Amount Period of delin- Cause EXHIBIT 18-Geological Survey's northwestern region, branch of oil and gas operations, item 3, lease account breakdown-Continued June 1958 to June 1953 to 8, 532. 12 August 1959 to May 1961. Posting errors, improper reporting, Rental error. Misapplied pay- Payment delay. Rental. Payment delay. May 1962. Anna Aronow Est. None. 1, 272. 49 March 1960 to Slow pay. April 1962. 1,005. 97 April 1960 to April 1962. do. 5, 169. 19 June 1960 to Mountain Fuel Supply Co.. Clay Basin. 1,362. 57 June 1961. Petroleum Delhi Taylor Oil Corp.. Clear Creek. 1,893. 98 May 1960 to Inland Development Corp... Empire Petroleum Co.. Pan American Petroleum Co.. North Fork. None. 1,629.94 June 1960 to January 1962. December 1961. Slow pay. Payment delayed. Volume and trucking differences. Slow pay. April 1962. True Oil Co.. Clareton. 1,866. 25 December 1959 to Do. October 1961. Mr. BROOKS. The survey that we looked at does not reflect interest on the amounts that are in delinquent status. Apparently they do not. How much has been charged on the delinquent amounts? Mr. DUNCAN. The Government charges nothing for interest on the disputed amounts. They never have. Mr. BROOKS. Disputed or delinquent? Mr. DUNCAN. Yes. Most of these are questions of amounts in dispute or in the 17 cases on which no action has been taken, are whether we have used the correct trucking allowance or manufacturing allowance or have the proper volume determinations. Practically every account on the list is in dispute, may be subject to appeal, or may be a matter of differences in the participating areas for units or the improper account credited to but it does not mean we do not have the money. We have the money. Mr. BROOKS. You just cannot spend it? Mr. DUNCAN. The money is earned and in the Treasury. Mr. BROOKS. The money has already been collected for all of these? Mr. DUNCAN. No. Some of it has been collected wherever it has been misapplied in the unit. That money has been received but the account is not adjusted. For instance, if you have a unit agreement, you may have eight or nine separate participating areas and it may take a year or two until you work those out. The companies may have sent in their check. Mr. BROOKS. It is a small percentage of the cases? Mr. DUNCAN. There are only 17 left that we have not rechecked out of the 82 listed. Mr. BROOKS. That is a small percentage of those that are on here. Do you sue for the interest too? Mr. DUNCAN. We never have sued for interest. Mr. BROOKS. Where there is an amount in dispute do they make a payment on that portion which is not in dispute or do they hold the whole amount until the dispute is adjudicated. Mr. DUNCAN. Usually they make their current payment as to what they estimate is correct. Mr. BROOKS. And send that? Mr. DUNCAN. Yes. Mr. BROOKS. The balance is then held pending the solution to the dispute. Mr. DUNCAN. Yes. For instance, on the first one in connection with the Husky Oil Co., they tendered $37,244.24, which we have. The rest of it represents disputed allowances. The case is on appeal in the Department. Mr. BROOKS. The $54,000 represents the disputed amount. Mr. BROOKS. This is all of the apparent delinquent accounts? Mr. DUNCAN. Other than current, maybe two or three accounts. This shows that we have adjusted from the 29 that were reported in 1961 to 17 as of August 13. All of these are producing leases. All of them have bonds. Some of them have $100,000 bonds, some $25,000 bonds or $5,000 bonds and, in fact, I believe all of those that remain are substantial oil companies. DELAY IN DECIDING APPEALS Mr. WALLHAUSER. Why does it take so long in an appeal? What is the delay in the settling of an appeal? Mr. DUNCAN. It is inability to get to it for the lack of help, I would say. In other words, our accounting has gone up from a few million dollars to about $127 million in less than 15 years and if there is anything in dispute you take it when you can possibly get to it, and because of the lack of personnel, because of trying to keep up as much as you can. You take the money in and then you work back. If you have an appeal Mr. WALLHAUSER. The appeal is made through a regular channel? Mr. DUNCAN. The appeal goes in to the supervisor and he responds to that to the Director. The appeal is to the Director of the Geological Survey. Mr. WALLHAUSER. That is to you in this case? Mr. DUNCAN. No. I am just the Chief of the Conservation Division. They address it to the Director of the Geological Survey. If they lose there, then they appeal to the Secretary of the Interior and the case is reviewed over there. Mr. WALLHAUSER. This includes hearings and testimony? Mr. DUNCAN. We have had few, if