A-16525, DECEMBER 10, 1926, 6 COMP. GEN. 395

A-16525: Dec 10, 1926

Additional Materials:

Contact:

Edda Emmanuelli Perez
(202) 512-2853
EmmanuelliPerezE@gao.gov

 

Office of Public Affairs
(202) 512-4800
youngc1@gao.gov

THE STATE OF OKLAHOMA IS ENTITLED UNDER SAID PUBLIC RESOLUTION TO THE PERCENTAGE PROVIDED THEREIN ONLY ON FUNDS REPRESENTING ROYALTIES PROPER. 1926: I HAVE YOUR LETTER OF DECEMBER 3. REQUESTING DECISION AS TO THE PROPER DISPOSITION OF CERTAIN FUNDS WHICH HAVE ACCRUED IN THE ADMINISTRATION AND OPERATION OF LANDS AND OIL WELLS LOCATED IN THE SOUTH HALF OF THE BED OF RED RIVER IN OKLAHOMA. IT IS WITH RESPECT TO THE PROPER DISPOSITION OF THE FUNDS WHICH HAVE ACCRUED ON THIS TRACT THAT YOU SUBMIT FOR DECISION TWO QUESTIONS HEREINAFTER QUOTED. THE MATTER RELATIVE THERETO BEING STATED IN YOUR LETTER AS FOLLOWS: TRACT "A" IS AN AREA UPON WHICH ARE A NUMBER OF PRODUCING WELLS ON ACCOUNT OF WHICH CERTAIN FUNDS ACCRUED UNDER OPERATIONS OF THE AREA BY THE FEDERAL RECEIVER.

A-16525, DECEMBER 10, 1926, 6 COMP. GEN. 395

ACCOUNTING - TRUST FUNDS - RED RIVER OIL OPERATIONS UNDER THE PROVISIONS OF PUBLIC RESOLUTION OF JUNE 12, 1926, 44 STAT. 740, THE TRUST FUND DIRECTED TO BE ESTABLISHED FOR THE BENEFIT OF CERTAIN INDIANS COMPRISES ALL FUNDS ACCRUING UNDER THE PROVISIONS OF THE ACT OF MARCH 4, 1923, 42 STAT. 1448, AND ANY ACT THEREBY ADOPTED OR MADE APPLICABLE, FROM THE ADMINISTRATION AND OPERATION OF LANDS AND OIL WELLS IN THE SOUTH HALF OF THE RED RIVER IN OKLAHOMA, WHETHER SUCH FUNDS REPRESENT ROYALTIES, RENTALS, BONUSES OR IMPOUNDED PROCEEDS FOR WHICH NO VALID CLAIM HAS BEEN ESTABLISHED. THE STATE OF OKLAHOMA IS ENTITLED UNDER SAID PUBLIC RESOLUTION TO THE PERCENTAGE PROVIDED THEREIN ONLY ON FUNDS REPRESENTING ROYALTIES PROPER.

COMPTROLLER GENERAL MCCARL TO THE SECRETARY OF THE INTERIOR, DECEMBER 10, 1926:

I HAVE YOUR LETTER OF DECEMBER 3, 1926, REQUESTING DECISION AS TO THE PROPER DISPOSITION OF CERTAIN FUNDS WHICH HAVE ACCRUED IN THE ADMINISTRATION AND OPERATION OF LANDS AND OIL WELLS LOCATED IN THE SOUTH HALF OF THE BED OF RED RIVER IN OKLAHOMA.

YOU STATE THAT PURSUANT TO THE PROVISIONS OF PUBLIC RESOLUTION OF JUNE 12, 1926, 44 STAT. 740, THERE HAS BEEN PLACED IN A SPECIAL TRUST FUND FOR THE INDIAN BENEFICIARIES AS PROVIDED IN SAID ACT THE SUM OF $100,000, BUT THAT THERE REMAINS IN THE GENERAL RED RIVER FUND ACCOUNT IN THE TREASURY THE SUM OF $1,429,582.83, WHICH AMOUNT IN ADDITION TO REPRESENTING ROYALTIES ON PAST AND PRESENT PRODUCTION WITH INTEREST THEREON INCLUDES TWO OTHER ITEMS, BEING PROCEEDS ACCRUING FROM TRACT "A" WELLS, AND A BONUS BID FOR A LEASE OF SAID TRACT "A.'

