LEGAL	3 Months Ended
Mar. 31, 2017
LEGAL
LEGAL	NOTE 13 – LEGAL Other than as disclosed below, there are no new material litigation or proceedings pending or threatened against us or any material developments in any material existing pending litigation or proceedings. We have development rights for a new coal‑fired generating unit or units at Sunflower Electric Power Corporation’s (“Sunflower”) existing single‑unit Holcomb Generating Station in western Kansas pursuant to a Purchase Option and Development Agreement (“PODA”). The July 2007 PODA with Sunflower and other Sunflower parties calls for us to make option payments totaling $55 million to Sunflower and/or the other Sunflower parties in exchange for the development rights. Upon execution of the PODA, we paid $25 million. In 2008, we paid $5 million and the remainder will be paid on the purchase date. The purchase date will be designated by us, Sunflower and the other parties to the PODA after we exercise our option to acquire the development rights. The purchase date has not been determined. The original air permit application was denied by the Kansas Department of Health and Environment (“KDHE”) in October 2007 and we and Sunflower appealed the denial to the Kansas courts. Subsequent to the denial of the air permit, Sunflower entered into an agreement with the governor of Kansas that could result in the KDHE issuing a permit for one new coal‑fired generating unit at Holcomb Generating Station of 895 megawatts. As a result of the agreement, Sunflower and we withdrew the appeal of the denial of the original air permit application. The KDHE issued the new permit on December 16, 2010. The Sierra Club filed an appeal of the new permit with the Kansas Court of Appeals on January 14, 2011 and the case was immediately transferred to the Kansas Supreme Court. The Kansas Supreme Court remanded the permit to the KDHE to consider a limited issue. The KDHE issued an addendum to the permit on May 30, 2014. The Sierra Club filed an appeal with the Kansas Court of Appeals on June 27, 2014. On November 3, 2014, the Kansas Supreme Court granted a pending motion to transfer the case from the Court of Appeals and KDHE subsequently filed the record on appeal. On January 28, 2016, the Kansas Supreme Court heard oral arguments on the appeal. On March 17, 2017, the Kansas Supreme Court issued a decision upholding the air permit. Our Board has not yet made a decision to proceed with the construction of this project, including whether or not to exercise our option to acquire the development rights. Excluding the cost of land and water rights, the cost of developing the project incurred by us as of March 31, 2017 is $92.7 million, which is included in other deferred charges on our consolidated statements of financial position. In June 2011, a wildfire in New Mexico, known as the Las Conchas Fire, burned for five weeks in northern New Mexico, primarily on national forest service land in the Santa Fe National Forest. Six plaintiff groups, composed of property owners in the area of the Las Conchas Fire, filed separate lawsuits against our Member, Jemez Mountains Electric Cooperative, Inc. (“JMEC”) in the Thirteenth District Court, Sandoval County in the State of New Mexico. Plaintiffs alleged that the fire ignited when a tree growing outside JMEC’s right of way fell onto a distribution line owned by JMEC as a result of high winds. On January 7, 2014, the district court allowed all parties and related parties to amend their complaints to include the addition of us as a party defendant. After JMEC settled with one plaintiff group, the remaining cases were Elizabeth Ora Cox, et al., v. Jemez Mountains Electric Cooperative, Inc., et al.; Norman Armijo, et al., v. Jemez Mountains Electric Cooperative, Inc., et al.; Esequiel Espinoza, et al. v. Allstate Property & Casualty, et al.; Jemez Pueblo v. Jemez Mountains Electric Cooperative, Inc., et al.; and Pueblo de Cochiti., et al. v. Jemez Mountains Electric Cooperative, Inc., et al. The allegations in each case were similar. Plaintiffs alleged that we owed them independent duties to inspect and maintain the right‑of‑way for JMEC’s distribution line and that we were also jointly liable for any negligence by JMEC under joint venture and joint enterprise theories. A jury trial commenced on September 28, 2015 on the liability aspect of this matter. On October 28, 2015, the jury affirmed our position that we and JMEC did not operate as a joint venture or joint enterprise. The jury did find we owed the plaintiffs an independent duty and allocated comparative negligence with JMEC 75 percent negligent, us 20 percent negligent, and the United States Forest Service 5 percent negligent. Although we have not settled this matter, we have reached separate confidential stipulations on damages with Jemez Pueblo, Pueblo de Cochiti, Espinoza plaintiffs, and the Cox plaintiffs, reserving the right to appeal liability issues. We maintain $100 million in liability insurance coverage for this matter. We anticipate appealing the determination of our liability for this matter. If we do not prevail on appeal, we expect our allocation of damages to be covered by our liability insurance. Although we cannot predict the outcome of this matter at this point in time, we do not expect them to have a material adverse effect on our financial condition or our future results of operations or cash flows. For further discussion regarding legal proceedings, see our annual report on Form 10-K for the year ended December 31, 2016 “Item 8 – FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA – Notes to Consolidated Financial Statements – Note 13 ‑ Commitments and Contingencies – Legal.”

