printed report) are pure obiter dictum. The Federal Government was not a party to any of the cases. The controversies were between individuals. The proposition was not necessary to a decision of the controversy involved in each case. As pointed out by Judge Blanton at the former hearings, dictum is not given weight and decides nothing against parties who were not parties to the lawsuit. Any other rule would mean that outsiders would not be permitted their day in court. Judicial action after all sides of the controversy are presented is the method set up by our jurisprudence. In this way snap judgments and loose or ill founded doctrines that creep into printed decisions are given little or no weight when an actual controversy is presented to the court. In no case has a court announced that title to these lands is not in the Federal Government where it was a party.

In suits brought by the State of California against operators to enjoin drainage and to recover in accounting for such drainage, counsel for the major companies have contended that the State is not entitled to maintain such an action because title to these lands is vested in the Federal Government. This is the position taken in the superior court of Los Angeles County in recent injunction cases. A similar contention was made in the cases pending in Orange County. The later cases were compromised.

Title-insurance companies have refused for years to insure title to leases producing from submerged lands. The bar of California has doubted the proposition for a generation.

The State of California has been struggling with the proposition for years (see printed report of the State's special senate committee acting pursuant to senate resolution adopted April 22, 1935). The senate committee, headed by Hon. Culber L. Olson, present Governor, made an elaborate report of their investigation, which dealt with fields including Huntington Beach. It shows that millions of barrels of oil has been withdrawn from these lands and that untold millions more are to be withdrawn in the future. The State has thus far realized little or nothing in the way of royalties. The legislature has been unable to pass an act permitting the leasing of these lands. Some effort has been made to settle claims, with the result the State has realized a mere pittance. The operators have banded themselves into a strong organization and have thwarted every attempt on the part of the legislature to pass adequate legislation. A bill championed by Senator Olson was repealed by referendum of the people.

It may be added that this organization financed the campaign against this law which authorized the finance commissioner of the State to enter into leases with operators. The interim investigating committee of the legislature, which investigated campaign contributions, exposed the fact that large oil interests paid for the decorations of the landscape with bill boards urging that the beaches be protected for the use of the youth of the land by protecting them against unsightly oil derricks, also pollution resulting from operations of oil wells. The beach frontage of existing oil fields is only 7 miles. California's coast line is 1,267 miles long. Scientists tell us that the major cause of pollution is the result of seepage through fissures or faults in structures overlying oil domes. Oil producers are not interested in pouring oil into the water-they are interested in running it into the pipe line. Thus the ridiculousness of such arguments is demonstrated.

But the parent-teacher organizations and allied organizations passed resolutions condemning the law and fought in the campaign against the leasing law. Repeal of the law rendered the State powerless to protect any title that it may have, and permitted these operators to continue to help themselves. The same unsightly derricks adorn the shore line. Over 100,000 barrels of oil per day are being drained from these lands at the present time, and hundreds of new wells are to be drilled. As long as these operators can keep this confusion up this state of affairs will continue, and the citizens will receive no benefit either at the hands of the State or Federal Government.

It was suggested at the former hearings before this committee that the resolution would jeopardize Texas' title to its shore line. Any resolution that this committee approved should leave Texas out of consideration, because Texas acquired title to its public lands as a result of the revolution against Mexico. When it attained statehood it was upon the condition that it retain title to all of its public lands. Thus Texas is the only State where this condition prevails. The Federal Government does not own a foot of public lands in Texas.

The Original Thirteen Colonies are in a similar position. Title to all lands passed from the Crown by charter, and subsequently as a result of the Rev

olutionary War. When the Constitution was approved, no powers were ceded to the Federal Government, except those specifically contained in the instrument itself. The Supreme Court has repeatedly affirmed this view. Thus California is in an altogether different position from Texas or the Original Thirteen Colonies. Mexico ceded the lands embraced within the boundaries of California to the Federal Government. Title to these lands are expressly protected by the organic act under which California attained statehood.

Since this resolution has been brought to the attention of this committee, these operators have adopted the same tactics that they used in the defeat of the Olson bill. They are now trying to thwart action by the Federal Government. In addition to the school block they have enlisted the various port authorities of the State and elsewhere. Many of whom have little or no interest at stake. The newspapers, who are influenced by these folks, refer to the Nye resolution as "Tideland grab." This assumes that the title to these lands is in the State, and the Federal Government proposes to take something that already belongs to the State. It also assumes that the passage of the resolution means that California will lose its chance to litigate all legal question as to title. Nothing can be further from the truth.

