[Federal Register Volume 63, Number 149 (Tuesday, August 4, 1998)]
[Notices]
[Pages 41550-41558]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-20727]
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DEPARTMENT OF ENERGY
Voluntary Agreement and Plan of Action to Implement the
International Energy Program
AGENCY: Department of Energy.
ACTION: Notice of intention to amend ``Voluntary Agreement and Plan of
Action to Implement the International Energy Program.''
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SUMMARY: The Department of Energy (DOE) gives notice that the
Department of Justice intends to amend the ``Voluntary Agreement and
Plan of Action to Implement the International Energy Program''
(``Voluntary Agreement'') to implement changes recently enacted by
Public Law 105-77 to the antitrust defense in section 252 of the Energy
Policy and Conservation Act (EPCA) for U.S. oil companies participating
in the International Energy Agency's (``IEA'') emergency preparedness
program. The Voluntary Agreement, which was adopted in 1976, implements
the EPCA section 252 antitrust defense. The Administration sought the
changes to EPCA section 252 to conform legal authority for U.S. oil
company participation in IEA emergency preparedness activities to
current U.S. and IEA emergency response policy for oil supply
disruptions. Prior to the enactment of Public Law 105-77, the EPCA
section 252 antitrust defense was available only for planning and
implementing the IEA's emergency international oil allocation system in
response to significant international oil supply interruptions. Now the
antitrust defense extends to the participating U.S. oil companies when
they assist the IEA in planning and implementing coordinated drawdown
of government-owned or government-controlled petroleum stocks, a policy
the U.S. successfully urged upon its IEA partners. The Department of
Justice intends to amend the existing Voluntary Agreement 20 days after
publication of this Notice, to implement the changes to EPCA section
252 enacted by Public Law 105-177.
FOR FURTHER INFORMATION CONTACT: Samuel M. Bradley, Acting Assistant
General Counsel for International and Legal Policy, Department of
Energy, Forrestal Building, Room 6H-74, 1000 Independence Avenue S.W.,
Washington, D.C. 20585; 202-586-6738
Angela Hughes, Attorney-Adviser, Transportation, Energy and
Agriculture Section, Antitrust Division, Department of Justice, 555 4th
Street, N.W., Washington, D.C. 20001; 202-307-6410
SUPPLEMENTARY INFORMATION:
The IEA, the main forum for energy cooperation among 24
industrialized countries, 1 was created in 1974 by its
governing treaty, the Agreement on an International Energy Program (the
``IEP Agreement''). Based in Paris, the IEA is an autonomous agency
within the framework of the Organization for Economic Cooperation and
Development (``OECD''). The IEA's main decision-making body is its
Governing Board, composed of senior energy officials from each member
country; the work of the Agency is supported by a Secretariat headed by
an Executive Director.
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\1\ Australia, Austria, Belgium, Canada, Denmark, Finland,
France, Germany, Greece, Hungary, Ireland, Italy, Japan, Luxembourg,
the Netherlands, New Zealand, Norway, Portugal, Spain, Sweden,
Switzerland, Turkey, the United Kingdom, and the United States.
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The IEA was formed in the aftermath of the 1973-74 Arab-Israel War
crisis. That crisis--and the failure to mount any effective joint
response to the supply disruption that it involved--shocked the nations
of the industrialized world into action to reduce their vulnerability
to future disruptions. It was the United States that took the
initiative, calling an international conference in Washington in 1974
that led to negotiation of the IEP Agreement. Through that Agreement
the IEA's founders charged it with responsibility for international
cooperation on oil supply disruption responses, long-term policies to
reduce dependence on oil, energy information systems, oil market
transparency, energy research and development, and relations with OECD
and non-OECD oil producers and consumers.
The IEP Agreement contains, in addition to its institutional
arrangements, a body of obligations that are binding on the member
governments. These include both long-term cooperation obligations, and
emergency response commitments, including the commitment to participate
in oil sharing with one another, in accordance with an agreed formula,
in case the IEP's emergency measures are activated by a serious supply
disruption.
The IEP's international oil sharing system has never been
triggered, and over the years the IEA's emergency preparedness strategy
has evolved significantly, reflecting the growing experience as well as
the dramatic changes that have occurred in oil markets and IEA member
countries. Taking into account the lessons of the so-called ``Second
Oil Crisis,'' beginning with the Iranian revolution in 1979 and
continuing during the Iran/Iraq War,
[[Page 41551]]
and the growth of strategic oil stocks in member countries, the IEA, in
response to urging by the U.S., adopted in 1984 its decision on
``Stocks and Supply Disruptions,'' the so-called ``Coordinated
Emergency Response Measures'' or ``CERM Decision,'' which supplemented
the emergency international oil allocation system the IEA already had
in place for dealing with oil supply disruptions.
The CERM Decision registered the IEA's conclusion that in most
supply disruptions timely coordinated drawdown of members' strategic
stocks could be a rapid and effective means of restoring interrupted
supply and mitigating economic damage. During the 1990-91 Gulf crisis
the IEA implemented a ``CERM'' Contingency Plan providing for IEA
member countries to make available to the market 2.5 million barrels of
oil per day, although at the time EPCA section 252's limitations
prevented the IEA from soliciting U.S. company views specifically on
the preparation of the Plan. The U.S. contribution to the Plan was to
draw down 17 million barrels of oil from the SPR in January 1991. In
1995 the IEA's Governing Board adopted its ``Decision on Emergency
Response Policies,'' which had been sought by the U.S., and which
represents a commitment by the IEA member countries that in the event
of an oil supply disruption they will give first consideration to
coordinated stockdraw rather than to international oil allocation.
