Interstate Oil and Gas Compact Commission

The Interstate Oil and Gas Compact Commission (IOGCC), formerly the Interstate Oil Compact Commission, is a United States organization, representing the governors of 31 member and seven associate states, that works to ensure the nation's oil and natural gas resources are conserved and utilized to their maximum potential while protecting health, safety and the environment.[3]

Interstate Oil and Gas Compact Commission
AbbreviationIOGCC
Formation1935
TypeInterstate compact
PurposePromote efficient harvesting of oil and gas while protecting health, safety and the environment.
HeadquartersOklahoma City
Region
United States
2018 Chairman
Asa Hutchinson, Governor of Arkansas[1]
Executive Director
Carl Michael Smith[2]
Websitewww.iogcc.state.ok.us
Formerly called
Interstate Oil Compact Commission

Background

In the early days of oil exploration, drilling was governed by the law of capture, which states that the owner of land on which a well resides has the right to any oil from that well even if it was drained from the land of his neighbors. This provided an incentive for each land owner to extract the oil as fast as possible.[4]:21 Each state tried to regulate its own oil by such measures as proration, the limiting of production to some fraction of capacity; but then two great oil fields, the Oklahoma City Oil Field and the East Texas Oil Field, were discovered. This, along with the Great Depression, led to much waste and very low prices, with a catastrophic effect on the industry. The problems were large enough that the states recognized the need for cooperation.[4]:33–34

The compact was formed in 1935 as the Interstate Compact to Conserve Gas and Oil.[5] The purpose of the compact was to eliminate the glut of oil and raise prices for consumers.[6] The interstate compact was seen as an alternative to direct federal regulation that would allow oil producing states to retain more control.[7]

While the National Guard occupied wells in Oklahoma and Texas in 1931–1932, an Oil States Advisory Committee drafted the Thomas-McKeon Bill, which proposed an interstate oil compact and a Federal Interstate Oil Board to recommend quotas. However, the bill was abandoned after oil industry representatives withdrew their support.[4]:37–38[8]:126 From 1933 to 1935, oil was regulated under the National Industrial Recovery Act and the Petroleum Code, which in effect left production control in the hands of industry representatives, with no representation for the states.[4]:38 The Supreme Court found these regulations unconstitutional in 1935,[9]:375 and the idea of an interstate compact was revived. On December 3, 1934, Oklahoma Governor-elect E. W. Marland met with the governors of Kansas and Texas to discuss an interstate compact. This led to the drafting of the Interstate Compact to Conserve Oil and Gas, which was ratified by Congress on August 27, 1935.[8]:150–151 At first, Congress ratified it for only two years at a time, then four years, and finally the compact was made permanent in 1979.[10]:76

Some economic historians have described the regulation of oil output under the compact as an example of a price fixing cartel.[11] The production controls of the IOGCC and the Texas Railroad Commission have been cited as precursors to the establishment of OPEC's caps on member state oil production.[12]

The stated purpose of the compact was "conserve oil and gas by the prevention of physical waste thereof from any cause".[13] States that ratified the compact agreed to enact legislation for this purpose. Article VI of the compact constituted "The Interstate Oil Compact Commission," renamed as the Interstate Oil and Gas Compact Commission in 1991, and its duty was to make recommendations for preventing the physical waste of gas and oil.[9][13]

Organizational structure
  Member states
  Associate states

Initially the commission had six members: Colorado, Illinois, Kansas, New Mexico, Oklahoma and Texas. It now has 31 member states, 7 associate states and 10 international affiliates (including 7 Canadian provinces and territories).[14] The governor of each member state appoints an official representative who can vote on policy recommendations, and any number of associate representatives who can vote in their place if the official representative is not available. The list of members can be found on the IOGCC website.[15] Many representatives are state regulators overseeing gas and drilling, but as of 2010 at least seven were industry executives and lobbyists.[16] The commission meets biannually, but much of its work occurs in small committee meetings throughout the year.[16] To govern operations, it has steering, finance, resolutions and nominating committees. Other committees are Energy Resources, Research and Technology; Environment and Safety; International; Public Lands; Public Outreach; and State Review.[17]

