Papers Relating to the Foreign Relations of the United States, 1918
File No. 812.512/2041
The Ambassador in Mexico ( Fletcher) to the Secretary of State
Sir: With reference to my telegram No. 1268 of July 13, 10 a.m.,1 I have the honor to transmit herewith a translation of the administrative regulations for enforcing Article 14 of the petroleum decree of February 19 last. These regulations are to go into effect August 1, the date fixed for the decree to become effective, and seem to indicate the determination of the Mexican Government not to recede from its original intention to enforce the decree.
This assumption is supported by other administrative acts of the past few days. As reported in my telegram No. 1272 of July 13,1 the special stamp tax on petroleum for the bimestre July and August, recently announced in a Treasury Department circular, is an increase of approximately 100 per cent over that of the previous bimestre for the principal petroleum products. I am informed that the new rates were determined upon during Mr. Nieto’s absence and are not approved by him, and the press to-day states that they have been materially lowered. The reported decreases are given in my telegram No. 1288 of July 17, 5 p.m.,1 but special attention is invited to the fact that these lower rates are still approximately 50 per cent higher than the old rates.
Excelsior published yesterday the following notice purporting to be an official statement of the Department of Industry, Commerce and Labor:
The Department of Industry, Commerce, and Labor, through the Bureau of Petroleum, has made known to the owners of petroleum lands that “options” or promises of lease, given prior to May 1, 1917 (on which date the General Constitution went into effect), must not be raised to the status of definite contracts.
[Page 737]This declaration has been made official, in view of the fact that, in accordance with Article 27 of the Constitution, the subsoil in the petroleum zone is not transferable, for which reason contracts made since that date shall be considered as null and void.
The press to-day also stated that a presidential decree has been signed imposing an additional tax of five pesos on each hectare of lands held for petroleum development, but this decree has not yet been officially published.
As stated in my confidential telegram No. 1249 of July 3, 11 a.m.,1 until the petroleum difficulty is satisfactorily settled it will remain so formidable an obstacle to good understanding as to render futile all attempts at cordial friendship between the two Governments. So far there is no indication of any intention of the Government to recede from its often asserted determination to carry into effect the provisions and principles of Article 27 of the Constitution.
Messrs. Garfield and Rhoades are now here and have resumed their conferences with Secretaries Pani and Nieto, and I would invite the attention of the Department to their telegraphic reports sent through the Embassy and the Department to their principals showing the course their negotiations are taking.
I have [etc.]
Regulations of July 8, 1918, covering the denouncement of oil lands2
Venustiano Carranza, Constitutional President of the United Mexican States, to the people thereof, be it known:
That in the exercise of the extraordinary faculties conferred upon me by the Honorable Congress of the Union in the Department of Finance, I have seen fit to issue the following:
Regulations to Article 14 of the decree of the 19th of February 1918:
- Article 1. After the first day of August of this year, petroleum claims may be denounced on free ground.
- Art. 2. A petroleum claim is considered to mean a plot of ground of unlimited depth, bounded underground by the vertical planes corresponding to the surface boundaries, with a continuous surface area of not less than four hectares, and destined to the exploitation of petroleum.
-
Art. 3. The exploitation of
petroleum is considered to mean the extraction,
collection or utilization of the following substances:
- I.
- Crude petroleum encountered in pools, springs and natural deposits.
- II.
- Gaseous hydrocarbides encountered in the subsoil or escaping from the surface.
- III.
- Natural deposits of ozokerite and asphaltum.
- IV.
- All such deposits of mixed hydrocarbides of the different groups as are due to the action of natural agents.
- Art. 4. Land to which title has been granted for the exploitation of petroleum, or covering which there is a denouncement pending, shall not be considered as free ground.
- Art. 5. Nor shall that be considered free ground the owner of which has presented to the Department of Industry, Commerce and Labor, a manifest in accordance with Article 14 of the tax law of February 19 of this year, and complying with the terms of Articles 1 and 3 of the decree of May 18; but land covering which a manifest has been presented shall become free ground unless denounced by the owner thereof within three months from the 31st day of July of this year.