The IEA has from the Agency's founding relied heavily on the direct
cooperation of the oil industry in developing, testing and,
potentially, advising on and implementing emergency measures. It has
been recognized from the outset that the performance of these functions
at the behest of governments could expose companies to antitrust and
breach of contract risks under U.S. law. To facilitate U.S. company
participation in the IEA, the Congress in 1975 enacted section 252 of
the EPCA, which authorized the development of voluntary agreements and
plans of action to implement the allocation and information provisions
of the IEP, and makes available a limited antitrust defense and breach
of contract defense with respect to actions taken to develop or carry
out voluntary agreements and plans of action. A ``Voluntary Agreement
and Plan of Action to Implement the International Energy Program'' was
agreed to in 1976 by a number of U.S. oil companies. 2 See
41 FR 13998 (April 1, 1976) and 2 CCH Federal Energy Guidelines, para.
15,845. In 1988, the Attorney General amended the Voluntary Agreement
to incorporate a ``Second Plan of Action to Implement the International
Energy Program,'' which describes actions the participating U.S.
companies may take during implementation of the IEA's emergency
international oil sharing system.
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\2\ At the present time, the following companies, which have
agreed to be IEA Reporting Companies, are participants in the
Voluntary Agreement: Amoco Corporation, Ashland Petroleum Company,
ARCO Oil and Gas Company, Caltex Petroleum Corporation, Chevron
Corporation, Conoco Inc., Exxon Corporation, Mobil Oil Corporation,
Phillips Petroleum Company, Shell Oil Company, and Texaco Inc.
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The recently-enacted amendments to EPCA section 252, when
implemented by amendments to the Voluntary Agreement, will ensure full
protection against antitrust risk for U.S. companies when they assist
the IEA in developing, testing, and implementing coordinated drawdown
of government-owned and government-controlled petroleum stocks.
In accordance with Section 9(a) of the Voluntary Agreement, on July
7, 1998, the Department of Energy submitted to the Assistant Attorney
General of the Antitrust Division for his approval, and to the Federal
Trade Commission and the Assistant Secretary of State for Economic and
Business Affairs for their comments, proposed amendments to the
Voluntary Agreement to implement the changes to EPCA section 252
enacted by Public Law 105-177. The text of these implementing
amendments is set forth in Appendix 1.
DOE has received from the Department of Justice notice of the
latter's approval, pursuant to its authority under section 252(d)(1) of
the EPCA and section 11(b) of the Voluntary Agreement, of these
implementing amendments. Prior consultation with the Federal Trade
Commission and the Department of State concerning these amendments also
has taken place, as required by section 252(d)(1) of the EPCA. The
Department of Justice's letter authorizes DOE, on behalf of the Justice
Department, to give notice to the Voluntary Agreement participants, as
required by section 11(b) of the Voluntary Agreement, that the
Department of Justice intends to adopt the implementing amendments to
the Voluntary Agreement effective 20 days after the date of this
Federal Register notice. Therefore, this Federal Register notice
constitutes the notice to Voluntary Agreement participants which the
Department of Justice is required to provide pursuant to section 11(b)
of the Voluntary Agreement. The correspondence among the Departments of
Energy, Justice and State and the Federal Trade Commission concerning
these amendments is contained in Appendix 2.
Issued in Washington, D.C. July 29, 1998.
Mary Anne Sullivan,
General Counsel
Appendix 1--Amendments to the Voluntary Agreement and Plan of
Action to Implement the International Energy Program
The Department of Justice intends to amend the Voluntary Agreement
and Plan of Action to Implement the International Energy Program
effective 20 days after publication of this notice. The Voluntary
Agreement as intended to be amended is set out below, with new language
in italics and text to be removed in brackets.
Voluntary Agreement and Plan of Action to Implement the International
Energy Program
1. Need for an Agreement
The oil embargo of 1973 and the marked increase in world oil prices
which occurred almost simultaneously severely disrupted the economies
of most importing nations and strained their political, strategic, and
economic relationships. Inadequate cooperation among the industrialized
countries resulted in unilateral efforts on the part of many to obtain
supplies of oil. The United States Government and certain other members
of the Organization for Economic Cooperation and Development (OECD),
based on the need demonstrated by that experience, have undertaken to
achieve a coordinated approach to decrease their dependence on foreign
oil, and to reduce the strategic and economic vulnerability which such
dependence can cause. The United States Government and such other
governments have decided that their best interests lie in taking steps,
such as developing plans for coordinated drawdown of strategic
petroleum stocks and international oil allocation [an effective
international oil allocation plan], to minimize the effects of a supply
interruption and to assure that the exigencies of extreme shortage do
not unduly disrupt national economics or the world petroleum market.
In this connection, the President of the United States determined
that, with respect to this country's national security and defense
programs and the related programs of certain other
[[Page 41552]]
members of the OECD, should any substantial reduction in world
petroleum supplies occur, it would directly impair United States
defense mobilization efforts. In addition, failure to respond promptly
to substantial international oil supply reductions, either by
augmenting supplies through coordinated drawdown of strategic petroleum
stocks and complementary actions or allocating [ensure that the]
remaining supplies [were allocated] rationally and fairly among the
major consuming nations, would have an adverse impact on U.S. national
security and defense mobilization efforts. In view of the foregoing,
the President has determined that the United States must be prepared to
cooperate with other nations in developing and implementing effective
measures for coordinated drawdown of strategic petroleum stocks and
complementary actions and when necessary the distribution of available
supplies on a rational and equitable basis, [in order to utilize them
with maximum efficiency during any future supply interruption], thus
minimizing the impact of any interruption on the economy and security
of the United States.
As part of a policy to reduce their dependence on foreign oil and
to obtain the greatest utility of supplies during an oil emergency, the
United States and certain other OECD members have signed an Agreement
on an International Energy Program (IEP), pursuant to which an
International Energy Agency (IEA) has been established as an autonomous
institution within the OECD. The effective functioning of the IEP is a
vital element in United States international energy policy and thus an
important factor in our overall foreign policy.
Consultations and cooperation with the IEA by certain oil companies
are essential to the effective implementation of the IEA's
international emergency response provisions [allocation and information
provisions of the IEP] and, in particular, to the development and
testing of the information system and to the development of plans and
programs for implementation of these response provisions [the
international allocation of oil] in times of emergency, to testing
systems developed for such response provisions [international
allocation] and, in emergencies, to actual implementation of such
plans, programs and systems.
In this connection, the President of the United States, in 1975,
requested a number of United States oil companies to enter into a
Voluntary Agreement and Program Relating to the International Energy
Program, pursuant Section 708 of the Defense Production Act of 1950. In
compliance with President's request, certain companies entered into
that Voluntary Agreement and Program, which was published in the
Federal Register on April 8, 1975, Fed. Reg. 1601.
