Phillips Petroleum Company

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PHILLIPS PETROLEUM COMPANY, ET AL. 1129

1129 Complaint

IN THE MATTER OF

PHILLIPS PETROLEUM COMPANY, ET AL.

CONSENT ORDER, ETC., IN REGARD TO ALLEGED VIOLATION OF SEC. 7 OF THE CLAYTON ACT AND SEC. 5 OF THE FEDERAL TRADE COMMISSION ACT

Docket C-3634. Complaint, Dec. 28, 1995--Decision, Dec. 28, 1995

This consent order requires, among other things, Phillips Petroleum Company, an Oklahoma-based corporation, to modify the acquisition agreement so that 830 specified miles of pipe and related gas gathering assets within the Panhandle counties are not included in the sale of Enron assets to Phillips. The consent order also requires Phillips, for 10 years, to notify the Commission before it acquires more than five miles of gas gathering pipeline located within the Panhandle counties from any one person during any 18-month period; and requires Enron, for 10 years, to notify the Commission before it can sell any of the 830 miles of pipeline assets excluded from the challenged deal to Phillips or to Maxus Energy Corporation.

Appearances

For the Commission: Ronald B. Rowe and Frank Lipson. For the respondents: William J. Kolasky, Wilmer, Cutler & Pickering, Washington, D.C. Neil W. Imus, Vinson & Elkins, Washington, D.C.

COMPLAINT

The Federal Trade Commission ("Commission"), having reason to believe that respondent Phillips Petroleum ("Phillips") Company, through its subsidiary GPM Gas Corporation ("GPM"), is subject to the jurisdiction of the Commission and Phillips' proposed acquisition of the outstanding voting securities of Enron Anadarko Gathering Company and Transwestern Anadarko Gathering Company, two subsidiaries of Enron Corp. ("Enron") is in violation of Section 7 of the Clayton Act, as amended, 15 U.S.C. 18, and Section 5 of the Federal Trade Commission Act ("FTC Act"), as amended, 15 U.S.C 45, and it appearing to the Commission that a proceeding in respect thereof would be in the public interest, hereby issues its complaint pursuant to Section 11 of the Clayton Act, as amended, 15 U.S.C. 21,

Complaint 120 F.T.C.

and Section 5(b) of the FTC Act, as amended, 15 U.S.C. 45(b), stating its charges as follows:

I. PHILLIPS

PARAGRAPH 1. Respondent Phillips is a corporation organized, existing, and doing business under and by virtue of the laws of the State of Delaware, with its office and principal place of business at Phillips Building, Bartlesville, Oklahoma.

PAR. 2. Respondent Phillips is, and at and all times relevant herein has been, engaged in commerce as "commerce" is defined in Section 1 of the Clayton Act, as amended, 15 U.S.C. 12, and is a corporation whose business is in or affects commerce as "commerce" is defined in Section 4 of the FTC Act, as amended, 15 U.S.C. 44.

II. ENRON

PAR. 3. Respondent Enron is a corporation organized, existing, and doing business under and by virtue of the laws of the State of Delaware, with its office and principal place of business at 1400 Smith Street, Houston, Texas.

PAR. 4. Enron is, and at all times relevant herein has been, engaged in commerce, as "commerce" is defined in Section 1 of the Clayton Act, as amended 15 U.S.C. 12, and is a corporation whose business is in or affects commerce, as "commerce" is defined in Section 4 of the FTC Act, as amended, 15 U.S.C. 44.

III. THE PROPOSED ACQUISITION

PAR. 5. Respondent Phillips through its subsidiary GPM entered into two agreements with respondent Enron Corp. through its subsidiaries, Enron Operations Corp. and Transwestern Gathering Company, to acquire the outstanding voting securities of Enron Anadarko Gathering Company and Transwestern Anadarko Gathering Company, which will own certain gas gathering assets currently owned by Transwestern Gathering Company and Northern Natural Gas Company, two subsidiaries of respondent Enron.

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IV. THE RELEVANT MARKETS

PAR. 6. The relevant line of commerce in which to analyze the effects of the merger is natural gas gathering services or the transportation, for the respondents' own account or for other persons, of natural gas from the wellhead or producing area to a natural gas transmission pipeline or a natural gas processing plant.

PAR. 7. The relevant geographic market in which to analyze the effects of the merger includes the Texas counties of Hansford, Ochiltree, and Lipscomb and all portions of Beaver County, Oklahoma, within ten miles of the Texas border.

PAR. 8. The relevant line of commerce is highly concentrated in the relevant geographic market. Respondents Phillips and Enron are the only competitive providers of natural gas gathering services in many areas of the relevant market. Respondents will have the largest market share in the relevant line of commerce throughout the relevant geographic market.

PAR. 9. Respondent Phillips is an actual and potential competitor of Enron in the relevant line of commerce in the relevant geographic market.

PAR. 10. Timely and effective entry in the relevant line of commerce in the relevant geographic market is unlikely.

V. EFFECTS OF THE MERGER

PAR. 11. The effects of the merger may be substantially to lessen competition or to tend to create a monopoly in the relevant markets in the following ways, among others:

a. Actual and potential competition between Phillips and Enron to provide natural gas gathering services to existing natural gas wells will be eliminated;

b. Actual and potential competition between Phillips and Enron to provide natural gas gathering services for new natural gas wells will be eliminated;

c. The respondents are likely to exact anticompetitive price increases from producers in the relevant geographic market for performance of natural gas gathering services in the relevant geographic market; and

Decision and Order 120 F.T.C.

d. Producers may be less likely to do exploratory and developmental drilling for new natural gas in the relevant geographic market than prior to the merger.

VI. VIOLATIONS CHARGED

PAR. 12. The merger agreement described in paragraph five constitutes a violation of Section 5 of the FTC Act, as amended, 15 U.S.C. 45.

PAR. 13. The merger described in paragraph five, if consummated, would constitute a violation of Section 7 of the Clayton Act, as amended, 15 U.S.C. 18, and Section 5 of the FTC Act, as amended, 15 U.S.C. 45.

DECISION AND ORDER

The Federal Trade Commission ("Commission"), having initiated an investigation of the proposed acquisition by Phillips Petroleum Company ("Phillips"), through its subsidiary GPM Gas Corporation ("GPM"), of the outstanding voting securities of Enron Anadarko Gathering Company and Transwestern Anadarko Gathering Company, two subsidiaries of Enron Corp. ("Enron"), that will own certain gas gathering assets currently owned by Transwestern Pipeline Company ("Transwestern") and Northern Natural Gas Company ("Northern Natural"), two other subsidiaries of Enron, and Phillips and Enron, hereinafter sometimes referred to as "respondents," having been furnished with a copy of a draft complaint that the Bureau of Competition proposed to present to the Commission for its consideration, and which, if issued by the Commission, would charge respondents with violations of the Clayton Act and Federal Trade Commission Act;

Respondents, their attorneys, and counsel for the Commission having thereafter executed an agreement containing a consent order, an admission by respondents of all the jurisdictional facts set forth in the aforesaid draft complaint, a statement that the signing of said agreement is for settlement purposes only and does not constitute an admission by respondents that the law has been violated as alleged in such complaint, and waivers and other provisions as required by the Commission's Rules; and

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The Commission having thereafter considered the matter and having determined that it had reason to believe that the respondents have violated the said Acts, and that the complaint should issue stating its charges in that respect, and having thereupon accepted the executed consent agreement and placed such agreement on the public record for a period of sixty (60) days, and having duly considered the comments received, and having modified such agreement, now in further conformity with the procedure prescribed in Section 2.34 of its Rules, the Commission hereby issues its complaint, makes the following jurisdictional findings and enters the following order:

1. Respondent Phillips is a corporation organized, existing, and doing business under and by virtue of the laws of the State of Delaware, with its office and principal place of business at Phillips Building, Bartlesville, Oklahoma. 2. Respondent Enron is a corporation organized, existing, and doing business under and by virtue of the laws of the State of Delaware, with its office and principal place of business at 1400 Smith Street, Houston, Texas. 3. The Federal Trade Commission has jurisdiction of the subject matter of this proceeding and of the respondents, and the proceeding is in the public interest.

ORDER

I.

It is ordered, That, as used in this order, the following definitions shall apply:

A. "Phillips" means Phillips Petroleum Company, its directors, officers, employees, agents, and representatives, predecessors, successors, and assigns, its subsidiaries, divisions, groups, and affiliates controlled by Phillips, and the respective directors, officers, employees, agents, representatives, successors, and assigns of each. B. "Enron" means Enron Corp., its directors, officers, employees, agents, and representatives, predecessors, successors, and assigns, its subsidiaries, divisions, groups, and affiliates controlled by Enron, and the respective directors, officers, employees, agents, representatives, successors, and assigns of each.

Decision and Order 120 F.T.C.

C. "Respondent" or "respondents" means Phillips and Enron, collectively and individually.

D. "Maxus" means Maxus Energy Corporation, its predecessors, successors, and assigns, subsidiaries, divisions, groups, and affiliates controlled by Maxus Energy Corporation.

E. The "Acquisition" means the proposed acquisition by Phillips of the outstanding voting securities of Enron Anadarko Gathering Company and Transwestern Anadarko Gathering Company, which will own certain gas gathering assets currently owned by Transwestern Pipeline Company and Northern Natural Gas Company, two subsidiaries of Enron, pursuant to the stock purchase agreements executed on November 15, 1994, by Phillips and Enron as subsequently modified and amended.

F. "Gas gathering" means pipeline transportation, for oneself or other persons, of natural gas over any part or all of the distance between a well and a gas transmission pipeline or gas processing plant.

G. "Person" means any natural person, partnership, corporation, company, association, trust, joint venture or other business or legal entity, including any governmental agency.

H. "Related person" means a person controlled by, controlling, or under the common control with, another person.

I. "Relevant geographic area" means the Texas counties of Hansford, Ochiltree, and Lipscomb and all portions of Beaver County, Oklahoma, within ten miles of the Texas border.

J. "Schedule A assets" means the whole and any part of the assets listed in Schedule A of this order (including, but not limited to, the assets listed in annex 1 and annex 2).

K. "Commission" means the Federal Trade Commission.

II.

It is further ordered, That Enron shall not sell, transfer, or otherwise convey, directly or indirectly, the Schedule A assets, or any stock, share capital, equity, or other interest in any person controlling the Schedule A assets, to Phillips in connection with the Acquisition; and, within thirty (30) days after this order becomes final, Enron shall provide notice of the requirements of this order to the Federal Energy Regulatory Commission.

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III.

It is further ordered, That Phillips shall not acquire, directly or indirectly, any stock, share capital, equity, or other interest in any person controlling the Schedule A assets in connection with the Acquisition.

IV.

It is further ordered, That, for a period of ten (10) years from the date this order becomes final, Phillips shall not, without prior notification to the Commission, directly or indirectly:

A. Acquire the Schedule A assets;

B. Acquire any stock, share capital, equity, or other interest in any person engaged in gas gathering within the relevant geographic area at any time within the two years preceding such acquisition, provided, however, that an acquisition of securities will be exempt from the requirements of this paragraph (IV.B) if after the acquisition Phillips will hold cumulatively no more than two (2) percent of the outstanding shares of any class of security of such person; and provided further, that this paragraph (IV.B) shall not apply to the acquisition of any interest in a person that is not at the time of the acquisition engaged in gas gathering within the relevant geographic area due to the sale within the preceding two years of all assets used for gas gathering within the relevant geographic area to another party who intended to operate said assets for gas gathering within the relevant geographic area; or C. Enter into any agreements or other arrangements with any person or with two or more related persons to obtain, within any 18 month period, direct or indirect ownership, management, or control of more than five miles of pipeline previously used for gas gathering and suitable for use for gas gathering within the relevant geographic area.

