Â鶹´«Ã½

UNITED STATES OF AMERICA
BEFORE FEDERAL TRADE COMMISSION

In the Matter of

The Williams Companies, Inc., a corporation.

File No. 981-0076

AGREEMENT CONTAINING CONSENT ORDER

The Â鶹´«Ã½ Trade Commission (“Commission”), having initiated an investigation of the proposed acquisition of the voting securities of MAPCO Inc. (“MAPCO”) by The Williams Companies, Inc. (“Williams”), and it now appearing that Williams, hereinafter sometimes referred to as “Respondent,” 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 Respondent with violations of Section 5 of the Â鶹´«Ã½ Trade Commission Act, as amended, 15 U.S.C. is willing to enter into an agreement containing an order to lease or divest certain assets and providing for other relief:

IT IS HEREBY AGREED by and between proposed respondent, by its duly authorized officers and attorneys, and counsel for the Commission that:

1. Proposed respondent Williams 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 located at One Williams Center, Tulsa, OK 74172.
2. Proposed respondent admits all the jurisdictional facts set forth in the draft of complaint here attached.
3. Proposed respondent waives:

a. any further procedural steps;

b. the requirement that the Commission's decision contain a statement of findings of fact and conclusions of law;

c. all rights to seek judicial review or otherwise to challenge or contest the validity of the Order entered pursuant to this agreement; and

d. any claim under the Equal Access to Justice Act.

4. Proposed respondent shall submit, within thirty (30) days of the date this agreement is signed by proposed respondent, an initial report, pursuant to § 2.33 of the Commission’s Rules, signed by the proposed respondent setting forth in detail the manner in which the proposed respondent will comply with Paragraphs II through VII and IX of the Order when and if entered. Such report will not become part of the public record unless and until the accompanying agreement and Order are accepted by the Commission for public comment.
5. This agreement shall not become part of the public record of the proceeding unless and until it is accepted by the Commission. If this agreement is accepted by the Commission it, together with the draft of Complaint contemplated thereby, will be placed on the public record for a period of sixty (60) days and information in respect thereto publicly released and early termination of the waiting period will be granted. The Commission thereafter may either withdraw its acceptance of this agreement and so notify the proposed respondent, in which event it will take such action as it may consider appropriate, or issue and serve its complaint (in such form as the circumstances may require) and decision, in disposition of the proceeding.
6. This agreement is for settlement purposes only and does not constitute an admission by proposed respondent that the law has been violated as alleged in the draft of complaint here attached, or that the facts as alleged in the draft complaint, other than jurisdictional facts, are true.
7. This agreement contemplates that, if it is accepted by the Commission, and if such acceptance is not subsequently withdrawn by the Commission pursuant to the provisions of § 2.34 of the Commission's Rules, the Commission may, without further notice to the proposed respondent, (1) issue its complaint corresponding in form and substance with the draft of Complaint here attached and its decision containing the following Order to divest in disposition of the proceeding, (2) make information public with respect thereto, and (3) grant early termination of the waiting period. When so entered, the Order shall have the same force and effect and may be altered, modified or set aside in the same manner and within the same time provided by statute for other orders. The Order shall become final upon service. Delivery by the U.S. Postal Service of the complaint and decision containing the agreed-to order to proposed respondent's address as stated in this agreement shall constitute service. Proposed respondent waives any right it may have to any other manner of service. The complaint may be used in construing the terms of the Order, and no agreement, understanding, representation, or interpretation not contained in the Order or the agreement may be used to vary or contradict the terms of the Order.
8. By signing this agreement containing consent order, proposed respondent represents that it can accomplish the full relief contemplated by this agreement, and that all parents, subsidiaries, and affiliates necessary to effectuate the full relief contemplated by this agreement are parties to the agreement and are bound thereby as if they had signed this agreement and were made parties to this proceeding and to the Order. Williams warrants that it and MAPCO, as the case may be, have good title to all of the assets necessary to effectuate the full relief contemplated by this agreement.
9. Proposed respondent has read the proposed complaint and Order contemplated hereby. Proposed respondent understands that once the Order has been issued, it will be required to file one or more compliance reports showing that it has fully complied with the Order. Proposed respondent further understands that it may be liable for civil penalties in the amount provided by law for each violation of the Order after it becomes final. Proposed respondent agrees to be bound by the terms of the proposed Order pending its final approval by the Commission.

