LEASES UPON NAVAL OIL RESERVES.

FRIDAY, DECEMBER 7, 1923.

UNITED STATES SENATE,

COMMITTEE ON PUBLIC LANDS AND SURVEYS, Washington, D. C. The committee met, pursuant to adjournment taken on yesterday, at 10 o'clock a. m., in room 210, Senate Office Building, Hon. Reed Smoot (chairman) presiding.

Present: Senators Smoot (chairman), Lenroot, Ladd, Kendrick, and Walsh of Montana.

The CHAIRMAN. If the committee will come to order, we will proceed with the hearings.

Senator WALSH. Mr. Chairman, I wish you would have the kindness to request the clerk of the records at the White House to appear this afternoon and bring with him any communications on file from either the Secretary of the Navy or the Secretary of the Interior in relation to the naval oil reserves.

Also ask the clerk of the Bureau of Navigation to come.

And also ask Secretary Denby and Assistant Secretary Roosevelt to return this afternoon.

Mr. Garnett was on the stand.

The CHAIRMAN. Mr. Garnett, please do not leave the room. We may call you later.

Senator WALSH. I will call Mr. Hamel.

TESTIMONY OF MR. CHARLES D. HAMEL.

(The witness was duly sworn by the chairman.) Senator WALSH. Give us your name, Mr. Hamel. Mr. HAMEL. Charles D. Hamel.

Senator WALSH. Are you holding some position in the Government service at the present time?

Mr. HAMEL. Yes; I am in the Bureau of Internal Revenue, the Division of Appeals and Reviews.

Senator WALSH. How long have you held that place?

Mr. HAMEL. Since February. I have been in the bureau since April, 1922.

Senator WALSH. Prior to that time, what work were you engaged in?

Mr. HAMEL. For several years prior to that I had been in the Department of Justice, and for several years prior to that in the Interior Department.

Senator WALSH. How long were you with the Department of Justice!

Mr. HAMEL. I went into the Department of Justice in October, 1915.

Senator WALSH. And remained until 1922 ?

Mr. HAMEL. I remained until January 1, 1922; yes, sir.

Senator WALSH. And how long theretofore had you been in the Department of the Interior?

Mr. HAMEL. I went into the Department of the Interior on April 1, 1909.

Senator WALSH. Are you an attorney at law, Mr. Hamel?
Mr. HAMEL. Yes, sir.

Senator WALSH. What place did you hold in the Department of Justice?

Mr. HAMEL. I was special assistant to the Attorney General. Senator WALSH. And what was the particular work with which you were charged?

Mr. HAMEL. I was assisting in the preparation for trial and trial of the so-called withdrawn oil-land cases in California, and I was also assigned to the Wyoming case.

Senator WALSH. What was the character of those cases, generally? Mr. HAMEL. Well, they were cases on the equity side of the court with reference to unpatented oil lands. Most of them-well, all of the suits affected producing lands, the purpose of those suits being to protect the land itself; in certain cases to get injunction, or to get such relief from the court as might be necessary to protect the Government pending the determination of title. In those cases where there were applications for patent the courts took jurisdiction and determined the facts, and in those where there were not applications for patents we merely asked the court for such relief as might protect the land pending proceedings for patent; ancillary proceedings.

Senator WALSH. Who had charge of that litigation in the field? Mr. HAMEL. Well, when I first went to California, the work was still in charge of Mr. C. B. Townsend; that is, I think it was still in his charge, but within a month or two after I went to California, Mr. E. J. Justice took charge. But after his death, in the summer of 1919, Mr. Henry F. Nay took charge. He remained in charge until the spring of 1921, when the entire force was dropped, with the exception of myself, and Mr. Raymond Benjamin, of San Francisco, was placed in charge, and Mr. Benjamin and myself remained on the work until it was entirely cleared up.

Senator WALSH. Well, during that time were you in anywise concerned with any proceedings affecting sections 16 and 36 in naval reserve No. 1?

