fyi
---------------------- Forwarded by Mike McConnell/HOU/ECT on 05/29/2001 
12:38 PM ---------------------------


Stanley Horton@ENRON
05/24/2001 03:38 PM
To: Mike McConnell/HOU/ECT@ECT
cc: Jeffrey A Shankman/HOU/ECT 
Subject: MTBE legislation

I just wanted to make sure you guys know everything I do.  Actually this is 
somewhat bullish considering past legislative attempts.
---------------------- Forwarded by Stanley Horton/Corp/Enron on 05/24/2001 
03:25 PM ---------------------------


Jeffrey Keeler
05/24/2001 12:52 PM
To: Stanley Horton/Corp/Enron@Enron, James Prentice/Enron@EnronXGate, Michael 
Terraso/OTS/Enron@ENRON, Steven J Kean/NA/Enron@Enron, Richard 
Shapiro/NA/Enron@Enron, Linda Robertson/NA/Enron@ENRON, <Pat 
Shortridge@erols.com>, Joe Hartsoe/Corp/Enron@ENRON, Marc 
Phillips/OTS/Enron@ENRON, Jim Peterson/OTS/Enron@ENRON, Adam 
Pollock/ENRON@enronXgate, Lisa Yoho/NA/Enron@Enron, Chris 
Long/Corp/Enron@ENRON, Lisa Jacobson/ENRON@enronXgate
cc:  

Subject: MTBE legislation

Today, Senators Bob Smith (R-NH) and Harry Reid (D-NV) will introduce an MTBE 
bill. which is expected to be slightly different than we've seen in previous 
Congresses.  

We expect it to include:  

1) a 4-year date certain to eliminate MTBE, with EPA determining the phaseout 
schedule
2)  a lifting of the 2% oxygenate standard upon perfunctory petition by State 
governors within 90 days from date of enactment
3)  and environmental "anti-backsliding" provision focused only on air-toxics 
and using a 2000 baseline with a 27.5% percent standard (the way I understand 
it right now, RFG must perform 27.5% better than 2000 baseline for 
conventional gasoline)
4) provisions for MTBE producer "transition assistance"

Brief analysis:  

We'll have more details shortly, but the bill looks a little better than 
previous efforts.  A number of bills have been introduced this Congress, but 
this will probably be the leading effort.  

As you know, Enron has led efforts to include the "transition assistance" 
piece -- which is still largely undefined in the legislation -- but we are 
pleased with the inclusion of a "placeholder" while the Senate decides on the 
best approach.  We will continue to lead the development of such incentives 
(which will likely take the form of EPA/DOE funding for MTBE producers who 
convert plants to produce iso-octane or alkylate).

An MTBE ban is of course not good, but a "date certain" gives producers more 
flexibility to determine their options rather than reduce production under 
several steps of a phase out.   Allowing states to get a waiver of the oxy 
standard is probably a given in any legislation, but will face some 
opposition from the ethanol community -- who just want a simple MTBE ban.

The anti-backsliding provision is still being refined, but looks fairly 
lame.  We need more details to make an accurate assessment, but its likely 
that environmental groups will want a bit more.

One political factor -- with Sen. Jim Jeffords leaving the Republican party, 
Democrats will be given control of the Senate Environment Committee, which 
will consider this bill.  They will likely allow Jeffords to chair the 
committee.  The significance is that Sen. Bob Smith (R-NH) is the current 
chair, and has been able to use that position to drive his past bills on MTBE 
-- in losing the chairmanship, his legislation may face a longer road through 
Committee.

I will keep you posted as the legislation evolves.

Jeffrey Keeler
Director, Environmental Strategies
Enron
Washington DC office - (202) 466-9157
Cell Phone (203) 464-1541