Submerged Lands

gas within the area of submerged coastal land covered by the State lease, or any other right respecting such land.

(c) The remittance will be deposited in a special account within the Treasury of the United States under 31 United States Code, 1946 edition, section 725r, subject to the control of the Secretary of the Interior, the proceeds to be expended in such manner as may hereafter be directed by an act of Congress or, in the absence of such direction, as the Secretary of the Interior may deem to be proper, which may include a refund of the money for reasons other than those hereinafter set forth.

(d) In the event that all or any part of the area covered by the State lease should later be determined to be above the ordinary low-water mark or within navigable inland waters, any sum tendered with respect to such area and held under paragraph (c) above will be refunded, either entirely or proportionately, as such determination may make appropriate, upon the request of the person who tendered such sum.

(e) If the United States should fail to provide within a period of 2 years from December 11, 1950, for the granting to the person making such a tender of the right to conduct oil and gas operations on the land covered by the State lease, under provisions substantially equivalent to those of the State lease, the sum so tendered and held under paragraph (c) above will be refunded upon the request of the person who tendered it, unless (1) such person shall have accepted a grant from the United States of the right to conduct oil and gas operations on the land under provisions different from those of the State lease, or (2) such person shall have failed to tender to the Secretary of the Interior, during the 2-year period, a further payment required under the provisions of the State lease.

(f) If, at the time for the making of a refund to any person under the preceding paragraphs of this part, the United States should have a claim against such person, the right to offset the amount of such claim against the amount otherwise scheduled for refund may be asserted.

JANUARY 26, 1951.

OSCAR L. CHAPMAN, Secretary of the Interior.

In the Supreme Court of the United States, October Term, 1950. United States of America, Plaintiff v. State of California. No. 11, Original

STIPULATION

Whereas on July 26, 1947, the parties to this cause, through their respective counsel, entered into a stipulation which provided for the continuation of all operations within or upon tide and submerged lands lying along the coast of California, and in which the State of California agreed to segregate and hold in a special fund all rentals, royalties and other payments received from such operations subsequent to June 23, 1947, for ultimate distribution pursuant to agreement of the parties or final judicial order or decree; and

Whereas on July 28, 1948, pursuant to the provisions of paragraph numbered 9 of said stipulation, the parties thereto again entered into a stipulation whereby the stipulation of July 26, 1947, was extended and continued in effect until the expiration of sixty days subsequent to July 31, 1949; and

Whereas on August 2, 1949, pursuant to the provisions of paragraph numbered 2 of the said stipulation of July 28, 1948, the parties thereto again entered into a sipulation whereby the stipulation of July 26, 1947, as extended by the stipulation of July 28, 1948, was extended and continued in effect until the expiration of sixty days subsequent to July 31, 1950; and

Whereas pursuant to the stipulation of July 26, 1947, as extended, the operations therein provided for have been continued and are presently being conducted, and the State of California has from time to time reported to the United States concerning the amounts received and segregated by the State as rentals, royalties and other payments; and

Whereas in paragraph numbered 2 of the stipulation of August 2, 1949, it is provided that the parties shall meet within thirty days after July 31, 1950, to consider the stipulation of July 26, 1947, as extended, and the effect thereon of any further proceedings or determinations in this cause, and to determine whether the said stipulation, as extended, or a revision thereof, should be continued for the further period; and

Whereas the parties, through their respective counsel, have met for the purposes contemplated by said paragraph numbered 2, and, as a result of such meeting, it is the opinion of the parties that the mutual interest of the parties and of the general public would best be served by a continuation of the stipulation of July 26, 1947, as extended, for a further period, provided it be revised as herein set forth.

Now, therefore, it is stipulated and agreed by the parties through their respective counsel that:

1. The stipulation entered into by the parties to this cause on July 26, 1947, as extended by the stipulations of July 28, 1948, and August 2, 1949, and as hereinafter revised, providing for a continuation of operations within or upon tide and submerged lands lying along the coast of California, be and the same is hereby extended and continued in effect until October 1, 1951. The provisions of this paragraph are not intended to preclude other arrangements adopted prior to the expiration date of this stipulation by reason of an order of the Supreme Court or an Act of Congress.

