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Mr. LARWILL. That is true, the language used in Castle v. Womble was used in connection with a lode mining claim.

Secretary FINNEY. That is right.

Mr. LARWILL. But it has been repeatedly quoted by the courts and followed by the courts whether the matter to be considered by the court was a placer claim or a lode claim.

Secretary FINNEY. But the principle could only apply where you had continuity in your mineral bearing formation or deposit or whatever it is.

Mr. LARWILL. And that is precisely, if you please, what has been shown by all of these papers and all of this discussion here to-day. There is not a barren zone, there is not a barren inch of that great Green River deposit in these shale areas of Wyoming and Colorado and Utah, not one barren inch. It all contains some of the kerogen-much in some of the zones, less in others, but never a barren streak in the whole deposit. I might stop and say here that when the department classified these deposits it could have classified them either as lodes or it could have classified them as placers. This character of deposit is right on the dividing line and some of this character of deposits have been classified as lodes and some as placers, but the discovery of mineral is the same.

You see Mr. Larwill here is serving in the capacity of a geological expert, and so I thought it was important to show that the contrary view is not presented.

Then at page 51:

However certain or justifiable the inference geologically that the lean beds of oil shale outcropping on the land indicate richer and valuable beds at depth, it is apparent that they have no physical connection with such deeper beds of rich deposits nor are they continuations of them, but are separate and distinct therefrom.

That is the statement of one of the department decisions, I think. The CHAIRMAN. We will recess until 10 o'clock Thursday morning.

(The hearings of December 1, 1926, before the Secretary of the Interior, are as follows:)

HEARINGS, DECEMBER 1, 1926, BEFORE THE SECRETARY OF THE INTERIOR ON THE QUESTION OF WHAT CONSTITUTES A SUFFICIENT DISCOVERY TO SUPPORT THE CLAIM OF AN OIL SHALE LOCATOR Under the GENERAL MINING LAWS

DEPARTMENT OF THE INTERIOR,
OFFICE OF THE SECRETARY.

Present: Hon. Herbert Work, Secretary of the Interior; Hon. E. C. Finney, First Assistant Secretary of the Interior; Hon. William Spry, Commissioner of the General Land Office; Dr. George Otis Smith, Director, U. S. Geological Survey; Dr. Edward Mead, Commissioner of Reclamation; Mr. Robert D. Hawley, Denver, Colo.; Hon. William L. Boatright, attorney general of Colorado; Mr. E. D. Winchester, consulting geologist, Denver, Colo.; Mr. Fred Carroll, Denver, Colo.; Mr. Charles A. Mitke, consulting mining engineer, Phoenix, Ariz.; Mr. Samuel J. McMullin, Grand Junction, Colo.; Mr. William G. Russell, Denver, Colo.; Mr. L. H. Larwill, Denver, Colo.; Mr. Harold D. Roberts, Denver, Colo.; Hon. John B. Kendrick, United States Senate; Hon. Edward T. Taylor, House of Representatives; Hon. Charles E. Winter, House of Representatives; Mr. George K. Thomas, First National Bank Building, Denver, Colo.; Mr. C. W. Church, Index Shale Oil Company, De Beque, Colo.; Mr. George E. Brimmer, The Prairie Oil & Gas Co., Cheyenne, Wyo.; Mr. Charles F. Consaul, Mills Building, Washington, D. C.; Mr. Daniel J. Danker, Brookline, Mass.; Mr. Lewis Z. Harrison, 160 Broadway, New York City; Mr. A. C. Harvey, The Pure Oil Co.; Mr. Samuel Leon Levy; Mr. J. D. Northrop, Geological Survey; Mr. L. G. Owen, Mr. Edward F. Johnson, and Mr. Peter Q. Nyce, representing L. P. Lyons; Mr. David A. Shepherd, secretary, The Columbia Oil Shale and Refining Co.; Mr. C. D. Sinclair, Ameri

can Shale Reducing Co., 115 Broadway, New York City; Mr. H. I. Smith, Geological Survey; Dr. Joseph P. Umpleby, geologist; Mr. F. D. Weaver, Camden, N. J.

DECEMBER 1, 1926-10 a. m.

