We need to talk about this
 -----Original Message-----
From: 	Liss, Kevin  
Sent:	Monday, July 09, 2001 7:12 PM
To:	Sanders, Richard B.
Subject:	Ontario Power litigation

Steve Douglas asked me to review and brief you on the pleadings for the Ontario Power tax refund litigation against the United States.  

Ontairo Power, a Canadian coal buyer, claims it is entitled to a refund of unconstitutionally imposed excise tax on coal it bought from several US producers. The IRS is apparently acknowledging that the coal excise tax is unconstitutional as applied to exported coal, and has announced that it will refund taxes improperly levied.  But at issue is whether coal buyers are properly the ones who are due the refund, or whether it more properly belongs to the coal producers.  The IRS says it is separately being sued by 40 coal suppliers, who claim entitlement to the refund, and has therefore asked that all coal producers who have sold coal to Ontario Power be given notice of this proceeding, perhaps as a precursor to an interpleader proceeding.  I presume that that is how we got copies of the pleadings that were forwarded to us.

This suggests to me that Enron should consider filing its own refund claim with respect to any exported coal we have been selling.  It would be useful to get a copy of the pleadings from some of the other producers so that we can use that as a template for our own complaint.  That would also give us a head start in researching some of the relevant legal issues.  We will also want to look at our invoicing to see whether or not the coal excise tax is separately itemized on our bill.  Finally, we will need to get records of our coal exports so we can ascertain how much money is in issue.  For how many years I am not sure; the applicable statute of limitations is one of the items that will need to be researched.   

I will be out of town for the next couple of days, but will be back on Thursday.  Perhaps we can discuss the way forward at that time.  

Kevin Liss
x58601