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Mr. HUMBLE. If they are contiguous.

Mr. WUNDER. What else could you have done? Is there anything else you didn't do that you could have done looking back at it in retrospect? What could you have done, I am talking about anything now, which would have given you a better idea of what exactly happened?

Mr. HUMBLE. It appears to me, Mr. Wunder, that we had two other logical choices. One is to forego a geologic evaluation of those 4,200 acres. Another is to go in and overstake those 4,200 acres.

No one is the winner if you forego the evaluation of a geologic prospect because the Nation needs uranium.

If we had overstaked, I am not prepared to say what reaction the senior locator would have given, but our legal counsel tells us that the odds of succeeding against senior locators is extremely remote and such an action is a weak legal position because regularly the judiciary has held in favor of senior locators.

Mr. WUNDER. The preponderance of cases has been on their side. Mr. HUMBLE. Yes.

Mr. WUNDER. Mr. McGuire has prevailed in a couple instances. But the overriding preponderance of cases has gone the other way,

Mr. HUMBLE. That is the clear reading of our legal counsel beginning with the case law 100 years ago.

Mr. WUNDER. You had past business dealings with Mr. Flanagan. Mr. HUMBLE. Yes, sir, we have.

Mr. WUNDER. And you found what he had done to be in conformity with the law?

Mr. HUMBLE. As to our investigation, yes, sir, and when he first began locating mining claims we acquired a group from him. At that time the claims were newly located and we did have an inspection. We found he complied with the requirements of the staking.

Mr. WUNDER. But your past experience with him had been with recently located claims.

Mr. HUMBLE. With old claims. We have not acquired any recently located claims in some years from him.

Mr. WUNDER. I mean at the time, your past business dealings with Mr. Flanagan had been with respect to claims that he had recently located at the time that you entered into your agreement with him.

Mr. HUMBLE. That is true in part of the instances. I cannot say from personal recall that has been the case in every instance.

I think we entered into an agreement on 20 to 25 claims a couple of years ago. As I recall, those claims were older ones, but some of the claims we entered into in agreements back in 1968, they were recently located claims.

Mr. WUNDER. Let me ask you to explain something you said in your earlier testimony. I would like to quote you. You said, “Different situations require different inquiry.

What exactly does that mean? What situations would require one type of inquiry as opposed to another type of inquiry?

Mr. HUMBLE. As we have a geologically attractive area identified to the land section, then we begin our record examination. Under normal circumstances we do not go beyond the record examination if that record is sound. Sworn statements have been timely filed; proper Federal and State laws have been complied with; and annual assessment affidavits have been filed. That is where our usual investigation ceases.

Upon being advised by others in the immediate area that they may be improper, then additional inquiry is warranted and is made.

Mr. WUNDER. My reaction seems to be this: The purpose or the recording system, the requirement for recording a claim, the requirement for filing proof of labor affidavits, is to give the person checking the title to the claim the information that he needs to make a judgment on whether or not the claim is in fact valid. Is that not the case?

Mr. HUMBLE. That is the legal advice we receive, yes, sir.

Mr. WUNDER. So if people are in fact filing false affidavits and tying up lands, the problem would be with respect to what they are required to record.

If persons were required, as Mr. Frandsen suggested, to file more detailed information as to what they did, when they did it, how much they expended, it would seem to me that would ameliorate the problem.

Mr. HUMBLE. Yes.

Mr. WUNDER. Would Exxon have any objections to such a change in the mining law?

Mr. HUMBLE. None whatsoever, no, sir.
Mr. WUNDER. You do believe that would ameliorate the problem?

Mr. HUMBLE. If not completely, it would certainly be a long step in the right direction.

Mr. WUNDER. Thank you, Mr. Chairman.

Mr. GORE (presiding]. I would add one thing to minority counsel's summation. The purpose of the law ultimately seems to be to insure that public land is developed in the public interest and that mineral resources which are greatly needed by the public are not held off the marketplace through a system of fraudulent speculation.

