The Connally Hot Oil Act of 1935 was enacted in the wake of the Supreme Court's decision to strike down Section 9 (c) of the National Industrial Recovery Act (NIRA) in Panama Refining Co. v. Ryan. The act gave the President authority "to prohibit the transportation in interstate and foreign commerce of petroleum... produced or withdrawn from storage in excess of the amount permitted... by any State law."[1] The act was named after Senator Tom Connally.

It revived the provisions of Section 9 (c) of the NIRA and added procedural safeguards, which, the Supreme Court argued, were constitutional.[2] Ostensibly enacted to protect the industry from "contraband oil," it was mainly a way of cartelizing the industry to stabilize falling prices. The new law reestablished the NIRA's original provision that violators would receive a maximum jail sentence of six months[1][3] but also increased the maximum fine penalty from $1000-which was enacted in the NIRA-[1] to $2000.[3]

Though the legislation was intended to expire on June 16, 1937, it was maintained afterwards as a permanent law.[3] There was some debate as to the law's effects on the transport of other fuels such as coal and timber, and many independent oil producers vehemently opposed the government regulations.[3]

In 1937, four federal courts upheld the Connally Act, which was later administered by the Federal Petroleum Board, also created by the law, within the Department of the Interior.[3][4]

See also


  1. ^ a b c "Our Documents - Transcript of National Industrial Recovery Act (1933)". Retrieved February 13, 2014.
  2. ^ "Panama Refining Co. v. Ryan - 293 U.S. 388 (1935) :: Justia US Supreme Court Center". Retrieved February 13, 2014.
  3. ^ a b c d e "CONNALLY HOT OIL ACT OF 1935 | The Handbook of Texas Online| Texas State Historical Association (TSHA)". Retrieved February 13, 2014.
  4. ^ "Kilgore Nat. Bank Et Al. v. Federal Petroleum Board., 209 F.2d 557 (5th Cir. 1954) - Federal Circuits - Docket Number: 14679 - March 28, 2008 - January 15, 1954 - vLex". Archived from the original on December 4, 2013. Retrieved February 13, 2014.
  • Armentano, Dominick T. (1990). Antitrust and Monopoly: Anatomy of a Policy Failure. Oakland: The Independent Institute. ISBN 0-945999-62-3.[page needed]