SEC. 119. Leases under this article shall be for terms of 20 years with the preferential right in the lessee to renew the lease for successive periods of 10 years upon such reasonable terms and conditions as may be prescribed by the commission.

SEC. 120. The commission shall prescribe such additional terms, covenants, and conditions, consistent with the provisions of this act, of permits and leases issued under this article as will in its opinion effectually protect the interests of the State in the mineral deposits reserved to it by this act.

ARTICLE 8. MISCELLANEOUS PROVISIONS

SEC. 130. All moneys and remittances received by the State pursuant to this act shall be deposited in the State treasury to the credit of the "State Lands Act fund," which fund is hereby created. There shall also be transferred to and deposited in said fund the balance of moneys in any appropriation or special fund in the State treasury now remaining or made available by law for the support of the division of State lands in the department of finance or for the administration of the statutes and laws the administration of which is transferred to the commission by this act. The moneys in said fund are hereby appropriated as follows:

(a) There shall first be transferred to the "school fund" all rents, bonuses, royalties, and profits, accruing from the use of State school land.

(b) The moneys transferred to the State Lands Act fund from existing appropriations and special funds, as provided by this section, shall be expended by the commission only in accordance with law for the support of the division of State lands in the department of finance and for carrying on the works or performing the duties for which the appropriations were made or the special funds created.

(c) The remainder of the moneys shall be used by the commission, with the approval of the director of finance and the consent of the Governor, to carry out the provisions of this act, including the acquisition of real property or interests therein, the purchase of materials and supplies, and the conducting of operations by the State as provided herein, the payment by the State of such sums as may be provided pursuant to agreements or contracts authorized herein, the payment of the necessary expenses of the commission, and the payment of refunds.

(d) Any remaining balance shall be transferred to the general fund on order of the commission, except 30 percent thereof, which shall be transferred to the "State park maintenance and acquisition fund," which fund is hereby created, to be expended in the manner hereafter provided by law.

SEC. 131. The following acts, together with all amendments thereof, are hereby repealed, but such repeal shall not affect any existing vested rights thereunder or any permit, lease, or agreement entered into under any provision thereof, nor shall it affect the rights or duties of any purchaser of State lands sold prior to the effective date of this act.

"An act to reserve all minerals in State lands; to provide for examination, classification, and report on the mineral and other character of State lands; to provide for the granting of permits and leases to prospect for and take any such minerals; to provide for the rents and royalties to be paid, and granting certain preference rights; to provide for the making of rules, regulations, and contracts necessary to carry out the purposes of this act; and repealing acts or parts of acts in conflict herewith; providing for an appropriation to defray the cost of administering this act," approved May 25, 1921 (chapter 303, Statutes of 1931).

"An act to authorize the leasing of certain lands belonging to the State of California containing oil, gas, or other hydrocarbon deposits and providing for the disposition of the moneys received under said leases, and creating a commission to carry out the provisions of this act," approved May 25, 1923 (chapter 227, Statutes of 1923).

SEC. 132. This act shall not be construed as repealing or otherwise affecting an act entitled "An act relating to lakes and streams, the waters of which contain minerals in commercial quantities; withdrawing State lands within the meander lines thereof from sale; prescribing conditions for taking such minerals from said waters and lands, and providing for the leasing of lands uncovered by the recession of the waters of such lakes and streams," approved April 27, 1911 (chapter 612, Statutes of 1911).

SEC. 133. If any clause, sentence, paragraph, or part of this act shall, for any reason, be adjudged by any court of competent jurisdiction to be invalid, such judgment shall not affect, impair, or invalidate the remainder of this act, but shall be confined in its operation to the clause, sentence, paragraph, or part thereof directly involved in the controversy in which such judgment shall have been rendered.

SEC. 134. All acts or parts of acts in conflict with the provisions of this act are hereby repealed.

