[00:00:00] Speaker 00:
Case number 24-1253, Ed Alp, East Tennessee for the petitioner versus Federal Energy Regulatory Commission.

[00:00:08] Speaker 00:
Mr. Regula for the petitioner, Mr. Edgar for the respondent, Mr. Johnson for the interviewee.

[00:00:15] Speaker 03:
Good afternoon, Your Honours.

[00:00:19] Speaker 07:
May it please the Court, Ryan Regula from Selma Wommer here on behalf of Petitioner East Tennessee Group.

[00:00:24] Speaker 07:
I'd like to reserve three minutes for rebuttal, please.

[00:00:28] Speaker 07:
Your honor, this case involves an appeal of an order of the Federal Energy Regulatory Commission, which granted Intervator Pipeline both, one, a certificate under Section 7C of the Natural Gas Act to construct in addition to the pipeline system, known as a SAP project, and two, a predetermination that the pipeline could recover from its shippers the entire $390 million price tag of this project.

[00:00:53] Speaker 07:
Petitioner is not challenging the certificate for construction.

[00:00:57] Speaker 07:
Rather, we are challenging the FERC's grant of predetermination that the entirety of the $390 million cost of this project should be borne by the pipeline shippers.

[00:01:08] Speaker 07:
Petitioner has two arguments, one due process and two arbitrary and capricious.

[00:01:13] Speaker 07:
We'll focus on due process first.

[00:01:14] Speaker 03:
Before you get to that, my understanding is, and correct me if I'm wrong, that a Section 4 proceeding is underway now.

[00:01:23] Speaker 06:
That is correct.

[00:01:23] Speaker 03:
And that in that proceeding, I think maybe you or at least others have argued about how these costs of these pipeline enhancements should be allocated, obviously consistent with your current view that it should go to more recent customers.

[00:01:43] Speaker 03:
Is that correct?

[00:01:45] Speaker 07:
There is a section four rape case going on currently.

[00:01:49] Speaker 07:
I am not involved in it, but my understanding is correct that there are an issue, and that issue is currently regarding allocation.

[00:01:58] Speaker 07:
I'm focusing on the predetermination, that the predetermination itself should be sent to a section four rape case to determine whether it should be the entire shippers, the new shippers, or the current shippers that are currently on the line.

[00:02:14] Speaker 03:
Would the section four proceeding that's underway make that same decision?

[00:02:19] Speaker 03:
Could it be decided there by the commission that the only fair based on all the evidence, whatever it is, comes in there?

[00:02:28] Speaker 03:
I'm not saying they would, but could they decide that, oh, you're right, either the vast majority, 99% or maybe even 100% has to be allocated to this group of shippers and not this group of shippers?

[00:02:43] Speaker 07:
I don't think so.

[00:02:45] Speaker 07:
I understand where you're going.

[00:02:48] Speaker 07:
Because of the commission already issuing a determination on predetermination of rolled in rates in this particular case, via its order from May 2024,

[00:03:01] Speaker 07:
That price tag is already kind of baked in the $390 million.

[00:03:07] Speaker 07:
So the rate case is minor.

[00:03:09] Speaker 03:
So you're not challenging the pipeline construction.

[00:03:11] Speaker 03:
The price tag's there, and the fact that it's going to be paid by existing customers, as opposed to people who wish to come in, maybe, but by existing customers, that seems to already be baked in.

[00:03:23] Speaker 03:
But which existing customers will pay, or which will pay the bulk

[00:03:29] Speaker 03:
of this expense, that's exactly what the section four proceeding is going to sort out, correct?

[00:03:34] Speaker 03:
Yes.

[00:03:34] Speaker 03:
And if the section four proceeding ended up saying that you, your clients ended up paying 1% and newer shippers end up paying 99%, would that not actually solve your problem here?

[00:03:51] Speaker 07:
Yeah, I think my distinction would be the allocation of costs versus the total sum of $390 million.

[00:03:57] Speaker 07:
And our argument is that the $390 million price tag, there was other methods that could be used to be evaluated to get to that dollar figure out before we even get to the allocation.

[00:04:12] Speaker 07:
So I'm bifurcating the two issues.

[00:04:16] Speaker 03:
I thought your argument, oh,

[00:04:17] Speaker 03:
in this case as well is that we shouldn't have to pay, other people should have to pay.

[00:04:22] Speaker 03:
I didn't see an argument here that they got the math wrong.

[00:04:28] Speaker 07:
Understood, but in terms of the section four kind of allocation that you're kind of getting at, I just want to make the distinction that the section four case that's happening elsewhere,

[00:04:39] Speaker 07:
It's more or less regarding the allocation.

[00:04:42] Speaker 07:
Again, you're right.

