
    412 F.2d 1319
    CAROLINE BUSH EMENY, ET AL. v. THE UNITED STATES
    [No. 317-66.
    Decided July 16, 1969]
    
      
      Gaynor Kendall, for plaintiff. Warren Ege, attorney of record, Joe A. Osborn, of counsel.
    
      David W. Miller, with whom was Assistant Attorney General Bhvro Kaslmoa. Floyd L. France, of counsel.
    Before Cowen, GMef Judge, Laramore, Durfee, Davis, Collins, Skelton, and Nichols, Judges.
    
   Per Curiam

: This case was referred to Trial Commissioner Mastín G. White with directions to make findings of fact and recommendation for conclusions of law under the order of reference and Buie 57(a). The commissioner has done so in an opinion and report filed on November 22,1968. Exceptions to the commissioner’s opinion, findings and recommended conclusion of law were filed by defendant and the case has been submitted to the court on oral argument of counsel and the briefs of the parties.

Since the court agrees with the commissioner’s opinion, findings and recommended conclusion of law, as hereinafter set forth, it hereby adopts the same as the basis for its judgment in this case. Therefore, it is concluded that the right to use the Bush Dome for the storage of helium-gas mixtures and pure helium produced elsewhere is vested in the plaintiffs, and not in the defendant. The case is remanded to the commissioner for the conduct of further proceedings consistent with this determination.

OPINION OP COMMISSIONER

White, Oorrvmissioner: The plaintiffs (11 individuals and a bank) allege that the defendant, under the power of eminent domain, has taken a subterranean geological structure, known as the Bush Dome, within lands owned by the several plaintiffs and is using such property for the underground storage of helium-gas mixtures and pure helium produced elsewhere. Accordingly, the plaintiffs assert that they are entitled to just compensation under the provision of the Fifth Amendment to the Constitution which declares that private property shall not be taken for public use without just compensation.

The defendant, on the other hand, contends that it has the right to store “foreign” or “extraneous” helium-gas mixtures and pure helium in the Bush Dome by reason of gas rights which it acquired in the particular lands many years ago from the plaintiffs’ predecessors in interest either by purchase or by condemnation, and for which compensation was paid at the time of acquisition.

At the request of the parties, the initial submission to the court involves only the question of whether the right to store in the Bush Dome helium-gas mixtures and pure helium produced elsewhere is vested in the defendant or in the plaintiffs.

It is my opinion that the right to use the Bush Dome for the storage of helium-gas mixtures and pure helium produced elsewhere is not vested in the defendant, as claimed by it, but is vested in the plaintiffs.

Inbrod/uetion

The Bush Dome is situated within a 12,000-acre area of land in Potter County, Texas. It is a closed geological structure, or underground dome, in which gaseous substances can be stored. The pertinent storage area consists of a subterranean porous and permeable stratum of rock. The porosity and permeability of this stratum are sufficient to permit the injection of helium-gas mixtures and helium into, and the withdrawal of such materials from, the formation at the required rates of flow. The potential storage area is surrounded by impermeable rock and edge water, which prevent the escape of gaseous substances contained in the formation. The potential storage capacity of the Bush Dome is in excess of 52 billion standard cubic feet of gas.

The various tracts of land comprising the 12,000-acre area which contains the Bush Dome are owned in fee simple by the several plaintiffs, except for the gas rights held by the defendant (and certain oil rights that are not involved in the present litigation).

In its natural state, the Bush Dome was a reservoir that contained a valuable deposit of natural gas. This gas was contained in a formation .known as the Panhandle Lime formation. Engineers of the U.S. Bureau of Mines have estimated that the amount of recoverable gas in the Panhandle Lime formation within the Bush Dome, before any production, was about 295 billion cubic feet.

As of 1928, the various tracts of land comprising the area which contains the Bush Dome were severally owned by Lee Bivins, William H. Bush, and the Fuqua Land & Cattle Company, predecessors in interest of the present plaintiffs. In 1923, Messrs. Bivins and Bush and the Fuqua Land & Cattle Company severally granted to the Producers & Refiners Corporation oil and gas leases covering a total of approximately 217,000 acres of land, including the area which contains the Bush Dome. These oil and gas leases were assigned in 1924 by the Producers & Refiners Corporation to the Mountain States Gas Company; and subsequently, in the same year, the Mountain States Gas Company assigned the leases to the Amarillo Oil Company.

In 1924, wells were drilled by the Amarillo Oil Company on the leased acreage, and gas was discovered in the Panhandle Lime formation within the Bush Dome, at a depth of about 3,500 feet below the surface. The gas produced from the Panhandle Lime formation in the Bush Dome contains helium. The helium content of the gas has ranged from about 1.7 percent to about 1.9 percent.

During the period between 1924 and 1929, the Amarillo Oil Company produced approximately 4.5 billion standard cubic feet of natural gas from the Bush Dome.

In 1929, the Amarillo Oil Company transferred a number of oil and gas leases, including some leases on lands that are involved in the present litigation, to the Canadian River Gas Company.

On May 16,1929, the defendant acquired by purchase the gas leasehold rights held by the Amarillo Oil Company and the Canadian River Gas Company in the lands containing the Bush Dome.

During the period 1930-1931, the defendant acquired by purchase from William H. Bush and the Fuqua Land & Cattle Company whatever gas rights they had retained under the 1923 oil and gas leases covering lands owned by Mr. Bush and the Fuqua Land & Cattle Company within the area containing the Bush Dome.

In 1933, by means of a condemnation suit, the present defendant acquired from the estate and devisees of Lee Bivins, who had died in the meantime, whatever gas rights Mr. Bivins had retained under the 1923 oil and gas leases on lands owned by him within the area containing the Bush Dome. Just compensation, as determined by the court, was paid by the present defendant for the rights condemned.

