REPORT ON THE CONGRESS OF INDUSTRIAL ORGANIZATIONS POLITICAL ACTION COMMITTEE

MAY 29, 1944.-Referred to the House Calendar and ordered to be printed

Mr. JARMAN, from the Committee on Printing, submitted the following

REPORT

[To accompany H. Con. Res. 88]

The Committee on Printing, to whom was referred the concurrent resolution (H. Con. Res. 88) authorizing the printing of additional copies of the report (No. 1311) of the Special Committee on Un-American Activities of the House of Representatives, dealing with the leadership of the Congress of Industrial Organizations Political Action Committee, having considered the same, report favorably thereon with the recommendation that the concurrent resolution do pass.

The purpose of this resolution is to meet the demands of many members of Congress for additional copies of the report of the Special Committee on UnAmerican Activities (H. Rept. 1311), which deals with the leadership of the Congress of Industrial Organizations Political Action Committee. Many members of Congress have appealed to the personnel of the House Committee on Printing and requested that there be printed an additional allotment of this publication, for which they have had an unusual demand. This resolution provides for an approximate allocation of not more than 100 copies to each member of the House who asks for that number.

The Public Printer estimates that the cost of complying with the provisions of his resolution will be $5,674.

the amount currently required for the national defense; and to use, store, exchange for other petroleum or refined products, or sell the oil and gas products thereof, and those from all royalty oil and gas from lands in the naval reserves, for the benefit of the United States, subject to the applicable limitations and restrictions of this Act; and to exercise exclusive jurisdiction and control over those lands within the borders of naval petroleum reserves numbered 1 and 2 which are embraced by leases granted pursuant to the provisions of the Act of Congress approved February 25, 1920, entitled 'An Act to promote the mining of coal, phosphate, oil, oil shale, gas, and sodium on the public domain' (41 Stat. 437).

"Any contract entered into pursuant to the authority granted in the preceding paragraph for joint, unit, or other cooperative plan of exploration, prospecting, conservation, development, use, or operation shall require that the United States be assured of receipt currently of its share of the total production from each of the various commercially productive zones underlying all lands covered by the contract as determined from time to time on the basis of estimates of its original share of the quantities of recoverable oil, gas, natural gasoline, and associated hydrocarbons in such zones underlying such lands on the date fixed in such contract: Provided, however, That any party to such a contract, other than the United States may, pursuant to the authority hereinabove granted to use and operate the reserves for their protection, conservation, maintenance, and testing, be permitted under the terms of such contract to have produced and to receive and shall have charged to its share in the total production from any zone or zones such quantities of petroleum as are necessary to compensate it

"(a) for its share of the current expenses of protecting, conserving, testing and maintaining in good oil-field condition such lands and the wells and improvements thereon, and its real and personal taxes levied or assessed thereon; and

"(b) for surrendering control of the rate of production from its lands: Provided, That if the Secretary of the Navy is not then causing petroleum to be produced pursuant to a joint resolution as referred to in the preceding paragraph, the quantity of petroleum determined to be produced under this subparagraph (b) may, in the absolute discretion of the Secretary, be terminated or reduced at any time on reasonable notice.

Such quantities permitted to be produced pursuant to the foregoing subparagraphs (a) and (b) shall in no event, however, exceed one-third of its share of the estimated recoverable petroleum on such date fixed in such contract in such zone or zones; and no such contract shall be entered into without prior consultation with the Naval Affairs Committees of the Congress.

"All expenses incurred by the Secretary in exploring, prospecting, conserving, developing, using, and operating lands owned or controlled by the United States in the naval petroleum reserves, and in producing petroleum, and the share of the United States of expenses incurred under any contract entered into pursuant to this Act, shall be paid from appropriations made available for such purposes by the Congress. All sales of petroleum, gas, and other hydrocarbons from the naval reserves by the Secretary of the Navy shall be at public sale to the highest qualified bidder at such times, in such amounts, and after such advertisement as the Secretary deems proper.

"In order to consolidate and protect the oil lands owned by the Government the Secre ry of the Navy is authorized to contract with owners and lessees of land within or adjoining such reserves for conservation in the ground of oil and gas and for compensation for estimated drainage in lieu of drilling or operating offset wells, and to exchange Government land in naval petroleum reserve numbered 1, the right to royalty production from any of the naval petroleum reserves, and the right to any moneys due to the Government as a result of the wrongful extraction of petroleum products from lands within naval petroleum reserve numbered 1, for privately owned land or leases within naval petroleum reserve numbered 1: Provided, That no lease of any portion of the naval petroleum reserves, no contract to alienate the use, control, or possession thereof from the United States, no contract to sell the oil and gas products thereof, other than royalty oil and gas products, no contract for conservation or for compensation for estimated drainage, and no exchange of any land any right to royalty production, or any right to any moneys as hereinabove authorized shall become effective

nor shall any condemnation proceedings be instituted until after consultation with the Naval Affairs Committees of the Congress and after approval by the President: Provided further, That the Secretary of the Navy shall report annually to the Congress all agreements entered into under the authority herein granted. "In the event of the inability of the Secretary of the Navy to make arrangements he finds satisfactory for exchanges of land or agreements for conservation as authorized under the preceding paragraph of this Act, or for contracts for joint, unit, or other cooperative plans with respect to lands or leases as authorized under the first paragraph of this Act, he is hereby authorized, with the approval of the President, to acquire such privately owned lands or leases (a) within the reserves or outside thereof but on the same geologic structure, by purchase, and (b) within naval petroleum reserve numbered 1 by condemnation, and (c) outside naval petroleum reserve numbered 1 but on the same geologic structure, provided that drainage exists, by condemnation. There is hereby authorized to be appropriated such sums as may be necessary to carry out the provisions of this Act. Such sums shall be expended under the direction of the President, who shall submit to the Congress estimates therefor in the manner prescribed by law: Provided, That the Secretary of the Navy shall report annually to the Congress all purchase and condemnation proceedings entered into under the authority herein granted and shall, within 30 days after the close of each calendar quarter, report to the Naval Affairs Committees of the Congress the total production from the reserves during the preceding quarter.

