Petroleum laws of all America

Front matter

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Author's Preface

This bulletin includes the petroleum laws of (1) United States; (2) the several oil-producing States; (3) Canada; (4) Mexico: (5) the Republics of Central and South America.

The author has sought to include the last congressional and legislative enactments on petroleum operations, and the laws given are the latest obtainable. .No discoveries of oil have been made in some of the Central and South American Republics and those countries, therefore, have no laws on the subject.

For some countries, in the absence of a law governing petroleum operations, the general mining code is given, as it may be possible for petroleum concessions to be made and oil deposits developed under a mining code.

The petroleum laws of the Spanish American Republics are usually supplemented by decrees of the Presidents, which serve the purpose of regulations. Such decrees may not change or annul absolutely a congressional enactment, but they may in effect modify the application and enforcement of the laws. These decrees may be issued at any time, and it is highly important for concessionaires to keep advised as to the latest decree. The same statement applies to the orders in council issued by the Canadian Government. The commissions of many of our own States have wide authority in regulating the operations of State laws, and their regulations are subject to change and amendment.

Compliance with any such decrees, orders in council, and rules of the State commissions is as essential as obedience to the laws themselves.

Much effort has been given to finding and presenting the latest and most reliable enactments. Every facility has been used in obtaining the most accurate translations of the Spanish laws- Different translations of some laws have been compared and the phraseology that seemed best has been adopted. A literal translation of every enactment has been sought, but some Spanish legislative expressions do not lend themselves to literal translation, and the intent of these has been gathered by persons familiar with Spanish legal terms and phraseology.

No general or full word index is given, as it is believed that the complete table of contents, repeated at the head of each State or country, and the prominent title lines showing each subject treated will lead the reader directly to any desired point or provision.

IV author's preface. v

Dr. Millspaugh of the State Department, in charge of the consular reports relating to the mining laws in Mexico, Central and South America, by his kindness contributed largely to the obtaining of the latest laws from these countries.

Expressions of appreciation are due the Hon. H. N. Branch, attorney, who is a naturalized citizen of Mexico and has specialized in the mining laws of that Republic, for his assistance with the Mexican laws and the translation of laws of other Republics.

The author is under obligation to the Hon. P. Luna y Parj*a, attorney, who has studied the laws of all the Spanish American Republics, for carefully criticising the entire collection, and to Mr. James R. Jones, formerly connected with the Bureau of Mines, for aid in collecting and arranging the laws of some of the Spanish American Republics.

J. W. Thompson,

Law Examiner.

COMPILATION OF PETROLEUM LAWS.

STATES AND COUNTBUBS INCLUDED.

UNITED STATES

ALABAMA

ARIZONA

ARKANSAS

CALIFORNIA

COLORADO

DELAWARE

IDAHO

ILLINOIS

INDIANA

KANSAS

KENTUCKY

LOUISIANA

MICHIGAN

NEBRASKA

NEVADA

NEW JERSEY

NEW MEXICO

NEW YORK

NORTH DAKOTA.

OHIO

OKLAHOMA

OREGON

PENNSYLVANIA-

TENNESSEE

TEXAS

UTAH

WASHINGTON

WEST VIRGINIA- WYOMING

40 42

CANADA

BRITISH COLUMBIA

NEW BRUNSWICK

ONTARIO

QUEBEC

MEXICO.

CENTRAL AMERICA

BRITISH HONDURAS

COSTA RICA

GUATEMALA

HONDURAS

NICARAGUA

PANAMA

SALVADOR

VI

COMPILATION OF PETROLEUM LAWS. VII

Page.

SOUTH AMERICA. 519

ARGENTINA 520

BOLIVIA 521

BRAZIL 523

BRITISH GUIANA— 535

CHILE 545

COLOMBIA 562

DUTCH GUIANA . 575

ECUADOR 575

FRENCH GUIANA 577

PARAGUAY 578

PERU 579

URAGUAY 600

VENEZUELA 605 extract helium from all gas produced from lands permitted, leased, or otherwise granted under the provisions of this Act, under such rales and regulation* as shall be prescribed by the Secretary of the Interior : Provided farther, That in the extraction of helium from gas produced from such lands, it shall be so extracted as to cause no substantial delay in the delivery of gas produced from the well to the purchaser thereof: And provided further, That citizens or another country, the laws, customs, or regulations of which, deny similar or like privileges to citizens or corporations of this country, shall not by stock, ownership, stock holding, or stock control, own any interest in any lease acquired under the provisions of this Act

OIL AND GAS.

