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of others, the lands upon which wells or other improvements have been made by the applicant,

SEC. 3. That each permittee or lessee shall be required to pay to the United States an amount equal to the value at the time of production of one-eighth of all the oil or gas already producell, except o:) or gas used for production purposes on the claim or unavoidably. lost, and after the date of this act shall be required to pay to the United States a royalty of not less than 124 per centum of all the oil or gas produced, except oil or gas used for production upon the claim or unavoidably lost.

“Sec. 4. That except as provided herein the applicable provisions of the act of Congress approved February 25, 1920, entitled 'An act to permit the mining of coal, phosphate, oil, oil shale, gas, and sodium on the public domain,' shall apply to the permits and leases granted hereunder, including the provisions of sections 35 and 36 of said'act relating to the disposition of royalties received hereunder: Provided, iPhat after the adjudication, adjustment, and disposition of all pending claims under this act, any lands or deposits remaining unappropriated and undisposed of shall, after date fixed by order of the Secretary of the Interior, be disposed of in accordance with the provisions of said act of February 25, 92;: Provided further, That upon the approval of this act the Secretary of the Interior is authorized to take over and operate existing wells on any of such lands pending the final adjustment and disposition of claims thereto, and to utilize and expend in connection with such administration and operation so much as may be necessary of moneys heretofore impounded from past production or hereafter produced, and upon final adjustment of pending claims and the issuance of permits or leases therefor, after deducting the expenses of administration and operation and payment of the royalty herein provided to the United States, to pay the balance remaining to the party or parties entitled thereto: And provided further, That out of the 10 per centum of money hereafter received from royalties and rentals under the provisions of this act to be paid into the Treasury of the United States and credited to miscellaneous receipts the Secretary of the Interior is authorized to use and expend such portion as may be required to pay the expense of administration and supervision over such permits and leases and the products thereof.

“ Sec. 5. That the Secretary of the Interior is authorized to prescribe the necessary and proper rules and regulations and to do any and all things necessary to carry out and accomplish the purposes of this act.”

"[H. R. 13475, Sixty-seventh Congress, fourth session.] "A BILL To authorize the Secretary of the Interior to issue to certain persons and

certain corporations permits to explore, or leases of, certain lands that lie south of the medial line of the main channel of Red River, in Oklahoma, and for other purposes.

"Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That the Secretary of the Interior is hereby authorized to adjust and determine the equitable claims of citizens and domestic corporations to lands and oil and gas deposits situated south of the medial line of the main channel of Red River, Oklahoma, which lands were claimed and possessed in good faith by such citizens or corporations, or their predecessors in interest, prior to October 1, 1919, and upon which lands expenditures were made in good faith in an effort to discover or develop oil or gas. And the Secretary of the Interior is further authorized to issue to those persons or corporations that may be found equitably entitled thereto permits to explore, or leases of, said lands so claimed by them.

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SEC. 2. That applications for permits and leases under this act shall be made to the Secretary of the Interior, and shall be made within and not after thirty days from and after the date that this act becomes a law. Leases and permits under this act shall be granted to the assignees or successors in interest of the original locators or the original claimants in all cases where the original locators or original claimants have assigned or transferred their rights, but when leases or permits are granted to the assignees or successors in interest of the original locators or original claimants the said leases and permits shall be subject to all contracts, not contrary to law or public policy, between the original locators or original claimants and their successors in interest. In every case where there shall be any conflict or contest on account of overlapping claims the said conflict or contest shall be determined upon competent evidence, and in every such case the land in conflict shall be granted to the person or corporation that in good faith first possessed and claimed the land and maintained such possession until dispossessed, by judicial process or otherwise.

SEC. 3. That not more than one hundred and sixty acres shall be granted by leases or permits to any one person or corporation, except in those cases where two or more locations or claims have been assigned to one person or corporation, and in such cases not more than four hundred and eighty acres shall be granted by leases or permits to any one person or corporation.

SEC. 4. That each lessee shall be required to pay to the United States an amount equal to the value at the time of production of 123 per centum of all oil and gas produced by him prior to the issuance of the lease, except oil or gas used on the property for production purposes or unavoidably lost; and shall be required to pay to the United States a royalty of not less than 127 per centum of all oil and gas produced by him after the issuance of the lease, except oil and gas used on the property for production purposes or unavoidably lost. Of the proceeds of the oil and gas that have been produced or that may hereafter be produced by the receiver of said property, who was appointed by the Supreme Court of the United States, after deducting the proper proportionate part of the cost of the said receivership and the cost of administration and production, 127 per centum shall be paid to the United States, and the residue shall be paid to the person or corporation to whom may be granted a lease of the land on which said oil and gas were produced.