[00:04:43] Speaker 07:
We're arguing that we don't think we should have to pay the $390 million where the shippers should not be that are currently on the pipeline.

[00:04:50] Speaker 07:
I'm in agreement.

[00:04:51] Speaker 03:
And you're arguing that in that proceeding?

[00:04:54] Speaker 07:
We are.

[00:04:55] Speaker 03:
And if you win, obviously you hope to win?

[00:05:00] Speaker 06:
I would hope to win, yes.

[00:05:01] Speaker 03:
You prevail?

[00:05:02] Speaker 06:
Yes.

[00:05:05] Speaker 03:
Then everything's fine.

[00:05:08] Speaker 06:
I would agree, Your Honor.

[00:05:09] Speaker 03:
Nothing about this case.

[00:05:10] Speaker 03:
It doesn't matter what happened in this case.

[00:05:12] Speaker 03:
Can you also challenge under Section 5?

[00:05:15] Speaker 07:
Possibly, Your Honor.

[00:05:18] Speaker 07:
The issue is that we already currently have an order on the books.

[00:05:23] Speaker 03:
Order that says we'll go to a Section 4 proceeding and figure out how much you pay there.

[00:05:27] Speaker 03:
And you can make your representations about we should pay zero or 1% or whatever if you think there's some small part that's fair for you to pay.

[00:05:35] Speaker 03:
And you can do that there.

[00:05:36] Speaker 03:
And you might win.

[00:05:38] Speaker 03:
My understanding also is that proceedings on pause for settlement negotiations.

[00:05:44] Speaker 06:
That is correct, Your Honor.

[00:05:45] Speaker 03:
Which, if successful, would also be at any need to decide this case or any injury you assert from this case.

[00:05:52] Speaker 07:
Correct.

[00:05:53] Speaker 03:
And I think for our purpose... Why should we decide this until we know what happens in the Section 4 proceeding?

[00:06:00] Speaker 03:
We have an order currently enforceable that the first one says we've made a judgment here that this should be paid by customers.

[00:06:09] Speaker 03:
But this enhances the pipeline capacity and service quality for all customers.

[00:06:16] Speaker 03:
So it'll be rolled in rates.

[00:06:19] Speaker 03:
But all Ferg said was, but who pays exactly how much?

[00:06:22] Speaker 03:
We'll sort that out later.

[00:06:24] Speaker 03:
And I raise this because you're about to start about due process.

[00:06:28] Speaker 03:
And I don't understand why this section four proceeding isn't part of the due process you get here.

[00:06:33] Speaker 07:
Sure, Your Honor.

[00:06:34] Speaker 07:
And if the court would be inclined to go that direction, that's a fair ruling.

[00:06:42] Speaker 07:
I think from our perspective.

[00:06:43] Speaker 03:
Whether we should, or my misunderstanding things.

[00:06:46] Speaker 03:
I mean, sort of two things.

[00:06:47] Speaker 03:
One, should we wait?

[00:06:49] Speaker 03:
Um, especially if you're going to resolve it by settlement.

[00:06:52] Speaker 03:
Um, and but 2, I'm also asking, so that's 1 of you can answer.

[00:06:56] Speaker 03:
But the 2nd question is.

[00:06:57] Speaker 03:
Don't we have to factor in for purposes of your due process concerns?

[00:07:04] Speaker 03:
that you're getting still more forks set at the time.

[00:07:08] Speaker 03:
This is not the end of the story.

[00:07:09] Speaker 03:
There's gonna be a section four proceeding and you can make all the showings you want in the world.

[00:07:13] Speaker 03:
And that section for proceeding about you guys, not your group, your client not having to pay much.

[00:07:19] Speaker 03:
So that's part of the due process you get.

[00:07:22] Speaker 06:
I understood your honor.

[00:07:23] Speaker 03:
No one sent you a bill yet.

[00:07:24] Speaker 06:
No one has sent us a bill, no.

[00:07:27] Speaker 03:
So can you answer my practical question?

[00:07:29] Speaker 03:
Should we wait?

[00:07:31] Speaker 03:
And then as you address your due process argument, how you have a due process concern given that you're still in the middle of getting your process through the Section 4 proceeding?

[00:07:40] Speaker 07:
Sure.

[00:07:40] Speaker 07:
Answering your initial question first, it's our position that you should rule on the issue now rather than at the Section 4 rate hearing.

[00:07:50] Speaker 07:
only because we've gone through the proceeding and FERC has already made the determination via the SAP application way back that was filed in 2023, had a final order that came out a year later that the pipeline has relied upon in terms of constructing.

[00:08:11] Speaker 07:
challenging the construction of the pipeline addition.

