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Enron Mail |
I have no changes to the Beeson disclosure
=09Gary Peng@ENRON =0907/24/2000 03:53 PM =09=09=20 =09=09 To: Charles Cheek/Corp/Enron@Enron, Robert Eickenroht/Corp/Enron@Enr= on,=20 Richard B Sanders/HOU/ECT@ECT, Frank Smith/Corp/Enron@Enron =09=09 cc: Rex Rogers/Corp/Enron@Enron, Jan Johnson/GPGFIN/Enron@ENRON =09=09 Subject: Litigation and Other Contingencies Disclosure Find below the Litigation and Other Contingencies footnote from the the Mar= ch=20 31, 2000 Form 10-Q. Please update the section of the disclosure for which= =20 you are responsible for inclusion in the second quarter 2000 Form 10Q . =20 Also, please let me know if there are any new items that should be consider= ed. Please respond no later than Tueday August 1. Gary 3-6841 3. Litigation and Other Contingencies Enron is a party to various claims and litigation, the significant items o= f=20 which are discussed below. Although no assurances can be given, Enron=20 believes, based on its experience to date and after considering appropriate= =20 reserves that have been established, that the ultimate resolution of such= =20 items, individually or in the aggregate, will not have a material adverse= =20 impact on Enron=01,s financial position or its results of operations. Litigation. In 1995, several parties (the Plaintiffs) filed suit in Harri= s=20 County District Court in Houston, Texas, against Intratex Gas Company=20 (Intratex), Houston Pipe Line Company and Panhandle Gas Company=20 (collectively, the Enron Defendants), each of which is a wholly-owned=20 subsidiary of Enron. The Plaintiffs were either sellers or royalty owners= =20 under numerous gas purchase contracts with Intratex, many of which have=20 terminated. Early in 1996, the case was severed by the Court into two=20 matters to be tried (or otherwise resolved) separately. In the first matte= r,=20 the Plaintiffs alleged that the Enron Defendants committed fraud and=20 negligent misrepresentation in connection with the =01&Panhandle program,= =018 a=20 special marketing program established in the early 1980s. This case was=20 tried in October 1996 and resulted in a verdict for the Enron Defendants. = In=20 the second matter, the Plaintiffs allege that the Enron Defendants violated= =20 state regulatory requirements and certain gas purchase contracts by failing= =20 to take the Plaintiffs=01, gas ratably with other producers=01, gas at cert= ain=20 times between 1978 and 1988. The trial court certified a class action with= =20 respect to ratability claims. On March 9, 2000, the Texas Supreme Court=20 ruled that the trial court=01,s class certification was improper and remand= ed=20 the case to the trial court. The Enron Defendants deny the Plaintiffs=01,= =20 claims and have asserted various affirmative defenses, including the statut= e=20 of limitations. The Enron Defendants believe that they have strong legal a= nd=20 factual defenses, and intend to vigorously contest the claims. Although no= =20 assurances can be given, Enron believes that the ultimate resolution of the= se=20 matters will not have a material adverse effect on its financial position o= r=20 results of operations. On November 21, 1996, an explosion occurred in or around the Humberto Vida= l=20 Building in San Juan, Puerto Rico. The explosion resulted in fatalities,= =20 bodily injuries and damage to the building and surrounding property. San= =20 Juan Gas Company, Inc. (San Juan), an Enron subsidiary, operated a=20 propane/air distribution system in the vicinity. Although San Juan did not= =20 provide service to the building, the National Transportation Safety Board= =20 (NTSB) concluded that the probable cause of the incident was propane leakin= g=20 from San Juan=01,s distribution system. San Juan and Enron strongly disagr= ee. =20 The NTSB found no path of migration of propane from San Juan=01,s system to= the=20 building and no forensic evidence that propane fueled the explosion. Enron= ,=20 San Juan, and four San Juan affiliates have been named, along with several= =20 third parties, as defendants in numerous lawsuits filed in U.S. District=20 Court for the district of Puerto Rico and the Superior Court of Puerto Rico= . =20 These suits, which seek damages for wrongful death, personal injury, busine= ss=20 interruption and property damage, allege that negligence of Enron, San Juan= =20 and its affiliates, among others, caused the explosion. Enron, San Juan an= d=20 its affiliates are vigorously contesting the claims. Although no assurance= s=20 can be given, Enron believes that the ultimate resolution of these matters= =20 will not have a material adverse effect on its financial position or result= s=20 of operations. Trojan Investment Recovery. In early 1993, PGE ceased commercial operatio= n=20 of Trojan. In April 1996 a circuit court judge in Marion County, Oregon,= =20 found that the OPUC could not authorize PGE to collect a return on its=20 undepreciated investment in Trojan, contradicting a November 1994 ruling fr= om=20 the same court. The ruling was the result of an appeal of PGE=01,s March 1= 995=20 general rate order which granted PGE recovery