Recent information indicates that the State of Michigan and possibly other 
state and industrial parties who have challenged the EPA's NOx SIP Call 
regulation in court -- and lost -- will file an appeal with the U.S. Supreme 
Court this September.

As you may recall, on June 22, the U.S. Court of Appeals, D.C. Circuit, 
upheld the EPA's NOx SIP Call regulations, lifted the stay on the 
regulations, and mandated that states move forward with developing and 
submitting State Implementation Plans (SIPs) by the end of October 2000.   

States that must now develop SIPs include:  Alabama, Connecticut, Delaware, 
District of Columbia, Georgia, Illinois, Indiana, Kentucky, Maryland, 
Massachusetts, Michigan, Missouri, New Jersey, New York, North Carolina, 
Ohio, Pennsylvania, Rhode Island, South Carolina, Tennessee, Virginia, West 
Virginia, Wisconsin  (Georgia, Missouri & Wisconsin were excluded from the 
regulation by the Appeals Court in its original decision, but will eventually 
be re-included in the SIP process)

Impact of a Supreme Court Appeal:

Parties appealing the case to the Supreme Court will likely ask for a stay of 
the EPA requirement for states to submit SIPs until the case is finally 
decided.    It is not certain whether or not a stay would be granted by the 
Court.  An appeal can not be filed until the Court returns at the beginning 
of October, and a decision on a stay might not come until after the October 
30 SIP deadline, so it many states might proceed with developing their SIP 
anyway.   States who choose to not develop a SIP and assume that a stay will 
be granted will be taking the risk that they miss the October 30 SIP deadline 
and EPA imposes its own Federal Implementation Plan (FIP) -- if the stay is 
not granted, the state would have to live with the federal requirements for 
NOx reductions in its state.

Another impact is that the May 2003 deadline for implementation of the rule 
-- and compliance by emitting sources -- may also be delayed if the Supreme 
Court imposes a stay on the regulations and accepts the case on appeal.   If 
the case is accepted, a decision would not likely be reached until June 2001, 
which would likely delay a compliance deadline until 2004.

We will keep you posted as this situation develops.  Right now, Environmental 
Strategies is continuing to work in the states that are developing SIPs, to 
ensure that the states treat new generation fairly and that market-based 
solutions to NOx reduction are employed so that trading and other 
opportunities for Enron businesses will be maximized.

Contacts:    Federal regulation, Court action -- Jeff Keeler 202-466-9157
  State Implementation Plan development -- Mary Schoen  713-345-7422