[00:00:00] Speaker 00:
Phase 123-1040, Big Rivers Electric Corporation petitioner versus Federal Energy Regulatory Commission.

[00:00:08] Speaker 00:
Ms.

[00:00:08] Speaker 00:
Raphael for the petitioner, Mr. Schaener for the respondents, Mr. Pearson for the intervener.

[00:00:15] Speaker 09:
Morning, Council.

[00:00:16] Speaker 09:
Ms.

[00:00:17] Speaker 05:
Raphael, please proceed when you're ready.

[00:00:19] Speaker 05:
Thank you.

[00:00:33] Speaker 04:
May it please the court, Dana Rafael for Petitioner Big Rivers Alaric Corporation.

[00:00:39] Speaker 04:
For Henderson to join the regional transmission organization and share in its revenues, it had to show that it is an owner of transmission facilities.

[00:00:48] Speaker 04:
That requires two things.

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One, that Henderson is an owner because it owns or controls the facilities.

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And two, under FERC's seven factor test, those facilities are transmission, not local distribution.

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The city of Henderson is a tiny utility serving just 12,000 people embedded entirely in Big Rivers transmission system.

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Because Henderson has no internal generation or connections with any other utility, every electron of power entering Henderson system comes from Big Rivers.

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But FERC nevertheless concluded that Henderson was a transmission owner, shifting more than a million dollars a year from Big Rivers to Henderson for conveying electricity to itself through and from the Big River system.

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So I'd like to be clear about one thing.

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When the matter was before the administrative law judge,

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In his opinion, did he not reference the fact that both parties, that is your client as well as Henderson, had experts who examined the documentation that was submitted by Henderson to substantiate its claim of the merits of its petition and

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in that respect that it owned the facilities.

[00:02:28] Speaker 05:
Yes, Your Honor.

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So your client had an expert who examined all of Henderson's proffers to the commission.

[00:02:44] Speaker 05:
Yes, Your Honor.

[00:02:44] Speaker 04:
Our expert

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looked at the ownership and control of six tie lines and specific as to those specific six tie lines argued that big rivers actually owned one of those times and.

[00:02:58] Speaker 04:
Everyone agrees now on appeal that big rivers actually did own that timeline all along the sub for.

[00:03:04] Speaker 06:
Everyone also agreed that that's not one of the tie lines that's relied on here.

[00:03:10] Speaker 04:
No, Your Honor, that is not agreed to.

[00:03:12] Speaker 04:
That is, in fact, a disputed issue of fact.

[00:03:15] Speaker 06:
And where did your client raise that on in its petition for rehearing?

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I know it raised it, but I thought part of the argument that the agency was making was that particular.

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Thailand wasn't one that was being relied on here by the parties for the purposes of its

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of Henderson's petition.

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Am I wrong about that?

[00:03:43] Speaker 04:
I respectfully honor the FERC on appeal has said that that is not one of the tie lines that was relied on that that was not FERC's position before

[00:03:55] Speaker 04:
in the proceedings below, FERC said repeatedly, both its trial staff, as well as the ALJ, the initial order, and the rehearing order, that the sub four sub four app 69 line that everyone agrees Big Rivers now owns, was in fact, not only one of the disputed facilities, but also that Henderson owned that facility.

[00:04:16] Speaker 04:
Henderson itself claimed that it owned that facility in its briefing before the commission.

[00:04:21] Speaker 05:
How do you read the harmless error

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principle under the APA.

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Your Honor, harmless error has to be applied consistent with Chenery Core, which is that the agency cannot rely on post-hoc explanations.

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And so when you have a factual error that is a particularly difficult circumstance for an agency to demonstrate that that error was in fact harmless, because factual errors, particularly those going to the agency's analysis,

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are very difficult for this court to assess whether that error pervaded the agency's analysis.

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And our brief cites several cases as to that point.

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Braniff Airways.

[00:05:04] Speaker 06:
Here, what you would be asking for then is for this court to grant your petition at least in part and send it back to FERC to say whether this particular line is part of

[00:05:23] Speaker 05:
the operational change Henderson is seeking and that at least the agency had heretofore approved.

[00:05:36] Speaker 04:
Well, Your Honor, we'd ask that this court grant the petition in full, vacate the decisions and remand, because it's not clear whether this error as to the ownership of this tie line pervaded

[00:05:47] Speaker 06:
the seven factor test analysis, which is the second issue on which- Well, I'm getting at hypothetically, take this, that there are six lines that are involved in Henderson's petition.

[00:06:06] Speaker 05:
And in the course of the proceedings, it turns out only five are at issue.

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In the sense that your client claims that Henderson doesn't own them and Henderson doesn't control them, even though me so.

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The client is turned over operational control to me so.

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And Henderson would qualify to use those.

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Facilities for operations.

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Would a and and.

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The point now is that as to the sixth line, in my hypothetical, Henderson doesn't own it, but Henderson's not relying on it for the purposes of its petition.

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Even in that circumstance, then we would be obligated to send it back to the commission.

[00:07:21] Speaker 04:
Yes, Your Honor, because the seven factor test is a facility by facility test.

[00:07:26] Speaker 04:
That's not the way that actually applied it here.

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Burke looked at all of the facilities together, including the sub four sub four tap 69 line that everyone agrees Big Rivers actually owned all along.

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And because that mistake pervaded the agency's analysis,

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Very difficult to figure out whether the analysis would come out any differently if you change one of those inputs and there are two really concrete examples of this in first brief.

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Fork at page 32 says that MISO in fact studied the flows along sub four sub four tap 69 when applying the seven factor test.

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And it also at page 48 says the reason it should prevail on factor three under the seven factor test, it cites a number about 22% of the hours flowing out of Henderson.

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That number, your honors, if you look at JA 88 through 89, that number was MISO's expert and MISO's expert said that

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It was relying primarily on this line that is both.

[00:08:30] Speaker 02:
Seems like all of this confusion has arisen because your client turned off this line after these proceedings started.

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And so.

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that both the initial decision and the commission are very clear that they're looking at both pre reconfiguration and post reconfiguration.

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So I guess my specific question to you is what in the analysis of the post reconfiguration setup is impacted in any way by the sixth line?

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Because to me, it seems to come down to this chart on JA-99, which acknowledges that

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sub 4 sub 4 tap 69 is turned off.

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And I didn't see anything in the analysis of host reconfiguration system that mentions that line at all.

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So what would you point to to dissuade me of that?

[00:09:24] Speaker 04:
Yes, your honor.

[00:09:25] Speaker 04:
Well, so factor three is the only factor in which the commission specifically referenced

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the post-configuration and did that analysis separately, the rest of the factors do not separate out pre-configuration and post-configuration.

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And so while the agency said it did not matter whether or not this line was part of the analysis, it didn't then separate analysis as to each factor.

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So there's that initial problem.

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But even as to this third factor, which is when the commission looks at this chart,

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The commission does two things, Your Honor.

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So first, pre-configuration, it cites this 22% hours number.

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And then it says post-configuration, cites the same expert, this J99, which comes from this expert hacker, and says that while there is an increase on one of these lines, we think that is sufficient based on what the expert said.

[00:10:20] Speaker 04:
But if you look at what the expert actually said, she is comparing the increase on that line compared to what the number was before the system configuration.

[00:10:31] Speaker 04:
So it's still a relational comparison.

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But if that line that Big Rivers owned all along, regardless of the disconnection or not, if that line should never have been part of the analysis, then whether there is an increase in relation to the, when you look at the numbers with that line,

[00:10:49] Speaker 04:
in the analysis, then the whole analysis might come out differently.

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Looking at that number in isolation is very different than doing a comparison when you have an input that shouldn't have been there in the first place.

[00:11:02] Speaker 04:
And this is not in the records, your honor, but there's been a lot of- Anything that's not in the record, please.

[00:11:10] Speaker 06:
That's part of the problem here.

[00:11:12] Speaker 06:
Well, the numbers are in the record, but- No, I'm quite serious about this council.

