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Colonel Klein then talked to the group for 10 or 15 minutes, outlining their procedure in Washington, touching on some of the high points that had been discussed, such as the price to commercial consumers; the split-dealer question; the premium-gasoline question; lease agreements involving exclusive handling of company products-all these pertaining to the Mother Hubbard suit and then spoke on the pipeline phase of the suit and emphasized its seriousness, stating that he did not believe the oil industry had faced litigation of such serious import, at least in many years. He felt that the staff was showing a very fair attitude in the negotiations and he thought there were good possibilities of accomplishing something through continued negotiation.

The chairman said that it would conserve everyone's time, and be much more helpful to the negotiating committee, if members of the industry who had suggestions to make on any topic covered by the agenda would reduce such suggestions to writing and send them to Mr. Edwin S. Hall, of the exploratory committee the original to be sent to New York and the carbon copy to the Shoreham Hotel in Washington.

Colonel Klein stated that it would facilitate the early completion of these negotiations if the industry-each, by companies-would nominate a representative to be quartered in Washington to confer with the negotiating committee from time to time and thereby relieve the committee of the impossible burden of attempting to sell each paragraph of the final plan to the industry, if and when they reached a satisfactory plan of settlement with the staff. As a result of a suggestion from someone present it was agreed that each company would nominate a representative, sending the name to the negotiating committee, and the committee would call members of this group to Washington for conference from time to time as the necessity might arise.

Mr. Don Emery, of Phillips Petroleum Co., stated the position that their company held and voiced a belief in the seeming impossibility of reaching an agreement with the staff which might involve placing a pipeline regulation under the courts rather than leaving it entirely to the ICC, where it now resided. There followed a considerable discussion about the method of negotiating.

Senator Pepper talked and gave advice as to procedure, stating that he felt the points on which the committee and the staff could agree should be covered first, and the procedure by which it might be placed in force be left to the end, as being a more likely method of arriving at a satisfactory outcome.

Mr. Richberg made the suggestion that when comments were sent to the negotiating committee it might be well-particularly for the Pacific coast companies to state clearly how far they were willing to be represented in the negotiations and on what points they preferred not to be represented.

Mr. German, of the Skelly Oil Co., stated he wanted to say in the meeting that their company had not yet decided whether they would be represented through this committee: that he would confer with his associates and that the committee would be informed at a later date.

Mr. Green urged that the members of the industry continue to keep all reference to the negotiations from the press, stating that the staff had agreed to do just that and had lived up to it very well.

A number of questions were asked as to what the ultimate objective of the staff was and opinions were given in answer.

At 12 o'clock a motion to adjourn was made and carried.

IN RE AMERICAN PETROLEUM INSTITUTE

The list of matters for discussion which was submitted by the Department o Justice is in the form of a proposed consent decree. The first six paragraphs relate to the institute. Heretofore, many antitrust cases have been closed, or at least temporarily closed, by entering a consent decree which enjoins in general and indefinite language, acts and activities of the defendants. In many of those cases, defendants have taken the position that, as their current activities were not in conflict with any of the terms of the decree, they would not be affected by its entry. In other cases the defendants have welcomed the general and indefinite terms of the decree on the theory that the case would be closed by the entry of the decree and leave them free to determine whether their acts violated the antitrust laws, to the same extent as before the decree was entered. We feel that the institute should have no desire to dispose of this case on any such

The bill of complaint fails to identify any act of alleged misconduct on the part of the institute. The alleged forecasting of consumptive demands by the statistical department is the only activity which was suggested to the explora tory committee as being in violation of the Sherman Act. In these circumstances we feel that the institute should not consent to any decree which does not definitely and specifically describe and identify the particular act, practice, or course of conduct which is now being engaged in by the institute and which is to be discontinued. If the alleged practice of making and disseminating forecasts of consumptive demands is the only practice which the Department of Justice expects to be discontinued by the institute, the negotiations and the decree should be limited to that matter, so far as the institute is concerned.

We feel that, while the institute should cooperate in an effort to settle this litigation, negotiations as to the institute should proceed on the basis that the Department of Justice identify the acts, conduct, and activities of the institute which it is contended are illegal and which are to be discontinued.

The officers of the institute know of no act or practice which they consider violates the law and we should take the position that the Department of Justice should dismiss the complaint as to the institute unless it can point to some specific illegal act or conduct.