Sec. 13. That the Secretary of the Interior is hereby authorized, under such, necessary and proper rules and regulations as he may prescribe, to grant to any applicant qualified under this Act a prospecting permit, which shall give the? exclusive right, for a period not exceeding two years, to prospect for oil or gas upon not to exceed two thousand five hundred and sixty acres of land wherein such deposits belong to the United States and are not within any known geological structure of a producing oil or gas field upon condition that the permittee shall begin drilling operations within six months from the date of the permit, and shall, within one year from and after the date of permit, drill one or more wells for oil or gas to a depth of not less than five hundred feet each, unless valuable deposits of oil or gas shall be sooner discovered, and shall, within two years from date of the permit, drill for oil or gas to an aggregate depth of not less than two thousand feet unless valuable deposits of oil or gas shall be sooner discovered. The Secretary of the Interior may, if he shall find that the permittee has been unable with the exercise of diligence to test the land in the time granted by the permit, extend any such permit for such time, not exceeding two years, and upon such conditions as he shall prescribe. Whether the lands sought in any such application and permit are surveyed or unsurveyed the applicant shall, prior to filing his application for permit, locate such lands in a reasonably compact form and according to the legal subdivisions of the public land surveys if the land be surveyed ; and in an approximately square or rectangular tract if the land be an unsurveyed tract, the length of which shall not exceed two and one-half times its width, and if he shall cause to be erected upon the land for which a permit is sought a monument not less than four feet high, at some conspicuous place thereon, and shall post a notice in writing on or near said monument, stating that an application for permit will be made within thirty days after date of posting said notice, the name of the applicant, the date of the notice, and such a general description of the land to be covered by such permit by reference to courses and distances from such monument and such other natural objects and permanent monuments as will reasonably identify the land, stating the amount thereof in acres, he shall during the period of thirty days following such marking and posting, be entitled to a preference right over others to a permit for the land so identified.

The applicant shall, within ninety days after receiving a permit, mark each of the corners of the tract described in the permit upon the ground with substantial monuments, so that the boundaries can be readily traced on the ground, and shall post in a conspicuous place upon the lands a notice that such permit has been granted and a description of the lands covered thereby : Provided, That in the Territory of Alaska prospecting permits not more than five in number may be* granted to any qualified applicant for periods not exceeding four years, actual drilling operations shall begin

Sec. 17. That all unappropriated deposits of oil or gas situated within the known geologic structure of a producing oil or gas field and the unentered lands containing the same, not subject to preferential lease, may be leased by the Secretary of the Interior to the highest responsible bidder by competitive bidding under general regulations to qualified applicants in areas not exceeding six hundred and forty acres and In tracts which shall not exceed in length two and one-half times their width, such leases to be conditioned upon the payment by the lessee of such bonus as may be accepted and of such royalty as may be fixed in the lease, which shall not be less than 12} per centum in amount or value of the production, and the payment in advance of a rental of not less than $1 per acre per annum thereafter during the continuance of the lease, the rental paid for any one year to be credited against the royalties as they accrue for that year. Leases shall be for a period of twenty years, with the preferential right in the lessee to renew the same for successive periods of ten years upon such reasonable terms and conditions as may be prescribed by the Secretary of the Interior, unless otherwise provided by law at the time of the expiration of such periods. Whenever the average daily production of any oil well shall not exceed ten barrels per day, the Secretary of the Interior is authorized to reduce the royalty on future production when in his judgment the wells can not be successfully operated upon the royalty fixed in the lease. The provisions of this paragraph shall apply to all oil and gas leases made under this Act.

