shall specify a minimum rental and term for lease; and shall fix a date when sealed proposals to lease will be received. Such proposal to lease shall be advertised for 3 weeks and the property shall be leased to the highest responsible bidder, subject to the right of the supervisors to reject all bids.

Section 3493m of Deering's California Statutes, 1931, provides that lands hereafter uncovered by recession or drainage of waters of inland lakes or swamp and overflowed lands not segregated by the United States may be leased for minerals subject to existing provisions of law, for periods not longer than 25 years.

COLORADO

Section 56 of the Colorado Session Laws of 1909 (p. 504) authorizes the State board of land commissioners to lease any portion of the land of the State for stone, oil, gas, or other minerals, upon the payment in advance of such annual rental as may be fixed by the board. Such leases shall be for such term and shall provide for the payment of such royalty as the board may determine. Failure to develop the land within a reasonable time shall be cause for canceling any lease. Leases may be renewed under such conditions as the board may prescribe.

Under regulations recently prescribed by the board, leases may be issued for a period of 10 years, and as long thereafter as the lessee continues to operate and produce commercial quantities of oil and gas from the well or wells each month. The royalty prescribed is 122 percent of the market value of each day's gross production. Applications for a maximum area of 2,560 acres each, in as compact form as possible, will be received by the board. A minimum rental of 25 cents per acre, payable semiannually in advance, is prescribed for the first 5-year period of the lease, and a minimum rental of 50 cents per acre is prescribed for the second 5-year period.

IDAHO

Oil and gas lands owned by the State of Idaho may be permitted or leased under the provisions of sections 46, 704, 705, and 706 of the Idaho Code (Annotated, 1932, vol. 3), which provide in substance as follows:

The State board of land commissioners may issue oil and gas prospecting permits for a period not exceeding 2 years upon not to exceed 640 acres of land wherein the deposits belong to the State and are not within any known geological structure of a producing oil or gas field, upon the condition that the permittee shall begin drilling operations within 6 months from date of permit, and shall within 1 year from date of permit, drill 1 or more wells to a depth of not less than 500 feet each, unless valuable deposits of oil or gas shall be sooner discovered; and shall within 2 years from date of permit, drill to an aggregate depth of 1,500 feet, unless valuable deposits of oil or gas are sooner discovered. Prospecting permits may be extended for 2 years under stated conditions. Upon a satisfactory discovery of valuable deposits of oil or gas on land embraced in permit, a permittee shall be granted a lease for 320 acres, if there be that number of acres in the permit, for a period of 5 years (with the right of renewal for successive 5year periods) at a royalty of 121⁄2 percent and an annual rental of 25 cents per acre, such rental to be credited on royalty accruing for the current year.

The permittee is entitled to a preference right to lease the remainder of the acreage in his permit at a royalty of not less than 20 percent of the amount or value of the production, and under such other conditions as are prescribed for oil and gas leases in the statute, the bonus and royalty rate to be determined by competitive bidding or fixed by such other method as the board of land commissioners may prescribe by regulation.

KANSAS

In the State of Kansas, the State board of administration is authorized to lease State lands under its control pursuant to sections 76, 112, 112a of the Kansas Revised Statutes of 1923, which provide, in substance as follows:

The board is authorized to lease any of the lands under its control for production of oil, gas, or other minerals for a term of 5 years and as long thereafter as oil, gas, etc., may be produced therefrom in paying quantities. Leases shall provide for the payment of a royalty of one-eighth of the production, whether taken in value or in kind, and the payment of an annual advance rental to be fixed by the board. Leasing shall be made public competition after not less than 30 days notice by publication in two newspapers, one published at the State capital and one in the county where the land is located. The actual leasing shall take place on the land which is to be leased, and the lease shall be granted

to the highest responsible bidder. The statute requires that all oil and gas leases shall contain provisions requiring the lessee to drill one well on each leased tract within 1 year from the date of the lease, for drilling all necessary offset wells, and for furnishing a bond for the protection of the lessor.