SEC. 5. That except as otherwise provided herein the applicable provisions of the act of Congress approved February 25, 1920, entitled "An act to permit the mining of coal, phosphate, oil, oil shale, gas, and sodium on the public domain,” shall apply to the leases and permits granted hereunder, including the provisions of sections 35 and 36 of said act relating to the disposition of royalties: Provided, That after the adjudication and disposition of all applications under this act any lands and deposits remaining unappropriated and undisposed of shall, after date fixed by order of the Secretary of the Interior, be disposed of in accordance with the provisions of said act of February 25, 1920: Provided further, That upon the approval of this act the Secretary of the Interior is authorized to take over and operate existing wells on any of such land pending the final disposition of applications for leases and permits, and to utilize and expend in connection with such administration and operation so much as may be necessary of moneys heretofore impounded from past production or hereafter produced, and upon final disposition of applications for and the issuance of leases and permits, after deducting the expenses of administration and operation and payment to the United States of the royalty herein provided, to pay the balance remaining to the person or company entitled thereto: And provided further, That out of the 10 per centum of money hereafter received from royalties and rentals under the provisions of this act and paid into the Treasury of the United States and credited to miscellaneous receipts, as provided by section 35 of the said act of February 25, 1920, the Secretary of the Interior is authorized to use and expend such portion as may be required to pay the expense of administration and supervision over leases and permits and the products thereof.

“ SEC. 6. That nothing in this act shall be construed to interfere with the possession by the Supreme Court of the United States, through its receiver or receivers, of any part of the lands described in section 1 of this act, nor to authorize the Secretary of the Interior to dispose of any of said lands or oil or gas deposits involved in litigation now pending in the Supreme Court of the United States, until the final disposition of said proceeding. The authority herein granted to the Secretary of the Interior, to take over and operate oil wells on said lands, shall not become effective until the said lands shall be, by the Supreme Court of the United States, discharged from its possession. And nothing in this act shall be construed to interfere with the jurisdiction, power, and authority of the Supreme Court of the United States to adjudicate claims against its said receiver, to direct the payment of such claims against the said receiver as may be allowed by the said court, to settle the said receiver's accounts, and to continue the receivership until, in due and orderly course, the same may be brought to an end. The Supreme Court of the United States is hereby authorized, upon the termination of said receivership, to direct its receiver to pay to the Secretary of the Interior all funds that may at that time remain in the hands of the said receiver; and when said funds shall be paid to the Secretary of the Interior the same shall be administered as in this act provided.

SEC. 7. That the Secretary of the Interior is authorized to prescribe the necessary and proper rules and regulations and to do any and all things necessary to carry out and accomplish the purposes of this act."

The CHAIRMAN. As I stated, when I asked for a report on Mr. Newton's bill, H. R. 11928, I received a letter from Secretary Fall, dated June 29, 1922, suggesting the substitute bill. It seems to me it would be well to read Secretary Fall's letter suggesting the substitute, .as it will give more or less of a history of this controversy. I shall read the letter from Secretary Fall, dated June 29, 1922, addressed to me as chairman of the committee:

66

JUNE 29, 1922. Hon. N. J. SINNOTT, Chairman Committee on the Public Lands,

House of Representatives. MY DEAR MR. SINNOTT: I am in receipt of your request for report upon H. R. 11928, entitled “A bill authorizing the Secretary of the Interior to lease to certain persons and corporations certain lands in Tillman and Cotton Counties, Okla., belonging to the United States that were, prior to February 25, 1920, claimed in good faith under the placer mining laws of the United States, and for other purposes."

My attention has been directed to the fact that one or two other bills have been introduced in Congress relating to the same lands, one of them proposing to confirm title in certain placer locators.

The area involved is that tractor those tracts of land extending from the medial line of the bed of Red River, Okla., to the Texas boundary line, title to which has been in issue before the Supreme Court of the United States in the suit of the State of Oklahoma 1. the State of Texas, Original No. 20, October term, 1927. In this suit the t'nited States intervened, setting up claim of title to the area, and certain placer mining claimants also intervened, asserting their claims by location and development under the placer mineral laws of the United States. Evidence was adduced by the mineral claimants before a special commissioner appointed by the court, and submitted.

In its opinion rendered May 1, 1922, the court held that the title to the area in question is in the United States and that the placer mining laws were not and are not applicable to the lands. The determination of the boundary lines of the area is a matter yet pending before the court for decision.

It appears from the records of this department that prior to the institution of the suit and the rendition of the decision of May 1, 1922, supra, a number of placer mineral claimants submitted applications for patents under the mining laws, which were rejected by this department, on the ground that the mining laws of the United States were not applicable to the lands. A number of claimants have also at various dates since February 25, 1920, filed applications for prospecting permits or leases under sections 13 and 19 of the general leasing act of February 25, 1920 (41 Stat. 437). The applications under section 19 were, of course, predicated upon alleged placer mining locations. These applications are now pending before the department.

