|
|
Enron Mail |
---------------------- Forwarded by Jeffrey Keeler/Corp/Enron on 09/06/2000
06:39 PM --------------------------- From: Jeffrey Keeler 09/06/2000 06:28 PM To: James Prentice/GPGFIN/Enron@ENRON, Stanley Horton/Corp/Enron@Enron, Shelley Corman/ET&S/Enron@ENRON, Ted Robinson/HOU/ECT@ECT, Michael A Robison/HOU/ECT@ECT, J Mark Metts/NA/Enron@Enron, Dwight Larson/Corp/Enron@ENRON, Michael Terraso/OTS/Enron@ENRON, Marc Phillips/OTS/Enron@ENRON, Jim Peterson/OTS/Enron@ENRON, Susan Worthen/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT, Joe Kolb/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT, Stacey Bolton/HOU/EES@EES, Sandra McCubbin/SFO/EES@EES, Richard Shapiro/HOU/EES@EES, James D Steffes/HOU/EES@EES, Rob Bradley/Corp/Enron@ENRON, Joe Allen/HOU/EES@EES, Joe Hillings/Corp/Enron@ENRON, Mark Palmer/Corp/Enron@ENRON, John Wodraska/HOU/AZURIX@AZURIX, Diane Bazelides/HOU/AZURIX@AZURIX, Jonalan Page/PDX/ECT@ECT, Thomas Krueger/HOU/ECT@ECT, Clayton Seigle/HOU/ECT@ECT, Chris Long/Corp/Enron@ENRON cc: Subject: Senate Environment Committee Markup Tomorrow (9/7) On Thursday 9/7 (tomorrow, 9 a.m.), the Senate Environment and Public Works Committee plans to mark up S. 2962, Chairman Bob Smith's legislation that would remove the oxygenate mandate and phase out MTBE. It is expected to be a very contested markup, with several Republicans and (hopefully) some Democrats opposing the legislation on various grounds. The basic provisions of the "Manager's Amendment" (the latest bill version that will be the operative vehicle at the markup) include: 1) Removal of the federal mandate that 2% of RFG contain oxygenates -- states apply for a waiver Comment: a state would need to do nothing but apply to have a waiver approved. Ethanol does not like this provision, because it harms them too, but the new "clean fuel" mandate (below) makes up for that. 2) A phase out of MTBE by 2004. Comment: rather than setting year-by-year goals, it sets a date certain for phase out in 2004 -- this is probably preferable for producers to transition to making other additives, giving them 4 years to make the necessary arrangements. 3) Environmental "Anti backsliding" language -- air toxics must be 27.5% better than a baseline -- criteria pollutants (this is still in development, drafted by NRDC) - sets a 5 year baseline period and then looks at that baseline and determines whether further action is warranted. Comment: this is a weak anti-backsliding provision, that will weaken MTBE's ability to hold on to market share on the basis that other additives are not meeting environmental criteria. 4) Clean Alternative Fuels Program: a mandate for clean, renewable fuels (mainly ethanol), ramps up over 10 years. It is estimated that the current 1.2 billion gallon market for ethanol would expand to 4.5 billion gallons in that 10 year period. Comment: This provision is the one that is causing most of the problems -- refiners, Highway Funding advocates (road builders, etc.) do not want to see ethanol get such a boost. Senator Jim Inhofe (the Clean Air subcommittee chairman) will vigorously try to remove this provision. In addition, ADM, Cargil and the other big ethanol producers don't really prefer this approach to an ethanol mandate. This may seem strange, but if there is simply an MTBE ban with no ethanol mandate, the market for ethanol production would increase quickly to 2.8 billion gallons, While this is smaller than the 10 year number of 4.5 billion gallons envisioned by the bill's mandate, the larger producers would be able to get a greater share and more money up front if there is no mandate. If the mandate stays in place, there will be more opportunity for smaller companies to build additional ethanol capacity to meet the eventual 4.5 bg market. 5) LUST funding: releases more LUST money and allows it to be used for remediation of MTBE spills. There are numerous amendments planned on various issues, many of which deal with the ethanol mandate. At this point, refiners (API, NPRA) are opposing the bill over ethanol issues. MTBE producers (thorough the OFA) are opposing the bill on a number of grounds and working with certain Republican Senators (Kay Bailey Hutchison, Bob Bennett) to develop amendments that would make the bill less acceptable. Enron has not directly opposed the legislation, but is relying on OFA to do most of that work. We have focused on issues related to "transition." Stranded cost amendments may be offered, but are not expected to have much traction. We were successful in getting Chairman Bob Smith to agree that if this bill is passed by the Committee, they will address issues of transition for MTBE producers before the bill goes to the Senate floor. He will engage in a "colloquy" with Senator Kay Bailey Hutchison at the end of the markup in which he will commit to work on these issues with Hutchison and other MTBE supporters. A transition package could include tax relief or other incentives for the production of other additives. In another recent positive development, we have received signals that Democrats Tom Daschle and Max Baucus will also support efforts to develop a MTBE transition package before a bill reaches the floor. This is largely in an effort to neutralize some of the MTBE industry opposition to a bill on the Senate floor. I will keep you posted as developments occur, and likely send a report later in the afternoon tomorrow. Please let me know if you have questions. Jeff Keeler
|