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Senator Walsh of Montana. Will you kindly proceed with the opinion of the Secretary!
Mr. FINNEY. You just want the part that relates to discovery?
Senator Walsh of Montana. Well, I think we better have everything except the formal part, Mr. Finney.
(The preliminary portion of the departmental decision dated December 20, 1924, not read by Mr. Finney, reads as follows:)
DEPARTMENT OF THE INTERIOR,
GENERAL LAND OFFICE,
Washington, January 10, 1931. I hereby certify that the annexed copy of departmental decision dated December 20, 1924, filed under Denver 032576, formerly Glenwood Springs 018825, is a true and literal exemplification of the record on file in this office.
In testimony whereof I have hereunto subscribed my name and caused the seal of this office to be affixed, at the city of Washington, on the day and year above written.
Thos. C. HAVELL, Assistant Commissioner of the General Land Office.
DEPARTMENT OF THE INTERIOR,
Washington, December 20, 1924. A. 6957. J. D. Freeman v. George L. Summers, H. Glenwood Springs 018825,
018827. Homestead entries held for cancellation. Reversed and conflicting mining claims held null and void. Decision promulgated December 27, 1924.
APPEAL FROM THE GENERAL LAND OFFICE
On May 10, 1920, George L. Summers filed application 018825 to make homestead entry under the act of February 19, 1909, subject to the provisions and reservations of the act of July 17, 1914 (38 Stat., 509), for the S. 12. NW. 14, N. 12, SW. 44, sec. 1, S. 162, NE. 14, N. 12, SE. 14. sec. 2,- T. 5 S., R, 97 W., Glenwood Springs, Colo., land district.
On the same date he also filed application to make additional stock-raising homestead entry for lots 3 and 4, S.12, NW. 14, sec. 2, lots 1, 2, and 3, SE. 14, NE. 44, sec. 3, in the same township and range.
The original entry was allowed on May 17, 1920. The lands applied for under the stock-raising application were designated September 27, 1920, and the entry was allowed January 28, 1921. Combined final proof was submitted on both entries May 22, 1923, and suspended pending the disposition of contests filed by mineral claimants. All the land above described was classified as valuable for petroleum and nitrogen on May 23, 1916.
On May 21, 1923, J. D. Freeman filed application to contest the above-mentioned entries. The grounds of contest alleged are, briefly, that he is the owner of the J. D. Group Nos. 1, 2, 3, 5, and F. D. Group, oil shale placer claims covering certain described portions of the entries mentioned ; that the claims were located and discovery of valuable oil shale made theron April 18, 1918; that at all times since the locators and the contestants who claims title from them, have held, used, occupied, and possessed all the claims except for the interference of Summers; that they have complied with the mining laws of the United States and the State of Colorado, performed the requisite annual assessment work; that the land has no value save for its oil-shale deposits. The contest affidavit concludes with a request for a hearing, “as to mineral or agricultural character of the lands in conflict," and for the cancellation of the homestead entries mentioned.
Hearing was ordered and duly held before the local officers on September 5 and 11, 1923, voluminous testimony being submitted by both parties. The local officers rendered a decision in favor of the contestee and held :
“ That no actual discovery of oil shale has been made on the land in controversy, a requirement of the law (Remis v. Murray, 22 L. D., 409) although it must be admitted that is apparently an unnecessary requirement where oir. shale claims are in consideration. That these claims had been allowed to lapse and were so lapsed at the time of the passage of the leasing act, February 25, 1920. That sufficient assessment work has at no time been done to hold these claims valid." Upon the question of discovery the local officers find
· While there appears to be no question but that immense shale beds underlie this land at considerable depth, it is just as clear that the higher strata exposed on the Summers place and on which discovery is claimed, do not now constitute valuable deposits and by development in the future could not to be expected to show such value as to make them merchantable."
By decision of April 8, 1924, the Commissioner of the General Land Office reversed the local officers, held the homestead entry for cancellation to the extent of their conflict with the mining claims in question. In support of this action the commissioner found that:
" It clearly appears that the lands in question, along with a large area of other land in that vicinity are mineral in character and valuable as a source of petroleum and nitrogen; that oil shale was discovered thereon and that they were located, surveyed, staked, and filed upon by contestant and his grantors long before the entries in conflict were made. It also appears that a certain amount of assessment work, said to be the required amount for each: year, has been done on and for the benefit of each of said claims and that their future development for the mineral contained therein is justified."