Effective 90 days after its enactment, the Energy Policy and
Conservation Act (EPCA) prohibits utilization of the authority
contained in Section 708 of the Defense Production Act for any
Voluntary Agreement to implement the International Energy Program.
Section 252 of the EPCA provides specifically for Voluntary Agreements
and plans of action to implement the IEA's international emergency
response provisions [allocation and information provisions of the IEP]
and provides that, effective 90 days after enactment, the procedures
provided in Section 252 shall be the sole procedures applicable to such
Voluntary Agreements and plans of action. Therefore, the existing
Voluntary Agreement and Program Relating to the International Energy
Program will cease to be effective on March 21, 1976.
2. What This Agreement Does
This is a voluntary agreement and plan of action under section 252
of Energy Policy and Conservation Act, 89 Stat. 871. Section 252
provides that participants in voluntary agreements shall have as a
defense to any civil criminal action brought under the antitrust laws
or any similar state law that challenged actions were taken in the
course of developing or carrying out a voluntary agreement or plan of
action in compliance with the requirements of section 252 and rules
promulgated thereunder. It is contemplated that this defense will be
available to all parties, including eligible affiliates, who are
participants under section 9 of this Voluntary Agreement and Plan of
Action (hereinafter called ``this Agreement''). This Agreement
contemplates that actions taken by the participants in order to
implement the objectives of the IEP will include (i) the membership of
participants in standing groups, working parties, advisory bodies or
other bodies created by the IEA or the U.S. Government for the purpose
of implementing the IEA's international emergency response provisions
[allocation and information provisions of the IEP], (ii) consultations,
planning, and individual and join actions which participants may take
to implement the IEA's international emergency response provisions
[international allocation of petroleum pursuant to the IEP] , and (iii)
the furnishing by participants of data and information, and
consultations and planning in respect thereof, in accordance with the
IEA's international emergency response provisions [allocation and
information provisions of the IEP] , all as included within the scope
of Sections 5 and 6 of this Agreement. This Agreement does not
contemplate acts which affect the production, refining, transportation,
or the marketing of petroleum within the United States except such acts
which are reasonably in accordance with the provisions of the IEP or
plans of action approved pursuant to section 6 of this Agreement.
3. Definitions for Purposes of This Agreement
(a) ``Oil Companies'' means international companies, national
companies, integrated and non-integrated companies, and other entities
which play a significant role in the business of producing,
transporting, refining, distributing or storing petroleum.
(b) ``Administrator'' means the Secretary of the United States
Department of Energy [Administrator of the Federal Energy
Administration].
(c) ``Petroleum'' means ``petroleum product'' as defined in section
3 of the EPCA, including to that extent:
(1) Crude oil
(2) Natural gas liquids and other liquids produced in association
with crude oil or natural gas.
(3) Refined petroleum products, including but not limited to
gasoline, kerosene, distillates, residual fuel oil, refined lubricating
oil, and liquefied petroleum gases, and
(4) Blending agents and additives used in conjunction with crude
oil and refined petroleum products.
(d) ``United States'' when used in the geographical sense means all
of the several states, the District of Columbia, Puerto Rico, the
territories and possessions of the United States, and the Outer
Continental Shelf (as defined in section 2 of the Outer Continental
Shelf Lands Act).
(e) ``International Energy Agency'' (IEA) means the International
Energy Agency established by the International Energy Program.
(f) ``International Energy Program'' (IEP) means the Agreement on
an International Energy Program, signed by the United States on
November 18 1974, including (i) the annex entitled ``Emergency
Reserves'', (ii) any amendment to such Agreement which includes another
nation as party to such Agreement, and (iii) any technical or clerical
amendment to such Agreement.
(g) ``Antitrust laws'' includes'
[[Page 41553]]
(1) the Act entitled ``An Act to protect trade and commerce against
unlawful restraints and monopolies'', approved July 2, 1890 (15 U.S.C.
1, et seq.);
(2) the Act entitled ``An Act to supplement existing laws against
unlawful restraints and monopolies, and for other purposes'', approved
October 15,1914 (15 U.S.C. 12, et seq.);
(3) the Federal Trade Commission Act (15 U.S.C 41, et seq.);
(4) sections 73 and 74 of the Act entitled ``An Act to reduce
taxation, to provide revenue for the Government, and for other
purposes'', approved August 27,1894 (15 U.S.C. 8 and 9); and
(5) the Act of June 19, 1936, chapter 592 (15 U.S.C. 13, 13a, 13b,
and 21A).
(h) ``International energy supply emergency'' means any period (A)
beginning on any date which the President determines allocation of
petroleum products to nations participating in the International Energy
Program is required by chapters III and IV of such program, and (B)
ending on a date on which he determines that all such allocation is no
longer required.
[(i) ``Allocation and information provisions of the International
Energy Program'' means the provisions of the International Energy
Program which relate to international allocation of petroleum products
and to the information system provided in such program.]
(i) ``IEA's international emergency response provisions'' means
(1) the provisions of the International Energy Program which relate
to international allocation of petroleum products and to the
information system provided in the Program, and
(2) the emergency response measures adopted by the Governing Board
of the International Energy Agency (including the July 11, 1984,
decision by the Governing Board on ``Stocks and Supply Disruptions'')
for --
(i) the coordinated drawdown of stocks of petroleum products held
or controlled by governments; and
(ii) complementary actions taken by governments during an existing
or impending international oil supply disruption.
4. International Energy Program
This Agreement facilitates implementation of the IEA's
international emergency response provisions [allocation and information
provisions of the International Energy Program].
It is understood that the U.S. Government does not view this
Agreement as in any way affecting the rights and obligations of the
United States as a party to the IEP.
