[00:00:01] Speaker 01:
calling case number 25, 1159 et al. People of the State of Michigan, petitioner, versus United States Department of Energy and Christopher Wright, Secretary, United States Department of Energy. Mr. Wilmington for the petitioner, State of Michigan. Mr. Shagney for the Public Interest Organization petitioner. Mr. Standard for the respondents. Mr. Schultz for the intervener, Consular Energy Company.

[00:00:29] Speaker 06:
Can I just get the court sheet? Good morning, counsel. Good morning, Your Honor.

[00:00:36] Speaker 08:
Mr. Walensine, please proceed when you're ready. Thank you, Your Honors. It may please the court. Lucas Walensine appearing here today on behalf of Michigan Attorney General Dana Nessel, as well as the other state petitioners in this case, Illinois and Minnesota.

[00:00:50] Speaker 08:
The department's claim of authority here is unprecedented. And if unchecked, it would transform the structure of power for regulating resource planning as it has been commonly understood for decades.

[00:01:00] Speaker 08:
The Emergency Clause of Section 202 presents a limited exception to a general reservation of state authority.

[00:01:06] Speaker 08:
The section's plain language, past interpretation, and context make clear that its exercise is constrained fundamentally by the existence of an emergency. That is to say, conditions necessitating immediate action by the Secretary.

[00:01:19] Speaker 08:
The department instead asserts that it is unbounded in its application of 202c, that it can use the emergency exception to undermine years-long resource planning frameworks without consideration for whether the secretary's immediate action is needed. That reading would allow the exception to swallow the rule, leaving all resource planning decisions subject to unilateral override by the secretary with no limiting principle.

[00:01:40] Speaker 08:
In turn, it would allow the department, as it has here, to interrupt and frustrate a finely calibrated system of overlapping regulatory processes, including the application of state statutes, the planning and cost recovery practices of utilities, and the entrenched rules of system operators, along with FERC's regulation of those rules.

[00:01:57] Speaker 08:
The court should thus hold that the department cannot use its 202 authority here and set aside the order on that basis.

[00:02:03] Speaker 08:
The department is further erred by failing to present substantial evidence to support its emergency determination and by failing to appropriately tailor its order to address any emergency which present independent bases for holding unlawful and setting aside the order.

[00:02:16] Speaker 06:
So can I just ask a question so you can appreciate where the parties are on what constitutes an emergency? Sure. If there's a danger...

[00:02:27] Speaker 06:
risk of harm that's off in the future but the actions needed to address that risk are ones that need to be taken now so there's immediate action that's necessary to avert a risk that's going to germinate in the future does that constitute an emergency from your perspective so so no i mean

[00:02:50] Speaker 08:
In terms of a long period of planning where there is a potential for an emergency years in the future, that is within the realm and ambit of existing regulatory processes.

[00:02:58] Speaker 06:
Well, definitely if you say it's a potential for an emergency, then you don't have an emergency now. I mean, I totally get that point. I mean, if it's a risk of a significant shortage, but the shortage isn't going to happen for a little while. But in order to avert that shortage from happening in a little while, there needs to be immediate action right now. Would that constitute an emergency?

[00:03:22] Speaker 08:
So, no. And that's because we have so many regulatory processes already in place to address that. And I want to talk about that for just a little bit. You have to keep in mind, we spent time in briefing talking about the role that the Public Service Commission and utilities play from integrated resource planning, as well as the system operator performing, you know, studies to make sure that retirements are okay. But you also have to keep in mind that MISO's tariff is regulated by FERC. And FERC has the ability to undertake efforts to attempt to steer resource planning if it so chooses. And furthermore, The Secretary himself has the ability to influence that process through Section 403 authority.

[00:03:55] Speaker 08:
He can ask that FERC undertake those methods as well. So you understand that there's a breadth of mechanisms starting at the state level, but including federal regulation that act before the Secretary's specific emergency authority kicks in. And that makes sense because his power under 22C is extraordinary and that it provides no procedural safeguards of notice appearing.

[00:04:15] Speaker 08:
And I'll say as well, the Otter Tail case that we looked to, Otter Tail Power we looked to in briefing, explicates this scenario a little bit better.

[00:04:23] Speaker 08:
So in that case, it was expected that a small utility's load would increase in just a year or so, such that it would start to run an acute risk of load loss. The Eighth Circuit, in that opinion, described that the low-loss event, as it would occur in a year or so, would be an emergency condition. It described it as such. But at the time at issue, that is to say, a year or so before any such potential low-loss event would occur, the court identified that a resolution did not necessitate immediate action by the secretary, and therefore that 22C did not apply. So the point being there that... Even in a context where, as in that case, not this case, in that case, where one could certainly say that poor planning by utility would be an underlying cause of a potential future emergency, the court did not assess the planning itself to be an emergency necessitating immediate action.

[00:05:07] Speaker 08:
And instead, it looked to 202B, which does preside procedural safeguard.

[00:05:10] Speaker 06:
That's a situation in which there wasn't any immediate action necessary, just even by the way you've described it. And I think, I'm not sure there's any disagreement that if there's no immediate action necessary, then the circumstances don't present an emergency. I guess the question that I'm asking conceptually is, The risk and the harm that's going to be visited may be off in the future, but it may be a situation in which immediate action is necessary to forestall that risk.

[00:05:41] Speaker 06:
And what I'm wondering is, if you don't think that that qualifies as an emergency, and it sounds from your answers that you don't, suppose one were to think that that is an emergency. that if you have a circumstance in which immediate action is necessary to forestall a risk that's going to germinate down the line. If that would qualify as an emergency, does that mean that you can't prevail in this case? Or do you still have an argument that you can prevail even if it's a certain circumstance in which immediate action is necessary?

[00:06:12] Speaker 06:
And you may well have an argument that actually this is not a situation in which immediate action is necessary. I totally understand that.

