The Senate Environment Committee has scheduled a markup of RFG/MTBE 
legislation for this coming Wednesday, July 26.   The Committee staff has 
released draft legislation from Chairman Bob Smith (R-NH) that will be the 
vehicle for consideration (a summary is attached).  

It is probable that the markup will not take place on Wednesday, and that the 
Committee's reason for scheduling the markup is really to "smoke out" 
potential amendments and positions of the affected industries.   In 
particular, there is a great deal of controversy surrounding the inclusion of 
a "renewable fuels" (ethanol) mandate in the bill, so the Committee wants to 
see how much opposition is raised by some of the parties.   There is 
currently no renewable fuel mandate in the draft Smith bill.  On one side, 
Governors of Midwest and Northeast states recently announced a "compromise" 
agreement on renewable fuels mandate language, and will be exerting a great 
deal of pressure to get this language included in the bill.   On the other 
side, Clean Air Subcommittee Chairman Jim Inhofe (R-OK) is very opposed to 
ethanol language (as are refiners and MTBE producers) and could mount a 
substantial challenge to such provisions.   This could cause an ugly fight at 
markup, so staff's reason for scheduling a markup is likely to find out in 
advance how much pressure to expect from both sides.

Regardless of whether the markup occurs on Wednesday, we have prepared 
amendments and are lobbying on the issue with the expectation that the bill 
could be considered in September in the Environment Committee, or as a 
possible rider to one of the appropriations bills moving quickly through 
Congress.

I have attached a list of amendments that MTBE industry has produced that 
will likely be offered on our behalf at the markup.  Enron has led the 
drafting of amendments related to stranded costs and other incentives for 
MTBE producers, since the legislation would waive the RFG oxygen content 
requirement and phase out use of MTBE.   We are working with several Senators 
on the Environment Committee that will offer these amendments and speak on 
our behalf, including Senator Kay Bailey Hutchison (R-TX), Bob Bennett 
(R-UT), and Craig Thomas (R-WY).

I will keep you updated on the progress of the legislation this week.  Please 
let me know if you have any questions.

Jeff Keeler
Director, Environmental Strategies
Enron
(202) 466-9157