The resolution authorizes (and directs) the Attorney General to institute suit to determine the validity of the Federal Government's title. Thus the title which the Federal Government obtained under the Treaty of Guadalope-Hidalgo can be determined by the court. On the face of the treaty Mexico ceded title, which was protected by the Enabling Act when California came into the Union. If the State of California has title, it will have ample opportunity to present its case to the court. The confusion that has baffled the legal fraternity and business interests for a generation can be brought to an end.

The resolution is a blessing in disguise. Once this important conflict is settled, investors can then proceed with assurance that they will be protected with valid title. At present this is impossible. The taxing authority can deal with property which has evaded its just share of the burden of government. It will open up vast properties to development by honest capital. Until now selfish interests have promoted the confusion and caused these lands to appear as "no man's land" so they could help themselves. The Standard Oil Co., after running millions of barrels of oil at Huntington Beach settled with the State for a mere pittance. Similarly other producers have done likewise. (See report of the senate investigating committee.) No one knows this better than Governor Olson, who fought hard for 2 years to protect these lands by State legislation and was defeated by these operators.

The Los Angeles Examiner (February 13, 1939) carries an interview from the Governor, from which I quote:

"Governor Olson advised the State's congressional delegation today and included in this communication a warning that unless Federal or State Governments take some action toward causing drilling of offset drainage wells on littoral lands of the undersea pools by privately owned wells tapping the deposits from adjacent shores, all the oil will be gone within a few years." And, further, Governor Olson replied to the delegation:

"He did not consider the threat of the Nye resolution of sufficient importance to warrant his appearance when the United States Senate committee takes up the measure. It is really a question of law, whether it is argued before the committee or before the courts. I will suggest to the attorney general of California that a brief be filed by his office in support of California's legal rights which the resolution will challenge and that I cannot see any serious consequences in this resolution, if it is adopted, it still will be up to the United States Supreme Court to determine whether these mineral lands belong to the Federal Government or to the State. Public officials have overlooked the practical side of the situation. It will be too late for either the Federal Government or State to benefit from these resources unless private drainage is offset by drilling wells on tide and submerged lands for the benefit of the public."

He reiterated his pledge that it will be the purpose of his administration to see that such offset wells are drilled, arguing that private wells on littoral ground are draining these coastal pools to the extent that all oil will be gone very soon, and pointed out further:

"I cannot see how these deposits can be reserved for use of national defense or for the benefit of future generations unless the privately owned wells on littoral lands also are acquired for such reserve purposes."

While the Governor does not concede that the Federal Government has title to these lands, he appreciates the importance of a prompt settlement of the ques

tion, and that California will have ample opportunity to assert its title in the courts, if the resolution is adopted. Thus the resolution is a blessing in disguise in more ways than one. When this conflict is settled, these lands can be developed in an orderly way. If title belongs to the State, an adequate leasing act can be passed by the legislature, which will enable the State to profit thereby. As matters stand there is so much doubt, and so much political confusion between factions in the oil industry, with all manner of injected conflict, such as protecting of the beaches, championed by the parent-teachers associations, harbor commissions, and similar organizations, all of whom are backed financially by selfish interests, who now oppose this resolution.

It was contended before this committee at hearings held February 23-25, 1938, that the resolution will defeat the title of those who have expended vast sums in filling in land near the port, particularly at Wilmington (Los Angeles Harbor) and Long Beach. Nothing can be further from the truth. If you will examine the leases made by the Los Angeles and Long Beach port authorities, permitted by act of the legislature, you will find that lessees are granted easements to use specific tracts (usually for 35 years) for specific purposes, viz, transportation, erection of piers for loading ships, and so on. An examination of leases to Banning Co. and Union Pacific Railway (who have scores of producing wells thereon), demonstrates that an easement only is granted. Under the terms of these leases fills and changes of profile of the land must be approved by the port authorities as well as the War Department. Other examples can be furnished which demonstrate this. It is safe to say that no title to the fee of such lands was ever granted. The constitution of the State of California prohibits it. The California Legislature has authorized the municipality (Los Angeles and Long Beach) to lease for various public purposes only. Thus the controversy is strictly one between the State of California and the Federal Government. These lessees are asserting title to oil deposits in open defiance of the State constitution.

