out any professional title. We have quite a variety of professions in our personnel.

Mr. SHEPPARD. What amount of your work could be typified as criminal as compared to civil?

Mr. HURLEY. Oh, a very small percentage I would say. Not more than 5 percent.

Mr. SHEPPARD. Five percent?

Mr. HURLEY. Five percent. It is a minor feature of our work.

PERSONAL SERVICES IN THE DISTRICT OF COLUMBIA

Mr. SCRUGHAM. On page 14 of the bill there is an item reading: "Not exceeding $43,500 for personal services in the District of Columbia." In the past years this committee has restricted personal services to the lowest practical point. Why do you want an increase this year?

Mr. HURLEY. The limitation was $42,370 for 1941, and the actual need for salaries as listed in the Budget estimate is $43,500.

Mr. FITZPATRICK. $43,500.

Mr. HURLEY. Yes.

Mr. JOHNSON of Oklahoma. How do you manage to pay it? Mr. HURLEY. This year we expect to meet it through lapses. Mr. JOHNSON of Oklahoma. Won't you have a similar lapse next year?

Mr. BURLEW. Our pay roll on an annual basis shows a deficit right now.

Mr. HURLEY. Do you mean in our total appropriation, Mr. Burlew? Mr. BURLEW. No; in the Washington office.

Mr. HURLEY. That is right, but the Washington office has had a lapse in one position so that it will meet its pay roll this year.

Mr. BURLEW. Yes; but next year we cannot expect lapses in this small item, and the annual District of Columbia roll of the division now is well in excess of the limitation.

Mr. LEAVY. But if you use this additional money, something over $1,100, and you have a Budget estimate here slightly under last year's Budget estimate, that will take care of you, will it not?

Mr. HURLEY. We are not asking for an increase in the total appropriation; in fact the Budget allowance for the fiscal year 1942 is $900 less than the amount we are operating on this year.

Mr. LEAVY. Then are you not going to have to take that out of the field?

Mr. HURLEY. That difference of $900 represents a fixed charge for rental for office space in Alaska and has no relation to the estimates for personal services.

Mr. LEAVY. No; but the difference between last year and this year for the District of Columbia will have to be taken out of the field? Mr. HURLEY. Yes; out of the total.

Mr. LEAVY. Out of the total?

Mr. HURLEY. It is a limitation rather than a specific appropriation. Mr. LEAVY. Won't that have a tendency to delay pending cases? Mr. HURLEY. No; I do not believe so, because there is a small turn-over in the positions.

Mr. SHEPPARD. Mr. Burlew, on that point I would like to ask you a question. As a matter of policy, when we are dealing with anticipated

obligations in which we find ourselves confronted with a shortage to take care of necessary things, obviously that takes us into the anticipated field of lapsed salaries.

Mr. BURLEW. That is right.

Mr. SHEPPARD. Frankly, as a clean-cut business policy, would it not be more advisable to prevent lapses and have direct appropriations?

Mr. BURLEW. It would be much better to get a direct appropriation. For instance, we make up our estimates 18 months before we start using an appropriation. In 18 months a lot of things can happen. In the case of the Secretary's office, for instance, we will get a number of new positions allowed by Congress and by the time we come to use that money we may have need for other positions which may be more urgent, and that makes us use lapses for something else. It is not a good way to handle it at all.

Mr. SHEPPARD. Does your Department make a practice or in any manner at any time use lapsed accumulations for the purpose of increasing salaries?

Mr. BURLEW. Sometimes.

Mr. SHEPPARD. Do you think that is good policy?

Mr. BURLEW. There are certain cases where we simply have to equalize salaries. I do not think it is a good method as a general rule. I think Congress should determine a promotion policy. As you know it has been working on this for 2 or 3 years and is now considering a recommendation, made by the Bureau of the Budget.

We have people going along for 2 or 3 years without raises while other people are getting the higher rates.

The inequitable thing about this situation is that some bureaus and offices in the Department are able to make more funds available for promotions than the other bureaus.

Mr. SHEPPARD. The policy followed by some departments in handling some promotions is by lapses?

Mr. BURLEW. It certainly is.

Mr. SHEPPARD. It is not a reasonable policy to follow with the provision that appropriations could be made to take care of promotions which were justified.

Mr. BURLEW. That is right.

Mr. SHEPPARD. That is all, Mr. Chairman.

Mr. LEAVY. There is one other question I would like to ask. As to this $469,100 for salaries and expenses, Division of Investigations, for 1942, does that cover all the money you have for that activity? Mr. HURLEY. Yes, sir.