If the institute is willing, in order to dispose of this litigation, to have a decree entered which will restrain it from engaging in acts, practices, and activities which are not in fact engaged in by it, we suggest for consideration the following form of decree:

(1) Engaging in any activities for the purpose and with the effect of raising, depressing, fixing, pegging, maintaining, or stabilizing the prices of crude oil or any of its products;

(2) Promoting, supervising, or enforcing, for the purpose and with the effect of unreasonably restraining trade and commerce among the several States, any policy, program, practice, or activity of any of the defendants or others engaged in producing, transporting, refining, and marketing petroleum and its products. (3) Promoting or sponsoring any program, agreement, or uniform operation among defendants or others for the purpose of restricting the production of crude oil or the manufacture of petroleum products to amounts suggested by the institute;

(4) Promoting or sponsoring any program, agreement, or uniform operations among defendants or others to restrict the production of crude oil or the manufacture of petroleum products, for the purpose and with the effect of unreasonably restraining trade and commerce among the several States;

(5) Promulgating and disseminating suggestions as to amounts of crude oil to be produced or the amounts of petroleum products which should be manufactured and maintained in storage by any defendant or others, for the purpose of indicating or establishing the amount of crude oil to be produced or the amounts of petroleum products which should be manufactured and maintained in storage, pursuant to any agreement or program prohibited in paragraphs 3 and 4 hereof;

(6) Promoting or sponsoring meetings of members of the institute, de fendants, or others for the purpose of agreeing on or adopting any policy, program, or practice with respect to sales prices of petroleum products, price differentials, sales contracts, and margins of profits or for the purpose of raising depressing, fixing, pegging, maintaining, or stabilizing the prices of crude oil or any of its products.

(7) Nothing contained in this decree limits the rights of the defendant American Petroleum Institute, its officers, directors, committees, representatives. agents, and employees to do or to agree to do, or cooperate in doing any act. or to engage in any practice not enjoined by the decree, including but not limited to the following:

(a) Gathering, auditing, and disseminating information and statistics showing the amounts and location of production and stocks of crude oil and petroleum products, daily refinery capacity, crude runs to stills, imports of petroleum and petroleum products; trends as to production, runs to stills, stocks on hand, and consumptive demands or any statistical information related to past transactions and, in the absence of any agreement or program forbidden by paragraphs 3 or 4 hereof, making and disseminating forecasts of overall demands for gasoline, fuel oil, aviation gasoline, and other petroleum products and calculations of overall requirements of production to meet the demands forecasted.

(b) The republication and dissemination of forecasts, statistics, or other information prepared by the Bureau of Mines or other governmental or administrative bodies, with interpretative, dissenting, or augmentative comments;

(c) Promoting, sponsoring, or opposing laws, regulations, and orders wherever proposed, enacted, or made relating to conservation, proration, cooperative development, unit operations, well spacing, or production methods;

(d) Promoting and sponsoring programs and policies among those engaged in producing crude oil, for cooperative development by unit operations and other methods intended to prevent underground or surface waste of oil and gas;

(e) Promoting and sponsoring meetings of members of the institute, defendants, or others or engaging in activities for the purpose of molding policies and agreeing on a program with respect to taxation, regulation or legislation affecting the oil industry in all or any of its branches.

OBJECTIONS TO SUGGESTIONS MADE BY THE DEPARTMENT OF JUSTICE

1. We object to suggestion No. 1 for the reason that it is too general and indefinite. If there is any activity of the institute which the Government contends has the effect of raising, depressing, fixing, pegging, maintaining, or stabilizing prices, such activity should be the subject of discussion, negotiation, and decree. If there is no such activity, this item should come out.

2. This item is also objectionable because of its general and indefinite character. Under this paragraph every useful activity of the institute would be prohibited. In 1934 Mr. Boyd prepared a statement which covered the institute's various activities as of that date, copy of which has been furnished each member of the committee. Most of those activities related to production, transportation, refining, or marketing of petroleum and its products and most of them would be enjoined under the wording of item No. 2, although no one would contend that any of these activities, with the possible exception of forecasts by the Department of Statistics, would be considered violative of the Sherman Act.

