and it is voluntary and now under the policy proposed in this bill if the permittee wanted to subscribe to such condition and accept a deed, he could do it, or not accept it and lose his deed or his permit, that is all.

Mr. HINES. The amendments to this act of March 4, 1931, to this section, also authorizes the Secretary of the Interior to alter or modify drilling and producing of oil requirements of permits and leases, so that the requirements of those permits and leases should be made to conform to that unit plan which may be approved for the particular area in which they are a part. This was done only with the consent of the lessee.

This section also provides that, if a permittee includes his lands with others in a cooperative or unit plan for a pool, field, or area, and discovery is made within that pool, field, or area, whether it be on a particular permit, whether it be on leased lands, or individually owned lands, the Secretary may issue leases for the area of that permit included within the plan, without further proof of discovery; that is, if the lands are included within the unit plan and area which the discovery has been made, the patentee may make it a deed without making the discovery provided for in section 14.

Section 28 merely authorizes the Secretary of the Interior to grant rights-of-way for pipe lines, and provides that pipe lines covering Government lands shall operate as common carriers.

Section 28 reserves to the Secretary the right to grant easements and rights-of-way on lands covered by any permit or lease. It also reserves to the Secretary the right to sell or otherwise dispose of the surface of the lands.

Section 36 specifies numerous general requirements of leases, among which are the provisions that no assignment of leases may be made without the approval of the Secretary of the Interior; that reasonable diligence and skill in the operation of property shall be exercised; for the payment of wages, and to insure the sale of the production from leasing lands to the United States and to the public at reasonable prices, for the protection of the interests of the United States, and for the prevention of monopolies.

Section 31 provides that any lease issued under the act may be canceled by appropriate proceeding in the United States district court for the district in which the property, or some part thereof, is located.

Mr. WHITE. Mr. Chairman, might I inquire at this point, of the witness, is this an analysis of the law that now exists or is it an analysis of the bill that we have under consideration?

The CHAIRMAN. Of the law as it now exists.
Mr. AYERS. Might I say something?

The CHAIRMAN. Perhaps I might say this: The bill only attempts to amend sections 13, 14, 17, and 18, as amended. Of course, the gentleman is farther than the amendments offered, but it was merely to complete our records so we would have a picture of the law as it exists today.

Mr. WHITE. I am heartily in accord with that procedure, but I just wanted information as to what is being done now.

The CHAIRMAN. That is all. I understand that that brings us up to section 38, and we are attempting to amend 13, 14, 17, and 18, as amended.

Mr. AYERS. And I would like to know what difference it makes on all of the rest of those sections, which takes up our time and seems to serve no good purpose.

The CHAIRMAN. No; I think you are right.

Mr. AYERS. I know I am.

The CHAIRMAN. I agree with you.

Mr. WHITE. I believe that the statement is not much longer and should go in the record.

The CHAIRMAN. I am somewhat of the opinion that in order for us to proceed as fast as we can, that we do not need any further statement, and I think we should hear from Mr. Poole, if there is no objection.

Mr. WHITE. I think we should permit him to include these matters in the record.

The CHAIRMAN. Very well.

Mr. GREEVER. Mr. Chairman, before Mr. Poole proceeds, there is one question that occurs to me, and has occurred to me over a long period of time, and I would like to ask Mr. Stabler that question, because he has been with the Department and been all through this proposition.

The CHAIRMAN. Very well.

Mr. GREEVER. What was the theory, Mr. Stabler, on the matter of the limitation of acreage as it appears? I know that that was changed from time to time. What was the theory upon which it was put in the original and the subsequent acts?

Mr. POOLE. I think I am in position to answer that question. Mr. GREEVER. I wonder what the theory of the Department was? Mr. POOLE. I can deal with that in part with reference to the subject-matter that I am about to address myself to.

When we started the preparation of this bill

Mr. GREEVER. May I state this, Mr. Poole, just for the benefit of the members? As I understand it, this law in no way attempts to change that acreage limitation?

Mr. POOLE. That is correct.

Mr. GREEVER. As to the total amount that is held by any one individual, corporation, or otherwise?

Mr. POOLE. That is correct. As I was about to say, when we started to prepare this bill, I became very much interested in the legislative history of the Leasing Act of 1920, and I went back and spent considerable time reading the debates which transpired when this law was in the form of a bill in the House and Senate. It pended for a period of about 8 years before its passage, and the records will testify to the fact that it was probably one of the most controversial pieces of legislation ever passed by Congress.