Prior to 1921, the State of California had no legislation to govern the extraction of oil and gas from the tidelands and submerged lands. In 1920 the Federal Government passed a mineral leasing act which authorized, among other features, the issuance of prospecting permits. Upon discovery upon a prospecting permit, the permittee was entitled to a lease of limited acreage at a royalty of 5 percent of the production or value thereof.

The State of California in 1921 practically duplicated the Federal effort with added provisions to govern the extraction of oil and gas from tidelands and submerged lands. The State mineral leasing act authorized the issuance of prospecting permits covering tidelands and submerged lands for a total period of 4 years with provision for the issuance of a lease upon discovery to an area not exceeding 160 acres at a royalty of 5 percent of the production or value thereof.

In 1923 the legislature amended the act of 1921 to authorize the issuance of leases at Summerland, Calif., at a maximum royalty of 1212 percent, and a number of leases were executed for areas at Summerland, but, as above mentioned, the gravity of the oil produced was low and the production thereof was negligible. At this time there are only two leases remaining at Summerland.

With the exception of the Summerland field, there were no known oil fields along the California coast until 1928 when a discovery was made at Elwood, Calif. The surveyor general, then in charge of the public lands of the State, was fairly showered with applications for prospecting permits over tidelands and submerged lands at El Capitan, Elwood, Goleta, Summerland, Rincon, Huntington Beach, and other areas. He refused to issue the prospecting permits which resulted in the institution of a number of cases in the California courts.

In Boone v. Kingsbury, the principal case, the court found the statute upon which the surveyor general based his reason for refusal to issue prospecting permits to be unconstitutional. The surveyor general was therefore forced to issue more than 100 prospecting permits covering areas along the coast. Since 1929 all prospecting permits have been canceled or have been converted into the few leases at El Capitan, Elwood, Coal Oil Point, and Rincon, all in the vicinity of Santa Barbara. Because of the lack of proper legislation in 1928 to protect these mineral deposits, the suveyor general was forced to issue these leases at a royalty of 5 percent to the State. The lessees, for the most part, did not drill but sold their leases either at a profit or with a reservation to operators capable of carrying on expensive prospecting from wharves and piers constructed in the Pacific Ocean. In 1929 the office of the surveyor general was abolished at the request of General Kingsbury, the surveyor general, and the jurisdiction was transferred to the department of finance. General Kingsbury was appointed chief of the division of State lands in the department of finance.

From 1931 to the special session in 1938, various attempts were made by State officials to obtain legislation to authorize the offsetting of littoral land wells at Huntington Beach.

An amendment to section 675 of the political code which would have authorized the director of finance to offset these wells passed the legislature and received the approval of the Governor but was nullified by a referendum.

At least two initiative measures were placed before the people during this period, one of which would have permitted tideland drilling and the other drilling from the upland by means of slanted wells.

In 1935 the legislature passed a measure to authorize drilling by means of slanted wells at Huntington Beach but this measure failed to receive the approval of the Governor.

In 1937 two bills, one by Gov. Culbert L. Olson and the other by Assemblyman O'Donnell, received the approval of the Governor, but these bills were held up by referendum.

There were many other attempts to obtain legislation, but it would seem from the foregoing that no particular group of people can be accused of preventing any particular type of legislation since initiatives have been presented to the people to authorize drilling on both the tidelands and the uplands.

It was not until March of 1938 that the legislature passed and the Governor approved a comprehensive public lands act known as the State Land Act of 1938. Perhaps the State may be accused of failing to provide appropriate legislation for the protection of oil and gas in the tidelands and submerged lands, and this has been admitted by many members of the legislature, nevertheless the State now has an act to protect its interests in public lands and tidelands and submerged lands.

As heretofore alluded to, the State Land Act of 1938 created a commission known as the State lands commission consisting of two constitutional officers, the Lieutenant Governor of the State, and the State controller, and the director of finance representing another constitutional officer, the Governor.