2. Paragraphs 1, 3, 4, 5, and 9 of the stipulation of July 26, 1947, are superseded by the provisions of this stipulation.

3. (a) With the advance approval or upon the request of the Secretary of the Interior, the State shall, during the period covered by this stipulation, and to the extent permissible under State law, call for bids for, and, with the additional advance approval of the Secretary of the Interior, enter into, new leases in cases where it is necessary to do so in order to prevent drainage of oil or gas from tide or submerged lands by wells drilled in other lands, or to protect the respective interests of the parties hereto. During such time, the State may, and at the request of the Secretary of the Interior will require any of its lessees to drill new wells or approve their drilling, in accordance with their leases and pursuant to State law, for the purposes described in this paragraph, provided that it gives the Secretary of the Interior notice of its action at least 15 days before drilling is to commence and that, unless the Secretary has initially requested such action, the said Secretary shall during the said 15 days have the right to disapprove such drilling.

(b) No change in the provisions of any lease subject to this stipulation, no acceptance of surrender, renewal, extension, or modification of any such lease, and no compromise or settlement of any controversy between the State and any lessee relating to any such lease, shall be made unless the State gives the Secretary of the Interior at least 45 days' notice thereof and the Secretary shall have the power during said period to disapprove such action. The Secretary of the Interior shall have the right to examine and inspect the area of, all operations under, and all records pertaining to any lease subject to this stipulation. Whenever requested by the Secretary of the Interior, the State shall take any action which it is required to take with respect to any lease subject to this stipulation or the parties thereto or any operations thereunder.

4. The State of California agrees to segregate and hold in a special fund all rentals, royalties, and other payments received from said lessees or under said leases beginning on, and subesquent to, October 1, 1950, and to pay the amount of such receipts to the United States quarterly, commencing three months thereafter by the check of the State drawn to the order of the Treasurer of the United States and delivered to the Secretary of the Interior. The United States agrees to segregate and hold the moneys so paid in a special fund. The State agrees to continue to segregate and hold in a special fund all the rentals, royalties, and other payments received from said lessees or under said leases in the period between June 23, 1947, and September 30, 1950, inclusive. It is further agreed that, notwithstanding the foregoing provisions of this paragraph, the State Lands Commission of California may expend not to exceed $12,000 per month from revenues in the special fund derived prior to October 1, 1950, from leases upon said tide and submerged lands to defray its expenses in administering the law respecting operations under such leases, and the Secretary of the Interior may use not to exceed $50,000 per annum of the funds paid by the State under this paragraph after September 30, 1950, to reimburse the Geological Survey and other agencies of the Department of the Interior for their expenses after September 30, 1950, under this stipulation; and, upon the distribution of the special funds pursuant to section 5 hereof, there shall be an accounting with respect to the money so expended or used, based upon the same percentages applicable to such distribution. The State also agrees (1) to report oil and gas production under said leases to the Secretary of the Interior monthly, commencing one

month after such date, and (2) to furnish the Secretary of the Interior with complete well records for all oil and gas wells subject to this stipulation. With respect to existing wells, such records shall be furnished within 30 days after the effective day of this stipulation; with respect to wells hereafter drilled pursuant to the terms of this stipulation, such records shall be furnished within 30 days after the completion of each well.

5. At such time as any particular area shall be finally judicially determined, or shall be agreed by the parties hereto, to be within or without the "three-mile marginal belt," the moneys segregated and held in the special funds referred to in paragraph 4 of this stipulation shall be distributed and paid over pursuant to the agreement of the parties, or in the absence of agreement pursuant to a final judicial order or decree. The above provisions of this paragraph are not intended to preclude any other proper disposition by reason of an order of the Supreme Court of the United States or of an Act of Congress.

6. The first sentence of paragraph 8 of the stipulation of July 26, 1947, is amended by inserting the word "mineral" immediately before the word "rights." 7. The parties hereto shall meet within 30 days after July 31, 1951, to consider the stipulation of July 26, 1947, as herein extended and revised, and the effect thereon of any further proceedings or determinations in this cause, and to determine whether the said stipulation as extended and revised, or a revision thereof, should be continued for a further period.