Beginning in 1929, the defendant has produced gas in substantial amounts from the Bush Dome. During the period between May 16, 1929 and the end of the fiscal year 1966, the defendant’s production of native gas from the Bush Dome totaled approximately 59.7 billion cubic feet of gas. The gas has been processed for helium extraction at the defendant’s plant in Amarillo, Texas, and the residue gas has then been sold by the defendant for use as fuel or for other purposes.

Pursuant to the authorization contained in the Helium Act Amendments of 1960 (14 Stat. 918; 50 U.S.C. §167 et seq.) for a long-range program of conserving and storing helium for future use, the defendant instituted and put into effect what is known as the helium conservation program. As part of this program, the defendant entered into long-term contracts with four private companies for the sale by the companies and purchase by the defendant of helium-gas mixtures. Three of these companies operate three separate helium-extraction plants in Kansas, and the fourth company operates two such plants in Texas. Deliveries of helium-gas mixtures to the defendant from two of the plants were begun in December 1962; deliveries from a third plant were begun in April 1963; deliveries from a fourth plant were begun in June 1963; and deliveries from the fifth plant were begun in July 1963.

Also, as part of its helium conservation program, the defendant constructed in 1962, and now owns and operates, a pipeline which connects the five plants mentioned in the preceding paragraph — and also three helium-extraction plants owned and operated by the defendant in Kansas, Oklahoma, and Texas — with the Bush Dome.

Each of tbe five privately owned delivers into the defendant’s pipeline, at the plant gate, a helium-gas mixture, sometimes referred to as crude helium, which is required by contract to contain at least 50 percent helium. The balance of the mixture consists largely of nitrogen, but it also contains small amounts of other constituents of natural gas. Also, a helium-gas mixture is delivered into the defendant’s pipeline from the defendant’s plant located in Kansas; and sometimes pure helium is delivered into the defendant’s pipeline from its plants located in Oklahoma and Texas. The helium-gas mixtures and pure helium from the sources mentioned are transported in the defendant’s pipeline to the Bush Dome in Texas, and are injected by the defendant into that geological structure through injection wells. Such materials are then stored by the defendant in the Bush Dome until they are needed.

Furthermore, as part of its helium conservation program, the defendant in 1966 and 1967 entered into contracts with the National Helium Corporation and with Cities Service Helex, Inc., both of which are private corporations, under which the defendant has, for compensation, received and stored in the Bush Dome helium-gas mixtures belonging to the two companies.

The defendant’s actions since 1962 in injecting and storing in the Bush Dome helium-gas mixtures and pure helium produced elsewhere — including helium-gas mixtures owned by third persons and stored by the defendant for compensation — occasioned the present litigation. As indicated earlier, it is my opinion that such actions by the defendant have been beyond the scope of the gas rights which the defendant acquired many years ago by purchase or condemnation in the lands containing the Bush Dome.

Gas Leasehold, Bights

In connection with the problem before the court, it is necessary that consideration be given to the defendant’s gas leasehold rights in the lands containing the Bush Dome.

As stated in the preceding part of this opinion, the defendant in 1929 obtained by purchase from the Amarillo Oil Company and the Canadian Eiver Gas Company the gas leasehold rights which these companies, as assignees, held at the time under the 1923 oil and gas leases granted by the then owners of the lands containing the Bush Dome to the Producers & Refiners Corporation. Each of the 1923 oil and gas leases stated that it was granted “* * * for the sole and only purpose of mining and operating for oil and gas and of laying pipe lines and of building tanks, power stations and structures thereon, to produce, save and take care of said products * *

The language of the several 1923 oil and gas leases, as quoted in the preceding paragraph, is clear and unambiguous with respect to the rights granted. Those rights pertained only to “mining and operating for oil and gas” on the leased premises and taking the other steps necessary “to produce, save and take care of said products,” i.e., the oil and gas produced from the leased premises. There is no reasonable basis on which the rights granted to the lessee in the 1923 oil and gas leases could be construed as including the right to bring to the premises and store there gas produced elsewhere. As the current holder, by assignment, of gas rights under the 1923 leases, the defendant stands in the shoes of the original lessee and has only those gas rights that were granted to the original lessee.

In granting the 1923 oil and gas leases, the respective landowners divested themselves of — and granted to the lessee— the right to explore for, produce, possess, use, and dispose of the gas and oil in place (Stephens County v. Mid-Kansas Oil & Gas Co., 254 S.W. 290, 292 (Tex. 1923)), and this necessarily included the right to make reasonable use of the premises for such purposes (Guffey v. Stroud, 16 S.W. 2d 527, 528 (Tex. 1929); Gulf Production Co. v. Continental Oil Co., 132 S.W. 2d 553, 562 (Tex. 1939)). The lessee — and its subsequent assignees, including the defendant — did not, however, acquire any right to use the premises for any purpose other than the specified mineral exploration and production. Stephens County v. Mid-Kansas Oil & Cas Co., supra, 254 S.W. at page 295.

The surface of the leased lands and everything in such lands, except the oil and gas deposits covered by the leases, were still the property of the respective landowners. Gulf Production Co. v. Continental Oil Co., supra, 132 S.W. 2d at page 561. This included the geological structures beneath the surface, including any such structure that might be suitable for the underground storage of “foreign” or “extraneous” gas produced elsewhere.

It necessarily follows that the 1923 oil and gas leases on the lands containing the Bush Dome did not grant to the lessee — or to ¡the defendant as the present holder of gas rights under such leases — any right to use the Bush Dome for the storage of gas produced elsewhere.

