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Minds may differ on some of them; some decisions were difficult or they would not have to be made by the highest officer of the department. But as to the honesty of the decision, and compliance with proper public policy, I think there can be but one answer.

I wish to assure you that, despite Mr. Kelley's nonsense, the oil and gas reserves of this Nation will continue to be conserved by this department as long as I am secretary of it, but with regard for all equities and with respect for statutory requirements. Any oil-shale claimant who complies with the law can expect his claim to go to patent uninfluenced by any hysteria arising from Mr. Kelley's statements. The speculator who is imposing on the public domain will continue to go through the house-cleaning process instituted by the posting of over 6,400 claims at my direction.

Senator Walsh of Montana. Mr. Finney, as I explained to you at the outset, this is really in the nature of an inquiry by the committee as to whether the resolution for a complete investigation of the whole matter ought to be pursued or not.

Secretary WILBUR. I understand that.

Senator Walsh of Montana. It was my desire to explore the question to see whether it was advisable or otherwise.

Secretary WILBUR. We appreciate your interest.

Senator Walsh of Montana. Now, Mr. Kelley wants to be heard, and I am desirous that he should be for the purpose of eliciting any further facts in the matter.

Secretary WILBUR. Yes.

Senator Walsh of Montana. But, as Senator Glenn exhibited some interest in that part of the inquiry, I will recess the proceedings until some day when Senator Glenn can be present, of which all of the witnesses will be advised.

(Whereupon, at 12 o'clock noon, the committee recessed subject to the call of the Chair.)




Washington, D.C. The committee met, pursuant to call, at 10 o'clock a. m., in the committee room of the Committee on Interstate Commerce, Capitol, Senator Gerald P. Nye presiding.

Present: Senators Nye (chairman), Glenn, and Walsh of Montana.

Present also: Hon. Edward C. Finney, Solicitor Department of the Interior; Northcutt Ely, executive assistant to the Secretary of the Interior; U. E. Goerner, Esq., assistant law examiner, General Land Office; Mr. Ralph S. Kelley.

The CHAIRMAN. The committee will be in order.

Mr. Ely. Senator Walsh, these are the Obenchain reports and my reports to Secretary Wilbur. I think those should be incorporated in the record in order to clarify matters.

Senator WALSH of Montana. Those may be included in the record.

(The Obenchain reports, referred to by Mr. Ely, together with Mr. Ely's report to Secretary Wilbur, read as follows :)



Washington, May 28, 1930. Memorandum for the Secretary.

I have read Mr. Obenchain's report on the oil-shale situation in Colorado and Utah and concur in the report as submitted.

C. C. MOORE, Commissioner.



Washington, May 27, 1930. The SECRETARY OF THE INTERIOR

(Through the Commissioner of the General Land Office). SIR: In compliance with your instructions of March 1, 1930, and in accordance with the letter of the commissioner of March 3, 1930, detailing me to the field to investigate the oil-shale situation, I proceeded to Denver on April 2, 1930, and thereafter proceeded to Glenwood Springs, Colo., and Salt Lake City, Utah.

I found considerable antagonism against the department, the General Land Office, and the field service, by the oil-shale claimants, their attorneys and others connected with such claims. This feeling is more acute in Colorado than in Utah, possibly because of the greater activity in Colorado and partly because of the way the situation has been handled. The Denver division has been very active for years in examining and reporting hundreds of oil-shale claims, resulting in many controverted issues, while comparative little of such work had been done in the Salt Lake City district until recently.

The oil-shale controversy has been occasioned largely by the provisions of section 37 of the leasing act of February 25, 1920. Many claims were questioned and charges filed because of lack of sufficient assessment work for several years past. This action by the department was questioned by oil-shale claimants and suit was started in the courts to test the right of the Government to thus proceed, which finally resulted in a decision by the Supreme Court of the United States in what is known as the Krushnic case decided January 6, 1930.

That decision was thought by the oil-shale claimants, apparently, to settle entirely the question of assessment work. But the department, in its decision of February 28, 1930 (Exhibit D), referred to in the attorneys' statement to me, did not give the Krushnic decision such wide interpretation.

Accordingly, Mr. Kelley was, on January 15, 1930, directed to submit, as soon as possible, reports in all cases where shale locators defaulted on annual labor and there was no evidence of resumption of work, and to post notices on all such claims against which charges had not already issued, that the United States had taken possession of the lands because of claimant's default. Some progress along these lines had been made prior to my arrival at Denver, but it was soon evident that because of the great number of the claims and the inaccessibility of many, and the difficulty in locating the boundaries of claims on the ground in order that notices would be properly posted, without extra help and extraordinary effort the posting would be very slow. Soon after my arrival in Salt Lake, and finding similar conditions in Utah, steps were taken to increase the field force by transferring mineral examiners from the field division at Santa Fe, San Francisco, and Portland, besides drawing on the surveying service for surveyors and transitmen.

