Click here for Adobe Acrobat version
Click here for Microsoft Word version
********************************************************
NOTICE
********************************************************
This document was converted from Microsoft Word.
Content from the original version of the document such as
headers, footers, footnotes, endnotes, graphics, and page numbers
will not show up in this text version.
All text attributes such as bold, italic, underlining, etc. from the
original document will not show up in this text version.
Features of the original document layout such as
columns, tables, line and letter spacing, pagination, and margins
will not be preserved in the text version.
If you need the complete document, download the
Microsoft Word or Adobe Acrobat version.
*****************************************************************
Consent Decree
I. Introduction
1. This Consent Decree is entered into by the Enforcement
Bureau of the Federal Communications Commission (``Bureau '')
and Enron Corp. (``Enron'').1
II. Background
2. Enron is a large diversified corporation that markets
electricity and natural gas; delivers physical commodities and
financial and risk management services to customers around the
world; and has developed an intelligent network platform to
facilitate online business. Its revenues in 2000 were $101
billion.
3. Enron has hundreds of affiliates and subsidiaries, and among
these companies, Enron holds hundreds of FCC licenses. These
licenses are primarily for private land mobile radio and fixed
non-commercial microwave facilities used in connection with
the operation of Enron's gas pipelines and other industrial
facilities. Only one subsidiary, Enron Broadband Services,
Inc., holds FCC licenses and authorizations used in the
provision of communications services. In the normal course of
business, Enron also frequently engages in corporate
transactions regarding its energy operations, including the
acquisition and disposition of companies that hold FCC radio
licenses used for intracorporate communications. Until the
date of this Consent Decree, oversight of FCC approvals
required in connection with any such transactions was
decentralized among Enron's various affiliates and
subsidiaries. In some cases, the prior approvals required
under Section 310(d) of the Communications Act of 1934, as
amended (the ``Act''), 47 U.S.C. § 310(d), for transfers of
control or assignments of FCC licenses were not timely
obtained. These failures were first discovered by Enron in
connection with the transfer of control of licenses held by
Portland General Electric Company (``PGE'') as a result of the
1977 merger of PGE's parent company, Portland General
Corporation (``PGC'') with Enron. On its own, Enron filed an
initial set of applications in August 1998 and a second set in
November 2000 for nunc pro tunc approval of the 1997
transaction involving wireless facilities in the land mobile,
microwave, marine coastal, ship, and aircraft services.2
These applications were granted by the staff of the
Commission's Wireless Telecommunications Bureau. However, the
circumstances prompted the Commission's Enforcement Bureau to
require that Enron enter into this Consent Decree.
4. In preparation for entry into this Consent Decree, Enron has
voluntarily undertaken a comprehensive internal review of all
transactions involving the acquisition of FCC licenses by
Enron subsidiaries and affiliate companies by either transfer
of control or assignment, and has taken all necessary remedial
action to ensure that all approvals for such transfers of
control and assignments have been obtained. The following is
a list of the transactions identified by Enron in its internal
review and now incorporated by reference into this Consent
Decree:
a. Licensee: Portland General Electric (Transfer of control
from Portland General Corporation; Aircraft and Ship
Licenses). As described above, control of several licenses
held by PGE were transferred to Enron in 1997 without prior
FCC approval through the merger of PGE's parent company,
PGC, with Enron Corp. In September 1998, on its own
initiative, Enron submitted applications to the FCC for
approval, nunc pro tunc, of the transfer of control of 27 of
the licenses. These applications were approved on January
25, 1999. In November 2000, Enron filed applications again
on its own motion to transfer control of an additional 69
licenses.3 All of these applications also have been
approved. The audit conducted in connection with this
Consent Decree identified one additional license for which
an application previously had been filed but, according to
the FCC's ULS database, had not been effectively
transferred. Therefore, another application for nunc pro
tunc approval of the transfer of control of that license was
submitted on December 19, 2001. Additionally, the licensee
holds ship and aircraft licenses, which may not be
transferred. Applications for new ship and aircraft
licenses were filed on December 19, 2001.4
b. Licensee: Enron Corp. d/b/a Zond Maintenance Corp (Transfer
of control from Zond Corporation, Name Change to Enron Wind
Maintenance and Aircraft Licenses). In January 1997, Zond
Corporation (``Zond''), the parent company of Zond
Maintenance Corporation (``Zond Maintenance'') was acquired
by Enron Renewable Energy Corp., which at the time was 78%
owned by Enron Corp. Subsequently, the corporate name of
Zond was changed to Enron Wind Corp. and the corporate name
of the licensee was changed to Enron Wind Maintenance Corp.