In connection with this aspect of the case, it should be mentioned that one of the 1923 oil and gas leases issued by Lee Bivins contained a provision wherein the lessee agreed to construct a pipeline for the transportation of gas from wells on the land covered by this particular lease to Amarillo, Texas, and, in consideration of the construction of such pipeline, Mr. Bivins granted to the lessee “an exclusive easement for right of way for pipe line purposes for the transportation of gas over the lands herein leased * * *.” The defendant contends that in so far as this lease is concerned, the granting to the lessee of an exclusive easement for the construction of a pipeline on the land necessarily precluded the lessor (or his successors in interest) from bringing gas produced elsewhere to the leased land for underground storage purposes, because this could be accomplished only by means of a pipeline.

Since gas is a volatile substance, it actually is not necessary to bring “foreign” or “extraneous” gas to a particular tract of land by means of a pipeline, and inject the gas into the Bush Dome through the surface of that tract, in order to utilize the portion of the Bush Dome underlying such tract for the storage of gas. Gas injected into the Bush Dome through the surface of one tract of land can utilize the storage capacity of portions of the dome underlying other tracts. Thus, the granting by Lee Bivins under one lease of an exclusive easement on the leased land for a gas pipeline to transport the gas produced from the leased land to Amarillo was unrelated to the problem of the subsequent use of any underground storage capacity in the land that might become available for the storage of gas produced elsewhere. The plaintiffs do not claim here any right to construct a pipeline on the particular land.

Purchase of Retained Gas Rights

When Lee Bivins, William H. Bush, and the Fuqua Land & Cattle Company granted the 1923 oil and gas leases on the lands involved in this litigation, the respective landowners retained certain rights with respect to the gas deposits underlying their lands, i.e., the right to require the development of such deposits by the lessee, the right to receive royalties on the gas produced from such lands, and the right to lease the lands again for gas development if the 1923 leases should terminate. With respect to the matter of royalties, the Bush and Fuqua leases provided that the respective lessors would receive one-eighth of the gas produced from their lands, while the Bivins leases provided that the lessor would receive a royalty of 1 cent per M c.f. on the gas produced from Mr. Bivins’ lands.

During the period 1930-1931, the defendant acquired by purchase from William H. Bush and the Fuqua Land & Cattle Company all the gas rights which these respective landowners had retained at the time of the execution of the 1923 oil and gas leases. The instruments of conveyance granted to the defendant “all gas in or under, or which may hereafter be found in or under and produced from the lands,” together with “all * * * rights and privileges necessary, incidental, customary or convenient to the development and exploitation of said lands for said gas * * *.”

The language of the instruments of conveyance, indicating that they related to “gas * * * produced from the lands” and to “the development and exploitation of said lands for said gas,” shows clearly that Mr. Bush and the Fuqua Land & Cattle Company were conveying to the defendant all those rights — and only those rights — which the respective grantors had retained in the native gas deposits underlying their respective lands. There is nothing in the language of the instruments to suggest that the parties were dealing with the right to use any underground capacity in the lands for the storage of gas produced elsewhere.

Condemnation of Retained Gas Rights

In 1933, the defendant prosecuted a suit and obtained a judgment against the estate and devisees of Lee Bivins, who had died in the meantime, for the condemnation of gas rights in lands covered by the oil and gas leases which Mr. Bivins granted in 1923.

The judgment in the condemnation suit recited that the respondents were the owners and holders of the legal title “to all the retained gas royalty rights, and other gas rights and interest in * * * [the lands described in the pleadings], outside of whatever gas rights or interests the lessee and its assigns hold therein under and by virtue of the aforesaid oil and gas leases * * and decreed that “The title to the possession and enjoyment of the hereinbefore described gas rights and interests * * * shall vest and will hereby vest in the United States of America * *

Thus, it is clear from the language of the judgment that it related to retained gas rights in the particular lands, and not to underground storage capacity in such lands.

As previously stated, when Lee Bivins issued oil and gas leases on his lands in 1923, he retained certain rights in the gas deposits underlying his lands, i.e., the right to require the development by the lessee of the native gas deposits, the right to receive a royalty on the gas produced from the lands, and the right to lease the lands again for gas development if the 1923 leases should terminate. Therefore, the 1933 judgment transferred to the defendant all the gas rights which Mr. Bivins had retained in the native gas deposits underlying his lands.

The 1933 judgment did not, either expressly or by implication, deal with the subject of the underground storage capacity in the lands involved in that litigation.

Conclusion

For the reasons stated, it is my opinion that the right to use the Bush Dome for the storage of helium-gas mixtures and pure helium produced elsewhere is vested in the plaintiffs, and not in the defendant.

1. (a) Tbe plaintiffs whose names and addresses follow are citizens of the United States:

Caroline Bush Emeny, 19111 Shelburne Eoad, Cleveland, Ohio, individually and as trustee; Francis T. O’Brien, P.O. Box 1230, Amarillo, Texas, trustee; Frederick L. Emeny, 19111 Shelburne Road, Cleveland, Ohio, trustee; Lee T. Bivins,_P.O. Box 708, Amarillo, Texas, trustee; Elizabeth Claire Bivins Childers, P.O. Box 708, Amarillo, Texas, trustee; Iris F. Prescott, 3920 West Lawn, Amarillo, Texas; Tom F. Marsh, First National Bank Building, Amarillo, Texas; Stanley Marsh, III, First National Bank Building, Amarillo, Texas; Estelle F. Marsh, Executrix of the Estate of Stanley Marsh, Jr., First National Bank Building, Amarillo, Texas; Michael C. Marsh, First National Bank Building, Amarillo, Texas.

(b) The plaintiff First National Bank of Amarillo, First National Bank Building, Amarillo, Texas, is a national banking association doing business under the laws of the State of Texas.

2. This is an inverse condemnation or “taking” suit arising under Title 28, U.S.C., Section 1491, for just compensation for property allegedly taken by the United States for use as an underground helium-gas mixture storage reservoir. The plaintiffs assert their claim based on their asserted title to the lands. The defendant, among other defenses, asserts title to the storage rights in question based on rights in the lands acquired by grant or condemnation.

