Commissioner TALLMAN. I have. The CHAIRMAN. The law, while vesting a discretion in the department in reality directs the department to grant that relief where in their sound discretion it would be carrying out the purpose and intent of the bill. Commissioner TALLMAN. That is true, but there is a difference of opinion on that situation also, the position being taken by Mr. Justice at any rate, and I think it is substantially the same by the Navy Department, that no contract shall be entered into under the act of August 25, 1914, where there is an adverse report by special agents after full investigation. The Interior Department has conceded to that view as to lands in the naval reserves and has for that reason refused to enter into contracts generally. There might be some, but I do not recall any in naval reserves. The CHAIRMAN. Was not the relief intended to benefit people against whom there were charges made on application for patents, pending the determination of those charges? Commissioner TALLMAN. That is my view. The CHAIRMAN. You are excepting the very cases for which this relief was provided. If there was no charge against the applicant for patent, he would not be delayed very long in obtaining patent, and he would not need any relief? Commissioner TALLMAN. Certainly. The CHAIRMAN. This thing was intended to act in the nature of a receiver, pending the contest over application of patent, was it not? Commissioner TALLMAN. That is the way we understand it, though we gave it a broader interpretation than that. The CHAIRMAN. And yet, as I understand it, you have reversed the entire theory by agreeing with the Department of Justice that where charge is preferred against the land under application for patents, the benefits shall be denied. Commissioner TALLMAN. Did you understand, Senator, that we had refused to grant contracts outside of the naval reserves in deference to the Department of Justice? The CHAIRMAN. No. I am talking about land within the naval reserves. The bill that we are discussing was intended to permit an applicant for patent, pending the determination of the application, to continue mining operations upon the impounding of royalty. Commissioner TALLMAN. It did not provide for the impounding of anything. The bill is very general. It just simply provides a permit to continuation of operations through the instrumentality of a contract which the Secretary of the Interior is authorized to enter into. We are negotiating one contract now which provides for security being given rather than impoundment. The CHAIRMAN. Have you granted any of those contracts in cases where investigations of the patent application were being made? Commissioner TALLMAN. Yes. The CHAIRMAN. Then it is your understanding of the bill that it granted you the power to apply the remedial provisions of the bill in cases where there was an investigation being made to determine whether or not the patent should be granted? Commissioner TALLMAN. Yes. We have applied it to that case, but we have applied it also to cases outside of naval reserves, where the investigation had been made and where we had an adverse report on file in our office. The CHAIRMAN. Have you applied the same construction of the act to lands upon which applications for patent has been made within the naval reserves? Commissioner TALLMAN. We have not. The CHAIRMAN. I will come right back to the question, Why not? Commissioner TALLMAN. I should say out of deference to the views of the Department of Justice and the Navy Department, that the cases presented were not proper cases for relief, in their judgment, under this bill. The CHAIRMAN. But you disagree with the Navy Department with regard to their views of it? Commissioner TALLMAN. Well, the fact that outside of the reserves we made a great many contracts is the best evidence I can give of what we thought of it. The CHAIRMAN. You have not changed your view in that construction? Commissioner TALLMAN. No. Of course, there was a difference of opinion also as to the specific terms of the contract, particularly as to the proportion of the oil that should be impounded." The CHAIRMAN. You have not changed your views, however, with regard to the construction that you placed upon the act in dealing with claimants for patent outside of the naval reserves? Commissioner TALLMAN. Not at all. The CHAIRMAN. Do you see any distinction between the applicants for patent within the naval reserves and outside of the naval reserves as to their rights under the bill? Commissioner TALLMAN. I do not think any distinction should be made. That is my personal opinion, but I recognize that there is perhaps room for a different view with respect to the naval reserves. The CHAIRMAN. Can you tell the committee in what way there is a difference? Commissioner TALLMAN. Well, I have endeavored to state what I understand to be the views of the Department of Justice, and particularly the Navy Department, with respect to this question, namely, that the purpose of the bill and the law was to grant relief where an investigation had to be made or where the conditions were such that the Government was not apprised that the patent application could reasonably be presumed to be defective and void. Besides there may be some question as to whether a reservation for a particular governmental purpose or use occupies the same status as a mere administrative withdrawal. The CHAIRMAN. But you do not agree with that view? The CHAIRMAN. You do not agree with that view? The CHAIRMAN. Is it not apparent, then, that you are withholding a statutory remedy from the claimants of patents in the naval reserve that you have granted to others outside of the naval reserve under the same construction of the law simply because another department differs with you as to the construction of the law? Commissioner TALLMAN. I think that is true. Representative LEN ROOT. Does the department differ with you in the construction of the law? In other words, does the Navy Department contend that this act of Congress distinguishes between lands within the naval reserves and lands without? Commissioner TALLMAN. I do not recall any place where they have gone on record to that effect. Representative LENROOT. You say that in some places without the naval reserve you have made these contracts where the department had actually made an adverse decision? Commissioner TALLMAN. Adverse report from special agents. Representative LENROOT. But within the naval reserves you have refused that same relief, where there had been no such adverse report? Commissioner TALLMAN. Where there had been no adverse re Commissioner TALLMAN. No; I did not say that. We have refused that relief where there have been adverse reports. I do not think the Department of Justice has objected to any contract where we did not have an adverse report. Representative LENROOT. Have some contracts been made within the naval reserve under that? Mr. FINNEY. It is my recollection they have not. The CHAIRMAN. Let us get down to a particular case. You know Louis Titus? Commissioner TALLMAN. Yes, sir. The CHAIRMAN. Do you know the company he is interested in applied for patent? Commissioner TALLMAN. Yes; I know it. The CHAIRMAN. Do you remember