Current newspaper reports exaggerate the statement that the California delegation was asleep when the House Judiciary Committee took for consideration the resolution, February 23, 24, and 25, 1938. The chairman of the committeesent out notices to the State authorities and Representatives in Congress, urging all to attend the hearings. In fact Representative Tolan, of Oakland, is a member of this committee and, of course, knew of the hearings and attended them. Like Governor Olson, everyone took the position that California's right could be protected in the courts. As a matter of fact they welcomed court action. But now the selfish interests, the very folks who caused the confusion in the past, for their own selfish advantage, use this argument to stir the wrath of the people against this committee. They are practicing the same sort of deceit that has enabled them to profit handsomely. They tell the public that California is to be ruined and this is merely an attempt on the part of the Federal Government to "grab the tide lands" and divert the vast benefits which the State is entitled to into the coffers of the Federal Treasury. They omit to mention that the State has realized practically nothing thus farthat the State legislature has been unable to pass a valid leasing act, which would permit the leasing of these lands, so the State could participate in the profits. They tell the good women of the State that the beaches will be ruined for the kiddies, and swarms of resolutions fill the air condemning the resolution and any action this committee may take. Never was there a more brazen steal perpetrated on an innocent people than is being perpetrated as a result of this confusion.

I need not mention the fact that all the while, millions of barrels of oil are being withdrawn from coast reserves that belong to the public (State or Federal). The Senate committee's report (supra) indicates that as much as three-fourths of the oil structure in coast-line fields lie under the ocean. This is true of Huntington Beach, as well as Wilmington (Los Angeles Harbor). Wells on littoral land are permitted to drain the oil from under this vast reserve. The State and Federal Governments sit idly by and watch this. It makes no difference which sovereignty-State or Federal-gets control, all of the citizens will profit. If the Federal Government establishes its title, all of the citizens will profit, particularly the California citizen, in returns from public lands, as required by law, also adequate appropriations for harbor facilities. The Federal Government has been most generous at Wilmington (the Los Angeles and Long Beach Harbors) the greatest artificial harbors on earth. The California citizen owes the Federal Government a debt of gratitude it can never repay. Congress alone can appropriate funds by which to

construct and maintain harbors. But notwithstanding this, some of the harbor commissioners are trying to defeat this resolution. They hope to distribute funds derived from leasing themselves. If the State of California is found by the Court to be owner, then the citizen will reap the benefit of reduced taxation and new incidence of taxation thus reducing the present onerous burden.

The magnitude and enormity of the drainage that these pirates are permitted to appropriate is for the petroleum engineer to estimate. Some intimation of it is contained in the State senate committee report (supra). Since that document was published, the great Wilmington field has been discovered, with enormous potentials per well, two-thirds of the oil structure, according to geologists, lies under the sea. Other fields, equally prolific, could be mentioned. Thus the importance of settling the confusion is demonstrated.

It has been suggested that the Attorney General already has the power to institute legal proceedings in this kind of case. Is it fair for the Congress to pass the buck in this regard? I fell sure that any attorney general would welcome the wholehearted backing of the Congress, which would be demonstrated by the passage of this resolution. Then again, there is the matter of expense. Without such a resolution he would be subjected to the criticism of selfish interests, who already profited by the confusion-they would charge waste and the folly of such litigation. Is it fair to turn away and permit the Department of Justice to be subjected to false propaganda? It is the duty of this committee to demonstrate by its action on the resolution that the Congress stands back of the Attorney General and that it is willing that sufficient funds be expended to see that the citizen's rights are protected.

Then again I could mention the importance of the passage of the resolution, so the vast oil reserves be conservatively explored and appropriate parcels be set aside for adequate national defense. The Navy Department realizes the importance of such reserves. They came forward when the matter was considered at the last Congress and produced figures demonstrating the importance of such reserves in time of war.

