While lawyers talked about a major step forward in 11 separate lawsuits that have been consolidated in California state courts regarding allegations that El Paso Corp. and San Diego-based Sempra Energy conspired to block increased interstate natural gas pipelines serving the state, Sempra tried Thursday to downplay a San Diego judge’s action, stressing that it was strictly procedural and did not rule on the merits of the lawsuits.

The cases are an offshoot of the state’s 2000-2001 energy crisis that included huge spikes in the California-Arizona border natural gas prices. Allegations of conspiracy to drive up wholesale gas prices brought lawsuits from various firms, businesses and at least three local governments (Long Beach and Los Angeles City and County) in several state Superior Courts. Sempra and El Paso both asked for them to be dismissed as being federal jurisdictional matters. (El Paso is named in all of the suits; Sempra’s Southern California Gas Co. and San Diego Gas and Electric Co. in seven of them.)

General news reports on Wednesday’s ruling denying the dismissals and saying that state anti-trust and competition laws could have been violated were branded as “misleading” by a Los Angeles-based Sempra spokesperson, who noted that the judge did not decide that the issues should go to trial at this point. It is a “procedural” decision, allowing for discovery to begin that could lead up to a trial and set a preliminary date for that as Sept. 4, 2003.

“The ruling was not about the merits or the facts of the case; it merely ruled that the court has jurisdiction over the case — not FERC,” the spokesperson said. Lawyers for the plaintiffs painted a different picture, including claims that an eventual jury award from any one of the lawsuits could result in nearly $1 billion in penalties, according to a Reuters report on the ruling.

“This is simply a preliminary ruling on a procedural matter,” both Sempra’s and El Paso’s spokespeople stressed. Judge Richard Haden’s ruling said “FERC cannot adjudicate this claim. This court will hear this matter, pending FERC’s proceedings.”

Proving the allegations could lead to damages and restitution, although El Paso and Sempra’s utilities all have strongly denied any wrongdoing during the past two years as they have attempted to get the case dismissed at the state level, claiming that the lawsuits “overlook critical facts and are without merit.” Similar allegations are involved in FERC’s ongoing investigation, in which its chief administrative law judge recently proposed a finding that El Paso and its affiliates manipulated wholesale border prices. El Paso will argue its side of that case at a FERC hearing next month.

Plaintiffs’ attorneys in the state case were quoted in local news media as saying the court ruling rejected the energy companies “on all fronts,” and they now intend to force senior executives at the targeted companies to testify under oath about an alleged 1996 meeting in Phoenix at which the companies allegedly conspired to divide up the gas market in Southern California and block less-expensive Canadian supplies from entering the state by having El Paso help kill a proposed Canadian pipeline project.

“This ruling is the first in a series of proceedings,” said El Paso spokesperson Kim Wallace, in the Reuters report. “And we believe these cases do not have any merit.”

What is not clear at this point is whether either jurors in a state court or regulators at FERC will have the ultimate say in these cases. As with any set of litigation, negotiated settlements often come before cases like these ever get to trial.

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