[00:11:19] Speaker 06:
This whole case and your argument is turning on the record.

[00:11:24] Speaker 04:
Yes, Your Honor.

[00:11:25] Speaker 04:
So I must spoke.

[00:11:27] Speaker 04:
The table in the record that the parties are referring to and that FERC at 48 is pointing to this 22% of outward flow number, they don't provide the number if you take out this disputed tie line that Big Rivers actually owned all along.

[00:11:46] Speaker 04:
Everyone agrees that Big Rivers owned.

[00:11:48] Speaker 04:
But applying the same math they applied to get their 22% number, the number would be 2.3%.

[00:11:55] Speaker 04:
And so FERC, at minimum, needs to go back and look at its analysis and determine, OK,

[00:12:02] Speaker 02:
I did the same math and had the same question.

[00:12:06] Speaker 02:
But one thing about this case is, you know, that gets to so under factor three is 8.9% on one line or 2.3% across all lines.

[00:12:18] Speaker 02:
Is that more than rare?

[00:12:20] Speaker 02:
And I don't think you've made.

[00:12:22] Speaker 02:
You've challenged that finding on appeal.

[00:12:25] Speaker 02:
Your argument seems to be very different that you should look only to net power flows.

[00:12:30] Speaker 02:
And so.

[00:12:31] Speaker 02:
The time, basically this chart is irrelevant.

[00:12:34] Speaker 02:
We should be looking at the magnitude of power going in each direction.

[00:12:39] Speaker 02:
And that's sort of in a different bucket than an argument that 2.3 or 8.9 is insufficient.

[00:12:48] Speaker 04:
Well, no, Your Honor.

[00:12:50] Speaker 04:
Our position is that the commission applied an overly rigid

[00:12:53] Speaker 04:
interpretation of the seven factor test and that repeatedly discounted arguments about net power, which isn't just what is the bottom line number, but looking at the amount of power flowing out.

[00:13:07] Speaker 04:
Big Rivers witness at J233 through 234 looked at the charts that Henderson and MISO put into the record that even looking at their numbers, 99.7% of the power entering Henderson system is consumed by Henderson.

[00:13:25] Speaker 04:
And the remaining power that is exiting system, again, when we take out this line that Big Rivers owned all along and should not have been part of the analysis,

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When you look at the power exiting the system, that is for these rare contingency scenarios.

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And the commission's precedent has said, when the power exiting the system is relatively small, and it's for these border communities or contingency systems, that is not the facility's primary function.

[00:13:53] Speaker 04:
And that departure from commission precedent is what Big Rivers is challenging here.

[00:14:00] Speaker 02:
the commission at least says that heckers tables are not they're both under ordinary conditions and emergency conditions.

[00:14:09] Speaker 02:
So when this read line shows 8.9% I think they're saying that's under ordinary operation.

[00:14:15] Speaker 02:
Is that incorrect?

[00:14:16] Speaker 02:
It sounds like you're saying.

[00:14:18] Speaker 04:
That's not our understanding of the record your honor.

[00:14:20] Speaker 04:
Our understanding is that when particularly the ALJ was referring to both normal and contingency operations, those normal operations were referring to

[00:14:29] Speaker 04:
When you include the disputed tie line, the tie line that Big Rivers owned, that had normal flows outward.

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But when you look at just the facilities under the current system configuration and taking out the one that Big Rivers owned,

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The outward flow there, Big Rivers has always maintained, is for contingency scenarios.

[00:14:53] Speaker 04:
And that is borne out at JA99 through 100.

[00:14:56] Speaker 04:
And when Hecker is talking about this 8.9% and talks about analyzing that number under various contingency scenarios, and Big Rivers' testimony at JA233 through 234 says that the outward flow is for emergency contingency scenarios.

[00:15:17] Speaker 04:
There really is not a dispute as to that issue to the extent that the commission wants to take another look at this with the right inputs, that's for the commission in the first instance.

[00:15:29] Speaker 06:
I know you might be river's evidence, but what I'm trying to get you to focus on is there was other evidence before the commission.

[00:15:37] Speaker 06:
And Judge Garcia has highlighted why we're in this difficult position, namely because of

[00:15:47] Speaker 06:
the sua sponde action of their client which has been referred but there was other evidence and the commission in its orders responds to what it understands the arguments to be and then on rehearing with this one exception that you're arguing

[00:16:17] Speaker 06:
It repeats its objections, but points to no error, says the commission.

[00:16:28] Speaker 06:
It doesn't tell us where we've heard.

[00:16:30] Speaker 06:
So that's why in this one instance, it's important that we hear, and I suppose give us the other sites, not only what your client said,

[00:16:45] Speaker 06:
but what the experts said based on their response to your client's evidence and where both the ALJ and then ultimately the commission came out.

[00:17:04] Speaker 06:
And I'm not saying you may not prevail in the end, but it's important, particularly in the circumstances where all this work was done

[00:17:15] Speaker 06:
And then your client changed the ballgame.

[00:17:19] Speaker 06:
And now wants to say that it gets the benefit of that.

[00:17:25] Speaker 06:
And we want to be very careful.

[00:17:28] Speaker 06:
And I thought that's what the ALJ was very careful because he said, I'm not going to make certain findings because of these changes.

[00:17:37] Speaker 06:
But I've looked, as Judge Garcia pointed out, both at the evidence before and after your client's action.

[00:17:45] Speaker 06:
And then the commission said the same thing.

[00:17:48] Speaker 06:
And that's why, at least one reason I'm asking you so closely about these things, because this is very troubling.

[00:18:00] Speaker 04:
A few responses to that, Your Honor.

[00:18:02] Speaker 04:
As to the disconnection, Big Rivers has always maintained that the disconnection was done to enhance the reliability of this.

[00:18:10] Speaker 04:
I understand it has.

[00:18:12] Speaker 06:
All right.

[00:18:13] Speaker 06:
The commission has referred that for consideration and not taken any position yet.

[00:18:22] Speaker 06:
And I'm not suggesting the court is going to take a position.

[00:18:26] Speaker 06:
But your client did not say on re-hearing in its petition that it had a legal right to do what it did in the middle of the proceeding the way it did it.

[00:18:41] Speaker 06:
I'm just dealing with the record we have.

[00:18:43] Speaker 06:
And obviously, you're going to be much more familiar with Big River's record.

[00:18:48] Speaker 06:
And that's why it's helpful to hear what you're citing so that at least we can hear the argument, how the agency responds and then decide if you have rebuttal.

[00:19:01] Speaker 04:
Yes, Your Honor, would you like me to provide the record citations in which the FERC proceedings

[00:19:10] Speaker 04:
address the ownership question?

[00:19:11] Speaker 06:
Oh, I've already got those in my notes.

[00:19:16] Speaker 04:
OK.

[00:19:18] Speaker 04:
Well, Your Honor, just as your question on why Big Rivers didn't discuss on rehearing that on this ownership question, Big Rivers did raise its ownership objections.

[00:19:35] Speaker 04:
It didn't raise an issue about this system disconnection issue because that was not part of the

[00:19:40] Speaker 04:
commission's findings.

[00:19:41] Speaker 04:
The commission was very, very clear at JA 453 that the system reconfiguration was not going to factor into or the reason for the disconnection was not part of the commission's analysis.

[00:19:56] Speaker 04:
And so Big Rivers had no reason to object.

[00:20:00] Speaker 04:
There was nothing to object to on that front.

[00:20:03] Speaker 06:
To object to its disconnection without authority.

[00:20:09] Speaker 04:
Well, Your Honor, there was nothing to object to because the commission said that it didn't matter.

[00:20:14] Speaker 04:
You understand what I'm getting at, don't you?

[00:20:17] Speaker 06:
Wouldn't be in your client's interest to object.

[00:20:21] Speaker 06:
But the point is the commission on rehearing was very clear saying your client repeats the same arguments, but it doesn't show where error has occurred.

[00:20:35] Speaker 06:
And the one exception is what we've been talking about

[00:20:38] Speaker 06:
mostly this morning.