[00:08:14] Speaker 07:
But we are challenging the allocation, or I should say, the price tag of this project and the feasibility of that $390 million price tag.

[00:08:24] Speaker 07:
So if we're waiting to the Section 4 rate case, we're behind the eight ball already.

[00:08:30] Speaker 03:
So the process argument?

[00:08:39] Speaker 07:
Sure.

[00:08:40] Speaker 07:
Regarding the due process argument, petitioners contend that the FERC and the pipeline have stonewalled petitioners' data requests and in fact denied our due process.

[00:08:50] Speaker 01:
Your main argument on due process is that FERC acted unconstitutionally or at least arbitrarily in granting this order before you had the CEII information.

[00:09:08] Speaker 01:
Yes, but there's a mean there's a certificate proceeding and

[00:09:14] Speaker 01:
The applicant has to put in all the information supporting the application that FER requires.

[00:09:23] Speaker 01:
And you intervened and had a chance to put in whatever information you want to require.

[00:09:29] Speaker 01:
And your complaint is that you didn't have access to agency information in, you know,

[00:09:38] Speaker 01:
wholly apart from the record of the adjudication.

[00:09:42] Speaker 01:
Sounds like you're saying there's a constitutional entitlement to discovery.

[00:09:50] Speaker 01:
Doesn't seem hugely plausible to me.

[00:09:53] Speaker 07:
Sure.

[00:09:55] Speaker 07:
You know, just taking a step back, we're looking for the CEI information because we want to test the allegation that the pipeline has alleged that there's this loss of displacement gas.

[00:10:06] Speaker 07:
And that's actually happening.

[00:10:08] Speaker 07:
So we want to be able to compare the historical numbers to understand the progression flows and whether or not that this project or the $390 million cost of this project is.

[00:10:19] Speaker 01:
None of it is in the record of this adjudication.

[00:10:23] Speaker 07:
Sure, but we have requested the information shortly after the SAP project the application was filed.

[00:10:31] Speaker 02:
And the request was not made on the docket such that FERC would have known that right away, but then later on you got the information that you asked for.

[00:10:40] Speaker 07:
In FERC's May 2024 letter response to us granting us the CEI information, they acknowledged that we requested it in June 5th of 2023, so a year earlier.

[00:10:57] Speaker 07:
So by the time we got the information, which was in fact August of 2024,

[00:11:03] Speaker 07:
The SAP order approving the application for the pipeline addition, that had already been approved.

[00:11:10] Speaker 07:
So we have not had an opportunity to look at the information until after the fact.

[00:11:14] Speaker 02:
Is that form 567 information also in the exhibit G's, essentially the data flow information?

[00:11:20] Speaker 07:
Yeah.

[00:11:21] Speaker 07:
There's a distinction to be made.

[00:11:23] Speaker 07:
And let me rephrase my yeses.

[00:11:26] Speaker 07:
Exhibit G contains a snapshot of two times of the gas flows, once before construction and another after the construction of the SAP.

[00:11:36] Speaker 07:
This snapshot is insufficient to provide or to demonstrate historical patterns or the progression of gas flows

[00:11:43] Speaker 07:
to determine the need for the project.

[00:11:45] Speaker 07:
And so Exhibit G was filed with a SAP application, but it was filed under seal of confidentiality.

[00:11:50] Speaker 07:
Our form 567, the CI information, that provides peak and average gas flows on an annual basis.

[00:11:59] Speaker 07:
And we first requested the 2022 form 567, which was delayed 14 months before we received it.

[00:12:07] Speaker 07:
And then we subsequently requested the 2023 version as well, which that was provided almost instantaneously.

[00:12:15] Speaker 07:
So to answer your question, the exhibit G is not the same as form 567.

[00:12:21] Speaker 07:
There are definitely differences.

[00:12:23] Speaker 02:
But FERC did ask for this annual flow data subsequent to the proceeding, but it at least is explained.

[00:12:29] Speaker 02:
They utilize this information that you're requesting.

[00:12:33] Speaker 07:
In your application in terms of approving the certificate?

[00:12:38] Speaker 07:
Yes.

[00:12:40] Speaker 07:
Whether FERC used it or not, it wasn't part of the record that we were able to see.

[00:12:43] Speaker 07:
That's part of our complaint.

[00:12:44] Speaker 07:
There's information out there that we haven't seen that we are entitled as interveners to be able to assess.

[00:12:52] Speaker 02:
Even now, between the 4557 and the exit at G's, you're saying there's additional information?

[00:12:58] Speaker 07:
No, the information now has been provided.

[00:13:00] Speaker 07:
And it was provided after our deemed denial to our request for rehearing.

[00:13:07] Speaker 02:
But is that information explained in FERC's later orders?

[00:13:16] Speaker 07:
No.