3. (a) The plaintiffs and the defendant derive their rights and interests in the lands through common sources of title.

(b) At the time when the defendant obtained gas rights in the lands (including both oil and gas rights in 60 acres), the lands were in three separate ownerships — the Bivins ownership, the Bush ownership, and the Fuqua Land & Cattle Company ownership. The plaintiffs and the defendant trace their titles to those ownerships.

4. The defendant obtained, by grant or condemnation, the gas rights (including both oil and gas rights in 60 acres) in all of the Cliffside Structure, which is located in Potter County, Texas. These gas rights were obtained between the years of 1927 and 1933, except for one small tract, they were obtained in 1942.

5. The Cliffside Structure has a surface area of approximately 50,000 acres. Contained within the Cliffside Structure is the Bush Dome, a geological structure having a surface area of approximately 12,000 acres.

6. The Bush Dome is located within the lands owned in fee simple by the plaintiffs, with the exception of certain gas, oil, and associated outstanding interests, including those of the defendant acquired by grant or condemnation through the title documents summarized in findings 16-35.

7. In 1924, and prior to the time when the United States acquired any interest in the Bush Dome area, wells were drilled on the leased acreage hereinafter referred to, and gas was discovered in the Bush Dome at a depth of about 3,500 feet below the surface, in a formation known as the Panhandle Lime. The helium content of the gas produced from this formation has ranged from about 1.7 percent to about 1.9 percent. The main producing stratum is that part of the Panhandle Lime known as the Brown Dolomite. There has been relatively little gas production from an “Upper Zone” and from a “Lower Zone” situated, respectively, above and below the Brown Dolomite.

8. The Panhandle Lime in the Bush Dome is a closed geological structure or underground dome. The gas-water contact is at approximately 260 feet below sea level. At the highest part of the structure, the top of the Brown Dolomite zone is about 300 feet above sea level. The thickness of the productive zone varies from zero at the gas-water contact to a maximum of about 272 feet. The thickness of the Brown Dolomite where it has been penetrated by productive wells varies from about 26 feet to about 262 feet.

9. The Bush Dome is a closed geological structure or underground dome in which gaseous substances can be stored. The pertinent storage area consists of a subterranean porous and permeable stratum of rock. The porosity and permeability of this stratum are sufficient to permit injection and production of helium-gas mixtures into and from the formation at the required rates of flow. The potential storage area is surrounded by impermeable rock and edge water, which prevent the escape of gaseous substances contained in the formation.

10. The perimeter of the potential storage area of the Bush Dome is defined by the gas-water contact.

11. (a) Approximately 4.5 billion standard cubic feet of natural gas was produced from the Bush Dome by Amarillo Oil Company prior to the time when the defendant obtained gas rights in the Bush Dome.

(b) In 1929, the defendant began producing gas in substantial amounts from the Bush Dome, which gas has been processed at its Amarillo plant for helium extraction, the residue gas being sold for use as fuel or for other purposes.

12. (a) The original reservoir pressure of the gas in the Brown Dolomite zone was about 817 p.s.i.a. (pounds per square inch absolute). By the fiscal year 1962, that pressure had declined to about 675 p.s.i.a.

(b) Engineers of the defendant’s Bureau of Mines have estimated that the amount of recoverable gas in the Panhandle Lime formation in the Bush Dome, before any production, was about 295 billion cubic feet.

(c) Production of native gas to the end of the fiscal year 1966 was about 64.2 billion cubic feet.

13. The potential storage capacity of the Brown Dolomite zone in the Bush Dome is in excess of 52 billion standard cubic feet of gas.

14. The plaintiffs and the defendant derive their titles in the Bush Dome from three common sources: William H. Bush, Lee Bivins, and Fuqua Land & Cattle Company. Excepting the title owned by the defendant (and certain outstanding oil interests not here material), the plaintiffs own the fee simple title in the Bush Dome, which they derived through mesne conveyances from the common sources.

■15. The segregated issue (see finding 42) requires the construction of the several instruments evidencing the nature and extent of defendant’s title in the Bush Dome, which are summarized in findings 16-35.

16. (a) In 1923, Lee Bivins, William H. Bush, and Fuqua Land & Cattle Company executed oil and gas leases to Producers & Kefiners Corporation covering various lands, including most of their ownership in the Qiffside Structure. Lee Bivins executed two leases, one ing 200,000 acres to be designated later, and one dated August 1,1923 covering 6,749.3 acres. Tbe Busb lease covered 9,000 acres, and tbe Fuqua lease covered 1,280 acres.

(b) These leases provided for payment to tbe landowners of royalties of: % on oil and 1 cent per M.c.f. on gas (Bivins leases); % for oil and gas produced (Busb lease); and ys for oil and gas produced (Fuqua lease).

(c) These leases each provided in their granting clauses that they were:

* * * for tbe sole and only purpose of mining and operating for oil and gas and of laying pipe lines and of building tanks, power stations and structures thereon, to produce, save and take care of said products * * * .

(d) Tbe Bivins lease of May 1,1923 contained the following provision (among others):

The lessee also agrees that within six months from the date of execution hereof, it will commence the construction of a pipe line or lines for the transportation of gas from the wells on said land to the town of Amarillo, Texas, such pipe line to be a minimum capacity of thirty million cubic feet, and in consideration of the construction of such pipe line the lessor herein hereby grants to the lessee an exclusive easement for right of way for pipe line purposes for the transportation of gas over the lands herein leased, and it is agreed that the lessor shall not grant a private or exclusive easement for right of way for laying pipe lines for the transportation of gas across said lands to any other person or corporation as long as the lessee herein, or its assigns, shall operate said premises, with the exception however, of the right of way for one pipe line heretofore verbally granted to R. B. Masterson for the transportation of gas.

