Subject: RE: Second Quarter 10-Q Litigation Disclosure
From: [email-masked]
To: [email-masked]
Cc: [email-masked]
Date: Thu, 26 Jul 2001 06:54:14 -0700 (PDT)

I have asked my asst. to put a meeting together.

 -----Original Message-----
From: 	Rogers, Rex  
Sent:	Thursday, July 26, 2001 8:48 AM
To:	Sanders, Richard B.; Eickenroht, Robert; Peng, Gary
Subject:	RE: Second Quarter 10-Q Litigation Disclosure

Richard:  We have a general discussion of California in our current SEC filings, but it is not included in the Litigation footnote.  Once we start putting the California discussion in the Litigation footnote, it pretty much stays there until all this goes away (which I assume could take years).  Gary: would you please send to Richard our current discussion of California that appeared in the first Quarter 10-Q.  Richard: I have tried to keep up to speed with our cases trough yours and Vicki Sharp's monthly litigation reports, but perhaps we could get together for just a few minutes next week at your convenience to discuss the status of the cases and the FERC proceedings.  thanks for your help.  Rex 

 -----Original Message-----
From: 	Sanders, Richard B.  
Sent:	Wednesday, July 25, 2001 5:46 PM
To:	Rogers, Rex; Eickenroht, Robert; Peng, Gary
Subject:	FW: Second Quarter 10-Q Litigation Disclosure

Are we doing anything on California and do you need my input?
 -----Original Message-----
From: 	Cheek, Charles  
Sent:	Monday, July 23, 2001 12:03 PM
To:	Peng, Gary; Eickenroht, Robert; Sanders, Richard B.
Cc:	Rogers, Rex
Subject:	RE: Second Quarter 10-Q Litigation Disclosure

The Rio Piedras Explosion Litigation note needs to be updated. My suggested note follows with deletions being noted by "***" and additions noted in bold.  Please let me know if you have any questions are comments.

____________ 

On November 21, 1996, an explosion occurred in *** the Humberto Vidal Building in San Juan, Puerto Rico. The explosion resulted in fatalities, bodily injuries and damage to the building and surrounding property. San Juan Gas Company, Inc. (San Juan Gas), an Enron affiliate, operated a propane/air distribution system in the vicinity, but did not provide service to the building. Enron, San Juan Gas, four affiliates and their insurance carriers were named as defendants, along with several third parties, including The Puerto Rico Aqueduct and Sewer Authority, Puerto Rico Telephone Company, Heath Consultants Incorporated, Humberto Vidal, Inc. and their insurance carriers, in numerous lawsuits filed in U.S. District Court for the District of Puerto Rico and the Superior Court of Puerto Rico. These suits seek damages for wrongful death, personal injury, business interruption and property damage allegedly caused by the explosion. After nearly four years without determining the cause of the explosion, all parties *** agreed not to litigate further that issue, but to move these suits toward settlements or trials to determine whether each plaintiff was injured as a result of the explosion and, if so, the lawful damages attributable to such injury. The defendants *** agreed on a fund for settlements or final awards. Numerous claims have been settled and ten cases involving 19 plaintiffs are scheduled for trail in the United States District Court beginning on December 10, 2001. No cases have yet been scheduled for trail in the Superior Court. Although no assurances can be given, Enron believes that the ultimate resolution of these matters will not have a material adverse effect on its financial position or results of operations. 
____________

 -----Original Message-----
From: 	Peng, Gary  
Sent:	Thursday, July 19, 2001 3:37 PM
To:	Cheek, Charles; Eickenroht, Robert; Sanders, Richard B.
Cc:	Rogers, Rex
Subject:	Second Quarter 10-Q Litigation Disclosure

Find below the Litigation and Other Contingencies footnote from the the March 31, 2001 Form 10-Q.  Please update the section of the disclosure for which you are responsible for inclusion in the second quarter 2001 Form 10Q .  Also, please let me know if there are any new items that should be considered.

Please respond no later than Monday July 30.

