dustry forum." The API is composed of a 140-man board of directors and employs about 300 employees.30 Its operations are carried out by more than 200 committees which deal with all phases of the petroleum industry.

The API was organized and incorporated in the District of Columbia on March 20, 1919, by James K. Jones, Charles H. Merillat, Charles J. Kappler, and Fayette B. Dow. Its incorporators were members and subcommittee men of the National Petroleum War Service Committee which had functioned during World War I as part of the United States Fuel Administration.31

The objectives of the API, as set forth in its article of incorporation,

are:

32

(a) To afford a means of cooperation with the Government in all matters of national concern; and

(b) To foster foreign and domestic trade in American petroleum products; and

(c) To promote in general the interests of the petroleum industry in all its branches; and

(d) To promote the mutual_improvement of its members and the study of the arts and sciences connected with the petroleum industry.

The activities of the API are organized into divisions and depart. ments, each with its own staff of assistants and clerical force, that correspond to the various branches of the petroleum industry. The divisions are: production, refining, marketing, and transportation. The departments are: American Petroleum Industries Committee, Technical Services, Statistics, and Information. The work of the API is accomplished through the activities of its numerous committees. The committees are composed of oil company personnel and operate within the organization of the institute under the direction of a chairman who, in most instances, is also an oil company employee. Some of the committees are chaired by employees of the institute.3 In its division of transportation, the API has organized committees to work with every Federal Government agency that deals with transportation matters. The objective of these committees is to cooperate with the Government regulatory body so as to secure for the industry in its relations with the Government, the maximum amount of industry self-regulation. The division of transportation publication entitled "Register of Committees" describes the scope of API committee activities with relation to the various Government transportation agencies and states: 34

It is probable that the work in which institute committees appear in the role of advisers to the Government is the institute's most important work, but in any event it is certainly the most important work of the institute's division of transporta

30 Hearings, p. 851. Hearings, p. 838.

See also Hearings, WOC's and Government Advisory Groups, Antitrust Subcommittee, House Judiciary Committee, 84th Cong., 1st sess., serial No. 12, pt. III, p. 2220.

32 Hearings, p. 838.

33 Hearings, pp. 844-853.

34 API Division of Transportation, Register of Committees, January 1957, p. B 4.

tion. As a result of such Government-industry cooperation, industry standards find wide Government acceptance and proposed Government regulations and procedures receive careful industry study as to their necessity, practicality and effectiveness. Committee activities of this character are an approach to industry self-regulation fully anticipated, encouraged and provided for in the Administrative Procedures Act passed by Congress in 1946 and becoming fully effective in 1947. [Emphasis supplied.]

The following chart shows the organization of the committees of the API Division of Transportation in 1957:

The API first organized a special committee to deal primarily with oil pipeline transportation in November 1932, when it established the central committee on pipeline transportation with 37 members.35 At that time there were several committees in existence that had been organized by oil pipeline companies, such as the Committee on Pipeline Crossings under Railroads, Committee on Pipeline Safety, and Committee on Corrosion of Pipelines, that were independent of the API and had worked intermittently with the ICC on various pipeline problems. These committees were brought under the central committee on pipeline transportation in 1932.36 In addition, there was a Committee on Pipeline Depreciation and ICC Accounting Regulations which had been operating since 1920, under the chairmanship of Mr. Fayette B. Dow. In October 1933 this committee was merged with the API Committee on Pipeline Accounting Regulations, a subcommittee of the Central Committee on Pipeline Transportation.37

Soon after the ICC commenced, on July 25, 1934, its oil pipeline valuation program, arrangements were made for the API to coordinate industry cooperation in the valuation work. These arrangements were based on ICC's experience with railroad industry committees and its previous experience with oil pipeline industry committees. To this end, on September 13, 1934, Mr. E. I. Lewis, then Director of ICC's Bureau of Valuation, suggested that Mr. A. J. Byles, then president of the API, take steps to have oil pipeline carriers assist the ICC in the planning involved in valuation work. In his letter Mr. Lewis stated:

38

It is desired that all interested parties be given opportunity to express their views. In the valuation of the railroads, the carriers created an organization and committees to represent them generally. The suggestion is therefore made that the carriers by pipeline of petroleum and petroleum products take similar steps for cooperation with the Interstate Commerce Commission in the planning and carrying forward of this work. Either directly or through the American Petroleum Institute such committees and contacts were established in the matter of depreciation charges and accounting classifications.

