Representative MICHENER,

REDDING, CALIF., February 8, 1947.

Chairman of the Judiciary Committee,

House of Representatives, Washington, D. C.

DEAR SIR: Quitclaim bills concerning the relinquishing of Government title to the submerged lands along the coast line of the State of California have again been introduced both in the Senate and in the House. In all of the information conveyed to the Senators and Representatives by press releases from the attorney general's office of the State of California, and in those originating in New York and Washington, no true picture of the actual motives behind the introduction of this legislation has ever been given.

The State has contended that the case brought by the Department of Interior against the State of California, and now pending in the Supreme Court, was made by the Department for the sole purpose of usurping title and property rights of the State, and has been represented by the State to have been made because of the Department's avaricious attitude toward acquiring submerged oil lands along the coast line.

Interest in the submerged oil structures of the California coast was first evidenced by the State in the year 1920, when legislative counselor, George Bush, an attorney from Los Angeles, was instructed to draw a State leasing act under which eligible citizens would be able to acquire title to submerged oil structures. At the time Mr. Bush was instructed to prepare this act he advised the State attorney general that, in his opinion, such an act would be unconstitutional, in that the title was held by the United States Government. He cited for his authority the enabling act by which the State of California was admitted into the Union. Quoting from this act:

"That the said State of California is admitted into the Union (September 9, 1850) by act of Congress upon the express condition that the people of said State through their legislature, or otherwise, shall never interfere with the primary disposal of the public lands within those limits and shall pass no law and do no act whereby the title of the United States to and the right to dispose of the same shall be impaired or questioned."

The primary title of all of the land within the boundaries of the State of California, as set forth in its application for admission into the Union, at the time this application was made, was vested in the Government of the United States by right of conquest and purchase from Mexico under the terms of the Treaty of Guadalupe Hidalgo. No act of Congress has ever granted title to the submerged lands of the State of California.

Ownership of the submerged lands of the Original Thirteen Colonies, the State of Texas, and the coast lines of Louisiana and California falls within three different categories. The Colonies acquired subsea title and upland title by right of conquest from Great Britain. Texas acquired subsea and upland title by right of conquest from Mexico; and upon admission into the Union, the Federal Government agreed to leave primary title of the land within the boundaries of the State of Texas vested in the State in lieu of assuming obligations for several million dollars owed by the Republic of Texas. Title to the area from which California was created was first acquired by the United States Government, and the State was admitted into the Union with the provision that the Government retain title to all of the land within the boundaries, as set forth in California's application for statehood.

In 1931 a wildcat well was started on a State lease permit granted in 1930 to Louise Schalmiler. The area being adjacent to Huntington Beach and lying within the boundaries of secs. 32 and 33, in T. 5 S., R. 11 W., and secs. 4 and 5, in T. 6 S., R 11 W., San Bernardino meridian. The well had progressed to several thousand feet in depth at the time of the expiration of the date of the original lease. Application for an extension of 2 years was made to the State and granted. At this time the management of the company believed that the State held the title. The ownership of the property bordering the shore line and abutting the Schalmiler lease was owned under the name of Balsa Chico, a subsidiary of the Standard Oil Co. When it became known that the drilling company would be able to complete its well under this lease extension, action was taken by Balsa Chico (Standard Oil Co.) to delay the operation. They sought and were granted an injunction by the court so that it was impossible for the operating company to do more than keep watchmen at the well until 6 months had elapsed, which time was consumed in showing the representations under which the injunction were granted were wholly unfounded and unjust. As a result of this delay, the well was not completed

within the time granted by the lease extension and the State refused to grant further renewal. Recourse was made by introducing a bill in the assembly in 1935. The assembly passed the bill, but Governor Merriam pocket-vetoed it. After this action by the Governor, investigation of the State's title was made by this private drilling company, and it discovered that the submerged lands titles were vested in the United States Government and upon discovering this made application to the Department of the Interior for the granting of a lease. The Department, however, refused to accept the application on the ground that it was their opinion the title was vested in the State. Some minor attorney had arrived at this opinion in refusing an application for sub-oil structures in the State of California, and the Department had never made a thorough investigation of the basis upon which the opinion was formed.

