Evening star., 1924-05-01
HARDING APPROVAL
Of NO. Z OIL LEASES
DECLARED LACKING
Search of Records Fails to
Show Fall Authorized to
Make Coast Deals.
TITLE TO 5000 ACRES
MAY BE FOUND INVALID
Remainder of California Reserve
Contracted for Under Work
at Higher Royalties.

Turning its attention for the first
time to Naval Reserve No. 2, in Cali
fornia, the Senate oil committee was
advised today by Assistant Secretary
Finney of the Interior Department
that a search of the records failed to
show the necessary presidential ap-
proval of the lease of over 3,0On
acres in that reserve to the Honolulu
Oil Company.
The lease was not valid, the wit
ness said, unless approved by the
President, because Secretary Fall had
no authority of his own to make such
contract.
Nearly Whole Area Leased.
All of naval reserve No. 2 had been
leased by Fall, with the exception OF
l,2S0 acres, he said, and since Secre-
tary Work came into Office the re-
malnder has been leased at the re-
quest OF the Navy Department. Thr
leases made since Fall resigned carry
IN royalties from 81 to so per cent
ne said, which were much higher than
those under Fall.
At the conclusion of Mr.. FinneyS
testimony the committee took re-
cess.
OetS List OF Leases.
Mr.. Finney gave to the committee
complete list of all leases made on
the Buena Vista reserve and re-
viewed the history of each. This re-
serve is known as the "checkerboard'
reserve, because the lands held for
the Navy were in most instances al
ternating sections. with the interven-
ing sections under private control.
Many of the early leases, Mr.. Finney
showed, were for Offset wells, granted
to protect drainage by wells on adjoin-
ing properties. While authority for
making the earlier leases rested in the
said. Secretary of the Interior Payne
in all instances referred applications to
Secretary of the Navy Daniels and made
no leases without the latters approval.
Some Made Under Payne.
Some of the leases made under Sec
retary Payne were to prevent the in
trusion of water, Finney said. The
early leases were made by act of Presi-
dent Wilson, upon written reports by
Secretary Payne.
Most of them We're for producing
wells. The first area leased by Mr..
Payne went to the Consolidated Mutual
Oil Company and covered 12O acres.
First Lease BY Fall.
Secretary Fall later granted "area"
leases, the witness said, to cover
areas in which his predecessor had
granted well" leases to producing
wells on mining locations. The first
AREA" lease by Fall was for 160
acres on naval reserve No. to the
Boston Pacific Oil Company.
Secretary Fall took the view"
Finney said, that on account of the
large area of patented lands and
wells upon them it was impracticable
to maintain the reserve as a reserve
and the lands should be leased. 1
heard him express that opinion.
About that time he was considering
a. plan of exchanging crude oil for
naval oil in storage"
The development of the Fall policy
with respect of naval oil reserves
was then reviewed by Finney, who
said the first discussion of the "ex-
change" plan was between March and
June, 1921. In July Fall went west
and was absent two or three months.
On December, IA, 1921, the lease to
approved and it was followed by
other area leases.
Quizzed On Reserve No. =.
The history of the lease on naval
oil reserve No. 2 to the Honolulu Oil
Company by Secretary Fall was ex-
plained at the request of Senator
Walsh, who said that by resolution
OF the Senate the committee had been
directed to go into that matter spe-
cially. Senator Walsh added that he
wanted to obtain from Finney a foun-
dation for such inquiry as would b
made later.
Fall had authorized the lease to the
Honolulu Oil Company, Finney said,
and it was not approved by Secre-
tary DENLY. He had been unable to
find any record to show that Presi-
dent Harding gave his approval. Sen
ator Walsh read from the law to sus-
tain his conclusion that the lease
was invalid unless approved by the
President, and Finney agreed.
Fall granted the lease to the Homo
lulu Oil Company after his predeces-
sor, Secretary Payne. had denied "a
patent to the company, the witness
said. Land covered was slightly in
excess of 5000 acres.