clapping or otherwise their approval or disaproval of statements that are made. The hearings are conducted for the benefit of the committee. It is nothing in the nature of an entertainment proposition that requires applause. Therefore, I will ask that you restrain yourselves in that particular occasions when applause is expected.

Governor Carlson, it is a pleasure to have you before the committee today, as a witness, and it is also a privilege. We have, for many years, enjoyed your association in the Congress of the United States, and we have found you at all times to be able and conservative and farseeing in your judgment.

Undoubtedly, this had much to do with your selection by the people of Kansas as their governor. We are certainly pleased to have this renewal of our former association, and particularly to have the benefit of the views that you will express with respect to this important legislation.

STATEMENT OF HON. FRANK CARLSON, GOVERNOR OF THE STATE OF KANSAS

Governor CARLSON. Mr. Chairman, I am indebted to you for those kind remarks.

As I sat in this chamber listening to this splendid statement this morning by my former colleague and your colleague, Ross Rizley, my memory went back to 12 years of service in this body; and this is the first time that I have appeared before a congressional committee. I have sat on the back side of the dais and heard witnesses time and time again.

I realize that you folks are the ones that are inflicted upon at this time, but if you will give me about 15 minutes, I promise to conclude my statement. I will appreciate it so much, because I must leave for Kansas this afternoon.

The CHAIRMAN. If there is any limitation of time, it is one that you have imposed upon yourself. The committee has not imposed any. Governor CARLSON. I assure you, Mr. Chairman, that I am going to follow the transcript I have, and should not use over 15 minutes. Mr. Chairman and members of the committee, I desire to present briefly to you my views respecting House bill 2185, and its companion and identical bill, Senate bill 734. So far as I know, this represents the predominant opinion of the people of my State upon this subject. As you know, the State of Kansas is one of the largest producers of natural gas in the United States, being second, I believe, only to the State of Texas. We, in Kansas, are therefore greatly interested in and concerned with any legislation which directly or indirectly affects the subject of regulation, production, gathering, transportation, processing, and use of natural gas and crude oil.

May I call your attention to the magnitude of the Hugoton gas field in Kansas. Engineers estimate that we have a reserve of 10 to 1012 trillion cubic feet of gas in the Kansas portion of the Hugoton field. During the month of February we were producing 404,993,000 cubic feet per day. Even this great reserve of gas is not inexhaustible and if production and distribution were increased to 1,000,000,000 cubic feet per day, the life of the field is estimated to be 28 years. Our pipe lines are amortized on a minimum of 25 years. The present statutory limit of production is 25 percent of the open flow capacity

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The present production is approximately 10 percent of the open flow production.

The particular bill now before the committee is a proposed amendment to the Natural Gas Act.

Speaking for the executive department of the government, and on behalf of the administrative and regulatory bodies of my State, I desire to say to you that we favor the enactment of the Rizley and identical bills by the Congress of the United States and believe that the enactment of the proposed amendments to the Natural Gas Act will accomplish a most desirable end.

Moreover, the effect will be to eliminate much uncertainty now existent and to properly clarify the line of demarcation between the orbit in which the State and Federal Governments respectively shall operate in the matter of jurisdiction over the production, gathering, processing, transportation, and use of natural gas which is one of the great natural resources of my State.

In urging upon the Congress the enactment of this bill, I am not unmindful of a recent release by the staff of the Federal Power Commission in which it is asserted that in view of the position now adopted the staff of the Federal Power Commission feels there is no present necessity for the enactment of the legislation here under discussion.

I desire to call to the committee's attention some matters which I think are pertinent. I am of the opinion that the regulation of the production, gathering, and processing in the field of natural gas is primarily a function of the several States and not a function of the Federal Government. There are many reasons why this is true, and some of them may be stated as follows.

(1) The problems relating to the production, gathering, and processing of natural gas within the gas fields are purely local. In Kansas, as in other States, the business of drilling, producing, gathering, and processing of natural gas is fully covered by State laws. Regulation is under jurisdiction of the Kansas Corporation Commission.

Our State has exercised this control for many years. The corporation commission has received full cooperation from the industry, and the control so exercised by the State authority has proved both satisfactory and effective in the prevention of waste, both physical and economic. All gas wells in the major fields of Kansas are under strict proration by the commission, and the markets are allocated monthly to the various producing wells within each of the several common sources of supply.