One call sign, originally held by Zond Maintenance, was not
effectively transferred to Enron, and appeared in the FCC's
database under the licensee name ``Enron Corp d/b/a/ Zond
Maintenance Corp.'' An application for nunc pro tunc
approval of the transfer of control of that license was
submitted on December 19, 2001. Simultaneously, an
administrative change was requested to correct the name of
the licensee. Additionally, the licensee holds two aircraft
call signs, which may not be transferred. New applications
for aircraft licenses were submitted on December 19, 2001.
c. Licensee: Limbach Company (Transfer of Control from Anjou
International Company). On March 3, 1998, Artemis
Associates, LLC, indirectly 100% owned by Enron, took
control from Anjou International Company of the latter's
subsidiary, Limbach Holdings, Inc., the ultimate parent of
licensee Limbach Company (``Limbach''). Limbach holds
licenses for private land mobile radio facilities. Prior
approval for the transfer of control of four licenses was
not obtained. Applications for nunc pro tunc approval of
the transfers of control were submitted on December 19,
2001.
d. Licensee: Bridgeline Holdings, L.P. (Assignment of
Authorizations from Louisiana Resources Company). On
February 3, 2000, the assets of Louisiana Resources Company
(``Louisiana Resources''), indirectly 100% owned by Enron,
along with licenses for microwave and private radio
facilities, were contributed to a new partnership,
Bridgeline Holdings, L.P., (``Bridgeline''). Bridgeline is
40% owned and 50% controlled by Enron and 60% owned and 50%
controlled by Texaco Exploration and Production, Inc. Prior
approval for the assignment of four licenses was not
obtained. An application for nunc pro tunc approval of the
assignment of the Louisiana Resources licenses to Bridgeline
was submitted on December 19, 2001.
e. Licensee: Midwestern Gas Transmission Company (Assignment of
Authorizations from EPEC Communications Corporation). On
April 30, 2001, Midwestern Gas Transmission Company, a
subsidiary of El Paso Corporation (``El Paso''), was
acquired by Border Midwestern Company, a subsidiary of
Northern Border Partners, L.P., a partnership indirectly
controlled by Enron. As part of this transaction,
Midwestern Gas took assignment of private radio licenses
from EPEC Communications Corporation, another El Paso
subsidiary. Upon their realization that the Commission' s
consent to the assignment of 14 licenses inadvertently had
not been timely obtained, the parties on their own motion
submitted an application for FCC approval nunc pro tunc on
May 30, 2001. The application was granted on June 8, 2001.
f. Licensee: InterEnergy Sheffield Processing Company (Transfer
of Control and Name Change to Bear Paw Energy , LLC (`` Bear
Paw'') Bear Paw, holder of seven private radio license, is
the successor in interest to InterEnergy Sheffield
Processing Company. On March 30, 2001, ultimate control of
Bear Paw was transferred to Enron by the acquisition of the
company by Northern Border Partners, L.P Prior FCC approval
for the transfer of control of the licenses was not
obtained. An application for approval nunc pro tunc of the
transfer of the licenses, and a change in the licensee name
for one call sign, was filed on December 19, 2001.
g. Licensees: Black Mesa Pipeline, Inc. (``BMP'') (Aircraft
License and Transfer of Control from Prudential Insurance
Company of America (``Prudential'')) On August 29, 1996,
majority control of Black Mesa Holdings, Inc. (``BMHI''),
the parent company of BMP (together ``Black Mesa''), was
obtained by Northern Border Intermediate Limited Partnership
(NBILP), which was then 50% ultimately controlled by Enron.
When NBILP acquired 100% of Black Mesa in 1997, negative
control passed to Enron. Enron gained ultimate positive
control in 1998. A new application for an aircraft license
was submitted by BMHI on December 19, 2001, and applications
for approval nunc pro tunc of the transfer of 6 private
land mobile and 14 non-commercial microwave licenses were
filed by BMP on December 20, 2001.