When the Department refused application, the drilling company requested the privilege of introducing evidence that the Government was the owner, and this privilege was granted. In the period from 1937 to 1940 many consultations were held with the Department's attorneys, and in January of 1940 Messrs. Margold and Lytell, attorneys for the Department of the Interior, held a hearing in Los Angeles and made a personal investigation of the physical evidence of the fact that drilling had been carried on upon the lease. They prepared a suit against the State of California to quiet title, and it went to the President for his signature in February of 1940. The present action pending in the Supreme Court of the United States stems directly from this drilling company's insistence that the Government owned the submerged lands.

Since 1935, and before, the attorneys general of the State of California have been aware of the fact that the State's title to the submerged land was questionable. The State has requested payment of royalties from oil produced from submerged structures, but the major producing companies have refused to pay such royalties until the State proved by court action that it owned the oil from these structures. Because of this attitude on the part of the companies, there is now due and collectible a huge sum represented by these accumulated royalties. It is owed to someone, either the United States Government or to the State.

The title should be adjudicated by the Supreme Court of the United States before any congressional action is taken, in order that it may be clearly established to whom these royalties are owed. If they are owed to the United States Government, the Government should collect the amounts due; and, in turn, this sum should be paid to the State of California, either through the educational fund or the rivers and harbors act. If Congress should rush in at this time, before the Supreme Court decision is handed down, and, as a consequence, the Supreme Court action should be dropped, the major oil companies can turn around and still refuse to pay the State of California, even though the State should acquire a quitclaim title. It would seem that, then, the only way they can be forced to pay the royalties would be by a joint action to be brought by the State joining with the Government, with the probability that before such collection could be made a number of the now-producing companies would exhaust the structures from which they are now taking oil; and when the State finally came to collect the royalties due, there would, in many cases, be no company from which to enforce payment.

The State Submerged Land Leasing Act was amended in 1933, so that it was impossible for any individual to acquire any submerged-land lease from the State. In the interim between 1933 and 1946, the major oil companies acquired ownership of shore-line areas where subsea oil deposits were indicated by favorable geological study. It was during this same period that directional drilling was perfected, hence it would seem that a definite plan was undertaken whereby these structures will be exploited without paying royalties to anyone. The success of this plan depended upon keeping the question of title either unsettled or in confusion. Since the filing of the action in the United States Supreme Court to quiet title, the State Leasing Act has been reamended so that an individual can now acquire a lease; but, strangely, this amendment was shoved through at a special meeting of the assembly in the spring of 1946, when the main agenda of the assembly was a consideration of rent controls. Within 72 hours after this legislation became effective, there were 385 lease applications for submerged oil structures filed.

It would seem from evidence at hand that an effort is being made in Washington to cloud the whole issue of the California submerged oil lands so that a grab can be made by the major companies. The success of the whole plan depends upon Congress passing the Submerged Land Quitclaim Act before the Supreme

Court hands down its decision. This being the case, it would seem that a Representative realizing his obligations would at least refrain from voting "Yes" on a bill to quitclaim the submerged land until after the Court had quieted title. Very truly yours,

A. N. WHEALDON,

DEPARTMENT OF JUSTICE, February 24, 1948.

Hon. EARL C. MICHENER,

Chairman, Committee on the Judiciary House of Representatives,

Washington, D. C.

MY DEAR MR. CHAIRMAN: This is in response to your request of February 9, 1948, for the views of this Department relative to the joint resolution (H. J. Res. 51) to quiet the titles of the respective States and others to lands beneath tidewaters and lands beneath navigable waters within the boundaries of such States and to prevent further clouding of such titles and the bill (H. R. 4999) to confirm and establish the titles of the States to lands and resources in and beneath navigable waters within State boundaries and to provide for the use and control of said lands and resources.