The department is also advised that some applications have been presented to enter some of the lands involved under the provisions of section 2289, Revised Statutes. A list of such claims, as shown by the records of the General Land Office, is hereto attached.

I am also advised that certain parties claiming under titles or leases deraigned from the State of Texas also entered into possession of some of these lands and performed more or less work thereupon in connection with the discovery or development of deposits of oil and gas.

The facts in the case as presented to the Supreme Court of the United States are quite fully set forth in the decision of that court dated May 1, 1922, hereinbefore referred to, and need not be here repeated. It follows from the decision that the locations attempted to be made and applications for paten's filed in the placer mining laws for these lands must fail, for, under the decision of the court

This part of the river bed never was subject to location or acquisition under the mining laws, nor, indeed to acquisition under any of the land laws—and therefore that these locations were of no effect and conferred no rights on the locators or their assigns.”

I am advised that in connection with some of the applications my predecessor expressed the opinion that the provisions of the general leasing law of February 25. 1920, supra, are applicable to lands and deposits of oil or gas owned by the United States in that area. Assuming this to be correct, it would appear that applications for preference-right permits or leases filed on behalf of those basing their titles on mining locations can not be allowed, in view of the provisions of said section 19 and of the finding of the court above quoted. Nor would the provisions of section 13 of the leasing act, providing for the issuance of prospecting permits, appear to be applicable to those tracts in the area involved, upon which oil or gas has been discovered and produced. As to such proven lands, the provisions of section 17 of the leasing act would appear to be more nearly applicable, but it would hardly appear just or equitable to put improved lands of this character up at public auction for sales of leases in cases where present claimants have made large expenditures in time and money in the development and improvement thereof.

This department is informed that after the institution of the suit a receiver was appointed by the court to take possession of and protect the properties involved, and that in addition to wells which may have been drilled by various claimants, the receiver, acting under authority vested in him, drilled a number of wells for the protection of the property in his hands. No report from the receiver is in my hands, but I have been informally advised that the total production from the oil and gas products taken from the land during the receivership approximates $9,000,000 or $10,000,000, and that after payment of expenses there remains in his hands about $2,500,000. More definite information on this point can doubtless be obtained from the receiver.

It further appears that many of the claims filed or attempted to be filed overlap and conflict with each other, so that ultimately some adjudication, adjustment, or disposition of conflicts must be made.

The situation is such that this department feels that early action should be taken to protect the interests of the United States, as well as others involved. Presumably those who entered upon the lands in good faith under what they believed to be valid locations under the placer mining laws, under claim or color of title from one of the States at that time claiming the area, or some other claim or color of title which had a substantial, if not legal, foundation, are entitled to equitable consideration. On the other hand, they have no legal right and have not been misled by this department. In my opinion, the circumstances are such to warrant some form of remedial legislation. Men who have spent money in good faith should be taken care of in some manner, as there is no sound reason why those who have such investments and aided in demonstrating the mineral character of the land should not, to a reasonable degree, be protected and rewarded.

The policy of leasing oil and gas deposits of the United States, as provided in the act of Congress of February 25, 1920, appears to have been a general policy intended to be applied to all lands or deposits owned by the United States, except certain reserved lands specifically excepted therefrom in section 1 of the act. The remedial sections of said law are, however, apparently not applicable to this situation. Section 18 of the act, which extends relief to placer claimants who had brought in producing wells upon their claims, is clearly not applicable to this situation, for it is limited to lands which had been withdrawn by Executive order “ issued September 27, 1909." Section 19 is not applicable for reasons already stated, viz, that the right to secure a preferential permit or lease must be bottomed upon a claim under the placer mining laws by one “who had previously performed all acts under then existing laws necessary to valid location thereof except to make discovery.” Here the Supreme Court has held that the placer-mining laws did not and do not apply. Section 18a is not applicable because these lands were not embraced in the Executive order of September 27, 1909. Moreover, no applications for adjustment thereunder were filed within 12 months after the approval of the act as prescribed. Consequently, if relief is to be extended to the claimants described, it would appear that legislatiou by Congress is desirable and necessary.

I therefore transmit for the consideration of your committee and for introduction, if you deem it.advisable, draft of a bill designed to authorize the Secretary of the Interior to consider and adjust the equitable claims mentioned in this report. As the claims are purely equitable, and the development except that carried on by the receiver necessarily limited, it is my opinion the permits or leases should be as nearly as practicable in 20-acre units, and that no one person or corporation should secure in the aggregate more than 160 acres, including, so far as possible, the lands they have improved or developed, that where this is impracticable they should be allotted an area elsewhere. Of the oil and gas already produced to the extent that the proceeds have not been devoted to expenses incident to the receivership, it is believed that these claim

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