under the laws of a State or under any regulation or order prescribed thereunder by any board, commission, officer, or other duty authorized agency of such State, or any of the products of such petroleum.

(2) The term "products" or "petroleum products" includes any article produced or derived in whole or in part from petroleum or any product thereof by refining, processing, manufacturing, or otherwise.

(3) The term "interstate commerce" means commerce between any point in a State and any point outside thereof, or between points within the same State but through any place outside thereof, or from any place in the United States to a foreign country, but only insofar as such commerce takes place within the United States.

(4) The term "person" includes an individual, partnership, corporation, or joint-stock company.

SEC. 3. The shipment or transportation in interstate commerce from any State of contraband oil produced in such State is hereby prohibited. For the purposes of this section contraband oil shall not be deemed to have been produced in a State if none of the petroleum constituting such contraband oil, or from which it was produced or derived, was produced, transported, or withdrawn from storage in excess of the amounts permitted to be produced, transported, or withdrawn from storage under the laws of such State or under any regulation or order prescribed thereunder by any board, commission, officer, or other duly authorized agency of such State.

SEC. 4. Whenever the President finds that the amount of petroleum and petroleum products moving in interstate commerce is so limited as to be the cause, in whole or in part, of a lack of parity between supply (including imports and reasonable withdrawals from storage) and consumptive demand (including exports and reasonable additions to storage) resulting in an undue burden on or restriction of interstate commerce in petroleum and petroleum products, he shall by proclamation declare such finding, and thereupon the provisions of section 3 shall be inoperative until such time as the President shall find and by proclamation declare that the conditions which gave rise to the suspension of the operation of the provisions of such section no longer exist. If any provision of this section or the application thereof shall be held to be invalid, the validity or application of section 3 shall not be affected thereby.

SEC. 5. (a) The President shall prescribe such regulations as he finds necessary or appropriate for the enforcement of the provisions of this Act, including but not limited to regulations requiring reports, maps, affidavits, and other documents relating to the production, storage, refining, processing, transporting, or handling of petroleum and petroleum products, and providing for the keeping of books and records, and for the inspection of such books and records and of properties and facilities.

(b) Whenever the President finds it necessary or appropriate for the enforcement of the provisions of this Act he shall require certificates of clearance for petroleum and petroleum products moving or to be moved in interstate commerce from any particular area, and shall establish a board or boards for the issuance of such certificates. A certificate of clearance shall be issued by a board so established in any case where such board determines that the petroleum or petroleum products in question does not constitute contraband oil. Denial of any such certificate shall be by order of the board, and only after reasonable opportunity for hearing. Whenever a certificate of clearance is required for any area in any State, it shall be unlawful to ship or transport petroleum or petroleum products in interstate commerce from such area unless a certificate has been obtained therefor.

(c) Any person whose application for a certificate of clearance is denied may obtain a review of the order denying such application in the United States District Court for the district wherein the board is sitting by filing in such court within thirty days after the entry of such order a written petition praying that the order of the board be modified or set aside, in whole or in part. A copy of such petition shall be forthwith served upon the board, and thereupon the board shall certify and file in the court a transcript of the record upon which the order complained of was entered. Upon the filing of such transcript, such court shall have jurisdiction to affirm, modify, or set aside such order, in whole or in part. No objection to the order of the board shall be considered by the court unless such objection shall have been urged before the board. The finding of the board as to the facts, if supported by evidence, shall be conclusive. The judgment and decree of the court shall be final, subject to review as provided in sections 128 and 240 of the Judicial Code, as amended (U. S. C., title 28, secs. 225 and 347).

SEC. 6. Any person knowingly violating any provision of this Act or any regulation prescribed thereunder shall upon conviction be punished by a fine of not to exceed $2,000 or by imprisonment for not to exceed six months, or by both such fine and imprisonment.

SEC. 7. (a) Contraband oil shipped or transported in interstate commerce in violation of the provisions of this Act shall be liable to be proceeded against in any district court of the United States within the jurisdiction of which the same may be found, and seized for forfeiture to the United States by a process of libel for condemnation; but in any such case the court may in its discretion, and under such terms and conditions as it shall prescribe, order the return of such contraband oil to the owner thereof where undue hardship would result from such forfeiture. The proceedings in such cases shall conform as nearly as may be to proceedings in rem in admiralty, except that either party may demand a trial by jury of any issue of fact joined in any such case, and all such proceedings shall be at the suit of and in the name of the United States. Contraband oil forfeited to the United States as provided in his section shall be used or disposed of pursuant to such rules and regulations as the President shall prescribe.

(b) No such forfeiture shall be made in the case of contraband oil owned by any person (other than a person shipping such contraband oil in violation of the provisions of this Act) who has with respect to such contraband oil a certificate of clearance which on its face appears to be valid and to have been issued by a board created under authority of section 5, certifying that the shipment in question is not contraband oil, and such person had no reasonable ground for believing such certificate to be invalid or to have been issued as a result of fraud or mis- ̧ representation of fact.