IT IS WITH RESPECT TO THE PROPER DISPOSITION OF THE FUNDS WHICH HAVE ACCRUED ON THIS TRACT THAT YOU SUBMIT FOR DECISION TWO QUESTIONS HEREINAFTER QUOTED, THE MATTER RELATIVE THERETO BEING STATED IN YOUR LETTER AS FOLLOWS:

TRACT "A" IS AN AREA UPON WHICH ARE A NUMBER OF PRODUCING WELLS ON ACCOUNT OF WHICH CERTAIN FUNDS ACCRUED UNDER OPERATIONS OF THE AREA BY THE FEDERAL RECEIVER, AND BY THE SECRETARY. HAD ANY PRIVATE PARTY ESTABLISHED AN EQUITABLE CLAIM TO THIS AREA, UNDER THE ACT OF MARCH 4, 1923, HE WOULD HAVE RECEIVED IN ADDITION TO A LEASE THEREOF THE SUM OF $457,345.77, THAT BEING THE NET CREDIT REMAINING AFTER THE ROYALTY TO THE UNITED STATES AND OTHER DEDUCTIONS REQUIRED BY THE ACT OF MARCH 4, 1923, HAD BEEN MADE. EQUITABLE CLAIM TO THIS AREA WAS ESTABLISHED UNDER THE ACT OF MARCH 4, 1923, AND THE UNITED STATES, HAVING BEEN DECREED TO OWN ALL THE RED RIVER FUND (OKLAHOMA V. TEXAS, 258 U.S. 574), SUCCEEDED TO THIS FUND.

THEREAFTER THE SECRETARY IN OFFERING TRACT "A" FOR LEASE TO THE HIGHEST BIDDER, RECEIVED ON THAT ACCOUNT A BONUS OF ABOUT $100,000. THESE SUMS ARE HELD, AS BEFORE STATED, TOGETHER WITH OTHER FUNDS SECURED PURSUANT TO THE ACT OF MARCH 4, 1923.

IT IS DESIRED TO DISCONTINUE THE SPECIAL RED RIVER FUND AND TO DEPOSIT THE MONEYS THEREIN IN TWO SEPARATE TREASURY ACCOUNTS--- ONE, A TRUST ACCOUNT FOR THE INDIANS, THE OTHER, TO THE CREDIT OF THE STATE OF OKLAHOMA. IN THIS CONNECTION THE FOLLOWING QUESTIONS HAVE ARISEN WHICH SEEM TO FALL WITHIN YOUR JURISDICTION.

1. DOES THE ACT OF JUNE 12, 1926, ENTITLE EITHER THE INDIANS OR THE STATE OF OKLAHOMA TO (A) THE NET CREDIT WHICH ACCRUED ON ACCOUNT OF TRACT "A" WELLS--- (B) THE BONUS SECURED FROM THE LEASING OF SAID TRACT?

2. IF THE ACT OF JUNE 12, 1926, RELATES TO THESE FUNDS, DOES THE "37 1/2 PERCENTUM OF THE ROYALTIES" ACCRUING TO THE STATE APPLY THERETO, OR ARE THESE FUNDS, OR EITHER OF THEM, GRANTED IN THEIR ENTIRETY TO THE INDIANS?

THE ACT OF MARCH 4, 1923, 42 STAT. 1448, AUTHORIZING THE SECRETARY OF THE INTERIOR TO ADJUST AND DETERMINE EQUITABLE CLAIMS OF PERSONS AND CORPORATIONS CLAIMING INTERESTS IN LANDS SITUATED SOUTH OF THE MEDIAL LINE OF RED RIVER, OKLAHOMA, PROVIDED:

