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OIL SHALE LANDS

TUESDAY, FEBRUARY 3, 1931

UNITED STATES SENATE,

COMMITTEE ON PUBLIC LANDS AND SURVEYS,

Washington, D. C. The committee met, pursuant to the recess, 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, Pittman, and Walsh of Montana.

Present also: Hon. Ray Lyman Wilbur, Secretary, Department of the Interior; 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. You may resume your testimony, Mr. Finney. STATEMENT OF HON. EDWARD C. FINNEY, SOLICITOR, DEPARTMENT OF THE INTERIOR-Continued

Senator WALSH of Montana. Did you get the opinion you were looking for?

Mr. FINNEY. Yes, the one we have not reached in my presentation. I had them all arranged according to date. After the two decisions had been rendered, which were read to you at our previous meeting, a petition for reopening of the case and for the ordering of a new trial, for the submission of additional evidence, was filed by Consaul & Heltman, attorneys for Freeman, in Washington. That was supported by affidavits purporting to state the new evidence. to be submitted at the new hearing.

Decision was then prepared by myself, ordering a new trial, and in that decision is the statement to which I referred about the Geological Survey classification.

Senator WALSH of Montana. Will you read that, Mr. Finney, omitting the formal part, "By Decision of December 20, 1924 "Mr. FINNEY. I may say this was written by the same attorney, Edson Phillips, and initialed by the board of review.

The CHAIRMAN. Let us have the body of it, beginning "By Decision of December 20."

Mr. FINNEY (reading):

By decision of December 20, 1924, the department directed a dismissal of the protest on the ground, in part, that no actual discovery of a valuable deposit of oil shale was shown by testimony adduced in the protest proceeding to have been made by the protestant or his predecessors in interest within the limits of any of said claims prior to the approval of the leasing act of February 25, 1920, or the diligent prosecution of work leading to such a discovery. That decision was on motion for rehearing adhered to by departmental decision of May 23, 1925, which also denied an alternative motion for a new trial, the latter on the ground, in substance, that the allegations

contained in the affidavits filed in support of the motion were insufficient, if substantiated at a further hearing, to establish the existence of a valid discovery upon any of the claims as of the date of said act, or to show diligent prosecution of work looking to discovery.

To support the petition now under consideration, wherein a new trial is sought, there is filed an affidavit by the petitioner in which he alleges:

That affiant now offers, and declares himself able to show at a further hearing, should one be ordered, that there was, prior to February 25, 1920, exposed naturally or as a result of development work, on each of the placer claims in conflict with said homestead entry, a valuable deposit of shale oil bearing rock in place, of such thickness and carrying such shale oil content as to be and constitute a valuable mineral deposit within the meaning and intent of the placer mining law, and in conformity with the standards established by the scientific bureau of the Government as to what shall constitute a valuable deposite of oil shale rock; or to be more specific, as stated in affiant's former affidavit, he offers to show by competent evidence at a hearing, that "on each of the placer claims in conflict with said homestead, deposit of oil shale more than 1 foot in thickness and carrying an oil content of more than 15 gallons per ton" were discovered and disclosed, prior to February 25, 1920; and affiant further offers to show and to prove by competent evidence, the existence of deposits of such value and character naturally exposed at points where no excavation or development wrok has ever been done at all, and it was the purpose and intention of affiant to offer to make a showing such as here described, in the affidavits filed in support of his motion for rehearing.

In determining whether an oil-shale deposit shown to have been physically exposed within the limits of an asserted oil shal placer mining location on any particular date is sufficient to constitute an adequate discovery of mineral to render the location valid as of that date, the department will apply to the deposit that may be shown to have been so exposed at that time, and relied upon as a discoverey, and to that deposit only, the rule adopted by the United States Geological Survey in its regulations of April 3, 1916, for the classification of lands with respect to their oil shale character. To warrant the classification of areas of oil shale land those regulations provide (1) where the oil-shale beds are too deep to be mined by open-cut methods, such lands must contain shale capable of yielding 1,500 barrels of oil per acre in beds not less than 1 foot thick, yielding not less than 15 gallons per ton and within a reasonable depth below the surface; (2) surface to be mined by open-cut methods, such lands must contain shale sufficient to yield 750 barrels of oil per acre in beds not less than 6 inches thick and yielding not less than 15 gallons per ton. In computing the acre value of the oil shale, it is considered that a yield of 1 gallon of oil per ton of rock is equivalent to yield of 50 barrels (42 gallons each) of crude oil per acre-foot of rock. Accompanying the regulations is a table giving the number of barrels per acre for each foot thickness up to 6 feet for different shales yielding from 15 to 60 gallons per ton.

