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Enron Mail |
I have no changes to the Intratex case description.
=09Gary Peng@ENRON =0910/19/2000 06:13 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 Jun= e=20 30, 2000 Form 10-Q. Please update the section of the disclosure for which= =20 you are responsible for inclusion in the third quarter 2000 Form 10Q . Als= o,=20 please let me know if there are any new items that should be considered. Please respond no later than Monday October 30. 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 Gas), an Enron affiliate, operated a=20 propane/air distribution system in the vicinity, but did not provide servic= e=20 to the building. Enron, San Juan Gas, four affiliates and their insurance= =20 carriers were named as defendants, along with several third parties,=20 including The Puerto Rico Aqueduct and Sewer Authority, Puerto Rico Telepho= ne=20 Company, Heath Consultants Incorporated, Humberto Vidal, Inc. and their=20 insurance carriers, in numerous lawsuits filed in U.S. District Court for t= he=20 District of Puerto Rico and the Superior Court of Puerto Rico. These suits= =20 seek damages for wrongful death, personal injury, business interruption and= =20 property damage allegedly caused by the explosion. After nearly four years= =20 without determining the cause of the explosion, all parties have agreed not= =20 to litigate further that issue, but to move these suits toward settlements = or=20 trials to determine whether each plaintiff was injured as a result of the= =20 explosion and, if so, the lawful damages attributable to such injury. The= =20 defendants have agreed on a fund for settlements or final awards. Numerous= =20 suits have been settled and 20 cases have been set for trial in the federal= =20 court beginning in February 2001. Although no assurances can be given, Enro= n=20 believes that the ultimate resolution of these matters will not have a=20 material adverse effect on its financial position or results of operations. Trojan Investment Recovery. In early 1993, Portland General Electric=20 Company (PGE) ceased commercial operation of the Trojan nuclear power=20 generating facility (Trojan). In April 1996 a circuit court judge in Mario= n=20 County, Oregon, found that the Oregon Public Utility Commission (OPUC) coul= d=20 not authorize PGE to collect a return on its undepreciated investment in=20 Trojan, contradicting a November 1994 ruling from the same court. The ruli= ng=20 was the result of an appeal of PGE=01,s March 1995 general rate order which= =20 granted PGE recovery of, and a return on, 87% of its remaining investment i= n=20 Trojan. The 1994 ruling was appealed to the Oregon Court of Appeals and wa= s=20 stayed pending the appeal of the OPUC=01,s March 1995 order. Both PGE and = the=20 OPUC separately appealed the April 1996 ruling, which appeals were combined= =20 with the appeal of the November 1994 ruling at the Oregon Court of Appeals.= =20 On June 24, 1998, the Court of Appeals of the State of Oregon ruled that th= e=20 OPUC does not have the authority to allow PGE to recover a rate of return o= n=20 its undepreciated investment in Trojan. The court upheld the OPUC=01,s=20 authorization of PGE=01,s recovery of its undepreciated investment in Troja= n. 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 Trojan. 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 any additional expenditures in connection wi= th=20 this 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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