The particular question that Congressman Greever asked was very controversial, and the record will disclose that the limitation on the amount of acreage that could be held by a patentee or lessee within a structure, or within a State, was actuated by a desire on the part of Congress to prevent monopolies and that, probably, alone. Mr. GREEVER. That answers the question.

Mr. WHITE. May I ask a question, Mr. Chairman?

The CHAIRMAN. Mr. White.

Mr. WHITE. Reference was made in the statement of the gentleman preceding you, in analyzing the law, as to the authority of the

Secretary to sell. Now, was it contemplated that the Secretary would have discretion or authority to sell oil lands to anybody, or has that been done?

Mr. POOLE. No; there is no such authority in the Leasing Act.

Mr. WHITE. This reference to selling or authority to sell land, what did it apply to?

Mr. DEMPSEY. That would be surface rights, as I understand it. Mr. POOLE. The surface rights; yes.

Mr. WHITE. But there was also the right to sell leases under

section 17.

Mr. POOLE. I thought the committee might be very much interested, in connection with the consideration of this bill, in knowing why certain provisions were incorporated in the Leasing Act of 1920, as to what actuated Congress to incorporate several provisions which we desire to have changed. I say that because they are not in accord with the ideas that prevail universally in the development of private land in connection with oil and gas leasing, nor are they in accord with the State laws that govern the development of oil and gas on State-owned lands.

So I went through the records, and I am going to give you, in part, some of the discussion that took place in the House and Senate when those bills were under consideration that, ultimately, were enacted into law in the form of the 1920 Oil and Gas Leasing Act.

As I stated before, this legislation pended for approximately 8 years before its passage. The first bill that shows any similarity to the act which was passed was Senate bill 2812, and that was introduced in the Sixty-fifth Congress, and failed of passage.

Mr. AYERS. Who introduced it?

Mr. POOLE. I do not have it here, but I recall, offhand, that it was Senator Pittman of Nevada.

Mr. AYERS. I was thinking some westerner did it, and I thought you might have the name.

Mr. POOLE. It was defeated. That is the very part out of which the present law grew, and it contains provisions that are substantially similar to those which were ultimately embodied in the law.

In this bill, the Secretary was authorized to issue general applicant permits to prospectors for oil and gas on the public domain. Upon the discovery of oil, the permittee was entitled to a patent in fee to one-fourth of the prospecting area, and leased the balance, at a royalty rate of not less than 12% percent. This was opposed in the Senate very strenuously by Senators La Follette and Norris, and the record will disclose that it was probably due to their opposition that the bill was defeated.

The records further disclose that patented land was to be given to propsectors by way of a bonus or reward for his discovery. In other words, Congress was presuming that the patentee was hazarding his capital in unknown geological areas and, in many instances, would drill a dry hole. This bill was handled in the House by Congressman Ferris, and with reference to this provision he made the following statement on February 18, 1919, before that body. I refer you to the Congressional Record, Sixty-fifth Congress, third session, volume 57, part 4, page 3699. In part his statement is as follows:

If an oil prospector gets a permit on wildcat territory-that is, territory that has not been previously explored-and gets out on the public domain more than

10 miles from any known oil fields and takes out a permit for 2,560 acres and digs ditches, puts in waterworks, establishes tanks, machinery, roads, etc., and takes a chance and brings in a well and, in short, pioneers that country, he just gets a patent for one-fourth of the entire area as his bonus for discovery, and three-fourths of it is left to the Government, so that you provide a reserve of oil territory for the Navy on a royalty basis and for any other purpose that may be desirable.

As I said, this bill was defeated. It was reintroduced by Senator Smoot in the Sixty-sixth Congress, first session. (See Senate bill 2775). That was the bill that was enacted into law. When Senator Smoot was considering this bill, by sections, before the Senate, and making explanation of its various provisions, he dealt at length with the purpose of the prospecting permit and the 5 percent royalty rate. His statement on this provision, in part, is as follows:

I take it for granted, Mr. President, that the greatest interest in this legislation revolves around the oil and gas lands of our country.

I probably should inject at this point, that this law embodied more than the oil and gas development, but it included all nonmetallic minerals. Continuing, he said:

In all the bills that have been reported in the past, there has been a provision that would allow permits for the exploration of oil within a known geological structure, and in most of the bills that have been reported heretofore the royalties have been the same whether the permittee develops the oil outside of a known geological structure or within one. Your committee thought that was unfair. The wildcatter, so called, is generally the man who goes out and discovers a new oil field. He is the one who, in many cases, goes outside of the known geological structure, spends all the money he has and all he can borrow in order to drive a well to the depth where he thinks oil will be found. He is the pioneer, as it were. Your committee thought the royalty that would be charged to him should be less than the royalty that would be charged to the man who, under the original bill, would be permitted to prospect for oil within a known geological structure.