[00:06:19] Speaker 06:
But I'm just wondering if one thought that this could be described as a situation in which immediate action is necessary to avert

[00:06:28] Speaker 08:
a harm from coming to fruition down the line then where are you in the case i i'm not i'm not sure uh the the theories around such a circumstance where there would be an immediate and to be clear that is not this case okay and i want to be i want to talk about that more in a minute because it has to do with the confines of how the department has described the emergency it's asserting here But theoretically, if there were a case where there was literally nothing else that could be done other than to undertake action in the present to avoid a future point.

[00:07:02] Speaker 08:
And I will say, too, we're speaking in relative terms. I'm not sure what timeline you're describing, but theoretically, maybe that could be a case, not this case, but a separate case where you could describe an emergency authority. But I want to be very clear that the court doesn't have to go drawing lines in this case around where imminency stops and starts. Because as I kind of previewed there a second ago, The government is saying that, sorry, the respondents are saying that they're not confined whatsoever to an imminency component when they need to act. They're saying they can identify generalized conditions spanning years into the future across huge swaths of the country, and furthermore, asserting plenary authority to determine when those conditions exist.

[00:07:39] Speaker 08:
So the court here doesn't need to draw lines around when imminency stops and starts. All it needs to do on the statutory interpretation question is say that the respondent's position on that point is wrong, and it does not justify use of 202c here.

[00:07:53] Speaker 05:
I think perhaps to follow up on the chief judge's question, it seems that there's a lot of ink spilled in the brief about, you know, definitions of emergency in various dictionaries and statutory contexts. And one of the arguments or points of disputes seems to be on whether to be an emergency, something has to be kind of unforeseen or unforeseeable.

[00:08:22] Speaker 05:
And I think, at least what the Chief Judge may be getting at is something that I've thought about as well, which is something like climate change.

[00:08:35] Speaker 05:
Is climate change an emergency? A lot of people would say that it is. It's not something that is going to result in devastation, according to scientists, tomorrow.

[00:08:50] Speaker 05:
but in the future and therefore you need to take action now to avert that risk or anything else that you can see coming down the road, but you conclude you have to take action now to avert the risk. It's not unforeseen because we know what the risk is.

[00:09:16] Speaker 05:
So if something that's foreseeable,

[00:09:20] Speaker 08:
that you have to take action now to avert is that an emergency the emergency the application of 202c steps in when it is needed for the secretary to act under that specific section and that's because it exists within the context of the statutory scheme where we have all these other processes from a state level and also integrated with federal oversight that serve as a planning mechanism. So in the climate change context, for example, in the context of 202 where we talk about where the secretary needs to act under that may be required to act immediately under that section it would not be an emergency in that context now i would hope that the other regulators that have these long-term planning responsibilities under the statutory scheme would take it seriously and proceed with you know a sense of urgency to to correct that but in the confines of section 202c that that is simply not the case so i guess in writing an opinion should we say that the meaning of emergency

[00:10:22] Speaker 05:
is an unforeseen circumstance.

[00:10:29] Speaker 05:
For an emergency be foreseeable circumstance, but it's it's an emergency because you have to take action action on an exigent basis.

[00:10:45] Speaker 08:
There could be emergency occurrences that could be somewhat foreseeable. And that is, for example, in the context of the Otter Tail case that I described, where they could tell in a year or so they were going to run a risk of emergency. But the underlying principle that's at the core of all the adjectives we gleaned from dictionary definitions, past interpretations of the statute and otherwise, is an immediate need for the secretary to act under that section.

[00:11:08] Speaker 05:
So you believe that exigency is really more relevant or important to defining emergency than foreseeability?

[00:11:20] Speaker 08:
Yes, and we stress imminency in briefing, but I think we're saying the same thing as far as you're using the word exigency.

[00:11:27] Speaker 06:
But it seems like you're adding one gloss to it, which is that you think that an emergency is when there is an exigency, as was described, but even the existence of an exigency wouldn't be enough to constitute an emergency for two of these C-first businesses, because you think it has to be And this may I'm not saying I'm not meaning to express skepticism. I'm just wanting to make sure I understand your position. It has to be an exigency as to which DOE has to act, meaning that there can be an exigency as to which someone else could act and avert the action.

[00:12:04] Speaker 06:
the harm that could occur down the line. But you think under 2OTC, it requires more than an exigency. It requires an exigency as to which DOE is the only entity that can take action to avert it. That is correct.

[00:12:22] Speaker 08:
Sorry. Yes, that is correct, in part because I described, because there are already so many tools at play, including at the department's own disposal, to influence planning and averting emergencies well before that extraordinary remedy without procedural safeguards is necessary to step in and play a role.

[00:12:39] Speaker 06:
So I guess my question, sorry, just one quick follow-up.

[00:12:43] Speaker 06:
My question about that is, Why would we think that Congress would have thought if there's a circumstance and circumstance that constitutes an emergency, at least in the sense that it requires immediate action? So it's an exigency requires immediate or imminent action, even for a risk that's going to come to fruition down the line a little bit.

[00:13:04] Speaker 06:
And if there's other players who could also take immediate action, someone's got to take immediate action. There's various immediate actions that could be undertaken, but someone's got to do something right quick because otherwise we're going to have this serious risk down the line.

[00:13:19] Speaker 06:
Why do we think Congress would have thought that...

[00:13:24] Speaker 06:
DOE should be disabled as long as it's possible that someone else can handle it, as opposed to a Congress saying, if it's that kind of circumstance, I just want to make sure that somebody acts, so I'm going to go ahead and let DOE do it. And then if there's duplicative efforts and we're just having a lot of folks react immediately to an emergency, I get that. That comes at a cost, but I just want to make sure that the emergency is not...

[00:13:51] Speaker 08:
Well, we can understand that from the structure of the statute. And that is to say, we start with the applicability section of 201, which preserves the general authority over generation planning to the states and provides for only specific exceptions to that general reservation authority. And we talked in briefing, I think I mentioned in the opening here, sort of conceptually how a unilateral override would allow the exception to swallow the rule. But there are practical consequences to that as well, which potentially, Congress had envisioned when they were setting out the statutory framework. I mean, for one, a unilateral override would interfere with the ability for regulators and the systems that have been developed over decades to understand how much capacity will be on the grid or will be needed on the grid at any point in time.

