Jeff:  Ironically, after we spoke earlier today I received a follow up call from Norman Pedersen.  As I noted the other day, Norm would very much like to join our L.A. office to try to expand his existing energy practice, but as I indicated I do not want to run into future conflict issues with you, Rick, etc. This concerns me since I understand most of Norm's work is on the state regulatory side, particularly on gas matters.   

In that call, I tried to try drill down more as to whether, in Norm's view, if he were to join LeBoeuf in L.A. whether we would be likely to encounter conflict problems with Enron, particularly with respect to existing matters he might be handling for some of his clients.  My general view is that we could deal with future potential conflict issues when they arise, at least with respect with future matters that we can't envision at this point.  If such a matter were to arise in the future in L.A. (or CA) and it looked like we (i.e., LeBoeuf) might be at odds with Enron, my general sense is that we would most likely refrain from taking on that representation--or at least we would check with you and Rick first about it to get your take on our possible involvement in the proceedings.  In that respect, I asked Norm to prepare a list of those items that he is involved in now or which he is likely to be involved in in the near future where his existing clients potentially could be adverse to Enron.  I am forwarding that e-mail to you to get the your sense on it.  I would appreciate it if you would keep it confidential since, obviously, if things don't work out here between Norman and LeBoeuf, I do not want to hurt his situation with his existing firm or others he may be considering.  

In general, based on my conversation with Norm today, he feels that the gas proceeding where he foresaw a potential future conflict issue was in the PG&E territory (in the event the Southern California issues were to be "taken  to" Northern California), but he said that he thinks that future concern could be mooted if PG&E's proposed reorganization plan (which, as you know, was filed yesterday) successfully moves the gas transmission issues to the FERC (from the CPUC).  Obviously, one big caveat there is whether PG&E will be able to accomplish its current plans in that respect.

In any event, I hate to bother you with this in light of everything you have going on, but in fairness to Norm and my partners in our L.A. office who would like to begin to build an energy presence in that office, I just wanted to make sure that my diligence was as complete and up to date as possible based upon the changing regulatory landscape.  My sense from our conversation the other day was that there could be a host of conflict-type problems going forward that, frankly, I very much do not want to have to deal with.  However, if in the proceedings in which Norm's existing clients are likely to be involved in there would not be much of an issue from a conflict of interest standpoint based on what you know may be currently out there, I thought it might make some sense from our Firm's standpoint to try to get an energy presence in Southern California even if you and Enron may be using other legal counsel in the various regulatory proceedings.  (I assume it is safe for me to assume that you will not be requesting Dan's services in the near future??).  Norm appears to be a fairly solid lawyer and even if he were not doing any work for Enron, our general sense is that he otherwise could be potentially helpful to the Firm in expanding some of our energy work in CA.

Jeff, please do not consider this follow up to be any kind of pressure or anything along those lines.  In view of my desire to avoid conflict problems with the Company (we recently had the potential to handle a nice assignment for Rick that we had to turn down in that respect), I am still leaning against pursuing things further with Norm, but I just felt compelled to do a bit of further diligence (wearing my "Firm hat") after getting this further information from Norm about the things he is handling now and those he is likely to want to be involved in in the foreseeable future.  Thanks very much, Jeff.  

John

John Klauberg
LeBoeuf, Lamb, Greene & MacRae, L.L.P.
212 424-8125
john.klauberg@llgm.com
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--------- Inline attachment follows ---------

From:  <napedersen@JonesDay.com>
To: john.klauberg@llgm.com
CC: dean.hansell@llgm.com
Date: Thursday, September 20, 2001 9:26:50 GMT
Subject: 

John:

     After we got off our call, I went back to listening to the CPUC
meeting.  Yes, they voted 3-2 to kill direct access in California.

     The case in which the Southern California Generation Coalition and
Enron were adverse in 1999-2000 was CPUC I.99-07-003 regarding the
structure of SoCalGas operations.   A proposed decision was issued in
November, 2000.  Through today's meeting, no action has been taken by the
Commission on the proposed decision.  Thus, at least technically, the case
is still alive.

     Given the positions taken by Enron and SCGC in I.99-07-003, it was
thought that my clients and Enron would be likely to square off again in an
anticipated proceeding regarding the structure of PG&E gas operations.
PG&E is required to file an application proposing  a structure for
post-2002 gas operations no later than October 6.  However, that proceeding
may never amount to much, assuming that it even gets off the ground.  The
reorganization plan that PG&E announced this morning proposes a spin-off of
PG&E's intrastate gas transmission operations with jurisdiction shifting
from the CPUC to the FERC.  That could eliminate from the CPUC proceeding
the issues on which my clients and Enron might have been adversial.

     It is conceivable that SCGC and Enron will be on opposite sides on
issues in the SoCalGas Biennial Cost Allocation Proceeding in which
SoCalGas is due to file an application on Friday.   However, insofar as
Enron is not a SoCalGas ratepayer, it usually is not involved in BCAPs.

     I do not foresee any other cases at this point in time in which my
clients and Enron might be adversial.  As we discussed, there are currently
numerous matters on which interests are aligned.

                                         Norman



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