"Leases of lands of the United States within the naval petroleum reserves, in existence prior to July 1, 1936, excepting those leases which have become a part of an approved unit or cooperative plan and agreement, shall terminate at the expiration of their initial twenty-year periods, and the lands covered by such terminated leases may be re-leased upon such reasonable terms and conditions as the Secretary of the Navy may prescribe, with the preferential right in the former lessees to leases of the same if and when the lands are re-leased: Provided, That every unit or cooperative plan of development and operation entered into after July 1, 1937, other than such plans as are specifically authorized in the first paragraph of this Act, and every lease entered into subsequently to July 1, 1937, with respect to lands owned by the United States within the naval petroleum reserves, shall contain a provision whereby authority limited as provided in such plan or lease is vested in the Secretary of the Navy, subject to approval by the President, to alter or modify from time to time in his discretion the rate of prospecting and development on, and the quantity and rate of production from, such lands of the United States under said plan or lease, any law to the contrary notwithstanding."

(b) Section 3 of the Act of June 30, 1938, is amended to read as follows:

"SEC. 3. All Acts or parts thereof in conflict with the provisions of this Act are hereby repealed: Provided, however, That nothing herein contained shall be construed as limiting the powers of the President or the Secretary of the Navy under Title II of the Act of March 27, 1942, known as 'The Second War Powers Act, 1942' ".

I. THE GENERAL PURPOSE AND BACKGROUND OF THE BILL

The central purpose of the bill is to clarify and define the powers and authority of the Navy Department in the administration of the four petroleum and three oil-shale reserves heretofore set aside for the use and benefit of the Navy.

The first attempt by the Congress to achieve this purpose was represented by a single paragraph inserted in a Navy annual appropriations act approved June 4, 1920. This was subsequently amended, and substantially expanded, by an act approved June 30, 1938. The present bill is a further amendment of the basic act of June 4, 1920, as so amended by the act of June 30, 1938.

The bill was originally drafted by the Navy Department and introduced at its request. A letter dated March 11, 1944, from the

Secretary of the Navy to the Speaker of the House, transmitting the bill, is reproduced below:

MY DEAR MR. SPEAKER: There is transmitted herewith a draft of a proposed bill to amend the part of the act entitled “An act making appropriations for the naval service for the fiscal year ending June 30, 1921, and for other purposes," approved June 4, 1920, as amended, relating to the conservation, care, custody, protection, and operation of the naval petroleum and oil-shale reserves.

The major purpose of the proposed legislation is to clarify provisions of existing law with respect to the naval petroleum and oil-shale reserves. In this regard the bill makes clear (a) that oil may be produced from the reserves when required for the national defense; (b) that the Secretary of the Navy may enter into joint, unit, or other cooperative plans involving Navy's lands in reserves 1 and 2 and private lands on the same geologic structure; (c) that exploratory and research programs may be carried on; and (d) that oil otherwise authorizedly produced from the reserves may be used in payment of the costs of its production or exchanged for other crude oil or refined petroleum products.

Other purposes are to enlarge Navy's power to protect against drainage by broadening the condemnation power to cover lands owned or leased by private interests within reserves 1 and 2 and outside thereof but on the same geologic structure; and to bring the oil-shale reserves generally under the provisions of the statute in the same fashion as the petroleum reserves.

The enactment of the proposea legislation would result in more effectively safeguarding the naval petroleum and oil-shale reserves, in preparing them for immediate use when required for national defense, and in authorizing production during such emergencies.

The Navy Department recommends enactment of the proposed legislation. The Navy Department has been advised by the Bureau of the Budget that enactment of the proposed legislation would be in accord with the program of the President.

Sincerely yours,

FRANK KNOX.

The Chairman and other members of the committee were opposed to the bill in the original form because it would have had the effect of transferring from the Congress to the Secretary of the Navy and the President control over the rate of production from the reserves and would have enabled the Navy Department to develop and operate the reserves without congressional appropriations. Such activities could have been financed by the Navy out of the proceeds of oil produced from the reserves. The absence of specific standards in the bill qualifying the Secretary's authority to enter into certain kinds of contracts also was deemed objectionable. In general it was felt that the scope of the bill was broader than necessary in order to accomplish the purposes and objectives of the Navy.

After extensive discussions between the committee and representatives of the Navy the bill has been revised and amended in many respects. This was accomplished with the active collaboration of the Navy Department; and, as so amended and revised, the Navy Department has expressed to the committee its hope that the bill will be enacted.

II. THE PARTICULAR PURPOSES OF THE BILL

These purposes may be grouped generally under the following categories 11 (19781Z D9JBD 191391 A J290р97 2л JB P99UD 1. The clarification of the Navy's power with respect to the exploron of the reserves.