[00:20:41] Speaker 06:
So it's important, at least to me, to understand that that is the circumstance in which the court is considering this case.

[00:20:52] Speaker 06:
Because your client and you as a representative know what your burden is in terms of when you seek rehearing by the agency.

[00:21:02] Speaker 04:
Do you mean the decision on the seven factor test, Your Honor?

[00:21:07] Speaker 06:
I mean, the decision in order 580-A.

[00:21:12] Speaker 06:
Yes, Your Honor.

[00:21:18] Speaker 04:
So on rehearing, the court did, or FERC did two things.

[00:21:22] Speaker 04:
FERC said first, it was going to look back at these ownership and control claims.

[00:21:27] Speaker 04:
And the commitment said, give one sentence, which was that nothing in the record indicates Henderson does not own its facilities, and yet concluded.

[00:21:36] Speaker 06:
Actually, counsel.

[00:21:38] Speaker 06:
I was shocked when I went to read that statement in paragraph 11, because that takes that statement out of context and ignores statements in that same paragraph where the commission specifically refers to Henderson having proved ownership.

[00:22:01] Speaker 06:
So that doesn't get you anywhere, at least with this judge.

[00:22:05] Speaker 04:
Well, so Your Honor, the ultimate conclusion on ownership was that Henderson properly owns, operates, or controls the Henderson facilities, which, quote, include the six tie lines that are at issue in this socket, including the sub-four, sub-four, tap 69 line, quote, alleged to be owned by Big Rivers.

[00:22:24] Speaker 04:
So the commission concluded, based on apparently the evidence that Henderson submitted that Henderson owned everything,

[00:22:33] Speaker 04:
FERC agrees in its brief FERC 30 that Big Rivers offered concrete evidence of ownership as to this one disputed line that everyone agrees Big Rivers now owns.

[00:22:43] Speaker 04:
And on rehearing, the commission's explanation for how it got to its ownership conclusion was the one sentence, which is that nothing in the record indicates Henderson does not own its facilities.

[00:22:54] Speaker 04:
And so Big Rivers' argument for this court that that conclusory sentence on ownership is just not reflective of

[00:23:03] Speaker 04:
what FERC did, whether it held Henderson to its burden of proof, whether it looked at what they were saying.

[00:23:09] Speaker 06:
Well, let me ask you one other question.

[00:23:11] Speaker 06:
The commission's position based on what was before it, Henderson either had own or control.

[00:23:22] Speaker 06:
And the commission made findings on why it concluded Henderson control.

[00:23:29] Speaker 05:
And as I understand your argument,

[00:23:33] Speaker 05:
this one line still creates a problem.

[00:23:39] Speaker 04:
So yes, Your Honor, we believe that the admitted error as to this one line is the easiest way for this court to cut through this case and to say with an admitted factual error, the easiest thing.

[00:23:51] Speaker 06:
The easiest way, counsel, that's the only way presented.

[00:23:54] Speaker 06:
All right, as I see it at this point in terms of what your petition hearing raised, how you responded to the commission and what the commission said.

[00:24:03] Speaker 06:
And that's what I'm trying to be very clear about in terms of what is before this court at this point.

[00:24:15] Speaker 06:
And I mean, I'm going to ask counsel for the agency a lot of questions too, but I mean, I just want to be clear where you are.

[00:24:25] Speaker 06:
Yes, Your Honor.

[00:24:26] Speaker 06:
Is there a particular point that I could clarify?

[00:24:29] Speaker 06:
Well, I mean, I think general statements are the easiest

[00:24:32] Speaker 06:
way for us to handle this case.

[00:24:34] Speaker 06:
I get that.

[00:24:35] Speaker 06:
But I mean, I haven't seen another way.

[00:24:37] Speaker 06:
That's why I brought up this control, because it's ownership or control.

[00:24:43] Speaker 06:
And the commission was very careful to separate those two.

[00:24:49] Speaker 04:
Yes, Your Honor.

[00:24:50] Speaker 04:
I'm happy to address the control issues as well.

[00:24:55] Speaker 04:
We do think that this factual error as to ownership is sufficient because it pervades the entire analysis to send the case back.

[00:25:01] Speaker 04:
separately as to control, Big Rivers did identify as to these six tie lines several contractual agreements that it argued.

[00:25:09] Speaker 06:
And the commission indicated why none of those survived your client's surrender of operational control of its facilities to MISO.

[00:25:22] Speaker 04:
Your Honor, FERC gave two reasons why it said that it was not going to consider the substance of these agreements as to the control issue.

[00:25:30] Speaker 04:
Both of those reasons do not survive the commission's own precedent and past decision making.

[00:25:37] Speaker 06:
And it distinguished its precedent.

[00:25:41] Speaker 04:
Well, Your Honor, the two reasons that the commission gave are inconsistent with its own precedent.

[00:25:47] Speaker 04:
The reasons were, FERC said, one, the agreements were not explicitly listed in the MISO tariff, and two, that any MISO member can use the facilities.

[00:25:57] Speaker 04:
Neither of those reasons are compatible with the Midwest cases that FERC decided previously.

[00:26:03] Speaker 06:
That's my only point, Council.

[00:26:07] Speaker 06:
You may not agree with FERC, but at least the commission in its order and on re-hearing distinguished

[00:26:17] Speaker 06:
All right, I'm sorry to take so much time.

[00:26:22] Speaker 02:
My colleagues don't have additional questions.

[00:26:24] Speaker 02:
One clarification.

[00:26:25] Speaker 02:
So we were trying to get to the bottom, whether the inclusion of this sixth line as being owned by Henderson infected any of the other analysis.

[00:26:34] Speaker 02:
And I think the specific point you directed me to was the commission saying there was an increase after the disconnect.

[00:26:42] Speaker 02:
So there was still a comparison going on.

[00:26:45] Speaker 02:
And so even if, just want to understand, even if Henderson doesn't own that line, what was being measured before was still the amount of power flowing from Henderson's lines out across something Big Rivers owns, right?

[00:27:01] Speaker 02:
So wouldn't that still be relevant evidence of whether Henderson is transmitting power?

[00:27:06] Speaker 04:
Well, Big Rivers position before the commission was that because this line was both disconnected and Big Rivers owned it, it should not be part of the analysis and that the commission had to look at the current system configuration.

[00:27:18] Speaker 02:
Right.

[00:27:18] Speaker 02:
So, but if it was just that Big Rivers owned it and we were looking pre the disconnection, it could still be relevant, right?

[00:27:25] Speaker 02:
In other words, wouldn't be wrong to look at what was happening on that line.

[00:27:32] Speaker 02:
before and after the disconnection, because it's evident what Henderson's system is doing, right?

[00:27:41] Speaker 04:
Well, again, Big River's position was that before the commission, that the commission has to look, and its precedent says this very clearly, at the current system configuration, not how the system was historically configured.

[00:27:53] Speaker 04:
And because that tie line is not connected, the proper analysis is the current system configuration, not

[00:28:00] Speaker 04:
historic flows on a disconnected line.

[00:28:03] Speaker 09:
Thank you.

[00:28:05] Speaker 09:
Okay.

[00:28:05] Speaker 09:
Why don't we hear from the commission now?

[00:28:06] Speaker 09:
We'll give you a little time for rebuttal.

[00:28:12] Speaker 03:
If it's okay, if it's okay with your honors, I may actually raise my podium here on this and I'm going to put myself on mute briefly while I do that, if that's acceptable.

[00:28:21] Speaker ?:
Sure.

[00:28:41] Speaker 03:
Thank you, Your Honors.

[00:28:42] Speaker 03:
May it please the court, Houston Schaener, for a respondent Federal Energy Regulatory Commission.

[00:28:48] Speaker 03:
And I'd like to start where Judge Garcia left off quickly to clarify some of the confusion around this.

[00:28:53] Speaker 03:
As I understand Big River's argument on rehearing, they never made a claim that all pre-disconnection flows were irrelevant.