any, hearings. If we have had any it has been in only one or two cases. Mr. WALLHAUSER. How is the appeal generally heard? Mr. DUNCAN. By written Mr. WALLHAUSER. By brief? Mr. DUNCAN (continuing). Briefs, from both sides and written opinions, or memorandums from interested parties. Let me explain, if I may, to go back to the Husky case. It is sulfur gas. We really have no authority, in one sense of the word, to collect royalty for sulfur on gas. It is not a hydrocarbon. Under unitization we do have such authority. Mr. BROOKS. Where is Husky? Mr. DUNCAN. In Wyoming. We had no history for sulfur values to establish a price. This company constructed its own pipeline and in its operation it dropped out the condensate. It made casing-head gasoline but could not obtain our price out of the sulfur company. All of those charges have not been adjusted and they are subject to dispute. Mr. WALLHAUSER. As I recall your figures, in 1951, which is 11 years ago, you had 29 accounts that were delinquent? Mr. DUNCAN. In May 1961. Mr. WALLHAUSER. So in 1 year you have whittled that down to 17? Mr. DUNCAN. Yes. We tried to detail a man to it as much as possible so we could move them through. Mr. WALLHAUSER. Don't you believe in your own mind that by assigning some individual who is a good negotiator and a fairminded individual, that you could settle these accounts more quickly? Mr. DUNCAN. I do not believe it is possible because of the difficulties with the Leasing Act and interpretation of it. It requires years of understanding and it seems that almost every lease is subject to a different law. Mr. WALLHAUSER. You were complaining about lack of staff. As I recall the figures, the Department of Interior has been granted additional employees even this year. I wonder why some individual was not employed certainly to do just this job. Mr. DUNCAN. I do not think we could find anybody. It has to be done by the regular personnel who are familiar with the types of relief and conditions and the decisions that go into making up a final recommendation to the Secretary. Mr. WALLHAUSER. You could not get anybody from the industry who would be qualified? Mr. DUNCAN. No, sir. Mr. WALLHAUSER. Or you could not take anybody out of your Department and relieve him of his duties and substitute somebody else for him? Mr. DUNCAN. We have, as stated in Assistant Secretary Beasley's statement, one party assigned to reducing the backlog. We are making progress from the 29 to 17 since last May. We should clear it up. Mr. WALLHAUSER. I think the disturbing thing to me is the length of time some of these appeals have been in the works. Some of them, as I recall a quick look at the list, are 5 years old. It seems to me that in 5 years some compromise could have been arrived at or some judgment made that would have settled them. Mr. DUNCAN. Disputes take time and the lessee-operators ask for time to make up their appeals. We have meetings with operators and then they may file an appeal with the Secretary if rejected by the Director, Geological Survey. Mr. WALLHAUSER. What happens if they are never settled? Mr. DUNCAN. We haven't had any that are never settled. We have collected over a billion dollars and have not had anything that was not settled as far as I know. Mr. BEASLEY. Congressman, it is my understanding that the area involved in these delinquent accounts has a total annual revenue of about $40 million, so you have to consider carefully taking some employee off to concentrate on a few delinquencies when there are approximately $40 million at stake that must be current at the same time. Mr. WALLHAUSER. You understand I am not trying to tell you how to run your shop but sitting here listening and observing the length of time that some of these appeals have been in the works, it seems that longer times have elapsed, even in your appeals, than some of our courts, which certainly are too long in many cases. seems to me that great effort should be made in this area. It I presume you have been making a real effort, but anything else that you can do, I think, would be to the advantage of the Government, because every time a dollar is outstanding, that is that much more somebody is going to have to, some way or another, make up that dollar deficiency, either through taxes or borrowing or some other way. Mr. DUNCAN. We are not delighted or glad to have any delinquent accounts but I am sure in handling public lands, with its multitude of laws and regulations, that there will be delays. PROPOSAL TO CHARGE INTEREST ON DELINQUENT ROYALTY ACCOUNTS Mr. BROOKS. I would like to have a statement showing the delinquent accounts in all the regions and what the interest at 6 percent |