The API had anticipated Mr. Lewis' request for industry cooperation. On September 4, 1934, Mr. D. S. Bushnell, Northern Group of Pipelines, had advised Mr. C. H. Kountz, then chairman of the API central committee on pipeline transportation, about the forthcoming ICC request for industry cooperation, and at that time had recommended that Mr. Kountz convene the members in order to consider the matter.40 On September 17, 1934, Mr. W. R. Boyd, Jr., then executive vice president of the API,41 referred Mr. Lewis' request for industry cooperation to the Central Committee on Pipeline Transportation with the suggestion that Mr. Fayette B. Dow be present at any meeting of the central committee in view of the fact that Mr. Dow had

35 Hearings, pp. 838 and 843.

36 Hearings, p. 839.

37 Hearings, pp. 926 and 839.

38 Hearings, p. 840.

39 Hearings, p. 841.

40 Hearings, p. 922.

41 Hearings, p. 840.

conferred on this subject with Mr. Lewis. In this connection, Mr. Boyd stated.42

If you call a meeting, as suggested by Bushnell and as I assume you will do, I suggest you advise Fayette Dow and have him present, as he has been discussing this matter with Mr. Lewis.

Pursuant to Mr. Lewis' request, Mr. Kountz, on September 19, called a meeting of the central committee on pipeline transportation to be held on September 28, 1934, in the API's New York offices. The officials of the central committee on pipeline transportation were particularly anxious that representatives from the ICC did not attend this meeting. There were at least 10 communications on September 19 and 20 between the secretary and the chairman of the central committee and various other API officials relative to the "inadvisability of having any representative from the ICC present at the meeting in New York on September 28." In this regard Mr. Dow, for example, was told by telegram:

4.5

Wrote you yesterday regarding meeting in New York September 28 central committee on pipeline transportation regarding valuation of pipelines. Please do not discuss this with ICC as officers do not desire representation from them at New York meeting.

The September 28, 1934, meeting in New York was attended by 30 representatives of the oil pipelines, including Fayette B. Dow, counsel for the API; H. T. Klein, the Texas Co.; D. S. Bushnell, Northern Group of Pipelines; and J. L. Shoemaker, Stanolind Pipe Line Co.46 At this meeting, Fayette B. Dow "*** outlined the developments in Washington which led to the drafting of the letter on September 13, 1934, by the Director of the Bureau of Valuation.” 47

The members unanimously approved a motion to authorize the chairman of the central committee on pipeline transportation to appoint an industry committee on pipeline valuations to confer with the Director of the ICC Bureau of Valuation.57 Although there was general discussion about limitations to be placed on the authority of this committee, in the end no action was taken to place any restriction on its activities. 48

A considerable part of the discussion at the September 28, 1934, meeting concerned the legality of Mr. Lewis' request for industry cooperation. The committee members tentatively concluded that provisions of section 19 (a) of the Interstate Commerce Act were broad enough to authorize industry action pursuant to Mr. Lewis' request.* After the meeting, Mr. Kountz appointed the following committee, sometimes referred to as the steering committee, to work on valuations with the ICC: 50

42 Hearings, p. 922. 43 Hearings, p. 858. 44 Hearings, p. 923.

45 Hearings, p. 924.

40 Hearings, p. 857.

47 Hearings, p. 858.

48 Hearings, p. 859.

49 Hearings, pp. 859 and 925. 50 Hearings, pp. 841 and 860.