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EXTENSION OF INTERSTATE COMPACT ON < <

GOVERN MEN OIL AND GAS

Storage

H E A R IN G S

BEFORE A

SUBCOMMITTEE OF THE

COMMITTEE ON

S ^ IT E R S T A T E AND FOR EIGN COMMERCE

HOUSE OF REPRE SEN TAT IVES

eig ht y-eig ht h congress

□ (□ F IR S T SE SS IO N

a ~ ~ q

S —- — IT OX

S 3 H.J. Res. 220

A JO IN T RE SO LU TI ON C ON SE NT IN G TO A N EXTENSI ON OF TII E 

IN TER STA TE CO MP AC T TO CO NS ER VE O IL AN D GAS

JU N E 18 AN D 19, 1963

P ri n te d fo r th e us e of th e 

Com mittee on In te rs ta te an d For ei gn Co mm erc e

20-731

U.S. GOVERNMENT PRINTIN G OF FIC E 

WASHINGTON : 1963
I V

K i r

> ">

Y

Ci 11

ST* Q . \

COMMITTEE ON INTERSTATE AND FOREIGN COMMERCE

ORE N HA RR IS,

JO HN BE LL W IL LI AM S, M issis sip pi

KEN NET H A. RO BE RT S, Al ab am a

HA RL EY O. ST AG GE RS , W es t V irgi ni a

WAL TE R RO GE RS , Tex as

SA MU EL N. FRIE D EL, M arylan d

TO RB ER T II. MAC DON ALD, M as sa ch us et ts

GE OR GE M. RH OD ES , Pen ns yl va ni a

JO HN JARM AN , Oklah om a

LEO W. O’BR IE N, New York

JO HN E. MOSS, Cal ifor ni a

JO HN D. DIN GEL L, Mi chiga n

PA UL G. RO GE RS , Flo rida

RO BE RT W. H EM PH IL L, So uth Car ol in a

DAN RO ST EN KO WSK I, Illin oi s

JA M ES C. HE AL EY , New York

HO RA CE R. KO RNEGAY , N ort h C ar ol in a

W. R. HU LL , J r., Miss ou ri

G IL LIS W. LON G, Lou isia na

LIO NEL VAN DEER LI N, Cal ifor ni a

A rk an sa s, Ch airm an

JO HN B. BE NN ET T, Michiga n 

W IL LI AM L. SP RI NGER , Il lino is 

PA UL F. SC HE NC K, Ohio 

J. AR TH UR YOUN GER, C al if or ni a 

MILTO N W. GL EN N, New Je rs ey 

SA MU EL L. DEV IN E, Ohio 

AN CH EIt NE LS EN , M in ne so ta 

HA ST IN GS K EIT H , M as sa ch us et ts 

W IL LA RD S. CU RT IN , Pen ns yl va ni a 

AB NE R W. SIBA L, Con ne ct ic ut 

GL EN N CUNN ING HA M. Neb ra sk a 

JA M ES T. BR OY HI LL , N or th Car ol in a 

DO NA LD G. BRO TZMAN, Co lorado

W. E. Wil li am so n, Clerk

Ken ne th J. P ain te r, A ss is ta nt Clerk

P ro fe ss io na l Sta ff

Andr ew Steve nson George W. P erry

Kur t Borc har dt J am es M. Menge r, Jr .

Subcommittee on Communication s and P ower

WAL TE R RO GE RS , Tex as , Ch airm an

JO HN E. MOSS, C al if orn ia J. AR TH UR YO UN GER, C al ifor ni a

DAN RO ST EN KO WSK I, Il linois GL EN N CU NN ING HA M, Neb rask a

HO RA CE R. KO RN EGAY , N or th C ar ol in a JA M ES T. BR OY HI LL , N or th Car ol in a 

W R. HU LL , JR., Miss ou ri

n
■+

C O N T E N T S

Hearings held on— Page

June 18, 1963_______________________________________________ 1

June 19, 1963___________________ 23

Tex t of House J oin t Resolution 220________________________________ 2

Report of—

Bureau of the Budge t________________________________________ 8

Defense De partm ent_________________________________________ 9

Federal Power Commission____________________________________ 8

Interior De partm ent_________________________________________ 7

Justice De partm ent__________________________________________ 9

Sta te Departm ent___________________________________________ 10

Statem ent of—

Alley, Lawrence R., executive secretary, Inter sta te Oil Compact

Commission_______________________________________________ 13

Berry, Hon. E. Y., a Representative in Congress from the Sta te of

South Da kota_____________________________________________ 23

Byrd, Hon. Richard C., chairman, Kansas Corporation Commission. 13

Campbell, Hon. Jack M., Governor, Sta te of New Mexico_________ 11

Morris, Hon. Thomas G., a Representative in Congress from the

State of New Mexico_______________________________________ 10

Orrick, Hon. William, Assistant Attorney General, Antitrust Division, Department of Ju stic e_________________________________ 24

Welsh, Hon. Matthew E., Governor, Sate of Indiana , and chairman,

Inter sta te Oil Compact Commission__________________________ 13

Additional inform ation subm itted for the record by—

Chamber of Commerce of the United States, letter from Thero n J.

Rice_____________________________________________________ 20

Clyde, Hon. George D., Governor, State of Utah, telegram from ____ 36

Egan, Hon. William A., Governor, Sta te of Alaska, telegram from 37

Fannin, Hon. Paul, Governor, State of Arizona, telegram from_____ 30

Gubbrud, Hon. Archie, Governor, Sta te of South Dak ota, telegram

from_____________________________________________________ 23

Guy, Hon. William L., Governor, Sta te of No rth Dak ota, telegram

from_____________________________________________________ 36

Hatfield, Hon. Mark O., Governor, State of Oregon, telegram fr om .. 36

Independent Petroleum Association of America, statem ent of L. Dan

Jones, general counsel______________________________________ 37

Intersta te Oil Compact Commission, letter from Lawrence R. Alley,

executive sec retary _________________________________________ 21

Kerner, Hon. Otto, Governor, State of Illinois, telegram from ______ 37

Michigan Department of Conservation, letter from Gerald E. Eddy,

director__________________________________________________ 19

National Oil Marketers Association, resolution of________________ 20

Petroleum Study Committee, report to the President, dated September 4, 1962__________________ 28

Rockefeller, Hon. Nelson A., Governor, Sta te of New York, letter

from _____________________________________________________ 35

Rosellini, Hon. Albert D., Governor, Sta te of Washington, telegram

from _____________________________________________________ 37

Tawes, Hon. J. Millard, Governor, State of M aryland, telegram from. 36

in

EXTENSION OF INTERSTATE COMPACT ON OIL AND

GAS

TUESD AY , JU N E 18, 19 63

H ouse of Repr esenta tives,

SUBCOMM ITTEE ON COMMUNICAT ION S A ND POW ER OF THE

Com mit tee on I nterstate and F oreign C ommerce,

Washington, D.G.

The committee met at 10 am., pursuant to call, in room 1334, Longworth House Office Building, Hon. Walter Rogers, of Texas (chairman of the subcommittee) presiding.

Mr. Rogers of Texas. The Subcommittee on Communications and 

Power of the Interstate and Foreign Commerce Committee of the 

House of Representatives will come to order for the consideration of 

business scheduled for hearing this morning.

We are meeting this morning to take testimony on House Joi nt 

Resolution 220, a bill to give the consent of the Congress to the extension and renewal for a period of 4 years to the interstate compact to 

conserve oil and gas, which was entered into originally in 1935 by the 

States of Oklahoma, Texas, New Mexico, Illinois, Colorado, and 

Kansas. The Congress gave consent to such compact by House Jo int 

Resolution 407, approved August 27, 1935, and has consented eight 

times since to its extension and renewal.

Unless the Congress gives its consent to the further extension 

and renewal of this compact, which is now entered into by 30 States, 

it will expire on September 1,1963.

When the compact was first consented to by the Congress in 1935, 

it was hoped tha t the several oil-producing States, acting together 

under the compact, would be able to effect conservation of this important natural resource, prevent its waste, and give aid to the petroleum industry in its effort to promote the maximum ultimate recovery of the oil and gas reserves of each State. During the 28 years 

tha t this compact has been in force, tha t hope has been fulfilled in substantial and ever-increasing degree.

A compact such as the one under consideration is in complete ha rmony with the spirit of our form of government. It preserves the 

rights of each separate State, while enabling the several States, as 

parties to the compact, to work together on a sound program which 

all of them accept and endorse.

A copy of House Joint Resolution 220 will be included in the record.

l
2 EX TENS ION OF INTERSTATE COMPACT ON OIL AND GAS

(The resolution referred to follows:)

[H.J. Res. 220, 88th Cong., 1st sess.]

JO IN T RE SO LU TI ON Con se nting to an ex tens io n an d rene wal of th e In te rs ta te Co mpact 

T o Co ns erve Oil an d Ga s

Resolved by the Senate and House of Representatives o f the United States of Ame rica in Congress assembled, That the consent of Congress is hereby given 

to an extension and renewal for a period of four years from September 1, 1963, 

to September 1, 1967, of the Interstate Compact To Conserve Oil and Gas, which 

was signed in the city of Dallas, Texas, the 16th day of Feb ruary 1935 by the 

represe ntatives of Oklahoma. Texas, California, and New Mexico, and at the 

same time and place was signed by the representatives, as a recommendation for 

approval to the Governors and Legislatures of the States of Arkansas, Colorado, 

Illinois, Kansas, and Michigan, and which prio r to August 27, 1935, was presented to and approved by the Legislatures and Governors of the States of New 

Mexico, Kansas. Oklahoma, Illinois, Colorado, and Texas, and which so approved by the six States last above named was deposited in the Department of 

Sta te of the United States, and the rea fter was consented to by the Congress in 

Public Resolution Numbered 64, Seventy-fourth Congress, approved August 27, 

1935, for a period of two years, and the rea fter was extended by the represen tatives of the compacting States and consented to by the Congress for successive 

Iieriods. without interruption, the last extension being for the period from 

September 1, 1959, to September 1. 1963, consented to by Congress by Public 

Law Numbered 143, Eighty-sixth Congress, approved August 7, 1959. The agreement to extend and renew said compact for a period of four years from September 1, 1963, to September 1, 1967. duly executed by repre sentatives of the States 

of Alabama, Alaska, Arizona, Arkansas, Colorado, Florida, Illinois, Indiana, 

Kansas, Kentucky, Louisiana, Maryland, Michigan. Mississippi, Montana, Nebraska. Nevada, New Mexico. New York, North Dakota. Ohio, Oklahoma, Pennsylvania, South Dakota, Tennessee, Texas, Utah. Washington, West Virginia, and 

Wyoming, has been deposited in the Departm ent of Sta te of the T’nited States, 

and reads as follows :

“AN AGREEMENT TO EXTEND THE INTERSTATE COMPACT TO 

CONSERVE OIL AND GAS

“WHEREAS, on the 16th day of February, 1935, in the City of Dallas. Texas, 

there was executed ‘AN INTERSTATE COMPACT TO CONSERVE OIL AND 

GAS’ which was there aft er formally ratified and approved by the States of 

Oklahoma, Texas, New Mexico, Illinois, Colorado, and Kansas, the original of 

which is now on deposit with the Dep artm ent of State of the United States, a 

tru e copy of which f ollo ws:

“ ‘AN INTE RSTA TE COMPACT TO CONSERVE OIL AND GAS 

“ ‘Article I

“ ‘This agreement may become effective with in any compacting state at any 

time as prescribed by that state, and shall become effective with in those states 

rati fying it whenever any thre e of the States of Texas, Oklahoma, California, 

Kansas, and New Mexico has ratified and Congress has given its consent. Any 

oil-producing state may become a par ty hereto as hereinafter provided.

“ ‘Article II

“ ‘The purpose of this compact is to conserve oil and gas by the prevention of 

physical waste thereof from any cause.

“ ‘Article II I

“ ‘Each State bound hereby agrees that within a reasonable time it will enact 

laws, or if the laws have been enacted, then it agrees to continue the same in 

force, to accomplish within reasonable limits the prevention o f:

“ ‘(a ) The operation of any oil well with an inefficient gas-oil ratio. 

“ ‘(b) The drowning with water of any stratu m capable of producing oil

or gas, or both oil and gas in paying quantities.
EX TE NS IO N OF INTERS TA TE COMPACT ON OIL AND GAS 3

“ ‘(c ) The avoidable escape into the open air or the wasteful burning of 

gas from a natur al gas well.

“ ‘(d ) The creation of unnecessary fire hazards.

“ ‘(e ) The drilling, equipping, locating, spacing or operating of a well or 

wells so as to bring about physical waste of oil or gas or loss in the ultimate 

recovery thereof.

“ ‘(f ) The inefficient, excessive or improper use of the reservoir energy 

in producing any well.

“ ‘The enumeration of the foregoing subjects shall not limit the scope of the 

auth orit y of any state.

“ ‘Article IV

“ ‘Each stat e bound hereby agrees tha t it will, within a reasonable time, enact 

statutes, or if such statutes have been enacted then tha t i t will continue the same 

in force, providing in effect tha t oil produced in violation of its valid oil a nd/or 

gas conservation statu tes or any valid rule, order or regulation promulgated 

thereunder, shall be denied access to commerce; and providing for stringen t 

penalties for the waste of eit her oil or gas.

“ ‘Article V

“ ‘It is not the purpose of this compact to authorize the states joining herein 

to limit the production of oil or gas for the purpose of stabilizing or fixing the 

price thereof, or create or perpetuate monopoly, or to promote regimentation, but 

is limited to the purpose of conserving oil and gas and preventing the avoidable 

waste thereof within reasonable limitations.

“ ‘Article VI

“ ‘Each State joining herein shall appoint one representative to a commission 

hereby constituted and designated as

TH E INT ERSTA TE OIL COMPACT COMM ISS ION ,

the duty of which said commission shall be to make inquiry and ascerta in from 

time to time such methods, practices, circumstances, and conditions as may be 

disclosed for bringing about conservation and the prevention of physical waste 

of oil and gas, and at such intervals as said commission deems beneficial i t shall 

report its findings and recommendations to the several States for adoption or 

rejection.

“ ‘The Commission shall have power to recommend the co-ordination of the 

exercise of the police powers of the several states within their several jurisdictions to promote the maximum ultimate recovery from the petroleum reserves of 

said states, and to recommend measures for the maximum ultim ate recovery of oil 

and gas. Said Commission shall organize and adopt suitable rules and regulations for the conduct of its business.

“ ‘No action shall be ta ken by the Commission except: (1 ) by the affirmative 

votes of the majority of t he whole number of the compacting Sta tes represented 

at any meeting, and (2 ) by a concurring vote of a major ity in intere st of the 

compacting States at said meeting, such intere st to be determined as follows: 

such vote of each State shall be in the decimal proportion fixed by the ratio of its 

daily average production during the preceding calendar half-year to the daily 

average production of the compacting States during said period.

“ ‘Article VII

“ ‘No State by joining herein shall become financially obligated to any other 

State, nor shall the breach of the terms hereof by any State subject such State 

to financial responsibility to th e other States joining herein.

“ ‘Article V III

“ ‘This compact shall expire September 1, 1937. But any State joining herein 

may, upon sixty (GO) days notice withdraw herefrom.

“ ‘The representatives of the signatory States have signed this agreement in a 

single original which shall be deposited in the archives of the Department of 

Sta te of the United States, and a duly certified copy shall be forwarded to the 

Governor of each of the signatory states.
4 EX TE NS ION OF INTE RS TA TE COMPACT ON OIL AND GAS

“ ‘This compact shall become effective when ratified and approved as provided 

in Article I. Any oil-producing Sta te may become a party hereto by affixing 

its signatu re to a cou nterpart to be similarly deposited, certified, and ratified.’