Parties were then organized, both in the Denver and Salt Lake divisions, for the field work, Mr. Moore having a total of 14 men, or 7 parties of 2 each, and Mr. Kelley having 15 men engaged in the work of examinations and posting. Mr. Moore of Salt Lake City estimates that the total number of oil-shale claims pending examination and posting, for which applications for patent have not been made, as of May 7, 1930, approximate 4,000. Abstracts covering approximately 3,500 oil-shale claims have been taken from the county records, leaving about 500 claims yet to be abstracted. Mr. Kelley reports that he has about 1,000 cases which require investigation before posting. The investigation is necessary in order to determine whether there had been a default in assessment work and whether assessment work had been resumed, prior to the time of such investigation.

The 1,000 oil shale cases in the Denver district upon which no patent applications have been filed, cover those which require investigation before posting and does not include all the claims in that district. Taking all classes of such claims, the number will probably exceed the 4,000 reported as pending in the Salt Lake district.

Under date of May 17, 1930, Mr. Moore, of Salt Lake City, reported that he is making excellent progress in examination and posting oil shale claims. He states that approximately by July 1, 1930, the claims of principal importance will have been examined and posted, and that he has not found any unusual interest or activity on the part of the claimants to resume work. No progress report of the work in the Denver district has yet been received.

An examination of the records of the district land office at Denver as of April 3, 1930, showed that approximately 100 applications for patent were pending in that district upon which final action had ņot been taken. In 71 of these cases payments have been made for the land and final certificates issued dated from 1922 up to and including 1930. Payments were made in 10 other cases, but no final certificate issued, and in 18 cases no payments whatever have been made and consequently no final certificate issued.

These cases cover approximately 96,000 acres involving approximately $190,000 paid to the Government as purchase money. Since that time, however, 11 cases have been approved for patent, after charges had been dismissed, which involve $14,370, so that there now remains approximately $166,000 which the Government holds as purchase money on unpatented claims. In the Salt Lake district there were only 17 applications for patent pending as of May 7, 1930, all of which, however, were filed within practically the last year.

In the Denver district there are approximately 30 cases ready for hearing provided no interlocutory motions are filed as to the right of the Government to proceed against such cases, which motions raise points of law which must be decided as the cases arise. There were also 39 cases in which interlocutory motions have been filed recently and will be considered as promptly as possible

The delay in taking final action in cases involving patent applications is the subject of much criticism by the claimants and their attorneys. They contend that the time of our field force, for some time past, has been consumed in examining locations for which no application for patent has been filed, when that time should have been used to clear up the patent application cases. In all of these cases charges of different kinds have been made by the Government, and the delay has not been entirely unavoidable. I do not mean to say that no action whatever has been taken on these cases during all these years, but only that final action has not been had. In fact, some hearings have been held, some only partially and others completed, while in others preliminary and intermediary action has been taken at various times. When the Krushnic case was taken into court, action was suspended in practically all of the cases which involved the question of assessment work, and since that decision was rendered on January 6, 1930, by the Supreme Court of the United States, considerable progress has been made toward clear listing and issuance of patents where the assessment work was the only charge made.

Action on applications for patent has not, to any extent, been delayed by the field work on locations, for all such cases in the Denver division have been investigated in the field and reports submitted. It may be necessary, in event a hearing is to be had, that a further checking up in the field will be required to obtain the latest data as to what has been done toward compliance with the law. The patent applications in the Salt Lake district have been invesigated and reported, except a few which have just recently been filed.

Many of these patent applications present considerable equity in and good faith on the part of the present holders. In many instances a group of local people now owning the claims purchased them from the original locators after having obtained legal advice as to the validity thereof from attorneys who were supposed to be versed in this class of work. They allege that large sums of money were paid for the claims and that since the purchase was made the assessment work, at large expense, has been kept up. The cost of the original purchase, the money paid for assessment work, and the expense of litigation for several years involve, as they allege, from $20,000 to $300,000 in the different cases. They advise that the funds of these groups have practically been exhausted, and it is a question with them whether they must abandon the claims and lose the money already spent or whether they will be able to provide more funds for further assessment work and for continued litigation. In some of these cases the charge has been made by the Government that one or more of the original locators were dummy ones which charge involves the validity of the location. These amounts of money were spent largely at a time when the general opinion prevailed that these oil-shale claims were in the same class as mining claims under the general mining law, unaffected by the provisions of the leasing act and would be so adjudicated. Outside of the question as to the validity of the locations, I believe that, as far as possible, any doubt as to other features of the case should be resolved in their favor.

The necessary delay in setting cases for hearing, because of the fact that no money has been available therefor, because of insufficient appropriations, and will not be available prior to July 1, 1930, is another cause for criticism. This condition exists, however, and can not be helped at this time. When the money becomes available for these hearings, there will be a great clamor on the part of all the claimants and their attorneys to have their particular cases heard first. As we have but one regular hearing officer, Mr. Heron, in the Denver district, it can readily be seen that considerable further delay will occur. The issues in these cases are hard fought with prominent and generally efficient attorneys appearing for the claimants. The Government attorney must, therefore, consume considerable time on each case to be prepared to conduct the hearing and to be ready to meet any and all questions which may arise during the course of the hearing. Besides the preparation by the Government attorney before the hearing, the taking of testimony itself consumes several days. In view of this situation, after my conference with Mr. Kelley, he contemplates using Mr. Bradshaw as an additional hearing officer to expedite this work. It is estimated that, notwithstanding the fact that some claimants may not ask for hearings or may default on charges made, the cases now to be heard will probably consume two years.

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