[00:29:02] Speaker 03:
They conceded that they were sort of both relevant and never disturbed the commission's findings of paragraphs 22 and 23 of the order on initial decision to that effect.

[00:29:11] Speaker 03:
Now, if you look at that in JA page 89, you'll see thousands or really hundreds of thousands of hours of flows both ways, even over the own tie line as Judge Garcia noted, which is substantial evidence and evidence that they never really managed to assail below.

[00:29:26] Speaker 03:
Now, I also like to correct the record from some of the previous discussion on table two at JA 99 and JA 100.

[00:29:35] Speaker 03:
There were some back and forth including with Judge Rogers on the normal flows versus contingency scenarios and what this evidence means at JA99.

[00:29:43] Speaker 03:
If you look at JA99, it is clear it is three months of data in table two.

[00:29:49] Speaker 03:
It is thousands of hours of flows across the lines post disconnection.

[00:29:54] Speaker 03:
So that's very clear that it's not merely contingency scenario evidence.

[00:29:58] Speaker 03:
The contingencies are described at the top of JA100.

[00:30:02] Speaker 03:
On the next side, you'll see four contingency outages listed there, but that is not the same as the evidence on Table 2 and J899.

[00:30:09] Speaker 03:
So I just want to make sure that we're clear at the record there.

[00:30:12] Speaker 03:
And this evidence of Table 2 is particularly important because as Judge Garcia discussed earlier, when we're wondering whether or not the sub 4 or TAP69 error in terms of describing it as one of the proposed facilities matters for the seven factor tests, it's very clear it does not here.

[00:30:29] Speaker 03:
Because they actually, Big Rivers actually disconnected the lines.

[00:30:33] Speaker 03:
And as the commission found based on this evidence, the flows largely shifted to other areas.

[00:30:38] Speaker 03:
So you still have material flows going between two and from Henderson and Big Rivers during this three-month period after the disconnection, which sustains the commission's findings in part under factor three, which is paragraph 78 of the order of firm initial decision, which we'll call the affirming order.

[00:30:55] Speaker 03:
here, and that finding is then incorporated as part of the basis for both factors four and factors five.

[00:31:02] Speaker 03:
So unlike my friend's assertion earlier, it is not the case that the commission only considered post disconnection scenarios or evidence for factor three.

[00:31:11] Speaker 03:
It's really factors three, four, and five.

[00:31:13] Speaker 03:
The finding of bidirectional flows is most explicit and most fully explained in factor three at paragraph 78, but then you'll see the reference to those flows also in paragraphs 87 through 89 for factor four,

[00:31:25] Speaker 03:
that I believe it's paragraph 96 of the affirming order for factor five.

[00:31:31] Speaker 03:
Now, my friend also mentioned the 99% number or something of that effect as I believe her description of the pre-disconnection flows.

[00:31:40] Speaker 03:
Ed, we really need to sort of unpack some of the confusion around this.

[00:31:44] Speaker 03:
You'll see that 99% number explained at JA 178.

[00:31:48] Speaker 03:
This comes from her bigger expert witness, Chambliss.

[00:31:52] Speaker 03:
That number,

[00:31:53] Speaker 03:
is for the 2015-2018 pre-disconnection scenario.

[00:31:58] Speaker 03:
And it is a version or a species of what Chambliss calls net flow.

[00:32:02] Speaker 03:
But the 99% number he derives is simply by looking at the inflow only and excluding the outflows over the subfloor-subfloor TAP69 tie line, which is wrong for one reason, because he's looking at the megawatts.

[00:32:18] Speaker 03:
And that's covered in our brief.

[00:32:19] Speaker 03:
And I believe Judge Garcia had mentioned this earlier.

[00:32:22] Speaker 03:
But it's wrong for a second reason because it's sort of a cherry picking the wrong counterfactual here, cherry picking the data improperly.

[00:32:29] Speaker 03:
What in fact happened when they disconnected the flows, as shown again in table two, many of the outward flows shift.

[00:32:35] Speaker 03:
So bidirectional flows were sustained even post system reconfiguration or disconnection of that line.

[00:32:44] Speaker 03:
Now, this is relevant also to the harmless errors because my friend sort of raises doubts about whether or not

[00:32:52] Speaker 03:
The include the reference in paragraph seven of the recurring order to the sub four tap 69 tie line really matters for the seven factor test.

[00:33:00] Speaker 03:
I believe the commission's comparison or the MISO experts comparison, the commission's adoption of that evidence showing that both pre and post connection, the flows still remain bidirectional shows you there is no doubt that factors three, four and five here did not depend on ownership of that line.

[00:33:17] Speaker 03:
It's just very clear it's in the record in that sense.

[00:33:20] Speaker 03:
big rivers ended up undermining their own argument here, because we know what the world looks like in both situations.

[00:33:26] Speaker 03:
The only evidence they have otherwise is sort of this 99% number, which is not a true hypothetical and is simply cherry picking the data.

[00:33:42] Speaker 05:
Well, let me just be clear.

[00:33:44] Speaker 06:
I didn't understand your

[00:33:46] Speaker 06:
brief to be taking the point is this connection didn't make any difference whatsoever.

[00:33:50] Speaker 06:
All right, which is no, it's certainly.

[00:33:53] Speaker 06:
Go ahead.

[00:33:54] Speaker 03:
That's correct.

[00:33:55] Speaker 03:
That's correct, your honor.

[00:33:57] Speaker 03:
Pre disconnection.

[00:33:58] Speaker 03:
Look at table one at J 89.

[00:34:00] Speaker 03:
You'll see at the support have 69 line.

[00:34:03] Speaker 03:
There are nearly continuous outflows from Henderson to big rivers.

[00:34:08] Speaker 03:
What other witnesses call an almost daily basis of outflows, even though there are also inflows occurring and maybe other points.

[00:34:14] Speaker 03:
And if you look at the average of all six tie lines, that's the 22%.

[00:34:17] Speaker 03:
That's sort of the hours as a whole.

[00:34:20] Speaker 03:
That's the bottom of the chart at J89.

[00:34:22] Speaker 03:
But if you're looking really at whether or not there are outward flows, they are nearly continuous there.

[00:34:27] Speaker 03:
And it is true that once they disconnect the line, you then go to J99 and that's the table two.

[00:34:33] Speaker 03:
And it's certainly not every day or not 98.9% of time having outward flows, but it is close to something like 10%.

[00:34:42] Speaker 03:
It's 8.9% over one line plus some change in the other lines, which gets you rounding up to roughly 10% of the time.

[00:34:49] Speaker 03:
And as Judge Garcia noted, the commission was well within its rights under cases like Green Development LLC to say that, look, 10% is enough for factor three here to point towards transmission.

[00:35:01] Speaker 03:
And because we've established bi-directional flows here, that also informs the commission's analysis under factors four and five.

[00:35:07] Speaker 03:
The commission will be within its rights

[00:35:11] Speaker 03:
interpreting its own order 888, which as you noted, uses the word rarely and is 10% necessarily insufficient for rarely.

[00:35:19] Speaker 03:
There's nothing that establishes that.

[00:35:21] Speaker 03:
And certainly nothing's been preserved jurisdictionally here that establishes the 10% is too low for factor three.

[00:35:31] Speaker 03:
Hopefully that, I believe that answered your question.

[00:35:36] Speaker 05:
Well, and well,

[00:35:39] Speaker 05:
I don't pretend to be an expert in this area, but I mean, a large transmitter resists competition from a small operation.

[00:36:04] Speaker 06:
All these years, I haven't seen a disconnect after the petition is filed and the expert evidence has been examined.

[00:36:14] Speaker 06:
That's very unusual.

[00:36:16] Speaker 06:
I never thought that we could just sort of ignore that in terms of the ultimate analysis here.

[00:36:33] Speaker 06:
I mean, you heard council for big rivers this morning say, you know, we don't know what the commission would have done, et cetera.

[00:36:38] Speaker 06:
Your argument is yes, we do because either the flows shifted or as to flows, they were sufficient under commission precedent.