ORDER

I.

IT IS ORDERED that, as used in this Order, the following definitions shall apply:

A. “Williams” means The Williams Companies, Inc., its directors, officers, employees, agents, representatives, predecessors, successors, and assigns; its joint ventures, subsidiaries, divisions, groups and affiliates controlled by The Williams Companies, Inc., and the respective directors, officers, employees, agents, representatives, successors, and assigns of each.

B. “MAPCO” means MAPCO Inc., its directors, officers, employees, agents, representatives, predecessors, successors, and assigns; its joint ventures, subsidiaries, divisions, groups and affiliates controlled by MAPCO Inc., and the respective directors, officers, employees, agents, representatives, successors, and assigns of each.

C. “Commission” means the Â鶹´«Ã½ Trade Commission.

D. “Competing Pipeline” means any existing, planned or proposed pipeline owned or operated by anyone other than Williams or MAPCO that transports, or is intended to transport, Raw Mix from Gas Processing Plants in Wyoming, directly or indirectly, to any Fractionation Plant located in Kansas, Oklahoma, New Mexico or Texas.

E. “Connection Agreement” means an agreement between Williams or MAPCO and a Competing Pipeline that provides for, among other things, the connection of a pipeline and the associated installation of valves, measurement apparatus, flanges and other devices necessary to deliver Raw Mix from a Williams Wyoming Gas Processing Plant to a Competing Pipeline and to measure the volume of such Raw Mix.

F. “Fractionation Plant” means a facility that separates Raw Mix into its individual components.

G. “Gas Processing Plant” means any facility that separates Raw Mix from methane.

H. “Kinder Morgan” means Kinder Morgan Operating L.P., its directors, officers, employees, agents, representatives, predecessors, successors, and assigns; its subsidiaries, divisions, groups and affiliates controlled, directly or indirectly, by Kinder Morgan, and the respective directors, officers, employees, agents, representatives, successors, and assigns of each.

I. “KM Agreement” means the Pipeline Lease and Operating Agreement between Kinder Morgan and Williams, dated March 3, 1998, and attached hereto as Confidential Exhibit A.

J. “KM Terminals” means the propane terminals owned or operated by Kinder Morgan at Des Moines, Clear Lake and Iowa City, Iowa and Tampico and Rockford, Illinois, and all tangible and intangible assets used in operating said terminals, that receive, or that can receive, propane in whole or in part from the Williams NGL System.

K. “Propane” means a colorless paraffinic hydrocarbon product with a chemical formula of C3H8 that is derived either as a by-product of petroleum refining or from natural gas processing, and that can be used for heating, cooking, agricultural crop drying, as a petrochemical feedstock, and for other applications.

L. “Proposed Acquisition” means the proposed acquisition of the voting securities of MAPCO by Williams.

M. “Raw Mix” means a mixture of natural gas liquids, consisting of at least two or more of the following components: propane, ethane, butanes, and pentanes-plus.

N. “Respondent” means “Williams.”

O. “Terminaling” means all services performed by a facility that provides temporary storage of propane received from a pipeline and the redelivery of propane from storage facilities into transport or tanker trucks.

P. “Williams NGL System” means the assets owned by Williams comprising the following pipeline segments: Plattsburg, Missouri to Des Moines, Iowa; Des Moines, Iowa to Clear Lake, Iowa; Des Moines, Iowa to Iowa City, Iowa; and Iowa City to Clinton, Iowa/Middlebury Junction, Illinois.

Q. "Williams Wyoming Gas Processing Plant" means any Gas Processing Plant owned or operated, in whole or in part, by Williams or MAPCO in the State of Wyoming, including plants located at or near Opal and Echo Springs, Wyoming.

II.

IT IS FURTHER ORDERED that:

A. Respondent shall comply with the KM Agreement, including, but not limited to, the provision of pipeline capacity to Kinder Morgan to service the KM Terminals pursuant to the terms and conditions of the KM Agreement.

B. Respondent shall not cancel the KM Agreement for any reason except pursuant to the provisions of Paragraph 4.5 thereof. If Respondent determines to cancel the KM Agreement pursuant to such provisions, Respondent shall provide the Commission with at least ninety (90) days’ prior written notice of such cancellation. At the time of such notice, Respondent shall designate, subject to the approval of the Commission, a proposed successor to Kinder Morgan's rights and interests under the KM Agreement. If no successor in interest has been approved by the time of such cancellation, the Commission may appoint a trustee pursuant to Paragraph V. of this Order.