[00:14:34] Speaker 08:
And the consequences of making mistakes in that context entail incredible costs.

[00:14:39] Speaker 08:
We're seeing that with consumers' energy here. They're reporting well over $100 million in net financial impact for continuing to run the Campbell plant pursuant to a 202 order. And that's not surprising because their own expert that they would save ratepayers well over $300 million from foregone capital expenditures, major maintenance costs.

[00:15:03] Speaker 03:
So, Mr. Wallenstein, just the same issue. I just wanted to probe a little bit more. I take your position to be in response to the questions that have been posed about if it's something that may not come to fruition for a while, but if it does, if there's not action now, it will be an emergency. I take your response to be, that 202c is only available if that it's sort of a last resort and it's structured into the statute as a last resort and that imminence is in fact the sine qua non because there are all these layers of longer term planning and DOE has a role also in triggering that.

[00:15:48] Speaker 03:
So if you have a region that is failing to do planning, and you say, whoa, if they're continuing on this path and not seeing the percentage risk of huge megastorms because of climate change or something, That's not an occasion to use 202C. It's an occasion for the Department of Energy and FERC and the regional planning apparatus to be, you know, prompted to act more constructively with respect to that.

[00:16:21] Speaker 03:
So it is my understanding that you're basically saying this is a last resort. For good reasons. And I actually thought that the energy law professors, energy law scholars were laying out the point that I think you just alluded to, which is if you get this sort of, you know, diving in to the middle of a long term planning process, then.

[00:16:48] Speaker 03:
All the variables shift and you end up with sort of environmental and price bumps that are just it ends up just sort of being a free for all. And so there's the reason why this is a last resort tool is because you don't need it. if you have all this long-term planning. You have a market. You have a market that you can use at the last minute. You have capacity. You have excess capacity. The whole planning process is a lot of anticipating of unanticipated factors.

[00:17:21] Speaker 03:
And so if you're thinking that there's going to be a problem down the road, you route that into the ordinary planning process. Is that right?

[00:17:29] Speaker 08:
Yes, Your Honor. And I want to emphasize one more point. I don't think you touched on there. which is that the existing processes are also just simply better positioned to address these resource planning questions. And the department acknowledges as much in the resource adequacy planning report where they state that DOE acknowledges that the resource adequacy analysis that was performed in support of the study could benefit greatly from the in-depth engineering assessments which occur at the regional and utility level. And they go on to say as well, however, entities responsible for the maintenance and operation of the grid have access to a range of data and insights that could further enhance the robustness of reliability decisions, including resource adequacy, operational reliability, and resilience.

[00:18:08] Speaker 08:
So there are a variety of factors here for interference with process reason, from the incredible costs that are entailed with making mistakes in that process, and from just a straightforward capability reason, it would not make common sense to give the Secretary a unilateral override as to the robust and intricate processes that currently exist for resource planning.

[00:18:27] Speaker 03:
STEPHANIE DESMOND- I took you to be having some hesitation in answering the prior questions. And is there anything behind that?

[00:18:37] Speaker 03:
I mean, it just seems like if it's a last resort, that that's just the case. But is there a pushback there or a precedent that that doesn't line up with?

[00:18:48] Speaker 08:
My hesitation was really about line drawing. And I think it's easy to get into a line drawing question here. But as I said earlier to Judge Trudeau-Boston, this case really is not about that, because the department's position is fundamentally opposed explicitly to any concept of imminency being a requirement whatsoever for the exercise of two or two C authority.

[00:19:08] Speaker 07:
Make sure my colleagues don't have additional questions at this point.

[00:19:12] Speaker 08:
Okay. Thank you, Your Honors. I'll pass off argument to my colleague from the public interest organizations. Thank you, counsel.

[00:19:24] Speaker 06:
Mr. Shagnon.

[00:19:25] Speaker 00:
Good morning, Your Honors, and may it please the Court. Ben Shagnon for the Public Interest Organization petitioners. I'd like to try to reserve three minutes for rebuttal. So I want to pick up right where the questioning left off, just to make clear that this case isn't about whether the grid faces challenges or whether they should be addressed. The real question is, who has the authority to address those challenges and how? I mean, getting to this exigency point and last resort point we've been talking about, in most usual cases, other actors have the authority to address these problems, not the Department of Energy.

[00:19:58] Speaker 00:
They really should serve to exist only as a last resort.

[00:20:03] Speaker 06:
And does that mean, just to get the lexicon right, does that mean a last resort in the case of an emergency? So the first layer is, is there an emergency? Yes. And then the second layer is, even if there's an emergency, DOE can only come in as a last resort. Is that how you understand the statutory? Or are you saying?

[00:20:21] Speaker 00:
Yes, that's right. So I think everyone could agree that there's a problem that needs to be solved. And everyone could agree that it would be most prudent to start solving that problem right now. And then there's this further question of which tool in the toolbox should be used. And very rarely should the answer be the Department of Energy's tool.

[00:20:38] Speaker 03:
But I think that's a different answer from what the chief judge was proposing. I mean, you can speak for yourself. But If I were asked, does last resort mean assuming there is an energy, an emergency, DOE can only come in as a last resort, I would think it's not an emergency unless it's a situation in which DOE's last-minute intervention is needed. Because an emergency is the thing that triggers 202C. And what I understood...

[00:21:09] Speaker 03:
your colleague from Michigan to be saying is there are important problems that could cause a lot of difficulty down the road that we take very seriously.

[00:21:22] Speaker 03:
New demands for energy, storms, high heat situations, those are not emergencies because there are layers and layers of long-term planning and lots of expert actors that are actually thinking about those today. If they're not, then you don't use emergency power. But the Department of Energy FERC can come in and say, you're not looking at something important.

[00:21:48] Speaker 00:
JOSHUA SHARFSTEIN- That's right, Judge Pillard. So you might think that it's a pressing problem, but we wouldn't call it an emergency in the Section 202c sense, because what Section 202c's emergency is talking about is those circumstances where there's a pressing necessity for the department to act. not just anyone to act. And so we're thinking about this climate change hypothetical that Judge Wilkins raised. There might be a need to act in the present, but there wouldn't be a need for everyone to act in all ways right now.

