiffs! brief in the first Morgan case, though nut necessarily binding on them in the second case, nonetheless is correct, and that consequently the first Morgan case, having to do with an identical mineral found in two restricted formations, i. e. , petroleum pools or bituminous sands, docs not - and ihe subject govern oil shale, the subject of the secoud Morgan case, as to any organic or dictum of rehearing here. In that respect, any language or chemical material not synonymous wilh oil and gas and bituminous sands, is not to be construed as requiring inclusion of such material within the Utah Code Annotated, as amended (Chap. four corners of Title 3. Mineral Leasing Act, 30 U.S.C. 181 et seq. ; 1969 Tax Reform Act, 1957, I. R. Bull. 45, 17; Secs. 501 and 502. See also Rev. Ruling in-pla- ce 65-1-1- 8, 57-52- 9, "The purposes of drafting the bill are verysitnple: First of all there would be extensive revision of the Land Board general leasing policies. It would permit the Board to adopt. a form of lease, the single form of hydrocarbon lease which would grant to the lessee the right to producT all hydrocarbons except oil shale and coal. Oil shale and coal would be excepted. The Land Board in the past year and a half has conducted many and extensive public hearings on this subject and is convinced that it would be in the best interest of the state to issue this single form of hydrocarbon . lease."so-call- - . ed so-call- ed - It seems significant that following that speech and within a month thereafter, the statute in question was passed (March 6, 1967), approved March 21, 1967, effective May 9, 1967, as Chap. 183, Sec. 2, L. Utah 1967. It is also highly significant that about two years later, after the first Morgan case had been decided by this court on October 10, 1968, the legislature on March 13, 199, passed H.B. 211, being Chap. 220, L.U$h 1969, entitled "An Act . . . Providing for the Authorization of the Board's Participation in the Development of Oil Shale Technology . . . etc. " The act was exclusively devoted to development and rentals of one mineral, and one mineral only, - oil shale, - and failed entirely to include oil, gas or other hydrocarbons or bituminous sands. It would seem almost inescapable to conclude other than that the legislature, by this act, considered oil shale, for the purpose of leasing, as a mineral other than oil in pools or in porous bituminous sands, hence leaseable as a different mineral under the 1967 act. It seems very much more significant that almost before the printer's ink had dried, and but eight days after the passage of that act, these plaintiffs, who assert a wide and long knowledge ability and experience in the development of oil, which we do not dispute, deliberately became signatories to a lease that granted rights to plaintiffs to explore for and discover oil and other hydrocarbons and a number of other minerals but "EXCLUDING COAL AND OIL SHALE", - which quoted language they now presume to ignore, and presume to ask this court to agree to, which would seem to prick the conscience of equity were we to canvass it. (Emphasis ours.) WE CONCUR: Land Board Rules, 10 and 11. 183, Sec. 2, L. Utah 1967), which is the basis for the present litigation, as it was in the first Morgan case, and whose pertinent part reads as follows: "The state land boaru may issue mineral leases including without limitation oil, gas and hydrocarbon leases for prospecting, exploring, developing, and producing minerals covering any portions of the state lands or the reserved mineral interests in state lands. In furtherance of the principle of multiple use of state lands, the land board may grant a lease for the prospecting, exploration, development and production of any mineral notwithstanding the issuance of other lease or leases on the same land for other minerals, and thall include in such lease suitable stipulations for simultaneous operation. The board shall not issue more than one outstanding lease for the same purpose on the same land. ..." In this connection the majority of the court recognizes that our learned colleague. Justice Tuckett, who authored both of the Morgan cases prior to this petition for rehearing is of a different opinion, and it is only fair to say that he eip polnt to an anato in the first unaijgptyfourt the In the result one concurrence by Morgan case to support his thesis, third, the author hern, with dissents E. R. Callister, Jr., Chief Justice A. H. Ellett, Justice J. Allan Crockett, Justice TUCKETT, Justice: (Dissenting) I dissent. In the case of Morgan v. Utah Board of State Lands re- ferred to in the majority opinion as the first Morgan case, we were conIn 1967, the legiscerned with certain language used in Section 65-1-1- 8. lature amended the above section. The section, as amended, contained the following sentence: The board shall not issue more than one outstanding lease for the same purpose on the same land. We construed the language to mean that the legislature intended to adopt a policy of allowing but one lease for the extraction of oil from any particular tract of state land. Since that decision was handed down in 1968, two general sessions of the legislature have taken place and that body has not seen fit to make ".i ugh the matter was called to the attention '': , of the lawmakers. |