“WHEREAS, the said Interstate Compact to Conserve Oil and Gas has heretofore been duly renewed and extended with the consent of the Congress to 

September 1,1963; and,

“WHEREAS, it is desired to renew and extend the said Interst ate Compact 

to Conserve Oil and Gas for a period of four (4) years from September 1, 1963, 

to September 1,1967:

“Now, therefore, this writing witnesseth :

“It is hereby agreed t ha t the Compact entitled

“ ‘AN INTERSTATE COMPACT TO CONSERVE OIL AND GAS’ executed 

in the City of Dallas, Texas, on the 16th day of February, 1935, and now on 

deposit with the Departm ent of Sta te of the United States, a correct copy of 

which appears above, he, and the same hereby is, extended for a period of four 

(4) years from September 1, 1963, its present date of expiration, to September 

1, 1967. This agreement shall become effective when executed, ratified, and 

approved as provided in Article I of the original Compact.

“The signatory States have executed this agreem ent in a single original which 

shall be deposited in the arch ives of th e D epartment of State of the United States 

and a duly certified copy thereof shall be forwarded to the Governor of each of 

the signatory State s. Any oil-producing state may become a party hereto by 

executing a coun terpart of th is agreement to be similarly deposited, certified, and 

ratified.

“EXECUTED by the several undersigned states, at their several sta te capitols, 

thro ugh their proper officials on the dates as shown, as duly authorized by 

sta tut es and resolutions, subject to the limitations and qualificatio ns of the acts 

of the respective S tate Legislatures.

“THE STATE OF ALABAMA 

“By J ohn Patterson, Governor “Dat ed : 9-4-62

“Attest: Bettye Frink

“Secreta ry of S tate

“ (seal)

“THE STATE OF ALASKA 

“By William A. Egan, Governor “Da ted : 9-21-62

“At test: Hugh J. Wade

“Secreta ry of Sta te

“ (S EA L)

“THE STATE OF ARIZONA 

“By Paul J . Fannin, Governor “Da ted : 11-1-61

“Attest: Wesley Bolin

“Secreta ry of Sta te

“ (S EA L)

“TH E STATE OF ARKANSAS 

“By Orval E. Faubus, Governor “Da ted : 3-15-62

“Attes t: Nancy J . Hall

“Secretary of Sta te

“ (S EA L)

“THE STATE OF COLORADO 

“By Steve McNichols, Governor “D ated :

“Atte st: George J. Baker

“Secretary of Sta te

“ (S EA L)

“THE STATE OF FLORIDA 

“By Farris Bryant, Governor “Da ted : 5-28-62 

“Attest: Tom Adams

“Secreta ry of State

“ (S EA L)
EXTENSION OF INTERSTATE COMPACT ON OIL AND GAS

“THE STATE OF ILLINOIS 

“By Otto Kerner, Governor

“Date d: 12-12-61 

“Atte st: Charles F. Carpentier

“Secretary of Sta te

(S EA L) “THE STATE OF INDIANA

“By Matthew E. Welsh, Governor

“D ated :

“Atte st: Charles O. Hendricks

“Secretary of Sta te

(S EA L) “THE STATE OF KANSAS

“By J ohn Anderson, Jr. , Governor

Da tod *

“A ttes t: Paul R. Shanahan

“Secretary of State 

Leone M. Powers

“Assistant Secretary of Sta te

(S EA E) “TH E STATE OF KENTUCKY

“By Bert Combs, Governor

“Date d: 11-30-61 

Atte st: Henry H. Carter

“Secretary of Sta te

“THE STATE OF LOUISIANA 

“By Jimmie H. Davis, Governor

“Da ted : 6-12-62

“Atte st: Wade O. Martin, Jr.,

“Secretary of State

“THE STATE OF MARYLAND 

“By J. Millard T awes, Governor

“Date d: 11-20-62 

“Atte st: Lloyd L. Simpkins

“Secreta ry of State

“ (SEAL)

“TH E STATE OF MICHIGAN 

“By JonN B. Swainson, Governor

“Date d: 7-6-62 

“At test: J ames M. H are

“Secretary of Sta te

“ ( seal) „

“THE STATE OF MISSI SSI PPI 

“By Ross R. Barnett, Governor

“D at ed :

“Atte st: Heber Ladner

“Secretary of Sta te

“ (SEAL)

“THE STATE OF MONTANA 

“By Donald G. Nutter, Governor

“D ate d: 1-18-62 

“Atte st: Frank Murray

“Secreta ry of Sta te

“ (SEAL)

“THE STATE OF NEBRASKA 

“By Frank B. Morrison, Governor

“D at ed : 1-24-62 

“Atte st: Frank Marsh

“Secretary of State

“ (SEAL)

20-731—61 2
6 EXTENSION OF INTERSTATE COMPACT ON OIL AND GAS

“THE STATE OF NEVADA 

“By Grant Sawyer. Governor

“Dated: 4-25-62 

“Attest: J ohn Koontz

“Secretary of State

“ (SEAL)

“THE STATE OF NEW MEXICO 

“By E. L. Mechem, Governor

“Dated: 10-23-61 

“Att est : Betty Fiorina

“Secretary of State

“ (SEAL)

“THE STATE OF NEW YORK 

“By Nelson A. Rockefeller, Governor

“Da ted: 0-22-62

“Attes t: Caroline K. Simon

“S ecretar y of St ate

“ (SEAL)

“THE STATE OF NORTH DAKOTA 

“By William L. Guy, Governor

“Dated: 3-2-62

“Attes t: Ben Meier

“Secreta ry of State

“ (SEAL)

“THE STATE OF OHIO 

“By Michael V. DiSalle, Governor

“Dat ed : 10-9-62 

“Attes t: Ted W. Brown

“Secretary of Sta te

“ (SEAL)

“THE STATE OF OKLAHOMA 

“By J. Howard Edmondson, Governor

“D ated: 10-20-61

“Attes t: William N. Christian

“Secreta ry of Sta te

“ (SEAL)

“THE STATE OF PENNSYLVANIA 

“By David L. Lawrence, Governor

“Da ted : 2-6-62

“Attes t: E. J ames Trimabchi, Jr.

“Secreta ry of Sta te

“ (SEAL)

“THE STATE OF SOUTH DAKOTA 

“By Archie Gubbrud, Governor

“Da ted: 3-26-62

“Attes t: Essie Wiedenman

“Secreta ry of Sta te

“ (SEAL)

“THE STATE OF TENNESSEE 

“By Buford Ellington, Governor

“Da ted : 9-10-62

“Attes t: Joe C. Carr

“Secretary of Sta te

“ (SEAL)

“THE STATE OF TEXAS 

“By Price Daniel, Governor

“Dat ed: 19-16-61

“A ttes t: P. Frank Lake

“Secreta ry of Sta te

“ (SEAL)

“THE STATE OF UTAH 

“By George D. Clyde, Governor

“Dated :

“A tte st: Lamont F. Toronto

“Secreta ry of State

(SEAL)
EX TE NS IO N OF INT ERSTATE COMPACT ON OIL AND GAS 7

“THE STATE OF WASHINGTON 

“By Albert L>. Rosellini, Governor

“Da ted: 10-25-62

“A ttes t: Victor A. Meters

“Secretary of State

“ ( SEA L)

“THE STATE OF WEST VIRGINIA 

“By W. W. Barron, Governor

“D ated : 10-10-62

“Atte st: J oe F. Burdett

“Secretary of State

“ (S EA L)

“THE STATE OF WYOMING 

“By J ack R. Gage, Governor

“Da ted : 10-3-62

“Attest: Robert Outsen

“Deputy Secretary of State

“ (seal)”.

Sec. 2. Tlie Attorney General of the United States shall continue to make an 

ann ual report to Congress, as provided in section 2 of Public Law 185, Eightyfou rth Congress, for the duration of the In terstate Compact to Conserve Oil 

and Gas as to whether or not the activities of the States under the provisions of 

such compact have been consistent with the purpose as set out in article V of 

such compact.

Sec. 3. The right to alte r, amend, or repea l the provisions of the first section 

of this joint resolution is hereby expressly reserved.

Mr. Rogers of Texas. We have a report from the Department of 

Inte rior over the signature of Assistant Secretary of Interior, John 

Kelly, a report from the Bureau of the Budget under date of June 7, 

a report from the Federal Power Commission under date of May 24 

over the signature of its Chairman, Mr. Swidler, a report from the 

Department of Defense over the signature of Mr. John T. McNaughton, a report from the Department of Justice over the signature of the 

Deputy Attorney General, Nicholas deB. Katzenbach, and a report 

from the Department of State over the signature of Frederick G. 

Dutton, Assistant Secretary. Without objection these reports will be 

included in the record.

(The documents referred to follow :)

U.S. Department of the Interior,

Office of the Secretary, 

Washington, D.C., June 11, 1963.

Hon. Oren Harris,

Chairman, Committee on Inters tate and Foreign Commerce,

House of R epresentative s, Washington, D.C.

Dear Mr. Harris : Your committee has requested our views on House Joint

Resolution 220, a joint resolution consenting to an extension and renewal of 

the inte rstate compact to conserve oil and gas.

We favor enactm ent of th e joint resolution.

House Joint Resolution 220 would extend the inter sta te oil compact to conserve oil and gas for a period of 4 years, from September 1, 1963, to September 1, 

1967.

The compact, when formed initially on September 16. 1935, had six member 

States. The subject join t resolution has been executed by official re presentatives 

of 30 States, subject to confirming a cts by the respective legislatures.

The compact, through the Interst ate Oil Compact Commission, its authorized 

executive instrument, has served through the y ears usefully as a forum for the 

free discussion of oil and gas conservation practices and related problems, the 

study of State conservation law, regulations, and adm inistrative procedures. 

Through the many technical and specialized committees organized through the 

initiative of the compact commission, significant information of value to the 

conservation of oil and gas has been developed and made public.
8 EX TE NS ION OF INT ER STAT E COMPACT ON OIL AND GAS

Because of the useful services the compact renders and the gre at potential 

for increasing values that may he developed in the held of conservation and 

resource policy, extension of the compact as proposed appears to be very much 

in th e national interest.

The Bureau of the Budget ha s advised t ha t there is no objection to the prese ntation of this report from the standpo int of the ad ministration’s program.

Sincerely yours,

J ohn M. Kelly,

Assistant Secretary of the Interior.

Executive Office of the President,

Bureau of the Budget,

W ashinyton, D.C., June 7, 1963. Hon. Oren Harris,

Chairman, Committee on Inter state and Foreign Commerce, House of Representatives, Washington, D.C.

Dear Mr. Chairman : This is in reply to your letters of February 14 and May 

21, inviting the Bureau of the Budget to comment on House Joint Resolution 

220, consenting to an extension and renewal of the intersta te compact to conserve 

oil and gas.

If this resolution were enacted, the inte rstate compact to conserve oil a nd gas 

would be extended until September 1.1967.

The Bureau of the Budget would have no objection to the enactment of House 

Joint Resolution 220.

Sincerely yours,

P hillip S. Hughes,

Assistant Director for Legislative Reference.

Federal Power Commission Report on House J oint Resolution 220,

88th Congress

a joint resolution consenting to an extension and renewal of the interstate

COMPACT TO CONSERVE Oil, AND GAS

House Joint Resolution 220 would gra nt the consent of Congress to the extension and renewal for a period of 4 years from September 1, 1963, of the inter ­

sta te compact to conserve oil and gas.

The inters tate compact to conserve oil and gas was originally approved by 

Congress in 1935 for the purpose of conserving our irreplaceable na tural resources. Extensions and renew als of th e compact have been granted by Congress, 

with the current 4-year extension period runn ing to September 1, 1963. The 

Interstate Oil Compact Commission created by the compact is composed of representatives of the member State s, and has continuously functioned under that 

auth ority.

The compact enables the signatory States to work together on a volu ntary basis 

to carry out a sound conservation program and there by accomplish desirable ends 

which might otherwise remain unfilled, while at the same time preserving the 

rights and responsibilities of each of the sep ara te States. It appears to the 

Federal Power Commission that the compact is in harmony with our Fed eral 

form of government.

Section 11 (b) of the Na tural Gas Act (52 Stat. 827; 15 U.S.C. 717j (bj~) 

requires the Federal Power Commission “to assemble and keep curre nt pertin ent 

information rela tive to the effect and operation of any compact between two or 

more States heretofore or her eafter approved by the Congress; to make such 

information public, and to rep ort to the Congress from time to time, the information so obtained, together with such recommendations as may appear to S e 

appropriate or necessary to promote the purposes of such compact.” In accordance with this provision of the Gas Act, the Federal Power Commission has 

maintain ed a continuing int ere st in the Interst ate Oil Compact Commission 

and has been represented at the meetings of the Oil Compact Commission, 

thereby keeping informed of the work of th at organization. The Powe r Commission’s annual reports to Congress describe the functioning of the Interstate 

O il Compact Commission and our relationship to the work of that bodv. (See 

FPC 42d Annual Report (1962), p. 91.)
EX TE NS ION OF INTERS TA TE COMPACT ON OIL AND GAS 9

The Power Commission has consistently given its supp ort to the Oil Compact 

Commission when the extension of the la tter ’s basic autho rity has been before 

the Congress. We reaffirm our prior opinion th at continuance of the compact 

organization is of utmost importance to the conservation of the fuel supply of 

the Nation.

We believe that the Compact Commission’s program should be continued and 

fully supported, and favor adoption of the jo int resolution.

Federal Power Commission,

By J oseph C. Swidler, Chairman.

General Counsel of the Department of Defense,

Washington, D.C .,Jun e 10,196S.

Hon. Oren Harris,

Chairman, Committee on In terst ate and Foreign Commerce,

House of Representatives.

Dear Mr. Chairman : Reference is made to your requ est for the views of the 

Departme nt of Defense on House Joint Resolution 220, 88th Congress, a join t 

resolution consenting to an extension and renewal of the intersta te compact to 

conserve oil and gas.

The joint resolution would gra nt the consent of Congress to an extension and 

renewal of the inter sta te compact to conserve oil and gas for the period September 1, 1963, to September 1, 1967. The purpose of the compact, which was originally signed and approved in 1935, is to conserve oil and gas by the prevention of 

physical waste. Oil-producing States are par ties to the compact. The compact 

does not authorize limiting production to stabilize or fix prices, create or perpetuate monopolies, or promote regimentation.

The Attorney General has annually reported to the Congress that in his opinion the activities of the States under the provisions of the compact have been 

consiste nt with its purpose.

Since oil and gas are essential to national security, conservation of these resources by the prevention of waste should be supported. Accordingly, the Departm ent of Defense favors enactment of the join t resolution.

The Bureau of the Budget advises that, from the standp oint of the administration’s program, there is no objection to the presentatio n of this report for the 

consideration of the committee.

Sincerely,

J ohn T. McNaughton.

U.S. Department of J ustice,

Office of the Deputy Attorney General,

Washington, D.C., June 18, 1963.

Hon. Oren Harris,

Chairman, Committee on In ter sta te and Foreign Commerce,

House o f Representatives, Washington, D.C.

Dear Mr. Chairman : T his is in response to your request for the views of the 

Dep artm ent of Justic e concerning the joint resolution (H.J. Res. 220) consenting 

to an extension and renewal of the i ntersta te compact to conserve oil and gas.

