APPENDIX 5 SERIES OF LETTERS AND INFORMATION SUBMITTED BY FEA REGARDING FEA'S INVESTIGATION OF Designated AFFILIATES PURSUANT TO THE ATTORNEY GENERAL'S OPINION OF MARCH 28, 1975 Question: What action has FEA taken with respect to the Attorney General's request that FEA provide further information concerning coverage of designated affiliates under the Voluntary Agreement? Answer: FEA has sought additional information from the participating companies on this subject. In reviewing this information, we established three criteria which the affiliates designated by each company should meet. First, they should be reasonably necessary to operations under the Agreement as presently foreseen. Second, they should not be engaged in fundamentally local or domestic activity, although we would accept a special showing to designate such an affiliate. And third, they should be under majority ownership or control by the parent company. On the basis of our review of the information received from eleven companies thus far, we have recommended to the Attorney General that he approve our findings that there should be certain revisions in the designated affiliates. Attached are copies of FEA's April 17, 1975 letter to each of the companies which had agree to participate in the Voluntary Agreement by that date, as well as a copy of FEA's letter to the Attorney General. When the remaining companies have responded, we will review the responses against the three criteria I have mentioned and we will forward our findings on these remaining companies to the Attorney General. Letter dated April 17, 1975, to Alameda Hess Corporation. Identical FEA letters dated April 17, 1975 were sent to: Continental Oil Company. Exxon Corporation. Getty Oil Company. Gulf Oil Company. Marathon Oil Company. Mobil Oil Corporation. Murphy Oil Corporation. Skelly Oil Company. Standard Oil Company of California. Standard Oil Company of Indiana. Sun Oil Company. Texaco, Inc. Union Oil Company of California. FEA letter dated May 14, 1975, to Attorney General Levi with enclosures. FEDERAL ENERGY ADMINISTRATION, Mr. PHILIP KRAMER, President, Amerada Hess Corp., DEAR MR. KRAMER: This letter is to solicit certain information from your company concerning the affiliates which you previously requested be included in the coverage of the "Voluntary Agreement and Program Relating to the International Energy Program." The Attorney General in his letter of March 28, 1975 to the Administrator of the General Services Administration approved the Voluntary Agreement per se and coverage of your company and affiliates as requested. However, coverage of affiliates was granted for a period of only thirty days, commencing March 28. The Attorney General further requested that the Federal Energy Administration provide him with respect to each designated affiliate: "(1) written assurance that to the best of FEA's information and belief, there are substantial grounds to believe the affiliate's participation is reasonably necessary to operations under the Agreement as presently foreseen, and (2) information on ownership or control of the affiliate by the parent company." To comply with this request and to provide coverage under the Voluntary Agreement by a sufficient but not excessive number of affiliates, FEA would like each company to reexamine each designated affiliate to determine whether the company believes that the affiliate meets the first criterion set forth by the Attorney General. For each affiliate which you wish still to designate, or any new designations which you now believe would be appropriate, you should provide (1) the grounds, briefly set out, on which the company believes the affiliate's participation is reasonably necessary to operations under the Agreement as presently foreseen, and (2) information on ownership or control of the affiliate. For the latter, an indication of the percentage of the affiliate's stock controlled by the parent should ordinarily be sufficient. In making your determination with respect to (1), you should consider whether the designated affiliate's participation is reasonably necessary to operations under the Agreement either pursuant to Section 5 (Meetings and Consultation) or pursuant to Section 6 (Emergency Allocation). With respect to Section 6, FEA recognizes that the acts which may be required in any particular emergency cannot now be specifically foreseen. Moreover, no set of principles/plans governing allocation has yet been approved. Nevertheless, to the extent possible, companies should identify those affiliates whose involvement would be reasonably necessary to implement emergency allocation plans as those plans are now foreseen. For this purpose, companies should take account of the general principles for allocation set out in Chapters III and IV of the International Energy Program, as amplified and made more detailed through the work of the International Energy Agency (IEA), its Industry Advisory Board, or the group of reporting companies. In this regard, it is expected that industry working papers prepared to date will be provided to members of the group of reporting companies by British Petroleum. In general, FEA assumes that the implementation of international allocation will require the participation of all affiliates significantly involved in international supply to member countries of the IEP. However, affiliates involved in fundamentally domestic or local activity absent some special showing, should not be designated for the purposes of carrying out Section 6 activities. Upon an appropriate showing, designation of foreign affiliates not operating in the United States may be