Evening star. [volume] (Washington, D.C.) 1854-1972, 1927-01-16
MEXICAN OIL SUITS
TO Be NEXT MOVE
lnjunctionS Due to Follow
Cancellation by Gales of
Drilling Permits.
By the Associated Pres.


NEW YORK. January 1.-THE
action of the Mexican government in
cancelling five drilling permits. which
had been granted to American oil
companies since January ! caused
q considerable stir in petroleum
circles here today. Injunctions against
the Enforcement of the Mexican oil
law, which went into effect on Jan.
uary /, IL was learned, win be filed
probably Monday. by all American oil
companies concerned.
President Gales move was seen as
preliminary step toward ultimate
confiscation of petroleum lands on
which applications for confirmation
of rights had not been filed. II was
characterized in some quarters as an
overt act and likely to lead to an
exceedingly delicate situation be-
tween the Gales government and the
United States.
Official Notification Received.
Official notification of five reyoca-
tions of drilling permits were received
by companies with headquarters here,
of these, four were directed against
the Huasteca Petroleum Co. and one
against the Transcontinental Petrole-
um Co. Existing oil wells, it is under
stood, are not involved. but it is be-
lieved probable that the next move
may be against the extracting of oil
from wells in operation before jan
uaFy /.
The injunction suits. or "amperos. -
will be filed IN the lower courts of
Mexico. specifically directed against
the new law, which provides that
land rights of oil producers who failed
to apply for concessions before the
first of the year are forfeited.
1t was pointed out by oil men
familiar with the situation that under
the Mexican law, American companies
cannot be granted confirmation Of
rights. because the Gales law. like the
constitution of 1917. excluded Ameri-
can companies from the right to take
concessions.
Ownership Limited TO Natives.
The Gales petroleum law. enacted
in December, 1925. provides that
Mexican and civil and commercial
companies constituted in conformity
with Mexican laws may obtain petroIe-
UNI concessions upon compliance with
the provisions Of the law. Foreigners,
in addition to the foregoing obligation,
must comply beforehand with what is
provided in article 81 OF the present
political constitution"
The provision in article 81. which
has been the basis for the American
oil industry's refusal to comply with
the law, makes 1t plain that "only
Mexicans by birth or naturalization
and Mexican companies have the right
to acquire ownership In lands, waters
and their appurtenances. or to obtain
concessions to develop mines. waters
or mineral fuels in the Republic of
Mexico"
These cross.indexed provisions are
interpreted by oil men to mean that
an American can obtain a concession
in Mexico only by relinquishing his
American citizenship, and that Amer
lean corporations, TO comply with the
law, must be reorganized as Mexican
companies.
Basis Of Injunctions.
Under these conditions, it is con.
tended that the Mexican government
is refusing. Americans the right to de-
velop and enjoy their own properties,
for the reason that they have refused
to divest themselves OF legal rights &C.
quired under the laws OF Mexico prior
to 1917.
The suits to be filed next week will
be entered on the ground that the oil
law is unconstitutional, in violation Of
specific stipulation in the Mexican
basic code that no law shall be retro.
active. Since the properties involved
were acquired before the adoption of
the constitution in 1917, 1t is contended
that the Gales law Is retroactive near
~ 10 years.