17. On July 30,1923, Lee Bivins designated the tracts of land comprising the 200,000 acres included within the Bivins lease dated May 1,1923 to Producers & Refiners Corporation (see finding 16).

18. (a) In 1924, the Producers & Refiners Corporation assigned all its interest in the four leases mentioned in findings 16 and 17 to Mountain States Gas Company.

1924, Mountain States Gas Company assigned all its interest in tbe four leases to Amarillo Oil Company.

19. In 1926, Fuqua Land & Cattle Company and Amarillo Oil Company amended tbe oil and gas lease covering the Fuqua land, adding additional tracts of land to tbe lease and providing for tbe immediate drilling of a well.

20. (a) On May 17,1927, Amarillo Oil Company and tbe defendant executed an option agreement concerning Fuqua, Bush, and Bivins tracts totaling 20,294.17 acres. Tbe agreement recited that the defendant’s Department of Commerce planned to erect a plant near the City of Amarillo, Texas, for the extraction of helium (as authorized by Act of March 3,1927, PL No. 758,69th Congress) and that:

* * * the Department desires to use, or have used, for processing for helium extraction the helium-bearing natural gas produced from the area known as the Cliff-side Structure * * *; and
* * * the Department desires that the helium-bearing gas in said Cliffside Structure shall be reserved and conserved for helium production and protected against drainage * * *.

(b) The agreement further stated that Amarillo Oil Company had the described lands under oil and gas leases, had drilled wells which produced helium-bearing gas in the Cliff-side Structure, and was:

* * * willing that the helium-bearing gas from said structure and leases be used, reserved and conserved for helium extraction under terms herein set forth * * *.

(c) The agreement provided that the defendant could extract helium from gas produced on the Amarillo Oil Company’s Cliffside Structure leases, and that the defendant would have a 2-year option to purchase “all gas rights and gas titles in and to the Company’s Cliffside leases,” with the equipment thereon, for a described price.

(d) A plat was attached to and incorporated by reference in this agreement, showing the area referred to by the parties as the “Cliffside Structure.”

(e) Provision was also made in the agreement for concurrent oil and gas operations by the two parties in case the option was exercised.

21. On July 27,1926, Fuqua Amarillo Oil Company executed a correction instrument amending the provisions of the Fuqua oil and gas lease concerning its term.

22. On December 7,1927, Fuqua Land & Cattle Company and Amarillo Oil Company executed an agreement concerning the obtaining of patents for certain described tracts from the State of Texas to satisfy title objections raised by the defendant under its May 17, 1927 option agreement.

23. On December 31,1927, William H. Bush and Amarillo Oil Company executed a lease agreement containing additional provisions concerning oil and gas lease rights in Bush lands held by the company. The agreement made express provision for the drilling of two wells and for royalty payments respecting helium-bearing gas produced and sold to “* * * all customers manufacturing helium gas.” The granting clause of the lease provided that it was issued:

* * * for the sole and only purpose of drilling and operating for gas upon the property hereinafter described in Paragraph One (1) hereof [840 acres], * * * and * * * for the sole and only purpose of drilling and operating for oil and gas, or either of them, as to the land described in this instrument in Paragraph Two (2) hereof [4,760 acres], and CHANTED, DEMISED LEASE And LET as an oil and gas lease thereon; and of laying pipe lines, and erecting telegraph and telephone lines, and of building tanks, power stations, camp sites and structures, thereon to produce, save and take care of said mineral products, and to house and board employees, together with all other rights reasonably necessary or convenient for said operations on the said tracts of land situated in the County of Potter, State of Texas * * *.

24. (a) On March 23, 1928, the defendant and Amarillo Oil Company executed a supplemental agreement to their agreement of May 17,1927. It provided in part as follows:

WPIEEEAS, the Company and the Department made and entered into two certain agreements each bearing the date the 17th day of May, 1927, one of said agreements (called the OPTION AGREEMENT) providing (among other things) that the Department shall have certain, rights, as set forth therein, with respect to the extraction of helium from gas produced from lands or leases owned by the Company on the Cliffside Structure, and that the Department is granted an option to purchase certain rights, interest and property from the Company, and the other of said agreements (called the OPERATING AGREEMENT) providing (among other things) that the gas in said structure is to be supplied and conserved for helium production by or for the Department under certain terms and conditions therein set forth; and * % * * ❖
WHEREAS, subsequent to the date when the aforesaid contracts of May 17, 1927, were made and entered into, the Department has found that the location of the helium plant in the northwest corner of Section 61, B.S. & F. Survey, Block 9, southwest of the City of Amarillo, instead of on the north or northwest side of Amarillo, will be more economical and advantageous to the Department in the construction and operation of the plant and the production and conservation of helium * * *.

(b) The agreement further provided for change in the location of the helium-extraction plant which the defendant planned to construct and the resulting change in the location of the pipeline planned to deliver helium-bearing gas to the plant, the return to Amarillo Oil Company of the residue gas after helium extraction, and defendant’s option to purchase lease rights covering lands described.

25. On May 16, 1929, Amarillo Oil Company transferred a number of oil and gas leases to Canadian River Gas Company, including some covering tracts within the Cliffside Structure.

26. (a) On May 16, 1929, the defendant having exercised its option to purchase the leasehold gas rights held by Amarillo Oil Company and Canadian River Gas Company in the 5,600 acres covered by the agreement mentioned in finding 23, an agreement was executed between these parties, conveying to the defendant:

(A) All the gas, gas rights and gas privileges, together with all the rights, titles and privileges in relation thereto, acquired by the AMARILLO OIL COMPANY and the CANADIAN RIVER GAS COMPANY in under or by the oil and gas lease on the lands hereinbelow referred to and particularly described, including the right to take gas from said lands and lease described and to transport and use the same subject to the terms, provisions and conditions of said lease, and to do and perform any and all acts and things necessary and desirable and which the lessor was authorized to do for those purposes * * *.