made. Such designation by a parent company shall not be understood to imply that the actions of such affiliates pursuant to the Voluntary Agreement necessarily subject them to the jurisdiction of the United States antitrust laws. As principles/plans are subsequently approved by FEA and the Attorney General, the types of actions and the affiliates reasonably necessary to implement those actions will become more clear and definite. At that time, additional affiliates (subject to approval) may be designated, or already approved affiliates may be reconsidered and disapproved. Since the Attorney General's approval of affiliates as now designated terminates on April 27, FEA would like to have your reply no later than April 21 in order to give FEA the minimum necessary time to review the replies before FEA's submission to the Attorney General. I would appreciate your providing four copies of your reply to Mr. James P. Morris, FEA, Office of International Energy Affairs, Room 2104, 2000 M Street, N.W., Washington, D.C. 20461. If you have any questions concerning this matter, please contact Mr. Morris (202-254-8110). Sincerely, FRANK G. ZARB, Administrator. FEDERAL ENERGY ADMINISTRATION, Hon. EDWARD H. LEVI, Washington, D.C. DEAR MR. ATTORNEY GENERAL: This is in partial response to your request, in your letter to the Administrator, General Services Administration, March 28, 1975, that the Federal Energy Administration reinvestigate affiliates originally designated by their parent companies for coverage by the "Voluntary Agreement and Program Relating to the International Energy Program", pursuant to Section 9 (c) of that Agreement. As you are aware, I have asked each company which has thus far agreed to participate in the Voluntary Agreement to re-examine its originally designated affiliates, with the objective of ensuring that a sufficient but not excessive number of such affiliates would be so designated. In requesting this re-examination and reviewing the results of the company re-examinations, I established three criteria. Briefly stated, the designated affiliates should be: (1) reasonably necessary to operations under the Agreement either pursuant to Section 5 (Meetings and Consultations) or Section 6 (Emergency Allocations); (2) not solely engaged in fundamentally domestic or local activity, absent some special showing for the need to designate such an affiliate; and (3) under majority ownership or control by the parent company, either directly or indirectly. I have thus far received responses to my request for re-examination from eleven companies: Amerada Hess, Exxon, Getty, Gulf, Marathon, Mobil, Skelly, Standard Oil of California, Sun Oil, Texaco and Union Oil. Copies of these responses are attached. Five companies, Mobil, Getty, Gulf, Marathon and Skelly, made no change in their designation of affiliates. Four reduced the number of designations: Amerada Hess, Standard Oil of California, Texaco, and Union Oil. Only Exxon and Sun Oil increased the number of designated affiliates. Subsequent to its original response, Sun Oil Company has asked that Sun Oil Company (Delaware) not be designated, and its response should be considered subject to this modification. We have reviewed the eleven re-examinations submitted. With the exception of Skelly, which designated no affiliates, each of the companies stated that the affiliates designated as a result of the re-examination would be necessary to implement Section 5 and/or Section 6 by virtue of the affiliates' activities in the production, refining, distribution and/or sale of oil in international markets. Nearly all of these affiliates are wholly owned by their parent companies, either directly or indirectly; none are less than 87% owned. Based on the statements contained in the attached letters, we find to the best of our information and belief that there are substantial grounds to believe that participation by the designated affiliates (other than Sun Oil Company (Delaware)) is reasonably necessary to operations under the Voluntary Agreement as presently foreseen. I also believe that they satisfy the other criteria which we established: they are not solely engaged in fundamentally domestic or local activity and they are under majority ownership or control by the parent company. By this letter I am asking your concurrence in this finding and your approval of their coverage by the Voluntary Agreement. In view of the importance and urgency which the United States Government associates with activities under the Voluntary Agreement, I hope that your approval can be obtained in as short a time as possible. As I mentioned above, Exxon has increased the number of affiliates it wishes to designate from four to eleven. The affiliates redesignated by Exxon are Esso Europe Incorporated, Esso Eastern Incorporated, Esso Inter-America Incorporated, and Creole Petroleum Corporation. The redesignated affiliates of Sun Oil, after modification, are five: Sun Oil Company of Pennsylvania, Sun Oil International Incorporated, Sun Oil Trading Company, Sun Oil Trading Company Limited, and Sun Oil Company of Canada Limited. I believe that the nine previously designated affiliates can be covered simply by your approval and the appropriate implementing action by the General Services Administration. For the seven newly designated affiliates of Exxon (identified on page 2 of the attached letter from Exxon), and the eleven newly designated affiliates of Sun Oil (beginning with Sun Oil Company Limited in paragraph six of the attached letter from Sun), I believe that the provisions of Article 9(a) of the Voluntary Agreement require the application of