Recommended:

(Signed) J. HOWARD MCGRATH, Attorney General of the United States. (Signed) FRED N. HOWSER,

Attorney General of California.

(Signed) OSCAR L. CHAPMAN,

Secretary of the Interior of the United States.

Dated this 21st day of August 1950.

In the Supreme Court of the United States, October Term, 1947. United States of America, Plaintiff, v. State of California. No. 12 Original

STIPULATION

Whereas on June 23, 1947, the Supreme Court rendered its decision in the above-entitled case and in said decision it was determined, among other things,

and

"that California is not the owner of the three-mile marginal belt along its coast, and that the Federal Government rather than the State has paramount rights in and power over that belt, an incident to which is full dominion over the resources of the soil under that water area, including oil."

Whereas the precise location of the "three-mile marginal belt" has not yet been determined, and it is the belief of the parties that further proceedings may be necessary in order to determine the line of demarcation between the "threemile marginal belt," and the tidelands and the inland waters of California (including ports, bays and habors) not claimed by plaintiff in this case, and

Whereas the Court has not yet entered a decree in the above-entitled case, and Whereas prior to June 23, 1947, the State of California pursuant to its laws executed leases of, and granted easements and other rights in, tide and submerged lands for the production of oil and gas and for other purposes, and

Whereas there are now many wells producing large quantities of oil and gas from such areas, and

Whereas until a line of demarcation between the "three-mile marginal belt" and the tidelands, inland waters, ports, bays and harbors of the State is definitely fixed, it is difficult to determine whether some of the areas covered by said leases, easements, and other rights are within the "three-mile marginal belt", and

Whereas it is in the mutual interest of the parties and of the general public, pending the establishment of a line of demarcation, that the production of oil or gas from wells now in production shall continue and not be interrupted, and also that new wells be drilled in said tide and submerged lands wherever necessary to prevent drainage by wells drilled in other lands, or to protect the respective interests of either of the parties hereto, and

Whereas the Attorney General in presenting the case of the Government herein to the Supreme Court of the United States made the following statement in oral argument:

We will recommend to the Congress that legislation be enacted designed to relieve California and those who have operated under State authority, from the necessity of accounting to the United States for revenues derived in the past from the exploitation of any of the lands here involved. Such legislation, in the view of the President, should also establish equitable standards for the recognition of investments made by private interests and should offer a basis for the continued operation of private establishments wherever consistent with the national interest, and on terms which would be fair and just under all circumstances.

And whereas the supplemental brief for the United States contained the following representation at pages 5 to 6:

In this connection it is pertinent to note, as stated by the Attorney General at oral argument, that the President had authorized him to say that there is no desire on the part of the President or of any federal official to destroy or confiscate any honest or bona fide investment, or to deprive the State or its subdivisions of any reasonable expectation of return from the areas that have been developed.

The President recognizes that in the event the decision of this Court is favorable to the United States, it will be necessary to have Congressional action looking toward the future management of the resources of this area. And he also intends to recommend to the Congress that legislation be enacted recognizing both prospectively and retrospectively, any equities of the State and those who have operated under it, to the fullest extent consistent with the national interest.

Now, therefore, it is stipulated and agreed by the parties through their respective counsel that:

1. During the period fixed by paragraph 9 of this stipulation all operations within or upon the tide and submerged lands lying along the coast of California, carried on under the terms of any lease issued by the State of California prior to June 23, 1947 and now in force, may continue without interruption.

2. Annexed hereto are a schedule and sample forms describing the leases heretofore issued which are the subject of this agreement.

3. With the advance approval of the Secretary of the Interior, the State shall, during the period fixed by paragraph 9 of this stipulation, call for bids for, and, to the extent permissible under state law, enter into, new leases in cases where it is necessary to do so in order to prevent drainage of oil or gas from tide or submerged lands by wells drilled in other lands, or to protect the respective interests of the parties hereto. During such time, the State may require any of its lessees to drill new wells or approve their drilling for the purposes described in this paragraph, provided that it gives the Secretary of the Interior notice of its action at least 15 days before drilling is to commence.

