For Your Information.

Dana
----- Forwarded by Dana Gibbs/Houston/Eott on 07/07/00 09:33 AM -----

	"Baird, Bob" <RBaird@velaw.com>
	07/06/00 09:40 PM
		 
		 To: Lori Maddox/Houston/Eott@Eott, Steve Duffy/Houston/Eott@Eott, Dana 
Gibbs/Houston/Eott@Eott
		 cc: Dana Gibbs/Houston/Eott@Eott, "Pena, Carlos" <cpena@velaw.com>
		 Subject: S-1




Steve and Lori:

 I spoke with Dana this afternoon, and I really think that the
wisest, by far, way to approach Koch on this is to call Tye tomorrow and
tell him we are exercising our rights to delay the filing of the S-1 under
the following clause of the registration rights provisions of the Purchase
and Sale Agreement:

"and provided further, that if the General Partner determines in its good
faith judgment that a postponement for up to four months of the filing or
effectiveness of the requested registration or the sales pursuant to an
effective registration would be in the best interests of EEP and its
Partners due to a pending transaction, investigation or other event, the
filing or effectiveness of such registration statement or any sales pursuant
thereto may be deferred for up to four months, but not thereafter."

Dana makes three points.

 First, there are some unresolved environmental issues involving
properties purchased from Koch, and although we do not believe there's a big
problem right now (we think Koch is liable under its indemnity agreement),
we have not confirmed the extent of the problem nor Koch's willingness to
honor its commitment, and it would be better to pin this down before making
any decision on whether or to what extent they are material.

 Second, there are uncertainties relating to the Koch contract that
we will probably have a much better handle on next month; these are serious
issues, but it is premature to disclose them until we have a better handle
on them.

 Third, we are looking at a possible material acquisition, and we may
even be entering into an agreement in principal or otherwise moving down the
probability curve sometime soon, but it is clearly premature to announce
this.

 Thus, we have both positive and negative events, the materiality of
which is subject to some uncertainty.

 As you know, as long as EOTT has a proper corporate purpose for not
disclosing material inside information and insiders are not trading, it can
keep the information confidential, even if it is material, for a limited
period of time.

 Filing a registration statement that omits possibly material
information is not advisable even if sales are not being made at the time of
filing, since market participants can reasonably rely on the information in
the registration statement in making purchases or sales.  Since some of the
information may be negative and some may be positive, there would arguably
be exposure to EOTT from both buyers and sellers in the market were it to
file a registration statement that omitted material information.  Although I
am not saying any of this information is material at this time, it arguably
could be or could develop to the point where it is.  This is just a bad time
to be filing a registration statement.  This is the very situation that the
above quoted language was designed to deal with.  Clearly we have a pending
investigation (of the environmental issue), a pending transaction (the
possible acquisition) and another event (the contractual issues).

 Obviously EOTT should not disclose the information to Koch just as
it should keep it confidential from others.  Thus, the best approach is to
call Tye Darland tomorrow and tell him that we are exercising our rights
under the above quoted language and tell him that for obvious reasons we
cannot tell him exactly what  the "pending investigation, transaction or
other event" is.  Dana believes that the situations will all have a decent
chance of clarifying themselves within about a month.  So I would say that
you can calm Koch down by saying that at this point we do not think there is
any realistic possibility that we will take another four months, and in fact
we think we are talking about a few days, but we just don't know at this
point.  We can say we are poised to file quickly after we determine that the
postponement period is ended.




Robert S. Baird
Vinson & Elkins L.L.P.
One American Center
600 Congress Avenue
Austin, Texas 78701-3200
Office phone: 512/495-8451
Fax: 512/236-3210
Home phone: 512/347-8065
Car phone: 512/627-8065
Pager: 1-888-487-2651
Voice mail: 512/495-8696, x8451
Internet: rbaird@velaw.com