Mr. FINNEY (reading):
After a careful examination of the whole record, the department is of the opinion that a great amount of testimony was taken to establish facts of minor importance and support issues not controlling or decisive; that in the decision complained of, undue consideration was given to certain facts and rules of law that have little bearing on the legal situation developed. For these reasons it appears advisable for the sake of clarity to make statement of what the department conceives to be the principal issues and questions that have arisen on the facts developed in this record.
First, it appears obvious, that all minerals being reserved from the stockraising entry, and certain minerals including oil shale from the enlarged homestead entry, proof merely that the land is valuable for its oil shale deposits in no way defeats or affects the entryman's homestead rights; though evidence to that effect, or to the contrary, may have a material bearing in determining whether a discovery had been made on a mining claim.
Second, the action of the commissioner holding the homestead entries for cancellation to the extent of the area in conflict can be justified only in the event that it is shown that the alleged placer mining claims are valid.
Third, if the claims were validated by discovery, under section 2522
This is not the right section number. Revised Statutes, the mineral claimants are entitled to the exclusive right of possession and enjoyment of all the surface of the claims included within the lines of their locations. Belk v. Meagher (104 U. S., 279); Clipper Min. Co. V. Eli Min. Co. et al. (194 U. S., 220); Noyes v. Mantle (127 U. S. 351). And even though no discovery had been made a mineral claimant may hold a claim in which he may be working against all others having no better right, while he remains in possession, diligently working toward discovery and is entitled-at least for a reasonable time—to be protected against forcible, fraudulent, and clandestine intrusions upon his possession. Union Oil Co. v. Smith (249 U. S., 347).
Fourth, in order that any of these claims may be considered valid it must appear from the evidence that the claimants thereof had, at the date of the leasing act, to wit, February 25, 1920, made a discovery of a valuable deposit of minerals thereon, or if no such discovery had been made at that time, that they were then diligently engaged in the prosecution of work on behalf of said claim leading to a discovery and that such work was continued diligently to the date the homestead rights of Summers would have otherwise attached to the land within the claim. McGee v. Wooten (48 L. D., 147); McLemore v. Express Oil Company (112 Pac., 59); Union Oil Company v. Smith, supra.
Fifth, the discovery must have been made within the limits of the claim as located. U. S. Compiled Statutes, vol. 5, sec. 4615, note 42, and case there cited. Sixth, the presumptive mineral character of the land arising from its classification as such, or evidence establishing its mineral character have nothing to do with determining the burden of proof to establish a superior right to the surface of the land by virtue of these locations. The burden lies with the contestant attaching the entry to establish his priority of right by a preponderance of evidence. Willis t. Parker (8 L. D., 623), Scott v. King (9 L. D. 299). Discovery being a vital question in this case, other contentions made by counsel will be passed to consider the evidence bearing thereon.
In support of the locations, certified copies of the location certificates were submitted reciting that the claims were located on April 1, 1918, and they bear certificates that they were recorded on April 18, 1918. The lands covered by these claims according to the certificates are as follows:
NE14 section 2, J. D. Group No. 1.
The testimony is not disputed that the land lies at an altitude of from 7,450 to 8,400 feet; that the surface formation is the upper Green River, containing comparatively lean strata of oil shale; that the prospectively valuable oil shales lie in the middle member of this formation which lies stratigraphically below and by geological inference is believed to underlie the land in question but not exposed thereon.
For the contestant, H. J. Hilton testified in effect that he is a mining engineer and geologist, and had, at times not specified, made considerable study of the geological structure and conditions on the lands in question and on neighboring lands, and had traced the outcrops of oil shale which continued uniform and regular and without earth disturbance to escarpments about 312 miles distant where they were studied, sampled, and subsequently analyzed for their oil content. A diagram was introduced, through this witness, purporting to repre. sent an ideal vertical geological section of the shale deposits and formation from the highest point on the land to a depth of 6.50 feet below the Summers cabin. which was made from the study of the outcroppings in the vicinity. According to this diagram and the testimony adduced in connection therewith, Hilton arrives at the conclusion, by geological inference and calculations, that a bed of shale oil lies 50 feet (vertically) below the Summers cabin and a commercial bed of oil shale 61.8 feet in thickness, sampling 28 gallons of oil a ton, lies at a depth of 530 feet below the cabin mentioned. These measurements of the oil shale bed were taken at an escarpment near Parachute Falls and witness states that he knows that they underlie the land because he traced the exposures; that he found exposures of oil shale on each of the claims and took samples of them, but did not consider it necessary to get the width of the beds in view of the large beds of shale that lie below and will be first worked; that the cost will not permit the stripping and quarrying on the land in question, but in his opinion it could be worked by shafts. Diagrams and photographs taken by this witness were introduced to show the position of the outcrops of oil shale on this and other lands in the vicinity. One shale bed, of undermined thickness and estimated to yield 7 or 8 gallons a ton, is specified as outcropping at a point marked "Arrow F” on Exhibit 9, which appears to be, from the diagram, on the J. D. No. 2 claim.
