-----Original Message-----
From:  Mathis, Robert  
Sent: Tuesday, March 27, 2001 7:57 AM
To: Lundstrom, Bruce; Brownfeld, Gail
Cc: Kraske, Paul
Subject: Protected by Attorney/Client Relationship & Privileged Information- 
MPCB
Importance: High
Sensitivity: Confidential

Bruce and Gail,

Root Cause Analysis -

Attached please find the root cause analysis which describes the series of 
events since the naphtha spill on March 19, 2001.  The original of these 
documents are being couriered to Bruce Lundstrom's attention by DHL courier 
today and should arrive in about 4 business days time.  We are also sending 8 
drawings/plans of the various equipment involved with the accidental 
discharge which could not be scanned. 

Memorandum regarding the Phase II fuel filter skids - 

Attached please find a memo which includes a description of Alan Stringer's 
and Ramu's evaluation of the amount of naphtha that may have been spilled at 
the DPC site. 

Legal opinions

Last Thursday, March 22nd, the DPC legal team determined that we needed to 
obtained outside counsel opinion on whether DPC has an obligation to disclose 
the discharge of naphtha at the DPC site, as a result of an mechanical 
failure in the Phase II Fuel Skids and which were in use for Phase I 
activities. The same day Atul Setalvad and Atul Rajadhyaksha were contacted 
for their opinions in the matter. 

Atul Setalvad was unavailable until Tuesday, March 27, 2001, and Atul 
Rajadhyaksha was not available on Friday, Saturday or Sunday, but agreed to 
give an interim note. Atul R. provided us with an interim note but it did not 
comprehensively cover the laws and rules that the DPC team considered 
applicable in the matter, and to which he agreed to provide supplemental 
information on Monday, March 26th, upon his return from travelling to visit 
his ill father. On Monday, Atul R. met in the DPC office on Monday at 3pm, at 
which time he was provided the facts as they were known at that time by the 
DPC legal team. He sent his revised note today. Today, we spoke with Atul 
Setalvad in his chambers and he render a preliminary opinion in hand writing 
that will be supplemented by a written opinion by Monday, April 2, 2001.

Both Atul Setalvad and Atul Radjadhyaksha have each provided an opinion/note 
on their views of whether DPC has an obligation to notify MPCB of the March 
19th discharge of naphtha at the DPC site. Resoundingly, each have urged 
immediate notification to MPCB of the discharge. Attached you will find their 
opinion/note. 

In brief, Atul Setalvad's opinion was based on pragmatic considerations and 
on his preliminary view of the law. Essentially, he argues the following:

1. MPCB will eventually learn about the discharge at the site due to the fact 
that at least 50 workers who cleaned up the discharge live in the nearby 
villages, and it will be communicated until the matter is brought to MPCB's 
attention.

2. It is improbable that MPCB will react rationally when they learn of the 
discharge.

3. If DPC needs to seek recourse to judicial intervention for re-dress of an 
MPCB action, then the court is not likely to treat DPC favorably if DPC 
failed to give notice of the discharge.

Finally, Atul Setalvad initially thinks DPC is obliged under the 
Environmental Protection Act to provide notice, as he thinks the discharge is 
clearly covered by the general provision section 9 of the law (zero 
tolerance) and, even if one took the broader view, also under the rules 
(major accident).

Atul Rajadhyaksha gave a long opinion but essentially concluded that DPC 
needs to notify. He thinks that if DPC doesn't notify then it will have the 
onus in a court of law to prove that it didn't have the obligation , which 
would be very difficult under the circumstances.

MPCB visit -

MPCB will visit the site on Wednesday, March 28th to measure the smoke stacks 
at the power blocks and to look into other matters which do not appear to 
include any activities near or about the area where the naphtha spill 
occurred.   Piyush Joshi will accompany the MPCB personnel and the MSEB 
personnel who will be visiting the site together with appropriate DPC 
personnel. It is anticipated that he could be asked questions that may be 
sensitive in nature so the Public Relations department has prepared a list of 
questions and answers for DPC personnel to answer in relation to the MPCB 
visit or for the press in the event of notification being sent to MPCB. Your 
views on these Q&A's would be appreciated; please bear in mind that we may be 
asked questions about the 1999 incident.