Secretary WORK. It is unnecessary, of course, for me to state the purpose of this hearing. It has definite and exclusive reference to oil shale-particularly to the laws and the regulations that have been established under them by the General Land Office and with reference to the General Land Office's responsibility in administering oil-shale lands. This is a “hearing" as far as the Department of the Interior is concerned. We have to make the regulations under the laws, and we have to administer this rather new mining industry. Some features of it are different from the mining processes that apply to oil, gas, or the precious minerals. So that you representative men from the field who are interested in the practical mining side of it we hope will tell us what you think about the existing laws and about our regulations, and make any suggestions that you think are pertinent that may be helpful in the administration of the law with relation to oil shale.

We have no advice to give. Our people working in the department are controlled by the law and the regulations we make to operate the law. They are referred to as "bureaucrats." That does not appeal to me as a term of opprobrium, because bureaus are necessary in the administration of the Government. But that is aside of the question. However, these "bureaucrats "—if you wish to call them that ought to have the benefit of the experience of practical men from the field. They can not get it themselves; so that is the purpose of this hearing.

If you have any complaints to make about the operation of the department, or about its agents in the field, I want them made to-day, and I want the names of the people given, if any, who appear to be lax in the discharge of duty, or perhaps killing time, as has been hinted to me, and of men who are not, as some claimed, active enough. Now if any of you know of such men do not hesitate to name them to us. We will take care of that here. We do not believe such complaints well founded, but let us know who is failing in his duty in the field.

Gentlemen, the meeting is open, and we want to make it just as informal as we can consistent with expediting the hearing, but we do not want to have the time of these men taken up with the unnecessary and irrelevant, but we will be patient and hope you will feel free to say what is on your mind. This department belongs to the people. The door is open every day from eight in the morning until five o'clock-so the public can look in and see its business done, and we court criticism so long as it is constructive.

Now we will hear anyone who wants to speak.

Mr. ROBERT D. HAWLEY (representing J. D. Freeman, the Pure Oil Co., the Federal Shale Oil Co., and some other oil-shale interests). I want to express, if I may, at the beginning, the gratitude of the oil-shale men generally over the opportunity which you have afforded to us to come here and discuss with you frankly and informally some of the problems with which we find ourselves confronted in our consideration of this new mineral deposit. We have not come here, Mr. Secretary, in a spirit of criticism at all; we have come here merely to discuss in the best way that we know how this potential source of oil which lies in the three States of Utah, Wyoming, and Colorado.

The question of the discovery, or a discovery, sufficient to uphold or validate an oil-shale placer location has been of particular interest to the oil-shale men during the past few months because of a rule of standard of discovery which was laid down by this department in the case of Freeman v. Summers and which we think has been applied to some other cases since. The rule has thus gained some of the dignity of a precedent.

This rule in effect adopts as a basis of discovery, the table of classification promulgated by the Geological Survey some years ago for the guidance of its men in the field in classifying the oil shale lands of the West. It provides in effect that in order to constitute a discovery there must have been physically exposed upon each claim, prior to the passage of the leasing act of February 25, 1920, or work must have been continued and exposure made after that, or a bed or a stratum of shale, as it has been said, at least 1 foot thick which would produce at least 15 gallons of oil to a ton of shale, or 1,500 barrels to the acre; or if the shale exposed happened to lie near enough to the surface to permit of its being worked by the open-cut method that it be at least 6 inches thick

with an oil yield of at least 15 gallons per ton of shale, or 750 barrels to the

acre.

It is our belief, gentlemen, in view of the rather intensive study which has been made of this oil shale formation, that this rule is not practically applicable to the conditions with which we are confronted.

We do not believe, in the first place, that the oil shale deposit from its very nature is susceptible to the application of such a standard.

In the second place, it is our belief that this rule in effect seeks to establish as a basis of discovery the exposure of a bed which would produce oil in commercial quantities; that is, to fix the cemmercial value of the ore disclosed as a basis for discovery. This in effect is done arbitrarily at a time when no one knows what commercial oil shale will be. There are not now in operation in this country, I think, on any considerable scale at least, commercial operations in oil shale. The effect of the rule is contrary, as we view it, to the thoughts and practices of the miners themselves since the beginning of the mining industry in America. They have always recognized among themselves and respected a discovery such as in their opinion justified the ordinary prudent man in spending his time and money in following the ore with a reasonable expectation of success.

It was under this old rule, which was intiated among the miners, and which has received the sanction of this Department and of the courts, that the mining industry of America was created and has been builded until the rule has gained what we believed to be the dignity of a rule of property. We believe that the rights acquired under it in good faith should be looked upon as vested rights. And it was under this rule, if you please, gentlemen, and in effect at the invitation of this department as evidenced by letters written to numerous persons, that the oil shale prospectors went out upon those barren hills 7, 8, or 9 or 10 years ago and made the oil shale locations-locations which they have attempted to maintain in the intervening years at considerable expense of time and of effort.