5. As part of its commitment to comply with the Act and
Commission's rules, Enron has already designated a
Telecommunications Compliance Attorney (``TCA''), under whose
direction the company has committed to ensure that it has all
necessary licenses for its current operations and that every
license is valid and in good standing.5
III. Definitions
6. For the purposes of this Consent Decree, the following
definitions shall apply:
(a) ``Commission'' means the Federal Communications Commission;
(b) ``Bureau'' means the Enforcement Bureau of the Federal
Communications Commission;
(c) ``Enron'' means Enron Corp. together with all of its
corporate affiliates (defined as any entity ultimately majority
owned by Enron Corp.) and all of their successors and assigns.
d) ``Adopting Order'' means the order of the Enforcement Bureau
adopting this Consent Decree.
(e) ``Parties'' means Enron Corp. and the Bureau;
(f) ``Act'' means the Communications Act of 1934, as amended,
Title 47 of the United States Code.
(g) ``TCA'' means Telecommunications Compliance Attorney
(h) "new material evidence" means information discovered after
the execution of this Consent Decree that directly relates to the
events described in paragraphs 3-4 of this Consent Decree and
indicates fraudulent or deceptive behavior on the part of Enron
with regard to violations of Sections 301 or 310 of the Act in
connection with such events.
IV. Agreement
7. The Parties agree that the provisions of this Consent Decree
shall be subject to final approval by the Bureau by incorporation
of such provision by reference in an Adopting Order of the
Bureau.
8. Enron admits the jurisdiction of the Bureau over the matters
contained in this Consent Decree and the Adopting Order.
9. The Parties agree that this Consent Decree shall become
effective on the date on which the Bureau releases the Adopting
Order. Upon release, the Adopting Order and this Consent Decree
shall have the same force and effect as any other Order of the
Commission. Enron agrees that any violation of the Adopting
Order shall constitute a violation of a Commission Order.
10. The Parties agree and acknowledge that this Consent Decree
shall constitute a final settlement between Enron and the Bureau
of the matters described in paragraphs 3-4, above. In
consideration for the termination by the Bureau of its
investigation into whether Enron has violated Section 310(d) of
the Act and Section 101.53 of the Commission's rules, Enron
agrees to the terms set forth herein.
11. Enron agrees that it shall make a voluntary contribution to
the United States Treasury in the total amount of $7,500 (seven
thousand five hundred dollars). This amount shall be paid within
ten (10) calendar days of the date on which the Adopting Order is
released. Such contribution shall be made, without further
protest or recourse, by certified check, cashiers check, or money
order drawn to the order of the Commission, and shall be mailed
to the Forfeiture Collection Section, Finance Branch, Federal
Communications Commission, P.O. Box 73482, Chicago, Illinois
60673-7482. Reference should be made on the check or money order
to the account number referenced in the Order adopting this
Consent Decree as well as to Enron's FCC Registration Number.
12. Enron agrees to implement, within 30 calendar days after the
Bureau releases the Adopting Order, a comprehensive internal
program, a summary of which is attached hereto, to ensure Enron's
future compliance with the Act, the Commission's rules, and the
Commission's policies.
13. In express reliance upon the covenants and representations
contained in this Consent Decree, the Bureau agrees to terminate
its investigation into the matters discussed in paragraphs 3-4,
above, without any finding of liability on the part of Enron.
14. The Bureau agrees not to institute any new proceeding,
formal or informal, of any kind against Enron for apparent
violations of Section 310(d) of the Act arising from the matters
discussed in paragraphs 3-4, above.
15. In the absence of new material evidence, the Bureau agrees
that it will not use the facts developed in its investigation
through the date of this Consent Decree, or the existence of this
Consent Decree, to institute on its own motion, any new
proceeding, formal or informal, or take any action on its own
motion against Enron concerning the matters described in
paragraphs 3-4, above, or with respect to Enron's basic
qualifications, including Enron's character qualifications, to be
a Commission licensee or with respect to compliance with the
Commission's rules and policies.
16. In the event that Enron is found by the Commission or its
delegated authority to have engaged in a violation of Section
310(d) of the Act and/or Section 301 of the Act subsequent to the
release of the Order adopting this Consent Decree, Enron agrees
that the conduct described in paragraphs 3-4, above, may be
considered by the Commission or its delegated authority in
determining an appropriate sanction. The Commission agrees that,
if such conduct is considered by the Commission in determining an
appropriate sanction, Enron will not be estopped from litigating
issues concerning the severity, degree, or impact on the public
interest of Enron's conduct.