the name of it now? I have forgotten it. It is the suit Titus is interested in on section 2. Mr. W. A. WILLIAMS. A-48. The CHAIRMAN. I will ask the Land Department if an application was sought by Mr. Titus or other officers of that company for the benefits of the act approved August 25, 1914, to which we have been referring? Commissioner TALLMAN. I do not recall now whether he made a formal application or whether he simply informally consulted us about it. The CHAIRMAN. Has there been any application granting the benefits of that bill to them? Commissioner TALLMAN. I think not; I am reasonably positive there has not. The CHAIRMAN. Will that be granted to that company if he makes application? Commissioner TALLMAN. No; because it is in suit. I should say that we have also refused to make contracts where suits were pending and receiver appointed. The CHAIRMAN. Let me read the bill into the record here and see if you believe in your opinion you have any authority under the act to make a refusal, under the construction you place on it. This is entitled [reading]: AN ACT To amend an act entitled "An act to protect the locators in good faith of oil and gas lands who shall have effected an actual discovery of oil or gas on the public lands of the United States, or their successors in interest," approved March second, nineteen hundred and eleven. Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That an act entitled "An act to protect the locators in good faith of oil and gas lands who shall have effected an actual discovery of oil or gas on the public lands of the United States, or their successors in interest," approved March second, nineteen hundred and eleven, be amended by adding the following section : "SEC. 2. That where applications for patents have been or may hereafter be offered for any oil or gas land included in an order of withdrawal upon which oil or gas has heretofore been discovered, or is being produced, or upon which drilling operations were in actual progress on October third, nineteen hundred and ten, and oil or gas is thereafter discovered thereon, and where there has been no final determination by the Secretary of the Interior upon such applications for patent, said Secretary, in his discretion, may enter into agreements, under such conditions as he may prescribe with such applicants for patents in possession of such land or any portions thereof, relative to the disposition of the oil or gas produced therefrom or the prceeds thereof, pending final determination of the title thereto by the Secretary of the Interior, or such other disposition of the same as may be authorized by law. Any money which may accrue to the United States under the provisions of this act from lands within the naval petroleum reserves shall be set aside for the needs of the Navy and deposited in the Treasury to the credit of a fund to be known as the Navy petroleum fund, which fund shall be applied to the needs of the Navy as Congress may from time to time direct, by appropriation or otherwise.” Approved August 25, 1914 (38 Stat., 708). Senator PHELAN. Has that law been ignored? The CHAIRMAN. Just a second. Let me finish it. That act expressly provides for the leasing of these lands in naval reserves. Commissioner TALLMAN. Expressly authorizes. The CHAIRMAN. To contract with regard to it? The CHAIRMAN. The same as outside of the reserves. The CHAIRMAN. And there is no reason why there should be any distinction, in your opinion, drawn between the same character of applications for land within naval reserves as without? Commissioner TALLMAN. There is not. The CHAIRMAN. As I understand, in this section 2, the department there declines to give the applications for patent, which is involved in suit A-48, the benefits of that act, by reason of the fact that it is in the naval reserve, and suit has been commenced by the Attorney General. Commissioner TALLMAN. That involves a different proposition. That is true, however. The CHAIRMAN. That is true? Commissioner TALLMAN. Yes. It has declined to enter into a contract in every case, whether in or out of naval reserve, where suit has been started, and the whole matter is in the jurisdiction of the court. The CHAIRMAN. Is that under authority of the act? Commissioner TALLMAN. I think so. The act is discretionary entirely with the Secretary. The CHAIRMAN. Is that the intention, as you understand it, of Congress in passing the act? Commissioner TALLMAN. I hardly think that the Department of the Interior would be justified in either affirmatively or tacitly recommending a suit in a case and at the same time making a contract which would in effect defeat the court's jurisdiction over the real subject matter of the suit. The CHAIRMAN. I know; but was not this very act intended to take the place of a receivership? Was it not to accomplish exactly the same thing as a receiver would accomplish in a suit that would be brought against a patent? Commissioner TALLMAN. In a large degree I think that is what the intention was; yes. The CHAIRMAN. In other words, if there was no delay in the issuance of patent, this thing would not be needed. As you have already stated, this act was passed for the very reason that pending the settlement of these questions oil was being produced and somebody had to look after it? Commissioner TALLMAN. Yes. The CHAIRMAN. And it was to take the place of a receivership, in effect? Senator PHELAN. One of the reasons was to protect the property itself, because a well discontinued and not operated may easily lead to the ruin and destruction of the property itself. The CHAIRMAN. Undoubtedly. It was to be a substitute for a receivership, allowing the claimant to conduct his own operations instead of having a receiver. Commissioner TALLMAN. There is much difference between the terms of those contracts and terms under which receivers are appointed in these cases. In the first place, the making of the contract at all is discretionary in the judgment of the Secretary. If a case arises, in the Secretary's judgment, where it is to the interest of the Government that suit be started and receivers appointed, I do not think it ever was intended by Congress to take away from the Government that remedy. The CHAIRMAN. This act only anticipated an operation by the lessee pending the determination of his rights on application for patent, is not that true? Commissioner TALLMAN. That is true. The CHAIRMAN. And it anticipated there was going to be some kind of contest on application of patent, and pending that this procedure would be taken to operate the claim. Commissioner TALLMAN. That that procedure might be taken to operate the claim. The CHAIRMAN. Might be taken; but do you not think that Congress intended that that should be? Commissioner TALLMAN. It intended to leave it discretionary with the Secretary as to the cases where it should be proper to take it. The CHAIRMAN. Do you not construe an act of Congress which authorizes a department to do a certain thing for a certain purpose that they are limited to a sound discretion in carrying out the intent of the act? Commissioner TALLMAN. Certainly; but you must bear in mind this, that in this whole section the President had set aside these lands |