Mr. LEAVY. When making an investigation for Reclamation Service, for instance, or for the Bureau of Mines, or for any other agency within the Department, do they pay for that investigation out of any funds which have been appropriated for them?

Mr. HURLEY. Not as a rule. There might be some such instances. Getting back to this mining work I mentioned a while ago, it is necessary for us to obtain title reports or a form of abstract, particularly where they have been of record for a number of years. The Bureau of Reclamation for instance might sometimes pay for this service directly.

Mr. LEAVY. But the actual salary of the individual employed in the investigation does not come out of the various agencies, but comes out of this other fund.

Mr. HURLEY. Yes, sir; the salary, expenses and per diem are paid by the Division of Investigation.

Mr. LEAVY. That is all.

Mr. JOHNSON of Oklahoma. Are there any further questions? There being none, we will proceed to the next item.

THURSDAY, MARCH 20, 1941.

PETROLEUM CONSERVATION DIVISION

STATEMENTS OF GEORGE W. HOLLAND, JOHN W. FREY,
JACK W. STEEL, AND RAY W. STULL

SALARIES AND EXPENSES

Mr. JOHNSON of Oklahoma. We will next take up the Petroleum Conservation Division, which is the next item in the bill on page 22, for which the appropriation in 1941 was $255,000, and estimated for 1942 is $255,000.

JUSTIFICATION OF ESTIMATE

Mr. HOLLAND. The following justification is offered for the record:
Salaries and expenses, Petroleum Conservation Division

Regular Appropriation, 1941 Act.
Total estimate or appropriation for 1942

$255, 000 255, 000

This item is requested for the administration and enforcement of the law known as the Connally Act, approved February 22, 1935 (49 Stat. 30) as amended by the act approved June 14, 1937 (50 Stat. 257) and the act approved June 29, 1939 (53 Stat. 927), and for carrying on other related work of the Petroleum Conservation Division.

The law is administered under the direction of the Secretary of the Interior as the agent of the President, and the Petroleum Conservation Division is the administrative agency. This Division also cooperates with Federal and State authorities, the Interstate Oil Compact Commission and other agencies in the conservation of oil and gas and in the adoption of uniform oil and gas conservation laws and regulations. The item of $255,000 for 1942 is the same amount and covers the same activities as the appropriation for the current fiscal year. In the enforcement of the so-called Connally Act, four field offices are maintained in addition to the administrative office at Washington. These offices and the employees assigned thereto at the present time are as follows:

For the fiscal year ending June 30, 1941, the item for personal services in the District of Columbia is limited to $43,000. It is respectfully requested that this amount be increased by $1,500 to $44,500 to allow for changes in personnel and reallocation of Washington office employees. The transfer of one employee from the field to Washington will probably be necessary.

The field office at Lansing, Mich. was closed on September 14, 1940, and the personnel transferred to Wichita, Kans. on the same date. It is anticipated that three or more additional Federal employees will be assigned to New Orleans when the reorganization of the office of the Commissioner of Conservation of the State of Louisiana is completed.

It is estimated that the amount of $255,000 for the fiscal year 1942 will be expended for salaries totaling $218,530 and for travel, supplies, and other items of expense totaling $36,470.

The Federal Tender Board No. 1, Kilgore, Tex., is the enforcement agency for the "Hot Oil" Act, and the personnel for the investigative offices at Houston, Tex., New Orleans, La., and Wichita, Kans., have been detailed from that office. The Federal Tender Board No. 1 operates in a designated area known as the East Texas oil field and issues certificates of clearance or tenders, permitting the shipment in interstate commerce of petroleum and petroleum products whenever it determines that the petroleum or petroleum products do not constitute contraband oil as defined in the act.

During the fiscal year the Board considered 4,058 tenders for shipment of petroleum and petroleum products for 205,023,125 barrels, and approved 3,999 tenders for 203,532,919 barrels of petroleum and petroleum products.

During the period since March 1, 1935, more than 2,000 investigations have been made of alleged violations of the Connally law. The number of alleged criminal cases investigated and reported was 572 of which 125 have been prosecuted with 121 convictions. Fines assessed and paid and bonds forfeited have totaled $231,000 of which an amount of $50,000 was assessed and paid during the fiscal year 1940. In addition to fines, 118 defendants have received suspended sentences of 30 days to 18 months. At the close of the fiscal year 1940, 12 cases were pending in the courts and 11 cases were under investigation.

The east Texas field contains approximately 130,000 acres of producing territory in which there are more than 25,800 producing wells. The allowable production for the field as fixed by the Railroad Commission of Texas during the fiscal year 1940 was 142,202,501 barrels. The following activities of the Board for the month of October, 1940, a typical month, indicate the scope of field operations in the enforcement of the Connally hot-oil law:

Leases gauged........