[00:13:16] Speaker 07:
To my knowledge, Your Honor, it's not, upon recollection.

[00:13:28] Speaker 07:
Thank you.

[00:13:30] Speaker 07:
Your honor, the petitioners are going to contend that the stolen of our data request which we have described provided us as an opportunity to make our case and that we as the petitioners failed to avail ourselves of the opportunity of that information and we were provided all the process that we were entitled.

[00:13:48] Speaker 07:
But FERC misses the point.

[00:13:50] Speaker 07:
Because this case turns on the principle that due process delayed is due process denied.

[00:13:54] Speaker 07:
And as mentioned, we didn't receive the information until months after the SAP certificate was already approved by FERC.

[00:14:03] Speaker 07:
In this case, the record demonstrates that the opportunity in which FERC- You don't care about this.

[00:14:07] Speaker 03:
You told us you don't care about the SAP certificate being approved.

[00:14:11] Speaker 03:
You could just care about who pays for it.

[00:14:13] Speaker 07:
Well, the SAP certificate had two elements.

[00:14:15] Speaker 07:
One, to construct the addition of the pipeline system, but it also had the predetermination that the pipeline could recover from its shippers the entire $390 million price tag of the project.

[00:14:26] Speaker 07:
We care about the price tag.

[00:14:28] Speaker 03:
OK, so you don't care about the price tag.

[00:14:31] Speaker 03:
You care about the allocation.

[00:14:34] Speaker 06:
Both, yes.

[00:14:36] Speaker 03:
Well, nowhere in your brief you challenged the price tag.

[00:14:38] Speaker 03:
I see no arguments about they spent too much money.

[00:14:41] Speaker 06:
Sure.

[00:14:41] Speaker 03:
I keep getting confused when you talk about challenging the price tag.

[00:14:46] Speaker 03:
You're challenging the allocation.

[00:14:47] Speaker 07:
Yeah, I suppose I'm baking the two of them into one, but I understand your point.

[00:14:55] Speaker 03:
And so you got the information.

[00:14:56] Speaker 03:
Well, first of all, when you asked FERC for the information, when you filed a request with FERC, did you tell that office that there was urgency?

[00:15:07] Speaker 07:
We made the initial request in June of 2023, so shortly after.

[00:15:14] Speaker 03:
There was ongoing proceeding you needed it for?

[00:15:17] Speaker 07:
We went through the appropriate channels.

[00:15:18] Speaker 07:
I don't believe we requested it being urgent.

[00:15:22] Speaker 03:
Okay, all right.

[00:15:23] Speaker 03:
And you make a lot about the delay, but my understanding is that you had to get a, FERC had to just go through a security clearance process to release this information because it's

[00:15:33] Speaker 03:
protected information.

[00:15:34] Speaker 03:
And so it's not like you just file and they hand it over to you.

[00:15:38] Speaker 03:
They had to pick a security clearance determination.

[00:15:41] Speaker 03:
So it's not something that's going to happen super fast.

[00:15:44] Speaker 06:
I agree with your honor.

[00:15:46] Speaker 03:
OK.

[00:15:49] Speaker 03:
So are you saying that the amount of time it took for FERC to produce the document was inordinate?

[00:15:54] Speaker 07:
I would agree with that, yes.

[00:15:56] Speaker 03:
It was inordinate?

[00:15:57] Speaker 07:
I'm sorry.

[00:15:58] Speaker 07:
It was excessive.

[00:15:59] Speaker 07:
It was different from the usual course.

[00:16:00] Speaker 07:
Yeah, different from the usual course.

[00:16:02] Speaker 03:
How long does it usually take to get this clearance and document?

[00:16:07] Speaker 07:
I don't know, but I could provide you two examples.

[00:16:10] Speaker 07:
We requested, in this case, it took 14 months, and then requested the 2023 CI information, and it took a matter of days.

[00:16:20] Speaker 03:
But had you already gotten the security clearance by then?

[00:16:22] Speaker 07:
That is correct.

[00:16:22] Speaker 03:
Well, that makes a big difference.

[00:16:23] Speaker 03:
It does.

[00:16:28] Speaker 07:
Your Honor, regarding the due process and just summing up before shifting over to arbitrary and capricious, it's our contention that by not having this information, we lack the ability to meaningfully and timely participate in the SAP application proceedings.

[00:16:45] Speaker 07:
And by not having that information.

[00:16:47] Speaker 03:
You said that you didn't say.

[00:16:48] Speaker 07:
I'm sorry?

[00:16:49] Speaker 03:
What would you, you've had months, years now to look at this document, what would you have said at that hearing and make in the record?

[00:16:58] Speaker 03:
that you didn't say.

