OG&E 2011 Annual Report Download - page 84

On September 18, 2009, the court entered its order denying class
certification. On October 2, 2009, the plaintiffs filed for a rehearing of
the court’s denial of class certification. On March 31, 2010, the court
denied the plaintiffs’ request for rehearing. On July 20, 2011, Enogex LLC
and OER filed motions for summary judgment. On January 25, 2012,
the court denied portions of the motions for summary judgment related
to the legal issue of the plaintiffs’ claims regarding civil conspiracy. In
an order dated January 23, 2012, the court granted the plaintiffs addi-
tional time to perform discovery prior to the consideration of the motions
for summary judgment as they relate to the plaintiffs’ other claims.
OGE Energy intends to vigorously defend this action. At this time,
OGE Energy does not believe the outcome will have a material impact
on its financial position.
Will Price, et al. v. El Paso Natural Gas Co., et al. (Price II). On May 12,
2003, the plaintiffs (same as those in the amended petition in Price I
above) filed a new class action petition in the District Court of Stevens
County, Kansas naming the same defendants and asserting substan-
tially identical legal and/or equitable theories as in the amended petition
of the Price I case. OG&E and Enogex Inc. were not named in this case,
but two of OGE Energy’s other subsidiary entities were named in this
case. The plaintiffs allege that the defendants mismeasured the British
thermal unit content of natural gas obtained from or measured for the
plaintiffs. In their briefing on class certification, the plaintiffs seek to
also allege a claim for conversion. The plaintiffs seek unspecified actual
damages, attorneys’ fees, costs and pre-judgment and post-judgment
interest. The plaintiffs also reserved the right to seek punitive damages.
On September 18, 2009, the court entered its order denying class
certification. On October 2, 2009, the plaintiffs filed for a rehearing of
the court’s denial of class certification. On March 31, 2010, the court
denied the plaintiffs’ request for rehearing. On July 20, 2011, Enogex LLC
and OER filed motions for summary judgment. On January 25, 2012, the
court denied portions of the motions for summary judgment related to
the legal issue of the plaintiffs’ claims regarding civil conspiracy. In an
order dated January 23, 2012, the court granted the plaintiffs additional
time to perform discovery prior to the consideration of the motions for
summary judgment as they relate to the plaintiffs’ other claims.
OGE Energy intends to vigorously defend this action. At this time,
OGE Energy does not believe the outcome will have a material impact
on its financial position.
Farris Buser Litigation
On July 22, 2005, Enogex along with certain other unaffiliated
co-defendants was served with a purported class action which had
been filed on February 7, 2005 by Farris Buser and other named plain-
tiffs in the District Court of Canadian County, Oklahoma. The plaintiffs
own royalty interests in certain oil and gas producing properties and
alleged they have been under-compensated by the named defendants,
including Enogex and its subsidiaries, relating to the sale of liquid
hydrocarbons recovered during the transportation of natural gas from
the plaintiffs’ wells. The plaintiffs asserted breach of contract, implied
covenants, obligation, fiduciary duty, unjust enrichment, conspiracy and
fraud causes of action and claim actual damages, plus attorneys’ fees
and costs, and punitive damages. Enogex and its subsidiaries filed a
motion to dismiss which was granted on November 18, 2005, subject
to the plaintiffs’ right to conduct discovery and the possible re-filing
of their allegations in the petition against the Enogex companies. On
September 19, 2005, the co-defendants, BP America, Inc. and BP
America Production Company filed a cross claim against Enogex
Products LLC, wholly-owned subsidiary of Enogex LLC (“Products”),
seeking indemnification and/or contribution from Products based upon
the 1997 sale of a third-party interest in one of Products natural gas
processing plants. On May 17, 2006, the plaintiffs filed an amended
petition against Enogex and its subsidiaries. Enogex and its subsidiaries
filed a motion to dismiss the amended petition on August 2, 2006. The
hearing on the dismissal motion was held on November 20, 2006 and
the court denied Enogex’s motion. Enogex filed an answer to the amended
petition and BP America, Inc. and BP America Production Company’s
cross claim on January 16, 2007. On October 14, 2011, this case was
dismissed without prejudice. While this lawsuit could be re-filed, Enogex
considers the claims and cross claim associated with this lawsuit to
be without merit, based upon Enogex’s investigation to date. Enogex
now considers this case closed.
Environmental Laws and Regulations
The activities of OG&E and Enogex are subject to stringent and complex
Federal, state and local laws and regulations governing environmental
protection including the discharge of materials into the environment.
These laws and regulations can restrict or impact OG&E’s and Enogex’s
business activities in many ways, such as restricting the way it can han-
dle or dispose of their wastes, requiring remedial action to mitigate
pollution conditions that may be caused by their operations or that are
attributable to former operators, regulating future construction activities
to mitigate harm to threatened or endangered species and requiring
the installation and operation of pollution control equipment. Failure to
comply with these laws and regulations may result in the assessment
of administrative, civil and criminal penalties, the imposition of remedial
requirements and the issuance of orders enjoining future operations.
OG&E and Enogex believe that their operations are in substantial com-
pliance with current Federal, state and local environmental standards.
Environmental regulation can increase the cost of planning,
design, initial installation and operation of OG&E’s or Enogex’s facilities.
Historically, OG&E’s and Enogex’s total expenditures for environmental
control facilities and for remediation have not been significant in
relation to its consolidated financial position or results of operations.
82 OGE Energy Corp.