[00:22:19] Speaker 00:
We would want to use the normal processes that are set up to address that kind of challenge. And to think of just an ordinary, everyday, kind of analogy, if we're driving along in a car and we decide, oh, we need to stop at this red light up ahead, I think we would look first to the regular brake, not the emergency brake, because we tend to use normal mechanisms to solve problems before we go to extreme ones. And as my colleague from Michigan made clear, there are features of this system that do make it the extreme option.

[00:22:50] Speaker 00:
We can look to the facts of this case where consumers' energy was set to retire this plant. And they took a lot of steps to make sure that it would work. They went and bought and acquired an entirely new gas plant with 1,200 megawatts of capacity. And all that is for naught if that planning exercise, that extreme planning exercise, makes little sense if Campbell was going to stick around anyway. So it's corrosive in that sense. It's also corrosive in the sense that the department recognized in its original 1981 regulatory preamble where it said, we're wary of jumping in to do long-term planning ourselves because we don't want people to think, we don't want utilities to think that we're always going to step in and solve their problems.

[00:23:31] Speaker 00:
Long-term planning is their job. We think they're best positioned. Congress required them to take on the mantle of solving these long-term issues in the first instance. And that makes sense for all the reasons my colleague from Michigan made clear, which is the state planning process, for instance, in Michigan has a 5, 10, 15-year forward-looking procedure where they figure out what's load going to be, how can we best address it, what policy decisions we want to make around that.

[00:24:02] Speaker 00:
That isn't present when you use 202C.

[00:24:04] Speaker 06:
Likewise... So then can I ask this question? So suppose you have a situation in which Yes, in theory, it's possible that other kinds of interventions and planning by other entities and institutions can redress the looming harm.

[00:24:22] Speaker 06:
But DOE looks at it. And I'm not saying this is this case. I'm just trying to understand how the statutory scheme works in the abstract. And the DOE looks at it and says, yeah, that actually, in theory, could work. I'm just investigating this, and I don't think they're doing it in the right way, or I don't think it's happening with sufficient exigency. at that point is doe free to use 202ce 202c to step in or is doe um supposed to use some longer range tool that it can have maybe under one of the preceding provisions to spur the other processes to act in the way that doe thinks would be necessary

[00:25:03] Speaker 00:
So no, they shouldn't be doing that, as Judge Pillard's earlier question. That being 202C, they shouldn't be using 202C. So one example of what they can do, and we haven't focused on this on the briefing, but there's 42 USC 7173, which is part of the Reorganization Act, and it empowers DOE to tell the actors, the FERC, that it should engage in rulemaking, for example. So if it doesn't think that MISO's tariff is getting the reliability or resource adequacy job done, or if it doesn't think NERC is getting the reliability job done, it should tell them that and say, your analyses are no good.

[00:25:38] Speaker 00:
Please revisit these questions.

[00:25:40] Speaker 03:
You cited a rule of statutory provision, which was?

[00:25:46] Speaker 00:
42 USC 7173A.

[00:25:48] Speaker 03:
How about anything less cumbersome than rulemaking?

[00:25:52] Speaker 00:
So they can also issue the kind of report that they issued shortly after the initial order came down, where they can analyze the problem and inform folks.

[00:26:02] Speaker 00:
And separate from DOE, it's not that the federal government is without tools to solve these problems. There's the NERC, which is an independent entity, but it is organized and supervised by FERC. As part of that process, they've set over 80 mandatory reliability standards, including establishing the one day in 10 years risk standard that animates the entire industry. You also have FERC supervising MISO, who's the planning coordinator at issue here, who's doing all of these analyses that DOE is looking at in its order and finding no real reason that they are insufficient.

[00:26:40] Speaker 03:
Tell me a little bit about if the Department of Energy comes in under 202 , is part of what happens is that the pricing and demand analyses that are in the long-term planning, like other generation sources, you're going to be relied on this amount, this amount, this amount, that just gets upended. So you might end up making a different source of energy, the new natural gas plant that they brought on, to make that actually no longer financially viable because they're putting prioritizing the output from from the legacy coal plant?

[00:27:26] Speaker 03:
I mean, are there tell me a little bit more concretely about the destabilizing impact of the kind of parachuting in on long term planning by the Department of Energy post hoc?

[00:27:41] Speaker 00:
So there's the set of problems you describe. If we also look at the kind of planning auction we have that MISO did here and that the department looks at, all of that is trying to figure out exactly how much capacity we need on the grid, in part to determine what prices might be and what signals that should send about future investment. It's hard for first-line investors who are trying to build this capacity, utilities. It's hard for state regulators. It's hard for MISO to know exactly what role Campbell's going to play.

[00:28:11] Speaker 00:
One feature of the department's order here is it identifies this open-ended emergency We don't think there's any pressing need based on what the record says, but they also identify no criteria under which it might end. So it's very difficult for anyone to plan, because right now there's potentially up to 1,560 megawatts going to be on the grid.

[00:28:32] Speaker 00:
That crowds out other investment or other opportunities to add other stuff to the grid. And one of the core problems that the department cites in its brief is there's this ongoing effort to interconnect more generation to the grid. And that becomes more challenging unless you have a complete picture of what's already there. So I'd just like to offer a few more words of comfort about why adopting the rule we're talking about won't upend society. So the first is, if you look at all of the historical examples that are cited in our brief and the state's brief and even the government brief, adopting the line we've described here and worked through with your honors would not require any of those orders to be undone.

[00:29:16] Speaker 00:
So it's really just starting with this order and the subsequent orders and other areas of the country that are doing this long term planning. But even the Morant case, which is this 2005 case about this area of the country that we think would be perfectly acceptable because there there was an imminent need for the department to act because there was going to be a shortage or a real risk of a shortage of. losing electricity in downtown D.C., this Yorktown order from 2017. Similarly, there was an imminent risk, as the department clarified in its rehearing order, that over 150,000 people might be without electricity unless the department acted.