[00:16:59] Speaker 03:
Now that you've looked at the document and you've been plenty of time to look at it, what would you have said that you didn't get to say?

[00:17:07] Speaker 07:
Your honor, I would argue first, before answering your question, that it's a bit of a red herring in terms of we didn't get the information timely.

[00:17:17] Speaker 07:
But if we did have the information, we would have been able to test the loss of displacement gas.

[00:17:23] Speaker 03:
You'd have plenty of time to do that, right?

[00:17:26] Speaker 07:
after the deemed denial and after we filed a petition.

[00:17:29] Speaker 03:
He asked you to tell me what you would have said that you wouldn't have said, that you didn't have the opportunity to say.

[00:17:34] Speaker 07:
Sure.

[00:17:35] Speaker 07:
We would have tested the ability of the pipeline to have the appropriate capacity, whether it was- And you would have tested it, and what would that test have shown?

[00:17:44] Speaker 03:
You've had plenty of time to do that test.

[00:17:46] Speaker 07:
Yeah, I don't know what the test would have shown.

[00:17:48] Speaker 03:
I mean, due process has a prejudice requirement.

[00:17:52] Speaker 03:
Yeah, and I would argue that our- What is your prejudice?

[00:17:55] Speaker 07:
Well, the prejudice was ultimately the price tag and the allocation is what we would argue.

[00:18:05] Speaker 03:
But you have to show is how the absence of this particular document prejudice you in that it contained information you would have provided material information you would have provided had you had it in time.

[00:18:20] Speaker 03:
And all I hear from you is we would have done an analysis.

[00:18:26] Speaker 07:
Correct, yes.

[00:18:29] Speaker 07:
The Form 567 information is not a smoking gun document.

[00:18:35] Speaker 07:
It's more information that we're able to test to determine whether or not that the displacement from the gas displacement was as the pipeline was alleging.

[00:18:45] Speaker 03:
Did you test?

[00:18:47] Speaker 07:
We did not test.

[00:18:49] Speaker 03:
Why not?

[00:18:51] Speaker 06:
I don't have an answer on why we did not test.

[00:18:59] Speaker 03:
All right.

[00:19:01] Speaker 03:
We'll give you a couple more minutes on rebuttal.

[00:19:03] Speaker 06:
Thank you.

[00:19:16] Speaker 05:
Good afternoon.

[00:19:17] Speaker 05:
May I place the court?

[00:19:18] Speaker 05:
I'm Scott Edgar for the Federal Energy Regulatory Commission.

[00:19:21] Speaker 05:
Judge Mollett, I think I want to go to the question you were just asking about whether the work has been done.

[00:19:26] Speaker 05:
And I want to refer specifically to pages 21 to 22 of the reply brief.

[00:19:32] Speaker 05:
But there's a long block quotation of, I think, a lot of the promises that we just heard

[00:19:37] Speaker 05:
more of.

[00:19:37] Speaker 05:
And what I just want to point out here is that when the person was typing up those words in September of 2024, figuratively, form 567 was right next to the keyboard.

[00:19:52] Speaker 05:
They had it and they could have made the assertions there, which leads into the primary point that we raise in response to the petition is that

[00:20:01] Speaker 05:
this commission, this agency takes the rehearing process seriously.

[00:20:05] Speaker 05:
And when the issue came to the commission's attention that CEII hadn't been

[00:20:15] Speaker 05:
disseminated quickly.

[00:20:17] Speaker 05:
The commission acted.

[00:20:18] Speaker 05:
And that's the May 29, 2024 letter.

[00:20:24] Speaker 05:
That letter comes a little over a month after the rehearing request, and I might add, before any paper was filed with this court.

[00:20:33] Speaker 05:
The commission issued that letter in order to

[00:20:39] Speaker 05:
Um, accommodate the desire of the shipper petitioners here to make the argument.

[00:20:46] Speaker 05:
Um, as the commission pointed out in the rehearing order,

[00:20:50] Speaker 05:
nothing happened after the May letter.

[00:20:53] Speaker 05:
And so the commission issued a series of letters subsequently giving the opportunity for the shippers to make the case that Form 567 somehow detracted from the predetermination determination that was made in the certificate order.

[00:21:12] Speaker 05:
by their own admission, that never occurred.

[00:21:14] Speaker 05:
This case shouldn't be here today.

[00:21:17] Speaker 05:
We should have been able to resolve this issue before the agency without taking more time today of the course of time.

[00:21:26] Speaker 05:
And that's the way, that's what we believe the Natural Gas Act provides, Section 19, as interpreted by Allegheny at pages

[00:21:42] Speaker 05:
I have it in front of me.

[00:21:43] Speaker 05:
But Allegheny clearly recognized that one of the arguments we responded to in Allegheny was that, well, these are complicated cases.

