Kennecott Corp. v. Union Oil Co.

—The Imperial Irrigation District (IID) owns land in the Imperial Valley underlying which are mineral deposits and geothermal formations capable of producing steam convertible into electric energy. IID as lessor leased 280 acres of such land to a lessee for production of steam and minerals. The lessee assigned the leasehold interest to Imperial Thermal Products (ITP). ITP then assigned to Southern Pacific Land Company (Southern) its rights to produce steam from the land and to dispose of the wastes from such production. Southern later assigned those rights such that Union Oil Company (Union), Mono Power Company (Mono) and Southern eventually became the owners of undivided one-third interests in the steam. While ITP was producing steam and minerals under the original lease, the waste residues were deposited into brine ponds. The cost of disposing of the wastes in these brine ponds as required by water quality control agencies and liability for such costs prompted Union, Southern and Mono to surrender to ITP their interests. ITP averred the surrender was ineffective. Union and its fellow owners considered the surrender divested them of their interests in the land. Three…