[00:36:54] Speaker 06:
And I'm putting words in your mouth now, but I want to be clear that this is a correct interpretation.

[00:37:03] Speaker 06:
that it doesn't matter for purposes of the review of the commission's orders that outflows might have occurred in one spot, but with the disconnect, now they occur in another spot, and the same with the inflows.

[00:37:33] Speaker 06:
That really doesn't matter.

[00:37:35] Speaker 06:
I get the point about you being a transmitter without all these facilities being close together, but I guess I'm a little unclear council and help me here is that, are you arguing that if we can find a chart that has the numbers that are adequate under what the commission requires and what the statute requires,

[00:38:03] Speaker 06:
It really doesn't matter whether the commission was looking at other data and that the experts who were examining the data were looking at other data because we have a redundancy of data, as it were.

[00:38:33] Speaker 06:
that establishes what Henderson had to establish here.

[00:38:41] Speaker 03:
I think the last part of your statement, Judge Rogers, is correct.

[00:38:43] Speaker 03:
There is a redundancy of data here.

[00:38:45] Speaker 03:
We have it both pre-disconnection and post-disconnection.

[00:38:48] Speaker 03:
There's also even a redundancy of experts.

[00:38:50] Speaker 03:
The commission, for example, in paragraph 78 reviews the testimony of the MISO witness, Mrs. Hecker, the trial staff witness, Mr. Magna, and then also considers Mr. Chambliss's arguments, even though he's not an engineer.

[00:39:02] Speaker 03:
and concludes that the most compelling evidence is the sort of empirical, metered evidence of actual flows at J99 and 89, along with the contingency scenarios at J89 and J100.

[00:39:17] Speaker 06:
So you think if I go back and parse the commission's decisions, carefully again, that's going to be what I find.

[00:39:26] Speaker 03:
I think you will find it's very clear to commissioners.

[00:39:29] Speaker 06:
Which is logical that,

[00:39:34] Speaker 06:
you know, expert evidence is only as good as the evidence it's looking at.

[00:39:42] Speaker 03:
To some degree, but the commission understood the evidence here, both at the expert level and the underlying sort of data.

[00:39:48] Speaker 03:
And it thought it was quite clear and certainly sufficient to establish the flows outward were more than rare as the language of factor three would require.

[00:39:58] Speaker 06:
I didn't see it use the word redundant though.

[00:40:01] Speaker 06:
In any event, that's my word.

[00:40:03] Speaker 03:
Commission.

[00:40:04] Speaker 03:
But the Commission was, as Judge Rogers noted, very clear that it examines the empirical evidence, both before the disconnection and after the disconnection.

[00:40:13] Speaker 03:
That's at paragraphs 22 and 23.

[00:40:15] Speaker 03:
And then you'll see it again in paragraph 78, which in paragraph 78 is the basis for other discussions of bidirectional flows in paragraphs 87 through 89 and then 96.

[00:40:28] Speaker 02:
Council, can I ask you to clarify something for me?

[00:40:31] Speaker 02:
And I wanna be clear.

[00:40:32] Speaker 02:
I think this is not really an issue, but it seems that everyone's agreeing that it would be sufficient if Henderson either owns or controls the facilities.

[00:40:44] Speaker 02:
Can you help me understand why that makes sense?

[00:40:47] Speaker 02:
So hypothetically, if Henderson owned these facilities, but actually had binding contracts that deprived them of control,

[00:40:55] Speaker 02:
Why would they be able to join a regional transmission system?

[00:41:00] Speaker 03:
That's simply the language of the transmission owners agreements and also the tariff.

[00:41:05] Speaker 03:
I believe as the tariff defines transmission owner, as the commission notes, the eligibility criteria are phrased as separately sufficient.

[00:41:12] Speaker 03:
Both documents use the destructive or.

[00:41:15] Speaker 03:
I believe you'll see that repeated it.

[00:41:17] Speaker 03:
We're hearing Order of Paragraph 11 as well as Affirming Order of Paragraph 4.

[00:41:21] Speaker 02:
Do you have any understanding of why that makes sense if you own but have no control over your own facilities?

[00:41:31] Speaker 02:
Maybe the question.

[00:41:31] Speaker 03:
Yeah, I think you are certainly correct, Judge Garcia, in that

[00:41:39] Speaker 03:
especially really with control, what you're looking at here is can you allow transmission service over these facilities?

[00:41:46] Speaker 03:
And that's really like the jumping point of this.

[00:41:49] Speaker 03:
And that's how you certainly read your control arguments for sure.

[00:41:51] Speaker 03:
I mean, the ownership I think is sort of straight up and down and it's just sort of clear the text, but control is a little bit looser concept here.

[00:41:59] Speaker 03:
And to start on control there, I would note that Big River's position sort of raises two possibilities, but they can't really meet either

[00:42:09] Speaker 03:
On the one hand, they have sort of these, what they call sort of a group of contracts.

[00:42:14] Speaker 03:
If those contracts impact or restrict transmission service to or from MISO and the MISO integrated network, then they have to be grandfathered under the MISO tariff or they're going to be preempted as conflicting with the tariff.

[00:42:26] Speaker 03:
Now there's no dispute here that none of their contracts were actually grandfathered or they would be listed in attachment P to the MISO tariff, but no one disputes that.

[00:42:35] Speaker 03:
So if they make a claim to these contracts, in fact, restrict transmission service between Henderson and MISO, which includes Big River transmission facilities, then they have to show that those contracts are grandfathered.

[00:42:45] Speaker 03:
Now, they wholly failed on that.

[00:42:47] Speaker 03:
The other alternative is that the contracts do not, in fact, affect transmission service.

[00:42:52] Speaker 03:
But if they do not affect transmission service, to go to your earlier question, they're not relevant to the legal question of control, because Henderson can still order transmission service, I'm sorry,

[00:43:02] Speaker 03:
MISO can still affect transmission service over the Henderson facilities and the Big River facilities.

[00:43:08] Speaker 03:
And they try to read the MISO 04 to 05 decisions as creating a sort of liminal space between total irrelevance to control and preemption under the tariff.

[00:43:18] Speaker 03:
But that decision simply doesn't say that.

[00:43:21] Speaker 03:
The MISO 04 decision says that, okay, you had a grandfathered, you grandfathered an agreement that we thought might affect transmission service

[00:43:28] Speaker 03:
You're saying now it doesn't affect transmission service.

[00:43:31] Speaker 03:
It only addresses things like financial obligations, which are just sort of orthogonal transmission service.

[00:43:36] Speaker 03:
And because of that, we can remove it from the grant list.

[00:43:39] Speaker 03:
But if they're correct that these contracts are like those in GFA number 374 and MISO, then they're simply irrelevant to the prospect of control.

[00:43:48] Speaker 03:
And that's what the commission was trying to say in paragraph 12 of the recurring order.

[00:43:51] Speaker 03:
And they say that even the commission says that to the extent that these contracts do resemble GA,

[00:43:56] Speaker 03:
number 374, it does not change the outcome, because you're just not speaking to the question of control.

[00:44:01] Speaker 03:
And that is, I think, the easiest out on the sort of eligibility criteria, because there's no dispute that Big Rivers has signed up the tariff and the premature would apply.

[00:44:09] Speaker 03:
But there's really no basis for getting out of either that or the question of the relevance.

[00:44:15] Speaker 03:
And really, on the relevance issue,

[00:44:19] Speaker 03:
they never explain what the contracts do in terms of transmission service.

[00:44:24] Speaker 03:
They're not even in the JA.

[00:44:25] Speaker 03:
So we're just talking about sort of an amorphous blob of contracts here that supposedly block off service to all six tie lines, even though the presiding judge and then the commission at paragraph 32 of the affirming order said that we can dispose of these individually is either not grandfathered or simply irrelevant.

[00:44:43] Speaker 09:
Okay, Councilman, let me make sure my colleagues don't have additional questions for you.

[00:44:47] Speaker 09:
Thank you.

