historic limits of the States you say that action must also be taken at the same time.

Secretary MCKAY. Yes, sir.

Mr. WILLIS. Dealing with that subject is a legislative function as you admit in your statement?

Secretary MCKAY. Yes, sir.

Mr. WILLIS. I take it that you realize that it is up to Congress, speaking of the area of the Continental Shelf beyond the historic boundaries, to determine whether 100 percent of the revenues shall go to the United States or 100 percent to the States, or, as in the case of the Walter bill, and the Daniel bill, 371⁄2 percent shall go to the States, and 622 percent to the Federal Government.

Secretary MCKAY. Yes, sir. That is Congress' right.

Mr. WILLIS. You are familiar as Mr. Wilson pointed out that the Walter bill and the Daniel bill do not depart from, but spell out a policy of Congress adopted in 1920 in the Federal Mineral Leasing Act. In other words, in that act as to development of Federal property within the States, 372 percent of the returns remain in the States. You are familiar with the fact that that is the pattern that the Walter bill and the Daniel bill sought to follow?

Secretary McKAY. Yes, sir.

Mr. WILLIS. And you know also that the House twice resolved its will on that proposition and determined that such is the policy we should follow with respect to the disposition of the oil development returns seaward of historic boundaries. I say you know the House twice acted on that.

Secretary MCKAY. I did not know it, but I know it now.

Mr. WILLIS. You are not necessarily asking the House to backtrack on that, and if the House resolves its will in the same fashion as it did in the past, as you say, you would go along and administer that law?

Secretary MCKAY. Yes, sir. I do not necessarily agree with that theory set up, but if that is the law, I am a public servant.

Mr. GRAHAM. Mr. Secretary, I think all of the members have exhausted themselves, and practically exhausted you at this point. Secretary MCKAY. I am in good shape.

Mr. YORTY. Mr. Chairman, may I ask the Secretary one question? Mr. GRAHAM. All right.

Mr. YORTY. Mr. Secretary, you and I have communicated relative to one provision in my bill which I think is the only provision that differs with the bill introduced by Mr. Wilson, Mr. Walter, and the others, and that is I have provided that the Secretary of the Interior shall have discretionary authority to contract with the existing State agencies to handle the leasing of the property outside of the historical boundaries for the Federal Government should you decide that is the best way to handle it. It is purely discretionary. It does not require you to do it. It permits you to do it if you see fit. Do you have any objection to that provision?

Secretary MCKAY. No, I would not have any objection to it because I think in some cases the State has better machinery to do it than the Federal Government.

Mr. YoRTY. I thought it might help you where you would have to draw this line perhaps right over the top of an oil pool, and the ad

ministration, it just seems to me, would be easier if one agency handled it.

However,the State, pursuant to its contract, would be carrying out your will in the matter anyway.

Secretary MCKAY. Yes. Ordinarily I do not like to give too much discretionary power to the Secretary of the Interior or any other public official, but in this case, I would agree, because I think there are extenuating circumstances where some cases would work out better.

Mr. GRAHAM. Mr. McKay, first of all, we want to thank you for your appearance here today, and if you desire to submit any additional things, we will be glad to receive them, and later on if you care to be heard, you will be heard again. We are anxious to hear the two gentlemen from the Navy.

From now on the questioning will be conducted only by members of the subcommittee.

Secretary MCKAY. Mr. Chairman, I am at your service, but I believe I have nothing further to add.

Mr. GRAHAM. The committee will now hear Admiral Ira H. Nunn, Judge Advocate General of the Navy.

Proceed, Admiral Nunn.

STATEMENT OF REAR ADM. IRA H. NUNN, JUDGE ADVOCATE

GENERAL, UNITED STATES NAVY

Admiral NUNN. Mr. Chairman, my name is Ira H. Nunn. I am a rear admiral in the United States Navy, and at present serving as Judge Advocate General of the Navy.