The int ers tat e compact to conserve oil and gas, to which 30 States are now 

signatory, is intended to foster action by the oil-producing States to conserve 

domestic resources of oil an d gas by ending waste incident to production. It was 

originally enacted in 1935 and has been extended periodically, the last extension 

under Public Law 86-143 (Aug. 7, 1959, 73 Stat. 290), which expires September 

1,1963.

House J oin t Resolution 220 provides for the consent of Congress to the extension of the compact for a period of 4 years. The resolution continues the provision in the existing law th at the Attorney General make s an annual report to 

Congress as to whethe r the activities of the States und er the compact are consistent with its declared purposes. Also, it reserves the right to alte r, amend, 

or repeal the le gislation giving such consent.

As noted in the recent report filed by the Attorney General pursu ant to the 

previous extension resolution, it has become increasingly clea r that operation of 

the rela ted State-Fe dera l control system governing crude oil production is 

inad equate to the policy needs of the individual States or of the Federal Government. It was there also observed that the In terstate Oil Compact Com-
10 EXTENS ION OF INTERS TA TE COMPACT ON OIL AND GAS

mission as established by the compact would provide a convenient focal point 

for discussion of needed improvements in th at system.

Fo r the reasons stated, the Departm ent of Justice favo rs the extension of the 

compact.

The Bureau of the Budget has advised that there is no objection to the 

submission of this repo rt from the stan dpo int of the administration’s program. 

Sincerely yours,

Nicholas deB. Katzenbach,

Deputy A ttorney General.

Department of State, 

Washington, June 17,1963. Hon. Oren Harris,

Chairman, Committee on Inter sta te and Foreign Commerce,

House of Representatives, Washington, D.C.

Dear Mr. Chairman : In your letter of Feb rua ry 14, 1963, you requested 

a report on House Joint Resolution 220, a joint resolution consenting to an 

extension and renewal of the interst ate compact to conserve oil and gas. The 

Departm ent supports this legislation.

The intere st of the Department in the compact is quite indirect, stemming 

prim arily from the fac t that petroleum is an internation ally trad ed commodity, 

the inte rrelatio nships of which with our foreign rela tions are complex and 

profound. This trade and these inte rrelatio nships at present are affected by 

our oil import control program. The basis of this program, as you know, is 

the certified requirements of our national secu rity which make it necessary that 

we preserve a vigorous, hea lthy domestic petroleum industry. While subscribing 

to this objective, the Departm ent is anxious that the industry so protected be 

trim and tough. The oil compact offers promise as one means of imparting 

these charac teristics.

The Departm ent has noted with approval the report on the operation of the 

compact which was submitted to the Congress by the Attorney General on 

May 15,1963. The report suggests ways in which the compact can be made even 

more effective and states, on page 5, that the Departm ent of Justice has urged 

its extension. The Department of Sta te associates itse lf with this recommendation.

The Bureau of the Budget advises that from the stan dpoint of the administrat ion ’s program there is no objection to the submission of this report. 

Sincerely yours,

Freberick G. Dutton,

Assista nt Secretary.

Mr. Younger. Mr. Chairman, are those favorable or unfavorable?

Mr. Rogers of Texas. They are favorable.

Air. Younger. They recommend the passage of the resolution ?

Mr. Rogers of Texas. Yes; the extension of the compact.

The first witness tha t we have this morning, and we are highly 

honored to have him, is the Honorable Jack M. Campbell, Governor 

of the State of New Mexico. And without objection, we will permit 

our colleague, Air. Tom Morris, who represents the great State of New 

Alexico, to introduce Governor Campbell to the committee.

Air. Morris.

STATEM ENT OF HON. THOMAS G. MORRIS, A RE PRESEN TA TIV E IN 

CONGRESS FROM TH E STATE OF N EW MEXICO

Mr. AIorris. Air. Chairman and members of the committee, it is a 

privilege and an honor to be here this morning. I take great pleasure 

in introducing to the committee not only the Governor of our State, 

but a personal friend of mine, Gov. Jack Campbell.

Jack has been our Governor for a very short time but he is not 

without experience in public service. He. was a member of our New 

Alexico Legislature for 6 or 8 years. He is also an attorney specializ-
EX TE NS IO N OF INTERSTATE COMPACT ON OIL AND GAS 11

ing in the practice of oil and gas law prior to becoming Governor of 

our State. And it is a real privilege and an honor to present Gov. 

Jack M. Campbell to this great committee this morning.

Mr. Rogers of Texas. Thank you, Mr. Morris.

Governor Campbell, it is nice to have you, and it is nice to have you 

introduced by such an outstanding citizen of New Mexico as our colleague, the Honorable Tom Morris.

1 understand you have a statement to make to the subcommittee on 

the pending resolution ?

STATEMENT OF HON. JACK M. CAMPBELL, GOVERNOR, THE STATE 

OF NEW MEXICO

Governor Campbell. Yes, Mr. Chairman.

Thank you, Congressman Morris.

Members of the subcommittee, I have a very brief statement which 

I would like to read to the committee, and then, of course, I would be 

happy to answer any questions I can with regard to the matter before 

the subcommittee.

I certainly appreciate this opportunity of appearing before you on 

what we consider in New Mexico as a very important piece of national 

legislation.

New Mexico has a stake in this. It was the first State to ratify the 

original interstate oil compact, which it ratified in February of 1935. 

All of our oil and gas conservation laws and our rules and regulations 

or conservation practices have been closely related to the information 

we have received and assistance we have received through the interstate oil compact and its commission.

New Mexico ranks fifth in the known reserves of petroleum and 

third in known reserves of natural gas in this country. I have been 

associated indirectly with the Interstate Oil Compact Commission for 

the last 17 years as a member of its legal committee. For some time— 

several years—I was a member of a subcommittee which worked on 

and prepared a form of oil and gas conservation statute which has 

been enacted in whole or in part in a number of States of the Union. 

I feel th at the compact has always been and is now a proper vehicle 

through which the officials and staffs of State regulatory agencies can 

exchange views and experiences. I notice that its engineering, its research, and its legal committees have made proposals which have resulted in marked improvement in the prevention of waste, promotion 

of efficiency of production, and in secondary recovery efforts. I believe that in the interests of national security, in the interests of conserving our available oil and gas reserves for future generations, that 

this compact is a splendid vehicle through which this can be accomplished.

I believe that the compact through the years has certainly indicated 

what individual States, protecting their own sovereignty, but at the 

same time taking advantage of the experience of other States, can 

do in this very important field. And I want to sincerely urge that 

the resolution which would extend the compact for another 4 years 

be passed by the Congress.

Thank you, Mr. Chairman.
12 EXTENS ION OF INTERS TA TE COMPACT ON OIL AND GAS

Mr. Rogers of Texas. Thank you, Governor Campbell. It is an 

honor and pleasure to have you before the subcommittee, and I appreciate your testimony and your comments on this subject.

Mr. Moss, do you have any questions ?

Mr. Moss. I have no questions at this time, Mr. Chairman. I am 

very pleased to welcome the Governor to the committee.

Governor Campbell. Thank you, sir.

Mr. Rogers of Texas. Mr. Younger?

Mr. Younger. Mr. Chairman, only one question.

So fa r as you know there is no change proposed in this Resolution 

220 as to the existing legislation creating the oil and gas conservation 

compact ?

Governor Campbell. No ; there is no change in the compact itself. 

It would simply be an extension of the existing agreement.

Mr. Younger. Tha t is all.

Mr. Rogers of Texas. Mr. Kornegay.

Mr. Kornegay. Thank you, Mr. Chairman.

Mr. Campbell, I too would like to join with my colleagues in 

welcoming you to the committee. I appreciate your coming a great 

distance to be here with us today.

As I understand, this is simply an extension of the agreement 

which has been in effect since 1935.

Governor Campbell. That is rig ht ; yes, sir.

Mr. Kornegay. Thank you very much.

Mr. Rogers of Texas. Mr. Cunningham.

Mr. Cunningham. Mr. Chairman, I too want to join in welcoming 

the Governor here. I appreciate the brief, to-the-point statement. 

We don’t get those kinds of statements very often.

Mr. Rogers of Texas. Mr. Broyhill.

Air. Broyiiill. I too join my colleagues in welcoming the Governor 

to the committee. No questions, Mr. Chairman.

Mr. Rogers of Texas. Governor, in your vast experience in the 

oil and gas segment of our economy do you feel that this is the proper 

approach to the problem to be solved ?

Governor Campbell. I certainly do, Air. Chairman, and I think 

experience is proving tha t this is the correct approach. I notice the 

Governors of the various States represented in the compact and with 

whom I am acquainted, all feel th at this is the way in which the best 

interests of the country can be served in the conservation of these 

very precious national natural resources.

Air. Rogers of Texas. Have you encountered any specific opposition 

to this approach, Governor ?

Governor Campbell. None whatsoever, Air. Chairman.

Air. Rogers of Texas. And let the chairman again thank you for 

coming before the subcommittee, Governor Campbell. It is nice to 

have you.

Governor Campbell. Thank you, gentlemen.

Air. Rogers of Texas. Our next witness this morning is Air. Richard 

C. Byrd, chairman of the Kansas Corporation Commission of Topeka, 

Kans., and first vice chairman of the Interstate Oil Compact Commission. The chairman understands that he is to be accompanied
EX TE NS IO N OF INT ER STAT E COMPACT ON OIL AND GAS 1 3

by Lawrence R. Alley, executive secretary of the Interstate Oil Compact Commission of Oklahoma City.

Mr. Byrd, will you come forward and be recognized ?

STATEM ENT OE HON. RIC HARD C. BYRD, CHAIRMAN, KANSAS

CORPORATION COMMISSION, TOPEKA, KANS., ACCOMPANIED BY

LAWRENC E R. ALLEY, EXECUTIVE SECRETARY , INTERSTA TE OIL

COMPACT COMMISSION, OKLAHOMA CITY, OKLA.

Mr. Byrd. Thank you, Mr. Chairman.

First let me thank the committee for the opportunity of appearing 

here and I convey the regrets of Gov. Matthew AA elsh of the State 

of Indiana who is the chairman of the Interstate Oil Compact Commission. Pressing duties in the State of In diana prohibited Governor 

Welsh from being present. And, therefore, as vice chairman of the 

compact, I will read his prepared statement.

As you stated, our executive secretary of the compact, Air. Lawrence 

R. Alley, is present here in the room, and will remain present while 

these proceedings continue, and will be available to answer any questions the committee might have.

Mr. Rogers of Texas. Thank you, Mr. Byrd.

Mr. Byrd. Aly name is Richard C. Byrd and I am chairman of the 

Kansas Corporation Commission. Aly office address is the State 

Office Building, Topeka, Kans. I will read the statement in the 

name of Governor Welsh.

STATEM ENT OF HON. MA TTHEW E. WE LSH , GOVERNOR, STATE OF

IND IAN A, AND CHA IRMAN, INTERSTA TE OIL COMPACT COMMISSION, AS PRESE NTED BY HON. RIC HARD C. BYRD

Aly name is Matthew E. AVelsh, and I am chairman of the Int erstate Oil Compact Commission. Aly residence is in Indianapolis, Ind. 

I am appearing in support of House Join t Resolution 220.

The interstate compact to conserve oil and gas was first signed in 

Dallas, Tex., on February 16, 1935, and subsequently approved by 

Congress the same year. Until 1913, successive renewals, with congressional consent, were for 2-year periods. Thereafter, Congress 

gave its authorization at 4-year intervals, the last being in 1959.

The membership of the Interstate Oil Compact Commission now 

consists of 30 oil-producing States, as follows: Alabama, Alaska, 

Arizona, Arkansas, Colorado, Florida, Illinois, Indiana, Kansas, Kentucky, Louisiana, Maryland, Michigan, Alississippi, Montana, Nebraska, Nevada, New Alexico, New York, North Dakota, Ohio, Oklahoma, 

Pennsylvania, South Dakota, Tennessee, Texas, Utah, Washington, 

West Virginia, and Wyoming.

In addition to the above States, Georgia, Oregon, and Idaho are 

associate members. An associate member is a State not now having 

oil and gas production, but having prospects for oil and gas production.

20-731— 63- 3
14 EX TENS ION OF INTERSTATE COMPACT ON OIL AND GAS

Th e purpo se of the com pact is best expressed by the lan guage of 

the compact itself. Ar ticle I I st at es :

The purpose of this compact is to conserve oil and gas by the prevention of 

physical waste thereof from any cause.

Artic le VI sets fo rth th at it is the du ty of the Commission—

* * * to make inquiry and ascertain from time to time such methods, practices, 

circumstances, and conditions as may he disclosed for bringing about conservation and the prevention of physical waste of oil and gas—

and to repo rt—

* * * its findings and recommendations to the several States for adoption or 

rejection.

Due to the discovery of enormo us fields in the 1920’s an d early 

1930’s, the need fo r an in terstate oil com pact was shown. Th e sit ua ­

tion became a natio nal pro blem so severe t hat th e State s of Oklaho ma 

and Texas fou nd it necessa ry to dec lare martia l law in the oilfields. 

The congres sional Come com mittee in 1934, af te r thorou gh investigatio n o f the si tua tio n s aid :

We strongly urge upon the oil-producing States the adoption of State compacts to deal with the problems of production of petroleum with which individual States are powerless to cope * * * a State compact * * * is the solution 

of those problems of petroleum production which cann ot be solved with modification of the “law of cap ture ” and other legislation operating with in State 

boundaries.

Follo wing this r eport, a conference was called of rep res ent atives of 

the oil-producing Stat es by Governor-elect Marl and, of Oklahoma, in 

December 1934. As a r esult of this conferen ce a m eeting was he ld in 

Dallas, Tex., in F eb ru ary 1935 w hen the comp act its elf was dr aw n and 

signed.

In 1955, when Congress agr eed to the extension of the compact, an 

amend ment was add ed th at req uir ed the At torney General to repo rt 

annually to Congress as to wh eth er or not the compact was living up 

to a rticle V of the co mpa ct, w hich sa ys :

It is not the purpose of this compact to auth orize the States joining herein to 

limit the production of oil or gas for the purpose of stabilizing or fixing the 

price thereof, or create or p erpetuate monopoly, or to promote regimentation, but 

is limited to the purpose of conserving oil and gas and preventing the avoidable wa ste thereof within reasonable limitations.

Th e At torney Gen eral has mad e five report s, follow ing th is directive.

In th e repo rt of Sept em ber 1,1956, the At torney G ene ral re po rt ed :

The function of the Commission and its committees has been undoubtedly of 

gre at importance to the conservation efforts of the States and of members of the 

industry.

In the repo rt of the At torney Gen eral, as of Sep tem ber 1, 1957, he 

concluded hi s sum mary by s ay in g:

On the whole, the activ ity of the Commission appears to have been worth while. 

It seems justifiable to ascribe a good deal of the improvement in indu stry operations over the past q uarter century—the elimination of gushing wells and flaring 

gas, the better use of reservoir energy, the rise in production of oil from about 

20 to 40 percent to 80 percent of the potential of the well through utilization of 

advanced recovery practices—to the promotional activities of the compact commission. Above all, the compact and its commission are unique examples of 

effective int ers tat e cooperation on a wholly v oluntary basis.
EX TE NS IO N OF INTERSTATE COMPACT ON OIL AND GAS 15

In the repo rt of the At torney General, as of Septe mb er 1, 1958, 

he said :

At most, the compact and its commission are unique examples of effective int ers tat e cooperation on a wholly volu ntary basis. Observation of the com­ mission’s activities over the current yea r require s no modification of these 

conclusions.