Thanks,

Gary
3-6841

3. LITIGATION AND OTHER CONTINGENCIES 
Enron is a party to various claims and litigation, the significant items of which are discussed below. Although no assurances can be given, Enron believes, based on its experience to date and after considering appropriate reserves that have been established, that the ultimate resolution of such items, individually or in the aggregate, will not have a material adverse impact on Enron's financial position or results of operations. 
Litigation. In 1995, several parties (the Plaintiffs) filed suit in Harris County District Court in Houston, Texas, against Intratex Gas Company (Intratex), Houston Pipe Line Company and Panhandle Gas Company (collectively, the Enron Defendants), each of which is a wholly-owned subsidiary of Enron. The Plaintiffs were either sellers or royalty owners under numerous gas purchase contracts with Intratex, many of which have terminated. Early in 1996, the case was severed by the Court into two matters to be tried (or otherwise resolved) separately. In the first matter, the Plaintiffs alleged that the Enron Defendants committed fraud and negligent misrepresentation in connection with the "Panhandle program," a special marketing program established in the early 1980s. This case was tried in October 1996 and resulted in a verdict for the Enron Defendants. In the second matter, the Plaintiffs allege that the Enron Defendants violated state regulatory requirements and certain gas purchase contracts by failing to take the Plaintiffs' gas ratably with other producers' gas at certain times between 1978 and 1988. The trial court certified a class action with respect to ratability claims. On March 9, 2000, the Texas Supreme Court ruled that the trial court's class certification was improper and remanded the case to the trial court. The Enron Defendants deny the Plaintiffs' claims and have asserted various affirmative defenses, including the statute of limitations. The Enron Defendants believe that they have strong legal and factual defenses, and intend to vigorously contest the claims. Although no assurances can be given, Enron believes that the ultimate resolution of these matters will not have a material adverse effect on its financial position or results of operations. 
On November 21, 1996, an explosion occurred in or around the Humberto Vidal Building in San Juan, Puerto Rico. The explosion resulted in fatalities, bodily injuries and damage to the building and surrounding property. San Juan Gas Company, Inc. (San Juan Gas), an Enron affiliate, operated a propane/air distribution system in the vicinity, but did not provide service to the building. Enron, San Juan Gas, four affiliates and their insurance carriers were named as defendants, along with several third parties, including The Puerto Rico Aqueduct and Sewer Authority, Puerto Rico Telephone Company, Heath Consultants Incorporated, Humberto Vidal, Inc. and their insurance carriers, in numerous lawsuits filed in U.S. District Court for the District of Puerto Rico and the Superior Court of Puerto Rico. These suits seek damages for wrongful death, personal injury, business interruption and property damage allegedly caused by the explosion. After nearly four years without determining the cause of the explosion, all parties have agreed not to litigate further that issue, but to move these suits toward settlements or trials to determine whether each plaintiff was injured as a result of the explosion and, if so, the lawful damages attributable to such injury. The defendants have agreed on a fund for settlements or final awards. Numerous claims have been settled. Although no assurances can be given, Enron believes that the ultimate resolution of these matters will not have a material adverse effect on its financial position or results of operations. 
Trojan Investment Recovery. In early 1993, Portland General Electric (PGE) ceased commercial operation of the Trojan nuclear power generating facility. The Oregon Public Utility Commission (OPUC) granted PGE, through a general rate order, recovery of, and a return on, 87 percent of its remaining investment in Trojan. 
The OPUC's general rate order related to Trojan has been subject to litigation in various state courts, including rulings by the Oregon Court of Appeals and petitions to the Oregon Supreme Court filed by parties opposed to the OPUC's order, including the Utility Reform Project(URP) and the Citizens Utility Board (CUB). 
In August 2000, PGE entered into agreements with the CUB and the staff of the OPUC to settle the litigation related to PGE's recovery of its investment in the Trojan plant. Under the agreements, the CUB agreed to withdraw from the litigation and to support the settlement as the means to resolve the Trojan litigation. The OPUC approved the accounting and ratemaking elements of the settlement on September 29, 2000. As a result of these approvals, PGE's investment in Trojan is no longer included in rates charged to customers, either through a return on or a return of that investment. Collection of ongoing decommissioning costs at Trojan is not affected by the settlement agreements or the September 29, 2000 OPUC order. With the CUB's withdrawal, the URP is the one remaining significant adverse party in the litigation. The URP has indicated that it plans to continue to challenge the OPUC order allowing PGE recovery of and a return on its investment in Trojan. 
Enron cannot predict the outcome of these actions. Although no assurances can be given, Enron believes that the ultimate resolution of these matters will not have a material adverse effect on its financial position or results of operations. 
Environmental Matters. Enron is subject to extensive federal, state and local environmental laws and regulations. These laws and regulations require expenditures in connection with the construction of new facilities, the operation of existing facilities and for remediation at various operating sites. The implementation of the Clean Air Act Amendments is expected to result in increased operating expenses. These increased operating expenses are not expected to have a material impact on Enron's financial position or results of operations. Enron's natural gas pipeline companies conduct soil and groundwater remediation on a number of their facilities. Enron does not expect to incur material expenditures in connection with soil and groundwater remediation.