mental agencies to control production without at the same time vesting in that same federal agency the power to control matters connected therewith.

The committee has labored hard upon the subject. The bill that is presented for your consideration is not only the bill of the representatives of the Bar Association, but of the three distinguished members of the American Petroleum Industry acting with us in this respect, the three government officials who were just as anxious to have this bill enacted into law as those of us who represented the American Bar Association. The Chairman of the committee, one of the ablest constitutional lawyers in the United States, Dean Bates of Michigan, has given his full sanction to the measure.

The probabilities are that this particular bill will be offered for the consideration of Congress by the Federal Conservation Board at its next session, and under these considerations the committee feels that it is entitled to the endorsement of the Association which created it.

Mr. Cohen:

I ask unanimous consent to offer an amendment to Section 2, the Section as thus amended would read:

No agreement, otherwise in the public interest, by two or more persons for the cooperative development and operation of an oil and gas pool shall be deemed in violation of any of the acts of Congress forbidding monopolies or agreements in restraint of interstate commerce by reason of the fact that such agreement embraces more than one producer.

The motion to amend was seconded.

James S. Twyford, of Oklahoma:

There are some of us little lawyers that do not represent the oil companies, but represent others, and there is some doubt in our mind about the scope of this bill. We want to vote for it if we can, but is there anything in this bill that would permit any commission appointed under it to affect implied covenants to develop on a particular lease. For instance, there may be a lease of the northeast quarter of a Section with two wells on it needing development. Could this commission or anybody appointed under it make any order?

Mr. Newlin:

It is my definite understanding that it could not.

Charles W. Beale, of Idaho:

Do I understand under the provisions of this bill that it permits the owners of oil and gas property to make agreements, when they deem it important and necessary to do so, to curtail the production so that they may continue their operations? Is that one of the policies?

Mr. Newlin:

That is one of the things covered by the bill.

Mr. Beale:

Now, after these owners of oil and gas have come to an intelligent understanding that they will either have to suspend in whole or suspend in part, must they get the permission of some bureau in Washington?

Mr. Newlin:

Not if it is in a single pool.

Mr. Beale:

Is it the purpose of this law to supplement that with another law affecting the mining of lead, zinc and copper?

Mr. Newlin:

That is extremely difficult to answer. If the situation with respect to mining of zinc and copper was as critical and there was such danger of destruction of the resources as there is in the oil industry, I would be sure that the same thing would follow, and the report of the committee definitely states in the resolution adopted on Tuesday that the Section would favor the offer of similar legislation with regard to irreplaceable minerals where a similar situation existed.

Mr. Beale:

Does it apply to metal mines?

Mr. Newlin:

This bill only applies to petroleum and gas.

Mr. Beale:

It permits this determination by the owners in different places, if they enter into one pool without any supervision of the Bureau at Washington?

Mr. Newlin:

Of an oil pool, yes.

Thereupon the amendment to Section 2 was adopted.

Mr. MacChesney:

I desire to offer a further amendment to Section 2 as amended, to carry out what I understand by the Chairman is the intention, and therefore I offer the following:

Provided where a series of such agreements are entered into, where any of the parties are opposed to such series, that the agreement entered into under Section 2 shall be subject to the provisions of Section 3,

the intention being to make it clear that Section 2 cannot be valid by avoiding the restriction in Section 3.

Mr. Newlin:

If that was your understanding of the intention of the committee from me, I did not make it clear. Section 2 is not intended to be in any manner controlled in the same way as is Section 3. In other words, it is the intention of Section 2 that where you have a single pool, being a matter entirely of local interest, governed and controlled by local conditions that the operators of that pool may agree, irrespective of the general conditions in the country, because as has been demonstrated many times in the United States, you will have over production in one state, when you do not have that same situation throughout the rest of the country, and it is intended that this agreement in regard to the single pool shall not be subject to the control or review of the Federal Conservation Board.

Mr. MacChesney:

I think that is clear, but Section 2 applies to a single pool and Section 3 applies to a series of pools. That sort of an agreement would be the same, would it not?

Mr. Newlin:

That sort of an agreement would be the same, but there might be many factors controlling 3 that would not enter into 2.

Mr. MacChesney:

Then I contend that it is perfectly possible, and reason and history has taught us that what is possible is also apt to happen. And with far less competent legal counsel than could be found in this Association, that you could enter into a series of agreements between the same owners, each with reference to a single pool, and do what you want to do under Section 2 with reference to pools, without any sort of control, and if the intention is to limit that to a single pool I see no reason why the committee should oppose the provision that where it is evident that an agreement made under Section 2 is part of a scheme to control locally pools widely scattered, it should be subjected to the safeguards provided in Section 3.

Mr. Veasey:

Cooperative development is defined here as:

Shall mean and include any agreed plan for the development and operation of a pool, as above defined, in such manner as to avoid wasteful methods of development and production, and cause as efficient and complete recovery as practicable.

That has nothing to do with curtailing production at all. It is purely a conservation measure to enlarge recovery and upon a more efficient basis. Now it is that kind of an agreement that may be made under Section 2. However, where it is a problem of over production when ascertained by Federal agents, those are the ones where the public interest would be supreme. The public interest in the other respect is in the direction of conservation, and if you read the definition of cooperative development in connection with Section 2, I believe you will find your amendment is unnecessary.

Mr. Cohen:

I am in sympathy with this bill, with its purposes, and in sympathy with the men who have done such able work to solve a large public problem. It seems to me that we have got to recognize that there must be cooperation in the development of our natural resources by private enterprises, or else we must come to public ownership of those enterprises, but we must all recognize that development by cooperative enterprises and by those who have been motivated by big profits has in the past resulted in injury to the

public interest, and therefore the committee has frankly stated that it recognizes that where there is permissible cooperation by agreement there must be supervision and control. They have created a public board for that supervision and control. The difficulties that we had with the original draft will have been overcome by the amendment, because, in my humble judgment, if there had not been a Section 2 in this form nothing in the Act would have been deemed to be in repeal of the applicable provision of the Sherman Anti-Trust Law. When the Committee puts it in this broad language, my fear was that it permitted agreements that would not be in the public interest, but we have now adopted the language "otherwise in the public interest," and therefore a decision by the Federal Oil Conservation Board which would permit something to be done against the public interest, would be subject to review by the United States Supreme Court. Therefore, it seems to me, we are reasonably safe in permitting as large a pool, and perhaps as many wells as you please, subject to check if it does not justify that conclusion.

James H. Brennan, of Massachusetts:

The title of this bill is a bill to conserve, or promote conservation of petroleum, and natural gas. I want to say that no man, no matter how eminent an attorney he may be, can say that he read this bill during the debate and understands it. It is too far reaching in its scope. We ask very naturally, who is going to determine these questions. He says the Federal Board is going to determine whether an agreement is in the public interest. Now, I do not know whether any Federal Board of two or three men can determine whether or not an agreement of that sort is or is not in the public interest. It is a very wide avenue, and it leaves loop holes of all sorts. I believe we are in the dark on this subject. I believe that the great majority of the members here do not understand the question. The gentlemen coming from the oil sections of the country, the attorneys here who are versed on the subject, they may understand it, but I think there are many of us who do not understand the full scope of this proposition.

And in view of the importance of this subject, in view of the fact that the people of this nation are very skeptical of oil legislation and oil propositions; in view of the lease developments