Just to clarify the record, Mr. Humble, looking at the map it would appear that the uranium claims that Exxon purchased from this gentleman who took the fifth amendment so frequently here last week is Teapot Dome. Is that correct?

Mr. HUMBLE. I am sorry, sir. I couldn't answer that question. I am not that personally familiar with the area.

Mr. GORE. Well, that is what the map indicates.

I have a closing statement from Chairman Moss, who was required to leave for medical attention.

Let me thank you for your testimony first.

I shall read this statement into the record, and these are the words of Chairman Moss and not mine, as apparent from the first sentence.

During my quarter century of chairing and participating in thousands of hours of congressional hearings covering myriad issues, few have concerned and disturbed me more than the evidence and testimony presented before this subcommittee the last few days regarding the illegal practices in staking and maintaining phony uranium lode mining claims on public lands. This hearing record is clear-serious abuses of both Federal and State mining laws are now and have been occurring over the past decade.


Last Thursday, we heard testimony from Phillip Flanagan concerning 20,000 uranium claims which he has held on Federal lands in Wyoming for many years. To be more precise, we heard Mr. Flanagan invoke his privilege under the fifth amendment 14 times, rather than respond to questions concerning those claims.

In the last 5 years alone, he filed sworn affidavits in Wyoming county courthouse attesting that his corporation had performed over $10 million worth of assessment work, when the subpenaed records of his company disclosed that only a fraction of the work was done. Yet, as recently as September 19 of this year, he was able to sell an exploratory interest in 9,500 claims to Phillips Petroleum for $70,000.

On Friday, we learned how Ralph Schauss and William Murphy put together a block of 18,000 uranium claims in the Red Desert of Wyoming. Those claims were illegally staked and validated at inception and were maintained over the years by instruments of deception-proofs of labor thought to be cleverly designed to circumvent the law. During the period 1970 through 1976, over $12 million in assessment work should have been performed on those claims. Instead, Mr. Murphy estimates only one-fourth of that amount was done, and investigation disclosed that considerably less than that was actually accomplished. Yet, early this year, Messrs. Schauss

and Murphy, as principal officers of Fremont Energy Corp., were able to sell an interest in those 18,000 claims to Washington Public Power Supply System, a major northwest.utility, for several million dollars.

Today, we heard how major energy companies and a leading public utility deal with phony claim stakers and false assessment affiants who paper courthouses with illegal and worthless documents. Unhappily, these land speculators, who tie up millions of acres of uranium-potential Federal lands, thus denying their diligent exploration to others, remain in business solely because major energy companies and others sustain, and thereby condone and encourage, their illegal practices by continuing to deal with them. It's all a matter of ethics-or the lack thereof.

In bringing these hearings to a close, I want to emphasize that the subcommittee is not closing the book on these matters. The Chair is directing the staff to take the following actions:

That the hearing transcripts be forwarded to appropriate Wyoming authorities for their assistance and use in connection with the current investigation into illegal claim-staking practices, including the filing of false location certificate and assessment affidavits;

That the hearing transcrips also be furnished to the Securities and Exchange Commission's enforcement division with the request that SEC conduct thorough, expeditious inquiries concerning the various mining claim transactions involving the several companies controlled by Messrs. Schauss and Murphy over the years to determine whether any of those activities violated Federal statutes and regulations of SEC and/or IRS;

That transcripts of these hearings be furnished to the Bureau of Land Management, Department of the Interior, and that staff discuss in detail with BLM officials these illegal practices occurring on public lands. I would note in this regard that the Federal Land Policy and Management Act of 1976 requires the recording of mining claims with the BLM and that the filing of any false statements with BLM would be in violation of Federal criminal statutes;

Finally, that the subcommittee promptly issue a report in this matter which will be furnished, together with the hearing transcript, to each energy company, including public utilities, engaged in the acquisition or uranium lode mining claims on public lands.

Mr. Humble, you are excused.
The subcommittee will stand in adjournment.
[Whereupon, at 1:18 p.m., the subcommittee adjourned.]

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