C. Notwithstanding Section 16.1 of the KM Agreement, if Kinder Morgan sells any of the KM Terminals, Respondent shall, not later than thirty (30) days after such sale, enter into a pipeline capacity lease and operating agreement with the acquirer of such KM Terminals that is substantially identical to the KM Agreement with respect to such terminals, and consistent with the purpose of this Order. Respondent shall provide a copy of such agreement to the Commission not less than ten (10) days prior to its execution.

D. Until the date at which all of Respondent's obligations under the KM Agreement expire, Respondent shall not, without prior approval of the Commission, make or agree to any modifications with respect to any term or terms of the KM Agreement.

E. Respondent shall provide to the Commission, no later than thirty (30) days after their receipt or transmittal, copies of all communications between Kinder Morgan, or its successor in interest, and Respondent regarding changes in or alleged breaches of the KM Agreement.

F. The purpose of this Paragraph II. of this Order is to ensure Kinder Morgan’s access to pipeline capacity, as set forth in the KM Agreement, to prevent the elimination of Kinder Morgan as a competitor in the transportation and terminaling of propane at the KM Terminals, and to remedy the lessening of competition in the transportation and terminaling of propane in Illinois, Iowa, Wisconsin, and Minnesota resulting from the acquisition as alleged in the Commission's complaint.

III.

IT IS FURTHER ORDERED that:

A. Within thirty (30) days of receipt of a written request from a Competing Pipeline, Respondent shall enter into a Connection Agreement for the connection of such Competing Pipeline to each Williams Wyoming Gas Processing Plant. The terms and conditions of such Connection Agreement shall be the terms customarily used by such Competing Pipeline to connect to other Gas Processing Plants. If the Respondent and a Competing Pipeline are unable to agree on the terms and conditions of a Connection Agreement, the Competing Pipeline may elect to cause the issue to be submitted to outside, independent, binding arbitration in accordance with the procedures in Exhibit B hereto. Respondent shall provide the Commission with a copy of each written request from a Competing Pipeline within ten (10) days after Respondent receives such request.

B. Respondent shall connect each Williams Wyoming Gas Processing Plant that is the subject of a Connection Agreement to a Competing Pipeline under the terms and conditions established by such Connection Agreement. All steps necessary to effectuate such connection shall be accomplished by Respondent within 180 days after the execution of such Connection Agreement.

C. From the date on which the agreement is signed until the earlier of (a) three days after the Commission rejects this agreement or (b) 120 days after the date this Order becomes final, Respondent shall not enter into any new or renewed agreement to process natural gas at any Williams Wyoming Gas Processing Plant pursuant to which the producer or seller of natural gas gives up its right, for a term of more than one year, to sell or otherwise dispose of its Raw Mix.

D. The purpose of this Paragraph III. of this Order is to ensure that the acquisition does not reduce the likelihood that a Competing Pipeline may be constructed to service Gas Processing Plants in Southwestern Wyoming.

IV.

IT IS FURTHER ORDERED that:

A. Respondent shall immediately notify the Commission of the initiation of any arbitration proceedings, agreements, or changes in agreements, involving any of the matters in this Order.

B. Judgment upon the decision rendered by any arbitrator(s) pursuant to this Order or pursuant to any agreements entered into pursuant to this Order may be entered in any court having jurisdiction thereof. The decision of the arbitrator, after confirmation by the court pursuant to the Â鶹´«Ã½ Arbitration Act, 9 U.S.C. §1, et seq., or succeeding statutory provisions, shall be final and binding upon the parties, and the failure of Respondent thereafter to abide by the arbitrator's decision shall be a violation of this Order.

V.

IT IS FURTHER ORDERED that:

A. If Respondent has not selected a successor to Kinder Morgan’s rights and interests under the KM Agreement as required by Paragraph II.B. of the Order, the Commission may appoint a trustee (or trustees) to select a successor and to lease the Williams NGL System, subject to the prior approval of the Commission. If the trustee does not select a successor to Kinder Morgan’s rights and interests under the KM Agreement, then the trustee may divest the Williams NGL System. Such divestiture shall be at no minimum price, to an acquirer that receives the prior approval of the Commission, and in a manner that receives the prior approval of the Commission.