Upon the showing now made, considered in the light of matters previously disclosed herein, the department believes that the protestant should be afforded opportunity, at a further hearing to be ordered for that purpose, with notice to the entryman, to present such additional evidence as he may desire as to what, if any, oil-shale deposits were actually and physically exposed within the limits of each of the claims here involved, prior to February 25, 1920, together with evidence as to the thickness of such deposits, their depth beneath the surface, and their oil content in gallons per ton and barrels per acre, equal opportunity to be afforded entryman to participate in the hearing and adduce testimony on his own behalf should he see fit so to do. It is so ordered, and upon the presentation of such evidence it will be considered in further determining the validity of such claims as mining locations as of the date last mentioned.

E. C. FINNEY, First Assistant Secretary.

Senator WALSH of Montana. You say this opinion was prepared by whom?

Mr. FINNEY. Edson Phillips, then an attorney in the department. Senator WALSH of Montana. And initialed?

Mr. FINNEY. By the three members of the board of review, Mr. Gardner, Newman, and Patterson.

Senator WALSH of Montana. You think that is the opinion that was the subject of discussion between you and Mr. Kelley, giving rise to the remark which was quoted?

Mr. FINNEY. No; that was not the opinion. It was the primary opinion which was discussed by Mr. Kelley and myself; the later decision prepared by me and signed by Secretary Work found the locations valid.

Senator WALSH of Montana. I call your attention to a statement in this article of Mr. Kelley.

Mr. FINNEY. Just a moment; I can finish this. You refer to some statement where I was alleged to have said I would not have signed one of the prior opinions, or that I thought that one of the prior opinions was wrong. I said it must have referred to this Geological Survey rule, if I made any such statement.

Senator WALSH of Montana. I was calling your attention to this statement in the Kelley article, Mr. Finney, article 4, the FreemanSummers decision: He said, "I did not write the first decision in this case. I do not understand how I ever permitted that decision to get by me and bear my signature."

Now you did not really write the first decision, did you, Mr. Finney?

Mr. FINNEY. Personally, I did not write the first three decisions. Senator WALSH of Montana. We will confine our attention first to the first decision. You did not write the first decision?

Mr. FINNEY. I did not.

Senator WALSH of Montana. But you passed it?

Mr. FINNEY. I signed it as my decision.

Senator WALSH of Montana. And you say, "I do not understand how I ever permitted that decision to get by me and bear my signature."

Mr. FINNEY. I am not admitting that is correct.

Senator WALSH of Montana. I understand you are not. I just want to get the facts about the matter. You said when you were here the other day that you could not have said that about the first decision, because you approved that, and approve it now.

Mr. FINNEY. Yes.

Senator WALSH of Montana. On the facts as they were before you at that time you are now satisfied with that opinion?

Mr. FINNEY. Yes.

Senator WALSH of Montana. So you said that if you made any such remark as this, it must have referred to some other decision than the first decision?

Mr. FINNEY. Yes, sir.

Senator WALSH of Montana. And you think now it must have referred to this opinion to which you have now called our attention? Mr. FINNEY. Yes, sir; that is correct.

Senator WALSH of Montana. That, however, did get by you and you signed it?

Mr. FINNEY. Yes, sir; I did.

Senator WALSH of Montana. And you now insist it does not correctly express your view.

Mr. FINNEY. No, sir; because in all my experience in dealing with mining cases, we have never established a hard and fast rule that

there must be so many barrels or gallons of oil, or ounces of gold to justify the miner in making the location.

Senator WALSH of Montana. The point is now you do not approve the decision and you never did.

Mr. FINNEY. Not the part which applies to this rule.

Senator WALSH of Montana. That is the meat of that decision, is it not?

Mr. FINNEY. It is substantially so, although the latter part of it ordered a new hearing at which they could put in new evidence.