Item No. 2 would restrain the institute from engaging in any activity for the purpose and with the effect of molding business policies and practices of the defendant and members of the industry. Among activities which would be restrained are the following: Uniform methods of oil accounting; standardization of oilfield and refinery equipment and other materials and standard specifications for same; policies with respect to, drilling and producing practices, uniform methods of measuring, sampling and testing natural gas and natural gasoline products, pipeline corrosion, disposal of production wastes, fire prevention in oilfields, disposal of refinery wastes, corrosion of refinery equipment, fire prevention in refineries, disposal of marketing wastes, fire prevention in marketing, marketing equipment, policies with respect to-legislation, accident prevention, secondary recovery methods, separate posting of gasoline prices and taxes, taxation, rules relating to tanker and barge transportation, fair-trade practices, policies relating to conservation, proration, and all dissemination and discussion of statistical data.

Item No. 2 of the suggestions made by the Department of Justice should be eliminated entirely. If the Department has in mind some specific activity of the institute which it contends has violated the law, negotiations should be carried on in connection with that particular matter and, if an agreement should be reached that the institute should be restrained as to such matter, the order should be limited to that specific thing.

It is our opinion that all of the statistics collected, published and disseminated by the institute, including the occasional forecasts by Mr. Van Coven, are legal and proper and there is no occasion for abandoning any of the present activities of this department. In view of the consent decrees which were entered in U. S. v. Kraft Paper Association, U. S. v. National Container Association, and U. S. v. Stevenson, Jordan and Harrison cases, we can see no reason why the Department of Justice should insist on item No. 3 suggested by it or the revised version of item No. 3 contained in the report of the Exploratory Committee. 4. We know of no activity of the institute relating to the production or manufacture of petroleum products which is even questionable; however, the Department of Justice must have something in mind and it should be willing to identify the particular activity of the institute which it desires or expects to restrain under provisions of item No. 4. This particular item is much broader than the complaint and would restrain acts which cannot possibly be considered as violative of the Sherman Act.

5. This paragraph should be divided into two parts;

(1) That part relating to meetings for the purpose of fixing prices or molding policies relating to prices;

(2) That part relating to meetings for the purpose of molding policies relating to amounts of petroleum products to be manufactured, maintained in storage, use of transportation facilities, and marketing policies.

The first part relating to fixing of prices, should be entirely eliminated because the institute has never promoted or sponsored meetings for that purpose.

The second part should be eliminated, but, if the Department has in mind any particular policy or practice which has been agreed upon at meetings sponsored by the institute and which is contrary to law, such matter should be the subject of negotiation.

6. This item should be eliminated entirely. It is not covered by the complaint and, as the institute and its representatives have never engaged in the character of activity covered by that item, there is no reason why it should be the basis of negotiation or should be included in a decree.

REVISED AGENDA FOR DISCUSSION BETWEEN THE STAFF OF THE DEPARTMENT OF JUSTICE AND NEGOTIATING COMMITTEE OF THE PETROLEUM INDUSTRY

February 27, 1941

United States v. American Petroleum Institute et al., Civil Action No. 8524, District of Columbia;

United States v. Great Lakes Pipe Line Company, Civil Action No. 183, District of Delaware;

United States v. Phillips Petroleum Company, and Phillips Pipe Line Company, Civil Action No. 182, District of Delaware;

United States v. Standard Oil Company (Indiana), Civil Action No. 201, Northern District of Indiana;

And potential pipeline rebate cases.

I. The Negotiating Committee of the industry presents the following agenda as a possible basis for further discussions between it and the gentlemen of the staff of the Department of Justice.

II. That the defendant, American Petroleum Institute, its officers, directors, members, committees, representatives, agents, and employees as such will refrain from:

(1) Engaging in any activities for the purpose and with the effect of raising. depressing, fixing, pegging, maintaining, or stabilizing the prices of crude oil or any of its products;

(2) Promoting, supervising, or enforcing for the purpose and with the effect of unreasonably restraining trade and commerce among the several States, any policy, program, practice, or activity of any of the defendants or others engaged in producing, transporting, refining and marketing petroleum and its products: (3) Promoting or sponsoring any program, agreement or uniform operation among defendants or others for the purpose of restricting the production of crude oil or the manufacture of petroleum products to amounts suggested by the institute;

(4) Promoting or sponsoring any program, agreement or uniform operations among defendants or others to restrict the production of crude oil or the manufacture of petroleum products, for the purpose and with the effect of unrea sonably restraining trade and commerce among the several States;