Mr. HAMEL. Yes, sir.

Senator WALSH. What was the nature of the proceedings?

Mr. HAMEL. There was no proceeding. The only thing we had to do with was with reference to a contemplated proceeding. Some time late in 1920-perhaps in December or November-the chief of the field division of the General Land Office, Mr. Favorite, called my attention to the fact that adverse proceedings had been directed by the Commissioner of the General Land Office with reference to sections 16 and 36, charging that those lands were known mineral lands at the date of the survey.

Senator WALSH. Now, for the information of the committee, tell us what is meant by "adverse proceedings.'

Mr. HAMEL. Well, based on information which comes to the department one way or another, generally by reports of special agents, when the department has reason to believe that there may be merit in the charge, it orders adverse proceedings; it directs the register and receiver of the local office of the district in which the land is located to proceed to take testimony, and it formulates a charge. The claimant to the land receives notice of that charge, and, based on that charge, hearing is held, in which both sides are permitted to have their witnesses. The witnesses are cross-examined and arguments are made before the Land Office, and from the decision of the register and receiver an appeal lies to the Commissioner of the General Land Office and to the Secretary of the Interior.

Senator WALSH. Well, with reference to those two sections, 16 and 36, if they were nonmineral in character at the time the survey had been made, they would have passed to the State of California? Mr. HAMEL. At the time-I would not say at the time the survey was made. The Supreme Court held in the Morrison case that the important date is the date when the survey is approved by the commissioner.

Senator WALSH. That is what I meant, when the commissioner approves the survey?

Mr. HAMEL. Yes, sir.

Senator LENROOT. Did you state, if they were mineral?

Senator WALSH. Nonmineral.

Mr. HAMEL. It is a grant.

Senator WALSH. If they were nonmineral at the time they were approved by the General Land Office, then those two sections would have passed to the State of California?

Mr. HAMEL. Without question.

Senator WALSH. If they were then mineral they would have remained the property of the United States?

Mr. HAMEL. If it could have been established that they were known mineral at the time of the survey, title in the State would not have attached.

Senator WALSH. And so this proceeding that you speak of was for the purpose of determining whether at the time the survey was approved those two sections, or either of them, were known to be mineral in character?

Mr. HAMEL. Yes, sir.

Senator WALSH. And the hearing on that question had been ordered before the local land office?

Mr. HAMEL. Yes, sir.

Senator WALSH. And the notice was given to the parties claiming the land from the State?

Mr. HAMEL. No, sir; that was just the difficulty.

Senator WALSH. Yes?

Mr. HAMEL. Notice had not been served on the parties claiming under the State, for some reason or another; I have been unable to learn why. Mr. Favorite informed me that these proceedings had been ordered some years prior-I have forgotten the date, but several years prior to the time I learned it. And I was somewhat surprised, because we supposed the oil matters had been cleaned up. My attention had not been aroused concerning this contest, because

68161-24-PT 5- -3

most of my time had been devoted to the withdrawn oil cases in this township, and it had not occurred to me that those surveys in this township were so recent as to involve any contention. It was in the same township as the Elk Hills, and those things had been largely disposed of before I went to California.

Senator WALSH. Well, did the hearing before the local land office go on without any participation

Mr. HAMEL (interposing). No, sir; the hearings had not been held. And when Mr. Favorite called my attention to it, I asked him to bring the thing up to me and let me see what was in the files.

Senator WALSH. What did you discover there?

Mr. HAMEL. I discovered that there had been adverse proceedings charging that these were mineral in character, and the files showed the parties had not been served with notice. And I suggested to Mr. Favorite that he get in touch with his superior, the Commissioner of the General Land Office.

Senator WALSH. Let me see if I understand the situation: When was this order made?

Mr. HAMEL. Directing proceedings?

Senator WALSH. Directing proceedings.