Sec. 18. That upon relinquishment to the United States, filed in the General Land Ofllce within six months after the approval of this Act, of all right, title, and interest claimed and possessed prior to July 3, 1910, and continuously since by the claimant or his predecessor in Interest under the preexisting placer mining law to any oil or gas bearing land upon which there has been drilled one or more oil or gas wells to discovery embraced in the Executive order of withdrawal issued September 27, 1909, and not within any naval petroleum reserve, and upon payment as royalty to the United States of an amount oqu&l to the value at the time of production of one-eighth of all the oil or gas already produced except oil or gas used for production purposes on the claim, or unavoidably lost, from such land, the claimant, or his successor, if in possession of such land, undisputed by any other claimant prior to July 1, 1919. shall be entitled to a lease thereon from the United States for a period of twenty years, at a royalty of not less than 12$ per centum of all the oil or gas produced except oil or gas used for production purposes on the claim, or unavoidably lost: Provided, That not more than one-half of the area, but in no case to exceed three thousand two hundred acres, within the geologic oil or gas structure of a producing oil or gas field shall be leased to any one claimant under the provision of this section when the area of such geologic oil structure exceeds six hundred and forty acres. Any claimant or his successor, subject to this limitation, shall, however, have the right to select and receive the lease as in this section provided for that portion of his claim or claims equal to, but not in excess of, said one-half of the area of such geologic oil structure, but not more than three thousand two hundred acres.

All such leases. shall be made and the amount of royalty to be paid for oil and gas produced, except oil or gas used for production purposes on the claim* or unavoidably lost, after the execution of such lease shall be fixed by the Secretary of the Interior under appropriate rules and regulations : Provided, however, That as to all like claims situate within any naval petroleum reserve the producing wells thereon only shall be leased, together with an area of land sufficient for the operation thereof, upon the terms and payment of royaltlee for each location if application therefor shall be made within six months from the passage of this Act shall be entitled to prospecting permits thereon upon the same terms and conditions, and limitations as to acreage, as other permitB provided for in this Act, or where any such person has heretofore made such discovery, he shall be entitled to a lease thereon under such terms as the Secretary of the Interior may prescribe unless otherwise provided for in section 18 hereof: Provided, That where such prospecting permit is granted upon land within any known geologic structure of a producing oil or gas field, the royalty to be fixed in any lease thereafter granted thereon or any portion thereof shall be not less than 12} per centum of all the oil or gas produced except oil or gas used for production purposes on the claim, or unavoidably lost : Provided, however, That the provisions of this section shall not apply to lands reserved for the use of the Navy: Provided, however, That no claimant for a permit or lease who has been guilty of any fraud or who had knowledge or reasonable grounds to know of any fraud, or who has not acted honestly and in good faith, shall be entitled to any of the benefits of this section.

All permits or leases hereunder shall Inure to the benefit of the claimant and all persons claiming through or under him by lease, contract, or otherwise, as their interests may appear.

Sec. 20. In the case of lands bona fide entered as agricultural, and not withdrawn or classified as mineral at the time of entry, but not including lands claimed under any railroad grant, the entryman or patentee, or assigns, where assignment was made prior to January 1, 1918, if the entry has been patented with the mineral right reserved, shall be entitled to a preference right to a permit and to a lease, as herein provided, in case of discovery ; and within an area not greater than a township such entryman and patentees, or assigns holding restricted patents may combine their holdings, not to exceed two thousand five hundred and sixty acres for the purpose of making joint application. Leases executed under this section and embracing only lands so entered shall provide for the payment of a royalty of not less than 12} per centum as to such areas within the permit as may not be included within the discovery lease to which the permittee is entitled under section 14 hereof.

OIL SHALE.