5. Meetings and Consultation
(a) Upon the invitation of the IEA and with the approval of the
Administrator and the Attorney General, any participant herein may
accept membership in any advisory body, working party, or other group
created by the IEA, and any subgroup thereof, including but not limited
to the Industry Advisory Board, the Reporting Company Group, the
Industry Working Party to the Standing Group on the Oil Market, the
Industry Supply Advisory Group (hereinafter called ISAG), and
subcommittees and other ad hoc groups. The Administrator shall give
notice to the Federal Trade Commission of each participant's membership
in any group pursuant to this section. Approval of membership in any
advisory body, working party, or other group created by the IEA, shall
be deemed to constitute approval of membership in any subgroup thereof,
provided that the participant provides written notice to the
Administrator, the Attorney General, and the Federal Trade Commission
ten days prior to accepting such membership and provided that
membership in such subgroup may be disapproved prospectively at any
time by the Administrator or the Attorney General upon written notice
to the participant. In addition, subject to the approval of the
Attorney General, any participant to this Agreement may accept
membership in any advisory body, working party or other group
established by the Administrator or the Secretary of State with respect
to the IEA [IEP] provided that any such group shall be chaired by a
full time federal employee who shall control the agendas for all
meetings of such group.
(b)(l) Each participant to this Agreement may as a member of a
group, or subgroup thereof, established as provided in subsection 5(a)
advise and consult with the IEA or the U.S. Government or with other
persons or entities, at meetings held in accordance with subsection
5(c), in order to develop, test or implement any of the IEA's
international emergency response provisions, including pursuant to a
plan of action approved pursuant to Section 6 [or, as necessary, during
an IEA allocation systems test, with respect to the allocation and
information provisions of the IEP, including the development and
recommendation to the IEA of emergency measures and programs and plans
subsidiary thereto, to be implemented pursuant to section 6]. To
further develop a subject discussed at such a meeting held in
accordance with subsection 5(c), participants may exchange with other
members of a group, or subgroup thereof, written drafts or comments
thereon, in order to develop material to be considered at subsequent
meetings. In order to develop, test or implement any of the IEA's
international emergency response provisions, including pursuant to a
plan of action approved pursuant to Section 6, each participant may
also furnish and exchange information and data, including confidential
and proprietary information and data, [in order to implement a plan of
action approved pursuant to section 6 or an IEA allocation systems
test,] and may also furnish data and information, including
confidential and proprietary information and data, to the IEA, or any
groups created by the IEA, or any subgroups thereof, [in order to
implement the allocation and information provisions of the IEP] ;
provided that confidential or proprietary information and data may be
exchanged among the participants, and with other persons and entities
or provided by the participants to the IEA, only in accordance with the
procedures set out in subsections 5(b)(2) and (3) below. Any written
confidential or proprietary information or data furnished or exchanged
pursuant to this section shall be retained by the participant
furnishing such data and provided upon request to the Administrator,
the Attorney General and the Federal Trade Commission.
(2) [In order to implement this Agreement or plans of action
approved pursuant to Section 6, and] Except as provided in subsection
5(b)(3), confidential or proprietary information or data may be
exchanged with, or provided to participants, the IEA, or other persons
or entities, only if the Administrator, after consultation with the
Secretary of State, and with the concurrence of the Attorney General
after consultation with the Federal Trade Commission, has approved in
writing the exchange or provision of such types of information or data.
Confidential or proprietary information or data provided or exchanged
pursuant to this subsection shall be aggregated or otherwise compiled
by the Administrator or the IEA to prevent, to the extent possible, the
identification of individual company data or information before being
disclosed to or exchanged with the participants or any other person or
entity unless the Administrator, after consultation with the Secretary
of State and with the concurrence of the Attorney General, has
determined that such exchange or disclosure is necessary in order to
[[Page 41554]]
develop, test or implement any of the IEA's international emergency
response provisions, including pursuant to a plan of action approved
pursuant to Section 6 [to develop, prepare, or test emergency
allocation measures].
(3) Upon notification by the Administrator to the participants of
an international energy supply emergency as provided in subsection
6(a)(1), the participants may, in addition to information provided
pursuant to the procedures in subsection 5(b(2), provide to the IEA and
to each other and to persons or entities as may be designated by the
IEA or the Administrator (which designation may be by class), such
types of confidential or proprietary information as are reasonably
required to implement this Agreement and plans of action approved
pursuant to section 6, and participants may consult with and advise the
IEA, among themselves and with such other persons and entities
concerning such information and data. The participants shall notify the
Administrator, the Attorney General, and the Federal Trade Commission
of the types of information and data exchanged or provided pursuant to
this subsection and shall at the request of the Administrator, the
Attorney General, or the Federal Trade Commission, provide such
information to them. The Administrator, after consultation with the
Secretary of State, the Attorney General, and the Federal Trade
Commission, may at any time prospectively prescribe terms and
conditions for the continued exchange or provision of information or
data pursuant to this subsection 5(b)(3).
(4) No employee or representative of a participant will supply to
his company any confidential or proprietary information about any other
oil company obtained as a consequence of his membership in the ISAG,
except such data necessary to be supplied in the course of carrying out
ISAG's allocation procedures pursuant to an emergency allocation plan
of action approved under section 6 or in an IEA allocation systems
test, or such other procedures as may have been approved by the
Administrator and by the Attorney General after consultation with the
Federal Trade Commission.
(c)(1) Any meetings pursuant to this Agreement shall be open to a
representative of the Administrator, the Secretary of State, the
Attorney General, and the Federal Trade Commission severally, to any
United States Government employee designated by the Administrator, and
to any other person as may be provided by law. The presence of a
fulltime federal employee shall be essential to the conduct of a
meeting. The Administrator or his designee shall keep a full and
complete record, and where practicable a verbatim transcript of the
meeting. Such record or transcript shall be deposited promptly with the
Administrator and shall be available to the Attorney General, the
Federal Trade Commission, and the Secretary of State.
(2) Prior to notification by the Administrator to the participants
of an international energy supply emergency as provided in subsection
6(a)(1), notice of all meetings pursuant to this subsection 5(c),
including time, place, expected participants and agenda, shall be
provided by or on behalf of participants attending such meeting at
least 14 calendar days in advance to the Administrator, unless
emergency circumstances, IEA or IEP requirements, or other
unanticipated circumstances require shorter notice and such shorter
notice is approved by the Administrator. In order that full-time
federal employees may be in attendance to monitor any subgroups, such
notice shall if relevant, indicate the number of simultaneously meeting
subgroups into which the participants intend to divide.