V.

It is further ordered, That, for a period of ten (10) years from the date this order becomes final, Enron shall not, without prior notification to the Commission, directly or indirectly:

Decision and Order 120 F.T.C.

A. Transfer Schedule A assets to Phillips or Maxus; B. Transfer any stock, share capital, equity, or other interest in any entity controlling the Schedule A assets to Phillips or Maxus; or C. Enter into any agreement or other arrangement to transfer direct or indirect ownership, management, or control of any of the Schedule A assets to Phillips or Maxus.

Provided, however, that prior notification shall not be required for Enron to transfer Transwestern System 3 -- Catesby/Ivanhoe -- to Maxus.

VI.

It is further ordered, That the prior notifications required by paragraphs IV and V of this order shall be given on the Notification and Report Form set forth in the Appendix to Part 803 of Title 16 of the Code of Federal Regulations as amended (hereinafter referred to as "the Notification"), and shall be prepared and transmitted in accordance with the requirements of that part, except that no filing fee will be required for any such notification, notification shall be filed with the Secretary of the Commission, notification need not be made to the United States Department of Justice, and notification is required only of respondents and not of any other party to the transaction. In lieu of furnishing (1) documents filed with the Securities and Exchange Commission, (2) annual reports, (3) annual audit reports, (4) regularly prepared balance sheets, or (5) Standard Industrial Code (SIC) information in response to certain items in the Appendix to Part 803 of Title 16 of the Code of Federal Regulations, Phillips shall provide a map showing the location of the pipeline whose acquisition is proposed and other pipelines used for gas gathering in the relevant geographic area and a statement showing the quantity of gas that flowed through pipeline whose acquisition is proposed in the previous 12 month period. Respondents shall provide the Notification to the Commission at least thirty days prior to consummating any such transaction (hereinafter referred to as the "first waiting period"). If, within the first waiting period, representatives of the Commission make a written request for additional information, respondents shall not consummate the transaction until twenty days after substantially complying with such request for additional information. Early termination of the waiting

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periods in this paragraph may be requested and, where appropriate, granted by letter from the Bureau of Competition. Provided, however, that prior notification shall not be required by paragraphs IV and V of this order for a transaction for which notification is required to be made, and has been made, pursuant to Section 7A of the Clayton Act, 15 U.S.C. 18a.

VII.

It is further ordered, That:

A. Within sixty (60) days after the date this order becomes final, each respondent shall file a verified written report with the Commission setting forth in detail the manner and form in which it has complied and is complying with this order; and B. One (1) year from the date this order becomes final, annually for the next nine (9) years on the anniversary of the date this order becomes final, and at such other times as the Commission may require, each respondent shall file a verified written report with the Commission setting forth in detail the manner and form in which it has complied and is complying with this order. Provided, however, that if Enron sells all of the Schedule A assets, it will no longer be required to file any further written reports with the Commission.

VIII.

It is further ordered, That each respondent shall notify the Commission at least thirty (30) days prior to any proposed change in such respondent such as dissolution, assignment, sale resulting in the emergence of a successor corporation, or the creation or dissolution of subsidiaries or any other change that may affect compliance obligations arising out of the order.

IX.

It is further ordered, That, for the purpose of determining or securing compliance with this order, and subject to any legally recognized privilege, upon written request and on reasonable notice to such respondent, each respondent shall permit any duly authorized representative of the Commission:

Decision and Order 120 F.T.C.

A. Access, during office hours and in the presence of counsel, to inspect and copy all books, ledgers, accounts, correspondence, memoranda and other records and documents in the possession or under the control of such respondent relating to any matters contained in this order; and B. Without restraint or interference from it, to interview officers, directors, or employees of such respondent, who may have counsel present, relating to any matters contained in this order.

X.

It is further ordered, That this order shall terminate twenty (20) years from the date this order becomes final.

SCHEDULE A

Transwestern System 3--Catesby/Ivanhoe Beaver County, OK Ellis County, OK ASSETS: All Transwestern-owned facilities located upstream of the discharge side of the Catesby Compressor unit. Includes approximately 45.5 miles of pipe and the Catesby compressor #745, 422 horsepower. Material assets are listed in Annex 1 for Transwestern system 3. Transwestern System 4--Frass Como Lipscomb County, TX Beaver County, OK ASSETS: All Transwestern-owned facilities located upstream of, but not including, the side/hot-tap valve that connects the Frass Como Lateral to the 12 inch Lipscomb- Mocaine Lateral, including the Frass Como compressor station. Includes approximately 55.1 miles of pipe. Material assets are listed in Annex 1 for Transwestern system 4.

Transwestern System 5--Follett Lipscomb County, TX ASSETS: All Transwestern-owned facilities located upstream of, but not including, the side/hot-tap valve that connects the 4 inch Follett Lateral to the 12 inch Lipscomb- Mocaine Lateral. Includes approximately 8.3 miles of pipe. Material assets are listed in Annex 1 for Transwestern system 5.

Transwestern System 7--Kiowa Creek Lipscomb County, TX

PHILLIPS PETROLEUM COMPANY, ET AL. 1139

1129 Decision and Order

ASSETS: All Transwestern-owned facilities located upstream of, but not including, the side/hot-tap valve that connects the 6 inch Kiowa Creek Lateral and the 8 inch Kiowa Creek Loop to the 12 inch Lipscomb-Mocaine Lateral, including the Kiowa Creek #2 compressor station. Includes approximately 77 miles of pipe and three compressor units: Kiowa Creek #2 Compressor #865, 1,078 horsepower; Kiowa Creek #1 Compressor #828, 1,078 horsepower; and E. Lipscomb Compressor #858, 531 horsepower. Material assets are listed in Annex 1 for Transwestern system 7.

Transwestern System 8--Wolf Creek Lipscomb County, TX Ellis County, OK ASSETS: All Transwestern-owned facilities located upstream of, but not including, the side/hot-tap valve that connects the 6 inch Wolf Creek Lateral to the 12 inch Lipscomb- Mocaine Lateral. Includes approximately 45.2 miles of pipe and the Wolf Creek compressors #755 and #853, 1,470 combined horsepower. Material assets are listed in Annex 1 for Transwestern system 8.

Transwestern System 13--Waka/Perryton Ochiltree County, TX ASSETS: All Transwestern-owned facilities located upstream of and including the pig receiver for the 8 inch Perryton lateral, located on the upstream side of and to the NE of the Waka compressor station. Includes approximately 77.8 miles of pipe and the Perryton Transwestern compressor # 827, 779 horsepower. Material assets are listed in Annex 1 for Transwestern system 13. Transwestern System 14--Gray Rock Ochiltree County, TX Lipscomb County, TX ASSETS: All Transwestern-owned facilities located upstream of, but not including, the 6 inch pig launcher on the discharge side of the Gray Rock compressor station. Includes approximately 43.3 miles of pipe and the Gray Rock compressor #826, 810 horsepower. Material assets are listed in Annex 1 for Transwestern system 14.

Transwestern System 20--Brillhart Hansford County, TX ASSETS: All Transwestern-owned facilities located upstream of, but not including, the side/hot-tap valve that connects the 8 inch Brillhart Lateral to the 10 inch Cactus- Hugoton Lateral. Includes approximately 78.5 miles of pipe and two compressors: Brillhart #748, 708 horsepower; and Brillhart #796, 785 horsepower.

Decision and Order 120 F.T.C.

Material assets are listed in Annex 1 for Transwestern system 20.

Transwestern System 21--John Creek Hansford County, TX Ochiltree County, TX Hutchinson County, TX Roberts County, TX ASSETS: All Transwestern-owned facilities located upstream of, but not including, the side/hot-tap valve that connects the 6 inch John Creek Lateral to the 12 inch Cactus- Hugoton Lateral. Includes approximately 31 miles of pipe and the John Creek compressor #747, 537 horsepower. Material assets are listed in Annex 1 for Transwestern system 21.

Northern Natural System 35--Spearman System - North Hansford County, TX ASSETS: The following four sections: (1) Approximately 6.3 miles of 6 inch and 2.0 miles of 4 inch Northern-owned gathering lines, upstream of where the 6 inch TG385 connects to the 8 inch--TG24001 in the northwest quarter of Section 42, Block 1, Washington County RR Survey. (2) Approximately 6.5 miles of 4 inch Northern-owned gathering lines, upstream of the side valve on the 10 inch TG24001 in the northeast quarter of Section 30, Block 1, Cherokee Iron Furnace CO Survey. (3) The Buckner Al wellhead facilities and approximately 3.4 miles of 4 inch Northern-owned gathering lines from the Buckner Al well in Section 20 to the side valve on the 10 inch TG24001 in Section 27, Block 1, Cherokee Iron Furnace Co Survey. (4) Approximately 3.5 miles of 8 inch, 3.8 miles of 6 inch, and 10 miles of 4 inch Northern-owned gathering lines, upstream of where the 6 inch TG247 and the 8 inch TG246 connects to the 12 inch TG24001 near the East Section Line of Section 7, Block 2, SA&MG RR Survey. Material assets are listed in Annex 2 for Northern Natural system 35.

Northern Natural System 35--Spearman System - East Hansford County, TX Hutchinson County, TX Roberts County, TX ASSETS: The following two sections: (1) The Brainard Lateral consisting of approximately 1.9 miles of 8 inch, 5.8 miles of 6 inch, and 19.2 miles of 4 inch Northernowned gathering lines, upstream of a side valve where the 8 inch TG335 connects to the 26 inch TG24001 in Section 8, Block H&GN Survey. (2) The East Leg consisting of approximately 11.1 miles of 10 inch, 19.5

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miles of 8 inch, 19.0 miles of 6 inch, and 49.6 miles of 4 inch gathering lines, upstream of where 10 inch TG301 connects to the suction of Northern's Spearman Compressor Station. Material assets are listed in Annex 2 for Northern Natural system 35.

Northern Natural System 37--Fuller System Hansford County, TX Sherman County, TX Hutchinson County, TX ASSETS:

The following two sections: (1) The Hansford County No. 1 System consisting of approximately one-half mile of 2 inch, 5 miles of 8 inch, 3 miles of 6 inch, and 11 miles of 4 inch gathering lines, upstream of the suction of Northern's Hansford County No. 1 compressor station. (2) The Hutchinson County No. 2 system consisting of approximately 5 miles of 6 inch and 5 miles of 4 inch gathering lines, upstream of the suction of Northern's Hutchinson County No. 2 compressor station. Material assets are listed in Annex 2 for Northern Natural system 37.

Northern Natural System 79--Perryton System Ochiltree County, TX Beaver County, OK ASSETS:

The Northern-owned facilities upstream of the suction of Northern's Perryton Compressor Station. The facilities consist of approximately one quarter mile of 2 inch, 89 miles of 4 inch, 58 miles of 6 inch, 23 miles of 8 inch, 4 miles of 10 inch, and 10 miles of 16 inch gathering lines. Material assets are listed in Annex 2 for Northern Natural system 79.

Decision and Order 120 F.T.C.