[00:29:54] Speaker 00:
So even in those cases, which were thought to be on the outer edges of Section 202C, we think those would fit comfortably within our rule. The second thing is just to make a little bit clearer that Even if some of these long-term challenges aren't addressed, I do think it's important to note, and this is reflected in our briefing, but also in all of the work MISO does, that there are very compelling ways for MISO to react to short-term problems. And they do this all of the time without going to DOE for help.

[00:30:25] Speaker 00:
And they can do very common sense things, like if there are plants being maintained optionally, we suspend optional maintenance. We can get imports from neighbors and we can do a bunch of other things like that before we ever activate the extreme remedies that the Department of Energy can provide.

[00:30:43] Speaker 06:
And it sounds like if you have one more point, you can make that quickly and then we'll give you some rebuttal time, too. But.

[00:30:49] Speaker 00:
Absolutely. And so I think what that all shows is just that it's very unlikely in this sort of imminence concept that's very common in the law that all the department has a speculation that these things happen, but they haven't worked through, they haven't done the work to figure out that the harms they fear are going to happen with a certainty because all of these other actors are doing their best to solve these issues.

[00:31:16] Speaker 03:
sure my colleagues don't have additional questions i just have one you know the the and i know the language in these in this area is specialized and we'll we'll hear from the department on this too but you know the department in its order identifies potential tight reserve margins during summer 2025 elevated risk of operational reserve shortfalls during periods of high demand or low resource output And the MISO planning resource auction results say new capacity additions were insufficient to offset negative impacts.

[00:31:54] Speaker 03:
They said just like it's all there admitted that there are shortfalls, gaps, potentially tight reserve margins. Is there anything about the terminology that it sounds bad but isn't and that you can tell us why that squares with your position?

[00:32:15] Speaker 00:
So agreed that it all can sound bad potentially, but none of it is bad. So starting with the tighter reserve margin, a reserve margin is set in the first instance by MISO to achieve the standard of risk tolerance that the overall system uses. And then they achieve a margin on top of that, a buffer on top of that to make sure that things are extra reliable. And even still, there was a surplus of generation beyond that.

[00:32:46] Speaker 00:
The government makes a big deal about how the surplus has reduced, but there's nothing magical about how much surplus one has. In fact, having too much surplus can be a bad thing, because that can mean that you're paying more for electricity than you might, or generating more electricity than you might otherwise need. And in terms of all these statements saying new capacity made up for some of these losses they're describing. In some ways, that's the function of the auction. It's, in part, a planning tool, what capacity we have. And this is present in the auction results itself.

[00:33:19] Speaker 00:
It's also a tool to tell investors, hey, it's worth investing here. More capacity will be needed going forward. We think there's real room for you to take advantages of these higher prices and come on in. So it's a planning tool in both of those senses. And MISO had specifically tailored its auction results to achieve that kind of end to more accurately reflect these dynamics. And as for the NERC assessment, it often says things like you might need. There's elevated risk, and so there's a possibility of shortages in some sense.

[00:33:53] Speaker 00:
But what the NERC assessment says, and this is at page JA118 when talking about the MISO region in particular, It says things like that is mostly a risk that you will have to go into all of these mitigation measures I talked about using things like exporting or sorry, importing from neighbors, curtailing your own exports and engaging in things like demand response.

[00:34:15] Speaker 02:
And there's no reason to think that the that the importing from neighbors is going to be unavailable.

[00:34:20] Speaker 00:
That's right. And the government might suggest that that is during things like winter storms. But one thing that's true even in that context, and this is in JA414, is that we don't all experience peak demand across the country at the same time. We don't all have outages at the same time. So it's perfectly common, even during the hardest winter storms or things like that, for importing to continue.

[00:34:46] Speaker 06:
One very pointed question. The first issue was a surplus one. Yes. That drew a fair amount of attention, particularly in the opening order. And I just, is it your view that a surplus is kind of like a prophylaxis on top of a prophylaxis such that no matter how much the surplus might dwindle, that can't be an emergency? That may well be right, but I'm just wondering if that's your perspective. So yes, can't be. That is at a layer of prophylaxis such that no matter what happens to that, we're not in emergency land.

[00:35:14] Speaker 00:
That's right.

[00:35:15] Speaker 06:
Okay.

[00:35:16] Speaker 00:
And maybe as the surplus is lower, the increased risk would be one of needing to use these mitigation measures. It wouldn't be a greater, a huge risk that there will be actually blackouts on the graph.

[00:35:28] Speaker 06:
That wouldn't be to OTC territory. Exactly. Okay. Thank you.

[00:35:31] Speaker 07:
I'm sure my colleagues don't have any questions at this time.

[00:35:34] Speaker 07:
We'll give you a little time for rebuttal.

[00:35:35] Speaker 06:
Thank you.

[00:35:41] Speaker 08:
Mr. Stander? Morning, Your Honors, and may it please the Court. Robert Stander, here on behalf of the Department of Energy.

[00:35:48] Speaker 08:
The Secretary of Energy is not required to wait for a blackout to happen before invoking Section 202 of the Federal Power Act. In the Campbell order, the Secretary identified a shortage of electricity that called for immediate action. The circumstances he identified fit within the ordinary meaning of emergency, as used in the statute.

[00:36:11] Speaker 08:
Within that boundary, Congress delegated to the secretary sole discretion to determine how much risk is too much risk, how much of a shortage is too short. And the order must be affirmed so long as it's supported by substantial evidence, as it is here. If I may, I'll start by addressing the meaning of emergency, apply it to the circumstances here, and then turn to a key precedent of the Morant order, which directly refutes some of the petitioner's arguments here today.

[00:36:43] Speaker 08:
and that was ratified by Congress when it amended the statute in 2015. And I'll then turn to the petitioner's other main argument about usurping the role of long-term planners and show why that's wrong and should be rejected.

[00:36:59] Speaker 08:
To begin, there's a lot of back and forth in the briefs about the definition of emergency. And we can just dispense with that here today and start with the definition that petitioners cite from Webster's first. And Webster's second has the same definition, but it's more timely. They define emergency as an unforeseen combination of circumstances that calls for immediate action. And then the statute adds specific circumstances that may call for immediate action, including a shortage of electricity.

