United States v. Republic Oil Refining Co.

• Decision Date: 17 October 1934
• Citation: 8 F. Supp. 897
• Parties: UNITED STATES et al. v. REPUBLIC OIL REFINING CO. SAME v. HARTOL PRODUCTS CORPORATION.
• Court: U.S. District Court — District of New Jersey

8 F. Supp. 897

UNITED STATES et al. v. REPUBLIC OIL REFINING CO.

SAME v. HARTOL PRODUCTS CORPORATION.

District Court, D. New Jersey.

October 17, 1934.

Harlan Besson, U. S. Atty., of Trenton, N. J., W. B. W. Snyder and Morris R. Clark, Sp. Assts. to Atty. Gen., and Robert L. Stern, Sp. Atty., of New York City, for plaintiffs.

Thomas G. Haight, of Jersey City, N. J., Ira C. Houck, of Pittsburgh, Pa., and George G. Tennant, Jr., of Jersey City, N. J., for defendant Republic Oil Refining Co.

Merritt Lane, of Newark, N. J., Todd Lee Wynne, of Athens, Tex., and H. Victor Crawford, of New York City, for defendant Hartol Products Corporation.

FORMAN, District Judge.

On October 6, 1934, a bill of complaint was filed in the case wherein the Republic Oil Refining Company was named as defendant.

In brief the bill recites that pursuant to the provisions of title 1, § 9 (c) of an Act of Congress, approved June 16, 1933, known as the National Industrial Recovery Act (15 USCA § 709(c) the President of the United States is authorized to prohibit the transportation in interstate commerce of petroleum and the products thereof, produced or withdrawn from storage in excess of the amount permitted to be produced or withdrawn from storage by any state law or valid regulation or order prescribed thereunder by any board, commission, officer, or other duly authorized agency of a state.

On July 11, 1933, the President, pursuant to said law (Executive Order No. 6199 15 USCA § 709 note), prohibited such transportation as aforesaid and on July 14, 1933 (Executive Order No. 6204 15 USCA § 709 note), by a further Executive Order, delegated to the Secretary of the Interior of the United States all powers vested in him for the purpose of enforcing section 9 (c) of the act aforesaid.

The bill further alleges that the production of crude petroleum and petroleum products are regulated by statute in the state of Texas, and that during the months of August and September, 1934, nearly 4,500,000 barrels of crude petroleum were produced in the East Texas oil field, in defiance of the said Texas statute requiring certain "tenders" or certificates of clearance.

Specifically paragraph VII of the said bill alleges the following:

"That some or all of said oil produced and withdrawn from storage in violation of the law of the State of Texas and the rules and regulations issued thereunder, were attached to and received by the following named refineries located in the East Texas oil fields:

Gilliland Refining Company Gladewater, Texas Pope Refinery Company Linzie Refining Company Gladewater, Texas Culver Gladewater, Texas Blue Diamond Gladewater, Texas Keystone Refining Company Wabash Refining Company Lone Star Refining Company Jackson Refining Company Consolidated Refining Company Utah Refining Company Chief Refining Company Texas Refining Company Kilgore, Texas A. J. Adams Oil Company

"That some or all of the petroleum or the products thereof thus illegally produced and withdrawn from storage were shipped from the above named refineries to the tidewater terminal of the defendant Republic Oil Refining Company, located at Texas City, Texas; that some or all of the said petroleum and the products thereof were at the tidewater terminal of the defendant Republic Oil Refining Company, loaded aboard the American Tanker S. S. Pueblo on or about September 27, 1934 in the amount of approximately 45,570.50 barrels for transportation in interstate commerce from the State of Texas to the State of New Jersey, and consigned to the defendant Republic Oil Refining Company. That upon the affidavits attached hereto and upon information and belief of the undersigned, it is alleged that the petroleum and/or petroleum products now aboard the S. S. Pueblo, bound for the port of Carteret in the State of New Jersey, within this jurisdiction, were produced in the East Texas field and refined in said location in violation of the laws of the State of Texas and regulations issued pursuant thereto, and that neither the owners, consignors nor consignees, nor any other persons in connection therewith have received, or have in their possession the tender or certificates of clearance covering the crude oil from which the cargo of said vessel was refined or manufactured, and that attached hereto is the affidavit of Roy D. Payne, an employee of the Texas Railroad Commission, having his office in Kilgore, Texas, alleging that he is familiar with the records of said Commission and more particularly familiar with all reports of the violations of the rules and regulations of the said Commission, and particularly insofar as they relate to the production, refining and transportation of oil in the East Texas field, and that agents and investigators under his supervision and control have from time to time in the past and up to and including the months of May, June, July, August and September, 1934, reported to him many instances of oil being run from adjacent leases to various of the above named refineries, and that since these refineries have received no oil whatsoever on legal and approved tenders, all of the said oil is illegal and produced and transported in violation of the rules and regulations of the Texas Railroad Commission, and the laws of the State of Texas; and that attached hereto is the affidavit of James R. Lewis and James R. McConnell, Special Agents of the Division of Investigations, Department of the Interior, by which it appears that on September 27, 1934, they interviewed C. E. Robertson, refinery superintendent of the Republic Oil Refining Company at Texas City, Texas, and were informed by Mr. Robertson that the Tanker S. S. Pueblo would finish loading that afternoon with a cargo of high octane gasoline from their 80,000 barrel storage tank, number 51, and that it would sail that afternoon for Carteret, New Jersey."