ANNEX 1 TO SCHEDULE A

TRANSWESTERN GATHERING COMPANY ANNEX 1 TO SCHEDULE A PAGE 1 OF 11

SYS LINE SEG DESCRIPTION WH COMP LINE METER COMP H/P PIPE DIAMETER PIPE LENGTH P PE 2 DIAMETER PIPE 2 LENGTH 3 CA-1 L--"SHEPHERD W/1 E MAYER #1 LAT X 0 0 6.6 31680. 0.0 0.00 3 CA-1 MTR STA SHL MAYER #L1 X 42800 0 4.5 100. 0.0 0.00 3 CA-1-01 MTR STA SHL SHEPROD W.1 X 42810 0 4.5 100. 0.0 0.00 3 CA-1-01 INAHN #1-20 UL LN X 41610 0 4.5 422. 0.0 0.00 3 CA-1-01 SHELL-TUBB #1-30 LN X 41530 0 4.5 400. 0.0 0.00 3 CA-1-01 PEETOOM #1-29 WELL LINE X 41660 0 4.5 5280. 0.0 0.00 3 CA-1-02 SHELL-OHENANN #1-32 WELL X 41620 0 4.5 6864. 0.0 0.00 3 CA-1-02 SHELL-WHITE #1-31 WELL X 41660 0 4.5 400. 0.0 0.00 3 CA-1-03 WHITE B #1-5 WELL LINE X 42830 0 4.5 14256. 0.0 0.00 3 CA-1-03 PHIL-DRAKE #1-9 WEL LN X 42840 0 4.5 106. 0.0 0.00 3 CA-1-04 PEARSON #1 4 LN & EQ X 41590 0 0.0 0. 0.0 0.00 3 CA-1-04 CONN KELIN 11-1 X 41750 0 0.0 0. 0.0 0.00 3 CA-1-04 SNEKN #1 4 LN & EQ X 42870 0 4.5 5908. 0.0 0.00 3 CA-1-04 MESA PETROLEUM CO-#1 PIERSALL X 43090 0 0.0 0. 0.0 0.00 3 CA-1-05 CONN SHELL - #2-31 WHITE X 41730 0 4.5 2600. 0.0 0.00 3 CA-1-05 CONN CHG-STATE UNIT #1 X 43210 0 0.0 0. 0.0 0.00 3 CA-2 CONN MEDALLION PETROLEUM AM1&2 X 41021 0 0.0 0. 0.0 0.00 3 CA-2 STATE #1-36 X 41690 0 0.0 0. 0.0 0.00 3 CA-2 WHITE #1-31 X 42820 0 4.5 53. 0.0 0.00 3 VH-1 STATE A #1 WELL LN X 0 0 12.7 34320. 0.0 0.00 3 VH-1 TSH IVANHOE & CATESBY LAT X 41911 0 0.0 0. 0.0 0.00 3 VH-1 CONMERBOURNE OIL #1-24 MYNN X 422 0.0 0. 0.0 0.00 3 VH-1-01 TW #745 IVANHOE/CATESBY COMP X 0 0 0.0 0. 0.0 0.00 3 VH-1-04 BERYL JET #1-14 LN X 42690 0 4.5 158. 0.0 0.00 3 VH-2-01 CONN BURKHART #1-15 REDELL INDIN FL X 41910 0 0.0 0. 0.0 0.00 3 VH-2-01 CONNMARLIN OIL #1 HALLIBURTON X 41740 0 4.5 2050. 0.0 0.00 3 VH-2-01 FOX #1 ML LN X 4170 0 0.0 0. 0.0 0.00 3 VH-2-02 BOCKELMAN #1-17 NL X 42760 0 4.5 108. 0.0 0.00 3 VH-2-03 MTR STA UNION DYCNE JL X 41020 0 4.5 4652. 0.0 0.00 3 VH-2-03 4" O'HARE U/KAISER FRANCIS REDELSPERGER#1 X 40301 0 0.0 0. 0.0 0.00 3 VH-2-03 OHAIR #1-40 TIN LN X 42770 0 4.5 5280. 0.0 0.00 3 VH-2/3 10" CATESBY EXTENSION X 0 0 10.7 44880. 0.0 0.00 3 VH-3 MCCLURE #1-13 WELL LINE X 41480 0 4.5 400. 0.0 0.00 3 VH-3-01 SUE HILL #1 X 41700 0 4.5 1750. 0.0 0.00

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TRANSWESTERN GATHERING COMPANY ANNEX 1 TO SCHEDULE A PAGE 2 OF 11

SYS LINE SEG DESCRIPTION WII COMP LINE METER COMP. H/P PIPE DIAMETER PIPE LENGTH PIPE 2 DIAMETER PIPE 2 LENGTH 4 FC-1 CONN TEX OKG - #2 PINKARD "B" X 38980 0 0.0 0. 0.0 0.00 4 FC-1 FRASS-COMO FLD TU #744 X 0 0.0 0.00 4 FC-1/2 8" COMO J FRASS FLD LAT X 0 8.6 52800. 0.0 0.00 4 FC-2 DAROVZET SALES MTR STA X 20 0 0.0 0. 0.0 0.00 4 FC-2-02 MTR STA HOB-FRASS #B-1 X 3651 0 4.5 3980. 0.0 0.00 4 FC-2-02 MTR STA HBL-FRASS WL-1 X 3653 0 4.5 8220. 0.0 0.00 4 FC-2-03 CONN NAT GAS ANADARKO #1-26 DEPEM X 43340 0 4.5 10500. 0.0 0.00 4 FC-3 8" COMO & FRASS FLD LAT X 0 8.6 25080. 0.0 0.00 4 FC-3-01 4"HOWARD/ MAHAFFEY/ MIER /ANDERSON X 0 6.6 13200. 0.0 0.00 4 FC-3-01 MTR STA CSO VICKERS WL X 42530 0 4.5 100. 0.0 0.00 4 FC-3-2 PHILLIPS EXCHANGE 3 SIDE VLVS X 952 0 0.0 0. 0.0 0.00 4 FC-5-02 CONN FALCON-CLENNEY #1 X 40390 0 4.5 25. 0.0 0.00 4 FC-5-02 CONN FALCON-SCHNIDER #1 X 40600 0 4.5 20600. 0.0 0.00 4 FC-5-05 CONN FALCON-#2 CLENNEY X 40630 0 4.5 400. 0.0 0.00 4 FC-5-07 CONN NAT GAS ANADARKO #1-2 DICK BVR X 40400 0 4.5 8037. 2.3 136.00 4 FC-5-08 COMMENBOURNE #1 BARNES 14 BEAVER X 40520 0 4.5 2540. 0.0 0.00

TRANSWESTERN GATHERING COMPANY ANNEX 1 TO SCHEDULE A PAGE 3 OF 11

SYS LINE SEG DESCRIPTION WII COMP LINE METER COMP. H/P PIPE DIAMETER PIPE LENGTH PIPE 2 DIAMETER PIPE 2 LENGTH 5 FT-1 LFR B&L-R TO LIP-M X 0 0 6.5 29040. 0.0 0.00 5 FT-1 CONN SAM REGER #1 X 36100 0 4.5 100. 0.0 0.00 5 FT-1-01 CONN COTTON #1 KRAFT X 37800 0 4.5 3600. 0.0 0.00 5 FT-1-02 FARM TAP - MERLIN LAUBHAN X 3110 0 0.0 0. 0.0 0.00 5 FT-1-02 FARM TAP - RUSSELL SIMER X 3400 0 0.0 0. 0.0 0.00 5 FT-1-03 CONN JACK G JONES #1 MASON X 38030 0 0.0 0. 0.0 0.00 5 FT-1-03 CONN COTTON - #2 LAUBHAN X 38480 0 4.5 9800. 0.0 0.00 5 FT-2-04 CONN LAUBHAN UNIT A #1 X 36220 0 4.5 50. 0.0 0.00

Decision and Order 120 F.T.C.

TRANSWESTERN GATHERING COMPANY ANNEX 1 TO SCHEDULE A PAGE 4 OF 11

SYS LINE SEG DESCRIPTION WH COMP LINE METER COMP. H/P PIPE DIAMETER PIPE LENGTH PIPE 2 DIAMETER PIPE 2 LENGTH 7 EL-1 4" E. LIPSCOMB FLD LAT X 0 0 4.5 2276. 4.0 480.00 7 EL-1 LINE PARKER 1 4 IN X 35710 0 4.5 272. 0.0 0.00 7 EL-1 LINE SHULTZ C-1 4 IN X 35790 0 4.5 272. 0.0 0.00 7 EL-1 EAST LIPS TW #658 X 500 0.0 4646. 0.0 0.00 7 EL-1-01 LINE TYSON A-1 4 IN 35680 0 4.5 4176. 0.0 0.00 7 EL-1-01 LINE SHULTZ 2-5625 4 IN 35760 0 4.5 5280. 0.0 0.00 7 EL-1-02 CONN HUMBLE-1 WM SCHULTZ UNIT 35952 0 4.5 2200. 0.0 0.00 7 EL-1-02 CONN 1 SCHULTZ X 35940 0 4.5 13781. 0.0 0.00 7 KC-1 6" LIPSCOMB F/PIPER #2 & LIPSCOMB LAT X 0 0 6.6 272. 0.0 0.00 7 KC-1 LINE PIPER 2 6 IN X 35730 0 4.5 272. 0.0 0.00 7 KC-1 LINE SHULTZ B-2 6 IN X 35740 0 4.5 272. 0.0 0.00 7 KC-1 KIOWA CREEK #1 4 IN 1100 0.0 0. 0.0 0.00 7 KC-1-02 4" LIPSCOMB F/KNICK/DUKE/SHULTZ B X 0 0 4.5 12619. 0.0 0.00 7 KC-1-02-01 NATOMAS #1 YAUCK TW #855 X 42 0.0 0.00 7 KC-1-03 CONN SCARTH OIL-PIPER #6089 X 9750 0 0.0 0. 0.0 0.00 7 KC-1-03 CONN SCARTH PETR #6011-PIPER X 38340 0 4.5 300. 0.0 0.00 7 KC-1-03 CONN SCARTH - PIPER GOO-1 X 38400 0 0.0 0. 0.0 0.00 7 KC-1-03 CONN SCARTH - PIPER 601-2 X 38410 0 0.0 0. 0.0 0.00 7 KC-1-03 CONMAY PETRO PIPER RNCH #1 ZIPSCO X 55120 0 0.0 30. 0.0 0.00 7 KC-1-05 MTR RIN MEMBOURNE-SCHULTZ #1 X 38120 0 2.3 2600. 0.0 0.00 7 KC-1-06 CONN RIN NAT GAS-MANDARINO #1-544 OWENS 38160 0 4.5 6000. 0.0 0.00 7 KC-1-06 CONN EXXON - 47 OLA O PIPER 38900 0 4.5 0. 0.0 0.00 7 KC-1-07 CONNWAY PET #M SCHULTZ #1 X 18940 0 0.0 0. 0.0 0.00 7 KC-1-08 CONNEMBOURNE #1 DUCE "781" X 55120 0 4.5 2082. 2.3 83.00 7 KC-1-08 CONNEMBOURNE #1 DUCE "761" X 55240 0 4.5 872. 2.3 152.00 7 KC-1/2/3 6" KIOWA CREEK LAT X 0 0 4.5 66264. 0.0 0.00 7 KC-1/2/3 / KC-3-5/6 EXT KIOWA CREEK T/LEAR PET 6" LINE X 0 0 6.6 27262. 6.6 151.00 7 KC-2 CONN OLA #1 0 36386 0 6.0 1750. 0.0 0.00 7 KC-2 KIOWA CREEK STAR2-TW #865 X 1020 0.0 0. 0.0 0.00 7 KC-2-01 MTR STA APAN LAURE WL1 X 0 4.5 13200. 0.0 0.00 7 KC-2-03 CON BRADFORD FD CSG HD X 36340 0 4.5 106. 0.0 0.00 7 KC-2-03 PURDOM #1 4LN & EQ X 36320 0 4.5 622. 0.0 0.00 7 KC-2-03 CONN FALCON-PURDOM UNIT #1 X 37190 0 0.0 0. 0.0 0.00 7 KC-2-04 CONN COTTON PETR-1-A PIPER X 38340 0 4.0 1000. 0.0 0.00 7 KC-2-06 CONN COTTON PETR-1 BRADFORD "B" X 36720 0 4.5 3100. 0.0 0.00