I appear here in the place of Mr. Robert B. Anderson, the Secretary of the Navy, in view of the fact that his appearance today before the Committee on Appropriations prevents his appearing in person. The statement which I am about to make reflects his views and bears his approval. The views which are contained in the statement reflect also the views of the Department of Defense.

It would be superfluous for me to review here the controversial history of the ownership of the offshore lands since it is well known to all members of the committee.

The Department of Defense believes that the Congress has before it a matter of broad national policy which can rightly and properly be determined only by congressional decision. It will be our purpose here to review for the committee only some of those factors which we believe should be taken into consideration in arriving at your conclusions.

There can be no doubt as to the importance of petroleum and its products to all phases of the military services. Any shortage of petroleum products which, in an emergency, would result in the curtailment of naval and other military operations, would be reflected as well in industry and transportation, equally essential to the support of the war effort.

The national requirement of petroleum products is constantly increasing both in terms of civilian and military requirements. In connection with these studies of petroleum needs I should like to invite your attention to the fact that the Department of Defense relies upon

the Petroleum Administration for Defense, an independent agency of the Government administered by the Secretary of the Interior. Should the committee require additional information regarding these studies, it is suggested that detailed information of these studies be obtained from that agency. For reasons which are apparent to you this detailed information and study is highly classified.

The Department of Defense has been asked to provide information with reference to the history of the Navy's naval petroleum reserves including discoveries of oilfields and the production therefrom. I have brought here a pamphlet which has been prepared by the Director of the Naval Petroleum Reserves, Capt. Robert H. Meade, Civil Engineer Corps, United States Navy, which will provide the committee both with the historic background of the naval petroleum reserves and the current production figures.

I might say parenthetically, Mr. Chairman, that the submission of this pamphlet obviates, I believe, the necessity of Captain Meade appearing here. He is also before the Armed Services Committee this morning in naval petroleum reserve matters, and the information which he could give you is in this book.

Mr. CELLER. May I ask whether the captain recommends any particular legislation in that pamphlet?

Admiral NUNN. No, sir. This is an engineering study.

Mr. GRAHAM. You now submit that for the record?

Admiral NUNN. I offer it for the record, sir.

Mr. GRAHAM. It may be inserted at this point.

(The matter referred to is as follows:)

THE NAVAL PETROLEUM AND OIL SHALE RESERVES

PART I-HISTORY TO JUNE 1944

I. CREATION OF THE RESERVES ORIGINS IN THE PUBLIC DOMAIN

In the years circa 1900 the public lands of the United States throughout the West were fast being transferred to private ownership. This steady disappearance of the public domain was taking place primarily through the exercise of rights created by legislation which enabled private persons to enter upon the Government's lands and to locate claims which ripened, on the fulfillment of certain conditions, into full private ownerships. Other tracts, of course, had earlier been ceded directly by the United States as subventions of various kinds, such as grants to the States in aid of school programs and to the railroad companies as subsidies for construction.

The turn of the century coincided with a growing realization of the tremendously important role which oil was destined to play in the years ahead. This was particularly apparent to the Federal Government, charged as it is, constitutionally, with the national defense and the waging of war. It had become clear that the navies of the world were in the future to be powered by oil, and the United States Navy itself had in prospect a complete changeover from coal to petroleum and an expensive new ship-construction program based on this principle.

Because of this obvious future need of the Government for oil for the Navy, the suggestion early was made that probable oil-bearing lands in the public domain should be permanently withdrawn from the areas upon which entry could be made and claims staked out. President Theodore Roosevelt directed the United States Geological Survey to inquire into and to report upon those parts of the public lands believed to contain oil.

The Geological Survey's inquiry was not completed until after President Roosevelt had left office, but early in the administration of President Taft its recommendations were made. As a result thereof President Taft on September 27, 1909, signed an order which in terms purported to be in aid of proposed legislation covering the use and disposition of oil lands on the public domain and

which temporarily withdrew certain large areas in California and Wyoming from entry and settlement under existing public land laws.

