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staff of the Division before proceedings were filed; but, second, that our policy was that barring some enforcement disadvantage stemming from such a conference, if we felt we could profit from one, we would have it; we would then agree to meet with him if it were feasible, but I would not make any commitment that we would so meet.

Mr. HARKINS. Did you-
Mr. Bicks. I believe shortly after that he left for Europe.

Mr. HARKINS. At that conference, did you advise Mr. Chaffetz that if it were feasible to do so, you would inform him if any case against Service Pipe Line were to be filed ? Mr. BICKS. I believe that is the substance of what I said.

Our policy is, Mr. Harkins, first, that we generally profit from meeting where civil proceedings are contemplated, with defense counsel. Our profit stems from the fact that in the course of such conference we ofttimes gage the texture and the path of what their defense in court will be.

Second, you have a quite basic issue of fairness here. When you are thinking of proceeding civilly against an American corporation or an American citizen, unless there is some enforcement disadvantage, I think there is a strong equity claim that he be informed of the nature of his Government's complaint against him. Involved here, it seems to me, is a basic principle of candor and fairness in our Government's dealings with its citizens.

Mr. HARKINS. In August 1957 did you have another conference with Mr. Chaffetz concerning a case against Service Pipe Line Co. under the consent decree?

Mr. Bicks. On Friday, August 23, 1957, Mr. Chaffetz met with me in my office, with Mr. Karsted and Mr. Kirkpatrick, early in the morning I would say between 9 and 10.

Mr. HARKINS. Did you have any conference with Mr. Chaffetz before that? Did you have any conversations with Mr. Chaffetz before this conference you described on August 23?

Mr. Bicks. As I recall, I think Mr. Karsted and Mr. Kirkpatrick were with me during the entire conference.

Mr. HARKINS. My question is, prior to the date of your conference on Friday, August 23.

Mr. Bicks. You mean, setting up the conference? I think I spoke with his Washington office and asked if he could come in and see us at that time. I went on to say that in order for him to address himself to the merits of what we were going to discuss, he might review his correspondence from the Department during the period 1954-1 think I referred to some correspondence between Judge Barnes and Mr. Burke, the president of Service. By reviewing that correspondence, he could have in mind the particular issue we were going to discuss.

In sum, it is frequently not too profitable to have a defense counsel come in to discuss a pending proceeding without him having some idea what we are going to discuss. So I asked him to reread that correspondence before he came in.

Mr. HARKINS. My question is this-
Mr. BICKS. I asked his office to do that.

Mr. HARKINS, Did you have a conference with Mr. Chaffetz with respect to any actions against Service Pipeline Co. under this decree

now.

in the period between your May conference—your early conference before he went to Europe—and the August 23 conference?

Mr. Bicks. I do not know if you would consider my speaking with his Washington office and asking if he might come in and see us at a conference.

Mr. HARKINS. The question is: Did you have a conversation with Mr. Chaffetz?

Mr. Bicks. I would like to check my records. I do not recall one

Mr. HARKINS. And will you check your records and see if you saw him personally in this period, between the time of your conversation, your conference with him in your office before he went to Europe, and your conference with him on August 23, as you have disclosed ?

Mr. Bicks. I would be glad to.

Mr. HARKINS. On the Monday preceding the Friday of August 23, did you call Mr. Rowe, from Chaffetz' law firm, and advise him that a suit would soon be filed against Service Pipeline Co. for alleged violation of the consent decree?

Mr. Bicks. I do not recall doing that, because I would have had no such authority.

Mr. HARKINS. In that telephone conversation you do not recall any telephone conversation?

Mr. Bicks. I indicated, in response to your previous question, that in response to Mr. Chaffetz' request for an appointment, I spoke with his Washington office to tell Mr. Rowe we would be glad to see Mr. Chaffetz at a prescribed time.

As I further indicated in response to your previous question, I asked Mr. Rowe to have Mr. Chaffetz read specific correspondence that would point up the issue between us. I did not, during the course of that conversation, as I recall, indicate to Mr. Rowe whether or not we would proceed, or if we would proceed, when.

Mr. HARKINS. Do you recall in that telephone conversation whether you advised Mr. Rowe that if he or Mr. Chaffetz wanted to discuss a case against Service Pipeline Co. before it was filed, they had to get to the Department in a hurry!

Mr. Bicks. No. Mr. Harkins, I can't picture myself using that sort of language. I would like to describe a bit what the status of our operations was at that time not only regarding this case, but other cases.

