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Enron Mail |
Stan:
I have not talked directly with Coastal about their specific approach, but am aware of efforts to find tax relief for conversion of MTBE facilities to alkalytes. This is also an option that has been discussed in the OFA and MTBE Producer groups. It certainly could be a viable "fallback" position to stranded cost recovery. However, Coastal is very differently situated than Enron in terms of stranded costs or liability protection. Refiners can't make as good a case for stranded costs as the merchant producers of MTBE who developed unique facilites directly in response to the Clean Air Act oxygenate mandate. On liability protection, refiners and marketers are more directly responsible for groundwater contamination with MTBE because they have the leaking tanks -- so they have what could be characterized as "contributory negligence", where MTBE producers do not. I agree with Steve Kean's response -- going after liability protection is probably going to be more viable than finding stranded costs. We will keep pressing both issues, and distinguishing ourselves as one of the "good actors" that responded to the Clean Air Act to produce MTBE and has not contributed to gasoline spills. In terms of conversion to alkalytes, one of the complicating factors is the "tax" angle. In all the current legislative efforts in the House and Senate, the sponsors are avoiding inclusion of tax provisions so that the bills do not have to go through review by the separate tax committees, which would delay the legislation probably to its demise. Passing separate tax legislation that contains alkalyte conversion provisions may also be difficult -- in general, it will be hard for Congress to pass even modest tax legislation this year. If this emerges as a viable strategy, however, I think it is worth consideration. I will talk with Coastal to see what their strategy is and follow up with you and Jim Prentice to see if it's appropriate to pursue. Jeff Stanley Horton 04/10/2000 05:49 PM Sent by: Cindy Stark To: Jeffrey Keeler/Corp/Enron@ENRON cc: Cynthia Sandherr/Corp/Enron@ENRON, Steven J Kean/HOU/EES@EES, Shelley Corman/ET&S/Enron@ENRON Subject: MTBE Jeff: At the fundraiser for Senator Thomas, I had the opportunity to discuss with David Arledge (Coastal Corp's Chairman & CEO) the MTBE issue. Coastal's position is somewhat different than Enron's. Coastal is advocating some sort of tax relief on alkalytes, which is the product they would convert their plant to produce. They also advocate protection of litigation. David believes that Congress cannot approve a multi-million dollar bailout of MTBE producers but can pass a tax relief bill that would encourage MTBE producers to convert their plants. Two questions for you: 1) What do you think of Coastal's approach? and 2) Have you discussed the approach with Coastal? Stan
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