It was widely urged that this order was void and of no effect, the theory being that the executive arm of the Government could not constitutionally suspend the operation of laws enacted by Congress permitting the acquisition of lands in the public domain. Although not, of course, sharing this view, President Taft did request Congress to pass legislation specifying that such authority did reside in the Executive. His request was honored by the passage of the act of June 25, 1910-the so-called Pickett Act-which vested the President with discretionary power at any time to make temporary withdrawals from entry and settlement of lands from the public domain for public purposes, such withdrawals to remain in effect until revoked by him or by an act of Congress. The statute expressly preserved the rights of any person who, upon the date of any order made before or after the law's enactment, was a bona fide claimant or occupant of oil or gas lands and who was at such date engaged in the diligent and continuous prosecution of work leading to the discovery of oil or gas.

President Taft thereupon, by an Executive order dated July 2, 1910, confirmed the withdrawals which, prior to the passage of the Pickett Act, had been made earlier by the order of September 27, 1909.

SPECIFIC RESERVATIONS FOR THE NAVY

President Taft's two withdrawal orders had not mentioned the Navy nor had they had the effect of expressly allocating any of the lands involved to the Navy for its benefit. The lands affected were merely withdrawn from private entry and they still continued as a part of the public domain under the jurisdiction of the Interior Department. The setting aside of cetrain of such lands for the exclusive use of the Navy did, therefore, require some further action. As is described below in the case of each reserve, this action was forthcoming throughout a span of years following June of 1912 at which time the General Board of the Navy had recommended to the Secretary of the Navy that "permanent reservations be made for future naval fuel-oil supplies."

A. The petroleum reserves

1. Reserve No. 1 (Elk Hills).-On June 25, 1912, the Secretary of the Navy asked the Secretary of the Interior for the latter's cooperation in securing the reservation for the Navy of oil-bearing public lands in California sufficient to insure a supply of 500,000,000 barrels. In response to this request, the Geological Survey recommended an area of 38,072.71 acres in the Elk Hills, Kern County, Calif. Accordingly, President Taft issued an Executive order, dated September 2, 1912, creating Naval Petroleum Reserve No. 1. Of the area lying within the boundaries of the reserve, as so constituted, 12,103.09 acres appeared to be legally patented to private owners and the balance, 25,969.62 acres, remained in the ownership of the Government.

At the time this reserve was actually set aside for the Navy, no actual discoveries of oil by drilling had yet been made, and the selection of the area had mainly been founded upon general knowledge of its geology. No one knew with any degree of exactitude whether it contained more or less than the 500,000,000 barrels which the Navy had requested. Subsequent exploration has proved the wiseness of the choice, since recoverable reserves are estimated to be well in excess of the above figure.

Plate No. I shows the present extent of the Elk Hills reserve. Plate IA is a location map of the petroleum and shale reserves situated in the continental United States.

2. Reserve No. 2 (Buena Vista Hills).-Because of the uncertaintly as to the amount of oil contained in reserve No. 1, the Geological Survey recommended a second reservation of an area of 30,180.69 acres in the Buena Vista Hills, Kern County, Calif., immediately adjacent to a portion of the southern boundary of reserve No. 1. Accordingly, by an Executive order dated December 13, 1912, President Taft created Naval Petroleum Reserve No. 2. Of the area lying within this reserve, the greater part, 19,090.94 acres, appeared to be patented to private owners and the balance, 11,089.75 acres, was still owned by the Government. Oil had already been actually discovered within the limits of this reserve. Plate No. II shows the present extent of reserve No. 2.

3. Reserve No. 3 (Teapot Dome).-On June 29, 1914, the Secretary of the Navy wrote the Secretary of the Interior that the Navy was thinking of asking the President to create a naval petroleum reserve in Wyoming. The Interior Department was asked to nominate possible sites, and it complied by suggesting

certain areas.