[00:44:48] Speaker 09:
We'll hear from intervenors council now, Mr. Pearson.

[00:45:17] Speaker 01:
Good morning, may I please the court?

[00:45:20] Speaker 01:
My name is Steve Pearson on behalf of intervener city of Henderson, Kentucky, utility commission, Henderson municipal power and light to address some of the issues that you've been talking about this morning.

[00:45:32] Speaker 01:
I think the biggest issue is Henderson ownership of facilities.

[00:45:38] Speaker 01:
And I have to start by pointing the court to

[00:45:43] Speaker 01:
Joint Appendix 108 to 110.

[00:45:45] Speaker 01:
That is an excerpt of the Transmission Owners Agreement.

[00:45:49] Speaker 01:
That is the agreement that Henderson signed with the system operator that initially started this case.

[00:45:56] Speaker 01:
Now what's significant about what's listed at 108 to 110 of the Joint Appendix in that Transmission Owners Agreement is those are the facilities at issue in this case.

[00:46:07] Speaker 01:
That is the definitive list.

[00:46:10] Speaker 01:
Importantly, one of the facilities that is not on that list is the sub four, sub four tap 69 line that we've been talking about.

[00:46:20] Speaker 01:
It's regrettable that there has been some confusion about ownership that has been created, but that definitive list does not include that timeline.

[00:46:31] Speaker 01:
So why are we talking about that timeline pre-disconnection?

[00:46:35] Speaker 01:
I think council for the commission makes very clear

[00:46:38] Speaker 01:
that there was substantial flows over that timeline.

[00:46:42] Speaker 01:
So what happened was, is pre-disconnection, you have a transmission facility, a Big Rivers transmission facility, interconnected with a Henderson transmission facility, substation four, and you had substantial flows off of the Henderson transmission facility to the Big Rivers transmission facility, indicating that these facilities operate in transmission.

[00:47:04] Speaker 01:
As council for the commission has pointed out, post-disconnection,

[00:47:08] Speaker 01:
You still have substantial transmission flows or at least sufficient transmission flows that the commission found that it exceeds the rarely if ever test.

[00:47:18] Speaker 01:
It's consigned to a different market, consigned to a different geographic area.

[00:47:26] Speaker 01:
That's task four and five.

[00:47:27] Speaker 01:
In both of those findings, the commission references those data tables.

[00:47:35] Speaker 01:
And I would also point, council addressed the issue of whether

[00:47:40] Speaker 01:
that the confusion of ownership of that line infected the entire analysis.

[00:47:46] Speaker 01:
Well, I would direct the court to exactly what the seven factor analysis is.

[00:47:53] Speaker 01:
The first one is proximity to load.

[00:47:56] Speaker 01:
How could a big rivers facility, whether it, you know, it's a big rivers facility, so it's not proximate to Henderson's load.

[00:48:05] Speaker 01:
It's a Big Rivers facility in factor two.

[00:48:07] Speaker 01:
So it doesn't affect whether the Henderson facilities are looped or radial.

[00:48:11] Speaker 01:
We've discussed factors three, four, and five.

[00:48:14] Speaker 01:
Factor six is metering.

[00:48:16] Speaker 01:
There's metering on other facilities.

[00:48:18] Speaker 01:
And it's got to be bidirectional.

[00:48:19] Speaker 01:
And the record shows that it's bidirectional.

[00:48:22] Speaker 01:
And factor seven really wasn't in dispute in this case.

[00:48:25] Speaker 01:
It's voltage.

[00:48:26] Speaker 01:
And my time is up.

[00:48:28] Speaker 01:
I would be happy to answer any questions from your honors.

[00:48:33] Speaker 01:
Thank you, counsel.

[00:48:34] Speaker 09:
We appreciate your argument.

[00:48:36] Speaker 09:
Thank you, your honor.

[00:48:39] Speaker 08:
Rafael, we'll give you three minutes for rebuttal.

[00:49:05] Speaker 04:
Few responses, Your Honor.

[00:49:07] Speaker 04:
First, it is disputed whether the sub-4 sub-4 line is one of the facilities.

[00:49:12] Speaker 04:
If FERC calls that an inadvertent mistake in its briefing, but if it was an inadvertent, it was apparently universal.

[00:49:20] Speaker 04:
Everyone below treated that facility as one of the disputed facilities.

[00:49:23] Speaker 06:
Could I ask you, do you agree or do you dispute interveners' direction of the court?

[00:49:34] Speaker 06:
to the listing of the facilities that are at issue here, namely in the agreement that your client signed, part of which appears at JO108-110.

[00:49:49] Speaker 04:
Big Rivers did not sign that agreement.

[00:49:51] Speaker 04:
That was a submission by the transmission operator, MISO and Henderson.

[00:49:56] Speaker 04:
And yes, our client does dispute whether that is necessarily the full list of facilities because Henderson itself told the commission at JA441 that it owned the sub four, sub four tap 69 line.

[00:50:12] Speaker 04:
The ALJ acknowledged Big River's ownership claim to that line.

[00:50:17] Speaker 05:
When Henderson and MISO signed this agreement saying, here's what we want to do.

[00:50:29] Speaker 05:
Do you agree that this line that we've been talking about was not listed?

[00:50:39] Speaker 04:
We don't dispute that on the particular JA pages that my friend on the other side points you to, that line is not on that list.

[00:50:47] Speaker 04:
All right.

[00:50:48] Speaker 06:
So at least as to the party petitioning here in terms of petitioning to the agency.

[00:50:59] Speaker 06:
for this authority, and MISO, those were the only lines of issue.

[00:51:08] Speaker 05:
It's not that your client didn't raise objections for all kinds of reasons, but at least the proposal that was on the table.

[00:51:20] Speaker 05:
That's what's so bizarre about this case.

[00:51:24] Speaker 04:
Yes, Your Honor, we agree that the situation is a little bizarre, but that's simply not how the commission treated the lines.

[00:51:32] Speaker 04:
On the initial order, it says that Henderson owns and controls that particular tie line.

[00:51:38] Speaker 04:
That's J463.

[00:51:40] Speaker 04:
Big Rivers objected and said, there is evidence in the record, not only that we own this line, but there are control issues as well.

[00:51:47] Speaker 04:
And on rehearing, the commission just doubled down.

[00:51:49] Speaker 04:
And at J515, it says there's no council.

[00:51:52] Speaker 06:
Explain to me.

[00:51:53] Speaker 06:
if you will, what you think happened here, just so I understand.

[00:51:59] Speaker 06:
Henderson went to MISO.

[00:52:02] Speaker 06:
They entered an agreement involving, let's just say, five lines.

[00:52:09] Speaker 05:
By the time the matter got to the hearing, the administrative law judge and his decision, the agreement had morphed into

[00:52:22] Speaker 06:
something where Henderson was seeking six lines.

[00:52:27] Speaker 04:
It's not clear exactly what happened, Your Honor, but there were- But that is in fact what happened.

[00:52:33] Speaker 04:
Well, Henderson claims that it owned that line and that particular line was an issue.

[00:52:37] Speaker 06:
Big Reverse claims- But I'm just trying to understand, counsel, my own mind.

[00:52:41] Speaker 06:
Henderson goes and says to Miso, I want to be in control of these five lines.

[00:52:48] Speaker 06:
Miso says, okay, so we've got to go to the commission.

[00:52:51] Speaker 06:
tariff, all those sorts of things.

[00:52:53] Speaker 06:
But by the time the matter comes before hearing, we're really talking about six lines.

[00:53:01] Speaker 04:
I mean, that is perhaps one way to read the record, Your Honor, yes.

[00:53:04] Speaker 06:
OK, I'm just done.

[00:53:05] Speaker 06:
I mean, you're more familiar with this than I. It's just bizarre.

[00:53:08] Speaker 06:
All right, so we're spending all our time on something that the parties, at least initially, said they weren't interested in.

[00:53:14] Speaker 06:
The parties being Henderson and Miso, sorry.

