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(b) Nothing contained in this amendatory Act shall be construed to affect the validity of oil- and gas-prospecting permits or leases previously issued under the authority of the said Act of February 25, 1920, as originally enacted or as amended, and in existence at the time this amendatory Act becomes effective, or impair any rights or privileges which have accrued under such permits or leases.

SEC. 3. [That the provisions of this amendatory Act shall not be in force and effect until July 1, 1935.] That the Secretary of the Interior, under such rules and regulations as he may prescribe, is authorized to issue to the first applicant a license to conduct geophysical, core drilling, or other subsurface surveys to determine subsurface structure on all public lands subject to lease under subdivision (c) of section 17 of this Act, as amended: Provided, That the area of such a license shall not be larger than six miles square. Such license shall be for a period of three months and may be extended by the Secretary of the Interior if in his opinion additional time is required to complete a reasonable geophysical, core-drilling, or other subsurface survey. Such application for a three months' license shall not be denied where the applicant, subsequent to date of such application, has with due diligence proceeded in such geophysical, core-drilling, or other subsurface survey on the lands for which application was made. Upon a showing that such geophysical surveys and core drilling and other bona fide exploration work has been done on the lands embraced by such license as may reasonably lead to belief that such lands, or a part thereof, may contain geologic structure favorable for oil or gas, such licensee shall have a preference right for nine months from the date of application for such license in which to apply for and receive a lease or leases for the lands or any part thereof included in said license, such lease or leases to be issued under the terms and provisions of subdivision (c) of section 17, as amended, without competitive bidding.

Mr. GREEVER. There has been a good deal said here about the small man and his rights-and we are all interested in protecting those rights. I think every man on the committee is of one accord in that particular.

I understand there are between six and seven thousand outstanding permits. Am I correct in saying that your testimony was that most of those are covered by an operating agreement at the present time?

Mr. TALLMAN. Yes; that is my belief: I do not know. I know that as to a number of the old permits-Mr. Stabler says there are 2,400 old permits and about 2,600 more recent permits granted since 1932. Is that correct, Mr. Stabler?

Mr. STABLER. Thirty-six hundred granted since 1932.
Mr. TALLMAN. And still in existence?

Mr. STABLER. And, roughly, 3,000 of the old ones.

Mr. TALLMAN. I have no doubt that all of the old ones are under contract, and I am reasonably certain that a great many of the new

ones are.

Mr. GREEVER. Has not that in some places amounted to a practical monopoly by reason of operating contracts?

Mr. TALLMAN. I do not think so. They are widely scattered. There is no monopoly at all; I would not think so.

We are trying to get producing wells; you have to file on about 10 before you get 1 good one. You will wind up with a very small percentage of what you start out with.

Mr. GREEVER. I understand that.

Mr. TALLMAN. Gentlemen, I thank you very much for the courtesy you have accorded me.

Mr. ROBINSON. The committee desires to thank you and appreciates the fact that you have given a very lucid explanation of the bill. I am sure your statement is appreciated by the committee.

Mr. GREEVER. Mr. Chairman, there is a gentleman here who owns some permits in Wyoming, and he would like to be heard. I refer to Mr. Danaher.

Mr. ROBINSON. We will hear Mr. Danaher.

Mr. GREEVER. I will say this for the information of the committee. Mr. Steele is also vet to be heard.

Mr. ROBINSON. Mr. Danaher, will you give your name and state the position you occupy?

STATEMENT OF A. T. DANAHER, CASPER, WYO.

Mr. DANAHER. My name is A. T. Danaher, of Casper, Wyo.
Mr. ROBINSON. Whom are you representing?

Mr. DANAHER. I am appearing for myself and various associations interested with us in permits.

Mr. GREEVER. Where is your home?
Mr. DANAHER. Casper, Wyo.

Mr. ROBINSON. You may proceed.

Mr. DANAHER. Mr. Chairman and members of the Committee on Public Lands of the House of Representatives: I appear here by reason of the interest of myself and associates in various oil prospecting permits in Wyoming, and particularly the area that is called the Poison Creek field, Wyo.