PHILLIPS PETROLEUM COMPANY, ET AL. 1145

1129 Decision and Order

TRANSWESTERN GATHERING COMPANY ANNEX 1 TO SCHEDULE A PAGE 5 OF 11

SYS LINE SEG DESCRIPTION VII COMP LINE METER COMP H/P PIPE DIAMETER PIPE LENGTH PIPE 2 DIAMETER PIPE 2 LENGTH 7 KC-2-06 CONN UNAPACHE-BRADFOO #1 X 26300 0 6.6 10560. 0.0 0.00 7 KC-2-06 CONN DIAMOND-A3-688 OLA O PIPER X 37741 0 4.5 6500. 0.0 0.00 7 KC-2-06 CONN COTTON - BRADFORD #2 X 36220 0 0.0 0. 0.0 0.00 7 KC-2-07 PAN PET HILTON #1 ML LN X 26630 0 4.5 3000. 0.0 0.00 7 KC-2-07 CONN COTTON PETR - 1 FAIR X 36880 0 4.5 4400. 0.0 0.00 7 KC-2-10 CONN APACHE BRADFORD #3 X 33652 0 0.0 0. 0.0 0.00 7 KC-2-10 CONN APACHE-4% OLA PIPER X 37720 0 0.0 0. 0.0 0.00 7 KC-2-10 CONN COTTON-4% OLA PIPER #1 X 38690 0 0.0 0. 0.0 0.00 7 KC-2-12 CONNENBOURNE #2 PIPER A X 37790 0 4.5 900. 0.0 0.00 7 KC-2-13 CONN COTTON PETROLEUM - 1 PIPER X 36710 0 4.0 400. 0.0 0.00 7 KC-2-13 CONN COTTON PETR-1 PIPER "B" X 36730 0 4.5 2900. 0.0 0.00 7 KC-2-14 CONNENBOURNE #2 BRADFORD X 36650 0 4.5 640. 0.0 0.00 7 KC-2-14 CONNENBOURNE CREEK LATERAL X 0 0 6.6 5500. 0.0 0.00 7 KC-3 6" KIOWA CREEK LATERAL X 38700 0 4.5 900. 0.0 0.00 7 KC-3 CONN ARCO - #2 FRED LOESCH X 0 0 4.5 0. 0.0 0.00 7 KC-3-02 CONN MEDALLION #1 36032 0 4.5 15840. 0.0 0.00 7 KC-3-02 CONN SINCLAIR-LOESCH #1 X 38886 0 4.5 1684. 0.0 0.00 7 KC-3-02 CONN FULTON SELL #4 X 0 0 0.0 0. 0.0 0.00 7 KC-3-07 CONN DIAMOND-OLA PIPER #1-6X1 X 30810 0 6.8 4300. 0.0 0.00 7 KC-3-07 CONN ARCO - #1 MARGARET L DIXON X 38740 0 4.5 600. 0.0 0.00 7 KC-3-08 CONN ARCO - #1 MALBROOK DAILY WELL X 38871 0 4.5 11000. 0.0 0.00 7 KC-3-09 CONN ARCO - #1 PAYNE BROS CO X 38822 0 4.5 6400. 0.0 0.00 7 KC-3-10 CONN ARCO - #1 FULTON-SELL X 38885 0 4.5 1500. 0.0 0.00 7 KC-3-10 CONN ARCO - #1 FULTON SELL #3 X 33680 0 0.0 0. 0.0 0.00 7 KC-3-11 CONN FULTON SELL #3 X 55210 0 4.5 2000. 0.0 0.00 7 KC-3-15 CONN ARCO-#2 LILLIE M PETERSON X 0 0 4.0 880. 0.0 0.00 7 KC-3A 6" KIOWA CREEK LAT X 0 0 2.3 280. 0.0 0.00

Decision and Order 120 F.T.C.

TRANSWESTERN GATHERING COMPANY ANNEX 1 TO SCHEDULE A PAGE 6 OF 11

SYS LINE SEG DESCRIPTION WH COMP LINE METER COMP. H/P PIPE DIAMETER PIPE LENGTH PIPE 2 DIAMETER PIPE 2 LENGTH B SG-1 TAP TO INTE[NORTH] MEIER #1 LIPSC X 16200 0 0.0 0. 0.0 0.00 B SG-1 CONN TO JERNIGAN-BATTIN #1 X 38260 0 0.0 5500. 0.0 0.00 B SG-1-01 CONN FILON EXPL. - #1 FRITZ X 41340 0 4.5 21120. 0.0 0.00 B SG-1/2 4" V/L METER #1 & ANNA RUF #1 WELLS, 1X X 0 0 4.5 26400. 0.0 0.00 B SG-2 4" UG TO W A MEIER #1 & ANNA RUF #1 WEL X 0 0 4.5 272. 0.0 0.00 B WC-1 PRICE 2 TO WOLF CK 4 IN X 35660 0 4.5 0. 0.0 0.00 B WC-1 WOLF CREEK TU #55 & 853 X 1470 0.0 2635. 0.0 0.00 B WC-1-01 PRICE 18 WOLF CK 4 IN X 35630 0 4.5 1800. 0.0 0.00 B WC-1-02 CONN EXXON - #6 WILLIS D PRICE "B" X 30310 0 4.5 200. 0.0 0.00 B WC-1-02 CONN EXXON - #5 WILLIS D PRICE X 38440 0 4.5 79147. 0.0 0.00 B WC-1/2/3 6" WOLF CREEK LAT X 3460 0 6.6 0. 0.0 0.00 B WC-2 FARM TAP - MARY & ROBERT SQUIRES X 3630 0 4.5 272. 0.0 0.00 B WC-2 R DOYLE 1-WOLF CK 4X5 X 35640 0 4.5 272. 0.0 0.00 B WC-2 PRICE 1 WOLF CK 4X 4 IN X 35670 0 0.0 0. 0.0 0.00 B WC-2 J DOYLE 1-WOLF CK 4X 6 IN X 55770 0 4.5 2550. 0.0 0.00 B WC-2 CONN WEATHERBOURNE OIL CO - SQUIRE #3 X 55540 0 4.5 6250. 0.0 0.00 B WC-2-01 CONN HUMBLE-1 TYSON X 35970 0 4.5 3500. 0.0 0.00 B WC-2-02 CONN HUMBLE-1 TYSON PRICE X 36620 0 4.5 0. 0.0 0.00 B WC-2-03 CONN HUMBLE-U D PRICE #4 X 35951 0 0.0 272. 0.0 0.00 B WC-3 BROWN 1-WOLF CRK 4 IN X 40200 0 4.5 165. 0.0 0.00 B WC-3-01 CONN T-WOLF-THORNTON TRUST #1 X 40240 0 0.0 0. 0.0 0.00 B WC-3-02 CONN FILON-LOIS BROWN #2-27 X 41440 0 0.0 0. 0.0 0.00 B WC-3-02 CONN WAPCO-LOIS BROWN 1-26 X 41470 0 0.0 0. 0.0 0.00 B WC-3-02 CONN WAPCO-PIERCE 1-28 X 41480 0 0.0 6300. 0.0 0.00 B WC-3-03 CONN WAPCO-PIERCE 1W1 NL IN X 40250 0 4.5 0. 0.0 0.00 B WC-3-05 SHERRILL OU 1W1 NL LN X 40240 0 0.0 0. 0.0 0.00 B WC-3-06 CONN BUNKER-WAYLAND #1-5 X 0 0 0.0 20803. 0.0 0.00 B WC-3-06 CONN 4" JORDAN CENT DELIV PT #1 X 41510 0 4.5 4281. 0.0 0.00 B WC-3-07 CONNECT JORDAN O&G #1 CENTRAL DEL PT X 41520 0 4.5 9240. 0.0 0.00 B WC-4 SHATTUCK OU-1 #3 NL LN X 40220 0 4.5 0. 0.0 0.00 B WC-4 GIBBS #1-19 WELL LINE

PHILLIPS PETROLEUM COMPANY, ET AL. 1147 1129 Decision and Order

TRANSWESTERN GATHERING COMPANY ANNEX 1 TO SCHEDULE A PAGE 7 OF 11

SYS LINE SEG DESCRIPTION WH COMP LINE METER COMP. H/P PIPE DIAMETER PIPE LENGTH PIPE 2 DIAMETER PIPE 2 LENGTH 13 NP-1 6" F/SHAW WIT #1, KERSHAW #1 X 0 36430 0 6.6 29315. 0.0 0.00 13 NP-1-01 INST/TAP HOI-NEUFELD #1 X 38995 0 0.0 0. 0.0 0.00 13 NP-1-02 CONN GARY GEORGE #1 X 52190 0 0.0 0. 0.0 0.00 13 NP-1-02 CONN ANADARKO MARIE #1-62 WLDET X 37000 0 0.0 0. 0.0 0.00 13 NP-2 MTR STA SH KERSHAW AL1 X 53260 0 4.5 18880. 0.0 0.00 13 NP-2 CONN MEMBOURNE SCHALK #1 X 38130 0 0.0 0. 0.0 0.00 13 NP-2-02 HAROLD D COURSON - #1-43 JAGGONER X 38080 0 4.5 20. 0.0 0.00 13 NP-2-02 CONN FALCON-WAGGONER #1-43 X 38130 0 4.5 1300. 0.0 0.00 13 NP-2-03 CONN FALCON-WAGGONER #1-43 X 38540 0 4.5 9600. 0.0 0.00 13 NP-2-04 CONN COURSON #1-42 MCGARROUGH X 36949 0 4.5 2200. 0.0 0.00 13 NP-3 PHILCON - J MARCELL X 34610 0 4.5 15312. 0.0 0.00 13 PE-1 PSNTGOD 1-PP LAY #4 IN X 38620 0 4.5 272. 0.0 0.00 13 PE-1-02 CONN ANADARKO #1-661 DUDLEY X 34911 0 4.5 600. 0.0 0.00 13 PE-1-03 PRL MK-18 PERRY LAT X 34911 0 4.5 2900. 0.0 0.00 13 PE-1-03 CONN COURSON OIL AND GAS #4-571 1ST X 38440 0 0.0 0. 0.0 0.00 13 PE-1-03 CONN #1-571 1ST NATL TRUST-ACCT REC X 36930 0 4.5 4400. 0.0 0.00 13 PE-1-04 LN FR RIDGMOR TO PSH L X 36551 0 4.5 15840. 0.0 0.00 13 PE-1-05 CONN COURSON - #2-571 1ST NATL TRUST X 38962 0 4.5 1600. 0.0 0.00 13 PE-1-06 CONN NAT GAS ANADARKO #1-66 CAMP X 52110 0 4.5 5400. 0.0 0.00 13 PE-1-06 CONN SANTA FE ENERGY #2-69 UPL AN X 52150 0 4.5 6172. 4.5 49.00 13 PE-1-06 CONN NAT GAS ANADARKO #1-66 RICHDSN X 0 7300. 0.0 0.00 13 PE-1/2/3 6" & 4" N. PARRYTON ALT X 9170 0 4.0 7207. 0.0 0.00 13 PE-2 LAND-EXCHANGE MA DUDE WILSON X 34610 0 8.6 650. 0.0 0.00 13 PE-2 HUM-PER W1-8 DUDE WILSON X 34811 0 6.6 272. 0.0 0.00 13 PE-2 HUM PER W1-8 PERRY LAT X 0 272. 0.0 0.00 13 PE-2 PERRYTON TU #027 X 785 0 4.5 0. 0.0 0.00 13 PE-2-01 MC HERNDON C #1 WL LN X 34750 0 0.0 264. 0.0 0.00 13 PE-2-01 J C HERNDON 1 U L UL LN X 37910 0 4.5 475. 0.0 0.00 13 PE-2-01 COMM HERNDON #1 X 37970 0 6.6 2650. 0.0 0.00 13 PE-2-02 4" F/DUDE WILSON GAS #1 & GW4 #1 X 0 13200. 0.0 0.00 13 PE-2-02 JONES #2-750 HELL LINE X 34740 0 4.5 317. 0.0 0.00 13 PE-2-02 MTR STA HUM-D WL GU4 X 34770 0 4.5 400. 0.0 0.00 13 PE-2-03 MTR STA HUM-D WL VE GU4 X 34830 0 4.5 100. 0.0 0.00 13 PE-2-03 DUDE WILSON GU-4 #2 WL X 37930 0 4.5 211. 0.0 0.00 13 PE-2-04 BRAUHMANN #1-17 WL LN X 34870 0 4.5 4752. 0.0 0.00

Decision and Order 120 F.T.C.

