---------------------- Forwarded by John Shelk/NA/Enron on 07/12/2001 10:12 
AM ---------------------------

Carin Nersesian

07/12/2001 07:47 AM

To: John Shelk/NA/Enron@Enron, Pat Shortridge/Corp/Enron@Enron
cc: Linda Robertson/NA/Enron@ENRON 

Subject: Barton,Tauzin letter to Gov. Davis


Committee News Release
The Committee on Energy and Commerce
W.J. "Billy" Tauzin,? Chairman 
Chairmen Tauzin, Barton Urge Gov. Davis
To Respond Immediately to Inquiries 

Washington (July 11) ) House Energy and Commerce Committee Chairman Billy 
Tauzin (R-LA) and Energy and Air Quality Subcommittee Chairman Joe Barton 
(R-TX) today sent the following letter to California Governor Gray Davis: 
July 11, 2001
The Honorable Gray Davis 
Governor 
State of California 
State Capitol 
Sacramento, California 95814 
Dear Governor Davis: 
??????????? As you know, the Energy and Commerce Committee recently 
considered legislation containing several targeted measures to assist 
California in resolving its energy supply crisis.? One of these measures was 
a temporary &safe harbor8 provision, effective only upon the California 
Governor,s request, to protect critical extended emergency operation of 
powerplants from challenges under the Clean Air Act. 
??????????? During the course of six hearings the Subcommittee on Energy and 
Air Quality held on the California electric crisis, including two hearings on 
draft legislation, Members of the Committee repeatedly told California 
officials that these plants were vulnerable to legal challenge, even with 
written &agreements8 for extended operation between state air officials and 
the powerplants.? Nevertheless, California officials testifying or providing 
information on behalf of your state and your citizens claimed that such a 
safe harbor was not necessary. 
??????????? I fear events have proven that on this important matter, the 
concerns expressed by Members of our Committee were valid and that our 
interpretation of the legal jeopardy faced by California was accurate.? On 
June 19th, several community groups filed a lawsuit in federal court against 
three electric generating units in California (all located at the Potrero 
power plant site) alleging multiple violations of the Clean Air Act for 
emergency extended operation.? On the same day, the City and County of San 
Francisco filed formal notice that it would also pursue legal action against 
the three Potrero units.? All parties involved in the litigation strongly 
assert that the extended operation agreement between state air officials and 
the Potrero power plant does nothing to prevent them from pursuing all 
available legal remedies under federal and state law. 
??????????? The legal action against the units located at the Potrero power 
plant claims that extended operation violates limits contained in federal air 
permits and seeks fines potentially amounting to millions of dollars.? 
Understandably, as a result of this potentially huge fine, the operator of 
the Potrero power plant has filed a motion with the Federal Energy Regulatory 
Commission to clarify that it will not be required to operate the three 
generating units, even during periods of electrical emergency.? Thus, the 
mere filing of this lawsuit could have a near-term impact of the amount of 
power available in California. 
??????????? Perhaps even more troubling is our understanding that substantial 
amounts of electric power produced by peaking plants and other facilities in 
California could also be subject to similar legal action.? The California 
Independent System Operator lists 31 units representing 1,430 megawatts of 
peaking units which are subject to legal limits on their total hours of 
operation.? In addition, several new units are being brought on-line this 
summer without required Clean Air Act control equipment.? According to 
incomplete information we received from the California Air Resources Board 
(CARB), 37 generating units have been identified in California which may 
exhaust allowable annual operating hours contained in their air permits prior 
to this summer,s peak demand period.? These units may represent up to 2% of 
generation, approximately the critical operating reserve shortfall of a Stage 
III electric emergency. 
??????????? Although presented with written requests for information from the 
Committee on April 2, 2001, CARB could not or would not provide the Committee 
with precise information on units that may have been off-line due to permit 
limits, a projection of the number of generating units that will face permit 
constraints that could cause such units to be off-line, the amount of 
generation associated with these facilities, the possible impact of these 
units on system reliability, and additional information related to air 
emissions from facilities that will be operating under &modified8 
conditions.?? We believe that in the face of the pending legal action, it is 
even more important that such information be accurately and objectively 
determined. 
??????????? As we mentioned above, over several months in the spring and 
early summer of this year, the Committee sought California,s support of an 
extremely narrow safe harbor provision to protect the extended operation of 
certain powerplants.? Regrettably, the Committee did not receive any support 
from your administration for such changes to the law, as represented by the 
testimony and responses attached to this letter.? Instead, witnesses 
representing California claimed such a legal safe harbor for emergency 
generation was unnecessary -- even if it could only be granted during periods 
of emergency and upon your personal request to the Environmental Protection 
Agency (EPA).? 
??????????? It appears now that citizen groups in California -- as well as 
the City and County of San Francisco -- do not believe that the actions taken 
by you, your state agencies and local air quality districts are legal.? The 
pending litigation challenges the very agreements which California previously 
claimed granted sufficient legal &flexibility8 to keep these units running 
during times of emergency.? It is time, then, to reconsider this issue. 
??????????? So that the Committee may understand the extent of this critical 
situation and respond accordingly, we would ask for your consideration of the 
following: 
(1) We would urge you to reply fully to the Committee,s earlier requests that 
CARB specifically identify each generating unit and power plant that is in 
jeopardy of exceeding limitations contained in the Clean Air Act and thus 
potentially subject to the citizen suit provisions of the Act.? We should 
have a clear idea of the power production which is at risk. 
(2) In view of the fact that we have moved from the world of legal theory 
into the world of legal fact and several California generating units are now 
being sued under authorities contained in the Clean Air Act, we ask whether 
you will now favor creating in federal law a limited, environmentally-neutral 
safe harbor for these essential units which could only be effectuated upon 
your request to EPA. 
(3) Finally, we would ask that if you support such legislation, that you work 
with our Committee so that we can truly try and resolve this issue in a 
targeted provision which helps ensure the lights stay on in California this 
summer. 
??????????? Thank you in advance for your consideration of our requests.
Sincerely,
W.J. (Billy) Tauzin
Chairman
Energy and Commerce Committee
Joe Barton 
Chairman
Subcommittee on Energy and Air Quality

Peter Sheffield
202.225.5735 





Carin Nersesian
Legislative Coordinator
Enron Corp.
1775 Eye St. NW, Suite 800
Washington, DC   20006
202-466-9144 (ph.)
202-828-3372 (fax)