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Enron Mail |
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.
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