Subject: New Senate Bill: Pipeline Safety
From: [email-masked]
To: [email-masked], [email-masked], [email-masked], [email-masked], [email-masked]
Cc: [email-masked]
Date: Wed, 6 Sep 2000 04:55:00 -0700 (PDT)

For your background and heads-up, we understand that the U.S. Senate is very 
close to agreement on a pipeline safety bill and it may be voted on by the 
full Senate as early as Wednesday evening.  Although this bill pre-dates the 
pipeline explosion in New Mexico and is not directly linked to it, the 
tragedy seems to have hastened the progress of this proposed bill.  We 
suspect that when approved in the Senate, this bill may draw press coverage 
and create some headlines, though the focus of the media attention and the 
reaction of gas trading markets--if any-- sems hard to predict.  One possible 
"market-moving" aspect of this legislation may be the announced increased 
costs that will need to be borne by pipeline operators in the future to fund 
new R&D and new safety measures.  

The main points of this bill are:

The bill would impose several new requirements on pipeline operators 
regarding inspection methods and community "right to know."  The language 
specifically allows for "periodic assessment of the integrity of the pipeline 
through methods including internal inspection, pressure testing, direct 
assessment, or other effective methods."

The bill would allow greater state authority over interstate pipes, with 
coordination between state and local officials and the Office of Pipeline 
Safety.  OPS will remain the controlling authority in matters of pipeline 
safety.

It would provide more R&D money and authorize an increase in user fees over 
the next two years.   

Cost assessment:  the legislation will increase operators' day-to-day costs 
and impose greater user fees.   Based on the calls for greater R&D, and for 
better OPS/DOT inspection capabilities in the future, we can expect 
appropriations in the next few fiscal years to be targeted for substantial 
increases -- most of which will come out of user fees paid by pipelines.

Political assessment:   Apparently the changes made to the bill in recent 
weeks reflect a number of the arguments Enron has been making in negotiations 
to make the McCain bill more palatable.  Even in the face of the El Paso 
incident, the Enron Political Affairs staff has reportedly been able to make 
meaningful changes to what was previously an unacceptable piece of 
legislation.  In the assessment of the Enron DC office, it is certainly in 
the best interests of the industry to lobby for its passage, given the 
political uncertainties of a new Congress in 2001 -- it would not be 
beneficial to have to re-start our negotiations from scratch next year.

In the House of Representatives:  The House has its own pipeline safety bill 
pending.  It remains to be seen whether the leadership will push for this 
bill (which will require reconciliation with the Senate bill before it can 
become a law), or whether the House will just adopt the bill that comes out 
of the Senate.  With only about four weeks left in the congressional session, 
final passage of a bill out of Congress will likely come only at the end of 
the session in October.