of, and a return on, 87% of i= ts=20 remaining investment in Trojan. The 1994 ruling was appealed to the Oregon= =20 Court of Appeals and was stayed pending the appeal of the OPUC=01,s March 1= 995=20 order. Both PGE and the OPUC separately appealed the April 1996 ruling,=20 which appeals were combined with the appeal of the November 1994 ruling at= =20 the Oregon Court of Appeals. On June 24, 1998, the Court of Appeals of the= =20 State of Oregon ruled that the OPUC does not have the authority to allow PG= E=20 to recover a rate of return on its undepreciated investment in the Trojan= =20 generating facility. The court upheld the OPUC=01,s authorization of PGE= =01,s=20 recovery of its undepreciated investment in Trojan. PGE and the OPUC each filed petitions for review with the Oregon Supreme= =20 Court. On August 26, 1998, the Utility Reform Project filed a petition for= =20 review with the Oregon Supreme Court seeking review of that portion of the= =20 Oregon Court of Appeals decision relating to PGE=01,s recovery of its=20 undepreciated investment in Trojan. On April 29, 1999, the Oregon Supreme= =20 Court accepted the petitions for review. On June 16, 1999, Oregon House Bi= ll=20 3220 authorizing the OPUC to allow recovery of a return on the undepreciate= d=20 investment in property retired from service was signed. One of the effects= =20 of the bill is to affirm retroactively the OPUC=01,s authority to allow PGE= =01,s=20 recovery of a return on its undepreciated investment in the Trojan generati= ng=20 facility. Relying on the new legislation, on July 2, 1999, PGE requested the Oregon= =20 Supreme Court to vacate the June 24, 1998, adverse ruling of the Oregon Cou= rt=20 of Appeals, affirm the validity of the OPUC=01,s order allowing PGE to reco= ver a=20 return on its undepreciated investment in Trojan and to reverse its decisio= n=20 accepting the Utility Reform Project=01,s petition for review. The Utility= =20 Reform Project and the Citizens Utility Board, another party to the=20 proceeding, opposed such request and submitted to the Oregon Secretary of= =20 State sufficient signatures in support of placing a referendum to negate th= e=20 new legislation on the November 2000 ballot. The Oregon Supreme Court has= =20 indicated it will defer hearing the matter until after the November 2000=20 elections. Enron cannot predict the outcome of these actions. Additionall= y,=20 due to uncertainties in the regulatory process, management cannot predict,= =20 with certainty, what ultimate rate-making action the OPUC will take regardi= ng=20 PGE=01,s recovery of a rate of return on its Trojan investment. Although n= o=20 assurances can be given, Enron believes that the ultimate resolution of the= se=20 matters will not have a material adverse effect on its financial position o= r=20 results of operations. Environmental Matters. Enron is subject to extensive federal, state and= =20 local environmental laws and regulations. These laws and regulations requi= re=20 expenditures in connection with the construction of new facilities, the=20 operation of existing facilities and for remediation at various operating= =20 sites. The implementation of the Clean Air Act Amendments is expected to= =20 result in increased operating expenses. These increased operating expenses= =20 are not expected to have a material impact on Enron=01,s financial position= or=20 results of operations. The Environmental Protection Agency (EPA) has informed Enron that it is a= =20 potentially responsible party at the Decorah Former Manufactured Gas Plant= =20 Site (the Decorah Site) in Decorah, Iowa, pursuant to the provisions of the= =20 Comprehensive Environmental Response, Compensation and Liability Act (CERCL= A,=20 also commonly known as Superfund). The manufactured gas plant in Decorah= =20 ceased operations in 1951. A predecessor company of Enron purchased the=20 Decorah Site in 1963. Enron=01,s predecessor did not operate the gas plant= and=20 sold the Decorah Site in 1965. The EPA alleges that hazardous substances= =20 were released to the environment during the period in which Enron=01,s=20 predecessor owned the site, and that Enron=01,s predecessor assumed the=20 liabilities of the company that operated the plant. Enron contests these= =20 allegations. To date, the EPA has identified no other potentially=20 responsible parties with respect to this site. Under the terms of=20 administrative orders, Enron replaced affected topsoil and removed impacted= =20 subsurface soils in certain areas of the tract where the plant was formerly= =20 located. Enron completed the final removal actions at the site in November= =20 1998 and concluded all remaining site activities in the spring of 1999. =20 Enron submitted a final report on the work conducted at the site to the EPA= . =20 Enron does not expect to incur material expenditures in connection with thi= s=20 site. Enron=01,s natural gas pipeline companies conduct soil and groundwater=20 remediation on a number of their facilities. Enron does not expect to incu= r=20 material expenditures in connection with soil and groundwater remediation.
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