Hilton testifled on cross-examination that there were no assessment holes on the ledge exposed on the Summers land; that the beds he found on the land were not valuable for their oil content but are proof of the existence of the Green River formation and an indicator of the rich beds in the middle series lying below; that on the surface they look worthless and run low in oil content but may have possibilities and there may be a change in their oil content at depth; "but at the present time they are of no value as oil shale for their oil content" (p. 120). The witness further stated that no commercial plant of commercial size for retorting oil had ever been built. This statement evidently has reference from its context to the United States or to a more limited field. The material testimony of H. Comer Wolfe bearing on the question of discovery is in substance as follows: That as a mining engineer and geologist he has made over 5,000 tests of oil shales in the district including this land. He made the statement that 25 samples were taken from the claims in question, but it developes in his testimony on cross-examination that nearly all these samples were taken from surrounding lands and at the escarpment mentioned on Parachute Creek. The witness, however, states that they were
taken from beds that were traced to the lands in question ; that he knows that the ledges from which the samples were taken underlie the land because he had taken them entirely around the field and the beds are uniform in content and thickness; that one of the beds that can be traced to the land yields 19 gallons of oil a ton; another bed, 2 inches thick, is specified and was sampled 6,000 feet east of the land, which when analyzed ran 30 gallons to a ton. Another bed of shale 4 to 6 feet thick is stated to lie 400 feet above a 61-foot shale bed and outcropping within a mile of the Summers place ran, according to the sample taken, 9 gallons of oil to a ton.
He further states that he did not search for these outcrops on the Summers place; that the only samples taken from the outcropping on the land in question were from leaner beds which was proof of richer beds to search for. He specifies the location of one exposure of oil shale with some precision by stating that his sample was taken in an assessment hole 400 feet east and 100 feet north from the south quarter corner of section 2, which would be on the SW. 14 SE. 14 of said section and within the bounds of the F. D. No. 7 claim. The shale tested from this last-mentioned exposure was 4 feet thick and yielded 7.9 gallons of oil a ton and indicated a 30-gallon bed below. He also mentioned a bed 32 feet in thickness on adjoining property which yielded 32-gallons a ton, and when asked if he had taken samples of like character from each and every placer claim involved in these proceedings, answered no, that he had taken samples of variable richness from each of the claims in question yielding from a maximum of 30 gallons to a minimum of 2 gallons a ton. It developed, however, upon cross-examination (pp. 150, 153) that he took but one sample from the homestead claims in question running 2 gallons a ton of oil “which was the top indicator of a lean grade bed." He was of the opinion that the exposed ledges of oil shale in question produced 5 gallons to the ton, but was unable to designate their location.
Carlton Hubbard testified that while engaged in the survey of the claims in the latter part of March and fore part of April, 1918, we made discoveries of oil shale on all of the claims” (p. 74); that he knew it was oil shale and brought several samples in camp to test it; that in some places it was taken from a ledge, that it was taken from the place nature put it; that he was not familiar enough with the land to state where he made the discoveries ; that he knew certain of the samples from the F. D. claim would produce shale but does not know how rich it is; "it might be one gallon, it might be a hundred " (p. 2.5).
The evidence as above set out substantially embodies the material testimony that was adduced by the contestant in support of his allegations of discovery. It compels the conclusion that the oil shales actually exposed on the claims in conflict with the homestead entries are of no value for their contents. The deeper beds of shale which are presumed to underlie this land and which are considered of commercial value have not been exposed on the land; and it is not shown by evidence of any probative force that they will become valuable for mining purposes, when the tremendous overburden and the accessibility of other large bodies of richer shale exposed in bold escarpments elsewhere are taken into consideration.
However certain or justifiable the inference, geologically, that the lean beds of oil shale outcropping on the land indicate richer and valuable beds at depth, it is apparent that they hare no physical connection with such deeper beds of rich deposits nor are they continuations of them, but are separate and distinct therefrom.