- Art. 6. That land shall not be considered as free ground which has been acquired by contract for the exploitation of petroleum, and covering which a manifest is presented to the Department of Industry, Commerce and Labor in accordance with the law cited in the preceding article, within the period fixed by Articles 1 and 2 of the decree of May 18 of this year, and in compliance with the stipulations of Articles 1, 2 and 4, of the said decree; but land covering which a manifest has been presented shall become free ground unless denounced within two months subsequent to the granting of preference mentioned in Article 2 of the said decree of May 18. The said establishment of preference will be made during the first fortnight of the month of November of this year.
- Art. 7. Nor, for the purposes of this decree and without prejudice to the stipulations of Article 27 of the Constitution, shall that be considered as ‘free-ground which is protected by a contract of concession celebrated by the National Government with some individual or company, covering the exploitation of petroleum.
- Art. 8. Lands dedicated to the common use, laylands and National lands, tribal lands and undivided commons may not be denounced.
- Art. 9. A denouncement will only cover a single petroleum claim.
- Art. 10. A person desiring to acquire a petroleum claim shall present in duplicate to the proper agency of the petroleum branch of the Department of Industry, Commerce and Labor, a denouncement in which there must appear his name, age, profession, domicile and nationality, as also the location, area, boundaries and all such other data as will serve to identify the claim in question.
- Art. 11. If the denouncer is a foreigner, he must present with his petition a statement from the Department of Foreign Relations, certifying to his having complied with the requisitions of Article 27 of the Federal Constitution.
- Art. 12. The petitioner must also attach to his denouncement a statement from the revenue stamp tax office certifying to his having deposited therein the value of the stamps which should be attached to the title, in accordance with the area of the claim denounced.
- Art. 13. The agent of the petroleum branch will receive the denouncement, entering the same in his book of registry, and noting therein and on the original and duplicate of the denouncement the date and hour of presentation. The denouncer may demand that these notations be made in his presence. If in the judgment of the agent the denouncement is not sufficiently clear and comprehensive, he may make a notation to that effect on the original and duplicate thereof, and in his book of registry; but the lack of explanatory data shall not constitute cause for not registering the denouncement. The duplicate of the denouncement, with the respective notations thereon, will be returned to the person presenting same.
- Art. 14. Within three days after the presentation of a denouncement the agent shall decide whether or not it shall be admitted. If admitted, he shall proceed forthwith to prepare the necessary documents; if not, he shall set forth in writing the reason for his adverse decision, which shall be subject to reconsideration by the Department of Industry, Commerce and Labor, upon request of the denouncer, presented to the said agent upon being notified of the non-acceptance of the denouncement or within three days thereafter.
- Art. 15. When two or more denouncements presented simultaneously and covering the same land have been declared admissible, chance shall decide which denouncement is to be given preference, unless the interested parties should reach an agreement among themselves as to such preference.
- In cases analogous to those provided for in Circular No. 28 of the Department of Mines, the method of procedure established in the said circular shall be followed.
- Art. 16. Once an agent has accepted a denouncement, he shall exhibit same on his bulletin board during one month, and shall cause same to be inserted three times during the same period, in the Diario Oficial and in other publications chosen from among those of greatest circulation in the locality. The interested party shall arrange for these insertions for his own account.
-
Art. 17. The following are the
causes upon which objections to a denouncement may be
based, interrupting the legal course thereof:
- I.
- The total or partial invasion of a titled petroleum claim whose title has not been declared canceled;
- II.
- A previous denouncement legally presented covering a part or all of the claim denounced;
- III.
- The period during which this regulation grants preference to some person or company regarding the claim in question, or a part thereof, not having terminated at the time a denouncement is made.
- Art. 18. Objections to a denouncement, based upon any of the causes established by the preceding article, must be filed with the petroleum agency during a period of 60 days counting from the date on which the denouncement is first exhibited on the bulletin board of the agency.
- Art. 19. The opposer shall present, together with his objections, a certificate from the corresponding principal revenue stamp office, wherein it is stated that he has deposited therein an amount equal to one year’s rental on the claim in question, in accordance with Articles 2 and 4 of the decree of February 19 of this year. Unless the said certificate is presented, the objections will not be admitted.