[00:21:51] Speaker 05:
We need more time.

[00:21:52] Speaker 05:
And the response was, well, you have more time.

[00:21:55] Speaker 05:
On the deemed denial date that occurred, the commission goes forward until you file the record.

[00:22:02] Speaker 05:
precisely your honor.

[00:22:04] Speaker 05:
And that's what the commission did here.

[00:22:07] Speaker 05:
I think this was provided in the Natural Gas Act and those opportunities were provided.

[00:22:16] Speaker 05:
I also want to point out it's interesting about the exhibit G. That was on file from day one.

[00:22:23] Speaker 05:
So that's on the record.

[00:22:24] Speaker 05:
And I just want to make some maybe talk a little bit about what the differences between exhibit G and the 587.

[00:22:32] Speaker 05:
And the commission talked about that.

[00:22:34] Speaker 05:
At paragraph 5, note 11, this is at JA417.

[00:22:40] Speaker 05:
And form 567 is more system-wide information, whereas exhibit G, which is required by commission regulation, this is 18 CFR 15714A8.

[00:22:51] Speaker 05:
And I think we appended that to our brief.

[00:22:55] Speaker 05:
It's very detailed information.

[00:22:57] Speaker 05:
And you can understand why it would be helpful to the commission to have that information, because it requires the pipeline to

[00:23:04] Speaker 05:
show us what the project or what the system looks like before the application and what it looks like after.

[00:23:12] Speaker 05:
That allows the commission to make the determination on whether the project is needed.

[00:23:16] Speaker 05:
Form 567 does something different.

[00:23:21] Speaker 05:
It's an annual update of the system, and it allows that all companies have to

[00:23:27] Speaker 05:
make the filing, it allows the commission to stay on top of what the sort of big picture of the natural gas industry looks like.

[00:23:35] Speaker 05:
And again, 587 not required by commission regulations to be put on the record.

[00:23:42] Speaker 05:
And I just want to get back to Exhibit G.

[00:23:46] Speaker 05:
The shippers never asked for it until well after the rehearing deadline.

[00:23:52] Speaker 05:
So they were flying blind through this process.

[00:23:54] Speaker 05:
This is the information required by commission regulation to be put on the record.

[00:24:00] Speaker 05:
And shippers never asked for it until well after the rehearing request.

[00:24:06] Speaker 05:
And they did so by a process.

[00:24:10] Speaker 05:
under G4 of the commission's regulations that govern CEII data.

[00:24:19] Speaker 05:
In our brief, we talked about the differences between G4 and G5.

[00:24:26] Speaker 05:
And the exhibit G was released, it's unfortunate that G is used twice here, but I'm sorry for that confusion, but that pipeline released the exhibit G information under G4 of 38813.

[00:24:43] Speaker 05:
And that was all on the record.

[00:24:45] Speaker 05:
And if counterfactually had pipeline for some reason refused to do that, they would have thought that that wasn't appropriate.

[00:24:53] Speaker 05:
They would have had to made a filing before the commission, and then the commission would have had to rule on it.

[00:24:59] Speaker 05:
And then that, of course, would become an issue that could be subject to judicial review.

[00:25:05] Speaker 05:
By contrast, this form is not on the record.

[00:25:10] Speaker 05:
It has never been on the record, and it's not on the record to this day.

[00:25:15] Speaker 05:
And I think what we just heard is that my friends for the shippers don't even know for sure that it supports their position.

[00:25:25] Speaker 05:
And we have no way of testing that because, as I say, it's not on the record.

[00:25:31] Speaker 05:
They requested it through G5 of the CEI regulations, which was appropriate.

[00:25:38] Speaker 05:
And they went through the process of

[00:25:44] Speaker 05:
Um, um, asking through the, this coordinator, um, to get that information and eventually it was released as the commission points out in the rehearing order that release occurs after the, after the certificate order.

[00:25:59] Speaker 05:
And, um, and that's why the commission provided the process.

[00:26:03] Speaker 03:
Um, can I ask you, um, about the status of the section for rate pursuing one?

[00:26:09] Speaker 03:
Assuming that they decide today to finally decide what they want to do with this information.

[00:26:15] Speaker 03:
Would they use that to argue about allocation in the section forward proceeding?

[00:26:21] Speaker 03:
If they think this document they finally got helps them with that argument as to whether they should have to pay much, if anything.

[00:26:28] Speaker 05:
That isn't.

[00:26:31] Speaker 03:
I'm sorry.

[00:26:32] Speaker 03:
I'm trying to finish my sentence.

[00:26:33] Speaker 03:
I think you already got the idea, but they just can't.

