UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
8-K
CURRENT
REPORT
Pursuant
to Section 13 or 15(d) of the
Securities
Exchange Act of 1934
Date
of Report:
February
7, 2006
(Date
of Earliest Event Reported: February 7, 2006)
EL
PASO CORPORATION
(Exact
name of Registrant as specified in its charter)
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Delaware
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1-14365
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76-0568816
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(State
or
other jurisdiction of
incorporation
or organization)
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(Commission
File Number)
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(I.R.S.
Employer
Identification
No.)
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El
Paso Building
1001
Louisiana Street
Houston,
Texas 77002
(Address
of principal executive offices) (Zip Code)
Registrant’s
telephone number, including area code (713) 420-2600
Check
the appropriate box below if the Form 8-K filing is intended to simultaneously
satisfy the filing obligation of the registrant under any of the following
provisions:
o Written
communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
o Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
o Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR
240.14d-2(b))
o Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR
240.13e-4(c))
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Item 8.01
Other Events.
Retiree
Medical Benefits Matters.
On
January 18, 2006, we filed a Form 8-K providing an update with regard to
a
recent decision by the U.S. Court of Appeals for the 6th Circuit. In that
Form
8-K, we indicated that we were reviewing our legal alternatives, as well
as the
potential financial impact of the decision. We have now completed that analysis.
As
previously
disclosed, we currently serve as the plan administrator for a medical benefits
plan that covers a closed group of retirees of the Case Corporation who retired
on or before June 30, 1994. Case was formerly a subsidiary of Tenneco, Inc.
that
was spun off prior to our acquisition of Tenneco in 1996. In connection with
the
Tenneco-Case Reorganization Agreement of 1994, Tenneco assumed the obligation
to
provide certain medical and prescription drug benefits to eligible retirees
and
their spouses. We assumed that obligation as a result of our merger with
Tenneco. However, we believed that our liability for these benefits was limited
to certain maximums, or caps, and costs in excess of these maximums should
be
assumed by plan participants. In 2002, we and Case were sued by individual
retirees in federal court in Detroit, Michigan in an action entitled Yolton
et
al. v. El Paso Tennessee Pipeline Co. and Case Corporation. The suit alleges
that El Paso and Case are required to pay all amounts above the cap, alleging
that the retiree medical plan was a vested lifetime benefit. Case further
filed
claims against El Paso asserting that El Paso is obligated to indemnify,
defend,
and hold Case harmless for the amounts it would be required to pay. In separate
rulings in 2004, the court ruled that, pending a trial on the merits, Case
must
pay the amounts above the cap and that El Paso must reimburse Case for those
payments. In January 2006, these rulings were upheld on appeal before a 3-member
panel of the U.S. Court of Appeals for the 6th Circuit.
We
intend to
file for a review of this decision by the full panel of the U.S. Court of
Appeals for the 6th Circuit as a result of conflicting precedent within the
circuit as well as with other circuit courts. In particular, we believe that
the
trial court and 3-member panel incorrectly applied existing case law with
regard
to whether the plan was a vested lifetime benefit. Other panels in the 6th
Circuit as well as other circuits of the U.S. Courts of Appeal have previously
held in cases where the language contained in other retiree medical plans
and
collective bargaining agreements was similar to ours that such plans were
not
vested lifetime benefits and, as such, could be amended or terminated at
any
time.
The
ability
to obtain the review of the full panel of the 6th Circuit is uncertain. If
such
review is not granted, then we will proceed with a trial on the merits in
the
same trial court in which the case was originally filed with regard to the
issue
of whether the cap is enforceable. In the meantime, El Paso will indemnify
Case
for any payments Case makes above the cap. Although such amounts will vary
over
time, the amounts above the cap are currently about $1.7 million per month.
While we will continue to vigorously defend the action, based upon the ruling
of
the 6th Circuit and the lessening avenues of appellate reviews, we recorded
in
the fourth quarter 2005 an after-tax charge of approximately $200 million
($350
million on a pre-tax basis).
We
have also
filed for approval by the trial court various amendments to the medical benefit
plans which will allow us to deliver the benefits to plan participants in
a more
cost effective manner. We will seek expeditious approval of such plan
amendments. Although it is uncertain what plan amendments will ultimately
be
approved, the approval of plan amendments could reduce our overall costs
and, as
a result, could reduce our recorded liability.
SIGNATURES
Pursuant
to the
requirements of the Securities Exchange Act of 1934, the registrant has duly
caused this report to be signed on its behalf by the undersigned thereunto
duly
authorized.
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EL
PASO CORPORATION
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By:
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/s/
Robert W. Baker
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Robert
W. Baker
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Executive
Vice President and General Counsel
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Dated: February
7, 2006
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