The testimony is silent or indefinite also as to the location of the outcropping deposits with reference to the particular claims in controversy, except for the specific instances heretofore mentioned, so that it can not be determined on just what claims any of the outcrops mentioned in the testimony occur.
In the present case there appears to be an attempt to substitute observation and geologic inference for discovery. In the case of East Tintic Consolidated mining claim (40 L. D. 271), affirmed on rehearing (41 L. D., 255), the department held:
“The exposure, however, of substantially worthless deposits on the surface of a claim; the finding of mere surface indications of mineral within its limits; the discovery of valuable mineral deposits outside the claim; or deductions from established geological facts relating to it; one or all of which matters may reasonably give rise to a bope or belief, however strong it may be, that a valuable mineral deposit exists within the claim, will neither suffice as a discovery thereon, nor be entitled to be accepted as the equivalent thereof." It is true that on a further showing of facts and a reargument in connection with a motion for exercise of supervisory authority, the department reversed its decision in that case on other grounds; but the principle above cited has never been repudiated or qualified. On the contrary, it has been reannounced in the recent decision of Oregon Basin Oil & Gas Co. (50 L. D. 244). In that case it was found that the formations from which the oil values are expected to be developed within the limits of the claim exist many hundred feet below and are wholly unconnected with the formations penetrated in the holes drilled. In that connection the department held :
“ Nor can the facts that the land may be geologically known to contain at depths formations and sands which have been proved in other fields to be heavily productive of oil; that the land has been in effect classified by the Geological Survey as valuable on account of petroleum deposits; or that above the supposed oil-bearing formations there exists within the limits of the claim gas deposits for which at the present time there is no available market, and which, on account of the excessive pressure thereof, can not be successfully drilled through in order to reach the supposed oil-bearing formations sought, be accepted by the department as the equivalent of a discovery.
On the motion for rehearing of this case the following language was used :
* The department is aware of no decision wherein, citing the rule announced in Castle v. Womble, it has ever taken into consideration the proven presence within the limits of a mining claim of deposits not actually and physically exposed therein as a ground for sustaining the sufficiency of an asserted discovery based upon the exposure within the limits of the claim of a deposit that did not warrant or justify the expenditure of time and money with a reasonable prospect of success in the development of a valuable mine on the particular deposit so exposed."
The contestant's attorney in his brief before the department contends in effect that the decisions applicable to pool oil should not be applied to oil-shale deposits because “ these shales can not be pinched or squeezed out like the oil in oil sands to a synclinal fold or otherwise, any more than oil sandstone can be pinched or squeezed out independent of the oil contents," and there being no question that immense bodies of shale underlie this land as found by the register and receiver, the hazard of chance of finding them is removed.
As to this contention, it is sufficient to observe that although, from the nature of the deposit, the geologic inference from the presence of near-by outcrops of rich beds of shale may be far stronger that they persist and underlie the land in question than would be an inference that certain lands contained valuable deposits of oil in oil sands deduced from geologic indications and discoveries on adjacent lands, yet it will be perceived from the reasoning and conclusions in the Oregon Basin case and the East Tintic case above cited, that the essential fact to be established is the disclosure of the valuable deposit on the land in order to constitute a discovery and the degree of assurance that the deposit exists from discoveries and geologic conditions on near-by lands was not an important or controlling element for consideration. Such adjacent or surrounding demonstrations of the presence of a valuable deposit on surrounding claims do not dispense with the essential requirement of the law that the valuable deposit must be discovered on the claim.
There not having been made any valid discovery of mineral within the bounds of any of these claims at any time, the mineral claimant can not successfully contend that there was, upon the evidence in this case, diligent prosecution of work leading to discovery prior to February 25, 1920, or indeed at any time.
The only evidence offered by the contestant as to work of any kind being done on or for the benefit of these claims relates to the performance of annual assessment work in 1919, 1920, and later. The work in 1919, according to the testimony of one Chris C. Dare, consisted in repairing, widening, and extending an old pack trail which terminates 212 miles from the claims. Dare stated that he spent $4,400 on this trail for the benefit of 44 claims including these here in question; that a wagon could not get over it when it was finished ; that the claims can be reached by a more circuitous and longer route. The contestant states that men and supplies could be transported by pack trail over trails of this character; that he had used five other trails to get to these claims; that there had been a shorter trail later constructed; that machinery and things of that kind could not be taken over it. The character and value of the work done on this trail, as testified to by Dare, was strenuously controverted by the contestee and a number of witnesses who passed over the trail before, after, and about the time this work was alleged to have been done, testified to the