As our conference of April 10, or so, put it, as of that time, no recommendations were before me involving actions under this judgment. Immediately after that conference, I talked with Bill Kilgore. Judge Hansen was present. And it was made pretty darn clear that we would like to know whatever he thought should be done under the judgment, since no recommendations were presently before us.

Our thinking developed over the months, and we decided that it would be not the better part of enforcement wisdom to bring one or two minor proceedings, but rather to get together all the proceedings involving the key provisions of the judgment, wherein we felt violations existed.

This task proceeded in April and May and June, and about the time August came around, we were in a pretty good state of preparation.

Reconstructing thé 1-day conversation with Mr. Chaffetz? Washington office, I may have indicated that if Mr. Chaffetz wanted to come in before we moved under the judgment, he had better do it pretty quickly. I didn't indicate this to Mr. Chaffetz, but the fact was that we had all just about become satisfied with the state of the pleadings, and it looked as though Mr. Kirkpatrick and myself and Mr. Kilgore and Mr. Karsted were going to be in the position to make a unanimous recommendation to Judge Hansen as to what he might do.

Mr. HARKINS. Then, would not your answer to my question previously asked be in the affirmative? That question was, in that telephone conversation did you advise Mr. Rowe that if he or Mr. Chaffetz wanted to discuss the case before it was filed, he had to get to the Department in a hurry?

Mr. Bicks. I wouldn't put it exactly that way, Mr. Harkins. I would stand on my reason of what I said.

Mr. HARKINS. On that same day did Mr. Chaffetz telephone you from Chicago with respect to this matter?

Mr. Bicks. He might have; I would have to check my records.

Mr. HARKINS. In that conversation, either with Mr. Chaffetz or with Mr. Rowe, did you advise them that you thought a suit would be filed on Friday, the 23d ?

Mr. Bicks. No; I couldn't have advised him of that, because one decision Judge Hansen had made was that he wanted to make sure that we had an enforcement package of all the suits we intended to file under the decree together, before we filed them; that he didn't want to have them one at a time. He thought it was a more orderly way to present it.

In this conclusion, I think all of us concurred. In point of fact, the last of that package was not ready until the week the suits were filed. So all I wanted to make clear to Mr. Rowe and Mr. Chaffetz was anytime in the near future, we might move without any feeling of bad faith in the sense of, "You didn't offer us an appointment in time for us to get down before proceedings were filed.”

Mr. HARKINS. In your telephone conversation, did you advise Mr. Chaffetz and Mr. Rowe that the basis for the suit that was proposed against Service Pipeline involved the question of whether the prorated value of new additions and betterments made by the pipeline company in the calendar year covered by the report could be added to the valuation of the carrier's property for the next preceding year?

Mr. Bicks. I would say what I advised Mr. Chaffetz and Mr. Rowe, that the issue between us would be reflected in correspondence as of certain dates. The correspondence referred to did raise the so-called pro rata issue.

To repeat, I cannot answer "Yes" to your question because I do not now recall what I said, and, in fact, comparatively, I didn't say that a suit would be filed on a particular date.

Mr. Harkins. You did have a conference on Friday, August 23, 1957

Mr. Bicks. That is right.

Mr. HARKINS. At 10 a. m. with representatives of the Service Pipeline?

Mr. Bicks. My recollection is it was slightly before 10 a. m.

Mr. HARKINS. Who were the representatives of the Service Pipeline Co. at this conference?

Mr. Bicks. Mr. Chaffetz, and I believe he had an accountant from the Service Pipeline Co., and I believe there was a nonprofessional business executive. My records would show their names.

Mr. HARKINS. Who were the representatives of the Department of Justice at this conference?

Mr. Bicks. Mr. Kirkpatrick; Mr. Karsted, the man in charge of the case; and myself.

Mr. HARKINS. At this conference did you hand to the representative of Service Pipe Line Co. a copy of the pleading that involved Service Pipe Line Co.?

Mr. Bicks. I began the conference by going over the correspondence with the Service representatives, so we could make sure what the issue between us was. I then said I thought the issue between us was reflected in a piece of paper which I gave them, which Mr. Karsted had prepared in the form of a pleading. This, Mr. Harkins, is a fairly standard way of conferring with defendants' counsel when a civil proceeding is contemplated. It focuses quite definitely the issue between us. It enables defendant's counsel to offer whatever arguments they may choose to offer as to why we are wrong, if in fact they think we are wrong. And that is just what Mr. Chaffetz did.

