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Feds regulate "hot" oil


On this day in 1935, the Connally Hot Oil Act became law. The act came about as a result of the federal government's attempts to deal with the problem of "hot" oil--petroleum produced in violation of state and federal quotas and regulations. In the early 1930s the overproduction of oil, largely a result of the East Texas oil boom, was adversely affecting the oil market. Sponsored by Sen. Thomas Connally of Texas, the law enacted in 1935 was intended to protect foreign and interstate commerce against "contraband oil" and encourage the conservation of domestic crude-oil deposits. It prohibited the shipment of hot oil. Under the law the president had the power to prescribe regulations and require certificates of clearance for petroleum and petroleum products to be moved between states. The law also called for the establishment of boards to issue certificates. Boards could conduct hearings and investigations regarding the enforcement of the act, and the United States District Courts had exclusive jurisdiction regarding judicial matters and disputes over denied permits. Though the legislation was intended to expire on June 16, 1937, it was maintained afterwards as a permanent law.

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