CHAPTER 25

THE PRODUCTION OF OIL AND GAS FROM FEDERAL, STATE AND INDIAN LANDS

The law relative to the acquisition of privileges to operate the mineral lands of the United States, public lands of a state, or Indian lands for oil and gas purposes, forms a very small part of the vast body of law relative to mining upon public lands. Furthermore, its importance is comparatively slight in comparison with the law relative to the production of oil and gas on privately owned lands. The law of mining on public lands has for its sources the federal mining statutes, supplemental state legislation and local mining rules, regulations and customs. To these has been added a vast body of case law, both state and federal. In addition the land department may issue rules and regulations and has a quasi judicial authority to pass upon questions of fact relative to conformity with its rules and regulations and the statutes. In a work of this kind it is impossible to give full consideration to all of this mass of statute, regulation and decision which may directly or indirectly affect the production of oil and gas from public lands. The most that can be done is to draw from these sources that material which directly concerns the production of oil and gas from such lands and sug

gest that for fuller information and treatment the reader consult the more extensive treatises upon mining law.1

§ 246. Federal legislation

The privilege of producing oil and gas from the public lands of the United States is governed by three groups of enactments commonly known as the Placer Mining Act, the Withdrawal Act, and the Leasing Act. These various acts will be briefly discussed in the order named.

§ 247. The Placer Mining Act

In 1866 it had

Congress passed the Placer Mining Act in 1870. declared that all lands of the public domain valuable for mineral purposes should be reserved from sale "except as otherwise expressly directed by law," and had passed an act providing for the location and patenting of veins or lodes of quartz or other mineral-bearing rock. In 1872 the Lode Mining Act and the Placer Mining Act were revised and amended. This latter enactment, to the extent that it provided for the location and patenting of placer claims, together with its subsequent amendments, forms the basic law under which oil and gas placer mines may be located and patented.

Although oil and gas were not expressly mentioned in the Placer Mining Act, it was apparently taken for granted that they were minerals within the meaning thereof and oil and gas lands located as placers. In 1896, however, the Land Office rendered a decision to the effect that oil and gas were not minerals within the meaning of the act and that oil and gas claims could not be located and patented as placers. This decision was overruled by the Secretary of the Interior,7 but to remove all doubt. in the matter Congress enacted in 1897 that persons authorized to enter

1 Costigan, Mining Law (1908); Lindley, Mines (3d Ed. 1914); Corpus Juris, Mines and Minerals.

2 Act July 9, 1870, c. 235, § 12, 16 Stat. 217; Rev. St. U. S. § 2329 (U. S. Comp. St. § 4628; 30 U. S. C. A. § 35).

3 14 Stat. 86; Rev. St. U. S. § 2318 (U. S. Comp. St. § 4613; 30 U. S. C. A. § 21).

4 Act July 26, 1866, 14 Stat. 251.
5 17 Stat. 91, c. 152.

6 Union Oil Co., 23 L. D. 222.
7 25 L. D. 351.

and obtain patents to lands under the mining laws of the United States might enter and obtain patents to lands containing or chiefly valuable for petroleum or other mineral oils under the Placer Mining Act.

In 1903 Congress passed an act which provided that the annual assessment labor for as many as five contiguous oil placer claims might be performed upon one of them, if such labor would tend to determine the oil-bearing character of such contiguous claims.9

Until the passage of the Leasing Act in 1920, there was nothing, other than the act just mentioned, and the Withdrawal Acts beginning in 1909, which differentiated the location and patenting of oil claims from any other placer claim. The Withdrawal Acts only affected the relations of claimants with respect to lands actually withdrawn. It seems unnecessary, therefore, to attempt to discuss here in detail all of the requirements of state and federal statute and land office regulations for the location and patenting of placer mining claims. It seems more advisable to merely point out the principal requirements as they apply to oil placer claims and for detailed information permit the reader to consult the more comprehensive treatments found in the treatises on mining law.

§ 248. Requirements for location of oil placer claim

Two distinct requirements of the federal statutes for the location of any mining claim are discovery, and the marking of the location on the ground. Other details are left to state legislation. In most of the western mining states there are distinct statutory provisions stating particular requirements that must be fulfilled before a valid location is made. These are usually discovery notice, location notice and record.

The federal statutes seem to require an actual discovery of mineral upon a claim as a condition precedent to its valid location.10 From this

8 Act Feb. 11, 1897, c. 216 (U. S. Comp. St. § 4635; 30 U. S. C. A. § 101).

9 Act Feb. 12, 1903, c. 548 (U. S. Comp. St. § 4636; 30 U. S. C. A. § 102).

10 Rev. St. U. 3. § 2320 (U. S.

Comp. St. § 4615; 30 U. S. C. A. § 23).

It is a condition precedent to the location of a mining claim that a discovery must be made, and in the case of petroleum or mineral oils the deposit from which the oil is

it seems to follow that the first step towards perfecting a valid location would be the discovery of the mineral within the limits of the claim. While discovery of oil is essential for the validity of an oil placer claim, discovery of oil seldom precedes the acts of marking the claim upon the ground, posting of the notice and recording the claim. This is due to the fact that the presence of oil in commercial quantities in a given tract of land cannot be determined by mere surface indications, but only by the drilling of a well hundreds or even thousands of feet deep at a great expenditure of time and money.12 Few would under

take the task of exploring public mineral lands for oil without some assurance that their claims would be protected from entry by others during the attempt to discover oil by the drilling of wells. The practice, therefore, in the location of oil claims is to stake out the claim, post the notice and record the claim.13 If the locator performs these acts and then enters upon the claim, he has rights against third persons who seek to enter thereon as long as he remains in possession and prosecutes the work of discovery with diligence.14 When discovery is actually made under