In section 28, as amended, it is required that applicants for rights-of-way for pipe-line purposes not only operate the pipe line as a common carrier, but also accept, convey, transport, and/or purchase without discrimination on a 100percent-volume measurement basis all oil and/or natural gas produced from Government lands in such proportionate amounts as the Secretary of the Interior may determine to be reasonable. Section 28 of the original act provides that pipe lines crossing Government lands must be operated as common carriers, and the proposed amendment would expand this provision to require that withdrawals of oil and/or natural gas produced from wells on Government or private lands be made in such proportionate amounts as are determined to be fair and equitable. The necessity for such a provision has been apparent for some time. In several cases gas lands of the United States have been subjected to drainage because pipe-line companies or others in control of a filed have failed or refused to transport or purchase gas produced from wells on public lands, while at the same time they are transporting and/or purchasing gas from wells on adjoining private lands.

The proposed amendment to section 28 also requires that the volume of all oil or natural gas transported or purchased be measured on a 100-percent volume basis; that is to say, the standard of measurement now recognized for the purpose of computing royalties on production from public lands must be adhered to by all pipe lines operating on public lands.

It is my considered opinion that this bill, modified in section 17 as indicated, is in the public interest, and I respectfully urge that it receive favorable consideration.

Sincerely yours,

Secretary of the Interior.

The CHAIRMAN. Mr. Greever, would you care to make any remarks? We have just read the report from the Interior Department, and if you choose to make any remarks, we will be glad to hear from you.

STATEMENT OF HON. PAUL R. GREEVER,

FROM WYOMING

REPRESENTATIVE

Mr. GREEVER. Mr. Chairman, briefly, this bill is brought about by the fact that all extensions of permits up to the present time, under the act of February 25, 1920-I believe that all of them have been extended no later than the 1st day of May 1935. Is that correct, Mr. Poole?

Mr. POOLE. That is correct.

Mr. GREEVER. The 1st day of May of this year. It became apparent sometime ago that if there were to be no further extensions, there should be some law here that would stabilize the production from, and drilling on, oil and gas lands.

There are two things, I might say, that this bill does which I am very much interested in and have always thought, for many years, should be done, which was to operate on a lease basis rather than on a permit basis.

For instance, in the State of Wyoming, the school lands there are operated on the lease basis. Twelve and one-half percent royalty, or more, is customary, according to the terms. Lands, of course, that are privately owned, everywhere, are operated on the lease basis. The minimum royalties provided in those permits on land, and on the school lands in our State, are 12%1⁄2 percent; whereas, under this law, the Government has been receiving 5-percent royalties upon what is known as preferred acreage; that is, 640 acres, we will say, out of 2,560 acres, or 160 acres out of 640 acres or lesser acreage.

The moneys that are received from the royalties go to three funds: 10 percent of it goes into the Treasury of the United States; 37%

percent goes back to the States from which it comes, and in the case of Wyoming and I presume it is somewhat similar elsewhere-it is covered into the school fund and the university fund, that amount of money; then 52%1⁄2 percent of it goes to the reclamation fund. That is the source from which the reclamation fund has received a large amount of money.

The preferred acreage, being one-fourth of the total, has enabledI do not know whether the report covers that-but it has enabled somebody to very often secure a lease at 5 percent on all of the good lands in 2,560 acres permit, without paying the higher royalty that was provided for on what was known as "B acreage ", or nonpreferred, as we generally term it.

I want to say this to you: There are a lot of witnesses here who are interested in these lands, and I think that most of them are interested in protecting fully the outstanding permits, and I think that is something that, by all means, should be done I do not think there should be any question at all but what they should be protected, and protected fully, because the policy of the Department for the last 4 or 5 years has been to not allow these lands to be drilled, rather than to encourage any drilling. Therefore, they have not been able to strictly comply with the law relative to drilling requirements; and for that reason, I think we should take it into consideration and give them every possible protection, so that their rights will be protected.

The CHAIRMAN. And that was true all over the United States?
Mr. GREEVER. Yes.

The CHAIRMAN. Insofar as drilling is concerned, oil was so cheap, and there were many other reasons, during this depression, why they could not carry on?

Mr. GREEVER. We have been very wasteful, too; that is true.

Mr. RICH. May I ask if these people that had these lands-do they have contracts that are expiring the 1st of May?

Mr. GREEVER. Well, many of them have permits, which are extended only up to the 1st of May. That is the last extension.