Environmental auditor visit - 

Currently, Alan Stringer, an Enron Europe employee, is at the DPC site (at 
the request of Bruce Lundstrom) and he is conducting due diligence and 
preparatory work for an environmental audit and risk management plan for 
remediation of the discharge. His report is not attached to this email as it 
was mailed separately to Bruce on Saturday, March 24, 2001.  

Pursuant to Alan Stringer's brief,  at least one independent environmental 
auditor (not an Enron employee) will arrive at the site on Friday, March 30, 
2001 to take ground water samples and soil samples and return to the UK since 
thereafter for further evaluation of the same. 

OPIC visit -

An environmental person from OPIC has long been scheduled for a visit to the 
DPC site on Thursday, March 29 and on Friday, March 30.  It is expected that 
at least two persons from the State Bank of India will accompany the OPIC 
representative to the site. While the site is very large, there is the 
possibility that these persons could observe AFCONS reassembling the drilling 
equipment in preparation of making new bore wells 

OPIC may require specific notification of environmental events that occur at 
the DPC site pursuant to its loan documents with DPC.  An initial review of 
these documents does not reveal this requirement though certainly the Common 
Agreement has a general obligation of the same nature to notify the lenders 
of environmental events that could have a material adverse effect.  The 
Common Agreement provides that such notification must come 10 days after an 
event such as notification to MPCB. It would not be advisable to notify the 
lenders but not notify MPCB of this event as the lenders would be curious as 
to our reasoning for such a non-disclosure to MPCB.  

DPC legal team position -  

The DPC Legal team recommends that notice be provided immediately to MPCB, 
which is in accordance with the position taken by outside local counsel for 
DPC.  It is further recommended that this notice be provided to MPCB by the 
monthly report submitted by DPC to MPCB in which a description of the event 
will serve as notification. While there may be other state bodies that could 
be required under the law to be notified, it is our view that notice to MPCB 
should be sufficient for meeting our most immediate obligations under the 
relevant environment laws.  At such time that it is determined that notice 
may be required under other acts of law, such notice may be provided to those 
concerned authorities. 

Timing and form of notification - 

The DPC commercial team thinks that notification to MPCB should be given 
immediately (by Wednesday). The form of the notification is recommended to be 
in the monthly MPCB report that DPC submit on or about the first of each 
month to MPCB.   It is being suggested by Ken Lambert at the site that the 
notice should be held ready to be delivered but not actually delivered until 
after MPCB's visit is completed on Wednesday. He is curious to see if MPCB 
clears the problem with the measurement of the smoke stacks. This is a 
strategic call and a view could be taken that if MPCB appears to be ready to 
review the area of the naphtha spill, then a telephone call could be made to 
DPC in Mumbai and the monthly report or other notification could be sent 
immediately via fax to MPCB in Mumbai and if necessary hand delivered to MPCB 
officials at the site.  In any event, notification should go in as soon as 
possible on Wednesday.  

Attached please find a form of that monthly report (Spill Report) for your 
review, which with your approval will form the basis of our notification to 
MPCB on Wednesday, March 28. I just received this draft from Mr. Mitra at 
that site, so no one has given me any comments yet. Yours are welcomed, 
before Wednesday morning IST.

In the event that it is not recommended by Houston management to send 
notification in the monthly report, please find attached a form notification 
letter to MPCB for your review and approval (Notice to MPCB-revised). 

Please provide guidance if you do not agree with the disclosure being made in 
the monthly report to MPCB.

Robert




---------------------- Forwarded by Robert Mathis/ENRON_DEVELOPMENT on 
03/27/2001 11:31 PM ---------------------------


Cecilia Almeida
03/27/2001 06:45 PM
To: Robert Mathis/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT
cc:  

Subject: 

Please see attached.