17. Enron waives any and all rights it may have to seek
administrative or judicial reconsideration, review, appeal or
stay, or to otherwise challenge or contest the validity of this
Consent Decree and the Order adopting this Consent Decree,
provided the Order is limited to adopting the Consent Decree
without change, addition, or modification.
18. Enron and the Bureau agree that the effectiveness of this
Consent Decree is expressly contingent upon issuance of the
Order, provided the Order adopts the Consent Decree without
change, addition, or modification.
19. Enron and the Bureau agree that in the event that this
Consent Decree is rendered invalid by any court of competent
jurisdiction, it shall become null and void and may not be used
in any manner in any legal proceeding.
20. Enron and the Bureau agree that if Enron, the Commission, or
the United States on behalf of the Commission, brings a judicial
action to enforce the terms of the Order adopting this Consent
Decree, neither Enron nor the Commission shall contest the
validity of the Consent Decree or Order, and Enron and the
Commission shall waive any statutory right to a trial de novo
with respect to any matter upon which the Order is based
(provided in each case that the Order is limited to adopting the
Consent Decree without change, addition, or modification), and
shall consent to a judgment incorporating the terms of this
Consent Decree.
21. Enron agrees to waive any claims it may otherwise have under
the Equal Access to Justice Act, Title 5 U.S.C. § 504, and 47
C.F.R. § 1.1501 et seq., relating to the matters discussed in
paragraphs 3-4, above.
22. The Bureau and Enron agree that this Consent Decree does not
constitute an adjudication on the merits or any finding on the
facts or law regarding any violations of the Act, including
Section 310 thereof, or the Commission's rules, including 47
C.F.R. § 101.53. The parties agree that this Consent Decree is
for settlement purposes only and that by agreeing to this Consent
Decree, Enron does not admit any liability for violating the Act
or Commission rules in connection with the matters that are the
subject of this Consent Decree. Indeed, Enron expressly denies
any such noncompliance, violation, or liability.
23. Enron and the Bureau agree to be bound by the terms and
conditions stated herein.
24. Enron and the Bureau agree that this Consent Decree may be
signed in counterparts.
ENFORCEMENT BUREAU
FEDERAL COMMUNICATIONS COMMISSION
By: _____________________________
____________
David H. Solomon Date
Chief
ENRON CORP.
By: ______________________________
____________
James V. Derrick, Jr. Date
Executive Vice-President and General Counsel
SUMMARY OF COMPLIANCE PROGRAM
OF
ENRON CORP.
Enron Corp. (``Enron'') will establish a Telecommunications
Regulatory Compliance Program to ensure compliance with relevant
provisions of the Communications Act of 1934 and Federal
Communications Commission regulations. The program will be
administered by the legal department and will be described in a
compliance manual addressing the following areas: (1) designation
of a Telecommunications Compliance Attorney; (2) establishment of
a compliance training program; (3) creation of an electronic FCC
license database; (4) FCC license renewals; and (5) FCC license
assignments and transfers of control.
Designation of Telecommunications Compliance Attorney. Enron
will designate a member of its legal department to serve as the
Telecommunications Compliance Attorney (``TCA''). The TCA will
have responsibility for overseeing Enron's Telecommunications
Compliance Program. Enron personnel with questions regarding FCC
compliance will be directed to the TCA for assistance.
Compliance Training Program. The TCA will conduct an
education program for company lawyers, managers, and other
parties responsible for the establishment, purchase, sale, and
use of Enron's telecommunications assets.
Database. The TCA will assemble and maintain information
about Enron's telecommunications licenses. The database will be
accessible by all employees who deal with FCC regulatory
compliance or telecommunications systems. The TCA will ensure
that the database is updated regularly.
License Renewals. The database will contain a tickler
system that will alert the TCA whenever one of Enron's licenses
must be renewed. The TCA will then have responsibility for
ensuring that the proper renewal application is filed and that
FCC approvals are obtained.
License Assignments and Transfers. The compliance manual
will contain information for Enron personnel regarding the need
to obtain prior FCC approval for all assignments and transfers of
control of FCC licenses.