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with respect to the delivery of the letter as you deem advisable, because in past years instances have occurred where letters intended for the personal consideration of the Secretary were, for certain reasons, kept from him.”

As a matter of fact, this report was secured by the General Land Office for you on a request made through me. When it was received, you were in the West and I held it for your attention upon your return to the city. As you well know, you saw it shortly after your return. Why Kelly should assume that I had any object in keeping this report from you, which in no way related to my work, I do not know, nor am I interested.

Kelly's charges against Mr. Finney are too serious to be dismissed without comment. From my own knowledge of the relations between Secretary Work and Mr. Finney in connection with oil shale and other transactions of importance, I can only class Kelly's allegations as the weavings of a mind that has dwelt too long on one subject. Mr. Finney had the full confidence of Secretary Work. His administration as First Assistant Secretary was marked by unusual energy in the transaction of Government business, a judicial attitude of mind, and a sensible approach to the problems presented to him, all of which were fortified by a thorough knowledge of the public land laws and understanding of the work of the department. He was constantly required to exercise sound discretion in the handling of controversial subjects and if Kelly, who is apparently a man of violent prejudices, failed to agree with some of his decisions, it is no reflection on the character or ability of Mr. Finney. But Mr. Finney needs no defense from me. His own convincing answer to Kelly's charges are supported by official records, and contrasts sharply with Kelly's suppositions, which are lacking in evidence, good sense, and a proper perspective of his relationship to the work of the department and those in Washington who have the responsibility of official action.

I do not see how we can permit the continuance of conditions now existing in Denver due to Kelly's method of handling oil-shale work, nor overlook his pernicious activities which have existed for several years, and which culminated in the unwarranted attack now before you. Serious criticism has been invoked against the department by Kelly's unreasonable frame of mind and utterances, and it is apparent that he is not qualified to continue in a situation, such as exists in Colorado, requiring the utmost tact and sound judgment. I believe he should be transferred to some other post in order that you and the Commissioner of the General Land Office may be assured that oil shale matters are being properly handled, and by this I mean with due consideration of the rights of claimants as well as protection of the Government's interests. Mr. A. D. Hathaway, chief of the field division, should be assigned temporarily to Denver and given full charge of the work there. This action is lenient so far as Kelly is concerned, for the only alternative, in my opinion, would be his dismissal. However, his lifetime of service in the General Land Office entitles him to this consideration and it may be that with a new environment he will acquire a proper perspective which will enable him to render useful service to the Government in the future.

Very truly yours,

Secretary WILBUR :

E. K. BURLEW, Administrative Assistant.

OIL SHALE DENVER VISIT.

The controversy between Colorado oil-shale interests and the department, with possible solutions, may be outlined as follows:

I. RIGHT TO REQUIRE ASSESSMENT WORK

Does the department have a legal right to require the $100 of assessment work be done annually and to contest the location if it is not done?

The locators say before the mineral leasing act (1920) these locations, made under the mining laws, were not subject to attack by the Government if the assessment work was not done. The only penalty was the chance that some one else would relocate the same land. The leasing act excepted these locations from its operation. It also provided that no new locations should be allowed. Result: These locations are exempt from any form of attack; third parties can not locate on them, and default does not make the leasing act applicable because that act never had any more operation on these lands than

a Colorado statute would have no Utah lands. The department is helpless. until new legislation is passed, and even then constitutionality of any law forfeiting these locations would be doubtful.

The field division says: The mineral leasing act established a new policy; an assertion of a proprietary royalty interest in minerals, in trust for the reclamation fund and the States. It applied to all public domain, but saved any valid locations made under the old mining laws if "maintained" in good faith. "Maintain" means to keep up annual assessment work. If it is not done, the land, on contest by the General Land Office, reverts to the United States. Before the Krushnic decision we thought it would revert if there were a default in any year, even though work were resumed thereafter. The Krushnic case said that a resumption of work before "challenge" by the United States cured past defaults. This language intimates that the United States may challenge the locations at any time before resumption of work. A contrary construction would mean that the land would be tied up forever-neither third parties nor the United States could challenge the location, although in default. Accordingly we are posting notices on every defaulted claim in Colorado, Utah, and Wyoming.

Recommendation: The right of the United States to challenge defaulted claims should continue to be asserted, and the posting should continue. If the department is right, which it appears to be, it is its duty to protect the public domain and clean house of locations held without compliance with the law. If the department is wrong, the question is a purely legal one which can be quickly tried out in the courts, as the Secretary's decision is not final on questions of law.

Alternative possibilities: The public lands commission may meanwhile be asked to make a study as to future policy on oil-shale lands and to consider the desirability of legislation which would subject defaulted locations to application for prospecting permits by third parties. Such legislation would be unnecessary if the department's legal view is correct; defaulted locations would automatically become open to prospecting permits after our contest, if the conservation policy (resulting in an Executive order withdrawal of these lands) had not intervened.