B. In the event that the Commission or the Attorney General brings an action pursuant to § 5(l) of the Â鶹´«Ã½ Trade Commission Act, 15 U.S.C. § 45(l), or any other statute enforced by the Commission, Respondent shall consent to the appointment of a trustee in such action. Neither the appointment of a trustee nor a decision not to appoint a trustee under this Paragraph shall preclude the Commission or the Attorney General from seeking civil penalties or any other relief available to it, including a court-appointed trustee, pursuant to § 5(l) of the Â鶹´«Ã½ Trade Commission Act, or any other statute enforced by the Commission, for any failure by the Respondent to comply with this Order.

C. If a trustee is appointed by the Commission or a court pursuant to the terms of this Order, Respondent shall consent to the following terms and conditions regarding the trustee's powers, duties, authority, and responsibilities:

1. The Commission shall appoint a trustee, subject to the consent of Respondent, which consent shall not be unreasonably withheld. The trustee shall be a person with experience and expertise in leasing, acquisitions and divestitures. If Respondent has not opposed, in writing, including the reasons for opposing, the selection of the proposed trustee, within ten (10) days after notice by the staff of the Commission to Respondent of the identity of the proposed trustee, Respondent shall be deemed to have consented to the selection of the proposed trustee.
2. Subject to the prior approval of the Commission, the trustee shall have the exclusive power and authority to lease or divest the assets as described in Paragraph V.A. of this Order. Such sale or lease, if it occurs prior to January 1, 2001, shall require that the lessee or buyer shall, for each year for five (5) years from the date of lease or sale, dedicate to the transportation of propane an amount of capacity equivalent to the average annual throughput of propane during the previous five-year period on that portion of the pipeline extending from Plattsburg Junction, Missouri, to Des Moines, Iowa.
3. Within ten (10) days after appointment of the trustee, Respondent shall execute a trust agreement that, subject to the prior approval of the Commission and, in the case of a court-appointed trustee, of the court, transfers to the trustee all rights and powers necessary to permit the trustee to lease or divest the assets as described in Paragraph V.A. of this Order.
4. The trustee shall have twelve (12) months from the date the Commission approves the trust agreement described in Paragraph V.C.3. to effectuate Paragraph V.A. of this Order, which shall be subject to the prior approval of the Commission. If, however, at the end of the twelve-month period, the trustee has submitted a plan of how the trustee intends to effectuate Paragraph V.A. of this Order or believes that compliance can be achieved within a reasonable time, this period may be extended by the Commission, or, in the case of a court-appointed trustee, by the court; provided, however, the Commission may extend this period only two (2) times.
5. The trustee shall have full and complete access to the personnel, books, records and facilities related to the assets involved or to any other relevant information, as the trustee may request. Respondent shall develop such financial or other information as such trustee may request and shall cooperate with the trustee. Respondent shall take no action to interfere with or impede the trustee's accomplishment of the lease or divestiture. Any delays in the lease or divestiture caused by Respondent shall extend the time for leasing or divestiture under this Paragraph in an amount equal to the delay, as determined by the Commission or, for a court-appointed trustee, by the court.
6. The trustee shall use his or her best efforts to negotiate the most favorable price and terms available in each contract that is submitted to the Commission, subject to Respondent's absolute and unconditional obligation to lease or divest expeditiously at no minimum price. The transactions shall be made in the manner and to the acquirer or acquirers as set out in Paragraph II. of this Order, provided, however, if the trustee receives bona fide offers from more than one acquiring entity, and if the Commission determines to approve more than one such acquiring entity, the trustee shall lease or divest to the acquiring entity or entities selected by Respondent from among those approved by the Commission.
7. The trustee shall serve, without bond or other security, at the cost and expense of Respondent, on such reasonable and customary terms and conditions as the Commission or a court may set. The trustee shall have the authority to employ, at the cost and expense of Respondent, such consultants, accountants, attorneys, investment bankers, business brokers, appraisers, and other representatives and assistants as are necessary to carry out the trustee's duties and responsibilities. The trustee shall account for all monies derived from the leases or divestitures and all expenses incurred. After approval by the Commission and, in the case of a court- appointed trustee, by the court, of the account of the trustee, including fees for his or her services, all remaining monies shall be paid at the direction of the Respondent, and the trustee's power shall be terminated. The trustee's compensation shall be based at least in significant part on a commission arrangement contingent on the trustee's leasing or divesting the assets to be leased or divested.
8. Respondent shall indemnify the trustee and hold the trustee harmless against any losses, claims, damages, liabilities, or expenses arising out of, or in connection with, the performance of the trustee's duties, including all reasonable fees of counsel and other expenses incurred in connection with the preparation for, or defense of any claim, whether or not resulting in any liability, except to the extent that such liabilities, losses, damages, claims, or expenses result from misfeasance, gross negligence, willful or wanton acts, or bad faith by the trustee.
9. If the trustee ceases to act or fails to act diligently, a substitute trustee shall be appointed in the same manner as provided in Paragraph V.A. of this Order.
10. The Commission or, in the case of a court-appointed trustee, the court, may on its own initiative or at the request of the trustee issue such additional orders or directions as may be necessary or appropriate to accomplish the divestitures required by this Order.
11. Except as otherwise provided in this Order, the trustee shall have no obligation or authority to operate or maintain the assets to be leased or divested.
12. The trustee shall report in writing to Respondent and the Commission every sixty (60) days concerning the trustee's efforts to accomplish the leases or divestitures.

