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curred in by Mr. Kauper, and the Division is presently updating the investigation in an effort to determine whether or not all interested users are presently being granted access on reasonable
terms. To complete the story, the Department updated its information on the access issue, which Assistant Attorney General Kauper characterized as the prime focus of pipeline investigations.69 As a consequence of this further investigation, it was found that there were presently no meaningful denials of access. On the basis of this information, the investigation was closed in 1976, 13 years after the Department started its investigation.
It is instructive to look back at the statements made by various Department officials during the course of this investigation. They provide striking evidence that the Department is fully capable of studying a case to death and providing no relief in situations where relief is vitally needed.
On January 12, 1972, Deputy Assistant Attorney General Bruce B. Wilson testified before the Subcommittee on Priorities and Economy in Government of the Joint Economic Committee. The following colloquy was held between Senator Proxmire and Deputy Assistant Attorney General Wilson:
Chairman PROXMIRE. Is it correct that a recommendation was made to institute antitrust proceedings against Colonial pipeline that has been pending for about 6 years now, and no action has been taken?
Mr. Wilson. That is a matter, sir, that we still have under
Mr. Wilson. Frankly, sir, with respect to a transaction of this type, it is impossible really to make a prediction as to how it is going to operate.
Chairman PROXMIRE. This investigation was begun toward the beginning of the Johnson administration. It looks like it is going to continue through the Nixon and, perhaps, the Muskie administrations.
Mr. Wilson. I hope to have an answer before 1980, sir. [Laughter.]
Chairman PROXMIRE. Well, I hope you have some results long before that.
Mr. Wilson. Seriously, on this point, one thing that we can do is wait and observe the pipeline in its actual operation to see if, in
fact there are going to be anticompetitive consequences." On June 15, 1972, Deputy Assistant Attorney General Bruce B. Wilson testified before the House Subcommittee on Special Small Business Problems. In the colloquy following his testimony, Mr. Wilson stated:
Be Oil Price Decontrol at 232-234. 60 Id. at 219.
70 It should be noted that Colonial began operations in 1965. [Testimony found in Small Business hearings, appendix F, A70.]
Mr. SMITH. Well, after something over 20 years of not getting to that point (reaching a conclusion on the factual analysis and legal analysis that will hold up in court] it seems like maybe you could start at the other point [instituting an action for declaratory judgment]. Maybe you might get along faster, do you thing?
Mr. WILSON. Well, I am quite certain that we will have a position on these questions certainly, before the Trans-Alaska line is ready to get into operation because I do not think we would want to let that kind of a mammoth project get into operation without have a pretty good idea where the law is going in this area.
Mr. SMITH. You say before they get into operation. What do you mean by that?
Mr. Wilson. Before they actually start building it.?1 On November 29, 1973, Deputy Assistant Attorney General Bruce B. Wilson testified before the Senate Committee on Interior and Insular Affairs. In the questioning after his testimony, the following exchange took place:
Senator HASKELL. How long have you been looking into the Colonial Pipeline situation. By you, I mean the Antitrust Division?
Mr. Wilson. This has been a very lengthy investigation, Mr. Chairman, and I believe it commenced around 1964. You can treat these cases in one of two ways. You can look at it before it goes into operation. You can make a prediction as to whether or not anticompetitive consequences are going to result. Given the rather large-scale economies which tend to result from the pipeline method of transportation, I tend to think it is probably a much better idea to wait and observe in actual operation how the pipeline operates, whether in fact competitors, other modes of transportation, and so forth, are disadvantaged and make an assessment based upon what actually happens as to whether or not there is a substantial lessening of competition or other practices which might constitute a violation of section 1 or 2 of the Sherman Act.
Senator HASKELL. Wouldn't you think that 1964 is quite a while ago? It seems to me the division would either close the case or bring an action. I just wonder why 9 years of investigation?
Mr. Wilson. Well, the investigation has not been continuous for 9 years. In other words, we will investigate for a time, update our information, make a decision as to whether or not suit is warranted at that time.