If I may interject, Mr. Chairman. I wish to state that Mr. Jeff Robertson, chairman of our Kansas State Corporation Commission is attending these hearings as a representative, also, of our State, but will not testify.

(2) The promptness with which questions affecting regulation can be disposed of by the State body has demonstrated the desirability of local regulation as opposed to Federal regulation centered in Washington.

(3) The burdensome expense to parties participating in hearings before the Federal Power Commission is well known. The minutiae of detail in the keeping of records, preparation of exhibits for hearings and other known costs make Federal regulation of this local business a most onerous, expensive, and unsatisfactory process. I,

therefore, say to you that it is my judgment and the judgment of our people that the production, gathering. and processing of natural gas within the State is primarily and fundamentally a State function and should be definitely and unquestionably lodged in the State bodies. We are being signally successful in Kansas in accomplishing the purposes of such regulation, and the cooperation between the Kansas commission and the Oklahoma commission has been very satisfactory in regulation of the gas fields common to both States.

(4) The business of producing, gathering, and processing of natural gas, as well as in the case of crude oil, is at best a specialized and hazardous business. It is quite differen in character from interstate operations of pipe lines and other carriers, which the Natural Gas Act was intended to cover.

(5) Kansas gas-producing fields are not controlled by any one company or groups of companies, but the ownership and production are vested in many individuals and companies owning leases and properties used in this business. In my judgment there is no more reason for the extension of Federal control and regulation over the business of producing, gathering, and processing of natural gas than there would be for Federal regulation of plowing, sowing, or reaping of wheat in the grain fields of Kansas, or of operating grocery stores in the State.

I am advised of at least one case in my State in which counsel for the Federal Power Commission in a law brief contended that jurisdiction was vested in the Federal Power Commission over the activities of a small producer which owned only leases, gas wells and gathering lines and sold the gas produced in the field to a pipe-line company. I have no wish to argue the merits but only to point out that uncertainty has and does exist as to the legal status of these producers.

The confusion now existing because of encroachment of the Federal Power Commission into the field of State jurisdiction can, in my opinion, be best and most satisfactorily dispelled by a definite act of the Congress upon the subject as proposed in the instant legislation.

(6) The legislative history of the Natural Gas Act seems to indicate clearly that the purpose of the passage of the Natural Gas Act was not to interfere with the local functions of the State in its regulation. and control of the business of producing, gathering, and processing of natural gas. It seems to have been the chief intent of the Congress, as shown by the legislative history of the act, that no overlapping of jurisdiction was to occur. As a matter of fact, the whole field of production, gathering, and processing of natural gas has for many years been regarded by lawyers and operators as a purely local operation, but they have been in constant apprehension that their entire operations were to be subjected to Federal control and, at the same time, to be unquestionably subject to State control.

This, in my judgment, has produced an intolerable situation so far as our producers are concerned. The status of their business should be made definite by the passage of this proposed legislation.

(7) I need not remind this committee that from the gas fields of Kansas to the Hurley-Wright Building in Washington, D. C., where the Federal Power Commission carries on its business, is more than 1,200 miles. Any sort of regulation affecting small or large producers

so remotely removed from the place in which the business is carried on is, unless there be some excellent reason therefor, an undue burden upon gas producers.

(8) It is my opinion that this act accomplishes a wholesome purpose, and its passage would make definite and clear the line of demarcation between those activities which are purely local, namely, the production, gathering, and processing of gas in the several common sources of supply in any State, and would leave the Federal jurisdiction vested at that point where the gas for resale subject to the jurisIdiction of the Federal Power Commission is sold to the interstate pipe-line company and after it enters upon its interstate journey.

(9) The subject of this legislation is, in my judgment, not a matter which should be left to construction by the Federal Power Commission, from time to time, nor by the courts, nor by any other body, but it should be made definitely certain and crystal clear by the act of the Congress itself so that hereafter not only the producers but the regulatory bodies of my State and other States may know just what is entrusted to the State and what to the Federal Government, and may order their conduct in accordance therewith.

(10) I am confident that other witnesses before your committee will discuss the legal confusion that has arisen in connection with the administration of the act. I shall not expand that subject beyond saying that I feel that here again the line of demarcation between Federal control and State control should be made definite and clear.

