McDonald

I. BACKGROUND

In 1934, Ray Whiting Jr. and Harry Hoy developed the Horse Heaven Mine and operated it until 1936. From 1936 to 1973, the mine was owned and intermittently operated by Sun. Sun permanently ceased mining operations at Horse Heaven in 1958. In 1973, among over 2,600 acres of property in Jefferson County, Oregon, Sun conveyed Horse Heaven to Thomas and Marian McDonald via a bargain and sale deed. In the deed conveying the property to the McDonalds, Sun reserved “all of the oil, gas, and other mineral rights” in the property to itself, but specifically excluded rights to “surface materials which are used for road-building or construction purposes, such as . . . calcine . . . except such quantities as are reasonably used or useful in the enjoyment of [Sun’s] reserved rights.” (ER 51.) At the time of this purchase, the 15512 MCDONALD v. SUN OIL CO. Horse Heaven property contained a large pile or piles of cal- cine tailings.

Calcine is a waste product resulting from the processing of mercury ore into mercury. Mercury sulfide ore is mined, crushed, and heated in a furnace or “retort” to separate mer- cury from the ore. After the heating process is complete,…