Lisa J. Mellencamp
Enron North America Corp.
1400 Smith St.
Houston, TX  77002
Tel:  (713) 853-7986
Fax: (713) 646-3393
----- Forwarded by Lisa Mellencamp/HOU/ECT on 07/19/2000 11:15 AM -----

	Richard Lydecker@ENRON
	07/19/2000 10:58 AM
		 
		 To: W David Duran/HOU/ECT@ECT
		 cc: Lisa Mellencamp/HOU/ECT@ECT
		 Subject: Infineum Lawsuit

Quick summary of where we stand:

Richard Sanders will be legal coordinator from Enron side in connection with 
this litigation.  Leboeuf Lamb will be our outside litigation counsel.

Our legal team has concluded that Infineum does not have the right to take 
steam in excess of their contractual maximums.  The loss of revenue (about 
$1.5 million annually) is clearly an adverse impact to our Linden plant which 
relieves even any ambiguous obligation to offer "excess" steam above the 
maximum to Infineum.

The initial strategy is to prepare a 12 B 6 (whatever that is) motion to 
dismiss which presents the contractual relationships to the court and argues 
that there is no reasonable interpretation of the contract and intent of the 
parties that would support Infineum's allegations that we have an absolute 
obligation to offer Infineum any steam in excess of the contractual maximum.  
This motion could be 2-3 months pending.

If the motion is granted, this particular  lawsuit is quashed.

If the motion is denied, we start spending real money re disclosure, 
depositions, counter-claims etc.  At that point we would probably take a very 
aggressive position vis-a-vis claims for damages against Infineum to raise 
the stakes for them and put real dollar risk exposure back to them for 
continuing the lawsuit.

Again, this suit is a cynical attempt to gain leverage in negotiations to 
supply energy to Infineum from Linden 6.  In the meeting at which our guys 
were informed by Infineum that the litigation would be initiated it was clear 
that if we gave them a big enough break on electricity price, the lawsuit 
would go away.  To me that seems pretty close to, if not actually, abuse of 
process.

Will keep you informed.  Let me know if there are any specific questions.  
Dick.