812.6363/707
The Secretary of State to the Chargé in Mexico (Summerlin)
Sir: The Department is informed that on July 10, 1920, there was published in the Diario Official at Mexico City, Circular No. 10, stated to be issued pursuant to Article 4 of the Executive Order of March 12, 1920, fixing the general conditions under which concessions may be granted for the development of petroleum deposits in the so-called Federal Zones, and that in the said circular it is provided that if an application for such a concession shall indicate that the concession will encroach upon a petroleum claim already granted, or for which a patent has been applied, the patentee or applicant for a patent may file an adverse claim, but even if the decision is favorable to the adverse claimant, he must apply within one month thereafter for a concession to develop the lands to which his claim refers, or lose all preferential rights to develop such lands. Moreover it seems that under the provisions of the circular, concessions may only be granted to Mexicans by birth or naturalization, or to corporations recognized under the laws of Mexico.
It is represented to the Department that these so-called Federal Zones include strips of land twenty meters in width along streams to the high tide mark and ten meters in width from high tide mark as far as the stream may be navigated by rafts; that the as[s]umption of government ownership of such streams is in conflict with the laws of Mexico, whereby the owners of lands adjoining or surrounding streams own to the center of streams, and that the Mexican law of 1902 [1901?] by which such so-called Federal Zones were recognized did not affect property rights therein, but merely provided that the easement enjoyed by the public on the edge of streams should be of the sizes mentioned.
[Page 221]It appears, however, that the circular and decree in question assume that the ownership of such strips is in the nation and attempt to deprive private owners without compensation of their rights therein. Such action is reported to the Department to be seriously prejudicial to the rights of American oil companies which have acquired by purchase or lease, in accordance with Mexican law, lands for the purpose of oil drilling adjacent to navigable streams, and are entitled by reason of such purchase or lease to drill in those lands or in the Federal Zones, if the public right of way is not disturbed by the drilling operation. In this connection the Department is advised that nearly all oil properties in Mexico are crossed by streams or creek beds, which, at certain times in the year carry water and may be claimed to be navigable by rafts for a few months in the year. It therefore follows that the damage threatened to American interests by the decree and circular mentioned is of large extent.
Bearing in mind the previous instructions of the Department relative to your communication with persons now exercising authority in Mexico, you will informally bring the foregoing to the attention of the appropriate person and state that if the facts are as above set forth, the circular and decree mentioned appears to threaten the confiscation of extensive rights of American citizens and that in your opinion the Government of the United States cannot remain insensible in the face of such danger to the rights of its citizens, but must support them in the enjoyment of those rights.
I am [etc.]