- Art. 20. The objections having been filed, the interested parties will be cited to appear at a meeting, following the manner of procedure established by the regulations of the mining law in force. Those parties who fail to appear shall be advised in the, act that they may have recourse to either administrative or judicial channels to adjust their differences.
- Art. 21. Should the interested parties not immediately elect to handle the matter through administrative channels, the course of the denouncement shall be interrupted, and the documents thereof shall, within 48 hours, be passed to the judicial authorities, for the substantiation of the corresponding suit at law. The opposer may only base his opposition upon the causes which he has alleged and which are expressly set forth in the administrative documents, just as the same have been remitted to the judicial authorities.
- Art. 22. In case the interested parties decide to handle the matter through the administrative channels, the denouncement documents will continue their course, to the end that when convenient the Department of Industry, Commerce and Labor, having heard both the denouncer and the opposer, may render a final decision.
- Art. 23. Should the interested parties have elected to handle the matter through administrative channels, they may not have recourse to judicial channels, but if they have chosen the latter, they may, previous to a court decision having been rendered, submit the matter to the decision of the Department of Industry, Commerce and Labor.
- Art. 24. Any other objection, founded on causes distinct from those expressed in Article 17, should be filed with the agency, but the latter will not in that case suspend the course of the denouncement; the Department of Industry, Commerce and Labor, when the documents are passed thereto for review, will then decide whether or not such objection should be given consideration. If the former, the objection will be substantiated and decided, observing the form of procedure set forth in Articles 20 to 23. If the Department decides not to take into account the objection filed, it shall proceed as though no objection had been made, the opposer reserving his due rights.
- Art. 25. The Department of Industry, Commerce and Labor may take under consideration objections to the denouncement presented thereto during the course of the examination of the documents, providing that the opposer furnishes proof of not having had recourse to the petroleum agency for causes beyond his control.
- Art. 26. A denouncer of a petroleum claim shall be declared as having forfeited his rights should he fail to make the insertions required by Article 15, during the period fixed by the said article; should he fail to furnish data requested within the period fixed therefor, in order to proceed with the investigation of the denouncement; and should he fail to appear at the meeting cited if objections or opposition to the denouncement should be filed. Such denouncer shall forfeit the deposit referred to in Article 12.
- Art. 27. An opposer who fails to appear at the meeting cited shall be considered as having forfeited his right to object to the denouncement, except in case such failure to appear is due to causes beyond his control.
- Art. 28. An opposer who forfeits his rights, or one whose objections prove unfounded, shall forfeit the deposit established by Article 19, which shall be applied to the payment of one year’s rental on the claim, counting from the date on which the denouncement was presented.
- Art. 29. Should a final decision thereon not be rendered within one year after the filing of an objection to a denouncement, the denouncer and the opposer shall each deposit an amount equal to one year’s rental, in the corresponding [Page 740] principal revenue stamp office, the same rule applying for each further year that the final decision may be delayed.
- The deposits made by the party in whose favor the final decision is rendered, shall be applied to the payment of rentals on the claim, and those made by the party losing the decision shall become a part of the national revenues, the first party reserving the right to demand indemnity from the second party, corresponding to the matter in question.
- Art. 30. The Department of Industry, Commerce and Labor may absolve the party who fails to appear at the meeting held for adjustment of the objections, should the denouncer furnish proof that his failure to appear was due to causes beyond his control.
- Art. 31. The period of 60 days having elapsed, without any objection having been filed which furnishes cause for the suspension of the administrative proceedings, the petroleum agent must remit to the Department of Industry, Commerce and Labor, copies of the denouncement documents showing the status thereof.
- Art. 32. The titles covering petroleum claims shall be issued through the Department of Industry, Commerce and Labor, after the petroleum bureau has reviewed the agency documents. Such titles confer possession of the respective claims, without the necessity of any other formality.
- Art. 33. Titles shall be issued to the party presenting the denouncement, without prejudice to the rights of a third party. In order that titles may be issued in favor of persons other than those making the denouncements, it shall be necessary to furnish proof in the form of a public instrument to the effect that the rights of the denouncer have been transferred to the other party. The interested party must furnish proof of having paid the rental corresponding to the claim, before title may be delivered to him.