Sec. 21. That the Secretary of the Interior is hereby authorized to lease to any person or corporation qualified under this Act any deposits of oil shale belonging to the United States and the surface of so much of the public lands containing such deposits, or land adjacent thereto, as may be required for the extraction and reduction of the leased minerals, under such rules and regulations, not inconsistent with this Act, as he may prescribe; that no lease hereunder shall exceed five thousand one hundred and twenty acres of land, to be described by the legal subdivisions of the public-land surveys, or if unsurveyed, to be surveyed by the United States, at the expense of the applicant, in accordance with regulations to be prescribed by the Secretary of the Interior. Leases may be for indeterminate periods, upon such conditions as may be Imposed by the Secretary of the Interior, including convenants relative to methods of mining, prevention of waste, and productive development. For the privilege of mining, extracting, and disposing of the oil or other minerals covered by a lease under this section the lessee shall pay to the United States such royalties as shall be specified in the lease and an annual rental, payable at the beginning of each year, at the rate of 50 cents per acre per annum, for the lands Included in the lease, the rental paid for any one year to be credited against the royalties accruing for that year; such royalties to be subject to .4 of the same producing oil or gas field ; no corporation shall hold any interest as a stockholder of another corporation in more than such number of leases; and no person or corporation shall take or hold any interest or interests as a member of an association or associations or as a stockholder of a corporation or corporations holding a lease under the provisions hereof, which, together with the area embraced in any direct holding of a lease under this Act, or which, together with any other interest or interests as a member of an association or associations or* as a stockholder of a corporation or corporations holding a lease under the provisions hereof, for any kind of mineral leased hereunder, exceeds in the aggregate an amount equivalent to the maximum number of acres of the respective kinds of minerals allowed to any one lessee under this Act Any interests held In violation of this Act shall be forfeited to the United States by appropriate proceedings instituted by the Attorney General for that purpose in the United States district court for the district in which the property, or some part thereof, is located, except that any ownership or interest forbidden in this Act which may be acquired by descent, will, judgment, or decree may be held for two years and not longer after its acquisition : Provided, That nothing herein contained shall be construed to limit sections 18, 18a, 19, and 22 or to prevent any number of lessees under the provisions of this Act from combining their several interests

so far as may be necessary for the purposes of constructing and carrying on the business of a refinery, or of establishing and constructing as a common carrier a pipe line or lines of railroads to be operated and used by them jointly in the transportation of oil from their several wells, or from the wells of other lessees under this Act, or the transportation of coal: Provided further, That any combination for such purpose or purposes shall be subject to the approval of the Secretary of the Interior on application to him for permission to form the same: And provided further, That if any of the lands or deposits leased under the provisions of this Act shall be subleased, trusteed, possessed, or controlled by any device permanently, temporarily, directly, indirectly, tacitly, or in any manner whatsoever so that they form part of, or are in anywise controlled by any combination in the form of an unlawful trust, with consent of lessee, or form the subject of any contract or conspiracy in restraint of trade in the mining or selling of coal, phosphate, oil, oil shale, gas, or sodium entered into by the lessee, or any agreement or understanding, written, verbal, or otherwise to which such lessee shall be a party, of which his or its output is to be or become the subject, to control the price or prices thereof or of any holding of such lands by any individual, partnership, association, corporation, or control, in excess of the amounts of land provided in this Act, the lease thereof shall be forfeited by appropriate court proceedings.

Sec. 28. That rights of way through the public lands, including the forest reserves, of the United States are hereby granted for pipe-line purposes for the transportation of oil or natural gas to any applicant possessing the qualifications provided In section 1 of this Act, to the extent of the ground occupied by the said pipe line and twenty-five feet on each side of the same under such regulations as to survey, location, application, and use as may be prescribed by the Secretary of the Interior and upon the express condition that such pipe lines shall be constructed, operated, and maintained as common carriers: Provided, That the Government shall in express terms reserve and shall provide In every lease of all lands hereunder that the lessee, assignee or beneficiary, if owner, or operator or owner of a controlling interest in any pipe line or of any company operating the same which may be operated accessible to the oil derived from lands under such lease, shall at reasonable rates and without d!*»

court for the district In which the property, or some part thereof, is located whenever the lessee fails to comply with any of the provisions of this Act, of the lease, or of the general regulations promulgated under this Act and In force at the date of the lease; and the lease may provide for resort to appropriate methods for the settlement of disputes or for remedies for breach of specified conditions thereof.

