Foreign Relations of the United States, 1952–1954, Iran, 1951–1954, Volume X

888.2553/9–1554: Telegram

No. 493
The Acting Secretary of State to the Embassy in Iran¹

secret
niact

Washington, September 15, 1954—7:57 p.m.

532. Following letter dated September 15 to President from Attorney General.² Letter unclassified but should be released only to interested company representatives.

“As a result of negotiations conducted by the international oil companies participating in the proposed Iranian consortium, there have been submitted to me by the participants drafts of fourteen documents which, I understand, are in final form for execution by the parties.³ Pursuant to your request for my opinion, I have examined these documents to ascertain the legality of the arrangements set forth, including the legality of participation therein by any or all of the five mentioned or other American oil companies.

On the basis of my review of these documents it is my view that the arrangements set forth therein do not deviate substantially from the arrangements stated in the “Proposed Iranian Consortium Plan” with respect to which I gave you an opinion on January 20 [21,] 1954.⁴ Accordingly, it is my opinion that these agreements, in their present form and if they remain unaltered, in view of the facts and circumstances which now characterize the production and refining of Iranian oil and the determination by the National Security Council that the security interests of the United States require that United States oil companies be invited to participate in an international consortium to contract with the Government of Iran, for the production, refining and acquisition of petroleum and petroleum products from within the area of Iran defined in these documents, would not in themselves constitute a violation of the antitrust laws, nor create a violation of antitrust law not already existing, subject to the limitations stated below.

This opinion of non-violation is limited to the arrangements described in the documents which have been submitted by the oil company participants and does not extend to any other act whatever, such as, but not limited to—

(a) Any other agreement or understanding among the participating parties, or any of them, or between any of the participating parties and non-participating persons.

(b) Marketing, distribution, further manufacture, or transportation of any petroleum or petroleum products, and any plan, program, agreement, or understanding, whether past, present or future, relating thereto.

This opinion of non-violation is given only subject to the express reservation of all rights of the United States, unlimited in any way by this opinion, to continue to prosecute the action against Standard Oil Company of New Jersey and others, pending in the United States District Court for the Southern District of New York, Civil No. 86–27, in accordance with the Federal Rules of Civil Procedure, and to prosecute the charges of such complaint with respect to the actions of the defendants therein and any other persons who may be added as parties defendant, as to any petroleum and petroleum products, including any and all actions dealing with petroleum and petroleum products acquired as a result of the consortium other than any actions which the preceding paragraphs of this opinion state ‘would not in themselves constitute a violation of the antitrust laws, nor create a violation of antitrust law not already existing.”⁵

Smith

1. Repeated to London. Drafted by Hoover and approved by William O. Baxter, Director, Office of Greek, Turkish, and Iranian Affairs.
2. Attorney General Brownell’s letter of Sept. 15 to President Eisenhower was occasioned by a letter Hoover had addressed to Brownell the previous day, Sept. 14. In that letter, Hoover informed Brownell that negotiations between the Oil Consortium and the Government of Iran had reached the point where the oil companies and the Iranians were “ready to execute, deliver and proceed to perform the various documents involved, subject only to [the Attorney General’s] advice as to the conformity of such action with [the Attorney General’s] opinion of Jan. 20, 1954.” (See Document 411.) Specifically, Hoover requested the Department of Justice to review the documents which constituted the basis of the Iranian oil settlement and which Justice received for review on Sept. 13, to ascertain if their contents conformed to Brownell’s opinion of Jan. 20. Hoover asked that this task be accomplished, if possible, by Sept. 15. (GTI files, lot 57 D 155, “Justice Dept. Interest”)
3. The final texts of these agreements are in two bound volumes in Department of State files and are entitled, respectively, “The Iranian Consortium: Government Agreement and Related Documents” and “The Iran Consortium: Participants and Consideration Agreements and Related Documents”. (888.2553/12–3154)
4. Not printed. (888.2553/1–2154)
5. On Sept. 15 Hoover notified the Embassy in Tehran of the Attorney General’s letter to the President. He added that the Department has informed George Koegler of the Standard Oil Company of New Jersey of its contents; and that he, Koegler, had said the Attorney General’s letter was satisfactory. The Department, however, also informed the Embassy that the text of the letter had to be submitted for the approval of the General Counsel of each of the other companies, who would meet in New York on Sept. 16 for this purpose; would make their decision; and would inform Page in Tehran of their decision on the morning of Sept. 17. (Telegram 531; 888.2553/9–1554)