[00:26:35] Speaker 03:
They argue about how much they should pay, if anything, in the section for proceeding.

[00:26:39] Speaker 05:
It is an ongoing proceeding.

[00:26:40] Speaker 05:
I think, if I can answer it this way, the presumption, the predetermination has been made in this case in the certificate order.

[00:26:47] Speaker 05:
And we're asking the court to affirm that.

[00:26:50] Speaker 05:
And that is a sort of high level determination that existing shippers are responsible for this project because it helps them.

[00:27:01] Speaker 05:
Reliability, flexibility.

[00:27:04] Speaker 05:
Now, within that, the equitable

[00:27:07] Speaker 05:
allocation of those costs among existing shippers, that could be a live issue.

[00:27:14] Speaker 05:
I don't want to get too far, and I don't know what's going on exactly in section four, what the issue, the section four case, and what the issues are, but those are potential issues that could come up.

[00:27:25] Speaker 05:
But what's happened here is, again, a very top level determination, presumption.

[00:27:31] Speaker 05:
to be applied in the next case.

[00:27:33] Speaker 05:
And I think we cited the Texas Eastern case.

[00:27:36] Speaker 03:
Is there a presumption that every shipper will pay something, but the section four proceeding will decide who pays how much?

[00:27:42] Speaker 05:
I think that sounds accurate.

[00:27:45] Speaker 05:
It's more granular, more detailed, and it'll be part of the tariff.

[00:27:50] Speaker 03:
Equitable, I think you said?

[00:27:51] Speaker 03:
I'm sorry.

[00:27:51] Speaker 03:
Sort of an equitable analysis?

[00:27:53] Speaker 03:
Yes.

[00:27:56] Speaker 02:
Was there any reason that you denied the re-hearing request first and then gave the data?

[00:28:04] Speaker 05:
I do believe so.

[00:28:06] Speaker 05:
I think it took the commission some time to decide what was appropriate.

[00:28:10] Speaker 05:
I think that it was an evolving process.

[00:28:20] Speaker 05:
And I think it became apparent from the rehearing request, what was necessary is that the commission believed that information needed to be released.

[00:28:32] Speaker 05:
And the commission, I think the only way to read this rehearing

[00:28:36] Speaker 05:
or the hearing order, is to realize that the commission believed that the group needed an opportunity to comment, to receive the information and to comment on it, and to get that argument before the commission.

[00:28:50] Speaker 05:
And there's a lot of arguments that they've made about how the commission wouldn't, like this was some kind of trap, and the commission wasn't going to really take that seriously.

[00:29:00] Speaker 05:
But I think the existence of the letters themselves

[00:29:03] Speaker 05:
lie that argument, and in addition, had the commission, they really followed through, had they really taken the information and made real substantive arguments, like they promised they can, and then the commission had rejected it, we'd be having a different conversation today, and I'd be standing here trying to defend that, and by their argument or their assumptions or their argument,

[00:29:28] Speaker 05:
I'd have a hard time with those arguments.

[00:29:30] Speaker 05:
I'd have a hard time today.

[00:29:31] Speaker 05:
And so I think the better reading is that the 567 is not relevant, not helpful, and that's why it hasn't been ever put on record.

[00:29:47] Speaker 03:
Thank you very much.

[00:29:58] Speaker 04:
Your honors, and may it please the court, Joshua Johnson for Respondent Intervener, East Tennessee Natural Gas.

[00:30:05] Speaker 04:
I think that the group's argument today has significantly narrowed the issues before the court.

[00:30:11] Speaker 04:
If I'm understanding the group correctly, their position seems to be that they are not challenging a project that benefits existing shippers.

[00:30:21] Speaker 04:
They just don't want those existing shippers as a whole to have to pay for the project.

[00:30:26] Speaker 04:
But that's not how the Natural Gas Act works.

[00:30:29] Speaker 04:
Under the Natural Gas Act, natural gas companies can recover their costs in a reasonable rate of return through the rates that they charge.

[00:30:38] Speaker 04:
For this particular project, there's no dispute.

[00:30:41] Speaker 03:
I'm not sure at this point if they're going to be an allocation proceeding and if they end up getting happy there that they really care if some other shippers have to pick up a big tab.

[00:30:54] Speaker 04:
But in this proceeding, and I agree that there's a separate question about allocation in the section four proceeding.

[00:31:01] Speaker 03:
Kirk did not decide in this case.

[00:31:03] Speaker 03:
Kirk did not decide that in this case.

[00:31:05] Speaker 04:
Correct.

[00:31:06] Speaker 04:
Correct.

[00:31:06] Speaker 04:
That's absolutely right.

[00:31:07] Speaker 03:
Sure.

[00:31:08] Speaker 03:
We'll roll in.