In the fo ur th repo rt of the At torney General, as of Sep tem ber 1, 

1959, a th ird discussion is con tain ed on the conservative prog rams of the various Sta tes , and, aga in, the Atto rney Gener al fou nd no com­ pl ai nt of the opera tion of the In te rs ta te Oil Compact Comm ission.

In the last repo rt, dated May 15, 1963, th e At torney General said :

In th at process, the intersta te oil compact, as an existing focal point for Fed­ era l contact with State regulatory agencies, will have to play an imp ortant pa rt. Accordingly, this D epartment has urged the extension of the compact.

As chair ma n of th e Int er stat e Oil Compac t Com mission, I received a lette r fro m the Secre tar y of the In te rior Stew art L. Ud all, dated 

A pr il 4, 1963. Th is lette r reads as follow s:

The States that make up the membership of the i ntersta te oil compact to con­ serve oil and gas have a responsibility to assure th at the petroleum industry makes its maximum contribution to the national secu rity and to the stren gth 

of the national economy. The tota l crude supply available for domestic use is made up of domestic production and imports. The major component is domestic production which is subject to a supply control system based upon Sta te statutes. Several factors have worked together to limit the effectiveness of this control system. Among these are the sta tus of Sta te regu latory sta tut es in light of present-day tech­ nology, the limited participation of some producing States, and the increased flexibility of intersta te purc hasing and transp ortation facilities. The purpose of the i nte rstate compact is *** ** to conserve oil and gas by the prevention of physical waste thereof from any cause.” In order fully to achieve thi s objective the IOCC, we feel sure you agree, must do everything in its power to assure th at State regulatory practices enhance the efficiency of the domestic 

petroleum indu stry. It is requested therefore, that the Interst ate Oil Compact Commission a ppoint a committee composed of representatives to the Commission to prepar e an analy sis of the regulatory systems of individual States and of the effect of these systems on the petroleum indu stry. We assume that the committee will bear in mind throughout the study th at Sta te regulatory systems direcly affect our national secu rity and economic growth. If i t is the wish of the Commission, the D epa rt­ ment of the Inte rior, because of its intere st and responsibilities in thi s area , would make available a representativ e of this to serve on the committee.

Follo wi ng th e receipt of th is letter, ac tin g in my cap aci ty as ch air­ man of the Int er stat e Oil Com pact Commission, I called a special meetin g of the executive committee fo r Apr il 8, 1963 , in Oklahoma City. 

A t th at m eeting, I issued the follow ing s ta te m en t:

Since its formation in 1935, the Interstate Oil Compact Commission has been dedicated to the promotion of oil and gas conservation, the elimination of waste, obtaining the greatest ultimate recovery and generally promoting the most effi­ cient production practices for the domestic oil industry. Congress has take n note of the contribution to the national welfare made by the Interstate Oil Compact Commission and its member States since its form ation by repeatedly extending the compact with commendation in each instance. In view of the tremendous strides which have been made by the member States and the industry in each of these are as of conservation practices, it is app ropriate that the Interstate Oil Compact Commission make an evaluation of wh at has been accomplished and wh at rema ins to be done, with pa rticular reference to the technological developments and economic changes which are 

constantly occurring.
16 EXTENSION OF INTERSTATE COMPACT ON OIL AND GAS

This country’s adeq uate supply of oil which powered America’s successful 

efforts in World War I I was in very large measure the resu lt of efficient application of the conservation practices developed under the leadership of the Intersta te Oil Compact Commission. Since in the foreseeable future, oil will be 

the principal supplier of energy for our economy in both peace and war, the 

member States are determ ined that the momentum they have achieved in the 

conservation of this vital natur al resource shall be continued.

For some time, the executive committee of the Inter sta te Oil Compact Commission has been discussing the role of the commission, its achievements, its 

futur e objectives, and obligations—and the appropriate manner of presen ting 

these m atters. The appointment of a committee composed of Goveronrs of some 

of the member States of the In terstate Oil Compact Commission would serve 

as an excellent vehicle for this purpose and I am pleased that the Secretary of 

Interio r, by his letter date d April 4, 1963, indicates he is in accord with this 

approach. I know t ha t his offer of cooperation in this project is appreciated by 

the Governors of the member States.

It is, therefore, my intention to name such a committee in the very near future, 

if this is in accord with the wishes of the executive committee.

A t this special meetin g, I was autho rized to ap po int a committee 

of Governors to con duc t the stu dy requested by Secre tar y of the In ­

terior Ud all. Th is c omm ittee was appointed im mediately an d consists 

of the follow ing Governors of mem ber St ates: Gov. Ma tthew E. 

Welsh, Indian a, ch airm an ; Gov. Otto Ke rner, Illin oi s; Gov. Jo hn 

Ander son , Jr ., K an sas; Gov. Jim mie H. Dav is, Lo uisia na ; Gov. Ja ck 

M. Cam pbell, New Mexico; Gov. He nry L. Bellmon, Ok lah om a; Gov. 

Jo hn Conn ally , Texas; and Gov. Clifford P. Hanse n, Wyoming.

Th is special stu dy com mittee met and asked the sta nd ing com mittees of th e comm ission to pu rsu e this stu dy vigorously. In compliance 

wi th t his request, ind ivi dual committees have met eight diffe rent tim es 

to prep are an out line fo r the scope of the stu dy. Th is outlin e was 

appro ved by the Gover nors' special stu dy committee at our midyear 

me eting in New Orleans, La. Ou r sta nd ing committees are now 

ga thering the mate ria l th at will be necessary to fulfill the requ est of 

the Secretary of Interior.

I h ave reta ine d Mr. Richard C. By rd, who is resign ing as ch airman 

of the Kansa s Co rporati on Commission, to be my admi nis tra tiv e 

assis tan t in p repa rin g this re po rt.

I can assure you that th is re po rt w ill be made and it will be a most 

complete rep ort . Recommenda tion s will be made to the mem ber 

State s on w hat th e Gover nors’ committee feels is th e best possible conservat ion prog ram in the lig ht of pres ent technological developments.

Our commission has c ontinued to ca rry on its e ducation al prog ram 

in oil and gas conservation. We hav e con tinu ed to issue ma ny 

pamp hle ts and much technical mate ria l to imp rov e oil and gas conservation.

Rec ently, at our mi dyear mee ting , we p rem iered a new movie, pr oduced by the commission. Th is is a 24-m inute, sou nd-and -color film, 

“Oil f or To day and Tomo rrow.” In 1944 we prod uce d our first movie 

and it was es timated th at this film w as shown to over 7 m illion people.

I am sur e it will be of inter est to you to know th at the com pact is 

financed entirely by vo luntary St ate c ontrib utions. I t does n ot accept 

ad ve rtisin g in any of its publication s, no r does it acce pt any money 

fro m ind ividuals, corpo ration s, companies, or org ani zation s.

In Oklahoma City, the commission has its own office bu ild ing th at 

was contr ibu ted by the St ate of Okl ahoma. Th ere are seven fu lltim e employees. Our agency is p roud to say that i t has always stayed
EX TE NS IO N OF INTERSTATE COMPACT ON OIL AND GAS 17

with in its b udget , in fac t, it has been able to bu ild up a rese rve fu nd fro m the St ate contrib utions. As is tr ue of the special stu dy re po rt of Gov ernors, p rev iou sly re ferre d to, we ar e p roud that most of the w ork of the commission is done by its sta nd ing committees. These com- mite es are composed of th e ou tst an din g men in th eir professions. Al l of thi s work is d one v olun tar ily and with out charge to the commission. Th ere have been th ree publications on which t he prod uctio n cost was so high we fou nd it necessary to mak e a charge. In each instance, 

however, th e ch arg e was less than the actual cost. I feel sure t ha t, thro ug h its work, the I nterstate Oil Compact Com- mission deserves some res ponsibility fo r the new law s th at hav e been passed since the las t extension. I t is inter estin g th at the oldest pr o­ ducin g St ate in the Union , where oil was first discovered—n amely, Pe nn sylva nia—passed a conservation law last y ear. Also Ke ntu cky, one of the older pr od ucing State s, passed a conservation law la st year. Dur in g the prese nt year, New Yo rk, Id ah o, an d Iowa have passed con servation laws th at are alm ost ide ntical wi th the suggested law prep ared by the legal committee of the In te rs ta te Oil Com pact Com ­ mission. Th ere has been conside rable pro gre ss by the State s in m od­ ernizin g th ei r laws, rule s, and reg ula tions. A rec ent tre nd has been developed in the State s to enc ourage wider spacing of wells so as to 

elimi nate unnecessary wells. I th in k th at the accomplishme nts of the In te rs ta te Oil Compact 

Com mission could best be enume rated by — (1) the prog ram th at has encourage d all of th e State s to eith er 

str ength en or pass conservation law s; (2) the edu cation al inf orma tio n di strib uted throug ho ut the Na tion, which has been of in estimable value to the general public in be tte r un de rst an din g th e benefits of oil and gas conservation an d th eir value to th e consume r (some of the pamp hle ts t hat have been publishe d by the commission have had a distr ibution of over 

600,000 ); and (3) the con tinued wor k in the field of second ary recovery and pressu re ma inte nan ce, show ing the benefits of these opera tions in prod ucing oil th at wou ld no t otherw ise have been pro duc ed and 

mad e ava ilable to t he N ation as an ene rgy fuel. Th ro ug h its edu cation al prog ram , the comm ission, th roug h th e Sta tes , has been effective in practic all y eli minating the form er waste of larg e amoun ts of gas pro duc ed with oil th at would oth erw ise have 

been wasted, bu t are now being sup plied to th e Nation. Member States of the In te rs ta te Oil Comp act Commission hav e show n a c lear u nd ersta nd ing of the ir respo nsi bilitie s in the field o f oil and gas conservatio n and hav e demo nstrated the benefits of con serv a­ tio n by to day ha vin g an excess p roducible reserve, that can be produce d wi thou t w aste, of some 3 m illion ba rre ls d ail y availabl e to this c ountr y in case of natio nal emergency. I t was fo rtu na te t ha t, due to the reserve created by thes e con serv ation pro gra ms , this pro ducible reserve was ava ilab le in W orld W ar I I, the Ko rea n war, an d du ring the Suez 

crisis. In view of the benefits I th in k the com pac t’s value h as been show n to the pub lic and to the Na tio n gen erally. I hop e Congress will ap ­ prove th is extension of th e com pact in accordance wi th th e pro visions of a rticle 1, section 10, of the Co nstituti on o f the Uni ted States.
18 EXTENS ION OF INTERSTATE COMPACT ON OIL AND GAS

Mr. B yrd. That completes Governor Welsh’s statement.

Mr. Rogers of Texas. Thank you, Mr. Byrd. If you have anything that you want to add personally, you may.

Mr. Byrd. Nothing, sir. If any of the committee members have 

any questions I would be glad to attempt to answer them. I am more 

familiar with the study that is being initiated than I am in some of the 

other aspects of the historical background of the commission.

Mr. Rogers of Texas. Mr. Moss, any questions?

Mr. Moss. I have no questions, Mr. Chairman.

Mr. Rogers of Texas. Mr. Cunningham ?

Mr. Cunningham. I was just wondering, sir, for the record, why 

is it tha t this come-; up for renewal periodically rath er than having 

permanent legislation ?

Mr. Byrd. I assume that when the compact was originally approved 

by Congress that they felt tha t there should be some periodic check 

to see that it was fulfilling the obligations in the compact. As Governor Welsh pointed out, originally it did not require the Attorney General’s report. That was added in 1955. And I think that the Congress felt in this that it should be extended fo r definite periods rather 

than permanently.

Mr. Cunningham. Thank you.

Mr. Rogers of Texas. Mr. Komegay.

Mr. Ivornegay. Mr. Chairman, I have no questions.

Mr. Rogers of Texas. Mr. Broyhill ?

Mr. Broyhill. I have no questions.

Mr. R ogers of Texas. Mr. Byrd, do you have any specific matters 

tha t you want to touch on with relation to the study tha t is to be made?

Mr. Byrd. Mr. Chairman, only to say that, as Governor Welsh 

pointed out, the members of the compact are very anxious that this 

study be completed as expeditiously as possible. The enthusiasm of 

the representatives from the various States as well as the committees 

indicates to me tha t it will be completed expeditiously and th at it will 

be a thorough and objective study of the present State regulatory 

statutes and practices. The outline that has been agreed upon is very 

exhaustive, and covers every subject tha t in any way relates to the 

conservation of oil and gas? There is a provision in the outline for 

the valuation of each of the topics as well as a conclusion which will 

be written by the eight Governors on the committee. And I can assure 

you that it is the ir intention to be objective, and if deficiencies in the 

State systems do appear, to make recommendations to those respective 

States to correct them. Really the study shows, if it is carried as initiated, t hat it will come up with a manual th at will be the authority on 

conservation practices.

Mr. Rogers of Texas. Are there any particular feelings or areas in 

which you feel there should be some priority as fa r as the States are 

concerned ?

Mr. Byrd. Well, in comparing State statutes, of course, there are 

differences. You really have to go into the State to see exactly how 

the statutes have been administered and interpreted before you can 

conclude whether there are any deficiencies in the practices of the respective States. You know th at some States have unitization statutes, some don’t.
EX TE NS IO N OF INTERS TA TE COMPACT ON OIL AND GAS 19

Some hav e poo ling an d spa cin g sta tut es, an d some don’t. Yet we 

realize th at even in the State s whe re the y don’t hav e these sta tutes a 

lot ha s been done and is bein g done to wa rd wider spacing, unitizatio n.

Mr. R ogers of Texas. As I u nd ers tan d it, you inte nd to cover every 

conceivab le asp ect of th e pro blem .

Mr. B yrd. Yes, sir.

Mr. R ogers of Texas. And to try to do th at in an orderly ma nner 

so th at you can exp edite the con sidera tion of all of them and ge t the 

re po rt out as soon as possible.

Mr. B yrd. Tha t is tru e.

Mr. R ogers of Texas. I presum e th at you desire suggestions fro m 

the d iffere nt area s and different groups in the industry .

Mr. B yrd. We welcome an y suggestions that wi ll help fro m anyone 

th at is a vailable.

Mr. R ogers of Texas. Th e reason I asked tha t, M r. B yrd, is this, that 

there have been some inquiries dir ected to me as to wh eth er o r no t some 

pa rtic ul ar are as wou ld be inv est iga ted or looked into. An d I hav e 

sug gested th at they get in tou ch wi th the grou p and make th eir sug ­

gestion s, and th at the y ou gh t to be looked into if the y are intere ste d 

in them. I h ope t hat is the pr op er meth od to p ursue this r at he r th an 

ho ld hearin gs on it.

Mr. Byrd. I wou ld pr ef er he aring fro m any grou p th at ha s any 

inter est in the m atter t hat we ar e stu dying t hat relate to the con serv atio n of oil and gas.

Mr. R ogers of Texas. I will c ontinue to re fe r them to you. Th an k 

you very m uch, Mr. By rd, fo r you r testimony.

We have no fu rthe r witnesses schedule d th is mo rning. But with ­

ou t objectio n t he C ha ir wou ld like to incl ude i n the record t he follow ­

ing:

A lette r fro m the Dep artm en t of Conse rvation of the St ate of 

Michi gan over the sig na ture of Mr. Ge rald E. Ed dy , director of the 

Michi gan De pa rtm en t of Conservation, and official rep resentati ve of 

the G ove rnor of M ichiga n on the intersta te oil com pact in M ichi ga n; a 

resolu tion sub mitted by the Na tio nal Oil Mark ete rs Ass ocia tion over 

the sig na ture of Mr. Pau l E. I ladu ck , counsel, c overing a lette r which 

was addressed to me, w ith whi ch the resolu tion was included. W ithou t objection the lette r will be include d in the file and the resolu tion 

in t he record; and a com municatio n from the U.S. Cham ber of Commerce over the sig na ture of Mr. Thero n J. Rice, leg islative gen era l 

ma nag er. W ith ou t objection, thes e item s will be included in the 

record.