Bluntly stated, this is a controversy between the Federal Government, on the one hand, and the State of California, on the other. The importance of the settlement of a doubtful question that has baffled the citizens of California for a generatlon cannot be overemphasized. Vast profits that have resulted from the confusion to undeserving should be prevented. Governor Olson, more than any other California citizen, realizes the importance of this. The citizen is not only interested in obtaining some small portion of the profits, whether title is established in the State or Federal Government, but he is also interested in fair play and the hope that legitimate capital, instead of that of pirates, be permitted to develop these vast resources and reap a profit. When the Attorney General is authorized to institute suit, the courts can say who is the rightful owner. Injustices to those who have tried to be abiding citizens and expended money in the development of littoral lands can be protected. My clients who have applied for permits under the leasing act, will be given adequate protection. The Navy's ambition to establish oil reserves for national defense can be given consideration. Why not let the courts straighten out the confusion? This committee should keep in mind that this is a controversy between the State and the Federal Governments. There is no need to become bewildered by propaganda. The injection of bogeymen has no place in arriving at a sane solution of settling the most bewildering problem the California citizenship has had to deal with in the last generation.

The Congress should uphold the hands of the Attorney General in the passage of this resolution and let the matter be settled in an orderly way by the Court, the tribunal set up by the Constitution. Once the resolution is passed, the courts can, in a few months, settle the question. In other words, let the courts do the job, not let scandalmongers and selfish interests continue to rob the public of its just heritage.

ROBT. B. KEENAN.

Attorney for various applicants for permits under the public-land laws. On behalf of myself and other citizens of California represented by me, I heartily endorse the presentation of facts and argument set out in the foregoing brief, and adopt the same as my brief in support of the resolutions. ROBERT E. LEE JORDAN.

I understand that the Navy Department wants 5 minutes in rebuttal.

141082-39-ser. 2- -18

STATEMENT OF CAPT. H. A. STUART, UNITED STATES NAVY, DIRECTOR OF NAVAL PETROLEUM RESERVES

Captain STUART. Mr. Chairman, the bill as written by Mr. Hobbs has been endorsed by the Navy Department, the Department of the Interior and the Department of Justice in preference to the O'Connor bill; and I would also like to call your attention to the fact that this Hobbs Resolution is a resolution establishing a naval reserve and not a public-lands resolution. Its administration would be under the Secretary of the Navy, and according to the act of June 30, 1938, and not under the act of February 25, 1920, the so-called leasing bill. So that Mr. Trammell's question would not come into the picture. Whatever rights they have under the bill as proposed by Judge Hobbs would apply in conjunction with the administration under the act of June 30, 1938.

Then there is the question of drainage. We feel that, as Mr. Michener said, you are not especially interested in drainage questions. because you are interested in the legal questions. We feel that drainage is exaggerated, very much exaggerated, but if it is declared to be United States property, the problem becomes a Government one, and we will have to solve it, and we feel that we can.

There is bound to be drainage. If there is a well in an oil pool, of course, there is drainage, but Mr. Warren an Mr. Johnson also spoke of drilling off-set wells to counteract drainage. I do not think that Mr. Johnson means "counteract," he means to compensate them for the oil that the private interests are getting; and the further out you go, the more you will drain. Everybody knows that. You have got to work out the problem some other way.

I would also like to remind you that the Teapot Dome and the Elks Hills leases were made ostensibly for drainage reasons-not reasons, but excuses, and it took 5 years to overcome those difficulties, and we have the same problem here.

Mr. TOLAN. Mr. Stuart, could I ask you this question: How many acres of reserve oil land has the Navy Department today?

Captain STUART. There are about 30,000 acres in reserve No. 1, about 9,000 acres in reserve No. 2, both in Kern County, Calif., and about 9,000 acres in Teapot Dome. And I think that there are about 35,000 square miles in reserve No. 4, which is inside the Arctic Circle. Mr. TOLAN. Has any estimate been made of the amount of oil that is contained in that acreage?

Captain STUART. Yes, sir; there is Teapot Dome, probably about 17,000,000 barrels there; that is reserve No. 3; and in reserve No. 2, which is in Kern County, Calif., there are probably 47,000,000 barrels in the upper sand, but we do not know what is in the lower sands. In reserve No. 1, which adjoins No. 2, also in Kern County, Calif., there is a moot question as to how many barrels there are. There may be 500,000,000 barrels and there may not be more than 200,000,000. We do not know.

But we had this bill passed last year, this act of June 30, 1938, which gives us authority to go ahead and try to find out how much is in this reserve.

Mr. TOLAN. Captain, in terms of years, how many years do you think that it would take you to exhaust that supply that you now have on hand?