SEC. 8. No common carrier who shall refuse to accept petroleum or petroleum products from any area in which certificates of clearance are required under authority of this Act, by reason of the failure of the shipper to deliver such a certificate to such carrier, or who shall refuse to accept any petroleum or petroleum products when having reasonable ground for believing that such petroleum or petroleum products constitute contraband oil, shall be liable on account of such refusal for any penalties or damages. No common carrier shall be subject to any penalty under section 6 in any case where (1) such carrier has a certificate of clearance which on its face appears to be valid and to have been issued by a board created under authority of section 5, certifying that the shipment in question is not contraband oil, and such carrier had no reasonable ground for believing such certificate to be invalid or to have been issued as result of fraud or misrepresentation of fact, or (2) such carrier, as respects any shipment originating in any area where certificates of clearance are not required under authority of this Act, had no reasonable ground for believing such petroleum or petroleum products to constitute contraband oil.

SEC. 9. (a) Any board established under authority of section 5, and any agency designated under authority of section 11, may hold and conduct such hearings, investigations, and proceedings as may be necessary for the purposes of this Act, and for such purposes those provisions of section 21 of the Securities Exchange Act of 1934 relating to the administering of oaths and affirmations, and to the attendance and testimony of witnesses, and the production of evidence (including penalties), shall apply.

(b) The members of any board established under authority of section 5 shall be appointed by the President, without regard to the civil service laws but subject to the Classification Act of 1923, as amended; and any such board may appoint, without regard to the civil service laws but subject to the Classification Act of 1923, as amended, such employees as may be necessary for the execution of its functions under this Act.

SEC. 10. (a) Upon application of the President, by the Attorney General, the United States District Courts shall have jurisdiction to issue mandatory injunctions commanding any person to comply with the provisions of this Act or any regulation issued thereunder.

(b) Whenever it shall appear to the President that any person is engaged or about to engage in any acts or practices that constitute or will constitute a violation of any provision of this Act or of any regulation thereunder, he may in his discretion, by the Attorney General, bring an action in the proper United States District Court to enjoin such acts or practices, and upon a proper showing a permanent or temporary injunction or restraining order shall be granted without bond.

(c) The United States District Courts shall have exclusive jurisdiction of violations of this Act or the regulations thereunder, and of all suits in equity and

actions at law brought to enforce any liability or duty created by, or to enjoin any violation of, this Act or the regulations thereunder. Any criminal proceeding may be brought in the district wherein any act or transaction constituting the violation occurred. Any suit or action to enforce any liability or duty created by this Act or regulations thereunder, or to enjoin any violation of this Act or any regulations thereunder, may be brought in any such district or in the district wherein the defendant is found or is an inhabitant or transacts business, and process in such cases may be served in any other district of which the defendant is an inhabitant or wherever the defendant may be found. Judgments and decrees so rendered shall be subject to review as provided in sections 128 and 240 of the Judicial Code, as amended (U. S. C., title 28, secs. 225 and 347).

SEC. 11. Wherever reference is made in this Act to the President such reference shall be held to include, in addition to the President, any agency, officer, or employee who may be designated by the President for the execution of any of the powers and functions vested in the President under this Act.

SEC. 12. If any provision of this Act, or the application thereof to any person or circumstance, shall be held invalid, the validity of the remainder of the Act and the application of such provision to other persons or circumstances shall not be affected thereby.

SEC. 13. This Act shall cease to be in effect on June 16, 1937.

Approved, February 22, 1935.

We have present, this morning, the Secretary of the Interior, Mr. Ickes, and we shall be very pleased to hear the Secretary.

STATEMENT BY HON. HAROLD L. ICKES, SECRETARY OF THE

INTERIOR

Secretary ICKES. Mr. Chairman, and gentlemen, members of the committee, when I appeared before the subcommittee of the Committee on Interstate and Foreign Commerce of the House of Representatives on September 18, 1934, I said that there are certain fundamental considerations which warrant the determination of a permanent national policy of oil conservation to be effective during periods of scarcity as well as of plenty.

As I said then, the first considerations are that the oil reserves of the United States are limited and that oil is an irreplaceable resource. Another consideration is that the United States is using up its oil reserves faster than the rest of the world, as a result of which there will be an oil shortage in the United States long before there is an oil shortage in the rest of the world. Still another is that, as a Nation, we should not be forced to depend upon more costly substitute fuels in advance of the rest of the world or pay the higher price for oil which foreign producers will demand when our production fails to meet our needs.

If this price for our past and present extravagance is to be avoided, adequate study should be made of all factors involved in oil and gas conservation in order to make certain that our present and future reserves of oil will be developed without waste and that our supply of this irreplaceable source can be made to meet, so long as possible, the needs of the Nation.

Oil is essential to our happiness and well-being as citizens and absolutely indispensable to our national defense. The Congress and the executive branch should not await the day of practical exhaustion before arriving at a national policy of oil conservation If we are to conserve our oil supply so that it will meet, to the fullest possible degree, the needs of the Nation, we must do it while there is oil to conserve. I suggest, therefore, that the Congress and the executive branch might well address themselves to the question as to how, in

addition to the permanent enactment of the Connally Act, the Federal Government might aid the oil-producing States to husband the oil resources of America.