TRANSWESTERN GATHERING COMPANY ANNEX 1 TO SCHEDULE A PAGE 8 OF 11

SYS LINE SEG DESCRIPTION L/W COMP LINE METER COMP. H/P PIPE DIAMETER PIPE LENGTH PIPE 2 DIAMETER PIPE 2 LENGTH 13 PE-2-04 CONN HORIZON #2-17 BRUHLMAN X X 52080 0 4.5 3389. 2.3 98.00 13 PE-2-05 PSNTGODA B #1 4LM & EQ X 0 0 4.5 15790. 0.0 0.00 13 PE-2-05 CONN EXXON CORP DUDE WILSON GU 7-3 34711 0 0.0 0. 0.0 0.00 13 PE-2-05 CONN EXXON CORP DUDE WILSON GU 5-4 X 34731 0 0.0 0. 0.0 0.00 13 PE-2-05 CONN EXXON GU #7 X 34721 0 4.0 53. 0.0 0.00 13 PE-2-07 CONN HO ROGERS #3-DUDE WILSON GSG LAT 36950 0 4.5 10666. 0.0 0.00 13 PE-2-07 4" LN WILSON #3-DUDE WILSON UNIT #2 X 0 0 6.6 800. 0.0 0.00 13 PE-2-07 CONN EXXON-W2 DUDE WILSON UNIT #2 X 33080 0 4.5 272. 0.0 0.00 13 PE-2-07 D WLSN GU 1-PP LAT 2-DU LAT 34800 0 4.5 4277. 0.0 0.00 13 PE-2-07 ROGERS 1-PP LAT 4 IN 3 34620 0 4.5 400. 0.0 0.00 13 PE-2-09 MTR STA HBL ROGERS WL 3 34660 0 4.5 400. 0.0 0.00 13 PE-2-10 HBL D WILSON 5-2 WL LM X 34791 0 4.5 3000. 0.0 0.00 13 PE-2-10 CONN EXXON-DUDE WILSON #6 X 38720 0 4.5 600. 0.0 0.00 13 PE-2-11 CONN EXXON - #2 DUDE WILSON UNIT #7 X 38760 0 4.5 1200. 0.0 0.00 13 PE-2-11 MBL OPER - #2 PSHIGODA X 38850 0 4.5 1340. 0.0 0.00 13 PE-2-12 CONN EXXON-DUDE WILSON GAS UNIT 5-3 X 33460 0 4.5 900. 0.0 0.00 13 PE-2-13 CONN EXXON - #2 DUDE WILSON UNIT #1 X 28800 0 4.5 2135. 0.0 0.00 13 PE-2-14 CONN EXXON - #3 DUDE WILSON UNIT #4 X 38860 0 4.5 2400. 0.0 0.00 13 PE-2-14 CONN EXXON - #5 HELEN ROGERS X 33070 0 4.0 0. 0.0 0.00 13 PE-2-16 DODSON #1-814 WL LM X 34690 0 4.0 728. 0.0 340.00 13 PE-2-16 CONN SAMSON RESOURCES DODSON #3 OCH X 52121 0 4.5 5808. 2.3 0.00 13 PE-2-17 U C HERNDON B #1-L WL LM X 37900 0 4.5 0. 0.0 0.00 13 PE-2-17 CONN COURSON #2-662 HERNDON OCHL X 52160 0 4.0 400. 0.0 0.00 13 PE-2-18 CONN COURSON #1-767 ELDEN WAKA PR1 52181 0 4.5 100. 0.0 0.00 13 SH-1 CONN PITMAN-SUINK WL #1 X 24700 0 4.5 24816. 0.0 0.00 13 SH-1-03 CONN SCHNEIDER #1-03 WL LM X 36410 0 4.5 66000. 0.0 0.00 13 SH-1/2 6" SHARE-WEST PERRYTON LAT X 0 0 6.4 2640. 0.0 0.00 13 SH-2-01 MTR STA RDG GREGG WL 1 X 34530 0 4.5 15312. 0.0 0.00 13 SH-2-02 TEVIS #1-20 WL LM X 36420 0 4.5 370. 0.0 0.00 13 SH-2-02 CONNER #1-30 WL LM X 36750 0 4.5 6864. 0.0 0.00 13 SH-2-03 SMITH #1-30 WELL LM X 36540 0 4.5 [illegible] 0.0 0.00

PHILLIPS PETROLEUM COMPANY, ET AL.

Decision and Order

TRANSWESTERN GATHERING COMPANY ANNEX 1 TO SCHEDULE A PAGE 9 OF 11

SYS LINE SEG DESCRIPTION WII COMP LINE METER COMP. H/P PIPE DIAMETER PIPE LENGTH PIPE 2 DIAMETER PIPE 2 LENGTH 14 ER-1/2 6" ELLIS RANCH FLD LAT X 0 0 6.6 52800. 0.0 0.00 14 ER-3 6" ELLIS RANCH FLD LAT X X 0 0 6.6 31680. 0.0 0.00 14 ER-3-01 MTR STA H KAY WELL WM1 X 34640 0 4.5 10560. 0.0 0.00 14 ER-3-01 CONN AMOCO - #2 KAYWELL-HAWKER TRUSTA X 38710 0 0.0 0. 0.0 0.00 14 ER-3-02 ARTHUR MORGAN #1 WELL LN X 36640 0 4.5 19908. 0.0 0.00 14 ER-3-03 MORRIS C-1 4 LN & EQ X 34940 0 4.5 370. 0.0 0.00 14 ER-3-04 CONN [illegible] MORRIS X 38610 0 4.5 6400. 0.0 0.00 14 ER-3M 4" MITCHELL A1 - #1 LAT X 0 0 4.5 4224. 0.0 0.00 14 ER-3M1 4" MITCHELL #1 & #4-1 LAT X X 0 0 4.5 10560. 0.0 0.00 14 GR-1 PEERY A #1-720 WL LN X 36490 0 6.6 45408. 0.0 0.00 14 GR-1 CONN AMADARKO #1-56 SELL NORTHRUP X 55360 0 0.0 0. 0.0 0.00 14 GR-1-01 WHEAT #1-678 WL LN X 57130 0 4.5 53. 0.0 0.00 14 GR-1-01 SHELL-WHEAT #1-732 WL LN X 37150 0 6.6 7920. 0.0 0.00 14 GR-1-01 CONN [illegible] PERRY #2 X 37150 0 0.0 0. 0.0 0.00 14 GR-1-02 CONN DICK BARTON #1 X 36800 0 8.6 7920. 0.0 0.00 14 GR-1-03 CONN APACHE-MILES UNIT #1 X 37260 0 4.5 1600. 0.0 0.00 14 GR-1-03 CONN APACHE HARRY L KING #1 X 34484 0 6.6 31120. 0.0 0.00 14 GR-1-03 CONN MOUNTAIN FRONT VARIOUS WELLS X 36470 0 0.0 0. 0.0 0.00 14 GR-1-04 CONN TED WEINER-MS 2 D GUY-1 X 36471 0 4.5 1700. 0.0 0.00 14 GR-1-07 CONN [illegible] #1 D PERRY X 37200 0 4.5 2100. 0.0 0.00 14 GR-1-09 CONN TARPON OIL-N PERRY #2 X 38600 0 6.6 7392. 0.0 0.00 14 GR-2 GRAY ROCK 1U #826 X 36480 765 0.0 0. 0.0 0.00 14 KC-3-02 MTR STA FAL SEA-NAN #1 X 36060 0 4.5 7920. 4.5 100.00 14 KC-3-03 LANDERS #1 WL LN X 37162 0 4.5 5364. 0.0 0.00 14 KC-3-12 CONN COURSON OIL #2-855 LANDERS X 55101 0 4.5 2520. 0.0 0.00

Decision and Order 120 F.T.C.

TRANSWESTERN GATHERING COMPANY ANNEX 1 TO SCHEDULE A PAGE 10 OF 11

SYS LINE SEG DESCRIPTION WH COMP LINE METER COMP. H/P PIPE DIAMETER PIPE LENGTH PIPE 2 DIAMETER PIPE 2 LENGTH 20 BH-1/2/3/4/5 8" HANSFORD LAT X 0 0 8.6 63360. 0.0 0.00 20 BH-2 BRILLIANT LN #740 & 796 X 0 1493 0.0 0. 0.0 0.00 20 BH-2-01 LAT 4 GANDY & GLOVER TO BRILLIHART X 0 4.0 10800. 0.0 0.00 20 BH-2-01 GD-GANDY LN-BRLHRT LT X 33020 0 4.5 21120. 4.5 100.00 20 BH-2-03 FARM TAP- GEORGE C. COLLARD X 352 0 0.0 0. 0.0 0.00 20 BH-2-04 CONN GULF-LONE-1 X 33440 0 4.0 6000. 0.0 0.00 20 BH-2-04 CONN BILLINGSLEY #1 X 33860 0 0.0 0. 0.0 0.00 20 BH-2-05 HORIZON-LONE #1 WL LN X 33960 0 4.5 5800. 0.0 0.00 20 BH-2-05 BALLARD #1-123 WL LN X 33990 0 4.5 5808. 0.0 0.00 20 BH-2-06 CONN BROCK EXPL CORP #1 ANDERSON X 35311 0 0.0 0. 0.0 0.00 20 BH-2-06 MTR STA HOR OG CORP WL 1 X 33970 0 4.5 7920. 0.0 0.00 20 BH-2-07 CONN GULF-RHODA HART - 1 X 33400 0 8.0 5280. 0.0 0.00 20 BH-3 CONN UNIT DRILL & EXPL NO 1 BECK X 33090 0 4.5 120. 0.0 0.00 20 BH-3-01 FUR-MUR LN-BRLHRT LT X 0 4.5 15240. 0.0 0.00 20 BH-1-01 CONN MARY #2 X 33982 0 2.0 60. 0.0 0.00 20 BH-3-03 CONNAUGHERBOURNE -HIGGS #1 X 33160 0 0.0 0. 0.0 0.00 20 BH-3/6 6" BERNSTEIN LAT X 0 8.0 52800. 0.0 0.00 20 BH-4 8" BRLHART LAT X 0 8.6 36960. 0.0 0.00 20 BH-4-01 FARM TAP - PAT PATTERSON/ROBERT H.ARCHER X 401 0 0.0 0. 0.0 0.00 20 BH-4-01 GO-STL WL LN-BRLHRT LAT X 33870 0 4.5 15840. 4.5 100.00 20 BH-5-03 CONNMARLIN OIL #1 SUE X 53250 0 0.0 0. 0.0 0.00 20 BH-5-04 CONN HORIZON TX BRLHRT 1-6 HNCFRD X 53230 0 4.0 3000. 0.0 0.00

PHILLIPS PETROLEUM COMPANY, ET AL.

