Evening star., 1924-03-11
COUNSEL ON WAY
T0F|LE OIL SUITS
Receivers to Be Asked for
Sinclair ,Venture-Doheny
Action Later.

Government counsel were on their
way today to Cheyenne. Wyo., TO open
the long court fight for the cancella-
lion of oil leases.
The government will ask receivers
to take charge of Teapot Dome in
Wyoming and Naval Reserve No. L in
California. pending the outcome of
annulment suits in the federal dis
trict courts in the two states. The
action of government counsel III Wy
oming. however, will differ from that
TO be followed in California in that
the courts in Cheyenne will be re-
Quested to issue temporary injunc-
lion to prevent further extraction of
oil in the Wyoming reserve. where
tho wells already have been shut
down.
In California the courts will be
asked to restrain the Pan American
Petroleum Comany from drilling any
oil revenue while litigation is in prog
ress. No injunction to prevent pro-
duction of oil from the California
reserve will be asked. as it is not
possible to stop 'gusher" wells from
producing.
The governments bill for cancel
lation of the Doheny leases in re-
serve No. ] will allege that they were
made in consideration of promise
OF great reward" and IT is understood
that there will be allegations of
fraud in the case of all of the leases.
Both the Sinclair and Doheny in
terests will vigorously contest the
governments annuiment suits. Harry
r: Sinclair and six attorneys left
Chicago yesterday for Cheyenne to
join issue with government counsel.
Atlee Pomerene and Owen j. Rob-
erts, at the initiation OF the litiga-
tion.
Agreement With Doheny.
Preliminary steps in the litigation
against the Doheny interests at Los
Angeles probably will be unopposed,
an arrangement having been made
between counsel for the government
and the Pan American Petroleum
company for the request for the i'm
ceivership. Also. the request for an
injunction to prevent the drilling OF
tested.
The Doheny company will fight the
take the ground that the executive
order issued by President Harding
transferring the reserves from the
control of the Navy Department to
the the Interior Department is not in
issue, that ample authorization for
the leases was contained in the act
of June 4, 1920, sponsored by former
secretary Daniels.
The litigation will not serve to stop
work on the No. 2 naval fuel station
at Pearl Harhor. Hawaii, being CON
structed under the lease of December
IL, 1922. r. l.. Doheny, through his
counsel, Frank j. Hogan, advised
President Coolidge yesterday that
since the government has stopped
futher payments on this project he
personally has guaranteed his COM
pany against loss for continuing this
work.
This project, similar to No. storage
plant at Pearl Harbor, which was
completed and accepted by the gov
ernment last month, is now estimated
to be 10 per cent completed and ex-
perts for the Doheny companies have
reported that because of the pc
work it probably would be a total
loss If II we're to be abandoned at
this time.
In a statement issued here last night
on behalf of the Pan-American Pc
trolcum Company reiteration is made
fore the oil committee that the gov
ernment is s3,627,100 in arrears in
payments on the two projects. OF this
sum, s1,590,991 is on account of the
completed plant.
Under the terms of the contract be-
American Company the company is
performing the tank construction at
cost and without profit, subject to
government supervision. 1t receives
it's pay in royalty oil from the Cali
fornia reserve. There is now in plant
No. !, at Pearl Harbor, 100000 bar
rels of naval fuel oil and an addi-
tional 100000 barrels of oil would
be placed in plant No. 2, under the
terms of the contract.