LOUISIANA

Under the laws of Louisiana, the Governor of that State is authorized to lease oil and gas lands belonging to Louisiana. Sections 4720, 4721, 4723, and 4724 of Dart's Louisiana Statutes (1932) provide, in substance, as follows:

Any person, firm, association, or corporation desiring to lease vacant or unappropriated public lands belonging to the State of Louisiana, shall make application in writing to the Governor, stating the description or character of the land, and enclosing a check for $50 to show good faith and cover the costs of leasing. The Governor shall then cause the register of the State land office to inspect the lands sought to be leased and the register shall make a report to the Governor as to the nature and character of the lands. The statute provides that the Governor shall next cause to be published in the official journals of the State and the appropriate parish an advertisement, to be published for not less than 10 days, describing the lands and setting forth the date upon which bids for leases will be received. The bids shall be received and opened by the Governor at the time specified in the advertisement, and the Governor may execute a lease or leases and fix the terms thereof: Provided, That no lease for oil lands at a royalty of less than oneeighth royalty shall be executed, or for less than $200 per year for each gas well. There is no provision in the act requiring payment of annual rental.

ΜΟΝΤΑΝΑ

The Revised Codes of Montana (1927 Supp. Sess. 1882-1-11) authorize the State Board of Land Commissioners of Montana to lease oil and gas lands wherein the deposits are owned by the State. These statutes provide in substance as follows:

Section 1182-1 authorizes the board to lease, in such manner as it may determine, State oil and gas lands wherein deposits belong to the State. Section 18822 provides that no person, association, etc., may hold more than 640 acres of State land under lease, with certain exceptions, and that leases shall be for a period of 5 years and so long thereafter during the term of 15 years from the date of execution as oil or gas is produced in commercial quantities. Section 1882-3 provides that the lands leased shall be in compact form and that minimum annual rentals shall be 75 cents per acre, payable in advance. Section 1882-4 provides that, in addition to rentals, a royalty of not less than 122 percent of the value of the production shall be paid to the State. Section 1882-6 provides that every lessee shall reserve in the board the right to terminate said lease upon failure of the lessee to drill a well to a depth of 1,000 feet within 2 years, unless commercial quantities of oil or gas be discovered at a lesser depth.

Section

The Board may extend this term within which to drill to 5 years, upon payment by the lessee of $1 per acre per year rental in advance, beginning with the third lease year. Section 1882-8 provides that the present leaseholders may exchange their leases and secure new leases under the terms of this new act. 1882-11 provides that a lessee, upon discovery of oil or gas, shall proceed to drill the wells necessary to economically test, develop, and operate the deposits discovered; no lessee is required to drill more than 1 well in any one calendar year, or a total number of wells under any one lease in excess of the total number of 40-acre tracts in the lease, nor more than 1 well to each 160-acre tract if only gas is discovered; except that necessary offset wells must be drilled with due diligence.

NEW MEXICO

The laws of the State of New Mexico make provision for the leasing of State lands (N. Mex. Stat., 1929, secs. 133-401-11) for oil and gas development, These laws provide, in substance, as follows:

Section 132-401 authorizes the State commissioner of public lands to execute and issue leases, in the name of the State, for exploration, development, and production of oil and natural gas from any lands belonging to the State (sec. 132-405). Applications for leases, made under oath, shall be accompanied by the amount offered as bonus, if any, and the rental for first year (sec. 132-406). All leases shall provide for an annual rental, to be fixed by the commissioner, of not less than 5 cents and not more than $1 per acre per year. The Commissic ner

shall fix rental districts, and not more than 6,400 acres shall be included in any one lease. The statute (sec. 132-407), creates a 'restricted" district and provides that no leases in this district shall be made except upon competitive bidding at public auction, and (sec. 132-408) provides the manner in which leases for lands in the restricted district shall be offered for sale at public auction. The law (sec. 132-409) provides, that if no bid is received the commissioner may lease the lands offered to the first applicant upon applicant's payment of not less than the minimum amount of rental and bonus. The Commissioner may withhold tracts from lease if, in his opinion, the best interests of the State will be served (sec. 132-410). The Commissioner is authorized to cancel leases for nonpayment of rental or for nonperformance of lease requirements (sec. 132-411). The lease form prescribed in (sec. 132-402) specifies a royalty of one-eighth of the net proceeds of the production of oil, gas or casinghead gasoline.

OKLAHOMA

The laws of Oklahoma (Oklahoma Statutes, secs. 5595-5596) authorize the commissioners of the State land office to lease school or other lands owned by the State. The statutes authorize the commissioners to lease such lands for oil and gas for a term of 5 years and so long thereafter as oil or gas is produced in paying quantities. Not less than one-eighth of the oil or gas produced is to be paid to the State as royalty, either in value or in kind. Leasing shall be made by public competition after advertisement for 30 days, and leases shall be let by sealed bids to the highest responsible bidder, the commissioners reserving the right to reject all bids. It is provided that if no well is completed within 1 year, the lessee shall pay, in advance, such annual rental per acre as the commissioners shall prescribe in the lease, such rental to defer completion of a well during that lease year (sec. 5598). All leases shall provide for the drilling of one well on each leased tract within 1 year from the date of the lease and for drilling all necessary wells to offset drainage.