Decision and Order TRANSWESTERN GATHERING COMPANY ANNEX 1 TO SCHEDULE A PAGE 11 OF 11 SYS LINE SEG DESCRIPTION WH COMP LINE METER COMP. H/P PIPE DIAMETER PIPE LENGTH PIPE 2 DIAMETER PIPE 2 LENGTH 21 JC-1 CONN BARBOUR ENERGY CORP. #1 JARVIS X 33110 0 0.0 0. 0.0 0.00 21 JC-1 JOHN CREEK TU #747 X X 0 708 0.0 0. 0.0 0.00 21 JC-1/2 6" JOHN CREEK LAT 0 0 6.6 4382. 0.0 0.00 21 JC-2 JOHN CREEK CROSSOVER X 9238 0 0.0 0. 0.0 0.00 21 JC-2 MTR STA SUN O-MIN K #1 33700 0 4.5 4752. 0.0 0.00 21 JC-2 MTR STA MATT HLI A 35961 0 6.6 18480. 4.5 100.00 21 JC-2-01 4" LAT F/JACKSON #1 & K L WEST #1 X 0 4.5 13200. 0.0 0.00 21 JC-2-01 ARCHER #1-72 WELL LINE X 33730 0 4.5 317. 0.0 0.00 21 JC-2-02 PAN AM-BRAINARD #1 LN X 37380 0 4.5 5280. 0.0 0.00 21 JC-2-02 MATHEUS #1 4LN & EQ X 38000 0 4.5 6336. 0.0 0.00 21 JC-2-2 MATHEUS #1-80 WL LN X 35052 0 4.5 264. 0.0 0.00 21 JC-3 CLEMENT A1-14 WL LN X 35980 0 4.5 28512. 0.0 0.00 21 JC-3 CONN HORIZON #1 CONVERSE A OCHLTR X 52240 0 0.0 0. 0.0 0.00 21 JC-3-01 PAN AM-BECK B #1 LN X 35061 0 4.5 264. 0.0 0.00 21 LP-1-01 FLOWERS A1-5 WL LN X 35661 0 4.5 158. 0.0 0.00 21 LP-1-02 CONN #2 REED X 33690 0 4.5 4900. 0.0 0.00 21 LP-1-02 CONN ELEANOR REED WELL #1 X 35071 0 4.5 264. 0.0 0.00 21 LP-1-04 CONN AMOCO PRO #2 WB MCINTIRE "A" X 52240 0 4.5 1800. 0.0 0.00

Decision and Order 120 F.T.C.

ANNEX 2 TO SCHEDULE A (REVISED 06-13-95)

| RES SYS | FN | STATE | ACCT SYS | LOC | LOCATION DESCRIPTION | AREA | LINE NO | MAP REF | |---|---|---|---|---|---|---|---|---| | | | | | | SPEARMAN | | | | | 35 | GP | TX | 75 | 30101 | LIPS A8 WELL GATH/TEXAS | A | TG30101 | T-2 | | 35 | GP | TX | 75 | 30301 | JOHNSON #1 WELL GATH/TEXAS | A | TG30301 | T-2 | | 35 | GP | TX | 75 | 30401 | STATEX NITSCHKE #1 WELL GATH/TEXAS | A | TG30401 | T-2 | | 35 | GP | TX | 75 | 31001 | BULTMAN #1 WELL GATH/TEXAS | A | TG31001 | T-2 | | 35 | GP | TX | 75 | 32101 | LIPS B1 WELL GATH/TEXAS | A | TG32101 | T-2 | | 35 | GP | TX | 75 | 33201 | KNOX PIPKIN #1-28 WELL GATH/TEXAS | A | TG33201 | T-2 | | 35 | GP | TX | 75 | 38601 | KILEBREW WELL GATH/TEXAS | A | TG38601 | T-2 | | 35 | GP | TX | 75 | 43801 | FLOWERS #1 WELL GATH/TEXAS | A | TG43801 | T-2 | | 35 | GP | TX | 75 | 48001 | SPEARMAN 16IN SUCTION GATH/TEXAS | A | TG48001 | T-2 | | 35 | GP | TX | 75 | 53601 | FLOWERS #1/FLOWERS #1 TIE-IN | A | TG53601 | T-2 | | 35 | GP | TX | 75 | 61401 | LIPS RANCH GATH/TEXAS | A | TG61401 | T-2 | | 35 | GP | TX | 75 | 72301 | ROBERTS COUNTY #1 SUCTION LINE/TX | A | TG72301 | T-2 | | 35 | GP | TX | 75 | 73501 | ROBERTS CO #1 LINE/TEXAS | A | TG73501 | T-2 | | 35 | GP | TX | 75 | 81191 | HODGES #1-39 WELL GATHERING/TEXAS | A | TG81191 | T-2 | | 35 | GP | TX | G5 | 86901 | LIPS RANCH LATERAL | A | TG86901 | T-2 | | 35 | GP | TX | G5 | 87001 | LIPS RANCH TIE-OVER LINE | A | TG87001 | T-2 | | 35 | GP | TX | 75 | 24001 | NORTH OF SPEARMAN GATH/TEXAS | A | TG24001 | T-3 | | 35 | GP | TX | 75 | 24601 | MC CARTY A1 WELL GATH/TEXAS | A | TG24601 | T-3 | | 35 | GP | TX | 75 | 24701 | VERNON A1 WELL GATH/TEXAS | A | TG24701 | T-3 | | 35 | GP | TX | 75 | 31601 | KIRK #1 WELL GATH/TEXAS | A | TG31601 | T-3 | | 35 | GP | TX | 75 | 32801 | JACKSON A#1 UT/LT WELL GATH LINE/TX | A | TG32801 | T-3 | | 35 | GP | TX | 75 | 32901 | WILMETH WELL GATH/TEXAS | A | TG32901 | T-3 | | 35 | GP | TX | 75 | 33501 | IODC #1-44 WELL GATH/TEXAS | A | TG33501 | T-3 | | 35 | GP | TX | 75 | 34701 | IREX #1 WELL GATH/TEXAS | A | TG34701 | T-3 | | 35 | GP | TX | 75 | 35001 | YANDA ET AL WELL GATH/TEXAS | A | TG35001 | T-3 | | 35 | GP | TX | 75 | 35101 | KENNY WELL GATH/TEXAS | A | TG35101 | T-3 | | 35 | GP | TX | 75 | 38501 | CLEMENTINE-LEE WELL GATH/TEXAS | A | TG38501 | T-3 | | 35 | GP | TX | 75 | 38801 | JACKSON #1LT/BEULAH #1 TIE-IN GATH | A | TG38801 | T-3 | | 35 | GP | TX | 75 | 38501 | BRAINARD #3 WELL GATH/TEXAS | A | TG38901 | T-3 | | 35 | GP | TX | 75 | 40601 | MC INTIRE B #1-LT AND UT WELL GATH/ | A | TG40601 | T-3 | | 35 | GP | TX | 75 | 41201 | BEULAH #1 WELL GATH/TEXAS | A | TG41201 | T-3 | | 35 | GP | TX | 75 | 46101 | MATHEWS #2 WELL GATH/TEXAS | A | TG46101 | T-3 | | 35 | GP | TX | 75 | 60801 | COCKE#1C WELL GATH/TEXAS | A | TG60801 | T-3 | | 35 | GP | TX | 75 | 64201 | CROWE 7-58 WELL GATH/TEXAS | A | TG64201 | T-3 | | 35 | GP | TX | 75 | 86801 | BRACKEN ENERGY-ETLING #1-8 | A | TG86801 | T-3 |

ITEM IN BOLD REFLECTS A PORTION OF THE TOTAL LINE NO. REFERENCED AS TG24001 The facilities for line no. TG24001 include only the following facilities: Buckner A1 wellhead facilities and approximately 3.4 miles of 4-inch pipeline from well connection in section 20 to side valve on the 10-inch TG24001 in section 27; and approximately 6.5 miles of 4-inch pipeline from a side valve on TG64201 in section 25 to a side valve on the 10-inch TG24001 in section 30 (including well facilities for G1, G1A, G2, & G3).

PHILLIPS PETROLEUM COMPANY, ET AL. 1153

1129 Decision and Order

ANNEX 2 TO SCHEDULE A (REVISED 06-13-95)

| RES SYS | FN | STATE | ACCT SYS | LOC | LOCATION DESCRIPTION | AREA | LINE NO | MAP REF | | | | | | | FULLER | | | | | 37 | GP | TX | 55 | 53401 | FISHER #1 WELL GATH/TEXAS | A | TG53401 | T-3 | | 37 | GP | TX | 55 | 53701 | R WAMBLE #1 | A | TG53701 | T-3 | | 37 | GP | TX | 55 | 53801 | PEARL #1 | A | TG53801 | T-3 | | 37 | GP | TX | 55 | 53901 | BOARD #1 WELL GATH/TEXAS | A | TG53901 | T-3 | | 37 | GP | TX | 55 | 59201 | GENE CLUCK #1 WELL GATHERING LINE/T | A | TG59201 | T-3 | | RES SYS | FN | STATE | ACCT SYS | LOC | LOCATION DESCRIPTION | AREA | LINE NO | MAP REF | | | | | | | PERRYTON | | | | | 79 | GP | OK | 44 | 16701 | GEORGE MOUNTS WELL GATH/OKLAHOM | A | OG16701 | O-13 | | 79 | GP | OK | 44 | 17801 | SIMS #1 LATERAL GATH/OKLAHOMA | A | OG17801 | O-13 | | 79 | GP | OK | 44 | 24001 | WILSON #1 WELL GATH/OKLAHOMA | A | OG24001 | O-13 | | 79 | GP | OK | 44 | 27301 | PALMER #1 WELL GATH/OKLAHOMA | A | OG27301 | O-13 | | 79 | GP | OK | 44 | 31901 | PITTMAN #1 WELL/GATH/OKLAHOMA | A | OG31901 | O-13 | | 79 | GP | OK | 44 | 47201 | BECKWITH 1-22 WELL GATHERING/OKLA | A | OG47201 | O-13 | | 79 | GP | OK | 44 | 50501 | NAYLOR #1 WELL GATH/OKLA | A | OG50501 | O-13 | | 79 | GP | TX | 71 | 21301 | CUTTER #1 WELL GATH/TEXAS | A | TG21301 | T-2 | | 79 | GP | TX | 71 | 21401 | PHISGODA #1 WELL GATH/TEXAS | A | TG21401 | T-2 | | 79 | GP | TX | 71 | 21501 | ORINGDERFF WELL GATH/TEXAS | A | TG21501 | T-2 | | 79 | GP | TX | 71 | 21601 | WRIGHT #1 WELL GATH/TEXAS | A | TG21601 | T-2 | | 79 | GP | TX | 71 | 21701 | SCHOENHALS #1 WELL | A | TG21701 | T-2 | | 79 | GP | TX | 71 | 21801 | GEORGE MOUNTS #1 WELL GATH/TEXAS | A | TG21801 | T-2 | | 79 | GP | TX | 71 | 27301 | PALMER #1 WELL GATH LINE/TEXAS | A | TG27301 | T-2 | | 79 | GP | TX | 71 | 28401 | GEORGE #1 WELL GATH/TEXAS | A | TG28401 | T-2 | | 79 | GP | TX | 71 | 28801 | LE MASTER #1 WELL GATH/TEXAS | A | TG28801 | T-2 | | 79 | GP | TX | 71 | 30801 | ODELL LA MASTER WELL GATH/TEXAS | A | TG30801 | T-2 | | 79 | GP | TX | 71 | 32301 | GREENE #1 WELL | A | TG32301 | T-2 | | 79 | GP | TX | 71 | 32601 | SIMS #1-36L WELL GATH/TEXAS | A | TG32601 | T-2 | | 79 | GP | TX | 71 | 34301 | MOYES-GEORGE #1 WELL GATH/TEXAS | A | TG34301 | T-2 | | 79 | GP | TX | 71 | 38701 | PERRY #1 WELL GATH/TEXAS | A | TG38701 | T-2 | | 79 | GP | TX | 71 | 39201 | PERRY B1 WELL GATH/TEXAS | A | TG39201 | T-2 | | 79 | GP | TX | 71 | 71701 | SCHULTZ #1 WELL GATHERING/TEXAS | A | TG71701 | T-2 | | 79 | GP | TX | 71 | 80031 | BATMAN #1-21 SIDE VALVE/TEXAS | A | TG80031 | T-2 | | 79 | GP | TX | 71 | 80751 | TANDY #1 WELL GATHERING LINE/TX | A | TG80751 | T-2 |

Advisory Opinion 120 F.T.C.