VI.

IT IS FURTHER ORDERED that, for a period of ten (10) years from the date this Order becomes final, Respondent shall not, without providing advance written notification to the Commission, directly or indirectly, through subsidiaries, partnerships, joint ventures, or otherwise:

A. Acquire any stock, share capital, equity, partnership, membership or other interest in any concern, corporate or non-corporate, engaged, at the time of such acquisition or within the year preceding such acquisition, in providing terminaling or pipeline transportation for propane located in Iowa or in any contiguous states within seventy (70) miles of the Iowa border; or

B. Acquire any assets used or previously used (and still suitable for use) for terminaling or pipeline transportation of propane in Iowa or in any contiguous states within seventy (70) miles of the Iowa border.

Said notification shall be given on the Notification and Report Form set forth in the Appendix to Part 803 of Title 16 of the Code of Â鶹´«Ã½ 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 Respondent and not of any other party to the transaction. Respondent shall provide the Notification to the Commission at least thirty (30) days prior to consummating the 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 or documentary material (within the meaning of 16 C.F.R. § 803.20), Respondent shall not consummate the transaction until twenty (20) days after submitting such additional information or documentary material. Early termination of the waiting 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 this Paragraph 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 and every sixty (60) days thereafter until Respondent has fully complied with the provisions of Paragraph III.C. of this Order, Respondent shall submit to the Commission a verified written report setting forth in detail the manner and form in which it intends to comply, is complying, and has complied with Paragraph III.C. of this Order. Respondent shall include in its compliance reports, among other things that are required from time to time, a full description of the efforts being made to comply with Paragraph III.C. of this Order, including a description of all substantive contacts or negotiations for the leases or divestitures and the identity of all parties contacted. Respondent shall include in its compliance reports copies of all written communications to and from such parties, all internal memoranda, and all reports and recommendations concerning leases or divestitures.

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 other times as the Commission may require, 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 each provision of this Order.

VIII.

IT IS FURTHER ORDERED that:

A. Respondent shall notify the Commission at least thirty (30) days prior to any proposed change in the corporate 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 in the corporation that may affect compliance obligations arising out of the Order.

B. Upon consummation of the acquisition, Respondent shall cause the merged entity to be bound by the terms of this Order.

IX.

IT IS FURTHER ORDERED that, for the purpose of determining or securing compliance with this Order, upon written request, Respondent shall permit any duly authorized representative of the Commission:

A. Access, during office hours and in the presence of counsel, to all facilities and access to inspect and copy all books, ledgers, accounts, correspondence, memoranda and other records and documents in the possession or under the control of Respondent relating to any matters contained in this Order; and

B. Upon five days' notice to Respondent and without restraint or interference from it, to interview officers, directors, or employees of Respondent.

X.

IT IS FURTHER ORDERED that this Order shall terminate twenty (20) years from the date this Order becomes final.

Signed this ___ day of March 1998.