Mr. HAMEL. Well, I should say it was as early as 1914, or perhaps

1915.

Senator WALSH. Evidently some special agent had inquired into the subject and had reported to the General Land Office that those sections were mineral in character?

Mr. HAMEL. Yes; I think so.

Senator WALSH. And upon the showing and the representation thus made by the special agent, the General Land Office had directed hearing on the matter?

it?

Mr. HAMEL. Yes, sir.

Senator WALSH. And there the matter hung fire, as I understand

Mr. HAMEL. Yes, sir.

Senator WALSH. Until your attention was directed to it some five or six years later, in 1920?

Mr. HAMEL. Yes, sir.

Senator WALSH. Did you ever learn how it came about that the proceedings were thus suspended?

Mr. HAMEL. No, sir; except this: I was advised that this file-the field-service file out there the field service of the General Land Office this was an open case, but that it had in some way gotten into the closed files, and had been serenely resting there for years. Senator WALSH. The file had mysteriously disappeared some way or other?

Senator WALSH. How did you come to discover it, Mr. Hamel?

Mr. HAMEL. Mr. Favorite advised me that he had found this in his

closed files; found this jacket directing this proceeding.

Senator WALSH. Where was Mr. Favorite then?

Mr. HAMEL. He was the field agent in charge of the field service of te General Land Office in San Francisco.

Senator WALSH. In San Francisco?

Mr. HAMEL. Yes; I was with the Department of Justice. had offices in the same place.

We

Senator WALSH. I understand. But the file was in the field

service?

Mr. HAMEL. The field service file.

Senator WALSH. In San Francisco?

Mr. HAMEL. Yes, sir.

Senator WALSH. Not the General Land Office here?

Mr. HAMEL. Not the file I knew of. I assume they had copies of everything here that was there.

Senator WALSH. That is, you assumed that this file Favorite had was a copy of the file here in the General Land Office?

Mr. HAMEL. Yes, sir.

Senator WALSH. And he had found the file in his closed files, as he told you?

Mr. HAMEL. Yes, sir.

Senator WALSH. Is that office an extensive one?

Mr. HAMEL. The field service office?

Senator WALSH. Yes; are the files very extensive?

Mr. HAMEL. Yes; they are very voluminous, and they were particularly so during the years from 1912 and 1913 up to 1920, during the period of this very active oil work in California, they were very; very voluminous. There were 18 or 20 men in that division all the time. Senator WALSH. Well, this file, then, with the recommendation of the field division and the order directing the hearing to be had, came into you hands-what was thereafter done about it?

Mr. HAMEL. So far as our office was concerned, Mr. May and I went over the case; I discussed the matter with him and went over the facts. We got as many of the facts together as we could in order that, if necessary, we might make proper recommendation as to what action should be taken toward protecting the interests of the Government. We knew that at that time the land was in the possession of the Standard Oil Co., and very large quantities of oil and gas had been produced and was being produced at that time. Senator WALSH. From which section?

Mr. HAMEL. From section 36. It was particularly important from our point of view because of the fact that the Supreme Court had at that time decided the Elk Hills case and had decided that the Government had title to sections 25 and 35-25 to the north and 35 to the west of this. So it was necessary to protect the drainage, and we wanted to do that.

Senator WALSH. Notwithstanding the diversion, Mr. Hamel, I want to inquire of you a little about that Elk Hills suit, and we will come back then directly to the proceedings with reference to section 36. Just what territory was involved in the Elk Hills suit?

Mr. HAMEL. Well, all the land in the Elk Hills suits were the oddnumbered sections--all odd-numbered sections in township 20, range 33; approximately 6,000 acres.

Senator WALSH. Thirty-three?

Mr. HAMEL. Yes, sir.

Senator WALSH. And that embraced sections 35 and 25?

Mr. HAMEL. Yes, sir.

Senator WALSH. And if those tracts were nonmineral at the time the survey was approved, they would have belonged to whom?