Mr. RICH. And a contract is void after that date?

Mr. GREEVER. Well, it is not a contract; it is a permit. I do not know, but I presume that the Secretary would have the right— wherever there is any equity, the Secretary should have the right to extend these permits after that date.

Mr. MOTT. Mr. Chairman, I would like to make a motion: That H. R. 5530 be reprinted with those sections of the original act which it undertakes to amend that it be reprinted in the usual form of printing and amendments to an original act-so that we could tell what that amendatory language is in the proposed bill, and what remains of the original bill after we amend it, if we do; and that a copy of the reprinted bill be before us at the next meeting at which we consider this legislation.

us.

This is a rather long and complicated act; we should have that before

The CHAIRMAN. Mr. Mott, you do not wish to include in the bill the entire matter that you referred to?

Mr. MOTT. No; I want sections 13, 14, 17, and 28 of the act of 1920. The CHAIRMAN. You would like to have any reports accompanying this bill?

Mr. Morт. No; I would like sections 13, 14, 17, and 18. Is there any other section of the original act that this bill amends?

The CHAIRMAN. No, sir; it does not amend any other section. Mr. MOTT. Then sections 13, 14, 17, and 18 of the act of 1920. Mr. GREEVER. And section 28, Mr. Mott?

Mr. MOTT. Yes; section 28 of the act of 1920 printed, with the amendatory language of H. R. 5530 shown in the bill; that is, what is stricken out will be included in the brackets, and what is put in will be in italics

The CHAIRMAN. I see no objection, of course.

You have heard the motion by the gentleman from Oregon. As many as favor it will signify by saying "aye"; the noes will say "no". The ayes have it, and it is so ordered.

Mr. MOTT. Now, may I ask Mr. Greever a very frank question? I would like to approach this matter in the proper way. Is this your bill, Mr. Greever, or is it the Department's bill?

Mr. GREEVER. Well, I can answer the gentleman just as frankly. The first I saw of the bill, I think, was in a conference I had with Senator O'Mahoney, when we were talking about it, and later he had discussed it several times with the Department of the Interior. He said he had this bill, and then asked if I would like to introduce it in the House. And I went over there, and we read the bill, and I think that at that time he made two or three changes in it.

Mr. MOTT. This is a bill identical with a Senate bill?

Mr. GREEVER. Yes; with a Senate bill; and I introduced it in the House.

Mr. MOTT. And was the bill written and drafted in the Department? I mean was it brought to the attention of yourself and Senator O'Mahoney by the Department?

Mr. GREEVER. Well, now, as I see it, Mr. Mott, that was about the way it happened. Senator O'Mahoney had rewritten it. Where he got the original bill I do not know, but he had rewritten it and had put some of the provisions in it, and sent it to me.

Mr. MOTT. I just wanted to inquire whether this is the usual departmental bill, drafted down at the Interior Department, introduced by the Member, referred to this committee, which requested the report, and report on the bill written by the same person in the Department who wrote the bill? That has been the usual procedure here, and I wanted to know if there was any difference in regard to this one.

Mr. GREEVER. Well, I think that, of course, that bill is sponsored by the Department of the Interior. The bill, as it stands today, is one rewritten by Senator O'Mahoney, after which I went over and agreed with him on various features of it.

The CHAIRMAN. As a matter of fact, though, there is nothing unusual insofar as the procedure of introducing the bill is concerned, in the way of handling of any bills that are introduced here, that I know of, without having to do with the parties that are interested in it, but I understand what the gentleman from Oregon has in mind.

In other words, if I understand you correctly, you want to know whether anybody else conceived this idea, or whether it was conceived in that Department?

Mr. MOTT. That is right; whether it is the Department bill or not. The CHAIRMAN. He knows the general purposes, so far as the bill is concerned, and the interests that are concerned have always, to some degree, been consulted, and, as a result of those conferences, brings the bill forward.

Now the gentleman from Utah is recognized.

Mr. ROBINSON. I understood that you had some amendments that you wanted to submit on this bill. Do you submit the bill now as it is, or do you still have other amendments?

Mr. GREEVER. No; I do not have any amendments to submit. However, the question comes up as to what time the present existing permits should be extended. Now, there may be a difference of opinion about that.

Mr. ROBINSON. The reason I asked that is, I was wondering if we are going to have this reprinted; it would be a good idea to have your amendments also printed, so we would have the whole thing before us.

