Environmental findings, Koch South Texas Records Review ,
 Randy, this is a short summary of the environmental findings that were 
identified during the records review conducted at the Corpus Christi Koch 
facility offices on May 1st and 2nd of this year.

All environmental records which were available in the file data room at the 
Koch office  were reviewed.  Assumptions were made that the environmental 
records were complete for all assets included in the sale.  Primary emphasis 
was placed on those environmental issues which are normally associated with a 
sale or purchase of assets dealing with distribution and transmission of 
crude oil. In particular, pipeline and tank farms were the most critical 
assets which were reviewed. 

Based upon the data review, the Koch assets were in compliance with the 
following:

  Air permitting, permit by rule, standard expemtions, recordkeeping and fee 
payments were documented 

  NSPS recordkeeping and inspections for VOC control on large crude oil tanks 
were documented 

  Oil Pollution Act-OPA 90 plans had been prepared and were up to date

  SARA compliance and reporting had been completed

  SPCC plans had been prepared for each site which qualified under 40 CFR 112

  Spill reporting history and notifications to the state agency were 
available for review

   There are ongoing groundwater and soil remediation activities at one site 
included in the asset for sale
     (permits for the remediation activity is in place)

  Hazardous waste notifications, annual reportings and fee payments were 
documented

Based upon the above review, there were no issues which could be identified 
which would be condsidered a major environmental limitation or would be a 
considered a major environmental  liability.  This statement is again based 
upon the assumption that all environmental information was present in the 
data room for the assets in question.  It should also be stated that this 
analysis of Koch's environmental compliance is based upon the fact that Koch 
has not held back or provided false or misleading information or knowledge 
during their presentation or informaiton contained in the facility files.

Pending further development and interest of this potential purchase, a 
recommendation is made to conduct a phase I due diligence and site visit to 
each location to verify findings from the records review.   Also, due to the 
past history of Koch's operating practices, it is recommended that contract 
conditions be implicitly stated that EOTT will not be held liable for 
discoveries of past deficiencies or releases of contamination which have 
occurred on any of the Koch assets purchased.
randy.belyeu@enron.com