Unbeknown to the State legislature, the Federal Government had, prior to 1938, discontinued the issuance of prospecting permits. The State Land Act of 1938 likewise prohibits the issuance of prospecting permits for lands thought to contain oil and gas. No means is provided in the act for any person to make application for an oil and gas lease. Full authority is vested in the commission to issue leases and easements for the extraction of oil and gas only to the highest bidder and then only when the commission has determined that the particular area of tidelands and submerged lands are then being, or may be, drained by means of straight wells drilled upon the adjacent littoral lands or uplands. In consequence, it is fair to assume that there will be no further exploitation for oil and gas of the tidelands and submerged lands unless it is necessary to protect the State's reserves against drainage.

At this point it should be observed that the Federal Government, were it the owner of these lands, could do no more. In fact, it has done much less with the Naval Reserves in the vicinity of Elk Hills and other localities in California.

The United Landowners Association has furnished members of Congress information relative to the filing by citizens of California, Utah, and other States, of applications for prospecting permits or leases on tidelands and submerged lands of California.

Upon at least two occasions the Secretary of the Interior has refused to recognize such applications and has advised the applicants that the Federal Government has no ownership in the tidelands and submerged lands of California. One cannot help but wonder at the motive which has prompted these people to file such applications and to urge the Navy Department and other departments of the Government to take the steps in 1938 and again in 1939 to obtain possession of the oil and gas along the California coast line.

A reference to pamphlet entitled "Hearing before the Committee of the Judiciary of the House of Representatives-75th Congress on S. J. Resolution 208" will disclose certain statements made by Hon. Thomas L. Blanton, a former Member of Congress and representing certain citizens of California. In Mr. Blanton's testimony before this committee he alludes to his employment by citizens of California for the purpose of obtaining the adoption of S. J. Resolution 208. On page 25 of this pamphlet Mr. Blanton stated, in part :

I am employed by California and am looking into this matter for Californians, and I will say mostly in behalf of the people of the United States rather than California. The people who have employed me could benefit in a very minor

Again on page 32, Mr. Blanton is quoted as follows:

I will finish now. I wish you would protect them and fix it so their applications up to the time of the filing of the Nye resolution shall be considered by the Secretary of the Interior and given certain rights, because he has refused to consider them public lands.

It seems apparent that Mr. Blanton was probably representing these applicants who have made filings with the Federal Government to obtain permits and leases along the California coast. If this is true, it would merely shift the stewardship from the State of California to the Federal Government with a history for conservation which is not at all encouraging.

It is not the purpose here to discuss the decisions of the courts respecting the ownership of tidelands and submerged lands. However, it is the contention of the Navy Department that the Supreme Court has never ruled upon the title to these lands.

In closing, reference can be made to United States of America v. State of Utah, 283 U. S. 64-91, 75 L. Ed. 844, 857, decided in 1931. In this case the court found that the State of Utah was the owner of the beds of navigable rivers within its exterior boundaries.

There is, of course, a host of decisions in the Supreme Court of the United States with reference to the ownership of the tidelands and submerged lands. However, the Navy Department contends that these cases are not conclusive upon the point.

Any doubt remaining should be firmly settled by United States v. Utah, since there is a complete analogy between the beds of navigable rivers and tidelands and submerged lands, the argument in this connection being that the public lands in an area admitted to statehood belong to the Federal Government, whereas sovereign lands such as beds of navigable rivers, lakes, etc., and tidelands and sub

merged lands are held in trust for the State, and, when admitted, it becomes the owner, subject only to an easement for navigation and commerce reserved by the Federal Government.

I make note of the fact that we had complete legislation on the subject through the years and that California has not been negligent in recouping her share of royalties from our own tidelands, so that it is not necessary for the Federal Government, under the guise of protecting California, to come and protect us, because we have protected ourselves.

I am going to introduce at this point a table that is sent me from the finance department containing a complete statement from the year 1922 to and inclusive of 1938 which shows all of the oil produced on the tidelands and the total amount of royalty received by the State, which today exceeds some $8,000,000.

Mr. WALTER. Received.

(The table referred to is as follows:)