Transparency and accountability

The IOGCC is governed by the compact and several bylaws. The compact did not provide for any resources to support IOGCC; a later bylaw stipulated that its expenses would be paid "from voluntary contributions from the member states and other sources of revenue approved by the Commission". These sources, which include federal grants, have proved to be enough to allow the commission to function.[18]:144 IOGCC uses an Oklahoma government email address and domain but it is not a state, not a federal agency and does not have to register to lobby the federal government.[19] A plethora of information is available but relatively little of it has come directly from the organization itself. IOGCC claims an exemption from the Open Public Records Act and has removed a provision within its by-laws that formerly said its records are open to the public.[20][21]

Activities

To identify best practices, IOGCC surveys member states and assesses their activities. It catalogues innovative programs and shares the information with states, and it hosts biannual meetings that draw together representatives from the government, the oil industry and environmentalists.[22] IOGCC is an advocate for states' rights, arguing that state regulation is more effective than "one size fits all" federal regulation.[23] As well as creating reports, it creates model statutes as a guide for legislation by states.[24]

Issues that IOGCC has worked on include national energy policy, carbon sequestration, environmental stewardship, hydraulic fracturing and produced water.[25]

Price fixing

In the 1930s and 1940s, the commission functioned as a price fixing cartel. According to the legal scholar Blakely Murphy, the commission operated under the guise resource conservation but primarily existed to protect the interests of oil producers.[26]

Carbon sequestration

A large part of the human contribution to global warming is from the emission of carbon dioxide (CO2) as a result of burning fossil fuels.[27] One way to reduce the contribution is to capture the CO2 before it enters the atmosphere and sequester it by injecting underground in depleted oil and natural gas fields, saline formations and coal beds.[28][29] Recognizing that the oil and gas industry has a lot of experience with injecting CO2 into the ground for enhanced oil recovery, the IOGCC launched the Geological CO2 Sequestration Task Force in 2002 to investigate the issues surrounding sequestration.[30] A two-phase study was funded by the Department of Energy. Phase I concluded that the states had the knowledge and experience to regulate sequestration safely. In phase II, started in 2006, the task force prepared a report that included a model statute for the states with explanations on how to implement it.[30][31]

Awards

The IOGCC has three awards. The E. W. Marland Award, established in 1994, recognizes an outstanding state legislator. The Warwick Downing Award, established in 2005, recognizes an individual outside state governments who has made an outstanding contribution to the IOGCC. The highest honor, established in 2001, is the Chairman's Stewardship Award for exemplary efforts in environmental stewardship.[32] This award has four categories: Environmental Partnership (for partnerships with industry led by non-industry organizations); Energy Education; Small Company and Large Company.[33]