SOUTH DAKOTA

Under the laws of South Dakota (acts of legislature, 1931, ch. 203, sec. 1), the State commissioner of school and public lands is authorized to execute and issue, in the name of the State, leases for the exploration and development of State-owned lands for oil and gas, upon such terms as the commissioner may deem to be to the best interests of the State. The term of lease shall be for 2 years and so long thereafter as oil or gas is produced in paying quantities. The royalty to be paid to the State shall be one-eighth of the oil or gas produced and may be taken either in value or in kind. The lessee shall pay such reasonable annual rental as is fixed by the rules and regulations of the board of school and public lands, but in no case shall the annual rental be less than 25 cents per acre.

TEXAS

The laws of the State of Texas provide that permits for the development of oil and gas may be issued to any person, firm, or corporation, upon all surveyed public school, university, asylum, and other public lands, etc. (Texas Statutes, 1928, art. 5338). Applications for permits, with a description of the lands, shall be filed with the county clerk, who shall note the filing on his records.

The application shall then be forwarded to the commissioner of the State general land office, with the filing fees and 10 cents per acre for each acre applied for (which shall be paid annually during the life of the permit); and if proper, the commissioner shall issue an exclusive permit to prospect for oil and gas for a period of 2 years. Permits may be extended for 5 years from the date of issuance upon payment of annual rentals in advance, and when production is secured in paying quantities, the permittee shall be entitled to a lease for so long as the land produces oil or gas in paying quantities, subject to provisions of act, payment of permit acreage rental to terminate upon issuance of lease (art. 5341-b). The permittee shall begin actual prospecting work within 1 year from the date of the permit, failing in which permit is subject to forfeiture (art. 5342). Upon discovery of oil or gas upon the land covered by a permit, and upon payment of $2 per acre rental, a lease may be issued for a term of 10 years, or less, as desired by applicant, with option of renewal for equal or shorter periods. The rental of $2 per acre per annum shall continue during the life of the lease, and one-eighth of the value of gross production of petroleum shall be paid as royalty (one-tenth of the value of all gas metered and disposed of).

University lands.-Leases on unsold university lands or university lands wherein the minerals have been reserved to the State, may be sold by the Commissioner of

the General Land Office. Such sales shall be made not oftener than once each month. Sales of leases shall be made for 10 cents per acre in advance for first year, 25 cents for second year, and 50 cents each year thereafter until production is secured in paying quantities, but not to exceed 5 years. A royalty of one-eighth of the gross production of oil and gas, or the value thereof, shall be paid to the State (art. 5343). The Commissioner shall advertise the land and the time when leases will be sold (art. 5343). Separate applications for each tract, with first payment of rental, shall be delivered to the State land office prior to date of the lease sale. If applications are favorably considered and the land found subject to lease, a lease shall be issued for 5 years to the applicant who pays the most, if any, sum for the area, in addition to the 10 cents per acre and stipulated royalty. If production is not secured within 5 years, the lease shall terminate, and another lease may be sold as herein provided (art. 5343). Whenever production is secured in paying quantities and payment of royalties begins, the owner shall not pay any further rental, and the lessee shall be entitled to a lease so long as production is secured in paying quantities (art. 5343).

Gulf lands. All islands, salt-water lakes, bays, inlets, marshes, and reefs owned by the State within tidewater limits, and that portion of the Gulf of Mexico within the jurisdiction of Texas, and all unsold, unsurveyed public free school lands, shall be subject to lease by the commissioner of the State general land office to any person, firm, or corporation for the production of oil and natural gas (art. 5353). The commissioner shall fix the day when an area shall be subject to lease and advertise for at least 30 days (art. 5354). Applications for lease shall be received by the State land office prior to the date fixed in the advertisement (art. 5355). When an application has been filed and considered and the area found subject to leasing, a lease shall be issued, for a term of not to exceed 25 years, to the applicant who pays the most for the area, in addition to the rental price per acre and the stipulated royalty. If production is not secured in 10 years, the lease shall terminate and the area again be subject to lease (art. 5357). The royalties shall be one-eighth of the gross production of oil and gas, or the value thereof, and 10 cents per acre in advance rental shall be paid for the first year, an additional 25 cents per acre to be paid the second year, 50 cents the third year, and $1 per acre for each year thereafter. When production is secured in commercial quantities and payment of royalty begins and continues, the payment of acreage charges shall terminate (art. 5358). The lessee must drill all necessary offset wells (art. 5359). Asylum and school lands: Statutory provision is also made for leasing these lands for oil and gas development. These provisions are similar to the above provisions, and therefore are not discussed herein.