These measures are sufficiently similar in purpose and substance to permit a single discussion of their provisions, although they contain several variances in repect to language and form. The proposed legislation would confirm in, and release and relinquish to, the several States all right, title, and interest in and to all "lands beneath navigable waters within the boundaries of the respective States, and the natural resources within such lands * The phrase “lands beneath navigable waters" would be defined so as to include not only lands underlying inland navigable waters but all such lands, both submerged and reclaimed, beneath the ocean, extending seaward to a line three geographical miles from the shore or to the seaward boundary of a State where such boundary extends seaward beyond three geographical miles. There would be excepted from the operation of the measure all lands acquired by the United States by cession, grant, quitclaim, or condemnation, and, under the provisions of H. R. 4999, lands to which the United States is entitled under the laws of respective States and lands held for the benefit of Indians. H. R. 4999 would also provide that the question as to the ownership of the subsoil and sea bed of the Continental Shelf, seaward of the boundary of any coastal State, shall be reserved for subsequent determination by legislation or judicial decree.

The generality of the language employed in the bill and joint resolution would imply an intention to embrace all lands underlying navigable waters, wherever situated, when, as a practical matter, the measures would be applicable only to lands underlying the open ocean. The rights and interest of the several States to lands situated between high and low tide along the shores of the ocean and to those underlying inland navigable waters, including bays, rivers, ports, and habors, have not been challanged by the United States. With respect to such lands no legislation of this type is needed. On the other hand, the United States has asserted its paramount rights, power, and dominion in and over the lands underlying the ocean adjacent to this country, seaward of low-water mark on the open coast and outside of the inland waters, and this assertion has been sustained by the decision of the Supreme Court in United States v. California (332 U. S. 19). It was also held in this case that the States do not have any title to or ownership of such submerged ocean lands. It is apparent, therefore, that the proposad legislation is designed to nullify the decision of the Supreme Court in the California case.

The enactment of either of these measures would operate not as a quitclaim, as their language would seem to indicate, but as an outright gift or transfer. The rights and interests of the United States in the lands and resources underlying the open ocean are incidents of its national external sovereignty and arise from its duties and responsibilities in respect to the conduct of international relations and the preservation of national security. In time of war or national emergency the resources, known and unknown, underlying our adjacent oceans constitute matters of vital importance to the security of this country. These resources belong to all of the people of all of the States, and they should not be given away.

In addition to expressing opposition to these proposals generally, the Department desires to invite attention to certain provisions thereof which would appear to be objectionable. Particular reference is made to the recitals appearing at the outset of the measures, which relate to the alleged assertions of ownership

by the various States in lands underlying all navigable waters within their boundaries since 1776 and the expenditures made by the States and their grantees in the development of such lands. Voluminous materials relating to these matters were presented to the Supreme Court in the California case, and the Court sustained the Government's contention that the several States had not established, or even claimed, ownership of lands underlying the ocean at the time of the formation of the Union, that such assertions of ownership as may have been made in this area have been comparatively few in number and of relatively recent date, and that the "State-Federal conflict" was before the Court for the first time.

Mention should also be made of the quotations from the Court's opinion in the California case which are set forth in paragraph 1 (c) of H. R. 4999. These statements, which are from different portions of the opinion and are quoted out of context, have apparently been included in an effort to give the impression that the Court contemplated action by the Congress such as that which this bill would provide. This is clearly not what was intended by the Court. The first of the phrases referred to, wherein the words “congressional area of national power" are used, relates to question as to whether the Congress had limited the power of the Attorney General to institute the California proceeding, the Court finding that the Congress had made no such limitation (332 U. S. at 27). The second phrase is a part of the Court's observation that it could not assume. that Congress would execute its powers "in such way as to bring about injustices to States" and relates to congressional action suggested by counsel for the Government whereby equity may be done to the States and individuals who have made investments in the area held to be that of the United States, under a mistaken assumption as to the title to the lands involved (332 U. S. at 40). The equitable resolution of the problem of these investments is an entirely different thing from an outright gift of the entire area. Indeed, there is now before the Congress a measure, S. 2165, which embodies the recommendations of the executive branch for the solution of this problem in respect to both past and future oil and gas operations in lands underlying the ocean.

For the reasons above-mentioned, the Department of Justice is opposed to the enactment of either the bill or the joint resolution.

The Director of the Bureau of the Budget has advised this Department that there is no objection to the presentation of this report, since the enactment of the proposed legislation would not be in accord with the program of the President.

Sincerely yours,

PEYTON FORD,

The Assistant to the Attorney General,

STATEMENT OF Gov. LESTER C. HUNT, OF WYOMING

My name is Lester C. Hunt, Governor of Wyoming. I have been an elected State official for the last 14 years and am now serving my sixth year as Governor.