Persons interviewed.

Man-days on special investigations_

Investigations and examinations on tender applications:

Leases involved..

Wells involved..

1, 113

135

133

524

1, 512

The constitutionality of the Connally Act has been sustained by the courts. The law extends to the States of Arkansas, Kansas, Louisiana, Mississippi, Michigan, New Mexico, Oklahoma, and Texas, each of which has enacted laws regulating the production of crude oil so as to prevent waste. In a recent decision by the United States Circuit Court of Appeals for the Fifth District, on March 4, 1941, in the cases of the President of the United States v. W. R. Skeen and Dick Duncan, and the President of the United States v. The Theron Oil Company, it was stated that

"The purpose of the Connally Act is to aid the States in enforcing laws limiting the amount of oil permitted to be produced from wells in designated fields, by prohibiting shipment of excess oil produced, known as 'hot' oil, in interstate commerce. It is settled that the law is a valid enactment of Congress to effect that purpose. Griswold v. The President of the U. S. (82 F. (2d) 922); Hurley v. Federal Tender Board No. 1 (108 F. (2d) 574); compare U. S. v. Gilliland decided February 3, 1941. No doubt investigations by the Board of actual conditions in the field and the requirement that those who engage in the production, sale and transportation of oil shall file reports and diagrams causes inconvenience and expense, but that is not an excuse for not complying with valid regulations adopted under the act. The Board is charged with the duty of enforcing the act. Its officers would not be bound by the denial of any person operating in the field that he was engaged in interstate commerce. The Board has the right to make its own investigation to determine that fact. It might well be that a person not engaged in interstate commerce would furnish oil to a third person, which was used by him in violating the law. If the Board could not require reports and investigate the conduct of every person operating in the field under its jurisdiction, regardless of whether he was engaged in interstate commerce, its enforcement of the law would be greatly hampered. As well might it

be said an innocent person could not be compelled to testify and produce his books and records before a grand jury."

"In both cases the judgment is reversed and the cause remanded."

Mr. HOLLAND. I have with me today Dr. John W. Frey, associate director for marketing and refining of the division, and Jack W. Steele, chairman of Federal Tender Board No. 1, Kilgore, Tex.

Mr. JOHNSON of Oklahoma. We have asked Mr. Sheppard to take charge of this. Just handle it, Mr. Sheppard, in any way you see fit.

Mr. SHEPPARD. Mr. Holland, do you care to make a brief statement pertaining to the justification for your appropriation which has been presented to the committee?

Mr. HOLLAND. I have not much to add to the justification submitted to the committee.

Of course, every one knows the item is for the enforcement of the Connally Hot Oil Act of February 22, 1935, which has now been extended to June 30,1942. The law has been administered under certain executive orders which have been issued by the President.

NUMBER AND LOCATION OF PERSONNEL

We have a total personnel of 82 people with a pay roll of $220,000. The employees in Washington total 14; in Kilgore, Tex., 63; and Houston, Tex., 2

Mr. SHEPPARD (interposing). Did you say Kilgore, 63?

Mr. HOLLAND. Yes, sir.

Mr. SHEPPARD. The justification I have shows 64. Is that a typographical error?

Mr. HOLLAND. No; there has been a recent change, Mr. Sheppard.
Mr. SHEPPARD. I have corrected that. You may proceed, sir.
Mr. HOLLAND. Houston, Tex., 2; New Orleans, 1; Wichita, Kans., 2.

PERSONAL SERVICES IN THE DISTRICT OF COLUMBIA

For the fiscal year ending June 30, 1941, under the present appropriation bill the item for personal services in the District of Columbia is limited to $43,040 as the personnel pay roll. It is respectfully requested that this amount be increased by $1,500 to $44,500 to allow for changes in personnel and reallocation of Washington office employees.

Mr. SHEPPARD. What is the type of reallocation you anticipate, Mr. Holland?

Mr. HOLLAND. We will probably have changes and maybe higher rates. You see things are stymied as they are today.

Mr. SHEPPARD. Then this increase is for bringing those in the higher brackets in from the field to the Washington office?

Mr. HOLLAND. That is right.

Mr. SHEPPARD. As to these states which you have indicated here, in which you are operating, Texas, Louisiana and Kansas, are there any other States in which you are operating aside from those enumerated?

Mr. HOLLAND. No, sir.

Mr. SHEPPARD. Do all of these States have laws regulating the production of oil?

Mr. HOLLAND. Yes, sir.