submerged lands, but only a paramount right. So, therefore, his answer merely is: the Congress cannot give the States, in his opinion, ownership, because ownership flows from the common law, whereas the paramount right of the Federal Government, under the Supreme Court decision, flows from international law, wholly independent.

Mr. COMBS. I see. Anyway, Mr. Perlman, the Congress, at one time at least, passed a bill confirming to the States their title in these lands. That is true; is it not?

Mr. PERLMAN. Yes.

Mr. COMBS. Assuming that is done again, let us assume that for the purpose of the argument

The CHAIRMAN. To be quite accurate, Judge, the Congress did not do that. It just quitclaimed. It passed a bill which merely surrendered whatever claim the United States might have. Now, that is very different from transferring ownership, as every lawyer knows. It is the difference between a quitclaim deed and a formal deed of transfer with warranty or guaranty of title.

Mr. COMBS. To avoid any technicality in that field, it is conceivable that Congress may decide that the States involved have a right to take and to use and appropriate that oil, by whatever title or law you might see?

Mr. PERLMAN. Yes.

Mr. COMBS. That is true; is it not?

Mr. PERLMAN. Yes.

Mr. COMBS. Now, in view of that possibility, and especially in view of the fact that the Court itself is divided as to that matter, and the Congress the only time it has spoken has decided in favor of the States, would it not be a lot better for us to pass an interim bill, if one is needed, to permit the States, which have the machinery in operation, who made the leases, who have the supervisory staff, and the know-how and long experience of producing this oil-would it not be better to authorize them, rather than the Department of the Interior, during this interim, to go ahead and produce? Would that not be the sensible thing? It would not cost the National Government a dime, and it would not cost the States very much, because they have the machinery. Mr. PERLMAN. If you ask me, I am the Solicitor General. It is my duty to urge the claims of the Federal Government. What you are asking to be done is a method by which three States of this Union could be advantaged and benefited and enriched at the expense of the other States in the Union. That is what would happen. These assets belong to all the people of the United States, and not just to three of the States.

Mr. COMBS. Now, Mr. Perlman, when the States established their boundaries, they located them some distance seaward, some 3 miles, some 102.

Mr. PERLMAN. That is right.

Mr. COMES. And, of course, it has been repeatedly held that the Continental Shelf under those waters is an extension of the adjacent land. Now, what does that language mean in this case that was decided in 1842. I want to read it to you. This language and this holding have been repeated in perhaps 100 cases:

When the Revolution took place, the people of each State became themselves sovereign, and in that character hold the absolute right to all their navigable waters and the soils under them for their own common use, subject only to the rights since surrender by the Constitution to the General Government--

which, of course, is the rights of imperium or the right to regulate traffic, and protect this oil.

Mr. PERLMAN. Mr. Congressman, you asked me what this means. And the Supreme Court said that it meant, when it handed down that decision, that the States had the rights to the beds of all navigable waters, just as you read it, within their boundaries, the beds of the rivers, the beds of bays, the beds of all inland waters belong to the States, and the States have sovereign authority over them. It had nothing to do with the beds of the ocean. And that is what the Supreme Court said.

Mr. COMBS. The Abby-Dodge case dealt with the ocean.

Mr. PERLMAN. But as to the Abby-Dodge case, as well as some 52 other cases, I think, in all, that were cited by the attorneys for California, Texas, and Louisiana, in answer to all of them, the Supreme Court reaffirmed its holding that the States had fee-simple title to the beds of their inland navigable waters. But nothing in those cases had any relationship to the paramount power and full dominion over submerged ocean lands, which the United States acquired as an incident of national external sovereignty, and which no State was ever possessed of.

The CHAIRMAN. Are there any other questions to be addressed to Mr. White?

(No response.)

Mr. White, the committee is very much indebted to you for your statement. As is always the case, you amaze the chairman by your memory for detail and figures for the most complicated aspects of the whole case.

Mr. WHITE. Thank you, Mr. Chairman.

The CHAIRMAN. The committee will come to order, please. We now have the opportunity of listening to the testimony of Mr. Walter S. Hallanan, president of the Plymouth Oil Co., who is the sole representative, at least at this time, of the industry.

He will testify, as I understand it, with respect to the position of the lessees in the entire area.

STATEMENT OF WALTER S. HALLANAN, PRESIDENT OF THE

PLYMOUTH OIL CO., PITTSBURGH, PA.