Sec. 32. That the Secretary of the Interior is authorized to prescribe necessary and proper rules and regulations and to do any and all things necessary to carry out and accomplish the purposes of this Act, also to fix and determine the boundary lines of any structure, or oil or gas field, for the purposes of this Act: Provided, That nothing in this Act shall be construed or held to affect the rights of the States or other local authority to exercise any rights which they may have, including the right to levy and collect taxes upon improvements, output of mines, or other rights, property, or assets of any lessee of the United States.

Sec. 83. That all statements, representations, or reports required by the Secretary of the Interior under this Act shall be upon oath, unless otherwise speedfled by him, and In such form and upon such blanks as the Secretary of the Interior may require.

Sec. 34. That the provisions of this Act shall also apply to all deposits of coal, phosphate, sodium, oil, oil shale, or gas In the lands of the United States, which lands may have been or may be disposed of under laws reserving to the United States such deposits, with the right to prospect for, mine, and remove the same, subject to such conditions as are or may hereafter be provided by such laws reserving such deposits.

Sec. 35. That 10 per centum of all money received from sales, bonuses, royalties, and rentals under the provisions of this Act, excepting those from Alaska, shall be paid Into the Treasury of the United States and credited to miscellaneous receipts ; for past production 70 per centum, and for future production 52f per centum of the amounts derived from such bonuses, royalties, and rentals shall be paid into, reserved, and appropriated as a part of the reclamation fund created by the Act of Congress, known as the Reclamation Act, approved June 17, 1902, and for past production 20 per centum, and for future production 37 i per centum of the amounts derived from such bonuses, royalties, and rentals ■hall be paid by the Secretary of the Treasury after the expiration of each fiscal year to the State within the boundaries of which the leased lands or deposits are or were located, said moneys to be used by such State or subdivisions thereof for the construction and maintenance of public roads or for the support of public schools or other public educational institutions, as the legislature of the State may direct : Provided, That all moneys which may accrue to the United States under the provisions of this Act from lands within the naval petroleum reserves shall be deposited in the Treasury as " Miscellaneous receipts."

Sec. 80. That all royalty accruing to the United States under any oil or gas lease or permit under this Act on demand of the Secretary of the Interior shall be paid In oil or gas.

Upon granting any oil or gas lease under this Act, and from time to time thereafter during said lease, the Secretary of the Interior shall, except whenever in his judgment it is desirable to retain the same for the use of the United States, offer for sale for such period as he may determine, upon notice and advertisement on sealed bids or at public auction, all royalty oil and gas accruing or reserved to the United States under such lease. Such advertisement and sale •hall reserve to the Secretary of the Interior the right to reject all bids whenever within his judgment the interest of the United States demands; and in where no satisfactory bid is received or where the accepted bidder fails to

UNITED STATES — OIL LEASING ACT. 11

complete the purchase, or where the Secretary of the Interior shall determine that It is unwise in the public interest to accept the offer of the highest bidder, the Secretary of the Interior, within his discretion, may readvertise such royalty for sale, or sell at private sale at not less than the market price for such period, or accept the value thereof from the lessee: Provided, however, That pending the making of a permanent contract for the sale of any royalty, oil or gas as herein provided, the Secretary of the Interior may sell the current product at private sale, at not less than the market price: And provided further, That any royalty, oil, or gas may be sold at not less than the market price at private sale to any department or agency of the United States.

Sec. 87. That the deposits of coal, phosphate, sodium, oil, oil shale, and gas, herein referred to, in lands valuable for such minerals, including lands and deposits described in the joint resolution entitled "Joint resolution authorizing the Secretary of the Interior to permit the continuation of coal mining operations on certain lands in Wyoming," approved August 1, 1912 (Thirty-seventh Statutes at Large, page 1346), shall be subject to disposition only in the form and manner provided in this Act, except as to valid claims existent at date of passage of this Act and thereafter maintained in compliance with the laws under which Initiated, which claims may be perfected under such laws, including discovery.

Sbc. 88. That, until otherwise provided, the Secretary of the Interior shall be authorized to prescribe fees and commissions to be paid registers and receivers of United States land offices on account of business transacted under the provitfens of this Act

Approved, February 25, 19201

REGULATIONS— PERMITS AND LEASE&

BIGHTS OF WAY— PIPE LINES*