Legislative Messages of Hon. James V. Allred, Governor of Texas 1935-1939 Page: 37 of 263
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price check will always be of paramount importance and value to land
and well owners in the gas fields of Texas.
Sixth: The divorcements of pipe lines from the producing, manufacturing
and marketing branches of the natural gas industry is essential to the
remedy. Pipe lines constitute the exclusive outlets from these gas fields.
In the past while their affiliated brethren have preached and secured oil
proration, these gas pipe line companies have successfully resisted gas
proration in the courts on the ground that they are not purchasers at all
but only users of their own production.
I believe it is essential, and I therefore recommend, that appropriate
legislation be enacted to limit the scope of business ownership of corporations
in this industry as the proper means to effectuate gas conservation
regulation. To insure effectiveness of this regulation, it will be necessary
to include a prohibition against interlocking ownership of units in these
several branches of the industry by holding companies.
I respectfully call your attention to possible pitfalls in some of the
bills that are now before the Legislature dealing with this subject.
Some sponsors have suggested that proposed legislation may disregard
vested rights under the "theory of capture," upon which our property law
is based. This step is believed by me to be dangerous under our Constitution
and property law. Its inclusions might serve to destroy the effectiveness
of the statute. I believe the statute can be so drawn as to respect
these vested rights and accomplish insurance against downfall under
Others have suggested the policy of price fixing. This, also, is off the
charted course and presents a serious constitutional question. It is also
significant that price fixing in the statute might bring us face to face
with the question of Federal control of this natural resource, a situation
wholly repugnant to the interest of the State in the exclusive exercise of
its right to handle its own internal problems. It is also important that if
by reason of he State's adoption of such a policy, natural gas production
should be declared interstate commerce and subject to exclusive Federal
control, then the State of Texas might thereby be forever precluded from
its own inherent right to levy taxes upon this resource because of the constitutional
prohibition against placing a burden on interstate commerce.
We are, of course, intensely interested in a market and a fair market
price for natural gas at the wells, not only in the interest of the State
but as well for land and well owners. This condition can and should be
improved by the finding of additional markets for natural gas from new
industry at home, as well as through new pipe line outlets to industrial
centers that now suffer great shortage of fuel gas supply at prices easily
within the limits of economic profit. Inquiries I have made conclusively
show that Detroit, St. Louis, and other large industrial cities are greatly
interested and desirous of cooperating fully in any program to bring to
their gates additional supplies of fuel gas. The National Administration
has indicated a profound interest and willingness to render active aid
to such a program. It is both reasonable and plausible that by State aid
and-authorization, without cost to the citizenship, a program can be inaugurated
by the gas producers, with available Federal aid, that will
establish these market outlets. At a later date I shall have a specific recommendation
to make in this connection.
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Allred, James V. Legislative Messages of Hon. James V. Allred, Governor of Texas 1935-1939, book, 1939; (texashistory.unt.edu/ark:/67531/metapth3899/m1/37/: accessed June 27, 2017), University of North Texas Libraries, The Portal to Texas History, texashistory.unt.edu; .