[00:53:20] Speaker 04:
Right, until Henderson changed its position and claimed ownership over that line.

[00:53:25] Speaker 04:
To address, much of FERC's argument on a deal is trying to make up for the deficiencies of the commission's order and coming up with new explanations.

[00:53:35] Speaker 04:
And the APA requires those explanations to have been by the agency in the first instance.

[00:53:41] Speaker 04:
They're too really clear.

[00:53:42] Speaker 06:
If the ALJ opinion says, here's the record,

[00:53:47] Speaker 06:
Here's the testimony.

[00:53:49] Speaker 06:
Here's all the evidence that they had before them.

[00:53:53] Speaker 06:
And I find it sufficient to show that Henderson has ownership and control.

[00:53:58] Speaker 06:
And the commission says on review sought by your client, we're affirming those findings.

[00:54:13] Speaker 05:
As I understand it, it's not that the evidence isn't there.

[00:54:17] Speaker 06:
But they didn't say something, and it wasn't until the petition for rehearing that the commission finally addressed your client's objection about this 169 line.

[00:54:30] Speaker 04:
Well, a few responses to that, Your Honor.

[00:54:32] Speaker 04:
The ALJ did not decide ownership or control.

[00:54:36] Speaker 04:
The ALJ says at J268 that it was.

[00:54:39] Speaker 04:
No, no, no.

[00:54:39] Speaker 06:
I know he didn't.

[00:54:40] Speaker 06:
But he cited all the evidence, and he cited the experts that your client had

[00:54:46] Speaker 06:
and the Henderson hat.

[00:54:49] Speaker 04:
Yes, Your Honor.

[00:54:50] Speaker 04:
So the first time the commission separately addresses ownership and control is on rehearing.

[00:54:55] Speaker 04:
And that's where the commission says explicitly that Henderson.

[00:54:59] Speaker 06:
The commission in order 580 addresses ownership and control.

[00:55:07] Speaker 04:
Yes, Your Honor.

[00:55:07] Speaker 04:
But it speaks in more general terms about ownership and control.

[00:55:11] Speaker 06:
And then largely.

[00:55:15] Speaker 06:
you know, operates, controls.

[00:55:19] Speaker 04:
So it goes through the six tie lines as to control, but does not say anything as to ownership specifically.

[00:55:26] Speaker 04:
And then Big Rivers objected, said there is evidence that Big Rivers both owns and controls these tie lines.

[00:55:34] Speaker 04:
And on rehearing, that's when the commission says that Henderson owns and controls all these lines and that nothing in the record indicates otherwise.

[00:55:45] Speaker 04:
And so before this court, our argument was that the evidence that Big Rivers put into the record about ownership and control was simply incompatible with the commission statement that nothing in the record indicated otherwise.

[00:55:59] Speaker 04:
Now, the commission believes that on appeal that perhaps there was this robust burden shifting council.

[00:56:05] Speaker 06:
I agree with that, but that's not the way it breathes.

[00:56:10] Speaker 04:
Well, Your Honor, that's exactly what we said in our briefing, which was that.

[00:56:15] Speaker 06:
You said that the commission hadn't met its burden of proof because look, it was saying that the burden was not on Henderson to show that it had ownership or control.

[00:56:30] Speaker 06:
I mean, with all due respect, counsel, you cite this sentence at least twice in your brief.

[00:56:37] Speaker 04:
Yes, Your Honor.

[00:56:38] Speaker 04:
So when we filed our opening brief, the commission still had not admitted that it apparently agrees now that it made this error.

[00:56:45] Speaker 04:
And so what Big Rivers had before it was the evidence put into the record as to ownership and control, the commission's one line statement that nothing in the record indicated otherwise.

[00:56:55] Speaker 04:
And Big Rivers' position was that that one line statement seemed to put the burden of proof

[00:57:00] Speaker 04:
on Big Rivers to disprove ownership and control when the burden of proof was on Henderson and MISO to affirmatively demonstrate ownership and control.

[00:57:09] Speaker 04:
Now, the commission's answer on appeal is that apparently the commission engaged in this robust burden shifting analysis and concluded Big Rivers didn't meet its burden.

[00:57:20] Speaker 06:
But the commission's decision on rehearing, we've talked about paragraph 11.

[00:57:32] Speaker 06:
where the commission says we remain unpersuaded, and you say the commission's just wrong about that.

[00:57:38] Speaker 06:
All right, now on appeal, the commission acknowledges it's wrong, at least in part.

[00:57:44] Speaker 06:
But then as to paragraph 12 on rehearing in order 580-A, the commission states, quote, moreover, we sustain the explanation and conclusions in our previous opinion,

[00:58:00] Speaker 06:
that Big Rivers has turned over operational control of its facilities to MISO, including Big Rivers substation and tie lines that interconnect with the Henderson facilities.

[00:58:14] Speaker 06:
MISO's use of the relevant facility is not limited by Big Rivers cited statements, excuse me, Big Rivers cited agreements

[00:58:27] Speaker 06:
Big Rivers has not disputed that it gave MISO operational control of its facilities and does not allege that the agreements actually were grandfathered.

[00:58:39] Speaker 06:
And it goes on.

[00:58:41] Speaker 06:
So as to control, there was a clear finding.

[00:58:46] Speaker 06:
Excuse, yes, right, control, sorry.

[00:58:50] Speaker 04:
Yes.

[00:58:51] Speaker 04:
Yes, Your Honor.

[00:58:51] Speaker 04:
So the argument about the complete lack of explanation, the burden shifting problem, that was as to ownership attorney.

[00:58:58] Speaker 06:
But it says, moreover, in other words, even if we're wrong about all that.

[00:59:05] Speaker 06:
All right.

[00:59:05] Speaker 06:
Look, Henderson has control.

[00:59:11] Speaker 06:
And what is required to have is either ownership or control.

[00:59:18] Speaker 04:
Yes, your honor.

[00:59:19] Speaker 04:
But as to control, as Big Rivers argued in its opening brief, there were two defects in the commission's answer as to control and defects that the commission has yet to explain on appeal.

[00:59:32] Speaker 04:
And in fact, this is a perfect example of the commission coming up with explanations on appeal that differ from what the council.

[00:59:40] Speaker 06:
Those alleged errors are your client disagrees with the commission's interpretation of its precedent.

[00:59:48] Speaker 04:
Respect your honor, no, that's not right.

[00:59:51] Speaker 04:
That's what you said.

[00:59:52] Speaker 06:
You said the commission gave two reasons, right?

[00:59:56] Speaker 04:
Yes, your honor, and neither reason is compatible with the decisions that FERC gave before.

[01:00:01] Speaker 04:
And FERC does.

[01:00:02] Speaker 06:
And that's what I'm saying.

[01:00:03] Speaker 06:
FERC interpreted its precedent differently than you or your client.

[01:00:09] Speaker 06:
That's all I'm getting at.

[01:00:10] Speaker 06:
I'm not saying who's right or wrong, but that's what happened.

[01:00:15] Speaker 04:
Your Honor, FERC attempts to come up with explanations on appeal, but those answers differ from what the commission said.

[01:00:21] Speaker 04:
So a perfect example of this is that the commission says at 519 that these agreements.

[01:00:27] Speaker 06:
I'm focusing on what the commission said.

[01:00:31] Speaker 04:
Yes.

[01:00:32] Speaker 06:
It said it didn't agree with your client's interpretation of its precedent.

[01:00:39] Speaker 06:
It said why?

[01:00:41] Speaker 06:
It said those situations were different.

[01:00:45] Speaker 04:
Your honor, it did not address the two reasons that it gave.

[01:00:51] Speaker 04:
That was the first time the commission gave those reasons.

[01:00:53] Speaker 04:
And so Big Rivers is arguing here that those two reasons are not compatible with the precedent.

[01:00:59] Speaker 04:
And an example of this is that the Midwest cases, the commission said at 519 on rehearing that the agreements in those cases were, quote, similar and relevant respects to the agreements in this case.