(T he docu ments referred to fo llo w:)

Michigan Department of Conservation,

Lansing, June 10,1963.

Hon. Oren Harris,

Chairman, Committee on Interstate and Foreign Commerce, House of Representatives, Longicorth House Office Building, Washington, D.C.

Dear Congressman Harris : This statement is given in response to receipt

of notice of public hearings concerning congressional extension of the inters tate 

compacts on oil and gas. This is also House Joi nt Resolution 220. This sta tement is made on behalf of the Governor of the Sta te of Michigan as I am his 

official representa tive on the Interstate Oil Compact Commission.

We in Michigan strongly urge the Congress to extend this compact for 

anoth er 3-year period as required by the statutes. Without question this or-
20 EXTENSION OF INTERSTATE COMPACT ON OIL AND GAS

ganizatio n since its inception in 1935 has been a most influential body in the 

prevention of was te in the oil and gas business and in sponsoring and urging 

the best application of conservation practices by the States. Also I am sure that 

the prominent position that the States occupy in the control of the oil and gas 

industry is due to the efforts put forth by the compact, its officers, and its working committees.

Sincerely,

Gerald E. E ddy,

Director, Michigan Department of Conservation, and Official Representative of Governor of Michigan on Inte rst ate Oil Compact Commission.

Reso lut ion of th e Nation al Oil Market ers A sso ciation

Whereas since 1935 the National Oil M arke ters Association has s teadily advocated a four-point program to check the grow th of monopoly in the oil industry, 

vi z:

(a) The repea l of State proration laws designed to limit the production 

of crude oil in order to mainta in p ric es;

(&) The repeal of the Connally Act under which Sta te oil proration laws 

are made effective ;

(c) The withdrawal of congressional approval of the inter sta te oil compact;

(d) The discontinuance of Fed eral aid to arbitra ry limitation of the 

production of crude oil by the issuance of monthly forecasts of market demand for petroleum pro ducts; and

Whereas the supply of petroleum products has been furth er restric ted by the 

Institution of mandatory Federal control and limitation of the importation of 

crude and refined petroleum products; and

Whereas the continuation of these laws and regulations has had the effect 

intended by the ir supporters of eliminating most of those elements in the petro ­

leum industry that furnished competition to the inte grated oil com panies: Now, 

therefore, be it

Resolved by the National Oil M arketers Association in meeting assembled at

Detroit, Mich., this 24th day of October I960, That the Congress now repeal the 

Connally Act, withdraw its approval of the inter sta te oil compact, and th at the 

Federal Government remove the mandatory restrictions on the importation of 

petroleum products, thus letting th e law of supply and demand operate.

Cha mb er of Comm erce of th e U nited States,

Washington, D.C., June 13, 1963.

Hon. Walter R ogers,

Chairman, Subcommittee on Communications and Power,

House In terstate and Foreign Commerce Committee,

House Office Building, Washington, D.C.

Dear Mr. R ogers : The Chamber of Commerce of the United States urged 

your subcommittee to approve House Joint Resolution 220 giving the consent 

of Congress to an extension and rene wal of the intersta te compact to conserve 

oil and gas fo r a period of 4 years from September 1,1963.

The inter sta te oil compact, to encourage the conservation of oil and natur al 

gas, was first entered into in 1935 by six of the principal oil and natural gas 

producing State s, and was approved by the Congress in that year. An agreement to extend and renew the compact for 4 more years already has been signed 

by 30 States.

The purpose of the Inter sta te Oil Compact Commission is to study and publicize the methods whereby the individual States signing the compact may bring 

about the conservation and prevention of physical waste of oil and natur al 

gas.

The compact’s method encourages conservation through precept and example. The compact does not atte mpt through Fed eral intervention and regimentation to dictate to the States the metho ds by which they will conserve oil and 

gas. Instead, each State signing the compact agrees that with in a reasonable
EX TE NS IO N OF INTERSTATE COMPACT ON OIL AND GAS 21

time it will enact laws to accomplish with in reasonable limits the prevention 

of—

(a) the operation of any oil well with an inefficient gas-oil ra ti o ;

(b) the drowning with wa ter of any str atu m capable of producing oil 

or gas in paying q ua ntities;

(c) the avoidable escape into the open air or the wasteful burning of gas 

from a natu ral gas w ell;

(d ) the creation of unnecessary fire ha za rd s;

(c) the drilling, equipping, locating, spacing, or operatin g of a well or 

wells so as to bring about physical waste of oil or gas or loss in the ultim ate 

recovery thereo f; and

(/) The inefficient, excessive, or improper use of the reservoir energy in 

producing any well.

The national chamber believes the inter sta te oil compact has been successful 

in conserving for more optimum use in the futur e our irreplacea ble oil and gas 

resources. For example, under the stimulus of the compact, all of the member 

States have passed laws regulating the location and distance between oil and 

gas wells, thus ending the destructive prac tice of drilling wells close to 

prop erty boundaries with res ult ant production prac tices which left behind resources which could not lat er be recovered except at excessive costs.

We commend artic le V of the compact which specifically states that “it is not 

the purpose of the compact to authorize the States to limit the production of oil 

or gas for the purpose of stabilizin g or fixing the price thereof, or to create or 

perpetuate monopoly, or to promote regimentation.” The chamber’s supp ort of 

the extension of the inter sta te oil compact is with the und erstanding that the 

compact is not to be used to promote practices th at are not consistent with the 

principles of free enterprise.

We there fore recommend that your subcomm ittee a pprove House J oint Resolution 220.

We ask th at you make this letter a pa rt of the record of the hearings on 

House Joi nt Resolution 220.

Sincerely,

Theron J. Rice.

Mr. Rogers of Texas. Mr. Alley, may we ask you a question? Will 

you identify yourself for the purpose of the record ?

Mr. Alley. I am Lawrence Alley, executive secretary of the In ter ­

state Oil Compact Commission.

Mr. Rogers of Texas. The Chair understands tha t at the time this 

resolution was introduced and there were five States tha t had not 

ratified it.

Mr. Alley. No, s ir; there were five States in which the secretary 

of state did not put the date on the compact itself. The compact as 

now filed with the State Department does have all of those dates. I 

would like permission to furnish tha t to you for the dates tha t are 

not appearing on your bill.

Mr. Rogers of Texas. Without objection you may furnish that.

Mr. Alley. Thank you, sir.

(The document follows:)

I nterstate Oil Compact Commission,

Oklahoma City, Okla., June 18,1963.

Mr. Williamson,

Chief Clerk, Committee on Inte rstate and Foreign Commerce,

House Office Building, Washington, D.C.

Dear Mr. Williamson : Listed below are the dates when the secr etaries of 

sta te signed the compact which were not included when it was filed and not 

included in the bills of the House and Senate.

Colorado________________________________________________

Indian a_________________________________________________

Kansa s_________________________________________________

Mississippi______________________________________________

Utah____________________________________________________

Nov. 9, 1961. 

Nov. 29, 1961. 

Dec. 3, 1962. 

Oct. 24, 1962. 

Feb. 20, 1962.
22 EXTENSION OF INTERSTATE COMPACT ON OIL AND GAS

If you desire additio na l inf ormati on , please do not he sitate to call on us. 

Sincerely,

Lawren ce R. Alley,

Executive Secretary.

Mr. R ogers of Texas. Th an k yon very much.

If the re a re no fu rth er business m atters to come before the committee 

at thi s time, the subcomm ittee will sta nd adjou rned un til 10 o’clock in 

the m orning. An d it is the un de rst an ding of the Ch air th at we will 

meet in the re gu lar com mittee room, 1334, at 10 a.m. tomo rrow m orn ing .

(Wher eup on, at 10:55 a.m., the subcomm ittee adjou rne d, to reconvene at 10 a.m. on the f ollow ing d ay, W ednesday, Ju ne 19, 1963.)
EXTENSION OF INTERS TAT E COMPACT ON OIL AND 

GAS

WEDNESDAY, JUNE 19, 1963

H ouse of Represe ntatives,

Subc omm itte e on C om mu nic ation s and P ower of the

Com mit tee on I nterstate and F oreign C ommerce,

TFtwA.mp'fon, D.G.

The committee met at 10 a.m., pursuant to recess, in room 1333, 

Longworth House Office Building, Hon. Walter Rogers of Texas 

(chairman of the subsconnnittee) presiding.

Mr. R ogers of Texas. The Subcommittee on Communications and 

Power will come to order for the further consideration of House 

Joint Resolution 220 to extend the interstate compact on oil and gas.

Our first witness this morning is our colleague from the State of 

South Dakota, the Honorable E. Y. Berry.

Mr. Berry, we will be glad to hear you at this time.

STATEMENT OF HON. E. Y. BERRY, A REPRESENTATIVE IN 

CONGRESS PROM THE STATE 0E SOUTH DAKOTA

Mr. Berry. Mr. Chairman, I join with, the Governor of South 

Dakota, Archie Gubbrud, in asking for an extension of the interstate 

compact on oil and gas for another 4 years.

Attached to this statement is the telegram of Governor Gubbrud 

which I ask unanimous consent to be made a part of the record of 

this hearing. As a new oil-developing State, South Dakota is very 

much interested in the extension of this compact.

Than k you.

Mr. R ogers of Texas. Thank you, Mr. Berry. Without objection, 

the telegram from Governor Gubbrud will be included in the record 

at this point.

(The telegram referred to follow s:)

P ier re, S. Da k., June 27, 1968. Hon. E. Y. Berry,

U.S. Representative, House Office Building,

Washington, D.C.:

Believe inte rests of South Dakota, as State ju st beginning to produce oil and 

gas, would be well served by passage of House joint resolution extending for 

4 years the inters tate compact to conserve oil and gas, coming before Subcommittee on Na tural Resources of House Interstate and Foreign Commerce Committee on Tuesday, J une 18.

Arc hi e Gubbrud, 

Oovernor, S tate of So uth Dakota.
24 EX TENS ION OF INT ERSTATE COMPACT ON OIL AND GAS

Mr. Rogers of Texas. Our next witn ess is the Ho norab le William 

Orric k, Assis tan t Attor ney Gen eral, Ant itru st Division, De partm ent 

of Jus tice, W ash ing ton , D.C.

Mr. Orrick, it is nice to have you here. You are recognized to make 

you r sta tem ent.

STATEMENT OE HON. WILLIAM ORRICK, ASSISTANT ATTORNEY

GENERAL, ANTITRUST DIVISION, DEPARTMENT OF JUSTICE,

WASHINGTON, D.C.

Mr. Orrick. Th ank you, M r. C hai rman.

Mr. Chairma n, I ap pe ar here on beh alf of the D ep artm ent of Ju stice in response to yo ur request fo r a statem ent as to the position of 

the Depart me nt on House J oin t Re solution 220.

As prev iously stated, the De partm ent of Justice fav ors t he resolution. The reasons are set fo rth , sir, in a l etter which is d ated Ju ne 18, 

1963, a ddresse d to the H onora ble Oren Har ris , c hairm an o f the Committee on In terstate and Fo rei gn Commerce, and signed by Mr. Nic holas K atzenb ach , D epu ty Attor ney G eneral.

The lette r is sho rt, and with yo ur perm issio n, sir, I should like to 

read it into the record.

Air. Rogers of Texas. You may proceed.

Mr. Orrick (re ading ) :

Dear Mr. Chairman : This is in response to your request for the views of th e 

Depa rtment of Justice concerning the join t resolution (II.J. Ites. 220) consenting to an extension and renewal of tlie inters tate compact to conserve oil and 

gas.

The intersta te compact to conserve oil and gas, to which 30 States are now 

signatory, is intended to foster action by the oil-producing States to conserve 

domestic resources of oil and gas by ending waste incident to production. It 

was originally enacted in 1035 and has been extended periodically, the last extension under Public Law 86-143 (Aug. 7, 1050, 73 Stat. 290), which expires 

September 1, 1063.

House Joint Resolution 220 provides for the consent of Congress to the extension of the compact for a period of 4 years. The resolution continues the provision in the existing law that the Attorney General make an annual report to 

Congress as to whether the activities of the States under the compact are consiste nt with its declared purposes. Also, it reserves the right to alte r, amend, 

or repeal the legislation giving such consent.

As noted in the recent report filed by the Attorney General pur sua nt to the 

previous extension resolution, it has become increasingly clear that operation 

of the related State-Federal control system governing crude oil production is 

inadequate to the policy needs of the individual States or of the Federal Government. It was there also observed that the Inter sta te Oil Compact Commission 

as established by the compact would provide a convenient focal point for discussion of needed improvements in th at system.

For the reasons stated, the Department of Justice favors the extension of the 

compact.

The Bureau of the Budget has advised that there is no objection to the submission of this report from the standpoint of the adm inistration’s program. 

Sincerely yours,

• Nich olas deB. Katz enb ach,

Deputy Attorney General.

Mr. Orrick. I am familiar with the repo rt, Mr. Chairma n, and 

although I have lieen in the De partm ent in this pa rticul ar job just 

a few clays, I will lie h appy to tr y an d answer a ny q uestions you, sir, or 

the members of the committee may have.

Mr. Rogers of Texas. Th an k you, Mr. Orrick.
EX TENS ION OF INT ERSTATE COMPACT ON OIL AND GAS 25

Mr. Korn egay, do you h ave any q uestions ?

Mr. Kornegay. Th an k you, Mr. Chairma n.

Mr. Orrick, I app rec iate your coming h ere to day and giv ing us the 

views of the D epart ment o f Justice. Do you know of any o pposition 

to the con tinuat ion of the compact?

Mr. Orrick. No, s ir ; I do not.

Mr. K ornegay. I ga ther fro m your statem ent, so f ar as you are concerned a nd the De partm ent is concerned, it serves a very worthwhile 

purpose.

Mr. Orrick. Yes, sir; and we think , as is pointed out in the last 

pa ragr ap h of the let ter , th at it will serve an ad dit ion al purpo se of 

being the focal point fo r discussion of imp rovements in the cu rre nt 

system. I th in k it has a ctu ally served this purpo se over the years.

Mr. Kornegay. I believe th at is all, Mr. Ch airma n, except to say 

I believe this is abo ut the only non controv ersial matter th at this committee h as h ad since I h ave had t he pleas ure of serving on it.

Mr. Rogers of T exas. I think it is slightly con troversial. We have 

one opposition. Th ere is very lit tle in Congress th at isn 't contr oversial. I t wouldn’t be very long.

Mr. Br oy hill, do you h ave some questions?

Mr. Broyhill of No rth Carolina . Ju st one to clear up a question 

in my mind. Do I un derst and from th is sentence which begins on the 

bottom of th e first page and continues to th e top o f th e second page th at 

you anticipa te some fu ture changes in the policies or reg ula tio ns in 

rega rd to this whole area ?

Mr. Orrick. I think , Mr. Broyhill, th at will dep end on the outcome 

of the discussions t ha t we contemplate will tak e place, and also on the 

outcome o f the study tha t I now und ers tan d is bein g undert aken by th e 

commission at th e instance o rig ina lly o f the S ecret ary o f the Interio r.