I request the privilege of filing this statement with the committee considering the submerged-lands bill, for only recently the Supreme Court of the United States, by decision, deprived my State of a valuable section of oil land, their decision being based on a Federal policy-certainly not on existing law; and so I appreciate the opportunity of presenting this statement and my views on this almost identical situation.

I favor the passage of S. 1988 and oppose the so-called administration and Cabinet bills for the following reasons:

The decision of the Supreme Court in the case of The United States v. California, generally referred to as the Tidelands decision, should be corrected by the enactment of S. 1988.

This legislation will preserve the sovereignty of the States; it will also preserve our dual Federal and State sovereignty system of government which there has been a tendency to weaken in recent years.

The States owning tidelands have, since their entry into the Union as sovereign States, enjoyed the propriety ownership and rights of their tidelands. Since 1776, ownership and control of the tidelands and submerged lands by the States has had recognition both by the Federal and by the State governments as to the title of the States in and to these lands. To disrupt these long-established

titles in the States and those who have acquired under and through the States would be to open the gates to great confusion.

The States have been prudent in their management of these lands throughout the years. The States have made great advancement in the sound conservation of their natural resources, especially their oil, and the States are best equipped to take care of the natural resources that lie within their borders.

I share the fear of our people that the establishment of the Supreme Court's doctrine in the Tidelands case to the effect that the Federal Government has paramount rights and dominion over the California tidelands. The opinion is broad enough to include the tidelands and submerged lands of all the States. This paramount right and the dominion superior to the rights of the mere title owner to these lands would be the establishment of a dangerous doctrine in America. If this doctrine could be established as to oil because of its part in national defense and the Federal Government's utilization thereof in its conduct of international affairs, this would be the entering wedge toward the nationalization of other vital natural resources. Every State in the Union has some vital natural resource that the National Government could use for national defense and its conduct of international affairs.

Legalization and effectuation of the principles announced in the California case would result in financial and economic losses to the States, both past and prospective, if the Federal Government takes over the full dominion of the lands, its resources, and the revenues therefrom.

The doctrine announced in the California case is so broad that it is susceptible to the theory's being applied to lands under lakes, bays, rivers, and other navigable inland waters.

The enactment of S. 1988 is necessary to preserve settled principles of real property law in the United States.

Unless S. 1988 is enacted by the Congress, the California decision and the socalled administration bills now pending in the Congress would permit and immediately result in further centralization of power in the Federal Government. It would be the entering wedge for the National Government to engage in the oil business through bureaus and commissions.

From my experience in Wyoming we feel that in view of the recent acquisition of the Federal Government of lands possibly productive of oil and the fact that the Federal Government now owns millions of acres of land in Wyoming and other Western States that S. 1988 and other complementary legislation should be enacted not only to prevent the Government from acquiring more lands and natural resources but also to vest them in the States wherein such lands and natural resources are situated.

FEBRUARY 21, 1948.

LESTER C. HUNT, Governor of Wyoming.

DEPARTMENT OF THE INTERIOR,

OFFICE OF THE SECRETARY,
Washington, March 2, 1948.

Hon. EARL C. MICHENER,

Chairman, Committee on the Judiciary.

House of Representatives.

MY DEAR MR. MICHENER: We have received your letter of February 9 requesting a report on 15 bills and 8 joint resolutions, of which H. R. 4999 and House Joint Resolution 51 are typical.

Each of these bills and joint resolutions purports to confirm in and release and relinquish to the several States all right, title, and interest to all lands beneath navigable waters within the boundaries of the respective States and the natural resources within such lands. The measures are applicable not only to lands and resources underlying bays, harbors, and other navigable inland waters, but also to lands and resources beneath the ocean.

With respect to lands and resources beneath bays, harbors, and other navigable inland waters, the Federal Government has not, and does not now, assert any claim. In order to provide more certain assurances in this respect, the Department of Justice, the National Military Establishment, and the Department of the Interior jointly drafted a bill relative to this subject. The bill has been introduced in the House as H. R. 5529. Under the provisions of H. R. 5529 the United States would quitclaim to the States any interest or title which it may have in and to lands and resources beneath bays, harbors, and other

JAN 251949