[00:37:30] Speaker 08:
Now, that definition is fine as far as it goes, but it doesn't at all answer the question here, which is when the circumstances call for immediate action. How much risk of a blackout is too much risk? And Congress delegated that solely to the discretion of the Secretary. So we apply that to the circumstances here. The Secretary identified a combination of four circumstances that called for immediate action. First is the imminent shutdown of the power plant.

[00:37:59] Speaker 06:
There's a prefatory question. So this is all, I think, going to bolster the notion that there's a need for immediate action. Correct. So there's at least one statutory provision, and there's so many floating around, I can't remember the name, the section number offhand, but it's adjacent to this one that uses the term immediate action in connection with emergency. And that's the succeeding provision. And just remind me what the words of that are, because... It says it pairs emergency with immediate action. And then you have an argument in your brief, I think, that the negative pregnant of that is that because this provision, 2OTC, doesn't pair emergency with immediate action, then an emergency for 2OTC purposes doesn't actually require immediate action.

[00:38:42] Speaker 08:
So we make that argument in our brief, Your Honor. We have the need for immediate action here. So I think that's sort of beside the point. But I think our overarching point is— Okay, so you're not relying on that then.

[00:38:50] Speaker 06:
You're willing to accept that an emergency, in fact, requires—is something that, in fact, requires immediate action.

[00:38:58] Speaker 08:
The emergency here required immediate action.

[00:39:00] Speaker 06:
So within the scope of this case, we're fine with that definition. But your assertion of authority, actually, is that something can constitute an emergency for TOTC purposes, even if it doesn't require immediate action.

[00:39:11] Speaker 08:
I'm not making that argument here today. What I am arguing is that this provision... I just want to understand.

[00:39:16] Speaker 06:
I'm not trying to be difficult. But I thought that was the takeaway from the brief, is that

[00:39:22] Speaker 08:
So the takeaway that I'd like to leave you with is 202C does not require intensifiers. It doesn't say last resort. It doesn't say absolutely we mean it only if absolutely necessary right now. It doesn't have all these added intensifiers.

[00:39:36] Speaker 08:
All these imminent, all these things that are in there, that's our argument today is it's just emergency. And here's what an emergency is, an unforeseen combination of circumstances that calls for immediate action. That's our point.

[00:39:49] Speaker 06:
That's your understanding. It does call for immediate action, actually.

[00:39:52] Speaker 08:
So with this explanation, if I can explain the immediate action that was required here and that was required in the Morant order, I think it'll help clarify. So the circumstances here, the imminent shutdown of the power plant, an elevated risk of a blackout, according to NERC, the standard setting entity for North American grid reliability. And third, an unexpected surge in demand from energy hungry data centers. And then fourth, the shutdown of the plant required imminent action, immediate action, because the shutdown was to be permanent.

[00:40:26] Speaker 08:
And so once it's shut down, it's not available in times of peak demand, like during a heat wave or a wind drought or a severe storm.

[00:40:35] Speaker 03:
I'm sorry, I was looking for the statutory language. Imminent shutdown of Campbell, the data centers increased demand, and your two others were...

[00:40:44] Speaker 08:
An elevated risk of a blackout. According to NERC, the standard setting entity says there's an elevated risk of a blackout. And then fourth, the need for immediate action is because once the plant shuts down, it was to be permanent and you can't bring it back to serve in times of peak demand.

[00:40:59] Speaker 03:
That's separate from imminent shutdown of Campbell. It's the difficulty of reversing that.

[00:41:05] Speaker 08:
Correct. Right now, it was shut down May 31st. It was scheduled to shut down. If we don't act now, this is permanent, it's done, and it's not going to be there.

[00:41:12] Speaker 03:
STEPHANIE DESMOND- So this is a more record and evidentiary question, and also definitional. But the order defines the emergency here as an anticipated shortfall in August of 2025. What is the department's view of what, in a factual sense on the ground, the current emergency is?

[00:41:37] Speaker 08:
Well, the emergency identified in this order, I just want to be clear, the only thing before the court today is this order. And so, in fact, we asked to have this order and a second order consolidated so that the entire record would be before the court. The petitioners objected to that, and the court denied that. So I think what we're talking about here today is just one order, and the combination of circumstances that was identified was a shortage of electricity.

[00:42:05] Speaker 08:
And the shortage of electricity required immediate action for those four combination of circumstances I just identified. So that's what this order is about.

[00:42:14] Speaker 05:
And- I don't understand that response because if the order is, if all we're reviewing is the initial order, which identified an emergency based on the events that were projected to happen in August, 2025, Why are we here? Because that's come and gone. The reason that we're still here, and I guess that this isn't moot, is because it's capable of repetition and could evade reviews.

[00:42:49] Speaker 05:
Therefore, why don't we look at what the purported emergency is now?

[00:42:57] Speaker 05:
Because it appears to be repeating.

[00:43:02] Speaker 05:
I mean, I don't understand what basis you think there is for us to ignore the facts as they exist right now or the justifications that have been given to continue the emergency.

[00:43:19] Speaker 08:
So I'm happy to discuss that series of issues, as long as we're clear that the order under review here is the Campbell 1 order. To answer the question, just to talk about the current order, is a continuing shortage of electricity. right, the continuing shortage of electricity. And to look at sort of some of the record support for that, you know, it's hard to even talk about record support because we're talking about a record that's tied to order one, not a record that's tied to anything else.

[00:43:53] Speaker 08:
But the statements that are in the record from MISO, for example, two black presidents of MISO, we have testimony in the record walking through the shortage, the issues with the grid. They say things like, So this is Todd Ramey, Vice President of MISO, says, changes in the grid, shifting generation from reliable thermal energy to unreliable wind and solar, and quote, unexpected demand for energy-hungry data centers. He says, these changes pose a host of complex and urgent challenges to electric system reliability.

[00:44:29] Speaker 08:
That's testimony from May 2025.

[00:44:32] Speaker 08:
He says, to maintain system reliability, we must respond to the unprecedented change. That's JA721.