- Art. 34. In the cases of community lands, only the coowners may denounce petroleum claims, and the denouncement proceedings shall be discontinued until all the coowners or their representatives have appeared before the Secretary of Industry, Commerce and Labor, who shall issue calls for such meetings with due anticipation, to furnish express and proven manifestations of their individual rights, and an agreement having been reached, a common title to the petroleum claim covering the subsoil of the land pro indiviso shall be issued. In such titles the representation of each coowner shall be expressed.
- The Department of Industry, Commerce and Labor has the power to appoint a commission which shall have charge of handling before the proper authority, the issuance of the titles of ownership to the coowners.
- Art. 35. A period of two months having elapsed, counted from the date of issuance of titles to the land to which the foregoing article refers, without the interested parties having exercised the right conceded by the said article, the said lands will be considered as free ground and susceptible of being granted to the first person soliciting same for the purpose of exploiting petroleum.
- Art. 36. The concessionaire of a claim may extract therefrom all the substances referred to in Article 3, without other restriction than that of not invading with his extraction operations neighboring claims, and that of complying with the disposition of this regulation and of those which may be issued covering exploitation.
- Art. 37. The exploiters of a petroleum claim may occupy, within the limits of the claim and with due authorization from the Department of Industry, Commerce and Labor, surface space necessary for the extraction operations and the immediate storage of the products extracted, paying to the proper party the corresponding indemnity, but in the latter case the proceedings engendered thereby shall not be permitted to delay the exploitation operations.
- Art. 38. The exploiters of a petroleum claim may acquire right of passage, and pipe-line right of way, upon due authorization from the Department of Industry, Commerce and Labor, and may install such pipe lines and pumping stations as the exploitation of the claim requires, paying to the interested parties the corresponding indemnities therefor.
- Art. 39. The exploiters of a petroleum claim shall have the right to establish storage plants and refineries, with the approval of the Department of Industry, Commerce and Labor and with the consent of the owners of the lands they propose to occupy. In case the consent of the owners can not be obtained, the areas necessary may be expropriated.
- Art. 40. The exploiters of petroleum claims shall have the right to construct wharves, loading stations, and submarine pipe lines, with the approval of the Department of Industry, Commerce and Labor, in conformity with the dispositions [Page 741] which the Departments of Finance and Public Credit and of Communications and Public Works dictate on the subject.
- Art. 41. On petroleum claims, only the respective concessionaires shall have the right to construct storage stations and refineries.
- Art. 42. The concessionaire of a claim may use the surface waters necessary to his operations, in accordance with the common laws covering such matters. He may use underground waters, for the same purpose, upon authorization from the Department of Industry, Commerce and Labor, and upon payment of the corresponding indemnity to whoever may be entitled thereto.
- Art. 43. Only within three years following the issuance of the respective title, may the concessionaire solicit the reduction in size of his claim; the reduced claim will be resurveyed and a new title issued therefor, the previous title being canceled.
- Art. 44. The concessionaire of a petroleum claim on contracted land shall pay the tax established by the law of February 19, 1918, in the terms fixed by Articles 2, 3 and 13 of the said law, the assessment fixed by Article 16 of the said law applying in such cases.
- Art. 45. The concessionaire of a petroleum claim on land not under contract shall pay the tax established by Article 4 of the law above cited.
- Art. 46. Rentals shall commence from the date of denouncement, and shall be payable bimonthly in advance, and such payments should be made during the first fortnight of each bimonthly term.
- Art. 47. During the period of one year from the date of issuance of the title covering a petroleum claim, the interested party must erect monuments at the vertices and other principal boundary points, and such intermediate monuments as may be necessary, so that each be visible from the preceding one, and must present in duplicate to the Petroleum Department, a map of the land so marked. This map must comply with the requisites fixed by the Department of Industry, Commerce and Labor, and in accordance therewith the ratification or rectification of the title shall proceed.
- Art. 48. Within the period of two years counted from the issuance of the title, the interested party should present in duplicate to the Department of Petroleum plans and descriptive memorial of the plants and installations projected for the exploitation of the petroleum claim. These plans and memorials must comply with the requisites fixed by the Department of Industry, Commerce and Labor.