5. At such time as any particular area shall be finally judicially determined, or shall be agreed by the parties hereto, to be within or without the "3-mile marginal belt," the moneys segregated and held in the special fund referred to in paragraph 4 of this stipulation shall be distributed and paid over pursuant to the agreement of the parties, or in the absence of agreement pursuant to a final judicial order or decree. The above provisions of this paragraph are not intended to preclude any other proper disposition at an earlier time by reason of an order of the Supreme Court of the United States or of an Act of Congress. 6. This stipulation is designed to regulate and protect the interests of the United States and of the State of California pending further proceedings in

this case. Nothing herein shall be deemed to waive or abridge any right or claim which the United States now has or may hereafter have against any lessee or grantee of the State of California; provided however, to insure the production of oil and gas necessary to meet the critical need now existing, plaintiff agrees that as to all operations conducted pursuant to this stipulation after June 23, 1947, under existing or new leases, and during the continuance of this stipulation, the extent of recovery against said lessees, if there be any right of recovery against them, "shall be the value of oil or gas at the time of extraction, without interest, after deducting all costs of development, operation and production, which costs shall include taxes and interest on all expenditures from the date thereof." (Sec. 3494, Calif. Code of Civil Procedure). It is understood that "costs" as referred to in the foregoing sentence shall be deemed to include such necessary and reasonable expenditures as are recognized by the industry in the areas involved, as well as rents and royalties referred to in paragraph 4 hereof. And plaintiff further agrees that any purchaser for value of oil or gas products purchased after June 23, 1947, from any of said lessees shall be entitled to resell or otherwise deal with such products on the same basis as products derived from undisputed lands not the subject of this litigation.

7. It is understood that the policy of the executive branch of the Government of the United States with respect to proposals for future legislation regarding the subject matter of this litigation, as expressed in the recitals in this stipulation concerning the statements of the Attorney General at the oral argument before the Supreme Court and in the Supplemental Brief for the United States, has not changed, and in fact is intended to be confirmed by this stipulation.

8. The word "lease" as used herein shall be regarded as including any easement, franchise, license, or permit under which the State of California receives rentals or royalties in return for rights granted by the State in tide and submerged lands lying along the coast of California. Nothing herein shall be deemed a waiver by the State of California of any right or equity held by it against a lessee.

9. This stipulation shall remain in effect until pertinent legislation is enacted by the Congress; provided, however, that if no such legislation is enacted prior to July 31, 1948, this stipulation shall terminate as of sixty days subsequent to that date, and the parties hereto shall meet within 30 days after July 31, 1948, to reconsider the terms of this stipulation and to determine whether this stipulation or a revision thereof should be continued for a further period; and provided further, that the moneys held in the special fund described in paragraph 4 of this stipulation shall be retained therein notwithstanding the expiration of this stipulation generally and that distribution of those moneys shall be made pursuant to paragraph 5 of this stipulation.

10. This stipulation shall be deposited with the Clerk of the Court, with the request that it be brought to the attention of the Court at the opening of the October Term, 1947. Nothing herein shall be deemed in any way to abridge the power or jurisdiction of the Supreme Court with respect to the subject matter of this action.

11. It is understood that the State of California has filed a petition for rehearing in the above entitled case, and it is agreed that if such petition is granted this stipulation shall nevertheless remain in effect during the pendency of this litigation, but in no event beyond the time fixed in paragraph 9 hereof.

Recommended:

(Sgd.) Toм C. CLARK, Attorney General of the United States.

(Sgd) J. A. KRUG,

Secretary of the Interior of the United States. (Sgd) FRED N. HOWSER,

Attorney General of California.

Dated this 26th day of July 1947.

Hon. JOSEPH C. O'MAHONEY,

DEPARTMENT OF JUSTICE,

OFFICE OF THE DEPUTY ATTORNEY GENERAL,
Washington, January 29, 1951.

United States Senate, Washington, D. C.

MY DEAR SENATOR: This is in response to your request of January 19, 1951, for the views of this Department relative to the joint resolution (S. J. Res. 20) to provide for the continuation of operations under certain mineral leases issued by

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