Mr. GREEVER. The only amendments that I would suggest to this bill, myself, will refer to the date to which these permits should be extended, and they are going to be controversial, no doubt. The CHAIRMAN. It is just a question of changing dates?

Mr. GREEVER. Yes.

The CHAIRMAN. In other words, the phraseology is not changed at all?

Mr. GREEVER. No.

Mr. AYERS. Mr. Chairman, I want to ask the Department counsel a question.

Did you say, a while ago, Mr. Poole, that all existing permits, under which extensions have heretofore been granted, would expire on the first day of May?

Mr. POOLE. By departmental rule.

Mr. AYERS. By departmental rule?

Mr. POOLE. Yes, they have been extended to May 1. However, there have been many permits, new permits issued pursuant to sections 13 and 14, which will extend beyond that date.

Mr. AYERS. But I mean, all of such extensions which have heretofore been issued, will now, by departmental rule, expire on May 1? Mr. POOLE. That is correct.

Mr. AYERS. And they are all in jeopardy now?

Mr. POOLE. Yes. Of course, they can be reextended.

Mr. AYERS. Of course, it is the purpose of the Department to reextend them, unless there is legislation in the meantime, under your procedure?

Mr. POOLE. I would not want to make a statement of what the policy of the Department would be, but I am rather certain, Congressman, that we will deal with those people who have equities and protect their rights.

Mr. AYERS. That is what I am particularly interested in. Here are men by the score out in the Western fields, the public-land States, with permits that have been extended; and now if they are to expire on the 1st of May, the first object I have in mind is to protect those interests, because this bill cannot be passed, with these amendments to it, by that time.

Mr. MOTT. When was the rule made and put into effect to terminate the existing permits on the first of May?

Mr. POOLE. I think Mr. Stabler is in better position to tell that, but as I recall, about 9 months ago.

Mr. AYERS. Was it a blanket rule?

Mr. POOLE. No; there have been some extensions beyond that date?

Mr. AYERS. Was there a blanket rule made, which made all of them to expire on May 1?

Mr. POOLE. I think it was with some saving clause that, in certain cases, where equities were shown, they would be extended beyond that date.

Mr. AYERS. I want to make this request: That you furnish this committee with that blanket order. I would like to see it.

Mr. POOLE. Yes.

Mr. RICH. I might say to my colleague that that would not be anything foreign to some of the rules that have been laid down in the past year, in canceling contracts.

Mr. DIMOND. Mr. Chairman, may I make a remark?

The CAIRMAN. The gentleman from Alaska is recognized.

Mr. DIMOND. I would like to inquire from Mr. Greever and Mr. Poole whether this bill will affect any oustanding permits at all, or the life which they have under the present law and under the present

extensions?

Mr. GREEVER. You mean if the permits were granted on January 1, 1934?

Mr. DIMOND. 1935, we will say? Suppose a permit has just been granted, will this insure the life of it?

Mr. GREEVER. I should not think so. There would not be any extension at all. I think the language in here is sufficiently broad to cover it.

Mr. POOLE. This contemplated change of the system does away with the permit system of operation.

Mr. DIMOND. But it does not take away any rights heretofore granted under existing permits?

Mr. POOLE. That is correct.

Mr. MOTT. Perhaps I do not understand the situation, at all. I understood you to say that, by the rule of the Department, all permits outstanding would be terminated on May 1. Now, Mr. Dimond asked you if a permit, a new permit had been granted in January 1935, it would also expire on May 1, 1935, under the Department's rule.

Mr. POOLE. Under the terms of the mineral lands law, extensions are made for a period of 2 years. period of 2 years. We picked May 1, 1935, as an arbitrary date to which we would extend all outstanding permits, as they came up for extension. At that time we intended, and announced, that there might be a change in policy to be pursued by the Interior Department.

The CHAIRMAN. Do you yield to the gentleman from Idaho?
Mr. DIMOND. Yes, Mr. Chairman.

Mr. WHITE. It had been announced there might be a change in the policy?

Mr. POOLE. Yes.

Mr. WHITE. And in the event of any change in policy, you might not renew those permits, as you state?

Mr. POOLE. That policy is determined by the Secretary of the Interior. I am not prepared to say what the Secretary is going to do. Mr. MOTT. Let us have an answer to Mr. Dimond's question. Mr. Dimond asked whether a permit granted in January 1935 would expire May 1, 1935?

Mr. POOLE. That is correct; it would.

6641-35-2