These permits, speaking of Poison Creek, form a group covering areas in four townships, the greater part of this area being in what is as nearly a solid block as title conditions allow. Some of these permits were originally issued under the terms of relief section 19 of the Leasing Act of 1920. Those permits were based upon the fact that the lands had been previously located under the placer mining laws, followed by a proven expenditure, to the satisfaction of the Land Office, of not less than $250 for each placer location. As a matter of fact, a sum much larger had been expended under the placer laws, and several wells had been drilled in this area by my father and associates in the effort to bring in an oil field.

The records of the General Land Office will bear out my statement that these permittees and associates and those working with them, expended over a quarter million dollars. The permittees themselves are scattered about through several States, including Wyoming, Minnesota, Wisconsin, and Iowa, with some now living in other States.

These folk were not rich people and in order to make the attempt to discover oil were obliged to join their financial resources, in what may be termed little syndicates, some of the parties putting in several thousand dollars and others, smaller sums.

These operations commenced before the passage of the present leasing act, and were brought about by the need for oil and the price obtainable and the natural desire to secure the profits that the discovery of oil would bring.

They spent so much money in drilling dry holes that they were unable to proceed with drilling operations owing to their having exhausted their financial resources. They not only drilled several wells in this general area, but they made considerable geological investigation at very substantial expense.

Some of the permits were canceled by reason of inability of the holders to cause drilling to be done upon them, but under Departmental order of April 4, 1932, were allowed to make applications for new permits, with a preference right by reason of the earlier permits and the expenditures which were made under them.

These permits, of course, were extended from time to time, but for the past several years, whenever a 2-year extension was granted, it would be upon condition that no drilling be done during the first year of the extension. That condition practically tied our hands so that we could not induce any of the oil-operating companies to drill our permits, as they did not think that a 1-year extension gave sufficient time to test the structure or test the entire group of permits. That was the situation we had to meet for several years past. We have recently succeeded in arranging to have this area tested by a company that has had experience in exploring for oil and has the financial resources which are necessary.

Not only that, but a unit plan has been submitted already including quite a number of these permits. It has been impossible up to the present, to secure any unit plan covering all of the permits.

These permits have been extended until May 1, 1935, and neither by any provision of the pending bill nor by any statement of policy issued to date by the Secretary of the Interior does the holder of such a permit have any guarantee whatsoever that his rights will be protected. Indeed, unless there is a provision written into the bill or unless the Secretary specifically announces that further extensions will be granted, permittees in the position of those whom I represent would be subjected to the complete loss of all their rights.

The bill provides (p. 2, lines 23 to 25) that no extension of any permit shall be granted after July 31, 1935. I understand from Senator O'Mahoney, who introduced the bill in the Senate, that this date, July 31, 1935, is not definitely fixed, but was selected merely to indicate that there should be a date which would mark the transition from the old system to the new. It was, I think, his thought that this date should be far enough in advance to give protection to all outstanding equities.

I want the committee to understand that unless some such provision is definitely written into the bill we are in danger of losing every dollar that we have expended on these permits.

I heard the clerk of the committee read the report of the Secretary of the Interior on this bill, and if I did not know better I might have thought that our associates and ourselves were tin-horn gamblers without any rights. The Secretary, as I recollect, referred to promoters and speculators who were getting something for nothing, or trying to. That is not the general fact, and whoever prepared that letter for the Secretary ought to have known that it was not a general statement of fact. As I have already mentioned, the records of the Department itself show an expenditure by our group of several hundred thousand dollars, and if that expenditure means that we have been trying to get something for nothing, then all I can say is that we put up a mighty expensive nothing.

It has always been our idea that when the Leasing Act was passed Congress intended that we little fellows should have a look-in, a chance to realize something if we were lucky enough to find oil on

public lands. The Secretary's advisers seem to think that we little fellows ought not to have any chance or consideration at all, and that no one ought to be allowed to get into this oil game at all except the big companies who would have means for bidding on leases, and shut out entirely us fellows of small means.

The leasing bill was passed, as Mr. Stabler said, to promote or encourage prospecting for oil. The Department last year set a dead line for all extensions to May 1, 1935. Well, as you all are aware, there has been no scarcity of oil the past year, and general business conditions were not such that funds could easily be found to develop potential oil pools-when the already existing pools were being only partly produced. So we permittees who have equities, which we acquired under an existing law, feel we should not now be canceled out. In 1929 we could have gone ahead if the Department had not, in March of that year, stopped all drilling on public lands-reopening partially development in 1932-but by then we were in the midst of a trying financial condition and it was impossible. Now, when conditions are apparently improving, and we have a possible chance for recovering some of our expenditures, we are to be put out.