And it is our belief that the best standard by which to judge what an ordinary prudent man would have done back in those days is to view the actions actually taken by ordinary prudent men at that time and under those circumstances.

As a matter of scientific knowledge the rule we believe is somewhat inconsistent in itself because it is impossible, gentlemen-(so the scientists who will speak to you today will say)-to produce 1,500 barrels of oil from an acre of shale 1 foot in thickness which will produce 15 gallons to the ton; that if you got every drop of oil from that 1 foot of shale you could not secure more than approximately 1,142 barrels.

So that the rule in itself is rather contradictory and not susceptible of practical operation and application, and all of the questions with which we have to deal here are more or less practical in their nature. The basis for the consideration of any problem with reference to oil shale in these three States, at least, is a study of the nature and character of the deposit in which the oil shales occur, and we hope to be able to show during the course of this hearing that the Green Giver formation in the States which I have mentioned is synonymous with oil shale; that this huge deposit is everywhere one ore body which in the light of experiments which have been conducted in Colorado recently will yield oil in varying quantities from each and every section or zone of the entire formation; that it is one mountain, if you please, of similar material laid down under similar climatic conditions by the waters, each and every section or zone of which is impregnated in some degree with those organic hydrocarbon materials which under destructive distillation will yield oil. It is not uniform in color or richness, but it is ore on its every part. You may speak of it as a layer or a series of layers, as a bed or a series of beds, as one stratum or as a series of strata; and it is immaterial which term you apply because in whatever form it lies it is all mineral bearing. The formation may be identified in its every section by its distinct fossils, notably fossil insects.

And so we believe, gentlemen, that when you have discovered visually exposed within the four corners of a claim, oil shale which you may identify as a part of the Green River formation, then you have discovered that enormous bed, or deposit of ore, which must be the foundation and very basis of any operations that are ever conducted in oil shales in those three States.

In order to bring more clearly to your attention this question, which to us is all-important, mining engineers of the highest standing will speak

to you to-day concerning the methods to be employed, in their opinion, in mining and handling this gigantic deposit of ore. In the early days of the study of this formation the geologists were wont to look upon it as a few layers of shale of some richness separated entirely from other portions of the Green River formation by barren streaks or zones of foreign materials. The mining engineers, following the geologists in their conception of this thing, looked at it from the viewpoint of a selective mining problem; that is, to mine only the rich or richest bed or stratum; if you care to view it in that way, of some 10, 12, or 20 feet in thickness-that bed or stratum that would produce the most oil-believing that the rest of the formation was of little value. And so we have discussions of, and papers written about, the selective system of mining this property, and it was compared to the coal problem. Then when the geologists began to make a more intensive study of the problem and began to accumulate more information and knowledge about the deposit they found that they had been mistaken in their original position and that the whole formation was an ore bed; that it all carried considerable mineral value; and then the mining engineers, following this lead of the geologists, began to look at the formation in the light of wholesale mining methods-methods which would move the mountain in effect-and they have determined, if you please, that they can mine sections of the formation of 500 or 600 feet in one operation at a lower mining cost per gallon of oil produced than the cost of mining one section of the richest ore. They have determined that if they use these wholesale methods of mining they will conserve the whole mineral deposit, while by the use of a selective system taking out 10 or 12 feet of the richest ore the rest of the ore would become dislodged and displaced so that we might never be able to recover it. When we consider, gentlemen, that this richest zone, which is commonly known as the Mahogany zone of shale, contains only approximately 6 per cent of the mineral in the formation, we can realize what a waste of natural resources it would be to discard and forever lay aside our opportunity to make use of the remaining 94 per cent.

We believe that in the light of the recent knowledge gained of this deposit the department will come to the conclusion that the oil shales are not susceptible to the same rules or regulations which have been applied to oil and gas deposits. We believe there is no similarity between the two forms of mineral deposits which justifies the subjection of them to the same consideration or the regulation of them under the same special law.

Secretary WORK. With that applying to oil and gas or that applying to minerals as before the act of 1920?

Mr. HAWLEY. We believe that the general regultaions which have been applied to other forms of mineral deposit through the years are far more applicable to the oil shales than are the oil and gas regulations, because we do not have the hazards here that we have in connection with the oil and gas-we do not have a deposit which is fugitive and migratory when the trap in which it occurs is opened by a well. One man can not drain another man's mineral through an opening in the ground. The oil shales are fixed and in place and certain as to position and as to richness-just as fixed and as certain as are the coal deposits of this country.