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References
  1. "About Us". IOGCC. Retrieved 29 April 2018.
  2. "Contact Us". IOGCC. Retrieved 24 September 2014.
  3. Baca, Marie C. (9 December 2010). "Some Appointees to Oil and Gas Commission Are Industry Execs, Lobbyists". Our Investigations. ProPublica. Retrieved 23 September 2014.
  4. Lovejoy, Wallace F.; Homan, Paul T. (2011). Economic aspects of oil conservation regulation. Hoboken: Taylor and Francis. ISBN 9781135985462.
  5. Joint resolution consenting to an interstate oil compact to conserve oil and gas Pub. Res., No. 64 (1935); 74TH CONGRESS. SESS. I. CHS. 780, 781.
  6. Leach, Richard H. "The Interstate Oil Compact: A Study in Success." Okla. L. Rev. 10 (1957): 274.
  7. Murphy, Blakely M. "The Interstate Compact to Conserve Oil and Gas: An Experiement in Co-Operative State Production Control." Miss. LJ 17 (1945): 314.
  8. Nash, Gerald D. (1968). United States Oil Policy, 1890–1964: Business and Government in Twentieth Century America. University of Pittsburgh Press. ISBN 9780822975748.
  9. Daintith, Terence (2010). Finders keepers? how the law of capture shaped the world oil industry. Washington, DC: RFF Press. ISBN 9781936331765.
  10. Zimmerman, Joseph F. (2002). Interstate cooperation : compacts and administrative agreements. Westport, Conn.: Praeger. ISBN 9780275977566.
  11. Libecap, Gary D. (1989). "The Political Economy of Crude Oil Cartelization in the United States, 1933-1972". The Journal of Economic History. 49 (4): 833–855. JSTOR 2122740.
  12. Grossman, Peter Z (2004). How cartels endure and how they fail: studies of industrial collusion. Cheltenham: Elgar. p. 218. ISBN 1858988306.
  13. "Charter". IOGCC. Retrieved 24 September 2014.
  14. "Member states". IOGCC. Retrieved 29 April 2017.
  15. "Member States". IOGCC. Retrieved 3 February 2016.
  16. Baca, Marie C. (9 December 2010). "Some Appointees to Oil and Gas Commission Are Industry Execs, Lobbyists". ProPublica. Retrieved 24 September 2014.
  17. "Committees and Workgroups". What We Do. IOGCC. Retrieved 24 September 2014.
  18. Broun, Caroline N.; Buenger, Michael L. (2006). The evolving use and the changing role of interstate compacts : a practitioner's guide. Chicago, Ill.: Administrative Law Section, American Bar Association. ISBN 9781590316436.
  19. DESMOG: Introducing IOGCC: The Most Powerful Oil and Gas Lobby
  20. Energy Wire: Hydraulic Fracturing - Public disclosure database kept private
  21. Huffington Post: IOGCC: The Most Powerful Oil and Gas Lobby You’ve Never Heard Of
  22. "What We Do". IOGCC. Retrieved 26 September 2014.
  23. "States' Rights". Issues. IOGCC. Retrieved 26 September 2014.
  24. "Model Statutes". Issues. IOGCC. Retrieved 26 September 2014.
  25. "Issues". IOGCC. Retrieved 26 September 2014.
  26. Murphy, Blakely M. "Administrative Mechanism of the Interstate Compact to Conserve Oil and Gas: The Interstate Oil Compact Commission, 1935-1948." Tul. L. Rev. 22 (1947): 384.
  27. Houghton, J.T.; Ding, Y.; Griggs, D. J.; Noguer, N.; Linden, P. J. van der; Xiaosu, D.; Maskell, K.; Johnson, C. A., eds. (2001). Climate change 2001: The scientific basis. Contribution of Working Group I to the third assessment report of the Intergovernmental Panel on Climate Change. Cambridge: Cambridge Univ. Press. p. 7. ISBN 0521-80767-0. Retrieved 26 September 2014.
  28. "Carbon Sequestration". Issues. IOGCC. Retrieved 26 September 2014.
  29. "Deep saline formations". CO2 storage. ICO2N. Retrieved 26 September 2014.
  30. Curtiss, David K. (April 2008). "Carbon sequestration rules emerge". Explorer. American Association of Petroleum Geologists. Retrieved 26 September 2014.
  31. CO2 Storage: A Legal and Regulatory Guide for States (PDF) (Report). IOGCC. December 2007. Retrieved 26 September 2014.
  32. "Award Programs". What We Do. IOGCC. Retrieved 26 September 2014.
  33. "Chairman's Stewardship Awards 2012" (PDF). IOGCC. Retrieved 26 September 2014.

Further reading
  • Interstate Oil Compact Commission (1954). The Compact's Formative Years, 1931–1935. Oklahoma City.
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