The President has several times mentioned the "forgotten man ", and it looks mightily to us that the little fellow of small means is the forgotten man in the framing of this bill.

I have no prejudice against the big oil companies and oil operators. They take big chances and I know they have big losses at times, and if they can make a big profit occasionally, that is all right. However, I wish to protest against passage of a bill which can benefit no one except the big fellows and which means practically shutting the ordinary man out of the game entirely. I do not believe this committee wishes to do that.

I do most earnestly ask that you give some consideration to our situation, and I am sure that thousands of others, interested in permits, are in just about the same position that we are in.

Of course, I am not concerned about the speculator. I am concerned about the permittee who has acted in good faith and about the permittee who would have drilled his permit with his own money if it had not been for the fact that the Department by order prevented him from doing so.

Surely if the Government said to a permittee you shall not drill, Congress should not now by any turn of language pass a law which would have the slightest possibility of preventing such a man from getting an extension. I believe that all outstanding permittees ought to be given the opportunity by a straight 2-year extension to adjust themselves to any new order which Congress may desire to impose. It would seem to me that to give only a short period of grace would practically have the same effect as to cancel the outstanding permits because in only a small number of cases will the permittees be able to show that they are actually in prosecution of work. Now, when we remember that most of the permittees are not engaged in drilling either because of the depression or because of the orders of the Department, I think it becomes clear that Congress ought to protect them.

At the hearing Monday, I understood Mr. Poole to tell the committee that this bill protects all present rights of permittees. As I read the bill, that is true only up to a certain point. It is a fact

that on page 13 of the bill it is stated that nothing in this bill shall affect the validity of permits or leases now in existence. But how is that going to help us when our permits have been extended only to May 1, 1935, and they are subject to be canceled on that date. We know we are protected until the expiration of the extension, but so is the man who is going to be hanged protected until the date set for the hanging. What we want is to avoid being hung. The leasing bill may need some changes-all well and good-but this bill takes away the existing rights of the little fellow, puts them up for auction to the big boys, and the Government and the big fellows split the proceeds.

I ask for myself and associates, and for all other permittees, that you give us a chance by granting a straight 2-year extension within which to commence drilling, and to so phrase the act that this will not have any strings tied to it nor give any official the right to deny it.

That will give us 2 years to salvage what we can and in the meantime, if the law is changed, we can try to adapt ourselves to the changes and plan accordingly.

Mr. GREEVER. Will a straight 2-year extension cover your proposition?

Mr. DANAHER. It would help. In this case it would probably take some time to organize a drilling campaign, and if we do not get that we are out. But 2 years will help.

Two years is an awfully short period in developing an oil field. We would much rather see it 3 years, but 2 years would help. We will probably be in a position by that time to be able to work it out. Mr. GREEVER. How much have you spent in that field, that is, in Fremont County? That field is in Fremont County?

Mr. DANAHER. Yes. Our group of associates in the Poison Creek area spent, I imagine, over $300,000, very conservatively speaking, and in several other parts of Wyoming we spent considerable sums, amounting to $200,000 more.

Mr. GREEVER. Do you not think that gives you sufficient equity so_you_should be protected?

Mr. DANAHER. We kind of think it does.

Mr. GREEVER. Do you not think that under the present authorization for permits you would be entitled

Mr. DANAHER (interposing). Absolutely.

Mr. GREEVER (continuing). As a matter of law

Mr. DANAHER (interposing). Absolutely.

Mr. GREEVER (continuing). To have those equities protected by extensions?

Mr. DANAHER. I think so.

Mr. ROBINSON. What is the name of your corporation?

Mr. DANAHER. We are a number of permittees. There are probably a thousand people interested with ourselves and others. Mr. ROBINSON. There is no corporation?

Mr. DANAHER. No particular corporation.

Mr. GREEVER. How many people contributed to that operation? Mr. DANAHER. I suppose to say in the neighborhood of a thousand would be conservative. They are naturally scattered. At the time that money was put in there was more or less money in the Middle West. Now those fellows are all broke. We thought we would have

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