Re: The applicability of the Telemarketing Sales Rule -- the Telemarketing Rule generally imposes no restrictions on the legitimate fundraising activities of nonprofit organizations.

[American Telephone Fundraisers Association, Inc., P/R # ]

December 15, 1995

Dear Mr. Paper:

This letter responds to your request on behalf of the American Telephone Fundraisers Association, Inc. for an advisory opinion concerning the applicability of the Telemarketing Sales Rule, 16 CFR Part 310, to fundraising telephone calls made by for-profit companies on behalf of nonprofit organizations. The Association seeks advice on the scope of the Rule's coverage as it may apply to fundraising activities of Association members that involve the use of the telephone.

Although the Telemarketing Sales Rule does not apply to entities over which the Commission lacks jurisdiction, it does apply to forprofit telemarketers acting on behalf of such entities. The Commission's view, however, is that telephone fundraising activities on behalf of nonprofit organizations will constitute a "plan, program or campaign which is conducted to induce the purchase of goods or services." As discussed below, this means that the Rule ordinarily imposes no restrictions on legitimate fundraising activities undertaken on behalf of nonprofit organizations.

The Telemarketing Act states that, "[N]o activity is outside the jurisdiction of [the FTC] Act shall be affected by this Act." Section 6(a) of the Telemarketing Act, Pub L. No. 103-297 (to be codified at 15 U.S.C. 6105(a)). Therefore, because the FTC Act does not apply to any entity that is not "organized to carry on business for its own profit or that of its members," neither does the Telemarketing Act or the Telemarketing Sales Rule. See 15 U.S.C. 44; Community Blood Bank v. FTC, 405 F.2d 1011 (8th Cir. 1969). The Rule, like the FTC Act, however, does apply to a company acting for profit even when it is providing services to a nonprofit organization. Statement of Basis and Purpose, Telemarketing Sales Rule, 60 Fed. Reg. 43,842, at 43,843 (Aug. 23, 1995).

AMERICAN TELEPHONE FUNDRAISERS ASSOCIATION, INC.1155

1154 Advisory Opinion

The Rule's applicability to fundraising telephone calls made by for-profit companies depends on whether such calls fall within the definition of "telemarketing." The Rule defines telemarketing as a "plan, program or campaign which is conducted to induce the purchase of goods or services." 16 CFR 310.2(u). This language is identical to the pertinent section of the Telemarketing Act. Section 7(4) (to be codified at 15 U.S.C. 6106(4)). Thus, the critical question in determining coverage under the Rule is whether a call is conducted to induce a "purchase of goods of services."

The Commission's understanding is that telephone fundraising on behalf of nonprofit organizations is not, in fact, typically undertaken as part of a "plan, program or campaign . . . conducted to induce the purchase of goods or services" (emphasis added). This is true despite the fact that fundraising campaigns often involve the incidental provision of goods or services, such as premiums, memberships, or other incentives for donations.¹ Legitimate fundraising activity is conducted primarily to elicit donations and not to induce purchases. Even when donors receive gifts, premiums, memberships or other incentives, representatives of the non-profit sector have advised the Commission that legitimate charities generally do not conduct telephone solicitations in which the stated or actual value of goods or services offered exceeds the amount of a donor's payment. The Commission's enforcement experience suggests that fraudulent telemarketers, in contrast, obtain money from consumers by promising goods or services with inflated values as consideration for smaller "donations."

Thus, the Commission concludes that only if goods or services offered in a covered telemarketing telephone call as an inducement for the consumer's payment have an actual or claimed value equal to or greater than the amount of the donor's payment, is such a call conducted for the purpose of inducing a purchase. Consequently, only calls of that nature would fall within the definition of "telemarketing" and be subject to the applicable requirements of the Telemarketing Sales Rule. The Commission's construction of the term "telemarketing," as defined in the Act and the Rule, is fully consistent with the legislative purpose of the Telemarketing Act. The

¹ Section 170(f)(8) of the Internal Revenue Code provides that contributions of more than $250 are eligible charitable deductions for the donor only where the donee organization has provided a description and good faith estimate of the value of any goods or services provided as consideration, in whole or in part, for the donation. 26 U.S.C. 170(f)(8). In addition, a taxpayer may claim a deduction only for the difference between a payment to a charitable organization and the market value of any benefit received in return. 3 Fed. Tax Serv. (CCH) A:17-41[4] (1995).

Advisory Opinion 120 F.T.C.

Commission's interpretation permits efficient interdiction of fraud without encumbering the legitimate use of telemarketing by sellers of good or services or by non-profit entities. In sum, the Telemarketing Rule generally imposes no restrictions on the legitimate fundraising activities of nonprofit organizations.

As is true of all Commission advisory opinions, this letter is limited to the proposed conduct described in the request. The Commission retains the right to reconsider the questions involved, and with notice to the requesting party in accordance with Section 1.3(b) of the Commission's Rules of Practice, 16 CFR 1.3(b), to rescind or revoke its opinion should be proposed conduct result in significant consumer injury, the purposes of the conduct be found not to be legitimate, or the public interest so require.

TABLE OF COMMODITIES*

DECISIONS AND ORDERS

Page

Acupressure devices ........................................ 278 Air cleaning products .................................... 649, 678 Amino acids ................................................ 206 Athletic footwear ........................................... 20 Automobiles ............................................... 1032

Beverages .................................................. 973 Brokerage firms ............................................ 882 Business opportunities .................................... 1078

Cable television services ................................... 846 Cholesterol reducing products ............................... 893 Computer software .......................................... 928 Consumer credit reports .................................... 577 Consumer credit transactions ............................... 600 Credit ........................ 334, 353, 372, 392, 411, 430, 449, 470, 489, 509, 528, 548, 577, 600 Credit sales .............................................. 600

Dating service franchises .......... 334, 353, 372, 392, 411, 430, 449,470, 489, 509, 528, 548 Designers ................................................. 817 Desserts .................................................. 312 Dietary supplements ............................... 206, 704, 793 Diet products ............................................. 206 Doctors ................................................... 567 Drugs ....................................... 243, 793, 1010

Entertainment graphics software ............................. 928 Expositions .............................................. 1078

Fashion designers ......................................... 817 Fertility services ........................................ 696

* Commodities involved in dismissing or vacating orders have italicized page references.

Page

Fertilizers .................................................619 Foods .......................................................973 Footwear .....................................................20 Franchises .................... 334, 353, 372, 392, 411, 430, 449, 470, 489, 509, 528, 548, 1078 Franchise trade shows ......................................1078 Frozen desserts ............................................312

Gas pipelines .............................................1129 Graphics software ..........................................928

Hair growth products .......................................206 Health care providers ......................................567 Herbal extracts ............................................206 Horseshoe nails ............................................865 Hospitals .......................................732, 743, 949

Infertility treatment services ...............................696

Juices .....................................................973

Modeling agencies ..........................................817

Nails ......................................................865 News transcripts ...............................1037, 1045 Nutritional supplements ........................206, 704, 793

Pharmaceutical products ............................243, 1010 Physicians .................................................567 Pipelines .................................................1129 Printing plants .............................................36 Printing services ...........................................36 Psychiatric hospital services ...............................949

Real estate brokers .........................................882 Real estate services ........................................882

Shoes .......................................................20 Smoking cessation products/programs ................264, 793 Supplements ...................................206, 704, 793

TABLE OF COMMODITIES 1159

Page

Trade shows ......................................... 1078 Transcripts ..................................... 1037, 1045 Trucks .............................................. 1032

Video dating service franchises .... 334, 353, 372, 392, 411, 430, 449, 470, 489, 509, 528, 548 Vitamins .............................................. 206

Weight loss products/programs ..... 206, 264, 278, 704, 829, 893

INDEX* ----------

DECISIONS AND ORDERS

Page

Acquiring Corporate Stock or Assets:

Acquiring corporate stock or assets ........ 36, 243, 619, 732, 743, 865, 928, 949, 1010, 1129 Federal Trade Commission Act. . . . . . . . . . . . . 36, 243, 619, 732, 743, 865, 928, 949, 1010, 1129 Arrangements, connections, dealings, etc. . . . . . . . . . . . . . . . . . . 243, 928 Joint ventures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 743 Advertising Falsely or Misleadingly:

Advertising falsely or misleadingly . . . . . . . 206, 264, 278, 312, 600, 649, 678, 704, 793, 829, 893, 1078 Knowingly by advertising agent . . . . . . . . . . . . . . . . . . . . . . . . 278, 829 Business status, advantages or connections . . . . . . . . . . . . . . . . . . . . . . . . 696 Endorsement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 704 Reputation, success, or standing . . . . . . . . . . . . . . . . . . . . . . . . . . 696 Comparative data or merits . . . . . . . . . . . . . . . . . . . 264, 649, 678, 696, 829 Competitors' products . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 649, 678 Content . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 312 Earnings and profits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1078 Endorsements, approval and testimonials . . . . . . . . . . . 312, 704, 829, 893 Financing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 600 Formal regulatory and statutory requirements . . . . . . . . . . . . . . . . . . . . . . 600 Truth in Lending Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 600 Government approval, action, connection or standards . . . . . . . 264, 278 Government endorsement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 264 In general . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 264 Tests and investigations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 278 Opportunities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1078 Patent or other rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 278 Prices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 600 Government requirements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 600 Terms and conditions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 600 Truth in Lending Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 600 Qualities or properties of product or service . . . . . . . . 206, 264, 278, 312, 649, 678, 704, 793, 893

____________________ * Covering practices and matters involved in Commission orders. References to matters involved in vacating or dismissing orders are indicated by italics.