When I spoke before the House committee, the daily average crude oil production in the United States was about 2,500,000 barrels; today, it is about 3,250,000 barrels, an increase of 30 percent. All-time records of production are being broken, one after another. The increase in demand for petroleum products necessitating this increased production of crude oil, coupled with the elimination of contraband petroleum products, largely has eliminated the problem of stabilization which was an important phase of our national recovery program and was particularly pressing during the summer of 1934. The increased demand and mounting production have emphasized further, to my mind at least, the need for conservation.

The minimum objective of a sound conservation program should be the prevention of waste. The Supreme Court of the United States, in its decision of February 2 involving the control of natural gas production in the Texas Panhandle, divided waste into (1) above ground waste, which involves production in excess of demand or for inferior uses, and (2) underground waste, which relates to the manner, place, or extent of production. The Court indicated clearly that the State has the right to prorate production to prevent waste, as well as to avoid undue drainage from one property to another.

In its decision of January 4, last, in the matter of the transportation in interstate commerce of goods made by convict labor, the Supreme Court held

that where the subject of commerce is one as to which the power of the State may constitutionally be exerted by restriction or prohibition in order to prevent harmful consequences, the Congress may, if it sees fit, put forth its power to regulate interstate commerce so as to prevent that commerce from being used to impede the carrying out of the State policy.

These decisions of the Supreme Court are of particular interest in view of the present status of the conservation of our oil and gas resources. Five States-Kansas, Louisiana, New Mexico, Oklahoma, and Texas-producing in the aggregate 73 percent of the natural oil output, have adopted the policy of regulating oil production within their respective borders so as to prevent waste.

There is a variation in the respective laws and in the orders issued thereunder, but each State determines each month the amount of oil which may be produced from its wells and fields, so that aboveground waste may be prevented by not producing in excess of demand, thereby escaping the loss by evaporation and hazard of floods and accidental fires to which oil placed in storage tanks is exposed, and that underground waste may be avoided by limiting the manner, place and extent of production, thus leaving room for the employment of sound engineering principles to assure an increased ultimate recovery of oil.

Each of these States determines for itself, on the basis of testimony received at public hearings, the amount of oil which currently may be produced without waste and the proportion in which it is to be divided among the fields and wells of the State. In determining its total allowable production, each State is guided to some extent by the purely advisory recommendations of the Bureau of Mines, but the record shows that each of the principal oil-producing States has

exercised its own judgment as to the amount of its oil which may be produced and marketed without waste.

This, then, is the State policy. The Federal Government, under the law which now is before your committee with my recommendation for its permanent enactment, simply supports the State policy by providing that petroleum, or the products thereof, produced in excess of the amounts permitted by State law or the orders thereunder, is contraband and may not be moved in interstate or foreign commerce. The law embodies the same policy which was expressed in section 9c of the National Industrial Recovery Act, but with one material difference. Section 9c merely delegated to the President the authority to prohibit the movement of such excess oil in interstate and foreign commerce; it did not prohibit the movement itself. Section 9c was declared unconstitutional by the Supreme Court in what is known as the "hot oil" case.

This section was attacked upon the ground that it was an unconstitutional delegation of legislative power. The Court declared that the question whether the transportation in interstate and foreign commerce of excess oil should be prohibited by law was one of legislative policy and that, in section 9c, the Congress had declared no policy as to the transportation of such excess production. Section 9c, the Court said, gave to the President an unlimited authority to determine the policy and to impose the prohibition, or not to impose it, as he saw fit, and disobedience to his order was made a crime punishable by fine and imprisonment.

It was because the Congress, in enacting section 9c, had delegated legislative authority to the President, without having declared its policy, established standards, or laid down rules, that action under section 9c was declared to be without constitutional sanction.

The Connally Act was approved 46 days after the decision on section 9c. In it the Congress has clearly stated its legislative policy, has established necessary standards, and laid down rules. Although subjected to legal attack immediately upon its enactment, the act has been supported with uniform success in Federal courts in Texas and Louisiana. No issue under the act has been presented to the Supreme Court.

By Executive Order No. 6979 of February 28, 1935, the Secretary of the Interior was designated by the President to execute all of the powers, except those in section 4, vested in him by the act, with the proviso that no regulation, the violation of which was punishable by fine or imprisonment, should be effective unless and until approved by the President. Executive Order No. 6980-B of March 1, 1935, approved regulations issued pursuant to the Act. Executive Order No. 6980-C of the same date required certificates of clearance for petroleum and petroleum products moving in interstate commerce from the East Texas oil field and established Federal Tender Board No. 1, with its principal office at Kilgore, Texas, for the issuance of such certificates.

Executive Order No. 7024-B of April 25, 1935, established Federal Petroleum Agency No. 1, as an investigative agency under the act and Executive Order No. 7129-A of August 6, 1935, required certain reports from masters of vessels transporting petroleum or its products in interstate or foreign commerce from any port in Texas or Louisiana. On April 1, 1936, the Petroleum Conservation Division was estab