(b) Amarillo Oil Company retained its option to purchase residue gas after helium extraction by the defendant.

27. (a) On May 16, 1929, Amarillo Oil Company and Canadian River Gas Company also conveyed to the defendant their leasehold rights held under various recited leases on which the defendant acquired an option to purchase on May 17,1927.

(b) The instrument contained a designation of the property rights involved similar to that quoted in finding 26(a).

28. (a) On December 7, 1929, the defendant and William H. Bush executed a gas royalty rate agreement. After reciting the various oil and gas leases and lease assignments through which the defendant held gas leasehold rights in the described land, the instrument provided for a specific royalty payment on an M c.f. basis rather than a percentage basis.

■(b) The agreement recited, inter alia, as follows:

WHEREAS, the lessor was to receive certain royalties as provided in said Oil and Gas leases on account of the gas extracted and sold from said lands, based on the weighted average price received from customers manufacturing helium gas and from certain customers purchasing an average of 2,000,000 cubic feet or more of gas per day; and
WHEREAS, the Department has no customers manufacturing helium gas nor customers purchasing 2,000,000 cubic feet or more of gas per day, and the royalty properly payable by the Department can not be determined;
NOW, THEREFORE, * * * the parties hereto mutually covenant and agree as follows:
Section 1: The royalty rate shall be one cent ($0.01) ■per thousand (1,000) cubic feet * * * on such gas from gas wells on lands covered by said leases * * *, as may be sold or may be used by lessee for any other purpose than the development and operation of said leases * * *.

29. (a) On March 29, 1930, William H. Bush and the defendant (acting through its Department of Commerce) executed a contract of sale.

(b) The contract of sale recited in part as follows:

WHEREAS, the Act approved January 25,1929, (45 Stat., 1134) provides an appropriation to the Department for production and conservation of helium, including acquisition of helium-bearing gas land or wells, or interest in such land or wells; and
V *{• •{»
WHEREAS, the Department desires to use, or have used, for helium extraction the helium-bearing natural gas produced from the Cliffside Structure lying northwest of the City of Amarillo, Texas; and
WHEREAS, the Department desires that the helium-bearing gas in said Cliffside Structure shall be reserved and conserved for helium production and protected against drainage and contamination; and
WHEREAS, the Seller now owns the lessors retained royalty and other rights under oil and gas leases on the lands described in Lists 1, 2, 3, and 4, of Exhibit “A” hereto attached and made a part hereof, and also owns the fee simple estate in the oil, gas and other minerals in and under the lands described in List 5, of said “Exhibit A”;
NOW, THEREFORE, * * * the parties hereto mutually covenant and agree as follows:
Section 1:
The Seller agrees to grant, sell and convey and the Department agrees to purchase the gas mineral rights in the lands described in Exhibit “A” hereto attached, subject to oil and gas leases therein referred to on the lands described in Lists 1, 2, 3, and 4 thereof.
* * * * #
Section Ip:
Conveyance of the mineral rights herein provided shall be according to the terms and in the form of the conveyance in Exhibit “A” hereto attached * * *.

30. (a) Attached to the contract mentioned in finding 29 was a form, entitled “Form of Gas Grant,” which was complete in every respect except for date and amount of consideration. This gas deed form recited in part as follows:

* * * I, William H. Bush * * *, do hereby grant, bargain, sell and convey unto the UNITED STATES OF AMERICA * * * all gas in or under, or which may hereafter be found in or under and produced from the lands described in Lists 1 to 5, inclusive, following, situated on or adjacent to the Cliffside Structure * * *.

(b) Five lists of tracts were then set out, acres.

(c) The gas deed form further recited in its granting clause that the gas was conveyed:

* * * together with the irrevocable right and easement, at all times, of possession and ingress and egress, for the purpose of exploring, mining and drilling said lands for said gas, and of extracting, storing, transporting and marketing the same therefrom, and all other rights and privileges necessary, incidental, customary or convenient to the development and exploitation of said lands for said gas, and the right of removing from said lands any and all property ana improvements (including casing) placed on or under the surface or erected thereon (as fixtures or otherwise) by the Department or assigns.
BESEBVING, however, similar rights to the owners of oil and other minerals not hereby conveyed, subject, however, to the provisions hereinafter set forth.
TO HAVE AND TO HOLD * * *, and without any obligation to explore or develop the gas resources of said land. * * *

(d) The gas deed form recited that the conveyance was subject to various named oil leases still outstanding, including the following:

This conveyance is subject * * * to the said “A” lease * * * said “A” lease being now held by the United States of America as to leasehold gas rights and by the Amarillo Oil Company as to leasehold oil rights; and this conveyance is subject * * * to the said “B” lease * * * said “B” lease being now held by the United States of America as to leasehold gas rights and by the Amarillo Oil Company as to leasehold oil rights; which leases shall be affected hereby only to this extent, viz; This conveyance is intended, and shall operate, to pass to and vest in the Department, and its assigns, all gas royalties and other benefits arising from gas production (but not royalties from oil or casing-head gasoline, if and when produced) and all rentals of whatsoever nature, reserved to the lessors in said “A” and “B” leases hereafter accruing or to accrue thereunder from the lands herein described; and whereas, the consideration herein expressed is accepted by the Grantors in payment (among other things) for all gas royalties which might accrue hereafter under said “A” and “B” leases and whereas the Department desires to nse said Cliffside Structure for the conservation of helium-bearing gas as well as the production of helium the rights of the lessees and their assigns, both as to oil and gas rights, under said “A” and “B” leases shall (regardless of whether gas is actually being produced from the lands herein described) be the same as though gas were being produced under the terms of said “A” and “B” leases, as long as any parts of the lands herein described are known to contain helium-bearing gas in commercial quantities and the said Cliffside Structure is being used for the production and/or conservation of helium-bearing gas, said “A” and “B” leases being to that extent modified hereby; and this conveyance is intended, and shall operate, to pass to and vest in the Department, and its assigns, all rights and benefits, arising from gas production or gas operations. But upon and from the expiration termination or reversion from any cause whatsoever of the now existing oil and/or gas leasehold rights on any of the herein described lands, the Department, and assigns, shall be deemed the absolute owner in fee simple, and have the full enjoyment of the gas mineral rights and all other rights and privileges above granted.