Page

Auxiliary, improving, or supplementary . . . . . . . . . 206, 278, 793 Cleansing, purifying . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 649, 678 Cosmetic or beautifying . . . . . . . . . . . . . . . . . . . . . . . . . . . 206, 793 Dustproof . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 649, 678 Medicinal, therapeutic, healthful, etc. . . . . . . . . 206, 264, 649, 678, 704, 793, 893 Non-irritating . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 649, 678 Nutritive . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 312, 704, 793 Preventive or protective . . . . . . . . . . . . . . . . . . . . . . . 649, 678, 793 Reducing, non-fattening, low-calorie, etc. . 206, 264, 278, 704, 893 Rejuvenating . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 206 Renewing, restoring . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 206, 793 Sanitary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 649, 678 Quality of product or service . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 829 Results . . . . . . . . . . . . . . . 206, 264, 278, 649, 678, 704, 793, 829, 893 Safety . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 649, 678 Product . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 649, 678 Scientific or other relevant facts . . . . . . . . . . . . 206, 264, 278, 312, 649, 678, 704, 793, 829, 893 Success, use or standing . . . . . . . . . . . . . . . . . . . . . 264, 696, 829, 1078 Surveys . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1078 Tests and investigations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 893, 1078 Claiming or Using Endorsements or Testimonials Falsely or Misleadingly:

Claiming or using endorsements or testimonials falsely or misleadingly . . . . . . . . . . . . . . . . . . . . . . . . . . . 312, 704, 829, 893 Doctors and medical profession . . . . . . . . . . . . . . . . . . . . . . . . . . 704 Users, in general . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 829, 893 Coercing and Intimidating:

Competitors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 817, 1037, 1045 Customers or prospective customers . . . . . . . . . . . . . . . . . . 1037, 1045 Distributors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20 Members . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 817 Collecting, Assembling, Furnishing or Utilizing Consumer Reports: Collecting, assembling, furnishing or utilizing consumer reports . . . 577 Confidentiality, accuracy, relevancy, and proper utilization . . . 577 Fair Credit Reporting Act . . . . . . . . . . . . . . . . . . . . . . . . . . . 577 Formal regulatory and/or statutory requirements . . . . . . . . . . . . . 577 Fair Credit Reporting Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 577 Combining or Conspiring:

Combining or conspiring . . . 20, 567, 817, 846, 882, 1032, 1037, 1045 To boycott seller-suppliers . . . . . . . . . . . . . . . . . . . . . . . . . . . 817, 1032

INDEX 1163

Page

To control allocations and solicitation of customers 846, 882, 1037, 1045 To control marketing practices and conditions ...... 567, 817, 846, 882, 1032, 1037, 1045 To discriminate unfairly or restrictively in general ................ 882 To eliminate competition in conspirators' goods ........ 567, 817, 846, 882, 1037, 1045 To enforce or bring about resale price maintenance .... 20, 1037, 1045 To enhance, maintain or unify prices ........ 20, 567, 817, 1037, 1045 To fix prices .............................. 20, 567, 817, 1037, 1045 To restrain or monopolize trade . 567, 817, 846, 882, 1032, 1037, 1045 To terminate or threaten to terminate contracts, dealings, franchises, etc. .......................... 20, 567, 1032, 1037, 1045 Corrective Actions and/or Requirements:

Corrective actions and/or requirements ......... 20, 206, 243, 264, 278, 312, 334, 353, 372, 392, 411, 430, 449, 470, 489, 509, 528, 548, 567, 600, 619, 649, 678, 696, 704, 732, 743, 793, 817, 829, 846, 865, 882, 893, 928, 949, 973, 1010, 1032, 1037, 1045, 1078, 1129 Corrective advertising .............. 206, 264, 278, 312, 649, 678, 704, 829, 893, 973 Destruction of records and/or data ........................... 732 Disclosures ................ 20, 243, 264, 312, 334, 353, 372, 392, 411, 430, 449, 470, 489, 509, 528, 548, 600, 704, 973, 1078 Formal regulatory and/or statutory requirements .... 334, 353, 372, 392, 411, 430, 449, 470, 489, 509, 528, 548, 577, 600 Truth in Lending Act ........... 334, 353, 372, 392, 411, 430, 449, 470, 489, 509, 528, 548, 600 Fair Credit Reporting Act ............................... 577 Grant license(s) ........................................... 865 Maintain records 206, 243, 264, 278, 312, 567, 577, 600, 619, 649 678, 696, 704, 732, 743, 793, 817, 829, 846, 865, 882, 893, 928, 949, 973, 1010, 1032, 1037, 1045, 1078, 1129 Advertising substantiation ........... 206, 278, 649, 678, 696, 793, 829, 973, 1078 Complaints ........................................... 577 Correspondence ....... 206, 243, 264, 278, 312, 334, 353, 372, 392, 411, 430, 449, 470, 489, 509, 528, 548, 567, 577, 600, 649, 678, 696, 704, 793, 817, 829, 846, 882, 893, 973, 1032, 1037, 1045, 1078 Records, in general ..206, 243, 264, 278, 312, 334, 353, 372, 392, 411, 430, 449, 470, 489, 509, 528, 548, 567, 577, 619, 649, 678, 696, 704, 732, 743, 793, 817, 829, 846, 865, 893, 928, 949, 973, 1010, 1032, 1037, 1045, 1078, 1129

Page

Maintain means of communication ........ 20, 206, 243, 264, 278, 312, 334, 353, 372, 392, 411, 430, 449, 470, 489, 509, 528, 548, 567, 577, 600, 619, 649, 678, 696, 704, 732, 743, 793, 817, 829, 846, 865, 882, 893, 928, 949, 973, 1010, 1032, 1037, 1045, 1078, 1129 Recall of merchandise, advertising material, etc. .............. 973 Refunds, rebates and/or credits ........... 278, 334, 353, 372, 392, 411, 430, 449, 470, 489, 509, 528, 548, 973 Release of general, specific, or contractual constrictions, requirements, or restraints .. 20, 567, 743, 882, 1032, 1037, 1045 Restitution ............................................. 206, 893 Cutting Off Access to Customers or Market: Hindering salesmen .............................................. 882 Interfering with advertising mediums ........................ 882, 1032 Cutting Off Supplies or Service:

Advertising contracts .......................................... 1032 Threatening withdrawal of patronage ............................ 1032 Dismissal Orders: ........................................ 1, 36, 1003 Failing To Comply with Affirmative Statutory Requirements: Failing to comply with affirmative statutory requirements ......... 577 Fair Credit Reporting Act .................................... 577 Failing to Maintain Records:

Failing to maintain records ...................................... 577 Accurate .................................................... 577 Formal regulatory and/or statutory requirements ............... 577 Interlocutory Orders: .............................. 1, 4, 1003, 1052 Maintaining Resale Prices:

Combination .................................................... 1037 Misbranding or Mislabeling:

Advertising and promotion ........................................ 893 Misrepresenting Oneself and Goods:

-Business status, advantages or connections: Financing activities .......................................... 600 Government endorsement, sanction or sponsorship ............ 264 Reputation, success or standing .............................. 696 -Goods:

Comparative data or merits ......... 264, 278, 312, 649, 678, 829 Content .................................................... 312 Earnings and profits ........................................ 1078 Endorsements ........................... 278, 312, 704, 829, 893 Formal regulatory and statutory requirements .................. 600 Truth in Lending Act .................................... 600 Government inspection ....................................... 278

INDEX

Page

Opportunities in product or service ...................... 1078 Qualities or properties ............ 206, 264, 278, 312, 649, 678, 704, 793, 829, 893 Results .............. 206, 264, 278, 649, 678, 704, 793, 829, 893 Scientific or other relevant facts ..... 206, 264, 278, 312, 649, 678, 704, 793, 829, 893 Success, use, or standing .................... 264, 696, 829, 1078 Surveys .............................................. 1078 Terms and conditions ...................................... 600 Sales contract .......................................... 600 Tests, purported .............................. 278, 893, 1078 -Prices:

Government requirements .................................... 600 Terms and conditions ...................................... 600 Truth in Lending Act ...................................... 600 Modified Orders: .................... 597, 613, 944, 1004, 1069 Neglecting, Unfairly or Deceptively, To Make Material Disclosure: Content .................................................. 312 Formal regulatory and statutory requirements ...... 334, 353, 372, 392, 411, 430, 449, 470, 489, 509, 528, 548, 600 Truth in Lending Act .................... 334, 353, 372, 392, 411, 430, 449, 470, 489, 509, 528, 548, 600 Qualities or properties ...................................... 312 Scientific or other relevant facts ............................ 312 Terms and conditions ............... 334, 353, 372, 392, 411, 430, 449, 470, 489, 509, 528, 548, 600 Truth in Lending Act ..... 334, 353, 372, 392, 411, 430, 449, 470, 489, 509, 528, 548, 600 Opinions, Statements By Commissioners: .. I, 4, 20, 30, 33, 36, 206, 243, 597, 619, 732, 829, 846, 858, 928, 973, 1052 Set Aside Orders: .............. 18, 30, 33, 593, 595, 617, 647, 790, 814, 858, 879, 926, 947 Unfair Methods or Practices, etc., Involved in this Volume: Acquiring Corporate Stock or Assets Advertising Falsely or Misleadingly Claiming or Using Endorsements or Testimonials Falsely or Misleadingly Coercing and Intimidating Collecting, Assembling, Furnishing or Utilizing Consumer Reports Combining or Conspiring Corrective Actions and/or Requirements Cutting Off Access to Customers or Market Cutting Off Supplies or Service

Page

Failing To Comply with Affirmative Statutory Requirements Failing To Maintain Records Maintaining Resale Prices Misbranding or Mislabeling Misrepresenting Oneself and Goods -Business Status, Advantages or Connections -Goods -Prices Neglecting, Unfairly or Deceptively, To Make Material Disclosure Using Deceptive Techniques in Advertising Using Deceptive Techniques in Advertising: Using deceptive techniques in advertising .............. 312, 600, 893 Labeling depictions .................................. 312, 600 Television depictions ...................................... 893

ISBN 0-16-049492-3 90000 9 780160 494925

Findings, Opinions, and Orders

IN THE MATTER OF

THE HOSPITAL BOARD OF DIRECTORS OF LEE COUNTY

Docket 9265. Interlocutory Order, July 7, 1995

ORDER SUA SPONTE DISMISSING PROCEEDING

On April 29, 1994, the Commission filed an action in federal district court under Section 13(b) of the FTC Act, 15 U.S.C. 53(b), for a preliminary injunction, pending completion of an administrative proceeding, to prevent respondent, The Hospital Board of Directors of Lee County d/b/a/ Lee Memorial Hospital ("The Hospital Board"), from acquiring the assets of Cape Coral Hospital from West Coast Health System, Inc. and Cape Coral Medical Center, Inc. (collectively "Cape Coral"). FTC v. Hospital Board of Directors of Lee County, 1994-1 Trade Cas. (CCH) ¶ 70,593 (M.D. Fla. 1994). Shortly thereafter, on May 6, 1994, the Commission issued an administrative complaint charging that the acquisition was likely substantially to lessen competition among acute care hospitals in Lee County, Florida, in violation of Section 7 of the Clayton Act, 15 U.S.C. 18.

Although the district court initially granted the Commission's request for a temporary restraining order, the court subsequently dissolved the restraining order and dismissed the Commission's complaint for preliminary relief on state action grounds, finding that The Hospital Board's acquisition of its competitor was pursuant to a clearly articulated state policy expressed in The Hospital Board's enabling legislation. 1994-1 Trade Cas. at 72,220. Acting in response to an emergency motion by the Commission, the United States Court of Appeals for the Eleventh Circuit stayed the district court's order dissolving the temporary restraining order pending an expedited appeal. On November 30, 1994, the appellate court affirmed the district court's decision, finding the requisite clearly articulated state policy in The Hospital Board's special enabling legislation and in the unique historical facts surrounding 1987 amendments to the enabling legislation. FTC v. Hospital Board of Directors of Lee County, 38 F.3d 1184, 1191-92 (11th Cir. 1994).