Mr. Broyhill of N orth C aro lina. No fu rthe r questions, Mr. Cha irman.

Mr. Rogers of T exas. Mr. Orrick, in 1955 I believe i t was, section 2 

pro vid ed t h a t:

The Attorney General shall repo rt to the Congress whether the activ ities of 

the States under the compact have been consistent for the purposes set out in 

article 5.

Now do you k now or are you familiar with the reasons beh ind the 

failu re of the At torney General to file those repo rts up un til this 

tim e? Is n’t th is th e first r ep ort t ha t has been filed.

Mr. Orrick. No, sir. The first r ep or t was filed Sep fember 1, 1956.

Mr. Rogers of Texa s. Yes.

Mr. Orrick. An d th e second was filed Sepfem ber 1,1957. The t hi rd 

was filed Sep tem ber 1, 1958. The fourth was filed September 1, 1959, 

and the n the fifth was filed this year.

Mr. Rogers of Texas. Yes. I shou ld hav e couched my question 

differently. I mean act ually since 1959.

Mr. Orrick. Yes, sir.

Mr. Rogers of Texas. 1959 was the last repo rt th at was filed?

Mr. Orrick. Yes, sir.

Mr. Rogers o f Texas. Th ere h asn't been one filed since then . Now 

do you know why?

Mr. Orrick. I do not know why, Mr. Ch airma n. I do know th at 

the repo rti ng f unction which is laid on the At torney General by this
26 EXTENSION OF INTERSTATE COMPACT ON OIL AND GAS

resolution is—I would n't say in conflict wit h, bu t it is in addit ion to 

his duties to c arry on an tit ru st litiga tio n. A previous At tor ney Genera l s tat ed in an early rep ort th at where any conflict came up between 

repo rti ng under this resolution and con ducting litiga tio n, he would 

fav or w hat he considered to be his pr im ary du ty, to wit, ca rry ing out 

an titrus t litig ation.

Now du rin g th at perio d there was a conside rable amount of an titr ust litiga tio n, and wh eth er th at was the reas on—t here were two 

Assistan t At tor neys General who didn ’t repo rt—wh eth er th at is the 

reason or not T haven’t discussed wi th them.

Mr. R ogers of Texas. I would think th at the an titrus t litigation 

would make it more im po rta nt act ually th at the rep orts be filed -will 

Congress. Tha t is the reason th at I was wondering why the y were 

not filed. It would seem to me under those circumstance s the y would 

have som ething to be discussed at length.

Mr. Orrick. Yes, sir. I th in k th at w ith ou t a rguing , since I h aven’t 

discu ssed it with them, th at they pro bably had in mind the necessity 

of kee ping the fac ts con cerning the existing lit igation within the 

pro vince of the De partm ent.

Now as par t of the re po rti ng fun ction, the At torney Gene ral is to 

repo rt on any ant ico mp etitive effects th at the work of the State s 

under this com pact h as on the indu str y, a nd the previous rep orts have 

been unanim ous th at the com pact itself has not had ant ico mp etitive 

effects on the industry.

Air. Rogers of Texas. Of course, the fact is th at the rep orts were 

no t filed, bu t as I ga ther fro m you, it is the intention of the pre sen t 

At torney General and of your Div isio n to see th at th at is tak en care 

of in accordance wi th the law.

Mr. Orrick. Yes, si r; it is, witho ut any question.

Air. Rogers of Texa s. Now in the let ter fro m Air. Katzenbach , I 

refe r to the p ar ag ra ph No. 4:

As noted in the recent report filed by the Attorney General pursuant to the 

previous extension resolution, it has become increasingly clear that operation of 

the rela ted State-Fe dera l control system governing crude oil production is 

inadequate to the policy needs of the individual States or of the Federal 

Government.

I w ond er if you could expand as to wh at Air. Ka tze nbach me ant by 

“inadeq uat e.”

Air. Orrick. Sir, I shall be ha pp y to do it.

Th e refe rence was mad e to this in the repo rt of the At torney Genera l which is dated Alay 15,1963, a nd on page 5 of t hat re po rt reference 

is made to the study of the Inter agen cy Com mittee on Petroleu m, 

which made its rep ort to t he Preside nt, dated Septe mb er 4, 1962.

Both those rep orts go int o thes e are as at some len gth , re fe rrin g to 

changin g conditio ns, as indeed they hav e c han ged sin ce 1935 when the 

compact first came into being, an d I would be delighte d if you wa nt to 

read from these re ports. But I do ma ke the two reference s.

Air. R ogers of Texas. Those rep orts so fa r as the Cha ir knows o r is 

advised never reache d th is committee.

Air. Orrick. The repo rt of the At torney Gener al sho uld have. 

There is no reason why th at sho uld n’t be before th e committee.

Air. R ogers of Texas. You mean the rec ent repo rt ?

Air. Orrick. Yes, sir.
EX TENS ION OF INTERSTATE COMPACT ON OIL AND GAS 27

Mr. Rogers of Texas. The May 15 report ?

Mr. Orrick. Yes, sir.

Mr. Rogers of Texas. I am talking about t-lie reports that you are 

referring to that are referred to on page 5 of the May 15 report of the 

Attorney General.

Mr. Orrick. Yes, sir. I do have a copy that is classified for official 

use only. I don’t know why, if the committee wants it, it didn’t come 

up here.

Mr. Rogers of Texas. You are referring to the Executive order?

Mr. Orrick. No, sir. I am referring to a report to the President bv 

the Petroleum Study Committee, dated September 4,1962.

Mr. Rogers of Texas. Is that referred to on page 5 of this report ?

Mr. Orrick. No, sir. I said the reasons detailing the changed conditions are made mention of on page 5 of this report, and also if you 

please on page 28.

Mr. Rogers of Texas. As I understand. Mr. Katzenbacli’s letter, the 

Department of Justice is recommending the extension of this compact 

for the purpose of merely providing a convenient forum or focal point 

to discuss what the Department feels are inadequacies in the operation 

of this situation, is that correct ?

Mr. Orrick. For th at reason, Mr. Chairman, and for the more important purpose of continuing to conserve the source of domestic crude 

oil. He had no intention of limiting the purpose of the Commission 

simply to that. If the letter isn’t clear on tha t-----

Mr. Rogers of Texas. Yes.

Mr. Orrick. Let me emphasize that point.

The position of the Department is th at the compact should be extended for the purposes which are set out in the resolution, and it may 

also serve this additional purpose.

Mr. Rogers of Texas. Yes. In other words, the letter you are saying, 

Mr. Orrick, that you read this morning is in addition to the comments 

of the Attorney General in his report?

Mr. Orrick. Yes, sir.

Mr. Rogers of Texas. And tha t this will not only provide a focal 

point for further discussion of problems tha t have arisen and may 

arise, but that basically it has proven a good conservation measure ?

Mr. Orrick. Yes, sir.

Mr. Rogers of Texas. Mr. Orrick, with regard to the so-called 

inadequacy, is it your contention tha t they are spelled out completely 

in the May 15 report ?

Mr. Orrick. I am not familiar enough with the industry to have 

an opinion on that, Mr. Chairman. There are inadequacies, I think, 

even as Governor Campbell mentioned in his testimony yesterday, 

and changes in conditions.

Governor Campbell in his statement, as I read it, seemed to indicate 

what I think has been the course of this commission’s history, tha t 

this is a point at which the States and the Federal Government can 

get together to discuss the conditions as they do change, and tha t in 

the light of Secretary ITdall’s request for the study and in the light 

of some of these inadequacies that have been mentioned in the record, 

hopefully, we would get less conflicting regulations.

Mr. Rogers of Texas. I am assuming from what has been said that 

the May 15 report with reference to inadequacies, whichever inade-
28 EXTENS ION OF INTERS TA TE COMPACT ON OIL AND GAS

quacies are spelled out in tha t report, it was written from a report 

by an Advisory Committee or Council to the President.

Mr. Orrick. I thin k reference was made to it.

Mr. Rogers of Texas. Reference ?

Mr. Orrick. I don’t think it is solely, as a matter of fact, I am sure 

it isn’t.

Mr. Rogers of Texas. Much of the information in this report is 

based upon the report tha t was made to the President that you 

referred to on page 5 and 28 of the report. Now, do you know of any 

reason, Mr. Orrick, why this committee couldn’t have a copy of that 

original report?

Mr. Orrick. I don't know, Mr. Chairman, what the classification 

of the report i s; I don’t know’ the reason. I would be happy to find 

out and let you know7

.

Mr. Rogers of Texas. Could you do that ?

Mr. Orrick. Certainly.

Mr. Rogers of Texas. If it could be declassified from whatever 

classification it may be in, and submitted to the committee, I think 

it would be most helpful in handling of this matter in the future, 

because if there are inadequacies, I think perhaps they can either be 

cleared up or declared not W’ell taken, let’s say, if the Congress feels 

tha t way about it.

But, it is very difficult to work with these things if you are working 

with classified information which isn’t available to the committee.

Mr. Orrick. I will be happy to look into it, and I will advise you; yes, sir.

Mr. R ogers of Texas. If you could I will appreciate it.

(The report referred to was later declassified and is as follows:)

A Report to th e Pre sid ent by t h e P etroleum Study Com mi tt ee, 

Sept ember 4, 1962

E xecutive Off ic e of th e P re sid ent,

Offi ce of E me rg en cy P l a n n in g,

M em or an du m fo r th e P re sid en t: Washington, D.C. September 4, 1962.

I am plea se d to su bm it a re port b ased up on a co mpr eh en sive stud y of pe troleu m 

re qu ir em en ts an d su pp lie s in re la tion to nat io nal se cu rity ob jec tiv es, unde rt ak en 

in ac co rd an ce w ith y ou r di re ct iv e issu ed De cemb er 2, 1961.

Th e co nc lusion s an d re co m m en da tion s of th e at ta ch ed re port are th e re su lt of 

ex tens iv e st ud y by th e Com mitt ee an d its ta sk fo rc e grou p an d th e re port 

ha s been s igne d on be ha lf o f all part ic ip ati ng de pa rtm en ts.

At th e re qu es t of th e D ep ar tm en t of In te ri or, I ha ve been as ke d to re port to 

you th eir opinion th a t th e co nc lusion s re la ti ng t o c os ts and b en efi ts are p ote nt ia lly 

misl ea ding . In te ri or co nten ds th a t “w hi le es tim at es purp or te dly co verin g co sts 

to th e econo my ar e in clud ed in th e re port , th e co un te rb al an ci ng benefits wh ich 

flow from th e m ai nt en an ce of th e pe trol eu m in dust ry in it s pre se nt st ate o f 

healt h w er e no t redu ce d to co m pa ra bl e te rm s.” Th e In te ri o r mem be r also 

st ate s “t h a t ex isting legi slat io n an d de lega tio ns ve st th e D ir ec to r of th e Office 

of Em erge nc y Pla nn in g w ith ad eq ua te a uth ori ty to deal w ith th e se cu rity as pe cts 

of th e pe trol eu m pro ble m an d th at, in consequence, the re co mmen da tio n in the 

rep ort , de alin g with co or di na tion of in te ra ge nc y ac tivitie s is un ne ce ss ar y an d 

could lead to fu tu re dif ficulty in as se ss in g resp on sibi lity fo r de ve lopm en t an d 

co or di na tion of pe tro leu m polic y w ithin th e ex ec utive bra nch .”

Exc ep t fo r th is co mm ent by th e D ep ar tm en t of In te ri or, th e at ta ched re port 

ha s th e un an im ou s su ppo rt of al l p art ic ip ati ng dep art m enta l mem be rs, th e 

Com mitt ee ’s ad vi se rs an d ob serv ers.

Respectfully.

E dward A. McDermott,

Chairman, Petroleum Study Committee.
EX TE NS IO N OF INTERSTATE COMPACT ON OIL AND GAS 29

Executive Ofeice of the President,

Office of Emergency Planning, 

Washington, D.C., Septem ber 4,1962.

INTRODUCTION

To the P resident:

On December 2, 1961, in connection with proposals to amend proclamation 

3279, governing the allocation of oil import quotas by press release (ta b A, at ­

tach ed) you announced “* * * th at a comprehensive s tudy of petroleum requ irements and supplies in relation to national security objectives will be un dertake n 

under the leadership ofthe Director of the Office of Emergency Planning, to be 

completed by mid-1962.”

This assignment was organized as an interagency study und er the chairmanship of the Director of the Office of Emergency Planning, with equal partic ipation by the Departm ents of State, Trea sury, Defense, Justice, Interio r, Commerce, and Labor. Representatives of the B ureau of the Budget and the Council 

of Economic Advisers, and the deputy special assistan t to the Preside nt for 

national security affairs served as advisers, and represe ntatives of the Central 

Intelligence Agency and the Federa l Power Commission partic ipated as observers.

In the course of this study, public hearings were not held. A press release, 

issued on February 16, 1962, advised industry and the public of the scope of the 

projecte d study, its objectives, and of the opportunity to subm it writte n position 

papers. Fu rth er notification to this effect was published in the Federal Register 

on Feb rua ry 24, 1962. In response to these public announcements, 32 written 

submissions were received by the Office of Emergency Planning from various 

segments of the petroleum industry. Each of these documents received full and 

careful consideratio n by the Committee and its task force group, and a large 

volume of intragovernm enta l information relatin g to the questions involved, 

and materi als subm itted in connection with other petroleum studies, were 

considered.

This assigned study has now been completed and we subm it the following 

conclusions and recommendations.

Respectfully,

Edward A. McDermott,

Chairman, Petroleum S tud y Committee.

P hilip H. Trezise,

Departm ent of State.

J ames A. Reed,

Departm ent of the Treasury.

Paul H. Riley,

Department of Defense.

Nicholas deB. K atzenbach,

Departm ent of Justice.

J ohn A. Carver, Jr.,

Departm ent of the Interior.

William B. Dale,

Departm ent of Commerce.

W. Willard Wirtz,

Departm ent of Labor.

PETROLEUM STUDY COMMITTEE CONCLUSION S AND RECOMMENDATIONS

I. Supply and requirements balance in relation to national secu rity

Petroleum policy has a complex effect on objectives of national effort, and 

decision as to i ts direction or its d etails cann ot be a simple form ula based solely 

on domestic capacity.

Matching estim ated minim al availability again st estimated probable requ irements for petroleum through 1965 leaves an ample margin of safety in domestic 

petroleum supply both for defense and civilian war needs and for protection 

against reasonably conceivable denial of other sources through political or 

economic action. This assumes no dra stic change in U.S. import policies and 

use of rationing in extrem e emergency. The re could be an additional but undeterm ined requirement to meet some portion of the needs of frien dly foreig n 

nations in such emergencies. Although generally considered, no complete 

appra isal of supply-requirements interrelation ships of the entire free world was
30 EXTENS ION OF INT ER STAT E COMPACT ON OIL AND GAS

made. The extent to which the United States must u ndertake to maintain spare 

capacity for other free world emergency requirements has not been determined 

by this Government nor made the subject of inte rna tional discussion.

Taking account of all facto rs, there is an area of choice within which action 

can be begun to accommodate petroleum policy to other relevant national 

objectives.

II . Economic growth

Domestic crude oil prices are substan tially highei’ than they would be in the 

absence of import controls, reinforced by the system of State-Fe dera l domestic 

supply controls. Because of the str uctur e of the indu stry, however, not all of 

this difference would necessarily be passed on to consumers if there were no 

controls. The control system has strongly tended to increase excess capacity 

and production cost and to distort competition.

