CONFIDENTIAL AND PRIVILEGED ATTORNEY/ATTORNEY AND ATTORNEY/CLIENT 
COMMUNICATION

My review of files on Dow Waiver has made me recall some important facts in 
support of the program's legality.

First, the 1978 Dow Waiver Program (which involved only wells in the Evetts 
Field) was instituted, at least in part, because interstate pipelines' takes 
from split-stream wells in that field were resulting in imbalances.  The 
intrastate producers were concerned that their fair share of the production 
was being siphoned off by the interstates.  Takes to redress that type of 
situation fall exactly within the meaning of "just and reasonable" 
discrimination, according to Don Ray (and that makes sense).

Second, the 1984 Dow Waiver Program, which began in August 1984, resulted in 
virtually no discrimination at all, since all other producers were offered 
the opportunity to participate in Panhandle in March, 1985.  The price 
offered by Panhandle was the lesser of (i) 90% of Panhandle's resale price on 
the spot market, or (ii) the producer's base contract price.  Most producers 
accepted the Panhandle offer.  Dow Waiver and Panhandle producers' gas was 
taken at rates of 100% of what the wells could produce.  Thus, at least as of 
March 1985, everyone had the opportunity for the same deal -- 100% of volumes 
taken at the lesser of the base K price or the 90%-of-resale price..  The Dow 
Waiver volumes were already being taken at the base contract price, which 
generally was lower than the Panhandle price; Panhandle producers' gas was 
being taken at the lesser of base K price or Panhandle price.  So even 
leaving aside the issue of the Panhandle volumes having been released from 
the base Ks, there was no discrimination.  The RRC was aware of the terms of 
the Panhandle "lesser of" price offer and raised no objection.  Nor did any 
producer complain to the RRC that a "lesser of" offer was illegal.  Thus, the 
Dow Waiver Program cannot have resulted in illegal discrimination as to 
producers who entered the Panhandle Program as of March 1985.