CA Legislative Committee Drops Contempt Sanctions Against Enron

The California senate rules committee Friday dropped contempt action against Enron Corp. after reaching agreement with the company on confidentiality protections for commercial documents the lawmakers are demanding. The agreement is identical to one signed with Reliant Energy earlier in the month, according to an Enron spokesperson.

These events bring to a close a bitter fight that has included Enron taking the lawmakers to state court and comes on the last scheduled day of this year's state legislative session, and one in which a number of key energy and fiscal issues were still undecided early in the day.

A special state senate committee investigating possible market manipulation in the state's wholesale natural gas and electricity markets cited Enron for contempt for allegedly failing to produce documents that other merchant generators eventually provided. The senate rules committee delayed sending the contempt issue to the full legislative body, allowing time for the company and the committee to work out a means of protecting confidential, "trade secret" information as ordered Sept. 6 by a Sacramento superior court judge.

With claims of stonewalling on both sides, the rules committee chair and also head of the senate, John Burton, said he was prepared to support a contempt finding with full sanctions against Enron, but first wanted the committee and company to work out a so-call "protective order" to which the state court said Enron was entitled.

Although state lawmakers closed their session by midnight Friday, the investigation of possible market abuses will continue, and reportedly will be expanded to include almost a dozen public power suppliers, such as the Los Angeles Department of Water and Power, BC Hydro in Canada and the Sacramento Municipal Utility District. Statistics from various public and private sources have indicated that over a critical 12- to 14-month period ending at the start of summer this year, the public sector power suppliers on average charged prices higher than private sector generator/marketers.

During the rules committee hearing, the select committee chairman, Joseph Dunn, and a ranking Republican minority leader, Ross Johnson, debated whether Enron was being treated "fairly," and whether the fact that the company challenged the committee in the courts was leading to a "punitive" response from the committee.

"This smacks of being punishment for the company exercising its rights and by taking the government to court," Johnson said at one point in a discussion by senators and attorneys at the committee hearing. "It smacks of a little `payback'."

Sen. Dunn responded that the contempt issue was separate from Enron's court-directed "protective order" for its commercially sensitive documents, but was instead centered on many non-privileged documents that Enron has failed to produce throughout the summer, although the other generators have complied.

Since the court ruling Sept. 6, Sen. Dunn's committee until ordered to do so by the senate rules committee last Thursday had refused to meet with Enron to discuss terms, said Houston-based Enron spokesperson Karen Denne.

Sen. Burton essentially encouraged the attorneys for both sides to work out an agreement on the protective order so the issue of contempt sanctions can be dropped. He indicated he hoped it would be worked out and approved by the senate by late Thursday or sometime Friday, the final day of the session.

"If I had to error on any side, it would not be on Enron's," Burton said at the rules committee hearing. "My inclination absent something else, would be to vote for the contempt with a little bit heavier sanctions. It is lost on me why all of these other (generators) did something (turned over documents), and you (Enron) did not. I don't think their lawyers were dumber than you. I am kind of at a loss as how we got here."

In the meantime, Enron had another court hearing date for next Wednesday (Sept. 19) to resist the senate committee's data request that it has now withdrawn. Sen. Johnson said Thursday he hoped "cooler heads will prevail," and they apparently did.

©Copyright 2001 Intelligence Press Inc. All rights reserved. The preceding news report may not be republished or redistributed, in whole or in part, in any form, without prior written consent of Intelligence Press, Inc.