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----- Forwarded by Richard B Sanders/HOU/ECT on 12/01/2000 10:01 AM -----
Mary Hain 12/01/2000 09:49 AM To: "Ronald Carroll" <rcarroll@bracepatt.com< @ ENRON cc: <GFergus@brobeck.com<@ENRON, "Jeffrey Watkiss" <dwatkiss@bracepatt.com<@ENRON, <acomnes@enron.com<@ENRON, <jhartso@enron.com<@ENRON, <jsteffe@enron.com<@ENRON, <mary.hain@enron.com<@ENRON, <smara@enron.com<@ENRON, Richard Sanders, Christian Yoder/HOU/ECT@ECT, steve.c.hall@enron.com Subject: Re: Latest Draft Attached is the discussion of our net earnings for question 2. I also did a little tinkering with the last paragraph from the last version I sent. I haven't looked at Ron's proposal yet so if Ron rewrote this paragraph I may want to defer to what he said or figure out how to "simonize" (ha ha) the two. Sorry to send this to you so late. I thought I had sent it yesterday but forgot to click the send button on my E-mail. No wonder no one was sending any comments! Enron Capital & Trade Resources Corp. From: "Ronald Carroll" <rcarroll@bracepatt.com< 12/01/2000 06:48 AM To: <GFergus@brobeck.com< cc: "Jeffrey Watkiss" <dwatkiss@bracepatt.com<, <acomnes@enron.com<, <jhartso@enron.com<, <jsteffe@enron.com<, <mary.hain@enron.com<, <smara@enron.com< Subject: Re: Latest Draft Gary, Thanks for your comments. They were most helpful. I agree that I have swung for the fences in that discussion, and I am not overly optimistic that FERC will reach out and specifically assert preemption (although its assertion of preemption could be implicit in its actions). I thought that the argument that the market would be damaged by ongoing litigation might have some appeal at FERC, and it was worth a shot. Until I read your email, I thererfore saw no downside in asking. The question that I have for you is how strong would an allegation in court be that the mere fact that we asked for a preemption finding, as to which FERC did not address, constitutes a negative finding that FERC elected not to assert preemption. Not having done the research, my sense was that such a result would have no precedential effect, along the lines that a denial a cert by the Supreme Court is not precedential. This is an important point. Perhaps we could schedule a call with Mary, et al., to discuss strategy. Ron <<< "Fergus, Gary S." <GFergus@brobeck.com< 12/01/00 12:04AM <<< Ron, Your latest draft has minimized the earlier concerns that I had. You are definitely swinging for a preemption home run ball in the San Diego litigation. In response to Question No. 4, you are asking FERC to specifically to find that it is preempting investigations of last summers market, find that the rates charged were just and reasonable and determine that sellers are immune from refund under any possible legal theory. There is some risk if we ask for this finding and do not get it, that fact will diminish arguments we might have in state or federal court that there has been preemption. As a practical matter, however, our preliminary research has shown that without a very specific intent to preempt anti-trust laws, for example, the preemption argument may be difficult to make anyway. I know that this may be the one chance we have to get FERC to make a finding. If FERC does make the finding, it will undoubtedly be appealed. I do not know how to assess the likelihood that FERC will make the requested finding, and if they do whether it will be upheld on appeal, so it is difficult for me to do a risk benefit analysis. If we are going to go this route, I would take out the conditional phrase on page 7 in the word version that reads: "if they were not in violation of market rules established under the ISO's and PX's tariffs." I know Mary is still working on the economics response. I will look at as soon as it comes in. Thanks Gary ======================================================= This email message is for the sole use of the intended recipient(s) and may contain confidential and privileged information. Any unauthorized review, use, disclosure or distribution is prohibited. If you are not the intended recipient, please contact the sender by reply email and destroy all copies of the original message. To reply to our email administrator directly, send an email to postmaster@brobeck.com BROBECK PHLEGER & HARRISON LLP http://www.brobeck.com
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