Lon, thanks for including me on the following distribution.  Both Greek Rice 
and I have received phone calls from the Coastal (Great Lakes) corporate 
legal officer informing us of the outcome on the day of the decision.  He 
expects the State to appeal, and we will be watching this very closely.

We have had a series of meetings with the Minn DOR on behalf of NNG, 
discussing not only the compressor fuel issue but the Industrial Processing 
tactic in general, and were on hold by the DOR until this case with Great 
Lakes was decided.  

If you would like to have further details, please let me know and we will be 
gald to furnish them to you.

Thanks again.
 -jtm




Lon Stanton
11/21/2000 10:58 AM
To: Mike McGowan/ET&S/Enron@ENRON, Mary Kay Miller/ET&S/Enron@ENRON, Dave 
Neubauer/ET&S/Enron@ENRON, Drew Fossum/ET&S/Enron@ENRON, Michel 
Nelson/ET&S/Enron@ENRON, Beth Jensen/NPNG/Enron@ENRON, Stephen 
Poulson/NPNG/Enron@ENRON, Jerry Thomas Moore/Corp/Enron@ENRON, Mark 
Adelmann/ET&S/Enron@ENRON
cc:  

Subject: FW: Litigation News

As you may recall we have been arguing with the MN Dept. of Revenue for years 
over whether or not natural gas used as a compressor fuel was subject to the 
Minnesota use tax.  Great Lakes has been in court with the DOR over this same 
issue.  Today I received the following, which is an internal memo that was 
circulated in the Dorsey & Whitney law firm, which has been representing 
Great Lakes announcing a favorable ruling.  


---------------------- Forwarded by Lon Stanton/ET&S/Enron on 11/21/2000 
10:54 AM ---------------------------


"Ahern, Michael" <Ahern.Michael@dorseylaw.com> on 11/21/2000 10:18:28 AM
To: "Stanton, Lon (E-mail)" <lstanto@enron.com>
cc:  

Subject: FW: Litigation News


Lon, thought you might be interested in this.

>  -----Original Message-----
> From:  Buckvold, Bob
> Sent: Tuesday, November 21, 2000 9:04 AM
> To: TRT All; Dirks, Katy; Frederick, Gloria; Snow-Samanant, Julie;
> Starkey, Melissa; Hinkley, Sally
> Subject: Litigation News
>
>  In a successful collaboration between the Tax Department and the
> Trial Department, Jack Windhorst and Chris Shaheen went to trial in
> Minnesota Tax Court and obtained a $1.5 million judgment for our client,
> Great Lakes Gas Transmission Ltd. Partnership.  Great Lakes transmits
> natural gas on behalf of shippers through an interstate pipeline system
> that runs through various states, including Minnesota.  The pressure of
> the gas decreases as it moves through the pipeline system.  Great Lakes
> has five compressor stations along its pipeline in Minnesota,  at which
> separators and compressor engines refine the gas and increase the pressure
> of the gas so that it will continue to flow through the pipeline.  Some of
> the natural gas in the system is burned as fuel by the compressor engines.
>
>  The Minnesota Commissioner of Revenue determined that Great Lakes
> must pay "use tax" for the compressor fuel gas and, in a 1998 Order,
> denied Great Lakes' claim for a refund of use taxes paid in 1994 and 1995.
> At a two day trial in February, Great Lakes presented fact and expert
> testimony supporting its contention that the compressor fuel was consumed
> in "industrial production" and therefore was exempt from taxation under
> the "industrial production exemption."  The Commisioner argued that Great
> Lakes was simply transporting the gas and therefore did not qualify for
> the exemption.  After extensive post-trial briefing, the court issued an
> opinion on November 16 reversing the Commissioner's Order and entering
> judgment for Great Lakes.  The decision should result in millions of
> dollars in additional savings for Great Lakes for tax years not directly
> at issue in the case.
>