Section 708 of the Defense Production Act of 1950, as amended. Accordingly, by separate letter, I am recommending to the Administrator of the General Services Administration that he request participation by these eighteen affiliates as (1) being in the public interest and contributing to the national defense of the United States, and (2) meeting the same three criteria specified above. I will, of course, inform you as the results of re-examination of these initial affiliate designations are completed by the remaining parent companies and reviewed by the Federal Energy Administration. In addition, we will keep the overall list of designated affiliates under continuous review, as the principles/plans provided for in the Voluntary Agreement are approved by you and me, and the types of actions and the affiliates reasonably necessary to implement those actions become more clear and definite. Federal Energy Adminitration, Office of International Energy Affairs, DEAR MR. MORRIS: Reference is made to Mr. Zarb's April 17th letter to Mr. Kramer requesting information regarding certain affiliates designated by Amerada Hess Corporation in connection with the Voluntary Agreement and Program Relating to the International Energy Program and to your recent conversations with Mr. A. M. Williams of this office. Set forth below is a list of the designated affiliates with a description of the activities of each. Amerada Hess believes that the activities of such affiliates reasonably require their participation with Amerada Hess under the Voluntary Agreement as presently foreseen. In each case, Amerada Hess owns all of the capital stock of the affiliate designated below either directly or through other subsidiaries. Amerada Hess Shipping Corporation: marine transportation of crude oil and refined petroleum products. Hess Oil Virgin Islands Corp.: owns and operates refinery in U.S. Virgin Islands. Hess Shipping Corporation: owns oil tanker. Amerada Hess Corporation of Abu Dhabi: production of crude oil offshore Abu Dhabi. Amerada Petroleum Corporation of Libya: production of crude oil in Libya. Amerada Petroleum Corporation of Norway: production of crude oil offshore Norway. Amerada Hess Norwegian Exploration A/S: holds concessions/licenses offshore Norway. Amerada Petroleum Corporation of the United Kingdom Limited: production of natural gas and crude oil offshore United Kingdom. Amerada Exploration Limited: holds concessions/licenses offshore United Kingdom. Amerada Hess Export Company: trading foreign crude oil. Please note that Amerada Hess Abu Dhabi Trading Company, Hess Pipeline Company and Berkshire Oil Company have been omitted from the Amerada Hess list of designated affiliates previously submitted pursuant to the Voluntary Agreement. Upon review, it has been determined that designation of these affiliates is not necessary at the present time. If you have any questions with respect to the foregoing, or would like additional information, please do not hesitate to telephone. Very truly yours, L. J. LAMBROS, Exxon Corp. Mr. FRANK G. ZARB, EXXON CORP., New York, N.Y., April 18, 1975. Administrator, Federal Energy Administration, New Post Office Building, DEAR MR. ZARB: In reply to your letter of April 17, 1975, we submit the following information regarding the affiliates designated in our letter of March 5, 1975. We consider each of these designations appropriate under the standards ex pressed in your letter. Esso Europe, and to a lesser extent Esso Eastern, may be involved in activities under Section 5 of the Voluntary Agreement, and Program, and all of them would be necessarily involved in any allocation of supplies in an emergency under Section 6. Percent of Ownership by Exxon Esso Europe, Inc.-Providing supervision and coordination of Exxon's oil Esso Inter-America, Inc.-Coordinating Exxon's oil and gas interests in 100 100 95. 41 In view of the standards set forth in your letter regarding the designation of all affiliates significantly involved in international supply to member countries of IEP, we would like to designate the following additional affiliates which we consider would be involved in any allocation of supplies under Section 6: Percent of Ownership by Exxon Esso Eastern Products & Trading Co.-Supply and sale of petroleum and petroleum products primarily in Far East--- Esso Europe Supply Co., Inc.-Trading in petroleum products between Exxon's European affiliates and others; making related freight arrangements Esso Standard Eastern Tankers, Ltd.-Marine transportation for crude Esso Standard Oil S.A., Ltd.--Refining and marketing of petroleum prod- 1100 100 1100 100 199+ Lago Oil & Transport Co., Ltd.-Refining in Aruba; major source of refined petroleum products to Exxon and its affiliates in United States, Canada, and Europe.. Standard Tankers (Bahamas) Co., Ltd.-Principal marine in-chartering and out-chartering affiliate of Exxon__ 1 Indirect. 100 100 We take due note of the statement in your letter regarding the addition of other affiliates or deletion of affiliates already designated as principles/plans are developed, and we, of course, reserve the possibility of designating additional affiliates in the future as provided in Section 9 (c) of the Voluntary Agreement. Sincerely yours, WATT H. DENISON, Jr., Assistant General Manager. Getty Oil Co. GETTY OIL, LOUISIANA, April 21, 1975. Re Voluntary agreement and program affiliates designation. Office of International Energy Affairs (Attention: James P. Morris), This is in response to Mr. Zarb's letter of April 17th requesting certain information with respect to affiliates designated by Getty Oil Company in connection |