In other words, we may have indications that there may be competitive practices but indications which do not rise to the height of where we could prove something in a courtroom. Under those circumstances we would not close it and say we are going to walk away from this one. We would continue to go along for another period and have another update and see whethor or not the indications which we had earlier were still there ar whether
71 Small Business hearings at 208 ; Construction of the TAPS system started in April 1974 and operations began in June, 1977. See, Aimee L. Morner, “For Sohio, It was Alaskan Oil-Or Bust," Fortune, Aug. 1977, at 172–184.
or not there was additional information which then, perhaps, might make those suggestions capable of being proved in a lawsuit in a courtroom.
Senator HASKELL. Would you give a prediction as to when you are either going to close or bring suit on the Colonial case ?
Mr. Wilson. I would think we probably are quite close to the point where we have enough actual experience to make a decision
in that respect, sir."2 On December 12, 1973, Deputy Assistant Attorney General Keith I. Clearwaters testified before the Senate Commerce Committee. In the colloquy subsequent to his testimony, Mr. Clearwaters stated the following:
Mr. CLEARWATERS. Colonial has been around with us for a number of years, and I think that it is fair to say that we are very anxious to decide the Colonial case once and for all up or down, because when you have an investigation in a prosecutorial agency such as ours for 10 years, it is time to do something about it.
Senator STEVENSON. I was going to ask about that case and some others. You have had the Colonial Pipeline case under study since 1963, the Olympic Pipeline case under study since 1965, the Explorer Pipeline since 1967, and of course, the Alaskan Pipeline since 1969. How long is it going to take to reach a conclusion in those cases?
Mr. CLEARWATERS. Well, my own personal view is that a 10-year investigation is indefensible. The Explorer matter, I think, will be coming to a head very soon. Olympic, the investigation is still open, but we would characterize it as an active investigation.
In Trans-Alaska, the investigation is active. We have issued several investigative demands to the proposed owners of the line, and we are reviewing documents and we in turn are trying to evaluate the potential operation of the line.
Part of the problem, I think, in the pipeline cases is that you are never sure what kind of economic impact is going to arise
from their operation until they actually go on-stream.*3 On September 5, 1975, Assistant Attorney General Thomas E. Kauper testified before the Senate Committee on Interior and Insular Affairs. After the testimony, the following exchange took place:
Senator STEVENSON. You indicated among the behavioral problems that the Justice Department had been concentrating on in recent years was access to pipelines. Let me ask you what the status of the investigation into the Explorer pipeline is. That was begun in 1965.
Mr. KAUPER. The Explorer pipeline case at the moment-I should say investigation, is moving ahead in terms of the staff investigation. We have in essence, Mr. Chairman, gone back to secure additional evidence. That is going on now,
Senator STEVENSON. And tle Colonial pipeline begun in 1963 ?
Mr. KAUPER. The Colonial pipeline matter is, to a degree because of where we are in terms of our resources, waiting the outcome of the examination of the Explorer. They presented similar questions and the judgment has been made as to which seems the better to look at.
72 Market Performance, I at 432-433. 13 Consumer Energy Act at 1023.
Senator STEVENSON. Isn't it a fact that among these behavioral problems that not one of the investigations has been concluded ?
Mr. KAUPER. I think that is true Senator. The primary staff lawyer on the Colonial investigation, who left the Division in 1972, was mystified why the Department never brought a case against Colonial. He stated :
Not one of the reasons that was even given to me or made accessible in the file for me to read, ever involved a determination that the Department could not win the litigation that had been recommended.75
2. OLYMPIC PIPELINE
The Olympic Pipeline investigation was commenced in 1965, the same year that Olympic began operation. After several years of analysis, a complaint was recommended in the spring 1970, recommending a civil action based upon section 1 of the Sherman Act and section 7 of the Clayton Act with divestiture as the ultimate remedy. Several months later, the Operations Section of the Antitrust Division recommended against the institution of any suit against Olympic, rejecting the staff's section 1 theories and indicating that insufficient evidence was presented to sustain the section 7 theories. Four months later, in January 1971, the Evaluation Section came to the opposite conclusion and supported the staff's recommendation that a civil suit be instituted based upon both section 1 and section 7 violations. The Director of Policy Planning concurred in that recommendation. Finally, the Deputy Assistant Attorney General recommended against the case.