UTAH

Under the Utah statutes (Utah Revised Statutes, 1933, secs. 86-1-18) the State land board may lease, in tracts not exceeding 2,560 acres in extent, to any one person, for prospecting and mining purposes, any portion of the unsold, unleased lands of the State for such annual rental (not less than 50 cents per acre) and for such royalty upon the product as the board may deem fair and in the interests of the State. Such rental paid for any year shall be credited against the royalties as they accrue for the year. Such leases shall be for indeterminate periods, and upon the condition that at the end of each 20-year period succeeding the first day of the year in which the lease is issued, such readjustment of terms and conditions may be made as the board may determine to be necessary in the interest of the State. Applications for such leases shall be made, on oath, in such form as the board may prescribe, and the applicant shall describe the land, statę the annual rental and royalty offered by him, specify the mineral or minerals, and give such additional information as may be required by the rules and regulations of the board.

WYOMING

The Wyoming statutes (Wyoming Revised Statutes of 1931, sections 91-801, 91-803), provide that the State board of land commissioners is authorized to lease, for a term of 10 years with the preference right in the lessee to renew his lease for successive 10-year periods, any State or school lands supposed to contain coal, oil, or minerals. Mineral leases shall be issued at such monthly or annual minimum payment as shall be fixed by the board, which payment shall be applied upon such royalty as may be provided for in the lease, which royalty on mineral or oil lands shall not be less than 5 percent of the gross output of mineral or oil from said lands under said lease.

6641-35-6

Under the Wyoming regulations, two types of oil and gas leases are issued: (1) Oil and gas prospecting leases, and (2) oil and gas operating leases. The oil and gas prospecting lease runs for 1 year, and the annual rental is $200. Upon discovery of commercial quantities of oil or gas, an oil and gas operating lease must immediately be applied for, the royalty to be at an initial rate of 122 percent. No person or corporation may lease more than 640 acres of the State land. The rentals on operating leases run from $100 up, such rentals to be credited against royalties for any one lease year.

LE ROY H. HINES,
Assistant Legal Adviser.

Mr. POOLE. The two exhibits I have offered, I think very clearly indicate that the minimum royalty rate provided for by the laws of such States and 18 States have laws pertaining to oil and gas development on State-owned lands-is uniformly 121⁄2 percent, with the exception of Wyoming, Utah, and California. In the State of Wyoming, they may have a royalty rate as low as 5 percent, but, as shown by the letter of the State land commissioner, there is only one lease at the present time that carries a royalty rate of less than 12%1⁄2 percent.

Mr. GREEVER. That was under the old law, and that is not operative any more. I do not think there is any law now that provides for a minimum royalty rate of less than 12%1⁄2 percent.

Mr. POOLE. He points out in the letter that you can still issue a lease for as low a royalty rate as 5 percent. The law may have been changed since then.

Mr. GREEVER. I do not think that is the law now. I think the minimum royalty rate is 121⁄2 percent. I know that is the mimimum rate on which leases have been issued. I have not read the law for some time.

Mr. POOLE. In the State of Utah, the royalty rate is fixed by a board. They have no 121⁄2-percent limitation.

In the State of California, the system, as I have pointed out, is similar to that which prevails under the Federal Government in the development of oil and gas on the lands of the public domain.

The thing I want to emphasize with reference to the provisions contained in these State laws is that practically all of the leases are let by competitive bidding, and almost uniformly the prevailing royalty rate is the minimum requirement of 122-percent. Only 4 out of 18 States have the permit statement.

Mr. Chairman, that is all I have to say at the present time.

The CHAIRMAN. I think it might be in order for Mr. Stabler to give us some more information on this bill.

ADDITIONAL STATEMENT OF HERMAN STABLER, CHIEF ENGINEER, CONSERVATION BRANCH, GEOLOGICAL SURVEY

Mr. STABLER. Mr. Chairman, I would like first to offer for the record, in response to a request made on yesterday, I think, by Congressman Greever, of Wyoming, a table prepared in the General Land Office showing payments to States from receipts under the Mineral Leasing Act of February 25, 1920, from the date of the act to June 30, 1934. That would include the payment of royalties received during 1933, the payments being about a year behind.

The CHAIRMAN. Without objection, the table will be inserted in the record at this point.