(3) Subsequent to notification by the Administrator to the
participants of an international energy supply emergency as provided in
subsection 6(a)(1), the provisions of subsection 5(c)(2) shall be
complied with to the extent practicable, provided, however, that, where
time does not permit compliance with the notice provisions of such
subsection, any group may have meetings so long as actual notice is
given to the Administrator of such meeting by telephone or other
appropriate means. For any such emergency meeting the participants
shall provide in writing as soon as practicable to the Administrator,
the Attorney General, and the Federal Trade Commission, the time, place
participants or expected participants, and agenda.
(4) During an international energy supply emergency, or an
emergency or impending emergency as to which the Governing Board of the
International Energy Agency determines to implement emergency measures
described in section 3(i)(2), or a test of the IEA's international
emergency response provisions [allocation systems test], any meeting of
the ISAG [Industry Supply Advisory Group] (or other group with similar
functions) at which representatives or employees of participants are
present shall be considered a meeting subject to the provisions of this
section, provided that the ISAG once convened may be considered to be
in continuous session for that emergency or test without further
notice.
(d) All approvals granted to participants by the Administrator and
the Attorney General pursuant to subsections 5(a) and 5(b)(l) of the
Voluntary Agreement and Program Relating to the International Energy
Program, which approvals are set out in Appendix A, shall be deemed to
remain in effect for the purposes of subsections 5(a) and 5(b)(2) of
this Agreement, provided that the persons who received such approvals
become participants in this Agreement within 45 days of its effective
date. Such approvals shall extend to subsidiaries and affiliated
entities to the extent that such subsidiaries and affiliated entities
are covered by this Agreement pursuant to subsection 9(b)(3).
6. Emergency Allocation
(a)(1) Upon a determination by the President that an international
energy supply emergency exists, the Administrator shall notify the
participants to this Agreement. Thereafter, any participant acting
alone, with other participants, or with other persons or entities, may
take such actions as may be necessary or appropriate to implement
emergency allocation programs of the IEA, subject to the terms and
conditions of this Agreement and plans of action approved pursuant to
this section. Such actions may include, among others, one or more of
the following:
(A) Arrangements between or among the participants, or with other
persons and entities, for the most effective use, without regard to
ownership, of terminal and storage facilities, tankers, pipeline
capacities, and other transportation facilities so as to minimize
duplications, multiple loadings and discharging, split cargoes, long
hauling, cross hauling, and back hauling, and idle time in port.
(B) The carrying out of the Second Plan of Action to Implement the
International Energy Program, which is set out in Appendix B.
(C) Alterations in the rate of production of petroleum. Such
alterations may be accomplished by any one or more appropriate methods
including the following: increasing or decreasing drilling for or
production of oil; adjusting or establishing transportation facilities
and crude throughput facilities, including adjustments in the
throughput, quality specifications or yields or conversion of equipment
now installed for the manufacture of any one particular petroleum
product to the manufacture of another petroleum product; the
[[Page 41555]]
processing of selected crude oils or the exchange of components between
various refineries; processing agreements; or exchange of refinery
capacity.
(b) After a determination by the President that an international
energy supply emergency no longer exists and publication thereof in the
Federal Register, no further action shall be initiated pursuant to this
section and action previously initiated shall be completed as promptly
as possible, and not later than 90 days after notification, provided
that upon specific application, the Administrator, with the concurrence
of the Attorney General after consultation with the Federal Trade
Commission, may approve extensions of such 90 day period.
(c)(1) Prior to notice of a determination by the President that an
international energy supply emergency exists, plans of action may be
developed elaborating and applying the allocation principles and
measures established by the Governing Board of the IEA. Each such plan
shall describe the types of substantive actions which may be taken
under the plan and shall be as specific in its description of proposed
substantive actions as is reasonable in light of [known] circumstances
known at the time of approval. Plans of action may be modified from
time to time and in particular may be made more detailed as planning
continues. Any plan of action, or modification thereof, pursuant to
this Agreement may not be carried out unless approved by the
Administrator, and by the Attorney General after consultation with the
Federal Trade Commission. Any plan of action or modification thereof
shall be submitted in writing by the Administrator to the Attorney
General and the Federal Trade Commission at least 20 days before being
implemented, provided that during an international energy supply
emergency, the Administrator, subject to the approval of the Attorney
General, may reduce such 20-day period.
(2) The Attorney General, in consultation with the Administrator,
the Federal Trade Commission, and the Secretary of State, or the
Administrator with the approval of the Attorney General and in
consultation with the Federal Trade Commission and the Secretary of
State, may at any time review, amend, modify, disapprove, or revoke, in
whole or in part, on his own motion or upon the request of another
federal agency or interested person, any plan of action submitted to
him for approval or already approved by him. The Administrator shall
provide notice to the participants of any approval, amendment,
modification, disapproval, or revocation of any plan of action.
(3) Except as provided in subsection 5(b)(l), the joint
development, joint formulation, or joint approval by the participants
of any plans of action as described in this subsection 6(c) shall take
place only at meetings of groups in which membership by the
participants has been approved pursuant to section 5 and which are
conducted in accordance with the provisions of that section.
(d) During an international energy supply emergency, any plans of
action submitted to the Administrator and the Attorney General shall be
deemed to have been approved if neither the Attorney General nor the
Administrator has given notice of disapproval to the participants on or
before the expiration of a 20-day[s] period after receipt of the plan
by the Attorney General and the Federal Trade Commission, provided that
the Administrator, with the approval of the Attorney General, may
reduce such 20-day period.
(e)(1) During an international energy supply emergency, any
participant may initiate individual, joint, or agreed action in
implementation of this Agreement or plans of action approved pursuant
to this section. Except where an approved plan of action contains other
provisions for recordkeeping and reporting to the U.S. Government with
respect to actions taken to carry out the plan of action, each
participant taking any joint or agreed action or agreeing to take any
action pursuant to this subsection shall notify the Administrator and
the Attorney General within 72 hours, or longer period as may be
determined by the Administrator, after the end of the week in which
such action is taken or agreed upon.