This investigation joined the same fate as Colonial, waiting for internal policy guidelines to be determined. But unlike Colonial, Olympic remains an open investigation to date, with no indication of its fate.
3. EXPLORER PIPELINE The Explorer investigation commenced in 1967 76 as an outgrowth of the Department's investigation into Gateway (see, infra). Although the Departments investigation began during the early planning stages of Explorer, it remains not concluded even though the pipeline began operations in the fall of 1972. Explorer has never gone beyond the staff level. The investigation has languished, with periodic updates, waiting for a resolution of first Colonial and then Olympic. With each of those cases relegated to the study pile, the focus within the Division shifted to Explorer; however, it became mired down in the Division's efforts to construct policy guidelines applicable to all pipelines. The Division's investigation into this pipeline remains open without resolution.
74 Oil Price Decontrol at 219. 15 Testimony of William J. Lamont, Consumer Energy Act at 675-76. 76 Consumer Energy Act at 1029.
4. GLACIER PIPELINE
Glacier has been one of two successes enjoyed by the Department in its long history of pipeline investigations. Glacier was a proposal to join Standard Oil of New Jersey's Silvertip Pipe Line with Continental's Glacier Pipeline, adding new lines and calling the entire system Glacier. It would have served the crude oil fields of Wyoming and Montana and supplied their refineries in Billings, Montana. In 1968 the Department threatened to sue based on the acquisition of existing pipelines and the proposal was withdrawn.77
5. GATEWAY PIPELINE
Along with Glacier, Gateway represents the other success enjoyed by the Department. In 1969, five oil companies Mobil, American (Standard Oil of Indiana), Texaco, Conoco and Humble (Known as the MATCH group) proposed acquiring the Texas Eastern Transmission Company's product pipeline (the old Little Inch line) running from the Gulf Coast along the eastern part of the Mississippi to Indiana, with a spur to Chicago. The Antitrust Division, under the direction of Assistant Attorney General Richard McLaren, threatened to sue the companies, again based on section 7 grounds. With this proposed suit, the project was abandoned.78
6. TRANS-ALASKA PIPELINE
The Trans-Alaska system has been under study within the Department since 1969.79 The early stories of investigative difficulties within the Department are well known and will not be repeated. 80
The Department did express its concern to the Department of the Interior at the time the Department of the Interior had the rights-ofway applications under review; however, nothing resulted from the exchange of correspondence.
In mid-1972, the Department's staff concluded its analysis of the documents received from TAPS, and concluded that nothing should be done until the pipeline commenced operations.
The Department has undertaken a recent effort concerning the tariffs filed by TAPS (see infra. section on Recent Directions).
The Department has made some recent movement in the area of pipelines and these will be treated in greater depth in the section on Recent Directions.
7. FTC'S EXXON COMPLAINT
The FTC filed a complaint against eight major oil companies in July 1973. The eight companies are Exxon, Texaco, Gulf, Mobil,
, , , Socal, Standard Oil Company of Indiana, Shell and Arco.81 The case is a major effort to restructure the operations of these eight companies.
77 Small Business report at 10; Small B118iness hearings at 205.
78 Small Business report at 10: Small Business hearings at 205 ; it should be noted that as a result of this action. five other companies proposed the Explorer project, which grew to eight participants and was successfully constructed and put into operation in 1972.
79 Consumer Energy Act at 1029.
81 In the matter of Exxon Corporation, et al., dkt. 8934, complaint reproduced in Consumer Energy Act, 127-131.