Mr. HALLANAN. Thank you, Senator. My name is Walter S. Hallanan. I am president of Plymouth Oil Co., an independent producer and refiner, which owns a substantial interest in approximately 120,000 acres of oil and gas leases acquired through competitive bidding from the State of Texas in 1947 on submerged lands in the Gulf of Mexico.

I think I might say parenthetically, Senator O'Mahoney, that I am not a lawyer; so I do not attempt to inject myself into some of the highly technical discussions and legal aspects of this controversy. I am appearing before you as chairman of the Offshore Lessees Čommittee, which consists of representatives of most of the holders of leases on surmerged lands off the coasts of Texas, Louisiana, and California.

The CHAIRMAN. You mean State leases?

Mr. HALLANAN. State leases. The committee will recall that at the hearings held in October 1949 on the subject of submerged lands,

the offshore lessees presented detailed and comprehensive testimony in order to give you as complete and accurate a picture of our offshore operations as was possible. We showed you a motion picture of our operations, which I think was enlightening to your committee. Mr. E. F. Bullard, president of the Stanolind Oil & Gas Co., described the geology of and the geophysical work accomplished on the submerged lands in the Gulf of Mexico.

Mr. H. H. Kaveler, assistant to the vice president in charge of production of Phillips Petroleum Co., testified with respect to drilling operations and production practices. Mr. Hines H. Baker, president of Humble Oil & Refining Co., discussed the equities of the holders of leases acquired from the respective States. Mr. Ernie E. Pyles, vice president of Jergins Oil Co., presented the facts concerning offshore operations in California.

At the hearings held before this committee last August on Senate Joint Resolution 195, Mr. Clayton Orn, counsel for The Ohio Oil Co., Mr. W. W. Clary, counsel for Signal Oil & Gas Co., and myself appeared in behalf of the offshore lessees to supplement the testimony previously given you and the committee. It is my understanding that the records of both those hearings during the Eighty-first Congress have been formally adopted as a part of the record of this hearing. It is the purpose of my testimony today to bring up-to-date the record with respect to offshore operations for oil and gas.

I am advised that current production from State leases on submerged lands off California-exclusive of production from the city of Long Beach-averages about 50,000 barrels per day. These leases cover 10,600 acres of submerged land. This oil is being produced from about 400 wells, the well-heads of which are located on the uplands but the wells are drilled at an angle and bottomed out under the water. Operations off California are continuing under a series of stipulations which have been entered into annually by the State and the United States pending the determination of the location of the seaward line of California's inland waters-that is, the line where the rights of the State end and the paramount powers of the United States begin under the Supreme Court's opinion in the case.

Of the total of 2,925,000 acres leased since 1945 by 30 operators from the States of Texas and Louisiana through competitive bidding, there remain outstanding leases covering 1,550,000 acres, or about 50 percent of the area originally leased. Leases covering about 400,000 acres have been surrendered within the past 6 months.

As of February 14 of this year, 235 wells had been drilled on these leases, resulting in 91 oil wells, 28 gas condensate wells, 4 dry gas wells, and 112 dry holes. These wells are located at distances from shore varying from 1 to 27 miles. The total oil produced up to the present time is estimated to be about 9,500,000 barrels. Present production, practically all of which is off Louisiana, amounts to about 20,000 barrels per day. Offshore operators have expended in excess of $250,000,000 in the search for oil in the Gulf of Mexico. The gross revenue from the oil produced has amounted to about $20,000,000.

I would like to call to your attention these facts which illustrate the extent to which activities in the Gulf have declined. Three and one-half years ago, 48 geophysical crews were in operation. At present there are only four in operation, all off the coast of Texas. Eight

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een months ago 26 drilling rigs were in operation. Six months ago the number had dropped to 14. At present five rigs are drilling off Louisiana and none off Texas. Unless some relief is forthcoming, when these five wells are completed, drilling in the Gulf will be at a complete standstill.

On last December 11, the Supreme Court of the United States entered its decrees in the Texas and Louisiana cases. In these decrees the lessees were enjoined from carrying on any activities on these submerged lands except under authorization first obtained from the United States. On the same day, the Secretary of the Interior issued a notice which, in effect, authorized those then conducting operations to continue them for a period of 60 days. A subsequent notice has extended the period for an additional 30 days, or until March 11.