(2) Such notification shall identify how such action is in
implementation of approved plans of action, the companies involved in
such action, the quantities of petroleum involved, and such other
detail as the Administrator may require. It shall also identify a
responsible person or persons who shall be prepared to answer inquiries
by the Administrator or the Attorney General concerning the action
agreed upon or taken.
(3) The Administrator or the Attorney General may disapprove such
action or such agreement after receipt of notice of the action or
agreement if, after consultation with the Secretary of State, he
determines that such action or agreement is not in implementation of
plans of action previously approved by the Administrator and the
Attorney General.
(4) With respect to any action taken prior to notice of disapproval
by the Administrator or the Attorney General, a defense to any civil or
criminal action brought under the antitrust laws (or any similar State
law) shall be available in accordance with section 252(f) of the EPCA.
(5) Where action has been disapproved and appropriate corrective
action has not been taken, the Administrator may, after consultation
with the Attorney General, the Federal Trade Commission, and the
Secretary of State, require the withdrawal of the participant from the
Agreement or from any plan of action approved under this Agreement.
Such withdrawal shall not affect any power of the Administrator to
otherwise compel corrective action.
7. Agreement of Participants
The participants severally agree that they shall endeavor in good
faith to take such measures as may be necessary or appropriate, taking
into account such limitations as may be imposed by circumstances such
as lack of petroleum resources or facilities, governmental restrictions
or requirements, and economic or other detriment, to develop and
implement plans of action contemplated by this Agreement.
The failure of the Administrator, other government official, or the
IEA to take any action required of them by this Agreement or any plans
of action approved pursuant to this Agreement shall not affect the
availability of the antitrust defense provided for actions taken in
accordance with this agreement and plans of action approved pursuant to
this Agreement.
8. Records
Participants shall keep whatever records are required by section
252 of the EPCA and regulation issued pursuant thereto. In any event,
each participant shall maintain, for a period of five years, full and
complete records of all its actions related to this Agreement including
but not limited to (i) all intracorporate documents related to any
meeting held pursuant to Section 5 or any action proposed or carried
out pursuant to Section 6 of this Agreement and (ii) any specific
records and indices which the Administrator, the Attorney General, or
the Federal Trade Commission may require. All such records shall be
made available promptly upon written request to the Administrator, the
Attorney General, or the Federal Trade Commission. Each participant
shall also make such reports with respect to any action related to this
Agreement as may be reasonably required by the Administrator, the
[[Page 41556]]
Attorney General, or the Federal Trade Commission.
9. Approval of Agreement and Procedure for Becoming a Participant
(a) This Agreement or any amendment or modification may not be
carried out unless approved by the Attorney General, after consultation
with the Federal Trade Commission, in accordance with the EPCA. The
Administrator shall submit to the Attorney General and the Federal
Trade Commission the proposed agreement or any amendment or
modification, in writing at least 20 days prior to implementation,
provided that during an international energy supply emergency, the
Administrator, subject to the approval of the Attorney General, may
reduce such 20 day period. Upon the Attorney General's approval, the
Agreement or any amendment or modification shall be published in the
Federal Register.
(b)(1) At the time this Agreement is submitted to the Attorney
General for approval or subsequently, the Administrator shall submit to
the Attorney General the name of any oil company whose participation in
the Agreement he has determined to be appropriate in light of the
purposes of this Agreement. If the Attorney General, after consultation
with the Federal Trade Commission, approves the company's
participation, the Administrator may request such company in writing to
participate. An oil company shall become a participant in the Agreement
by advising the Administrator, in writing, of its acceptance of the
Administrator's request. The Administrator shall notify the Attorney
General and the Federal Trade Commission of such acceptances. Notice of
such requests and their acceptance shall be published in the Federal
Register. Such requests and their acceptance shall be effective for the
purpose of making available the antitrust defense provided pursuant to
this Agreement only with respect to such actions by such companies as
are within the scope of sections 5 and 6 of this Agreement.
(2) Any oil company which desires to become a participant may ask
that it be so requested. If the Administrator determines that its
participation is appropriate in light of the purposes of this
Agreement, he shall, subject to the approval of the Attorney General
after consultation with the Federal Trade Commission, request that such
company participate in accordance with the procedures set forth in
paragraph (1) of this subsection.
(3) Approval of any oil company's participation in this Agreement
shall extend to actions of other companies which (i) are more than 50%
owned. directly or indirectly, by the company to which approval is
granted, (ii) own, directly or indirectly, more than 50% of the company
to which approval is granted, or (iii) are more than 50% owned,
directly or indirectly, by a person described in (ii), provided that
the company to which approval is granted notifies the Administrator and
the Attorney General of each affiliate to be covered by this
subsection, including the reasons for its inclusion and the nature of
the company's ownership; and provided that neither the Administrator
nor the Attorney General notifies the participant that he disapproves
the coverage of such affiliate by this subsection.
10. Notices
Where notice under this Agreement is required to be furnished by a
participant to the Administrator, the Attorney General, the Federal
Trade Commission or the Secretary of State, such notice shall be
directed to the following persons, or to such other persons as the
Administrator, the Attorney General, the Federal Trade Commission, or
the Secretary of State may designate:
(a) Administrator: The Secretary [Administrator], U.S. Department
of Energy [Federal Energy Administration], Washington, D.C. 20585
[20461].
(b) Attorney General: Assistant Attorney General, Antitrust
Division, Washington, D.C. 20530. ATTN: Chief, Transportation, Energy
and Agriculture [Public Counsel and Legislative] Section.
(c) Federal Trade Commission: Secretary, Federal Trade Commission,
Washington, D.C. 20580., ATTN: Director, Bureau of Competition.
(d) Secretary of State: Assistant Secretary of State for Economic
and Business Affairs, Department of State, Washington, D.C. 20520.
11. Effective Date and Duration
(a) This Agreement or any amendment or modification shall become
effective upon the date of its approval by the Attorney General as
provided in subsection 252(d) of the EPCA. Unless revoked or
disapproved by the Attorney General pursuant to section 252(d), it
shall be effective whenever authorized by section 252 of the EPCA, or
any other legislation.
