APPENDIX G.-MATERIAL SUBMITTED BY SOUTHERN CALIFORNIA SERVICE STATION ASSOCIATION

EXHIBIT 1

SOUTHERN CALIFORNIA SERVICE STATION ASSOCIATION

16750 Hale Avenue Irvine, California 92714 Phone (714) 549-4178

Your committee will be hearing several witnesses on HR1362 this week. Marc Rosenberg thought you might find the following facts relevant to your questioning of witnesses.

CHEVRON

In California, Chevron is using the strongest possible pressures to get dealers to oppose the open supply provisions of a California bill (AB522) and your HR1362. I have enclosed a sample packet they are using with their dealers. Their tactics are as follows: 1. Dealers are invited (and pressured) to attend a company meeting on legislation. Dealers attending were furnished with drinks and hors d'oeuvres. High-ranking Chevron officials then gave dealers a very strong presentation against open supply, concentrating on our State bill but specifically mentioning HR1362. This presentation represented that open supply would likely destroy the branded marketing system, and result in large cost increases to the retailer. See the enclosed package for examples of this.

2.

3.

4.

5.

After the presentation, Chevron officials asked
their dealers to write letters to their legislators
against open supply. Chevron furnished blank paper,
envelopes and pens, as well as a complete set of
instructions on how to write the letter and a long
list of questions to ask.

Chevron then picked up the letters, and we suppose
provided postage and mailing.

As the dealers left the room by a single door, they
were guided by a table where they were asked to sign
petitions. We had reports of extreme pressure to
sign, some feeling they had to sign even though they
didn't agree with Chevron. Bear in mind one-third
of the dealers hoped to have their lease renewed in
the current year.

SHELL

6.

Meanwhile, Chevron's property representatives
telephoned dealers throughout Southern California
to get them to write or call their Congressmen in
opposition to HR1362

Enclosed is a nearly complete company in-house (internal company) kit on their lobbying efforts with respect to HR1362 and what they have been telling their dealers. Look this over carefully and it will show you the extreme effort they are making to defeat your bill.

JUSTICE DEPARTMENT

Our Association has uncovered massive documentary evidence of illegal conduct by oil companies. Especially with Atlantic Richfield's retail price fixing, and Gulf's takeover of dealer stations. I believe we have affidavits from at least eight Arco and Gulf employees outlining their company's illegal conduct. Most of these gentlemen turned over stacks of company documents supporting their allegations. An affidavit from a former Gulf employee is enclosed that is well worth reading.

The Justice Department refused to act in either of these cases. They did not even interview a single witness. In Arco's case, that company was already under two Consent Orders not to fix retail prices which they were violating. The result: a third Consent, Order, obtained by our local District Attorneys (Arco also paid $190,000 in costs) but no convictions and no Justice Department action even though the internal memoranda admitted excellent prospects for prosecution.

Contact me if you need furthur information.

Sincere

Duve

STEPHEN R. SHELTON
Executive Director

SRS:rir

Encs.

Als & see John Flynn's stalement ne divorcement. He is a noted

Antitrust expert and supports retail divorcement.

EXHIBIT 2

EXCERPT FROM DECLARATION OF WARD E. BATES

1. My name is Ward E. Bates, I reside at 25372 Champlain Road, Laguna Hills, California, and I am a former Gulf Oil Company employee. If called as a witness I could and would competently testify of my own personal knowledge to the following facts:

2. I started my employment in the oil industry in the year 1958, when I was hired by Wilshire in the capacity of Wholesale Credit Manager for the Northern Region. Wilshire was subsequently purchased by Gulf Oil. In 1960 I was transferred in the same capacity to the Southern Region of California. In 1961 I was transferred to Santa Rosa, California, in the capacity of retail marketer. From 1966 to 1967 I was assigned to the Real Estate Division of Gulf in Santa Rosa. In 1968 I was transferred to the Seattle, Washington, region and there I again was assigned duties with Real Estate Department of Gulf Oil. In 1973 I was transferred to the Southern California Real Estate Department. In 1974 I was made retail marketer in the Van Nuys district of Gulf Oil Company and I remained in that capacity until June 15, 1976, when I was terminated, allegedly due to injuries I sustained in an automobile accident.

3. While a retail marketer for Gulf Oil Company in the years 1974 and 1975 I was instructed by Mr. George Williams and Mr. Al W. Johnson, my superior, to eliminate every Gulf lessee-branded dealer assigned to my jurisdiction. When I inquired why this had to be done, Mr. George Williams informed me that the lessee-branded stations were needed for the Economy Oil department of Gulf Oil and that it has been decided that Gulf Oil does not need any retail lessee-dealers since it can increase its return on investment by either selling the lessee-branded sites or converting them to Economy. Mr. Williams and Mr. Johnson outlined to me the methods to be utilized in getting my lessee-branded dealers out of business as follows: (a) call the Santa Fe Refinery and hold up or delay shipment of gasoline to the dealers; (b) break the lessee-branded dealers financially by overloading them with TBA and thereby forcing them to make payments they could not afford; (c) withhold rental rebates from the dealers as long as possible and to force the dealers to purchase TBA with the proceeds from the rental rebates; (d) force the lesseebranded dealers by threat of non-renewal of leases to lower the retail prices of gasoline so as to make them more competitive, but reducing their profit margin, and thereby forcing them to abandon their stations; and (e) any other way I can think of.