The bill proceeds generally to charge that the movement of petroleum and petroleum products thus illegally produced, refined, and transported in interstate commerce constitutes an obstruction and burden to the free flow of interstate commerce; that it interferes with the policies of the National Industrial Recovery Act (48 Stat. 195) and of the Congress of the United States of America; is detrimental to the general welfare of the people of the United States, in that such petroleum tends to increase interstate commerce between Texas and other states and decreases that production from other petroleum producing states to their sister states; that such traffic demoralizes the natural normal flow of petroleum in interstate commerce and that the United States, as one of the largest owners of oil lands and oil royalty, has a direct property interest in the stability of interstate commerce in petroleum products.

It further charges that the cargo of the tanker steamship Pueblo contained petroleum or petroleum products which had been produced in violation of the laws of Texas and that by reason of the commingling of such products with other petroleum or petroleum products the entire cargo of said vessel was illegally transported in interstate commerce.

The plaintiffs had no remedy at law and that irreparable damage and injury would result to the plaintiffs and the nation if the cargo of said tanker steamship Pueblo was permitted to be discharged.

Plaintiffs pray that a temporary restraining order be issued against the defendant company enjoining it from unloading the tanker steamship Pueblo and that a time and place be fixed for the defendant to appear and show cause why the temporary restraining order should not be made permanent.

On October 8, 1934, a bill of complaint was filed against the Hartol Products Corporation, containing generally the same allegations, but specifically, in paragraph 7, the following charge:

"That during the months of August and September, 1934, the Texas Railroad Commission prescribed total quotas of allowable production from the East Texas oil field and divided the said total allowables among the wells in the said field.

"That upon the information contained in the affidavits in support hereof, and upon the belief of the undersigned, it is alleged that during the month of September, 1934, the United East and West Oil Company's well on the Dunaway land on Block 5, Gladewater Townsite, Gregg County, Texas, produced and delivered to the Gladewater Refining Company pipeline a total of 1,634.92 barrels of crude oil, as well as 492 barrels of crude oil, part of which is still in the leased tanks, and that the total of these amounts being 2,126.92 barrels of crude oil was produced from said well during said month of September; that the maximum allowable of crude oil permitted to be produced from said well during the month of September, 1934, under the rules and regulations of the Railroad Commission of the State of Texas was 1,050 barrels, and that there was produced in excess of this amount 1,076.92 in excess of said allowable permitted by said Railroad Commission, and that these facts are more particularly set forth in the affidavits of D. S. Raney and E. N. Stanley hereto attached; that the Foxwood Well on the Morgan Gin lot, Block 4, Gladewater Townsite, produced and delivered to the Gladewater Refining Company pipeline during the month of August, 1934, 2,405.88 barrels of crude oil; that the maximum allowable of crude oil permitted to be produced from said well during the month of August, 1934, under the rules and regulations of the Railroad Commission of the State of Texas was 1,193.5 barrels, and that said well produced 1,212.38 barrels of crude oil in excess of the allowable permitted by said Railroad Commission, and that this is more particularly and at large set forth in the affidavits of J. I. Morgan and E. N. Stanley, and the affidavit of David C. McCaleb, which is hereto annexed; that the Gladewater Refining Company operates a gathering system and pipeline purchasing and running crude oil from various wells in Gregg...