(b) The Attorney General, in consultation with the Federal Trade
Commission, the Secretary of State, and the Administrator, may review,
amend, modify, or revoke this Agreement, on his own motion or upon the
request of a federal agency or interested person, at any time, and, if
revoked, thereby terminate prospectively the availability of any
immunity to the antitrust laws (or similar state laws) which may be
provided by compliance with this Agreement. Except as he may otherwise
determine, the Attorney General shall provide at least 20 days notice
to the Administrator, the Federal Trade Commission, the Secretary of
State, and the participants of any intention to amend, modify, or
revoke this Agreement.
12. Withdrawal From Agreement
(a) Any participant may withdraw from this Agreement upon at least
30 calendar days notice to the Administrator subject to the fulfillment
of obligations incurred under this Agreement prior to the date of such
notice, except that when emergency measures have been undertaken in
accordance with section 6 of the Agreement or the Administrator
determines that such measures may be immediately required, the
Administrator may postpone the effective date of withdrawal for up to
60 calendar days.
(b) The Administrator, after consultation with the Attorney
General, the Federal Trade Commission, and the Secretary of State, may
by giving not less than 10 calendar days written notice to any
participant require the withdrawal of that participant from this
Agreement or any plan of action approved pursuant to this Agreement.
Appendix 2--Correspondence Concerning Approval of the Amendments to
the Voluntary Agreement and Plan of Action to Implement the
International Energy Program
(1) Letter of the General Counsel of the Department of Energy to
the Assistant Attorney General of the Antitrust Division, dated July 7,
1998:
In accordance with section 252(d) of the Energy Policy and
Conservation Act (EPCA) and section 9(a) of the ``Voluntary Agreement
and Plan of Action to Implement the International Energy Program,'' I
herewith submit for your approval proposed amendments to the Voluntary
Agreement.
The proposed amendments to the Voluntary Agreement implement
changes recently enacted by Public Law 105-177 to section 252 of the
EPCA. The Administration sought the changes to section 252 to conform
the legal authority for U.S. oil company participation in International
Energy Agency (IEA) emergency preparedness
[[Page 41557]]
activities to current U.S. and IEA emergency response policy for oil
supply disruptions. As amended by Public Law 105-177, the antitrust
defense in section 252 now extends to participating oil companies when
they assist the IEA in planning for and implementing coordinated
drawdown of government-owned or government-controlled petroleum stocks,
a policy the U.S. successfully urged upon its IEA partners. The
enclosed amendments were developed through consultations among the
staffs of the Department of Energy, the Department of Justice, the
Department of State, the Federal Trade Commission, and representatives
of the Secretariat of the IEA and counsel to a number of U.S. oil
companies participating in the Voluntary Agreement.
Upon your approval, we will provide notice to the Voluntary
Agreement participants of an intention to adopt the proposed amendments
to the Voluntary Agreement, as required by section 11(b) of the
Voluntary Agreement. We request that you adopt the amendments, pursuant
to your authority under section 252(d)(1) of the EPCA, twenty days
after our provision of such notice to the participating companies.
The Chairman of the IEA's Industry Advisory Board (IAB) has advised
the Department that at the request of the IEA he has scheduled an IAB
meeting for September 11, 1998, to consider, among other subjects,
issues related to the design of the IEA's fall test of its procedures
for coordinated drawdown of strategic petroleum stocks. To accommodate
the IAB and the IEA, we must adopt the proposed amendments by the first
week of September.
cc: The Honorable Robert Pitofsky, Chairman, Federal Trade Commission
Ambassador Alan Larson, Assistant Secretary of State for Economic and
Business Affairs
Roger W. Fones, Chief, Transportation, Energy and Agriculture Section,
Antitrust Division.
(2) Letter of the General Counsel of the Department of Energy to
the Assistant Secretary of State for Economic and Business Affairs,
dated July 7, 1998:
I am writing to request your comments on the enclosed proposed
amendments to the ``Voluntary Agreement and Plan of Action to
Implement the International Energy Program.'' Simultaneously, I am
forwarding this document to the Assistant Attorney General of the
Antitrust Division for his approval; a copy of my letter to him is
enclosed.
The proposed amendments to the Voluntary Agreement implement
changes recently enacted by Public Law 105-177 to section 252 of the
Energy Policy and Conservation Act (EPCA). The Administration sought
the changes to section 252 to conform the legal authority for U.S.
oil company participation in International Energy Agency (IEA)
emergency preparedness activities to current U.S. and IEA emergency
response policy for oil supply disruptions. As amended by Public Law
105-177, the antitrust defense in section 252 now extends to
participating oil companies when they assist the IEA in planning for
and implementing coordinated drawdown of government-owned or
government-controlled petroleum stocks, a policy the U.S.
successfully urged upon its IEA partners. The enclosed amendments
were developed through consultations among staffs of the Department
of Energy, the Department of Justice, the Department of State, the
Federal Trade Commission, and representatives of the Secretariat of
the IEA and counsel to a number of the U.S. oil companies
participating in the Voluntary Agreement.
Subject to the approval of the Assistant Attorney General of the
Antitrust Division, we will provide notice to the Voluntary
Agreement participants of an intention to adopt the proposed
amendment to the Voluntary Agreement, as required by section 11(b)
of the Voluntary Agreement. Thereafter, in accordance with section
252(d) of the EPCA and section 11(b) of the Voluntary Agreement, the
Voluntary Agreement would be formally amended.
The Chairman of the IEA's Industry Advisory Board (IAB) has
advised the Department that at the request of the IEA he has
scheduled an IAB meeting for September 11, 1998, to consider, among
other subjects, issues related to the design of the IEA's fall test
of its procedures for coordinated drawdown of strategic petroleum
stocks. To accommodate the IAB and the IEA, we must adopt the
proposed amendments by the first week of September.
It would be appreciated if you would address any comments you
may wish to make with respect to the proposed amendments to the
Voluntary Agreement both to the Assistant Attorney General of the
Antitrust Division and to me.
cc: The Honorable Joel I. Klein, Assistant Attorney General,
Antitrust Division
The Honorable Robert Pitofsky, Chairman, Federal Trade Commission.