(11) There are many problems peculiar to large gas fields like the Hugoton field in Kansas. In this field there are approximately 2,600 square miles of known productive gas territory-an area approximately 39 times the size of the District of Columbia. There are problems which involve the rights of nonproducing tracts as well as producing tracts which, in my judgment, can best be dealt with by the State body.

(12) It seems to me that the whole problem of the regulation of the gas industry from the sands of the wells to the burner-tips in a foreign State could very well be considered on the thesis of the "original package" cases so well recognized by our courts and legislative bodies in the past. I believe the State jurisdiction should be exclusive to the point where the interstate transportation actually begins and control of the gas and ownership passes to the person or company over which the Congress, because of the commerce clause of the Constitution, alone has control.

I believe that when the gas has completed its interstate movement to the point where it is again subject to State control, the power of regulation should again become the subject of State and local jurisdiction free from economic or other influence of the Federal regulatory bodies.

(13) It seems to me that the whole question could be easily freed of all difficulty if the Congress will recognize the simple and wellknown fundamentals of interstate commerce as set forth in the commerce clause. That is to say, that all that transpires before the natural gas or its residue has been assembled to begin its interstate voyage and after that interstate movement has been completed should be left to the control of the states and local bodies.

I desire to thank the committee for this opportunity to appear at this time. I have purposely avoided an effort to attempt a legal

or lectural discussion of the vast natural-gas industry and have assumed that these subjects will be fully covered by others.

I want to say, Mr. Chairman, that I appreciate very much your kindness in permitting me to appear. I think I know every member personally. It is nice to be back and meet you, and I am confident that the usual deliberations that this committee gives to all legislation that is presented to it will be given to this legislation and that we will receive a clarification of some of the problems that are prevalent now in the gas fields of our State.

Thank you very much.

The CHAIRMAN. Are there any questions, gentlemen?

Mr. HINSHAW. Mr. Chairman, Governor Carlson refers to cooperation between the commission in his State and the similar commission in the State of Oklahoma. Is there anything further than cooperation? Is there such a thing as an interstate compact or agreement in that respect?

Governor CARLSON. We have an interstate oil compact between States in the oil-producing area and our working arrangements have been most satisfactory.

Mr. HINSHAW. That is all.

Mr. LEA. I have no questions. I would like to express my pleasure at having the Governor appear before us and present the fine feeling of confidence in this committee.

Governor CARLSON. Thank you, Mr. Lea.

The CHAIRMAN. If there are no further questions, thank you, Governor, for your attendance this morning. I can assure you that the statement which you have made will receive very careful consideration of the committee.

Governor CARLSON. Again thanks, Mr. Chairman. (The following was submitted for the record :)

Re H. R. 2185.

Hon. CHARLES A. WOLVERTON,

STATE OF OKLAHOMA,

OFFICE OF THE GOVERNOR, Oklahoma City, April 2, 1947.

Chairman, Committee on Interstate and Foreign Commerce,

House Office Building, Washington, D. C.

DEAR MR. WOLVERTON: I particularly refer to the above bill which has for its purpose the amendment of the Natural Gas Act approved June 21, 1938, as amended. I understand that hearings are to be held by your committee in the near future on this bill and other similar bills proposing amendments to the Natural Gas Act.

The State of Oklahoma is intensely interested in seeing H. R. 2185 enacted into law. The production and gathering of oil and natural gas is a major segment of the economy in our State. It is firmly believed that these operations are local in character and that they do not affect interstate commerce so intimately or directly as to furnish any logical arguments for Federal regulation and administration. We believe the State commissions, with detailed and upto-date knowledge of the requirements of producing and marketing oil and natural gas, can better administer desirable supervisory powers over these functions.

H. R. 2185 clearly provides that any jurisdiction of the Federal Power Commission shall first attach to the interstate transportation of natural gas or to the selling of gas for resale in interstate commerce at the point where gas is actually delivered into an interstate line. This is as it should be because all functions of production, gathering, and transportation to that point are local functions.

This proposed act further provides that the Federal Power Commission shall have no right, authority, or jurisdiction to designate or limit the end uses to which natural gas transported interstate may be put. This is designed to retain free