4. I told both Mssrs. Johnson and Williams that in my opinion, their proposed methods were criminally illegal. Mr. Williams informed me that "such is life," and besides, "the legal department will handle it." I flatly told them that I refused to carry out such assignments.

Subsequently, in the early part of 1975, Mr. O. D. Meyer, a senior Gulf Oil executive informed me that the Gulf excutives in Houston were extremely upset about the slow rate of dealer disappearance in California and that they could not understand how the dealers could resist the pressures we were supposed to put on them. Mr. O. D. Meyer stated that it was because of people like me, who had misplaced loyalties, that the Gulf program had bogged down. He informed me that his own job was on the line because Houston was screaming at him. He informed me that before he loses his job, he would make sure that I go first. I once again told him that I refused to do anything illegal. Thereafter, Mr. O. D. Meyer and Mr. George Williams invited me to a meeting to give me a last chance to "see the light." Mr. Meyer told me at that meeting that it is Gulf and not the dealers who pay my salary and that therefore I should be interested in Gulf's profits and not the dealers' profits. I proposed to them that Gulf offer each dealer a decent sum of money in order to get out of the station. Mr. Meyer told me that that is impossible since Gulf must convert lessee-branded dealerships to Economy without a capital investment. I informed them that that was plain stealing. They then informed me that I was not, after all, a company man like 95 percent of the retail marketers who without any question carried out their orders.

5. On June 17 1975, I was called to the District Sales Office at Van Nuys, by Mr. Geroge Williams, the District Sales Manager. Mr. Williams informed me that due to a need for "staff reduction" I was being terminated. On July 23, 1975, I was admitted to the Mission Community Hospital due to colitis. On July 6th, 1975, my physician certified me for work. On July 11, 1975, I telephonically spoke to Mr. George Williams, who expressed his sympathies and then told me that my termination was decided by O. D. Meyer acting on direct orders from Houston. Notwithstanding my "termination notice," I continued working as a retail marketer until I was involved in a serious auto accident. Following my discharge from the hospital,

on March 28, 1976, I informed Mr. Al Johnson that I was ready to resume my employment. On or about June 15, 1976 I was officially terminated.

6. I participated in the Gulf Divestiture Program in Northern California. At a Real Estate Sales meeting in Northern California attended by, among others, Mr. Robert Bartlett, my supervisor, who were informed by senior real estate executives that the Divestiture Program in Northern California was being carried out for the purpose of getting a tax advantage for Gulf, but that Gulf had absolutely no intention of leaving the Northern California market. The idea was, according to these gentlemen, to close and sell those stations that were low on gas and TBA volume and to convert the choice stations to Economy. We were given strict instructions to insert "petroleum restriction" clauses into all real estate sold so that no one could use the real estate in order to compete with Gulf. The foregoing instructions were then discussed by me with Mr. Robert Bartlett in detail. I followed these instructions and insisted that all escrows contain the petroleum restriction clause

APPENDIX H.-LETTER FROM LEONARD COBURN, DEPARTMENT OF ENERGY, TO HON. BERKLEY BEDELL

Thank you for the opportunity to appear before the Subcommittee on Energy, Environment and Safety Issues Affecting Small Business to present the views of the Department of Energy on H. R. 1362. At the Department's appearance on March 31, 1981, we indicated that due to the complicated nature of some responses to your questions we would submit the responses for the record. The following are submitted for insertion into the record on H. R. 1362.

A question was raised concerning some portions of the final report, The State of Competition in Gasoline Marketing (Title III Study), prepared by the Office of Competition. Concerning statements made on page 181 of the Title III Study (The reference at the hearing was to the sixth paragraph and specifically to "Because rentals are excluded from the regulations, refiners are able to capture some of their dealers' "windfall" or "regulatory-induced" profits."), you asked whether a refiner in a decontrolled market unilaterally could capture some of a dealer's profits by raising the dealer's rental payment.

The ability of a refiner to capture successfully the profits of a dealer by a rental increase depends upon the opportunities available to the dealer. Under certain circumstances a refiner could capture some of the dealer's profits, while under other circumstances the dealer could terminate the relationship with the refiner to prevent the refiner from capturing part of the dealer's profits through a higher rental payment. A more detailed analysis of these circumstances is enclosed.

In addition, you raised the issue of functional profitability and the use by the Office of Competition of the data from the Financial Reporting System (FRS). The staff of the Office of