Muddy Waters

On the Los Angeles Stock Exchange one day last week, shares of Signal Oil & Gas Co. dropped a whopping 15 points, and Hancock Oil Co. of California fell eight points. The companies are two of the biggest drillers in California's underwater "tidelands" oil areas. The fall in the prices of their securities was the most noticeable result of the U.S. Supreme Court ruling that this "marginal sea," from low tide to the three-mile limit, and all of its wealth, belonged to the Federal Government, not the State of California.

Since the early '30's, California has been drawing rich royalties from billions of dollars of underwater oil. And since 1937, when a Senate resolution was first introduced asserting federal claims to the land, the issue has been a hot states' rights question. Only last year Congress passed a bill vesting title in the states, but the President vetoed it.

The court decision left Signal, Hancock and smaller operators, who have sunk some $50 million in California tideland wells, wondering what would happen to their property. They feared that they might have to pay the U.S. for the millions in oil they had already pumped and sold. The State of California stood to lose $4 1/2 million annual royalties and the city of Long Beach, which owns 290 wells, might lose $30 million in yearly profits.

Californians even had dire visions of the U.S. seizing docks and harbors built on filled land below the former low-tide mark. Actually, nothing as drastic as that was in prospect. Attorney General Thomas Campbell Clark, who brought the suit, indicated that the Government would respect existing property, merely replace the state as the royalty receiver.

Texas Jitters. California's reactions were mild compared to the cries from Texas, which has at least a $4 billion stake in submerged oil lands. The wells pay $2 million annually to state schools. Most of them, in inland bays, would not be affected even if the Supreme Court decision proved applicable to Texas. There was reason to believe that it would not. As a republic, Texas fixed its boundaries at 10 1/2 miles out into the Gulf before annexation. The 1845 treaty of annexation had confirmed them.

But Land Commissioner Bascom Giles declared that he favored seceding from the U.S. "if necessary." Said Salt Dome Oil Corp.'s Karl Hasselmann, who has 40 wells in the Galveston Bay area: "The only thing for us to do is to shut down our rigs and wait." At week's end he was still drilling.

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