Rogas Line -- USFW Approval

Randi McCormick just forwarded to me a letter addressed to EOTT, dated
February 14, 2001 from the US Fish and Wildlife Service approving our
project "for participation in the Kern Water Bank Compensation Bank," and
authorizing the Water Bank "to extend their incidental take authority to you
and your entire project under their Master Permit." This is, of course, very
good news.

The letter notes, however, that we still need to purchase compensation
acreage both at North Coles Levee and at the Kern Water Bank. Specifically,
we must do the following: (1) contact Cheryl Harding of Kern Water Bank to
acquire 23.1 acres of compensation credits, and to get included in their
Master Permit; and (2) get Cheryl Harding a letter from the Coles Levee
Ecosystem Preserve (Mark Poe of Aera) stating that we have purchased 15.3
acres of credits for North Coles Levee, or that we have set aside that amount
from credits we have in the past purchased.

While I could make these contacts, I do not believe that would be wise
because -- as Kenny can attest -- our past experience has been that whenever
a lawyer contacts the Water Bank, it prompts them to automatically get their
lawyers involved. And our experience has been that this only slows things
down -- or worse.

My suggestion therefore is that one or both of you gentlemen contact Cheryl
as soon as practical and ask her for (1) proposed contract for acquisition of
23.1 acres of compensation credits and (2) perperwork to include EOTT (and
its contractors) in their Master Permit. She should also be informed that,
while we have not yet purchased the 15.3 acres of NCL credits, we will by the
end of this week have a letter of credit posted as security, as allowed under
our State Take Permit, to cover this amount of acreage. Ask whether a copy
of this LC will suffice for her purposes, or whether we will need to have the
actual acreage purchased.

As this would remove a major impediment to construction of the new lines, it
is important that we move on this will all deliberate speed. Please call me
if you have any questions, or if you would like otherwise to discuss how to
approach this issue. Thanks a lot.

--ETA