II. FORFEITURE FOR FAILURE TO DO ASSESSMENT WORK

Assuming that the department has a right to challenge defaulted locations: (a) Is the form of the challenge (posting notices and mailing copies) legally sufficient and (b) is it equitable to insist on a forfeiture before sufficient time has elapsed after the Krushnic decision for a locator to resume work?

As to the form of the challenge: No better method appears available, and the objection seems largely superficial.

As to the equity: Solution of this point would do more than any other factor to remove local antagonism.

The locators say: We admit that locations on which no work has ever been done should be subject to a house cleaning, if the department has legal authority to do it, but you are catching many valid locations off guard. This is because many locators, who happened to be in default many years ago, learned of the department's ruling that a default could not be cured by resumption of work, and so made no continuation until the Krushnic case should decide the question of whether a resumption would do them any good. The Krushnic decision came down and held that a resumption of work, if made before the Government challenged, would cure the default; that is, held that the department was wrong. But they had no chance to resume, for the department, before the snow was well off the ground, had been in the field posting challenges. Sufficient interval should have been allowed to enable resumption of work.

The field division says: If the assessment work is in default 10 years after the leasing act was passed, no further consideration is deserved.

Recommendation: It is recommended that you make a public announcement, and enter an order, that all locations posted will be deemed abandoned after June 30, 1931, if assessment work for the fiscal year ending on that date is not done, but that this period of grace will be allowed within which proof of such work may be submitted. This course would obviate the complaint that bona fide locators were not given a chance to show their good faith by resuming work; and would simply substitute the present fiscal year for the past fiscal year, as the test period. The bona fide locators will resume 46780-31-19

work; the speculative locations, in large part, will default. Some speculation will ensue, but it will be discouraged if, when the suggested notice is given, it is added that strict compliance with the assessment requirements of the law each year hereafter will be demanded.

III. ADJUDICATION OF LOCATION CONTESTS

After the Government "challenge" (contest), the case is adjudicated by the department, on one or more of three issues:

(a) Good faith of the locators (dummy locators);

(b) Mineral character of the land;

(c) Performance of assessment work.

Is the department's method of adjudication fair? In general:

The locators say as to general methods: The field division is overcritical, too suspicious, interposes delays, makes an issue out of all possible objections. The old policy, even after the leasing act and up to Mr. Kelley's coming in 1925, was one of cooperation, giving an opportunity to correct defects, helping expedite cases, etc. The present difficulty is one of psychology; the Denver field division has had an obsession which induces it to defeat all claims that can be defeated. This policy has permeated through the department, requiring exhaustive hearings and trips to Washington on matters that could be settled by agreement.

The field division says: The difficulties originate with speculative interests. With most attorneys we are on good terms, but even with the high-class attorneys trouble starts with our conflicting legal theories; they believe that we have no right to challenge; we believe we do, and this difference of viewpoint colors their conception of everything we do.

Recommendations on general policy: The air will be cleared by a statement from the Secretary, stating the necessity of cleaning house on speculation, but stating a policy of expediting action on bona fide claims. The situation has apparently cleared greatly following Mr. Obenchain's visit, and a statement of general policy will be helpful.

As to particular issues:

(a) Good faith (dummy locators). The locators say the field division is overparticular.

The field division says: If we are not to press this issue, we want to be instructed so. If a locator did act in good faith, and did not lend his name as a dummy, it is much easier for him to prove it than for us to prove that he made no expenditure or otherwise acted in bad faith.

Recommendations: The question is one of fact in each case, and a general policy of careful scrutiny is desirable. No change is recommended.

(b) Mineral character: This issue is dormant. The Freeman-Summers decision as to what constitutes discovery under a patent application settled the mineral character of a large area, and specific cases mentioned by attorneys seem in general to be satisfactorily adjusted.

(c) Performance of assessment work.

The locators say: The field-division engineers value this work on too meticulous a basis, according to what the cost would be under modern and efficient methods, and refuse often to accept check books and other evidence of what the work actually cost. If a deficiency is found, the locator is not given a chance to make it good; his location is contested at once.

The field division says: Our valuations are from 50 to 100 per cent more liberal than the examining engineer generally believes proper, as to giving an opportunity for making good the deficiency; no locator for gold or silver has such an opportunity; his claim is jumped by some one at once. Oil-shale claims can not be relocated by third parties. That is enough of a concession. Recommendation: No general policy permitting defaults to be made good would be workable, because of the number of claims involved. Valuation is an individual question in each case. The objection is to the supposed general policy of defeating all claims. A general announcement of intention to deal equitably with bona fide work and strictly with speculative efforts would probably largely clear this sore point.

IV. ADJUDICATION OF PATENT APPLICATIONS

If the location is not contested, the locator eventually files application for patent. Here the issues are the same as on a contest of a location, plus (1) the requirement that $500 of work must have been done (this can be five

years' assessment work or it can be done in a shorter time), (2) a discovery must have been made. The department's handling of patent applications has been the focal point of attack.

