-----Original Message-----
From: 	Jim Mccartney <jw1000mac@yahoo.com>@ENRON [mailto:IMCEANOTES-Jim+20Mccartney+20+3Cjw1000mac+40yahoo+2Ecom+3E+40ENRON@ENRON.com] 
Sent:	Wednesday, June 06, 2001 4:25 PM
To:	Walls Jr., Rob
Cc:	bruce.lundstrom.@enron.com
Subject:	dpc

CONFIDENTIAL, PRIVILEDGED ATTORNEY-CLIENT
COMMUNICATION...rob and bruce. i read yesterday the
erc of 1998 yesterday as well as the indian solicitors
opinions, and most of the regs. i am out of town for a
couple of days and i just wanted to give you my
reactions....1. i feel that we would not prevail on
our jurisdiction arguments were we before a u.s.
court. the law is too well established against us
here. i am coming from having been involved in both
the contract modification point in various fpc/ferc
cases including the order 380 cases that overturned
all the pipeline contracts and the gulf warranty/texas
eastern case that disregarded the arbitration
provision of the gulf warranty contract in favor of
fpc review. so i confess, i would be hard to convince.
2. we are positing a rather narrow interpretation of
the dispute resolution authority, e.g. no jurisdiction
for disputes between "utilities". will the h.c.
interpret the mrc for all future cases as withholding
jurisdiction or disputes between utilities? the point
of all this negativism is that we consider trying to
avoid the risk of an up or down decision by the h.c.
(obviously, we may not be able to do so and some
probably will not wish to do so), suggesting
alternatively to the court that it e.g. permit the ppa
arbitration to go forward, deferring to a future date
the jurisdiction determination. in one of our
discussions chris mentioned this as a strategy. there
are no doubt other imaginative options. i, of course,
defer to chris and the indian counsel, who believe
merc has no jurisdiction, but this regluatory issue is
new to them and old to u.s. public service companies
and me, so i would question them thoroughly to be sure
they have focussed on the risks. an adverse finding by
merc could effect our political risk coverage. we
might quietly ask our coverage expert how an adverse
merc finding on the misrep issue would effect our
protection. 3.  a couple of comments on today's
meeting...i am concerned that any hint or threat of a
lender liability claim would produce a claim against
us, not a valid one, but one we don't want. secondly i
would use bankrupcy as a last resort to save our
having to put more into the project. clearly others
know much better than i, but i don't see us salvaging
any equity money from a bankrupcy and i don't see the
indian courts or merc honoring a u.s. court order. for
whatever value or use, if any, they may be, these are
my views, which i reserve the right to change. jim

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