In other words, drilling of the five wells now being drilled, and production from existing wells can be continued, but no new wells can be commenced. The Secretary of the Interior in his notice stated:

The relationship between the known domestic supplies of petroleum and the present and potential national needs, military and civilian, for petroleum is such that undue interruption of the present operations in the Gulf of Mexico would involve the risk of injury to our national security and economy. Moreover, the producing wells and the elaborate facilities used in drilling for and producing oil and gas in the submerged coastal lands are subjected to unusual risks of loss, injury, and deterioration through action by the elements, which can only be avoided or minimized by continuous and vigilant operation and maintenance. Such loss, injury, and deterioration, if permitted to occur, would be an economic waste in an operation of benefit to the national security and economy and productive of income to the Federal Government.

Gentlemen of the committee, we cannot overemphasize the great importance of adequate petroleum supplies in these critical times. Petroleum is the lifeblood of the machines of production and mobilization-whether on the farm or in the factory. It is the propelling power of practically all forms of transportation, whether on land, on sea, or in the air. It is the motive power for all our military forces, whether the Army, the Navy, or the Air Force. History shows that our superiority in oil was a vital and decisive weapon in winning the past two world wars. Our enemies' inferiority in oil hastened their ultimate defeat.

Lord Curzon said of World War I, "The Allied cause floated to victory on a wave of oil." Fleet Admiral Nimitz said that World War II was won with "bullets, beans, and oil." No one knows now what our petroleum requirements would be in the event of another world conflict. We all agree, however, that they will be staggeringeven beyond the requirements of previous wars.

Let us look for a moment at our present petroleum picture. Today our domestic production of crude oil is approaching 6,000,000 barrels a day, and our Nation's partial mobilization plan is just beginning. This production is 1,100,000 barrels a day in excess of the peak production in World War II.

Today we are importing both crude oil and refined products in sizable quantities. According to the latest published report of the Bureau of Mines, which is for the month of November, we imported an average of 465,000 barrels of crude oil a day, 100,000 barrels a day coming from the Middle East and 365,000 barrels a day coming from Mexico, Colombia, and Venezuela. We also imported from the Caribbean area about 450,000 barrels per day of refined products,

mostly residual fuel oil. Total imports of crude oil and refined products are currently in excess of 1,000,000 barrels daily.

The impact of a world conflict on these foreign sources of supply is unpredictable. Many believe that the Middle East supply would be lost. In that event, we would not only be deprived of that oil we now utilize here at home, but we would also face the responsibility of furnishing from our own supplies the necessary petroleum requirements of our allies overseas, who are now receiving supplies from the Middle East. Production in the Middle East for November averaged 1,900,000 barrels daily.

Many are also concerned about the possibility of a substantial reduction in supplies from South American sources which might result from sabotage in those countries where the oil fields are located or from extensive submarine warfare along the shipping lanes.

With respect to the relationship of petroleum to our national defense, this committee will be interested in a request made by the Department of the Interior on January 29 last of the National Petroleum Council, of which I am chairman. The Department informed the council that preliminary studies by the Petroleum Administration for Defense indicated that in the event of war there would be a sharp increase in the demand for petroleum requirements which would require large quantities of capital and materials, and the Department stated that the magnitude of the quantities was not known.

However, the Department, which is specifically charged with the responsibility of seeing that adequate petroleum supplies are obtained to meet our civilian and military demands, requested the council to make a study of the capital and materials needed in order to increase the availability of petroleum products in the Western Hemisphere by 1,000,000 barrels per day. That study is already under way. This assignment, which I consider to be one of the most important that the National Petroleum Council has been called upon to undertake, is certainly indicative of the staggering demands we may have to meet. If the necessity arises, how can we be prepared to replace the petroleum imports which we might lose, to supply our allies who might be cut off from their present sources of supplies and, at the same time, to satisfy the tremendous increases in military and essential civilian requirements at home which would result from another world conflict?

For one thing, we must intensify our exploratory activities. We must intensify our drilling activities, both exploratory and development, in an attempt to discover new oil fields as well as to develop fully and rapidly the existing fields. We must build up a reserve productive capacity which will be available immediately to meet the demands of any emergency. As the late Secretary of Defense, the Honorable James Forrestal, said: "I do wish to emphasize that undeveloped oil fields provide no power for machines of either war or

peace.

When we were attacked at Pearl Harbor, we were in a position to increase our production immediately and within maximum efficient rates by more than 800,000 barrels a day. At present, according to the best-informed opinion, our reserve productive capacity is only about 450,000 barrels per day. It is imperative that this cushion of safety so vital to our existence be very substantially increased with the utmost speed.