The Navy Department preferred one of these a tract known as Teapot Dome-for the reasons that, unlike reserves Nos. 1 and 2, all of its acreage was owned by the Government and there were, therefore, none of the problems presented by the checkerboarding of a reserve with private holdings. This reason, in the Navy's view, more than balanced the fact that the area had not been drilled.

President Wilson's Executive order designating the Teapot Dome area in Wyoming as Naval Petroleum Reserve No. 3 was signed on April 30, 1915. Plate No. III shows the present extent of reserve No. 3.

4. Reserve No. 4 (Alaska).—On February 27, 1923, President Harding signed an Executive order creating Naval Petroleum Reserve No. 4, an enormous area of 37,000 square miles on the northern tip of Alaska just south of Point Barrow.

Plate No. IV shows reserve No. 4 on a map of Alaska. Plate No. V shows reserve No. 4 on a larger scale than plate No. IV.

B. The oil-shale reserves

1. Shale Reserve No. 1 (Colorado No. 1).-As a further guaranty of oil for the Navy in future emergencies, it was decided to segregate and hold apart for such purpose certain sections of the public domain containing shale rock capable of being mined and the hydrocarbons contained therein converted into oil. President Wilson, by an Executive order dated December 6, 1916, designated 44,560 acres of the public lands in Colorado as Naval Oil-Shale Reserve No. 1 (Colorado No. 1). By subsequent Executive order dated June 12, 1919, President Wilson restored to the public domain some 3,880 acres of that originally withdrawn. Accordingly, reserve No. 1 comprises a surveyed area of 41,353 acres, of which 4,785 acres are patented mineral lands.

2. Shale Reserve No. 2 (Utah No. 1).—By an Executive order, also dated December 6, 1916, President Wilson established Naval Oil-Shale Reserve No. 2. This consisted of 4 townships in Utah exclusive of 8 sections which were granted to the State of Utah for school lands. With the exception of 880 acres, these 8 sections were reconveyed to the Federal Government pursuant to an Executive order issued by President Coolidge on November 17, 1924. As a result, the reserve No. 2 now comprises an area of approximately 92,160 acres, of which 880 acres are patented mineral lands.

3. Shale Reserve No. 3 (Colorado No. 2).--Naval Oil-Shale Reserve No. 3, established by Executive order of September 27, 1924, comprises approximately 22,600 acres bordering reserve No. 1 on the east, south, and west. While less than 15 percent of reserve No. 3 contains oil-bearing shale, its withdrawal was considered necessary to afford working space and spent-shale disposal areas-necessary for the ultimate, anticipated operations. Plate VI shows the location of the oil-shale

reserves.

II. EARLY ADMINISTRATION BY THE NAVY

The Executive orders creating the naval reserves provided that the public lands embraced therein should be held for the exclusive use or benefit of the United States Navy.

By the act of June 4, 1920 (41 Stat. 813), Congress acted to place the naval reserves expressly in the possession and under the authority of the Navy and defined the uses to which the Navy could put them.

The act of June 4, 1920, continued for 18 years as the charter of Navy's powers with respect to the reserves. It directed the Secretary of the Navy to take possession of all properties within the naval petroleum reserves not subject to equitable claims resolvable by the Secretary of the Interior under the Leasing Act or to patent under any law, and to conserve, develop, use, and operate the same in his discretion, directly, or by contract, lease, or otherwise, and to use, store, exchange, or sell the oil and gas products therefrom for the benefit of the United States.

The Secretary of the Navy in October 1927 established as a part of his office, the Office of Naval Petroleum and Oil Shale Reserves, and various officers of the Navy have served as Director of that office. The present Director is Capt. Robert H. Meade (CEC), United States Navy.

An amended version of the act of June 4, 1920, was approved on June 30, 1938, and was later amended by the act of June 17, 1944.

A. The shale reserves

Some experimental work on oil shale has been done by the Navy, and a great deal of valuable experimental work has been done by the Bureau of Mines.