[00:44:40] Speaker 08:
There's also testimony from Jennifer Curran, another vice president of MISO. So it's these sorts of statements that talk about ongoing grid reliability problems. And the response to that is to keep power plants, major power source, online. And that's a discretionary judgment call for the secretary.

[00:45:02] Speaker 08:
uh that congress delegated to the secretary in 202c so that's if to answer the question about what's going on now that's that's the answer to that but just to take us back to the camel one order well aren't we supposed to in construing 202c to look at what i guess is considered 202a um

[00:45:24] Speaker 05:
And I hate referring to things by these shorthands when that's not what's in the U.S. Code. But I think the U.S. Code provision, we're talking about a 16 U.S.C. 824A subparagraph C. But if we jump up to subparagraph A, there Congress...

[00:45:48] Speaker 05:
It says, for the purpose of assuring an abundant supply of electric energy throughout the U.S., et cetera, et cetera, the commission is empowered to divide the country into these regional districts, and then that's how you get MISO, and that's how this planning is all supposed to happen.

[00:46:09] Speaker 05:
So what are we supposed to do with that? Well, Your Honor—

[00:46:16] Speaker 08:
This 202c order is clearly not doing the type of long-term planning the petitioners suggest when they point to this provision, because this provision authorizes FERC to divide the country into regional districts. The Secretary is not using 202c to divide the country into regional districts here. He's not using 202c to create nationwide reliability standards.

[00:46:39] Speaker 05:
I'm not saying that the...

[00:46:44] Speaker 05:
Secretary is doing what's in 824AA or 202A. What I'm saying is that 202A is how Congress said long-term planning is supposed to be done. And the petitioners are saying that that's why you don't use 202C to do long-term planning, and that's what's happening here.

[00:47:12] Speaker 08:
We are under two responses to the long-term planning argument. The first is that long-term planning and 202C orders are not the hermetically sealed categories that petitioners would have you believe. Every time there's a 202C order, at least often when there's 202C orders, it will in some way interfere with or override the prior decisions of long-term planners.

[00:47:33] Speaker 03:
But that's a different point from saying that 202C order can be used to respond to to, I think as your brief argued, to alleviate longer-term shortages of electric energy, even if an acute shortfall or blackout might not materialize until much later. So that goes back to the series of questions at the beginning of Michigan's Council's argument, which is If it's the kind of anticipated shortfall, even assuming there is an anticipated that long term planning is has not yet woken up to a long term risk.

[00:48:13] Speaker 03:
What's your response to the notion that, well, but it could. And the Department of Energy, including through FERC, has tools consistent with the state's primacy and the regional organization's primacy in long term planning. to go there to affect it rather than kind of diving in in a unilateral way that doesn't take the systemic interests into account.

[00:48:41] Speaker 08:
Well, Your Honor, if I could answer that question by responding, by discussing briefly the Morant order from 2005, and look at the text of the statute, and then talk about what's going on with the order at issue here from May to August last year, and then talk about the order, what went on during Winter Storm Fern in January. So taking those in order, the Morant order from 2005, uh it is it is squarely on point with some of the issues we've been talking about about the need for immediate action now but risk going on into the future so in morant uh the potomac river generating station was one of three power sources for washington dc the other two were two major transmission lines that connected dc to the grid and the energy excuse me the emergency arose when virginia regulators ordered the power plant to shut down for violating air quality standards uh and shutting down the plant would have elevated the risk of a blackout.

[00:49:35] Speaker 08:
But a blackout would only have happened if both other transmission lines failed at the same time. The secretary invoked 202C, ordered the plant to remain open. In that circumstance, the only thing that was imminent was the shutdown of the power plant. There was no suggestion of an imminent risk of a blackout. There was no suggestion of a high probability of a blackout. And the secretary acknowledged that in the order itself. He said, quote, i recognize that the simultaneous failure or outage of both transmission lines is not a high probability many said but there certainly is nothing in the statute that requires me to wait until the blackout actually has occurred and lives are put in jeopardy before invoking 202c that's that's page eight of the morant order and the source for that is in our brief at page 39 note 23. so grant directly refutes this argument that there must be an imminent blackout, that there must be a high probability of a blackout.

[00:50:28] Speaker 08:
Instead, the imminent shutdown of a power plant, coupled with an elevated risk, is sufficient. And it's up to the secretary, sole discretion of the secretary, to decide how much risk is too much risk.

[00:50:38] Speaker 06:
But is that a situation in which, even if there wasn't a high probability of a blackout in the very near future, there was still, you know, some...

[00:50:48] Speaker 06:
not immaterial possibility of a blackout. And that is such a dramatic scenario that got to do something right now to make sure we stamp out that level of risk. It doesn't rise to the level of probable, but it's at the level of not something we can disregard. And it's too immediately pressing. So two responses to that.

[00:51:08] Speaker 08:
I don't think there's, you know, The Morant order didn't say anything like, didn't have any quantification of a risk. It's just that it's not a high probability, but it's good or not. The statute delegates this discretion to the judgment of the secretary. And here we have NERC, the standard setting entity, saying there's an elevated risk of a blackout in the region. at this time. And so that's a record question. And the record, you know, all of petitioners' responses to that, they don't negate the fact that NERC says there's an elevated risk of a blackout.

[00:51:43] Speaker 03:
But they do put it in context. Their position is that NERC routinely designates areas as elevated risk without those areas ever experiencing blackouts. It's not useful for actually predicting whether there's an imminent electricity shortage. It's a much more nuanced signal. What's your response to that?

[00:52:08] Speaker 08:
It's pretty difficult for environmental petitioners to stand up here and say, we know best, to say, substitute their judgment for the judgment of the secretary and NERC.

[00:52:16] Speaker 03:
Putting NERC's judgment in context and saying, we do understand what it means historically and how and whether any kinds of emergencies have either arisen or the Department of Injury has ever thought it was incumbent on it to respond to that.

[00:52:34] Speaker 08:
So again, the statute delegates discretion to the secretary to decide how much risk is too much risk. And as far as the NERC report, it very clearly says that there is an elevated risk of a blackout at peak demand. And then it even says that Section 202C orders may be necessary. That's in the recommendations in that report.