(e) The gas deed form further recited that William H. Bush reserved the right to operate, lease, or grant described land for oil upon the expiration, termination, or reversion of the existing leasehold oil rights, but it was agreed that future oil leasehold operations would require that no more than three parties would operate for oil on described lands at any one time, and:

* * * that the respective operating rights thereon of the Department and of the Grantor or those holding oil rights, by, through or under him (hereafter called the “oil owners”) shall be as set forth in Sections 1 to 7, inclusive, following:
Section 1:
The Department shall have the right reasonably to prospect for and produce gas and the oil owners shall have the right reasonably to prospect for and produce oil on said lands but both the Department and the oil owners shall conduct their operations in the most approved manner to conserve the oil and/or gas in the structure, to prevent any unnecessary waste of oil or gas, to protect tbe interests of both parties and so that neither party shall unreasonably interfere with the operations of the other.
Section %:
If the oil owners shall drill any well through the gas-bearing strata to reach an underlying oil-bearing strata, they shall seal off the gas strata by casing or otherwise and promptly and efficiently prevent any underground or surface waste of gas and shall not produce any gas therefrom except as hereinafter provided.
Section 3:
The oil owners shall use every reasonable precaution and device to prevent the underground or surface waste of gas from all wells they may drill or operate upon said land and to prevent salt water or other liquids from entering into the gas-bearing sands through which such wells may have been or may be drilled and to prevent contamination of the gas produced or the gas contained in the sands with any substance that will make extraction of helium from the gas more difficult or more costly than extraction from the gas as originally constituted; and the Department shall use every reasonable precaution and device to prevent the underground or surface waste of oil from all wells it may drill or operate upon said lands and to prevent salt water or other liquids from entering the oil-bearing sands through which such wells may have been or may be drilled. All wells on the lands described herein which shall be abandoned by the oil owners or by the Department shall be plugged by the owner of the same so as to permanently confine all oil, gas or water to their original strata.
Section If.:
The oil owners shall have the right to purchase any well or wells now or hereafter owned by the Department on said lands which are, or at completion shall be found, or shall afterwards, become, non-productive of gas in paying quantities, but productive of oil in paying quantities, and the Department shall have the right to purchase any well or wells now or hereafter owned by the oil owners on said lands which are, or at completion shall be found, or shall afterwards become non-productive of oil in paying quantities, but productive of gas in paying-quantities.

(f) Section 5 provided a detailed formula to arrive at a sales price for Government or private wells referred to in Section 4.

(g) Section 6 provided a method by which, if oil and gas both were found, devices for separating oil and gas were to be installed by either the defendant or the oil lessee operating the well; and the oil or gas thus produced and separated was to be furnished to the owner, or else a royalty was to be paid on such production.

(h) Section 7 provided for unite of measurements.

31. On April 17, 1930, the defendant and Fuqua Land & Cattle Company executed a contract of sale similar in every respect to the contract with William H. Bush dated December 7,1929 (see finding 29). Only the consideration and tracts described were different. A similar gas grant form (see finding 30) was attached to the contract of sale. The form contained four lists of described lands, reciting a total of 13,344.5 acres.

32. On July 19,1930, the defendant and William H. Bush executed the gas grant whose form was attached as an exhibit to the contract of sale of December 7,1929 (see finding 30), adding only the consideration and the date.

33. On February 25,1931, the defendant and Fuqua Land & Cattle Company executed the gas grant whose form was attached as an exhibit to the contract of sale of March 29, 1930, adding only the consideration and the date.

34. (a) On October 23,1933, judgment in a condemnation case between the defendant and the estate and sole devisees of Lee Bivins was entered, which in due course became final. The judgment contained findings of fact describing 9,067 acres on which oil or gas leases were outstanding and 60 acres on which no oil or gas leases were outstanding. Such f actual findings included the following statements (among others) :

(1) * * * [T]he respondents * * * are the successors in interest of said Lee Bivins, deceased, and the owners and holders of the legal title to all the retained gas royalty rights, and other gas rights and interest in said block of 9067 acres, outside of whatever gas rights or interests the lessee and its assigns hold therein under and by virtue of the aforesaid oil and gas leases * * *.
(2) That said * * * [respondents] are the owners •and holders of the legal title to the full oil and gas mineral rights and estate in the remaining 60 acres of land * * *.

(b) The judgment ordered and be paid, the method of its payment, and that:

* * * The title to the possession and enjoyment of the hereinbefore described gas rights and. interests. so held by the said Mary Elizabeth Bivins, Miles Gr. Bivins, and Julian L. Bivins, individually and in the capacities hereinbefore stated, in and to the said block of 9067 acres of land, more or less, and the hereinbefore described oil and gas rights and interests so held by them in said respective capacities in and to the aforesaid 60 acres of land, shall vest and will hereby vest in the United States of America, free and clear, of all rights and/or claims of the other parties to this proceeding and all other persons and public bodies whatsoever, together with all reasonable and requisite ingress and egress, and rights of surface user incidental to the due enjoyment of all mineral rights or interests petitioner may own and hold therein, whether acquired under this condemnation judgment or otherwise, as well as the right at any time to remove all machinery and fixtures of petitioner placed on the premises, and the right to draw and remove casings, all subject to the coordinate rights appurtenant to the oil property and estate in and to the afore said block 9067 acres of land, more or less, and the co-existing rights of the general owner of the soil in the use of the surface of all the lands described herein.