[00:31:09] Speaker 03:
This isn't some outside customer who wants to come in and should pay for this thing to connect to their plant, wherever it is.

[00:31:16] Speaker 03:
This is something that just sort of depends.

[00:31:18] Speaker 03:
It's a whole pipeline for everybody who's already on it.

[00:31:21] Speaker 03:
But you all go figure out later in a section four proceeding who pays how much.

[00:31:25] Speaker 04:
And I have no dispute with anything that you just said, Judge Millett, but the group in this proceeding is still challenging the role in predetermination.

[00:31:34] Speaker 04:
They're asking the court to vacate that.

[00:31:37] Speaker 04:
So they're asking the court to undermine the basic decision that the existing shippers, as I suppose the pipeline,

[00:31:46] Speaker 04:
should pay for the costs of this project.

[00:31:50] Speaker 04:
And the court, I think, can easily reject that argument and say that any issues about cost allocation should be left to the section four proceeding.

[00:32:00] Speaker 04:
That's actually what FERC said in its certificate order.

[00:32:05] Speaker 03:
But in terms, there have also been... Do you have any update on the status of the section four proceeding?

[00:32:12] Speaker 04:
Section four proceedings are very lengthy proceedings.

[00:32:15] Speaker 04:
So I still think that in terms of the life of the proceeding, we're still pretty early and in terms of the parties defining what arguments are going to be presented.

[00:32:25] Speaker 04:
I would say that I think that the court should issue a decision here that there is a ripe dispute about

[00:32:33] Speaker 04:
the basic fundamental question of whether the roll-in predetermination should stand.

[00:32:38] Speaker 04:
And what that clarifies is that existing shippers as a whole will cover the costs of the project through new rates in a rate proceeding.

[00:32:50] Speaker 04:
And the court, we believe, should deny the petition for review, allow that roll-in predetermination to stand, and then any questions about allocation or attribution can be left to the section four proceeding.

[00:33:01] Speaker 04:
if there are no further questions.

[00:33:04] Speaker 03:
Thank you.

[00:33:04] Speaker 03:
Thank you, Council.

[00:33:06] Speaker 03:
We'll give you two minutes for a rebuttal on Mr. Regula.

[00:33:09] Speaker 07:
Thank you, Your Honor.

[00:33:10] Speaker 07:
Just very quickly, following up on the line of statements by the intervener pipeline, talking about the rolled-in predetermination, one of our problems, and this goes just very quickly to our arbitrary and capricious argument, is that the FERC elevated one factor of its policy statement, and that's treating the absence of new capacity as automatically justifying the rolled-in rates.

[00:33:38] Speaker 07:
And it disregarded other factors in the policy statement, specifically policy statement at pages 19 to 22, which we also said in our brief regarding abandoning balancing disregarding prudence and cost causation principles.

[00:33:55] Speaker 07:
To be frank, FERC didn't weigh the purported reliability benefits against rate impacts and compare the appropriate costs.

[00:34:03] Speaker 07:
So as it pertains, and I understand I've got just a minute or two, I just wanted to flag that again for our arbitrary and capricious, that the policy statement and how it is applied for the predetermination is part of our contention as well, which will not be resolved at the section four rate hearing.

[00:34:25] Speaker 07:
As my friends on the other side have mentioned, the pre-determination is- You've got to forfeit your problem on your policy statement argument.

[00:34:31] Speaker 07:
Yes.

[00:34:33] Speaker 07:
And then just very quickly tie in the loop regarding us receiving the data.

[00:34:39] Speaker 07:
We received the data on August 16, 2024.

[00:34:41] Speaker 07:
We were given two weeks to respond.

[00:34:46] Speaker 07:
I'm sorry, two weeks later on August 28th, we were told to respond to the data request.

[00:34:51] Speaker 07:
Two days after that, FERC granted the certificate to construct.

[00:34:57] Speaker 07:
So as we're kind of looking at the information, the amount of meaningful and timely participation by FERC's own actions.

[00:35:03] Speaker 03:
You're not challenging the pipeline and its construction.

[00:35:05] Speaker 03:
So nothing about construction affects.

[00:35:08] Speaker 03:
Correct.

[00:35:08] Speaker 03:
OK, so I'm not sure why that matters.

[00:35:10] Speaker 07:
Understood, Your Honor.

[00:35:11] Speaker 07:
That's all I have.

[00:35:12] Speaker 07:
Thank you, Your Honor, and we would request that the court remand the predetermination of rates.

[00:35:19] Speaker 07:
Thank you.

[00:35:20] Speaker 03:
Thank you.

[00:35:21] Speaker 03:
The case is submitted.

[00:35:22] Speaker 03:
Thank you to both counsel.