Senator WALSH of Montana. Can you give us any explanation now, Mr. Finney, as to how you ever came to sign that, when it does not express your views now and never did express your views?

Mr. FINNEY. I can not say especially. I can not recall distinctly why I allowed it to go through with that in. I am not infallible, and I did not realize I was attempting to lay down a rule in that decision that no location could be valid unless there were so many gallons of oil to the ton.

Senator WALSH of Montana. Do you remember the circumstances of your signing that, Mr. Finney?

Mr. FINNEY. No; it is just one in hundreds that I signed, Senator. Mr. Phillips was a lawyer in the department. He had also made some study of geology in one of the schools, and I think he probably personally thought this Geological Survey rule was a good one. I do not. I do not think you can lay down a yardstick.

Senator WALSH of Montana. When was your attention first called to this decision in such manner that you recognized you were in error in signing it?

Mr. FINNEY. As near as I can recall now, it was during the general hearing which was held before the Secretary of the Interior on the 1st of December, 1926. A number of the lawyers representing shale claimants commenced to argue and talk about that rule, and if you will examine that record you will see I made a statement at that time.

Senator WALSH of Montana. I notice much of the argument is directed to that rule.

Mr. FINNEY. Yes.

Senator WALSH of Montana. You think that was the first time your attention was called to it?

Mr. FINNEY. That was the first time it was brought to my attention; yes, sir.

Senator WALSH of Montana. We want to get back now to the circumstances giving rise to that opinion. The case had run its regular and usual course, had come by various appeals to the Secretary of the Interior, and the Secretary of the Interior had ruled that there was no sufficient discovery.

Mr. FINNEY. Yes, sir.

Senator WALSH of Montana. And then a motion for a rehearing was made, and there was further argument upon the matter. The motion for rehearing was denied in another hearing.

Mr. FINNEY. Yes, sir.

Senator WALSH of Montana. Affirming the decision theretofore taken.

Mr. FINNEY. That is correct.

Senator WALSH of Montana. Then an application was made, asI understand you, for the exercise of supervisory control by the Secretary.

Mr. FINNEY. That is right.

Senator WALSH of Montana. Under all ordinary circumstances the denial of the motion for a rehearing would end the proceedings. Mr. FINNEY. That is ordinarily true. There is provision in our rules of practice which permits the filing of such a petition and its granting is wholly discretionary.

Senator WALSH of Montana. That is, however, an extraordinary proceeding.

It is

Mr. FINNEY. I guess you could call it extraordinary. exercised quite frequently. It is not a matter of right. It is a matter of privilege.

Senator WALSH of Montana. Oh, yes; I want to get some idea about how often the privilege is exercised.

Mr. FINNEY. Well, we have had quite a large number filed, as I recall, during the last several years.

Senator WALSH of Montana. Ordinarily there would have to be something out of the question, something extraordinary, to evoke the exercise of that power.

Mr. FINNEY. They ordinarily must show either absolute error of some sort in the previous decisions, or in a case like this allege that they will be able to produce new and additional evidence.

Senator WALSH of Montana. Up to that time, up to the time of the application for the exercise of supervisory control, there have been no such rules laid down, as required 15 gallons per ton to constitute a discovery.

Mr. FINNEY. The rule had been in existence, but it had not been laid down in the decision.

Senator WALSH of Montana. You had not applied any such rule in this case?

Mr. FINNEY. No.

Senator WALSH of Montana. Nor in any other case, so far as you know?

Mr. FINNEY. No.

Senator WALSH of Montana. So that, although the Geological Survey had a rule of that character, and the classification of lands, it had never been applied in your branch in the matter of the issuance of patents?

Mr. FINNEY. As far as I recall it had not.

Senator WALSH of Montana. Now just what was the showing that was made, Mr. Finney, to induce the exercise by the Secretary of this extraordinary power of review?

Mr. FINNEY. Various affidavits have been filed. I do not know that I have copies of them here, Senator. I have here a copy of the petition for the exercise of supervisory authority, supported by the affidavit of Freeman, the mining locator.

Senator WALSH of Montana. Your opinion here does not recite at least any extraordinary conditions that seem to prevail in this

case.

Let me read again:

By decision of December 20, 1924, the department directed a dismissal of the protest on the ground, in part, that no actual discovery of a valuable

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