The cost of petroleum to industry, including transportatio n, is only a small 

percentage of the cost of manufactu red products. Coal, natural gas, and residual fuel oil are the ind ustrial fuels of the United States. Residual fuel oil is 

subject to its own control program, which is not directly reviewed here. The 

impact of the crude oil program alone on U.S. industry is less t han that indicated 

by a consideration of the use of all petroleum prod ucts by indu stry. While a 

reduction in the price of petroleum would have a relatively small effect on thefuel cost of the U.S. m anufacturing industry, any reduction in such cost would, 

of course, improve its competitive position in the world.

The major effect of a reduction in petroleum prices would be the aggregate 

economic effect on U.S. consumers of petroleum products. It has been estimated 

th at complete abandonment of controls could lead to a reduction in the price of 

domestic crude oil of $1 per barrel (to approximately the world pric e). Since 

the to tal demand for petroleum prod ucts in the United States is about 3.5 billion 

barrels annually, it is apparen t th at the present system of controls involves a 

larg e cost to consumers. At the same time, it should be recognized th at the 

jtotential net effect on consumer prices cannot be precisely determined because 

of the changes in the struc ture of the industry which would follow a reduction 

in crude oil prices.

Levels of price and production are of direct and critica l importance to the 

welfare of many producing are as with in the United States. Petroleum is basic 

to the economies of the principal producing States, affecting levels of employxnent, business activity, and the revenues of State governments. While a pa rt 

of the benefit of crude oil price supports is received by nationally owned oil 

companies and rela ted industrie s, the remainder flows to local business and local 

economies. A sh arp decline in the level of prices or of production would create 

pockets of economic distress and unemployment.

It is therefore difficult to make any precise judgm ent as to the cost of th e 

program to the economy.

It should be noted that the industry receives tax treatm ent which to some 

degree complements the control system. The Treasury Department estim ates 

th at the tax foregone by percentage depletion as contrasted to cost depletion 

averages $1 billion pei- year. This tax treatm ent has led to the allocation of 

more resources to petroleum development than would otherw ise have been the 

case and has resulted in a redistribution of income with in the economy. It is 

difficult, however, to determine the extent to which the tax stimulus given to 

investment in petroleum has been at the expense of more productive investment 

elsewhere in the economy and hence retarded economic growth.

On balance, then, these consideration s indic ate that the supported price of 

crude oil should not be alte red rapidly. At the same time, it is imperative that 

domestic petroleum costs be reduced to perm it a narrowing of the difference between the United States and foreign prices.

Aside from its effects on the domestic crude oil price level by limiting imports, 

the control program involves very sub stan tial economic forces which may bear 

imixortantly on the performance of this industry and the economy. Such side 

effects, recognized or not, inevitably accompany any commodity program. Given 

the necessity for limiting imports, the use of tariffs is generally considered 

preferab le to quantitative restriction s by reason of the ir simplicity and the 

larger scope they allow to market forces. For a number of reasons this does not 

seem to be feasible at this time (among them possible adverse effects in th is hemisph ere). With an import quota system there must be a means of distrib uting 

allocations, which places the Federal Government in the role of distrib uting a 

considerable economic advantage. Excluding residual fuel oil, oil import alio-
EXT ENS ION OF INT ERS TAT E COMPACT ON OIL AND GAS 31

cations ar e “worth” perhaps $1 million per day. The distribution of an economic 

advantage of this magnitude is bound to bear on the financial return of individual companies, the struc ture of the industry, the functioning of the economy, 

and other national objectives.

Although improved means of distributing oil allocations are not suggested, it is 

clear tha t the question merits further consideration. Fees and auctions are 

among the methods which might be used.

III. Implementation of Federal and Stat e Government policy

Of first importance in appraisal of national policy in petroleum as it relates 

to national objectives is recognition of inadequacies in the administrative machinery available to carry it out. Pa rt of the difficulty stems from the complexities of Federal-State relations in petroleum supply control and part from 

the lack of close coordination between agencies at the Federal level, and an important part from the inadequacy of the d ata ui>on which both Federal and State 

action should be predicated.

A. State-Federal supply system.—The total crude pertoleum supply available 

for domestic use is made up of domestic production and imports. The major 

component is domestic production which is subject to the complicated FederalState control system. Decisions as to import levels have a direct relationship to 

domestic production control and vice versa.

The domestic supply control system rests on both State and Federal statutes. 

The State statutes provide for the actual regulation of production by State 

agencies. Federal statutes provide for prohibition of inte rsta te shipments of 

oil produced in violation of State orders, authorize supervision (through suspension of the stat utes) of the inter state market effects of State proratio n and provide the necessary approval of the burden of State regulation on interstate commerce. This legal framework was intended to join the intense State interest 

in conserving its natu ral resources against waste with the broad national and 

international responsibilities of the Federal Government.

It is now clear tha t several factors have seriously distorted the regulatory 

system and decreased its effectiveness to adequately serve either Federal or 

State objectives. These factors include—

(1 ) the limited participation of some producing S tat es;

(2 ) the growth of imports which led to Federal import controls;

(3 ) the growing use of natu ral gas regulated on an unrelated ba sis;

(4 ) the increased availability of domestic natural gas liquids (largely 

interchangeable with crude oil), the production of which is not similarly 

regulated by either the States or the F ederal Government: and

(5 ) the increased flexibility of t he inter state purchasing and transportation facilities of the principal crude oil buyers.

It is apparent tha t the burden of compensating for national supply variations 

by control of a diminishing par t of the domestic source has intensified State 

curtai lment of crude oil production to a point where it adds substanti ally to real 

costs and raises serious question as to the equity of its impact on producers. It 

is also apparent tha t the preceding considerations severely limit the scope of 

action available to the individual States and to the Fed eral Government.

It is urgent tha t stei>s be taken to revise the control system to make it more 

realistic and responsive to both State and Federal needs. Since any such revised 

system must recognize tha t the States have and must continue to have a principal 

responsibility for the administration of controls in this area, the first step must 

be to establish a basis of cooperation with the producing States. The Inte rsta te 

Oil Compact Commission, which is a respected forum for discussion of common 

problems among producing States, has already begun discussion of the inequalities of the State supply regulation system.

It is recommended th at the Secretary of th e In terio r be requested to undertake 

discussion with the commission, looking toward the formation of a working group 

to consider objectively the problems involved in updating the control system.

B. Executive branch organization.—Within the Federal Government, there 

is a continuing need for close coordination of action among the various departments and agencies whose operations affect, or are affected by, the security 

and rela ted aspects of national petroleum policy.

It is recommended that, at the completion of the present petroleum study, fur ­

ther interagency studies be undertaken under the leadership of the Office of 

Emergency Planning to provide a basis for adequately reflecting such considerations in the petroleum activities of the Federal Government.
32 EX TE NS ION OF INTERSTATE COMPACT ON OIL AND GAS

C. Need for better data.— Satisfac tory information concerning petroleum reserves, productive capacity, and deliverability, and their expansibility under n ormal and emergency conditions is seriously lacking. Suitable cost information is 

even more seriously lacking. A gre at deal of fragmentary and sometimes contradictory da ta is available.

Corresponding data and analytical shortcomings are to be found in regard 

to the inte rrelationships of different segments of th e economy. There is, in add ition, a related inadequacy in analytic studies. These undesirably limit the conclusiveness of any petroleum study under existing circumstances.

It is recommended th at the Bureau of the Budget, in cooperation with the 

agencies responsible for th e needed inform ation, particularly Interio r, Treasury, 

Commerce, and Sta te (for available foreign da ta), develop a proposal for a 

coordinated program to provide t he needed data.

IV. Mandatory oil import control program

A. Level of imports.— No immediate sharp change in the level of imports can 

be justified as prudent. A d ras tic decrease in import levels to stimulate additiona l productive capacity is unnecessary. It would add to consumer burdens 

and, by widening the difference between domestic and world prices, could cause 

more serious difficulty with in the industry and the internatio nal community. 

A dra stic increase in imports would produce prese ntly unpredictable and possibly severe disruptions within the industry and in the local economies of producing regions, both domestic and foreign, with possible serious consequences 

to national security.

Since the oil import program is an extrao rdinar y control measure, justified 

only by special circumstances bearing on the national security, measures should 

be undertak en to mitigate, and if possible eliminate, the basic conditions which 

led to its creation.

Even with the apparen t degree of flexibility afforded by the safety margin in 

supply, the area of decision is, as a practical matter, confined to moderate change. 

Within t ha t area, there are three possible courses—

(1) Increase in res trictiveness;

(2) Maintenance of present degree of restric tivene ss; and

(3) Liberalization of controls.

The Committee (In terio r dissenting) believes tha t, on a balance of all policy 

objectives, an incre ase in restrictiveness is not indicated. Considering these objectives and the inadequacies of present information, the best case can be made 

for maintenance of import controls, looking toward such liberalization as may 

be possible and clearly safe. The Committee also believes tha t a modest increase 

in the level of licensed crude oil imports above that which would be provided, 

by the present program for distric ts I to IV can now be undertaken.

B. Exempt imports.—Exempt imports from Mexico have not created a problem since they were stabilized in May 1961 at 30,000 ba rrels per day for a 3-year 

period by voluntary commitment of th e Government of Mexico.

In view of the upward tren d of crude oil imports from C an ad a1 under the overland exemption, it is recommended th at the Secretary of State, with the ass istance of the Secretary of the Interio r, discuss this problem with the Government 

of C anad a with a view to obtaining coordination of United States and Canadian 

policies rela ting ot North American petroleum security.

1956 1957 1958 1959 1960 1961 19621 1963 2

D is tr ic ts I to I V .......... . ......... 50

67

56

3

 95

58

25

56

36

64

50

93

92

106

124

135

D is tr ic t V ________ 135

T o ta l............ ........... . ....................... 117 151 83 92 114 185 130 270

1

 P a rti a ll y esti m ate d.

2

 C an ad ia n N ati o n al E nerg y B oa rd es ti m at e.

3

 Su ez em er ge nc y.

C. Administration of the program.—Concerning adm inistra tion of the oil import control program, the committee recom mends:

(1) The level of licensed imports of crude oil, unfinished oils, and products 

(other than residual fuel oil to be used as a fuel) into dis tric ts I to IV should

1

 “ C ru d e O il I m p o r ts F r o m C a n a d a ” ( th o u s a n d b a r r e l s p e r d a y ) .
EX TE NS IO N OF INTERS TA TE COMPACT ON OIL AND GAS 33

be determined as a perce ntage of domestic produ ction in those dis tric ts of tota l 

liquid hydrocarb ons (i.e., all crude oil, condensate, and na tural gas liq uid s). 

The pres ent proced ure for esta blishing import levels in distr ict V and Pue rto 

Rico should rem ain unchanged.

(2 ) The proclamation provisions for grantin g allocatio ns und er the progra m 

sh ou ld:

(a ) Continue the gra dual phas ing out of alloc ation s based on historic al 

impo rts of crude and unfinished oils in dis tric ts I to V a nd permit, as appropria te, the more rap id phasing out of hist oric al allocatio ns gra nted on the 

basi s of im ports now governed by th e ove rland exemption.

On the hist oric al method the refiner’s import level is set at a percen tage 

of the quota which each had under the voluntary prog ram which preceded 

the present man dato ry program. This percen tage, set at the discreti on 

of the Secr etary of the Interio r, has gradua lly decreas ed. At the beginning of the pres ent progra m, these were 80 perc ent of the hist oric al level 

of the volu ntar y progra m. They are now at 70 percent of th at amount. 

The hist orical basis is designe d to assure th at the imp ort allocation of 

establish ed impo rters would not be cut abru ptly .

(b ) Provi de th at the slidin g scale for dete rmin ing alloc ation s to refiners 

on the “inp ut” basis include specia l provision for refiners defined as “small 

busin ess” u nde r the s tan dards of the Small Busin ess Act.

(3 ) The proclamat ion should be amende d to gr an t to the Secretary of the 

Inter ior autho rity to perm it by regulation, to the ext ent practicable, the sale 

or exchange (al rea dy perm itte d) of c rude or unfinished oils imported by persons 

on the “inpu t” basis and to req uire the repo rting of prices as well as of qua ntities of petroleum involved in exchanges or sales in addition to infor mati on now 

required.

D. Suggestions subm itted to the committee for extension of the progra m.—

(1 ) Tan kers: A numbe r of submissions to Petroleum Study Committee involve 

tank ers. Includ ed was a proposal th at tan ker owners engaged in carryin g Soviet cargoes not be perm itted to car ry licensed oil impo rts to the Unite d States. 

Thi s questio n is rega rded as beyond the purview of the study . Questions as to 

the significance of “effective cont rol” of tan ker s und er foreign flags were also 

raised. The Committee regards this issue as beyond the scope of this study.

A thi rd tan ker issue, however, is with in the range of the study. It was proposed th at the oil impo rt control program provide for the movement of a designated propo rtion of impor ted crude oil in U.S.-flag tankers. Otherwise, it was 

contended, the rate of obsolescence, retir eme nt, conversion, and scrap ping of 

U.S.-flag tan ker s by 1965 would serious ly reduce the U.S.-flag ta nk er fleet. This 

reduc tion, it was stated, might then requ ire an incre ase in imp orts because the

U. S. fleet would not be sufficient to carry the coastw ise movements of domestic 

oil which are implic it in the pres ent program . Our ana lysis of availabl e inform atio n does not supp ort this contention . The stud y did not, however, conside r the broa d questions of employme nt and the general situ ation of U.S.-flag 

tankers. These are curre ntl y und er considera tion by the Pre sid ent’s Committ ee on Forei gn Flag s and Cargo Prefere nce.

(2 ) Petro chem ical ma nuf acture rs: It has been suggested to the Committe e 

th at domestic petroc hemic al produ cers with out impo rt alloc ation s are at some 

compe titive disadva ntag e in rela tion to petroleum refiner s with impo rt alloc ations who produce petrochemicals and to foreign petroc hemical ma nuf acturers 

with chea per feedstoc k sources.

The balance of economic force s as among various components of the petr ochemical ind ust ry canno t be assessed with precision. Fur thermo re, it would be 

exceeding difficult to und erta ke to compensate for the possible adve rse effects 

which may flow from the oil import control program to other sectors of the 

economy. Inevi tably , the import control system will bea r on comparative 

economic positi ons in various rela ted industries. It is not considered desirable 

to extend the oil impo rt contro l progr am beyond its pres ent scope. However, if 

it should appear neces sary to redress the competitive equities involved, it would 

be pre fera ble to a dju st the pre sen t m ethod for estab lishing a llocation s fo r refiners 

with petroc hemical facili ties.

V. Export expansion

A number of major n atio nal objectives a re involved in the promotion of exp orts. 

The Committee recommends th at fu rth er study be given to the possib ility of 

incre asing the volume of U.S. exports of petroleum pro duc ts and prod ucts in 

which petroleum is a prin cipa l raw ma teri al (chiefly petrochem icals). At this
34 EXTENS ION OF INTERSTATE COMPACT ON OIL AND GAS

ju nctu re , in fo rm at io n is ina deq uate to as se ss th e ex te nt of for eign m ar ket s which 

m ig ht be dev eloped.

T he s tu di es sh ou ld inc lu de su ch a rr an gem en ts as—

(1 ) Sp ec ial cr ude oil im po rt al lo ca tion s as in ce nt iv es to ad ditio nal 

ex p o rt s;

(2 ) Fo reign tr ad e zones i n th e Uni ted S ta te s; an d

(3 ) Bonded pr oc es sing wareh ou se s.