[01:01:14] Speaker 04:
Now, FERC's brief at FERC 38 transforms that finding and says that the agreements were similar in some respects, but ultimately irrelevant.

[01:01:23] Speaker 04:
That's not what the commission said on rehearing, which is that they were similar and relevant respects.

[01:01:29] Speaker 04:
Now, the two reasons- What paragraph are you citing?

[01:01:32] Speaker 04:
So I'm clear.

[01:01:33] Speaker 04:
That's paragraph 12, Your Honor.

[01:01:34] Speaker 04:
That's right.

[01:01:38] Speaker 04:
Yes, so it's on 519 at the top on the third line, the second and third line, similar and relevant respects.

[01:01:45] Speaker 06:
Yes.

[01:01:46] Speaker 06:
I mean, relevant respects doesn't necessarily be dispositive, does it?

[01:01:52] Speaker 04:
Perhaps not, Your Honor, but the finding was similar and relevant respects.

[01:01:56] Speaker 04:
And FERC on appeal changes that to some respects, but ultimately irrelevant.

[01:02:00] Speaker 04:
That's not what the commission said.

[01:02:02] Speaker 04:
Now, again, the two reasons that the commission said that these past cases were

[01:02:08] Speaker 04:
not pertinent to this case, despite the finding of the similarity between the agreements themselves, was that the agreements were not listed in the tariff.

[01:02:18] Speaker 04:
But that was just as true in the Midwest cases, where in Midwest, the entire premise of the commission's process was to determine whether those agreements should be listed in the tariff.

[01:02:31] Speaker 06:
In Midwest, were the agreements part of the record?

[01:02:37] Speaker 04:
I'm not aware if they were.

[01:02:40] Speaker 06:
Well, they're not part of the record here.

[01:02:42] Speaker 06:
You agree with that, don't you?

[01:02:44] Speaker 04:
Well, they're part of the agency record, Your Honor.

[01:02:46] Speaker 04:
They're not in the joint appendix because the commission determined that the substance of the agreements, it wasn't even going to look at the substance.

[01:02:55] Speaker 04:
So we did not feel that there was any basis to put them in the joint appendix itself.

[01:03:00] Speaker 04:
But we're happy.

[01:03:01] Speaker 04:
They're not on appeal.

[01:03:02] Speaker 06:
They're not in the record for the court to look at, right?

[01:03:06] Speaker 04:
In the joint appendix before this court your honor, but are in the administrative record.

[01:03:12] Speaker 04:
Their big rivers exhibits 569 submitted those agreements and full there were certainly factual disputes as to what these agreements said and did and the Commission simply didn't wait into any of that because it gave these two reasons.

[01:03:26] Speaker 04:
But again, those reasons have to be compatible with the with the commission's previous precedent.

[01:03:34] Speaker 04:
And when the commission has said in the past that these two the Midwest says.

[01:03:39] Speaker 04:
that the agreements could be excluded from attachment P, which JA 455 talks about how attachment P is the MISO tariffs official listing of permissible grandfathered agreements.

[01:03:54] Speaker 04:
And so agreements could be excluded from the tariff and yet, quote, remain in effect and not be impacted by such lack of inclusion in the tariff.

[01:04:03] Speaker 04:
Big Rivers argued the same circumstance should be true here.

[01:04:06] Speaker 04:
If the agreements are not listed in the tariff, they should still be operative.

[01:04:11] Speaker 04:
So the reason the commission gave was not compatible with its own prior decision.

[01:04:15] Speaker 04:
Now, the second reason that the commission gave, which is that MISO had control over these facilities, was a similar problem.

[01:04:23] Speaker 04:
And that the transmission owner there was also a member of MISO.

[01:04:28] Speaker 04:
And so membership in MISO was sufficient to

[01:04:33] Speaker 04:
make those agreements not operative, then surely the commission couldn't have said that the agreements would, quote, not be impacted by such lack of inclusion in the tariff.

[01:04:43] Speaker 04:
And the commission still has no answer to those arguments on appeal.

[01:04:47] Speaker 04:
The commission, instead, its counsel says that the agreements were just irrelevant.

[01:04:53] Speaker 04:
That's not what the commission said.

[01:04:55] Speaker 04:
Now, there are certainly circumstances in which the commission could parse the record and come out the way that FERC's counsel on appeal says that it could come out.

[01:05:05] Speaker 04:
But there's no guarantee of that.

[01:05:07] Speaker 04:
And where there's any uncertainty and an admitted factual error, the right answer is to send it back to FERC to look at this in the first instance.

[01:05:15] Speaker 04:
Thank you.

[01:05:16] Speaker 05:
So you think that commission's whole discussion of its precedent

[01:05:25] Speaker 05:
when it was looking for purposes of opinion number 579, is it relevant?

[01:05:38] Speaker 05:
Opinion 579, Your Honor?

[01:05:40] Speaker 06:
That's at, let's see what page.

[01:05:43] Speaker 06:
That's on the rehearing at JA 519.

[01:05:48] Speaker 06:
That's where it starts.

[01:05:53] Speaker 05:
You mean paragraph 12 that's discussing the Midwest cases?

[01:05:57] Speaker 06:
No, you've already told me what you think of that.

[01:06:00] Speaker 06:
So that's why I asked you about what appears now as to the discussions as to order 579, which appears starting at paragraph 13.

[01:06:20] Speaker 04:
Uh, grid lines, your honor.

[01:06:21] Speaker 04:
So that that pertains to the seven factor test.

[01:06:24] Speaker 04:
That's not really correct.

[01:06:25] Speaker 04:
That's what I'm dealing with now.

[01:06:29] Speaker 06:
That's what that's what the subheading says.

[01:06:31] Speaker 06:
Seven factor test for jurisdictional transmission facilities.

[01:06:37] Speaker 05:
That's what the commission order says.

[01:06:41] Speaker 05:
That's what it's dealing with here.

[01:06:45] Speaker 04:
Yes, your honor.

[01:06:45] Speaker 04:
So there.

[01:06:46] Speaker 04:
Just to clarify, there are two issues that FERC has to win on here, both ownership and the seven factor test.

[01:06:54] Speaker 04:
And on the seven factor test, Big River's argument was that the commission's explanations were not consistent with its precedent.

[01:07:01] Speaker 04:
And grid lines is part of that.

[01:07:04] Speaker 04:
But the commission.

[01:07:04] Speaker 06:
And the commission answers is all I'm getting at.

[01:07:08] Speaker 06:
You may not agree with its answer, but it answers.

[01:07:12] Speaker 06:
It says Big Rivers mischaracterizes the commission's analysis and conclusions.

[01:07:20] Speaker 06:
I mean, you may disagree with that, but that is what the commission said on rehearing, as opposed to suggesting it just didn't look at it and never responded to Big Rivers' argument.

[01:07:32] Speaker 06:
That's all I'm getting at.

[01:07:34] Speaker 04:
Yes, yes, your honor.

[01:07:35] Speaker 04:
Big River's position was never that the commission ignored gridlines specifically.

[01:07:39] Speaker 04:
Big River's position on the seven factor test was that the commission departed from its past precedent, which looks at the primary function of a facility and not

[01:07:49] Speaker 04:
particular contingency operations.

[01:07:51] Speaker 04:
And that grid lines was a great example of this because grid lines talked about net flow and looked at net power flow.

[01:07:58] Speaker 04:
And the commission on multiple factors said that net flow was not relevant.

[01:08:03] Speaker 04:
And so grid lines was part of Big River's larger argument that this departure from precedent violated the APA.

[01:08:11] Speaker 09:
As to the seven factor test.

[01:08:12] Speaker 04:
As to the seven factor test, yes, your honor.

[01:08:16] Speaker 09:
OK, thank you, council.

[01:08:17] Speaker 09:
Let me make sure my colleagues don't have additional questions

[01:08:19] Speaker 09:
For you, if not, we'll thank you.

[01:08:23] Speaker 09:
Thanks to all counsel.

[01:08:25] Speaker 09:
We'll take this case under submission.