And while there might be reasons for saying something about commercial value when we discuss oil and gas placers, because of the uncertainty which exists in connection with that form of mineral deposit-because of the fact that the reservoirs in which oil and gas usually occur (sandstone or porous limestone) are not even and uniform as to porosity or saturation, because we have vast barren areas in many of the most productive oil and gas fields, which conditions do not exist in the oil shales at all-we feel that we should not be governed in the light of the rules and regulations which are applicable to oil and gas, and that there is no jurisdiction for applying a commercial standard to oil shale discoveries.

We have here, if you please, a condition which is somewhat similar to that considered by the miners and by this department, and later by the Supreme Court of this country in connection with the so-called blanket veins in the Leadville district. We have here an enormous horizontal lying blanket deposit of mineral, and you might consider this, and you might govern your action in connection with the deposit more logically, perhaps, on the basis of the consideration which you gave the Leadville cases than you could under the oil and gas regulations.

Now, gentlemen, there have come here to speak to you on these various phases of this subject, which we think of so much importance, the men whom we believe are the best qualified to speak. Mr. Winchester, a geologist who perhaps has given as much, if not more, thought to this subject than any other geologist in the country, is to discuss some of the features of the geology. Mr. Carroll and Mr. Mitke, who have recently conducted investigations of the Green River formation, and both of whom are mining engineers of unquestioned integrity and outstanding ability, will discuss certain features of the question. Mr. Russell, another prominent mining engineer, has given much thought to the oil shales, and will have some ideas to advance; and there are other mining engineers whose views will be expressed. After the scientists have had their say and Attorney General Boatright has spoken to you in the interest of his State and Congressman Winter of the interest that his State has in this matter, the lawyers-one or two, perhaps. or more if there are others here who wish to will speak rather briefly upon the practical features of the law to be applied here, but we will not tire you with long drawn out supertechnical discussions of legal problems.

Now Attorney General Boatright has a statement he would like to make. Hon. WILLIAM L. BOATRIGHT, Attorney General of Colorado: I am here, Mr. Secretary, at the request of His Excellency, the Governor, and Doctor Coolbough, president of the Colorado State School of Mines, and I have some data here prepared by Lester Grant, dean of the School of Mines, and professor of mining, which I desire to present, and to give a few very brief remarks with reference to the interest which I feel that the State has in this problem. Mr. Grant says in a letter dated November 24, of which the original ought to be in your file:

The Hon. HUBERT WORK,

COLORADO SCHOOL OF MINES, Golden, Colo., November 24, 1926.

Secretary of the Interior, Washington, D. C.

SIR: We have had notice of the hearing to be held before you on December 1, 1926, with reference to the question of a discovery sufficient to validate an oil-shale placer location.

Considering the widespread interest in Colorado in oil shale matters, you may be sure that the Colorado School of Mines is desirous of keeping in close touch with oil-shale problems. We hoped to have a representative present at the hearing, but an important meeting in Denver on the date set for the hearing has prevented attendance. Consequently, we take the liberty of expressing our views on this subject in a letter.

The writer has had occasion to examine the briefs filed by the contestant, the contestee, and the intervenor, in the case of Freeman v. Summers, in which case a special hearing was had in Glenwood Springs last January. It is in this case, we understand, that the question of oil-shale discovery has been raised.

To my mind, each of these briefs contains a very great amount of matter that is irrelevant and immaterial. I am astonished at the facetious language used by the attorney for the intervenor; this brief is so drawn as to immediately convey the idea of extreme prejudice.

It would seem to me wise to base the case upon a clear statement of facts and the matter of good faith on the part of the locators. It may be well to review the conditions that evidently obtained at the time that the locations were made, viz:

1. The locators were desirous of obtaining title to this land in order to acquire the oil shale beneath its surface.

2. The United States Government required that location be made under the laws governing the location of placer claims.

3. By reason of exposures in deep canyons in this terrain there was complete geological evidence that the oil shales comprising the Green River formation passed under large areas of mesa or table-land. This statement is sustained by statements in the bulletins of the United States Geological Survey.

4. It was the intent of all locators to claim mining rights to all oil shale lying beneath the surface and within the vertical planes through the boundaries of their locations, whether these claims were in or adjacent to the canyons, or comparatively distant therefrom on the high lands between the canyons.

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