The locators say: The objections to your handling of contests of locations all apply here. As to the $500 patent work, the objection is stronger, because much of this work was done when costs were high and labor inexperienced, 1920-21, whereas modern standards of efficiency and costs are applied by your engineers. As to the question of discovery, we are satisfied under the FreemanSummers decision.

The field division says: As to the $500 assessment work, we have, pursuant to the Secretary's instructions, offered to make a joint field examination in any disputed case, and endeavor to come to an agreement. We are also allowing slight deficiencies to be made good. As to the question of discovery, the Freeman-Summers case is wrong. Our later investigations show that there are great barren strata throughout this area, the land is not solidly mineralized; the Freeman-Summers case should be reviewed, and the locators be required to actually uncover the rich shale at depth.

Recommendations: The joint-examination offer has practically disposed of the objection as to valuation. The situation would be helped by an announcement by the Secretary of the present policy of permitting deficiencies in work, if minor, to be made good.

ELY.

STATEMENT OF RALPH S. KELLEY, FORMER CHIEF OF FIELD DIVISION, GENERAL LAND OFFICE, DENVER, COLO.

Senator WALSH of Montana. Mr. Kelley, I want to ask you a few questions.

When you came down here at the direction of the Secretary, when did you arrive?

Mr. KELLEY. I reached here on July 25.

Senator WALSH of Montana. 1930?

Mr. KELLEY. Yes, sir.

Senator WALSH of Montana. What was the date of the telegram asking you to come?

Mr. KELLEY. The date of the letter was July 7.

Senator WALSH of Montana, July 7?

Mr. KELLEY. Yes, sir.

Senator WALSH of Montana. And, you got here July 25?

Mr. KELLEY. Yes, sir.

Senator WALSH of Montana. What detained you, Mr. Kelley? Mr. KELLEY. I have the letter here ordering me to come to Washington, if you would like me to read that.

Senator WALSH of Montana. Well, for the present that is not necessary. The question is: What detained you?

Mr. KELLEY. The Secretary, in this letter, directed me to take two or three days to advise the man who was to assume my duties in Denver, before I came to Washington, and then to come on immediately.

Senator WALSH of Montana. Perhaps you had better read the letter.

Mr. KELLEY (reading):

Mr. RALPH S. KELLEY,

Chief of Field Division, G. L. O.,

Denver, Colo.

JULY 7, 1930.

MY DEAR MR KELLEY: You are hereby assigned to the General Land Office, Washington, D. C., for work on oil-shale claims. It is my desire to complete

all pending oil-shale matters at the earliest practicable date, and I believe that your presence here will expedite final action.

Mr. A. D. Hathaway, Chief of Field Service, has been directed to proceed to Denver to take charge of the field division there. Upon his arrival you will turn the office over to him, taking two or three days to advise him, as much as possible, as to the affairs of that office, and then imediately report to the Commissioner of the General Land Office.

No per diem will be allowed you while on duty with the General Land Office in Washington.

Very truly yours,

RAY LYMAN WILBUR

Senator GLENN. What is the date of that letter?
Senator WALSH of Montana. Give the date.

Mr. KELLEY. The date of the letter is July 7, 1930.

Senator WALSK of Montana. Why did you take so long to get here?

Mr. KELLEY. I did not know for sure whether I was to be returned to Denver or not and, naturally, I had to settle up some of my affairs before coming, and also I was ill for a couple of days there, on sick leave.

Senator WALSH of Montana. Well, you arrived here the 25th?
Mr. KELLEY. Yes, sir.

Senator WALSH of Montana. And, reported to the commissioner? Mr. KELLEY. I went to see the commissioner within two or three days after my arrival and informed him that I was on sick leave and under the doctor's care at that time, as I had been in Denver, and wasn't able to report for duty. I talked to the commissioner and I talked to the assistant commissioner at that time, and they both fully understood my condition, and in fact, theretofore had called on me at the Ambassador Hotel, where I was stopping.

Senator WALSH of Montana. That is, the commissioner had? Mr. KELLEY. Yes; he had called there, but I was not there at that time.

Senator GLENN. Commissioner Moore?

Mr. KELLEY. Yes. As soon as I was able to report for duty I did so, on or about August 5, and tendered a doctor's certificate. I was under the care of two or more physicians during that time.

Senator WALSH of Montana. Well, Mr. Kelley, Mr. Ely has just called my attention to a telegram here to you from Mr. Moore of date July 29, 1930, as follows:

KELLEY,

Chief of Field Division, General Land Office,

Denver, Colo.:

Wire immediately why Secretary's instructions July 7 have not been complied with and state when you will arrive here.

Mr. KELLEY. I was in Washington four days before that. Senator WALSH of Montana. And, as I understand you, within two or three days after your arrival, which would be as late as the 27th or 28th, you actually called on Commissioner Moore?

Mr. KELLEY. I did, but I can't state precisely the date, Senator, because I haven't that in mind. It was within a very few days.

Senator WALSH of Montana. Would you have us understand that the commissioner sent this wire after you had called on him?

Mr. KELLEY. I would not think so, no; so that it must have been after the 29th.

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