- Art. 49. Within the period of three years counted from the issuance of the respective title, the concessionaire of a petroleum claim must furnish proof to the Department of Petroleum that he has commenced the work of exploiting the claim.
- Art. 50. When it is desired to reduce the size of a petroleum claim, the petition for such reduction, together with a map of the claim and the primitive title, must be presented to the corresponding petroleum agency. The issuance of a new title cancels the previous one.
- The issuance of a new title having been agreed to, the surplus land included under the primitive title will be declared free ground, and a period fixed during which the interested party must erect new monuments.
- Art. 51. The ratification or rectification mentioned in Article 47 may be made upon petition of the owner of the claim, of the owners of adjoining claims who may be interested therein, or ex officio by the Department of Industry, Commerce and Labor. In the latter case the final decision of the Department mentioned will not prejudice the rights of the owner of the petroleum claim in question, or with those of the neighbors who consider their interests to have been damaged.
- Art. 52. Every concessionaire of a petroleum claim is obligated to furnish to the Department of Industry, Commerce and Labor, such technical and economical data as may be requested by the Petroleum Department, and to admit to the plants the students of the official schools who visit such plants for the purpose of acquiring practical knowledge of the petroleum industry, furnishing every facility to such students. These obligations also apply to concessionaires of pipe lines, refineries, storage plants and loading stations.
- Art. 53. The following shall be considered as causes for the cancelation of petroleum-claim titles: failure to pay the tax referred to in Articles 44 and 45; failure to comply with the conditions imposed by Articles 47, 48, 49 and 52: closing down of the works for a continuous period of six months without just cause, after the work of exploitation has commenced; or any serious infraction of the regulations of exploitation, in the terms expressed therein.
- Art. 54. Cancelation of a claim will be declared administratively by the Department of Industry, Commerce and Labor, after the interested party has been cited to appear in his own defense.
- Art. 55. In the cases of cancelation of titles for failure to make rental payments, the corresponding declaration will be made within the four months subsequent to the bimonthly term in which the said rental payments were not made.
- In the cases of cancelation for failure to pay royalty, the declaration of cancelation will be made during the bimonthly term following that in which the penalty was incurred.
- Art. 56. The titled claim of any holder of the right of exploitation whose title is declared canceled, may only be denounced during the three months subsequent to the date of cancelation, by the previous concessionaire and by the owner of the surface area of the claim, who, for that purpose, must present a manifest in the form prescribed in Article 4 of the decree of May 18 of this year, in order that the petroleum agency of the Department of Industry. Commerce and Labor may admit the denouncement of the person making such manifest, as being the last holder of the right of exploitation.
- If a claim whose title is declared canceled be under the exploitation of a third party through a contract still in force, the said contract of exploitation shall retain its force, the former concessionaire being substituted by the new one for the effects of the said contract.
- Art. 57. The direct exploiter of a claim, officially recognized as such, although not the holder of the concession therefor, in case the title should be declared canceled shall enjoy the preferent right to denounce same within the thirty days following the period conceded by the preceding article to the various concessionaires of the right of exploitation and to the owner of the surface area of the claim, providing that none of the latter have made use of their rights.
- He shall also enjoy such preference in cases of cancelation of titles not covered by the preceding article, within the period of thirty days following the date on which the declaration of cancelation is exhibited on the bulletin board of the respective agency.
- Art. 58. Any claim on land under contract the title to which is declared canceled, shall be considered as free ground as soon as the periods fixed by the two preceding articles have terminated, and thirty days have transpired since the date on which the declaration that the claim is free ground was first exhibited on the bulletin board of the respective agency.
- Art. 59. Any claim on land not under contract the title to which is declared canceled, shall be considered as free ground thirty days after the declaration of cancelation is first exhibited on the bulletin board of the respective agency.
Transitory Articles
- I.
- Denouncements will be admitted on manifested lots the area of which is less than four hectares, if wells in process of drilling or in production, covered by concessions previously granted, exist thereon.
- II.
- All other laws and regulations are hereby annulled in so far as they may conflict with these regulations.
I therefore order that these regulations be printed, published, circulated, and duly complied with.
Given at the Palace of the Executive Power of the Union, on the eighth day of the month of July, nineteen hundred and eighteen.