THAT EXCEPT AS OTHERWISE PROVIDED HEREIN THE APPLICABLE PROVISIONS OF THE ACT OF CONGRESS APPROVED FEBRUARY 25, 1920, ENTITLED "AN ACT TO PERMIT THE MINING OF COAL, PHOSPHATE, OIL, OIL SHALE, GAS, AND SODIUM ON THE PUBLIC DOMAIN," SHALL APPLY TO THE LEASES AND PERMITS GRANTED HEREUNDER, INCLUDING THE PROVISIONS OF SECTIONS 35 AND 36 OF SAID ACT RELATING TO THE DISPOSITION OF ROYALTIES: PROVIDED, THAT AFTER THE ADJUDICATION AND DISPOSITION OF ALL APPLICATIONS UNDER THIS ACT ANY LANDS AND DEPOSITS REMAINING UNAPPROPRIATED AND UNDISPOSED OF SHALL, AFTER DATE FIXED BY ORDER OF THE SECRETARY OF THE INTERIOR, BE DISPOSED OF IN ACCORDANCE WITH THE PROVISIONS OF SAID ACT OF FEBRUARY 25, 1920: * * *

UNDER THE PROVISIONS OF THIS SECTION, THE LAND INCLUDED IN TRACT "A" BEING UNAPPROPRIATED AND UNDISPOSED OF, WAS PROPERLY FOR DISPOSITION PURSUANT TO THE PROVISO QUOTED IN ACCORDANCE WITH THE PROVISIONS OF THE ACT OF FEBRUARY 25, 1920, 41 STAT. 441, AND THE PROCEEDS DERIVED THEREFROM WOULD, UNDER SAID PROVISO, BE FOR DISPOSITION UNDER SECTIONS 35 AND 36 OF THE ACT OF 1920. BY SECTION 2 OF THE ACT OF MARCH 4, 1925, 43 STAT. 1302, HOWEVER, IT WAS PROVIDED:

THE SECRETARY OF THE INTERIOR IS DIRECTED TO RETAIN IN HIS CUSTODY UNTIL OTHERWISE DIRECTED BY LAW THE 12 1/2 PERCENTUM AND OTHER ROYALTIES HERETOFORE OR HEREAFTER RECEIVED BY HIM IN PURSUANCE OF PUBLIC ACT NUMBERED 500, SIXTY-SEVENTH CONGRESS, APPROVED MARCH 4, 1923.

AND BY DECISION OF THIS OFFICE, 5 COMP. GEN. 585, IT WAS HELD THAT THE FUNDS INTENDED BY THIS LAW INCLUDED ALL ROYALTIES, BONUSES, RENTALS, ETC., ACCRUING UNDER THE PROVISIONS OF THE ACT OF MARCH 4, 1923.

THE PUBLIC RESOLUTION OF JUNE 12, 1926, 44 STAT. 740, PROVIDES:

THAT THE SECRETARY OF THE INTERIOR IS AUTHORIZED AND DIRECTED TO SET ASIDE AND ADMINISTER AS A TRUST FUND FOR THE BENEFIT OF THE ENROLLED MEMBERS OF THE KIOWA, COMANCHE, AND APACHE TRIBES OF INDIANS AND THEIR UNALLOTTED CHILDREN IN OKLAHOMA THAT PART OF ANY MONEYS RECEIVED UNDER THE ACT APPROVED MARCH 4, 1923 (FORTY-SECOND STATUTES AT LARGE, PAGE 1448), AND ANY ACT THEREBY ADOPTED OR MADE APPLICABLE, DERIVED FROM THE SOUTH HALF OF RED RIVER IN OKLAHOMA WHICH INURES TO THE FEDERAL GOVERNMENT BY VIRTUE OF THE DECISION OF THE SUPREME COURT OF THE UNITED STATES IN THE SUIT OF THE STATE OF OKLAHOMA VERSUS THE STATE OF TEXAS, WHICH DECISION WAS RENDERED MAY 1, 1922, BEING THE ENTIRE AMOUNT RECEIVED FROM THIS SOURCE, EXCEPT SUCH PART AS MAY HAVE BEEN AWARDED TO SUCCESSFUL CLAIMANTS UNDER SAID ACT APPROVED MARCH 4, 1923 (FORTY SECOND STATUTES AT LARGE, PAGE 1448), AND EXCEPT 37 1/2 PERCENTUM OF THE ROYALTIES DERIVED FROM SUCH SOURCE, WHICH SHALL BE PAID TO THE STATE OF OKLAHOMA IN LIEU OF ALL STATE AND LOCAL TAXES UPON SAID TRIBAL FUNDS AND SHALL BE EXPENDED BY THE STATE IN THE SAME MANNER AS IF RECEIVED UNDER SECTION 35 OF THE ACT APPROVED FEBRUARY 25, 1920 (FORTY-FIRST STATUTES AT LARGE, PAGE 4371).