(c) The tracts of Bivins land were then particularly described. The described 60-acre tract is the only tract in issue in which the defendant acquired oil rights.

35. (a) On February 23, 1942, Kuth Gr. Bush and the Trustees of the Estate of William H. Bush, all holding through William H. Bush, executed a gas deed conveying to the defendant:

* * * all gas in or under, or which may hereafter be found in or under and produced from * * * [a described 160-acre tract] together with the irrevocable right and easement, at all times, of possession and ingress and egress, for the purposes of exploring, mining and drilling said land for said gas, and of extracting, storing, transporting and marketing the same therefrom, and all other rights and privileges necessary, incidental, customary or convenient, to the development and exploitation of said land for said gas, and the right of removing from said land any and all property and improvements (including casing) placed on or under the surface or erected thereon (as fixtures or otherwise) by the Department, or assigns.
RESERVING-, however, similar rights to the owners of oil and other minerals not hereby conveyed, subject, however, to the provisions hereinafter set forth.
TO HAVE AND TO HOLD * * * without any obligation to explore or develop the gas resources of said land.

(b) The gas deed incorporated the provisions for joint oil and gas operations contained in the Bush contract of sale dated March 29, 1930 and the Bush gas deed dated July 19, 1930.

36. Prior to 1960, the increase in demand for helium by Government and private sources, plus the fact that much helium was being wasted in natural gas which was being piped to the fuel markets, resulted in the passage by the Congress of an act known as the Helium Act Amendments of 1960 (Public Law 86-777, 74 Stat. 918, 50 U.S.C. § 167 et seq.), approved September 13,1960. The act authorized a long-range program of conservation and storage of helium for future use. Under this act, the defendant instituted and has put into effect what is known as the Helium Conservation Program.

37. As a part of the Helium Conservation Program, the defendant entered into long-term contracts with four private companies for the sale and purchase of helium-gas mixture. The names of the companies, the location of the plants constructed by the companies, and the dates when those plants first delivered helium-gas mixture to the United States are as follows:

38.As a part of its Helium Conservation Program, the United States constructed and now owns and operates a pipeline which connects the five plants mentioned in finding 39 and the Otis, Keyes, and Exell helium extraction plants owned by the United States with the Bush Dome in the Cliff-side Field. This pipeline is sometimes known as the Helium Conservation Pipeline and was completed in November, 1962.

39. The five privately owned helium extraction plants deliver into the Helium Conservation Pipeline at the plant gates a helium-gas mixture, sometimes referred to as crude helium, which is required by contract to contain at least 50 percent helium, the balance being largely nitrogen but containing small amounts of other constituents of natural gas. Also, a helium-gas mixture is delivered into the Helium Conservation Pipeline from the Government’s Otis Plant in Kansas. During periods when production exceeds demand, pure helium is delivered into the Helium Conservation Pipeline from the Government’s Keyes Plant in Oklahoma and Exell Plant in Texas.

40. (a) As a part of its Helium Conservation Program authorized by the act mentioned in finding 36, the defendant on June 14, 1966 executed a contract with National Helium Corporation, which is a private corporation. By this contract, the defendant agreed to store in Bush Dome for National Helium Corporation a helium-gas mixture belonging to National Helium Corporation, for the compensation stated in said contract. Under this contract, the defendant has received and stored for National Helium Corporation a helium-gas mixture.

(b) At the time of the filing of the petition in this case on August 30, 1966, the National Helium Corporation contract mentioned in paragraph (a) of this finding was the only storage contract in force. Subsequently, on April 28,1967, a similar contract was executed by Cities Service Helex, Inc., and the United States.

41. (a) The helium and helium-gas mixture is transported in the Helium Conservation Pipeline to the Bush Dome in Texas and injected into the Brown Dolomite zone through injection wells designated as Bivins A-3, Bivins A-6, and Bivins A-13, and located in Section 26, Block 6, B. S. & F. Survey, Potter County, Texas.

(b) During times when the demand for helium cannot be met from the gas supply otherwise available, helium-gas from the Helium Conservation Pipeline before it reached Bush Dome and processed for helium extraction at the Keyes and Exell Plants.

42. On request of the parties, the issue of whether the right to store helium or helium-gas mixtures in the Bush Dome is owned by the plaintiffs or by the defendant was segregated from the other issues in the case for initial determination.

43. The Bush Dome is located within the lands described as (a) the N1/^ and SW% of Section 13, Section 14, the Wy2 and SE14 of Section 15, the S% of Section 17, and Sections 18, 19, 20, 21, 22, 23, 24, 25, 26, 27, and 28 in Block 6, (b) the N14 of Section 85 and Sections 86, 119, and 120 in Block 9, and (c) Sections 1,2, 3, and 4 in Block J.A.D. — all in the B. S. & F. Survey, Potter County, Texas.

CoNOlusion op Law

Upon the foregoing findings of fact and opinion, which are adopted by the court and made a part of the judgment herein, the court concludes as a matter of law that the right to use the Bush Dome for the storage of helium-gas mixtures and pure helium produced elsewhere is vested in the plaintiffs, and not in the defendant. The case is remanded to the commissioner for the conduct of further proceedings consistent with this determination. 
      
       Tlie defendant lias gas rights in all the lands that are involved in this action, and it also has oil rights in a 60-aere parcel of such land.
     