Leg al or adm in is trat iv e dif fic ultie s or un de si ra bl e conseq ue nc es wh ich m ig ht 

att en d th eir us e sh ou ld be iden tif ied an d ap pro pri ate co rrec tiv e m ea su re s 

su gg ested .

i[ Imme diate release, Office of the White House Press Secre tar y, Dec. 2, 1961]

Tii e White House

ST UD Y OF PETROL EU M SE CURIT Y OBJE CT IV ES BY T H E OFF IC E OF EM ER GE NC Y PLA N N IN G

I’ro po sa ls of th e Sec re ta ry o f th e In te ri o r to am en d Pro cl am at io n No. 3279 

go ve rn in g th e al lo ca tion of oil im port quota s ha ve be en unde r co ns id er at io n 

fo r th e p a st se ve ra l we eks . The Pre si dent an no un ce d toda y th a t a co mpr eh en ­

sive stu dy of petro leum re quir em en ts a nd su pp lie s in r el at io n to n at io nal se cu rity 

ob jectives will be undert aken lm de r th e le ad er sh ip of th e D irec to r of th e Office 

of Em erge nc y Pl an ni ng , to be co mplete d by mid-1962.

The s tu dy w ill ta ke in to acc ou nt n ot only th e w el fa re of the do mestic p et ro le um 

in du st ri es , bu t also th e ne ed to pr om ote th e N at io n’s eco nomic gr ow th in th e 

fa ce o f ra pi d tech no logica l an d wor ld ch anges. The stud y gr ou p has bee n as ke d 

to m ak e re co m men da tio ns on alt ern ati ve m ea ns of ac hiev ing our se cu rity ob jec ­

tive s and pr ov id ing a ba si s fo r in cr ea si ng our st re ngth to co mp ete in th e fr ee 

wo rld .

Sinc e th e stud y will includ e a review of th e m an dat ory oil im po rt qu ota pr ogr am , it will prov id e a ba sis fo r th e co ns id er at io n of an y ch an ge s in th e ex is ting 

pr og ra m th a t may be ne ce ss ary. In th e mea ntim e, al lo ca tion s of oil in qi or t 

qu ot as will co nt in ue to be mad e un de r th e ex is ting pr oc la m at ion.

Executive Office of th e President

Office of E mergency Planning

W as hi ng ton, D.C.

F or re le as e a.in. P R 30

Fri da y, F eb ru ar y 1G ,15X52

E dw ar d A. M cD ermott, A cting D irec to r of th e Office of Em erge nc y Plann in g, 

to da y iss ue d a st ate m ent in re sp on se to qu es tio ns co nc erni ng the opp or tu ni ty 

to he prov ided th e pe trol eu m in dust ry and oth er in te re st ed par ti es to su bm it 

view s an d data re le vant to m att ers un de r co ns id er at io n by th e Pe trol eu m St ud y 

Co mm ittee. He re ca lled th a t th e Pre si den t, as an no un ce d la st Decem ber 2, ha d 

di re ct ed a co mpr eh en sive st udy of pe trol eu m re qu irem en ts an d su pp lie s in re la ­

tio n to nat io na l se cu ri ty ob jectives . The Pre si dent's an no un ce men t, he no ted , 

had also st at ed th a t th e st udy wo uld ta ke in to ac co un t, be sid es th e w el fa re of 

th e in du st ry , th e ne ed to pr om ot e the N at io n’s econom ic gr ow th in a pe riod of 

ra pid tech no logica l an d world ch an ge s. H e sa id th a t th e Pe trol eu m Stu dy 

Co mm ittee, of wh ich h e is Cha irm an , ha d been f or med in resp on se to the direc tive 

to co nd uc t th e st ud y an d to m ak e reco m m en da tio ns on po ssible alt ern ati ve 

mea ns of ac hiev ing se cu ri ty ob jectives an d of pr ov id in g a ba si s fo r im pr ov ing 

U.S. st re ngth to compe te in th e f re e wo rld .

Mr. McD ermott no te d th at, sin ce th a t an no un ce m en t, in dust ry gr ou ps an d 

ot he rs ha d ex pressed g re at in te re st in th e Com mitt ee ’s pl an s fo r th e stud y, an d 

part ic ula rl y in an y po ssible re qu es t fo r su bm iss ion of re le vant view s an d fa ct s 

wh ich mig ht he ma de. He sa id th a t th e Com mittee had giv en pri ority co ns idera ti on to th e need fo r such m ate ri al an d to th e ty pe of subm iss ion which wou ld 

be m os t u se fu l an d a t th e sam e tim e no t un du ly bu rden so me to tho se p ro vi di ng it.

In th is re sp ec t he ca lle d att enti on to th e fa ct th a t a nu m be r of re ce nt st udie s 

an d in ve stig at io ns h av e be en m ad e, a nd hea ring s he ld, b y th e Gov ernm en t d ep art ­

men ts an d ag encie s co nc erne d w ith m att ers be fo re th e Co mm ittee, an d em ph asiz ed th a t the in te rd epart m enta l mak eu p of th e Co mmitt ee ga ve as su ra nce th a t 

th es e stud ie s an d th e und er ly in g d ata wo uld be re ad ily av ai la bl e. In ad di tion 

to th is sou rce , he no ted, oth er m ate ri al w as av ai la ble from nu merou s past 

co ng re ss iona l h ea rings an d in qu irie s i n th is a re a.
EXTENS ION OF INTERSTATE COMPACT ON OIL AND GAS 35

Co ns eq ue ntly, lie st at ed , th e Com mittee be lie ve s th er e is no im m ed ia te need 

fo r subm iss ion of vie ws and m ate ri al by th e pu blic. How ev er, he did no t ru le 

ou t th e po ss ibili ty th a t specific re qu es t mi gh t la te r be ma de fo r d ata on top ics 

wh ich prov e to be ins uffic ien tly develop ed . At th e sa m e tim e, he em ph as ized 

th er e w as no disp os iti on to deny an yo ne wh o wish ed to do so an op po rtunity 

to su bm it m at er ia l co ns id ered re le van t to th e in qu iry. To be us ef ul, he said, 

st at em en ts sh ou ld be concise an d in te rm s of th e ex pe rien ce of th e in di vi du al , 

co mp any, or grou p under curr ent Gov ernm en t po lic ies or pr og ra m s. If possib le, st at em en ts shou ld includ e reco mmen da tio ns as to spe cific ch an ge s in po lici es or pr og ra m s co ns idered des irab le in th e ligh t of su ch ex pe rie nc e, co nsi st en t 

w ith th e ob jectives o ut lin ed by th e Pre si de nt .

The D irec to r wen t on to sa y th at, in view of th e de si re fo r ea rl y comp let ion 

of th e stud y, an y such st at em en ts shou ld be su bm itte d no t la te r th an April 2. 

H e a sk ed th at, if |>ossible, all su bm ission s in clud e 25 copies.

All pa pe rs su bm itt ed shou ld be ad dr es se d to th e D irec to r, Office of Em erge nc y 

Pla nn in g, W as hi ng ton, D.C.

Mr. Rogers of Texas. Mr. Kornegay ?

Mr. Kornegay. One question, Mr. Chairman.

Mr. Orrick, you said the only reason you could advance for the failure of the Attorney General to file reports in 1960, 1961, and 1962 

was the fact th at you were engaged in an titru st litigation ?

Mr. Orrick. Yes. I said, Mr. Kornegay, that I hadn't discussed 

the matters with my predecessors.

Mr. Kornegay-

. Yes.

Mr. Orrick. But I hazarded tha t suggestion, and I said that as 

far as I am concerned I intend to file those reports while I have this 

job.

Mr. Kornegay. Now, let me ask you this question. Was the antitrus t litigation which you refer to in the field of oil and gas?

Mr. Orrick. Yes.

Mr. Kornegay. Or are you speaking of antitrust litigation in general ?

Mr. Orrick. Ob. no; in the field of oil and gas.

Mr. Kornegay. In other words, legal activity in the field of oil and 

gas was the reason rath er than a shortage of personnel.

Mr. Orrick. I don’t know. We are short on personnel, too, Mr. 

Kornegay, but f just don’t know precisely.

Mr. Kornegay. All right, that is all.

Mr. Rogers of Texas. Thank you very much, Mr. Orrick, for your 

testimony.

Mr. Orrick. Thank you, Mr. Chairman.

Mr. Rogers of Texas. This is the only witness to come before the 

subcommittee this morning. Without objection the hearings will be 

held up for 5 days for the filing of statements by anyone desiring 

to submit them to the Chair.

Otherwise, the subcommittee will stand adjourned subject to the 

further call of the Chair.

(The following material was submitted for the record:)

Sta te of N ew Yor k,

E xec uti ve C ham ber,

Albany, June 20,1963.

Ho n. Oren H arris,

Chairman, Committee on Interstate and Foreign Commerce, House of Representatives. House Office Building, Washington, D.C.

Dear Mr. Harris : T hi s is in re gar d to th e in te rs ta te co mpa ct to co nserve 

oil a nd gas, c on gres sion al c on se nt to w hich ex pi re s th is yea r.
36 EX TENS ION OF INTERS TA TE COMPACT ON OIL AND GAS

As Governor of a compact State, I urge adoption of House Joint Resolution! 

220 consenting to extension of the compact fo r another 4 years.

With best wishes.

Sincerely,

Nelson A. Rockefeller.

Salem, Oreg., June l't, 1963.

Hon. Al Ullman,

House Office Building, Washington, D.C.:

The State of Oregon’s association with the Interst ate Oil Compact Committee

during the past 10 years has been most fruitfu l. Our Oil an d Gas Conservation 

Act stems from experience of IOCC. Our offshore legislation was aided grea tly 

by IOCC. 1 urge extension of the compact in the inte rest of good conservation.

Mark O. H atf ie ld , 

Governor of Oregon.

Bismarck, N. Dak., June 17,1963.

Congressman Oren Harris,

Chairman, Inters tate and Foreign Commerce Committee,

U.S. House of Representatives, Washington, D.C.:

Be assu red of my supp ort for House joint resolution extending for 4 years 

inter sta te compact to conserve oil and gas, set for hearing before Subcommittee 

on Natural Resources of House Interstate and Foreign Commerce Committee, 

Tuesday, June 18. I urge t ha t th is resolution be adopted.

William L. Guy, 

Governor, State of North Dakota.

Annapolis, Md., Jun e 18,1963.

Congressman Oren Harris,

House Office Building, Washington, D.C.:

I respectfully request favorable consideratio n of the Subcommittee on Natural 

Resources of the House Interstate and Foreign Commerce Committee of House 

joint resolution extending for 4 years the intersta te compact to conserve oil 

and gas on which hearin g is being held today.

J. Millard T awes, 

Governor of Maryland..

Salt Lake City, Utah, June 18,1963.

Hon. Oren Harris,

Chairman, Interstate and Foreign Commerce Committee,

House of Representatives, Washington, D.C.:

Respectfully urge favorable consideration of resolution extending inters tate 

compact to conserve oil an d gas.

George D. Clyde, 

Governor of Utah.

Phoenix, Ariz., June 17,1963. Hon. Oren Harris,

Chairman, Inters tate and Foreign Commerce Committee,

Washington, D.C.

My Dear Mr. Chairman : I sincerely hope that your committee will recommend the extension for 4 years of the int ers tat e compact to conserve oil and gas. 

The 33 member States have urged this extension. Your favorable consideration 

will c ertainly be appreciated.

Sincerely,

Paul Fannin, Governor of Arizona.
EXTENSION OF INTERSTATE COMPACT ON OIL AND GAS 37

Springfield, III., Jun e 17,1968.

Re Jun e 18 hearing before the Subcommittee on Na tur al Resources of the 

House Inter sta te and Foreign Commerce Committee.

Hon. Oren Harris,

U.S. Rep resentative from Arkansas,

House Office Building, Washington, D.C.:

Illinois strongly supp orts the extension of the interstate compact to conserve 

oil and gas. Will you please advise committee members of our concurrence 

in the action previously taken by the executive committee of Interstate Oil 

■Compact Commission. We urge the adoption of thi s legislation.

Otto Kerner, 

Governor, Sta te of Illinois.

Olympia, Wash ., June 17,1963.

Hon. Oren Harris,

Chairman, House Committee on Interstate and Foreign Commerce,

House Office Building, Washington, O.C.:

This is to indic ate the full supp ort of the Sta te of Wash ington for passage 

of House Joint Resolution 220, a measure to extend for 4 years the intersta te 

compact to conserve oil and gas. Favorable consideration by the committee 

would be appreciated. Albert D. Rosellini, 

Governor, St ate of W ashington.

J uneau, Alaska, June 18,1963.

Hon. Oren Harris,

Chairman, House Inte rstate and Foreign Commerce Committee,

Washington, D.C.:

Strongly recommend passage of House joint resolution extending for 4 years 

the intersta te compact to conserve oil and gas. The 33 member States concur 

in the extension of this compact as did the U.S. A ttorney General in his report 

dated May 15,1963.

William A. Egan, 

Governor, Stat e of Alaska.

Statement of L. Dan Jones, General Counsel, Independent Petroleum Association of America, Before the Subcommittee on Communications and

Power of the House Committee on Interstate and Foreign Commerce, on

House J oint Resolution 220, J une 19, 1963

My name is L. Dan Jones. I am general counsel of the Indepen dent Petroleum

Association of America.

The association is a national trade association of some 6,000 indep endent producers of crude oil and natur al gas, including land and royalty owners, with 

membership in every oil-producing area in the United State s. The prim ary interest of our membership is the search for and production of oil and gas within 

the borders of the United States.

At the outset, we wish to advise the committee that the Independent Petroleum 

Association of America strongly supports the extension of the int ers tat e compact 

to conserve oil and gas as proposed in House Joi nt Resolution 220.

From the time the first inter sta te compact to conserve oil and gas was signed 

in the city of Dallas, Tex., on February 16, 1935, it has served well its stated 

purpose to “conserve oil and gas by the prevention of physical waste thereof 

from any cause.” From this beginning with only a few States participating, the 

compact has grown to its position of prominence today with a membership of 30 

oil-producing State s. This w idespread partici pation is evidence of the contribution this body has made as recognized by the States with prim ary intere st in 

petroleum.
38 EX TENS ION OF INTERSTATE COMPACT ON OIL AND GAS

It has been long recognized by the oil and gas producing industry that the 

inte rest of the individual producer is directly served by improved conservation 

practices. Proper conservation of oil and gas serves not only the consumer in 

providing larg er supplies and reserves of energy, but the producer as well. Oil 

that is wasted is lost to the producer as well as the consumer and the Nation. 

Oil th at is saved, the producer may sell. The producer, therefore, has a personal 

intere st in the promotion of improved conservation.

The petroleum-producing industry also recognizes its responsibility to provide 

increasing supplies of oil and gas to meet the expanding needs of the growing 

economy of the United States and to be prepared to meet the security needs of 

any national defense emergency. Improved conservation contributes to the 

ability of the in dustry to m eet th is responsibility.

The compact provides a forum for the development and exchange of information based upon the experiences within the various State s. Good conservation 

practices are developed out of the experiences of the indu stry in the many producing areas operating under widely varying conditions. In this way, a multiplicity of experience becomes the testing ground and the basis for sound conservation practices and laws. These experiences are brought together by the compact, 

serving as a forum for the exchange of views by represen tatives from the various 

States with personal knowledge of each producing a rea’s problems. The compact 

has served this function well.

For these reasons, we urge this committee and the Congress to report favorably 

on the extension of the in ter sta te compact to conserve oil and gas.

(W hereu pon, at. 10:30 a.m., the subcomm ittee adjou rned subject, 

to the call of th e Ch air.)