THIS LAW BY ITS TERMS EMBRACES ALL FUNDS ACCRUED UNDER THE ACT OF MARCH 4, 1923, AND ACTS THEREBY ADOPTED OR MADE APPLICABLE IN CONNECTION WITH THE ADMINISTRATION AND OPERATION OF LANDS, WELLS, ETC., LOCATED IN THE SOUTH HALF OF RED RIVER. THE PROCEEDS DERIVED FROM TRACT "A," WHETHER THEY REPRESENT MONEYS AGAINST WHICH NO VALID CLAIM HAS BEEN ESTABLISHED, OR MONEYS COLLECTED AS A BONUS BID FOR A LEASE OF THE TRACT, ARE PROCEEDS ACCRUED UNDER THE ACT OF MARCH 4, 1923, AND AS SUCH SHOULD BE DISPOSED OF IN ACCORDANCE WITH THE PROVISIONS OF PUBLIC RESOLUTION OF JUNE 12, 1926, SUPRA.

UNDER THE PROVISIONS OF SAID PUBLIC RESOLUTION, HOWEVER, THE STATE OF OKLAHOMA IS NOT ENTITLED TO RECEIVE ANY PERCENTAGE OF THE RENTALS OR BONUSES OR ANY IMPOUNDED PROCEEDS FOR WHICH THERE IS NO VALID CLAIMANT. THE LAW IS SPECIFIC IN ITS TERMS THAT THE STATE SHALL RECEIVE "37 1/2 PERCENTUM OF THE ROYALTIES," AND THAT ALL OTHER MONEYS RECEIVED OR TO BE RECEIVED UNDER THE ACT OF 1923 FROM THE SOURCE INDICATED AND NOT AWARDED TO SUCCESSFUL CLAIMANTS SHOULD GO INTO THE TRUST FUND FOR THE INDIANS. WOULD SEEM CLEAR THAT TERM "ROYALTIES" AS USED IN DESIGNATING THE STATE'S SHARE WAS INTENDED TO RELATE SOLELY TO THE MONEYS RECEIVED AS ROYALTIES AS DISTINGUISHED FROM RENTALS, BONUSES, OR OTHER FUNDS DERIVED FROM THE OPERATION OF OIL WELLS LOCATED ON LANDS FOR WHICH NO VALID CLAIM HAS BEEN ESTABLISHED.

IT MUST, THEREFORE, BE HELD THAT UNDER THE LAW OF JUNE 12, 1926, SUPRA, THE INDIANS ARE ENTITLED TO THE NET AMOUNT WHICH ACCRUED ON ACCOUNT OF TRACT "A" WELLS AS WELL AS THE AMOUNT RECEIVED AS BONUS FROM THE LEASING OF SAID TRACT, AND THAT THE STATE OF OKLAHOMA IS NOT ENTITLED TO A PERCENTAGE OF THESE AMOUNTS FOR THE REASON THAT NEITHER OF THEM REPRESENTS ROYALTIES WITHIN THE MEANING OF THE LAW.

THE TWO QUESTIONS SUBMITTED ARE ANSWERED ACCORDINGLY, AND YOU ARE ADVISED THE DISPOSITION OF THE SPECIAL RED RIVER FUND SHOULD BE MADE AS HEREIN INDICATED, PLACING TO THE CREDIT OF THE TRUST FUND FOR THE INDIAN BENEFICIARIES ALL FUNDS WHICH HAVE ACCRUED UNDER THE ACT OF MARCH 4, 1923, EXCEPT 37 1/2 PERCENT OF ROYALTIES, WHICH 37 1/2 PERCENT SHOULD BE PLACED TO THE CREDIT OF THE STATE OF OKLAHOMA TO BE EXPENDED BY THE STATE IN THE SAME MANNER AS IF RECEIVED UNDER SECTION 35 OF THE ACT OF FEBRUARY 25, 1920, 41 STAT. 450, AS PROVIDED BY THE PUBLIC RESOLUTION OF JUNE 12, 1926.