(5) Promulgating and disseminating suggestions as to amounts of crude oil to be produced or the amounts of petroleum products which should be manufactured and maintained in storage by any defendant or others, for the purpose of indicating or establishing the amount of crude oil to be produced or the amounts of petroleum products which should be manufactured and maintained in storage, pursuant to any agreement or program prohibited in paragraphs 3 and 4 hereof;

(6) Promoting or sponsoring meetings of members of the institute, defendants or others for the purpose of agreeing on or adopting any policy, program or practice with respect to sales prices of petroleum products, price differentials, sales contracts and margins of profits or for the purpose of raising, depressing. fixing, pegging, maintaining, or stabilizing the prices of crude oil or any of its products;

(7) Nothing contained in this decree limits the rights of the defendant, American Petroleum Institute, its officers, directors, committees, representatives, agents and employees to do or to agree to do, or cooperate in doing any act, or to engage in any practice not enjoined by the decree, including but not limited to the following:

(a) Gathering, auditing and disseminating information and statistics showing the amounts and location of production and stocks of crude oil and petroleum products, daily refinery capacity, crude runs to stills, imports of petroleum and petroleum products; trends as to production, runs to stills, stocks on hand and consumptive demands or any statistical information related to past transactions and, in the absence of any agreement or program forbidden by paragraphs 3 or 4 hereof, making and disseminating forecasts of overall demands for gasoline, fuel oil, aviation gasoline and other petroleum products and calculations of overall requirements of production to meet the demands forecasted.

(b) The republication and dissemination of forecasts, statistics or other information prepared by the Bureau of Mines or other governmental or administrative bodies, with interpretative, dissenting, or augumentative comments;

(c) Promoting, sponsoring or opposing laws, regulations and orders wherever proposed, enacted or made relating to conservation, proration, cooperative development, unit operations, well spacing, or production methods;

(d) Promoting and sponsoring programs and policies among those engaged in producing crude oil, for cooperative development by unit operations and other methods intended to prevent underground or surface waste of oil and gas;

(e) Promoting and sponsoring meetings of members of the institute, defendants or others or engaging in activities for the purpose of molding policies and agreeing on a program with respect to taxation, regulation or legislation affecting the oil industry in all or any of its branches.

III. That the major and secondary company defendants herein, their subsidiaries, successors, officers, directors, agents, employees as such, and all persons claiming to act in behalf of any of them will refrain in transactions in interstate commerce from:

(1) Entering into agreements or arrangements with other any defendants for the purpose and or with the effect of monopolizing, or eliminating competition with respect to the acquisition of potential developed or undeveloped or ereating a monopoly of the developed or undeveloped crude oil reserves in of the United States; provided, however, that this provision shall not prohibit reasonable and non monopolistic agreements for the joint exploration, aequisition or development of reserves by defendants, or the sale to each other of interests in wells and pools so as to permit unit operation by or with the buyers:

(2) Jointly or collectively suggesting, promulgating or adopting, except when pursuant to governmental regulation or approval, the amounts of crude oil to be produced, utilized or maintained in storage and the amounts of petroleum products to be manufactured, maintained in storage or distributed, or promoting and entering into agreements, programs or arrangements among defendants or with others to restrict, dominate or control crude oil production, storage or utilization and or the manufacture, storage or distribution of petroleum products, provided that this provision shall not prohibit the unitization of developed or undeveloped areas nor the aequisition, sale or other disposition of divided or undivided interests in any property or properties included in a designated area or areas embraced in a plan for unitization or cooperative development; nor shall it prohibit well spacing agreements or plans for conservation of natural resources, including the voluntary curtailment plan in effect in California:

(3) Jointly or collectively agreeing among themselves to receive or individually refusing to receive in crude oil gathering lines from independent producers or others less crude oil than the amounts legally tendered and offered for such transportation and legally required to be received in such pipelines; provided, however, nothing contained in this paragraph shall be construed to require the operation of erude oil gathering lines eontrary to State laws or regulations.

(4) Combining and agreeing to raise, depress, fix, peg, maintain or stabilize prices to be paid by defendants for crude oil at producers' wells or at gathering pipeline connections or and prices at which crude oil is to be sold.

(5) Jointly or collectively preventing or interfering with the establishment or maintenance of an oil exchange for the purchase and sale of crude oil.

(6) Jointly, collectively or individually adopting or following the practice of er requiring or compelling crude oil producers or others to sell their crude oil as a condition to the acceptance of the crude oil for transportation by pipeline as a common carrier.

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