(3) Letter of the General Counsel of the Department of Energy to
the Chairman of the Federal Trade Commission, dated July 7, 1998:
In accordance with section 252(d) of the Energy Policy and
Conservation Act (EPCA) and section 9(a) of the ``Voluntary
Agreement and Plan of Action to Implement the International Energy
Program,'' I herewith submit for your comments proposed amendments
to the Voluntary Agreement. Simultaneously, I am forwarding this
document to the Assistant Attorney General of the Antitrust Division
for his approval; a copy of my letter to him is enclosed.
The proposed amendments to the Voluntary Agreement implement
changes recently enacted by Public Law 105-177 to section 252 of the
EPCA. The Administration sought the changes to section 252 to
conform the legal authority for U.S. oil company participation in
International Energy Agency (IEA) emergency preparedness activities
to current U.S. and IEA emergency response policy for oil supply
disruptions. As amended by Public Law 105-177, the antitrust defense
in section 252 now extends to participating oil companies when they
assist the IEA in planning for and implementing coordinated drawdown
of government-owned or government-controlled petroleum stocks, a
policy the U.S. successfully urged upon its IEA partners. The
enclosed amendments were developed through consultations among the
staffs of the Department of Energy, the Department of Justice, the
Department of State, the Federal Trade Commission, and
representatives of the Secretariat of the IEA and counsel to a
number of U.S. oil companies participating in the Voluntary
Agreement.
Subject to the approval of the Assistant Attorney General of the
Antitrust Division, we will provide notice to the Voluntary
Agreement participants of an intention to adopt the proposed
amendments to the Voluntary Agreement, as required by section 11(b)
of the Voluntary Agreement. Thereafter, in accordance with section
252(d) of the EPCA and section 11(b) of the Voluntary Agreement, the
Voluntary Agreement would be formally amended.
The Chairman of the IEA's Industry Advisory Board (IAB) has
advised the Department that at the request of the IEA he has
scheduled an IAB meeting for September 11, 1998, to consider, among
other subjects, issues related to the design of the IEA's fall test
of its procedures for coordinated drawdown of strategic petroleum
stocks. To accommodate the IAB and the IEA, the Department of
Justice must adopt the proposed amendments by the first week of
September.
It would be appreciated if you would address any comments you
may wish to make with respect to the proposed amendments to the
Voluntary Agreement both to the Assistant Attorney General of the
Antitrust Division and to me.
cc: The Honorable Joel I. Klein, Assistant Attorney General of the
Antitrust Division
Ambassador Alan Larson, Assistant Secretary of State for Economic
and Business Affairs
(4) Letter of the Acting Assistant Attorney General of the
Antitrust Division to the General Counsel of the Department of Energy,
dated July 27, 1998:
This letter is in response to your letter of July 7, 1998 by
which you seek approval from the Department of Justice
(``Department'') of proposed amendments to the ``Voluntary Agreement
and Plan of Action to Implement the International Energy Program''
(``Voluntary Agreement''). The proposed amendments implement changes
recently enacted to Section 252 of the Energy Policy and
Conservation Act (``EPCA'') to extend the antitrust defense to cover
advice given by U.S. oil companies to the International Energy
Agency (``IEA'') on the coordinated drawdown of government-owned or
government-controlled oil stocks.
[[Page 41558]]
Section 252(d) of EPCA and section 9(a) of the Voluntary
Agreement require the Department's approval before the proposed
amendments can be adopted. Those sections preclude the Department
from approving the amendments until it receives the advice of the
Federal Trade Commission. On July 21, 1998, the Federal Trade
Commission informed the Department that it had no objection to the
Department's approval of the proposed amendments.
As you note in your letter, the Department participated in the
development of the proposed amendments. Our role has been to ensure
that the Voluntary Agreement cannot be used by participating oil
companies to collude on prices. The Voluntary Agreement and the
proposed amendments provide the necessary assurances to permit the
Voluntary Agreement participants to proceed with planned meetings
and begin assisting the IEA in the development of a coordinated
drawdown plan. The Department hereby approves the proposed
amendments. Division staff will participate with the FTC in the
development of additional amendments, as needed.
The Department will not adopt the proposed amendments until
twenty days after you publish a notice of our intention to adopt
them. This procedure is in accordance with Section 11(b) of the
Voluntary Agreement.
(5) Letter of the Chairman, Federal Trade Commission, to the
Assistant Attorney General of the Antitrust Division, dated July 21,
1998:
The Department of Energy recently requested that you approve the
attached amendments to the Voluntary Agreement and Plan of Action to
Implement the International Energy Program (``Voluntary
Agreement''). The Voluntary Agreement requires that the Commission
consult with you before your approval.
The proposed amendments to the Voluntary Agreement implement
changes recently enacted by Public Law 105-177 to Section 252 of the
Energy Policy and Conservation Act. The Administration sought the
changes to Section 252 to enable U.S. oil companies to advise the
International Energy Agency (``IEA'') on the coordinated drawdown of
government-owned or government-controlled oil stocks.
The Commission has no objection to your approving the proposed
amendments. We note, however, that the proposed amendments do not
contain details of how U.S. oil companies will interact with each
other and with the IEA in fulfilling the goal of the recently
amended legislation. Our staff has informed us that these details
will be developed during industry meetings this fall and will be
incorporated in future amendments to the Voluntary Agreement.
By direction of the Commission.
(6) Letter of the Acting Assistant Secretary of State for Economic
and Business Affairs to the General Counsel of the Department of
Energy, dated July 24, 1998:
I am responding to your July 7 letter requesting comments on
proposed amendments to the ``Voluntary Agreement and Plan of Action
to Implement the International Energy Program.''
The Department of State supports the proposed amendments to the
Voluntary Agreement. We believe the amendments to implement the
recently enacted changes to the Energy Policy and Conservation Act
should facilitate U.S. oil company participation in the
International Energy Agency's oil crisis emergency response
activities. Thank you for the opportunity to review the proposed
amendments.
cc: The Honorable Joel I. Klein, Assistant Attorney General of the
Antitrust Division.
The Honorable Robert Pitofsky, Chairman, Federal Trade Commission
[FR Doc. 98-20727 Filed 8-3-98; 8:45 am]
BILLING CODE 6450-01-P