Mr. HARKINS. Did you advise the representatives of Service Pipe Line Co. at that conference that the Department was prepared to file the pleading on Friday, August 23 ?

Mr. BICKS. I do not recall that I did now.
Mr. HARKINS. Was the pleading filed on Friday?

Mr. Bicks. No; it wasn't. I repeat, the decision that Judge Hansen had made was that we were to wait until we got all the proceedings under the key provisions together so we could file them as an enforcement package.

Mr. HARKINS. At that conference did the representatives of Service Pipe Line Co. persuade the Antitrust Division not to file a pleading?

Mr. Bicks. Quite obviously, Mr. Harkins, we have filed a pleading. So the answer to your question is, they did not.

Mr. HARKINS. You are referring to the pleading that was filed on October 11, 1957?

Mr. BICKS. I am.
Mr. HARKINS. Involving Service Pipe Line?
Mr. Bicks. I am.

Mr. HARKIN :. Was the motion that was filed on October 11, 1957, the same pleading that was discussed with Mr. Chaffetz and representatives of the Service Pipe Line Co. ?

Mr. Bicks. Mr. Harkins, I will not go into the changes that were made in the pleading, on the basis of the facts we learned since the meeting.

The CHAIRMAN. He didn't ask that.

Mr. Bicks. It is not. I will say this, that whatever changes were made were minor. And all were made with the full concurrence of all four of us here. Quite frequently, Mr. Harkins, pleadings are revised up until the date they are filed.

Mr. HARKINS. Mr. Bicks, with respect to the memorandum you wrote in September 1955, concerning the pleading that was attached to Mr. Karsted's August 10, 1955, memo, did you discuss the matters involved in that pleading with Mr. Chaffetz or Šír. Rowe?

Mr. Bicks. No.

Mr. Harkins. Is it customary for the Department of Justice to discuss with the defendants subject to a consent decree proposed actions by the Department for enforcement of that consent decree? Mr. Bicks. Judge Hansen testified yesterday, of course it is.

Mr. Harkins. Is it customary to show the defendant in such a case copies of the pleadings that the Department of Justice proposes to file?

Mr. Bicks. Mr. Harkins, where we think it is to our advantage in terms of focusing discussion to show defendant's counsel the sort of pleading we have in mind filing in a civil case, we do.

Mr. Harkixs. Were these discussions with the representatives of the Service Pipe Line Co. part of the prefiling negotiation procedures of the Department of Justice?

Mr. BICKS. No.
Mr. HARKINS. They are not?
Mr. Bicks. No.
I have never heard that applied to any but original proceedings.
The CHAIRMAX. He just asked the question.
I think the committee will now recess until 2 o'clock.

(Whereupon, at 12:20 p. m., the subcommittee recessed, to reconvene at 2 p. m. of the same day.)

AFTERNOON SESSION

(Present: Representatives Celler, Keating, and Rodino.)

The CHAIRMAN. The subcommittee will come to order. The Chair wants to announce that the witnesses for tomorrow will be the Honorable Owen Clark, Chairman of the Interstate Commerce Commission, Cecil W. Emken, Director of the Bureau of Accounts, Interstate Commerce Commission, C. F. Howser, Chief of Engineering Branch, Bureau of Accounts, Cost Finding and Valuation, ICC, James E. Moss, director, division of transportation, American Petroleum Institute, Fayette B. Dow, Chairman of the API committee on pipeline accounting, secretary to the API engineers-accountants valuation committee.

We will now resume testimony of Judge Hansen and his colleagues.

Mr. HARKINS. Judge Hansen, paragraph VIII of the consent decree requires the defendant pipeline companies to render a report to the Attorney General annually, does it not?

TESTIMONY OF HON. VICTOR R. HANSEN, ASSISTANT ATTORNEY

GENERAL, DEPARTMENT OF JUSTICE, ACCOMPANIED BY ROBERT A. BICKS, FIRST ASSISTANT, W. D. KILGORE, JR., AND ALFRED KARSTED, ANTITRUST DIVISION, DEPARTMENT OF JUSTICEResumed

Mr. HANSEN. Yes, sir.

Mr. HARKINS. Pursuant to this provision many of the defendants in this case have on file with the Attorney General more than one report for any particular year; is that not so?

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