So, Mr. President, we decided to strike from our Senate bill 1269 (bill introduced in 66th Cong., and reintroduced with amendments as S. 2775) all rights for permits within a known geological area, because within that structure, and they are generally small in area, the man who gets a permit knows that within such a structure it is being produced, and he wants to go within one of those structures he ought to take a lease and not a permit, and that is what the pending bill provided for, with a different rate of royalty.

In other words, if a person desires a permit to prospect for oil on 2560 acres of the public domain outside of a geological structure, he has a right to place onequarter of the 2,560 acres, if he discovers oil, at a royalty of 5 percent instead of 122 percent. This is given a preference right to the other three-fourths of that amount, if he so desires, at the regular royalty of not less than 121⁄2 percent nor more than 25 percent.

That is all I have on the legislative history of the 1920 Leasing Act. Mr. AYERS. That is the 1920 Leasing Act, and now you do not mean I mean the Department is attempting to abandon that premium for discovery, and put this all on a leasing basis?

Mr. POOLE. That is correct.

Mr. AYERS. And put the little fellow that makes the discovery up against bidding against the Standard Oil Co.?

Mr. POOLE. No, sir.

Mr. AYERS. Tell us about that.

Mr. POOLE. It will take another day to do that.

Mr. AYERS. That is what I want to know about.

Mr. POOLE. In presenting the addenda that outlines the method in which we will present our case, we desired to present that at a later date, and first show you and give you the legislative history of this act, and explain the provisions of it to you, what was occurring first, on private lands, and then on State lands, and then on Indian

lands, and then point out why we think the changes that the bill embodies are desirable.

Mr. AYERS. Will you remember the question that I asked you? Mr. POOLE. I will, Congressman.

Mr. AYERS. And will you answer it?

Mr. POOLE. You will be given a lot of data on that, I assure you. If the committee will permit, I would like to have it hear another witness from the Department, Mr. Kirgis, from the Solicitor's office, who is eminently familiar with the leasing of the lands in the Indian Territory.

STATEMENT OF FREDERICK L. KIRGIS, ASSISTANT SOLICITOR, DEPARTMENT OF INTERIOR

Mr. KIRGIS. Mr. Chairman and gentlemen of the committee, my name is Frederick L. Kirgis, Assistant Solicitor in the Department of the Interior.

The purpose of presenting this very brief résumé of the practice of leasing Indian lands, is merely to form a contrast with the existing system for the disposition of public lands in the United States, and at the same time to furnish something of a basis for comparison with the Greever bill, which is now being considered.

At the outset, it might be well to point out that an Indian lease is not on a unified system. There are, as a matter of fact, several statutes and several departmental regulations applying to Indian leases on Indian lands. There is a statute, a Federal statute, regulating the terms of Indian lands, a separate statute regarding terms of leases of tribal Indian lands. If there are certain definite reservations which have particular statutes, for instance, the Osage Reservation has a particular statute, and the Five Tribes of Oklahoma are governed by a particular statute; and so also the ceded area of the Shoshone Reservation of Wyoming, and the Crow Reservation of Montana.

For the most part, the system of leases under these various statutes is the same; but there are details which differ. If any of those are pertinent, I will point them out, or attempt to, as I go along.

Indian lands are put up for competitive bidding in all instances. The bidding, as a matter of practice, is on what is termed a bonus; a bonus, in explanation, is, you might say, the price which the prospecting lessee proposes to pay for the privilege of securing the lease. In a few instances, a relatively few instances, the minimum bonus is fixed prior to the sale. In most instance it is not, but the right is reserved to refuse to accept any or all bids, if the bonus offered is deemed too low.

That is pretty much an arbitrary power which exists in the Department officials in charge of the leasing, and they are advised in that connection ordinarily by the members of the Geological Survey who are familiar with the value of the land.

In addition to the bonus, the Indians receive a certain royalty on all oil which is produced. In most instances, that royalty is 12%1⁄2 percent. The statute regarding the ceded of the Shoshone Reservation provides that the minimum royalty shall be 10 percent. That is only set as a minimum, but in practice 12%1⁄2 percent is secured and demanded. On Indian tribal lands, there is a graduated scale of royalties from 121⁄2 to 25 percent, depending on the amount of production which is had.