Message-ID: <16590824.1075846357881.JavaMail.evans@thyme>
Date: Fri, 8 Sep 2000 02:28:00 -0700 (PDT)
From: jeffrey.keeler@enron.com
To: james.prentice@enron.com, stanley.horton@enron.com, steven.kean@enron.com, 
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Subject: MTBE Legislation - Senate Markup
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The Senate Environment & Public Works Committee yesterday approved S. 2962, 
Chairman Bob Smith's (R-NH) RFG legislation by a final vote of 11-6.   The 
major provisions of the Smith bill include:
direct EPA to ban MTBE ban within 4 years, unless EPA found a ban 
unneccesary.   Allows states to ban MTBE.
allowing states to waive the federal requirement that RFG contain 2% oxygen 
by weight
a new "Clean Alternative Fuels Program" that mandates use of primarily 
ethanol from .6% in 2002 to 1.5% in 2015
authorizes the use of Leaking Underground Storage Tank (LUST) funds to 
remediate MTBE spills, and add $200 million to the LUST fund.

The markup saw a number of amendments from the Republican side, but Smith 
(R-N.H.) sided with committee Democrats at to defeat most, setting the stage 
for a rough road ahead for the bill before it can move any further in the 
Senate.  Particularly the ethanol mandate is bringing opposition from 
refiners, auto makers, and highway construction/users groups.  There will 
also be serious opposition going forward from a number of MTBE supporters in 
the Senate.   

The "no" votes and supporters of MTBE industry at the markup were Senators 
James Inhofe (R-OK), Kit Bond (R-MO), Kay Bailey Hutchison (R-TX), John 
Warner (R-VA), Craig Thomas (R-WY) and Robert Bennett (R-UT).   Senate 
Majority Whip Don Nickles (R-OK) has also indicated he will oppose the bill 
going forward.  The MTBE industry lobbied vigorously to try to gain support 
for amendments and defeat the bill, but most realized in advance that this 
outcome was not possible.  

From Enron's perspective, however, the markup was not entirely discouraging.  
In fact, we gained commitments by both Republican and Senate leaders to 
address our primary issue -- transition funding for MTBE producers affected 
by a ban of the product -- before the Smith bill moves to the Senate floor.   
Senator Kay Bailey Hutchison offered an amendment that we drafted, providing 
transition funding for MTBE producers who would have to retrofit their plants 
to produce other chemicals.   While the measure was defeated by voice vote, 
Chairman Smith agreed there should be transition funding, but said he could 
not support the amendment because the MTBE industry would not support an MTBE 
ban.   Smith did commit that he would work with Hutchison and MTBE producers 
before the bill goes to the Senate floor to achieve an acceptable compromise.

In addition, Senator Inhofe, Chairman of the Clean Air Subcommittee, offered 
a "liability relief" amendment, among several amendments he offered to the 
bill.   The amendment was aimed at providing "liability relief" to producers 
and distributors of MTBE, who face potential "toxic tort" lawsuits because of 
groundwater contamination.   The amendment was defeated by voice vote, and it 
will likely be a difficult fight to gain traction on this issue going forward.

Our task in the coming weeks will be to get MTBE producers to agree on the 
details of a transition package, and agree to back off somewhat on opposing 
the MTBE ban in exchange for this transition package.

I have attached a summary of the legislation, and a list of the amendments 
that were offered at the markup.   Please e-mail or call if you have 
questions or require additional information.  (202-466-9157)

Jeff Keeler