NOTE 13 – LEGAL

Other than as disclosed below, there are no new material litigation or proceedings pending or threatened against us or any material developments in any material existing pending litigation or proceedings.

We have development rights for a new coal‑fired generating unit or units at Sunflower Electric Power Corporation’s (“Sunflower”) existing single‑unit Holcomb Generating Station in western Kansas pursuant to a Purchase Option and Development Agreement (“PODA”). The July 2007 PODA with Sunflower and other Sunflower parties calls for us to make option payments totaling $55 million to Sunflower and/or the other Sunflower parties in exchange for the development rights. Upon execution of the PODA, we paid $25 million. In 2008, we paid $5 million and the remainder will be paid on the purchase date. The purchase date will be designated by us, Sunflower and the other parties to the PODA after we exercise our option to acquire the development rights. The purchase date has not been determined. The original air permit application was denied by the Kansas Department of Health and Environment (“KDHE”) in October 2007 and we and Sunflower appealed the denial to the Kansas courts. Subsequent to the denial of the air permit, Sunflower entered into an agreement with the governor of Kansas that could result in the KDHE issuing a permit for one new coal‑fired generating unit at Holcomb Generating Station of 895 megawatts. As a result of the agreement, Sunflower and we withdrew the appeal of the denial of the original air permit application. The KDHE issued the new permit on December 16, 2010. The Sierra Club filed an appeal of the new permit with the Kansas Court of Appeals on January 14, 2011 and the case was immediately transferred to the Kansas Supreme Court. The Kansas Supreme Court remanded the permit to the KDHE to consider a limited issue. The KDHE issued an addendum to the permit on May 30, 2014. The Sierra Club filed an appeal with the Kansas Court of Appeals on June 27, 2014. On November 3, 2014, the Kansas Supreme Court granted a pending motion to transfer the case from the Court of Appeals and KDHE subsequently filed the record on appeal. On January 28, 2016, the Kansas Supreme Court heard oral arguments on the appeal. On March 17, 2017, the Kansas Supreme Court issued a decision upholding the air permit. Our Board has not yet made a decision to proceed with the construction of this project, including whether or not to exercise our option to acquire the development rights. Excluding the cost of land and water rights, the cost of developing the project incurred by us as of March 31, 2017 is $92.7 million, which is included in other deferred charges on our consolidated statements of financial position.

In June 2011, a wildfire in New Mexico, known as the Las Conchas Fire, burned for five weeks in northern New Mexico, primarily on national forest service land in the Santa Fe National Forest. Six plaintiff groups, composed of property owners in the area of the Las Conchas Fire, filed separate lawsuits against our Member, Jemez Mountains Electric Cooperative, Inc. (“JMEC”) in the Thirteenth District Court, Sandoval County in the State of New Mexico. Plaintiffs alleged that the fire ignited when a tree growing outside JMEC’s right of way fell onto a distribution line owned by JMEC as a result of high winds. On January 7, 2014, the district court allowed all parties and related parties to amend their complaints to include the addition of us as a party defendant. After JMEC settled with one plaintiff group, the remaining cases were Elizabeth Ora Cox, et al., v. Jemez Mountains Electric Cooperative, Inc., et al.; Norman Armijo, et al., v. Jemez Mountains Electric Cooperative, Inc., et al.; Esequiel Espinoza, et al. v. Allstate Property & Casualty, et al.; Jemez Pueblo v. Jemez Mountains Electric Cooperative, Inc., et al.; and Pueblo de Cochiti., et al. v. Jemez Mountains Electric Cooperative, Inc., et al. The allegations in each case were similar. Plaintiffs alleged that we owed them independent duties to inspect and maintain the right‑of‑way for JMEC’s distribution line and that we were also jointly liable for any negligence by JMEC under joint venture and joint enterprise theories. A jury trial commenced on September 28, 2015 on the liability aspect of this matter. On October 28, 2015, the jury affirmed our position that we and JMEC did not operate as a joint venture or joint enterprise. The jury did find we owed the plaintiffs an independent duty and allocated comparative negligence with JMEC 75 percent negligent, us 20 percent negligent, and the United States Forest Service 5 percent negligent. Although we have not settled this matter, we have reached separate confidential stipulations on damages with Jemez Pueblo, Pueblo de Cochiti, Espinoza plaintiffs, and the Cox plaintiffs, reserving the right to appeal liability issues. We maintain $100 million in liability insurance coverage for this matter. We anticipate appealing the determination of our liability for this matter. If we do not prevail on appeal, we expect our allocation of damages to be covered by our liability insurance. Although we cannot predict the outcome of this matter at this point in time, we do not expect them to have a material adverse effect on our financial condition or our future results of operations or cash flows.

For further discussion regarding legal proceedings, see our annual report on Form 10-K for the year ended December 31, 2016 “Item 8 – FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA – Notes to Consolidated Financial Statements – Note 13 ‑ Commitments and Contingencies – Legal.”