[00:52:53] Speaker 03:
It says- What may be necessary?

[00:52:55] Speaker 08:
202 orders. That's JA 110.

[00:53:01] Speaker 08:
Then fast forward. For other evidence, just fast forward while we're talking about future orders to January of this year in Winter Storm Fern. So at that time, MISO issued an emergency alert and ordered maximum generation.

[00:53:21] Speaker 08:
During that event, the Campbell plant generated enough power to power 600,000 homes for all 16 days of that severe cold weather event.

[00:53:31] Speaker 08:
And that was at a time when all other power sources had already been ordered at maximum generation.

[00:53:38] Speaker 08:
This affected real people with real lives who used power for everything from medical treatments like dialysis to getting their kids a place to sleep. And so in very real-world terms, these orders, in fact, offered power when it may not have been available. And for evidence of that, we point to the declaration of Tim Coker that we included as an addendum to our brief.

[00:54:06] Speaker 08:
That's page 17 of the addendum. He talks about the Campbell plants generation period of state to 10 of that declaration.

[00:54:17] Speaker 08:
I think that goes through, I guess, the last point that I was going to say is the statute, Judge Pillard, that the statute doesn't say the secretary may issue orders so long as they don't interfere whatsoever with long-term planning. In fact, it suggests quite the opposite because subsection B, and this is 824A, B says the secretary may issue orders upon application from a state or from any person.

[00:54:51] Speaker 08:
And so, that suggests when long-term planners want to apply, you go to 202 .

[00:54:55] Speaker 08:
But 202 doesn't say that it requires an application. In fact, it says the opposite, with or without application.

[00:55:02] Speaker 08:
and with or without notice hearing a report. So it expressly contemplates or strongly contemplates that these orders will be used to, in fact, override the decisions of long-term planners. The regulations say the same thing. The definition of emergency in the applicable regulation says extended periods of insufficient power supply as a result of inadequate planning can constitute an emergency. That's 10 CFR 205.371.

[00:55:30] Speaker 06:
Can I ask this question? So I think this brings into play the backdrop of the executive orders that are, or at least the determinations about coal power that are kind of in the air here. The first line of your brief is the United States is facing a national energy emergency. And does that mean, and it's a 202c case, so I assume you mean emergency in the 202c sense. So does that mean that right now, throughout the nation, every any plant that wants to um reduce its operations or shut down to a pc authorities in play we we no you're wrong that's not what we meant by including that in our brief i think i think we that's not our position uh uh in this case we're talking about a single order uh we're talking why not why isn't that your position because it why why isn't a national energy emergency an emergency for 202C purposes?

[00:56:23] Speaker 06:
Because I think it would help me to understand what the distinction is. Thank you.

[00:56:27] Speaker 08:
It's evidence of this emergency. So in another case, in another region, another state, it surely could be evidence of an emergency in that context. But what I mean is, in this case, we're just talking about a single order, and we think it supports its evidence and supports the shortage in this case.

[00:56:45] Speaker 06:
And what is it?

[00:56:47] Speaker 06:
Again, just to help me understand the categories you're drawing, what is it about this case that you would distill to say it's over and above the national energy emergency that currently exists everywhere?

[00:56:58] Speaker 08:
I'll give you a combination of the four circumstances I mentioned before. Okay, it's those four. Got it. Correct. And NERCs...

[00:57:08] Speaker 08:
A key piece of record support is NERC's summer 2025 reliability assessment that says that the Midwest region was at an elevated risk of a blackout. And then that's, you know, for the three months of this order, that's a key piece of support. And then you add the testimony from MISO's vice presidents talking about some of the broader problems, the reliability problems with the grid, and the other evidence that we've submitted in the record. That's all what supports it.

[00:57:36] UNKNOWN:
Okay.

[00:57:36] Speaker 03:
So what is the line that that I'm not sure that you have one, but the discretion of of the secretary and the ability to foresee a potential?

[00:57:53] Speaker 03:
shortfall, is it limited to the prediction of a blackout? Or what's the limiting factor in your reading? I know you say we're only reviewing this. But of course, we're always thinking about the precedent that we set.

[00:58:10] Speaker 03:
So offer us some limiting factors so that this isn't just carte blanche for a very interested energy secretary to skydive into anywhere in the country.

[00:58:23] Speaker 08:
Yes, Your Honor. I think a key limiting principle is that any order must be supported by substantial evidence commensurate with the scope of the order. So, for example, suppose I can imagine a winter storm, let's say some wild winter storm that covered the entire country from Texas to Maine in three feet of snow.

[00:58:46] Speaker 08:
uh and that had a severe you know cold front afterwards that kind of record evidence would support some broader uh order perhaps uh but uh and so that that's a key learning principle is what is the record evidence that is commensurate with the scope of the uh the order here we have just a very narrow order that's focused on one power plant in one region and it's supported by concrete evidence about an elevated risk of a blackout in this circumstance so i think that's a key learning principle and you know I know it's It's difficult because the statute is open-ended.

[00:59:20] Speaker 08:
Congress did that on purpose. Congress reviewed this in detail in response to the Morant emergency in 2015.

[00:59:28] Speaker 08:
The Morant order is all over the legislative history of those amendments. It's referred to 100 times in one of the hearings. And Congress responded. So the particular problem Congress responded to was, in Morant, Virginia regulators had fined the plant for operating under the 202c order. So Congress responded. analyzed this, like, affirmatively looked at 202 and added the immunity provision in subsection C3 so that power plants are now immune from environmental regulations when they're operating under an order.

[01:00:00] Speaker 08:
Congress also added the 90-day limit and said each order needs to be for 90 days. You can renew it for unlimited periods, but then you need to consult with relevant agencies. So Congress thought about this. Congress thought hard and long about this and left the statute the way it is, didn't add intensifier language, didn't say only in these narrow circumstances. It left it open because Congress knows, can't foresee all the circumstances that might happen. And so that's kind of, it has to be the end of, I think, the sort of limiting principle we have.

[01:00:33] Speaker 03:
Anything further? That's it for limiting principles. It seems to me that in your four factors, imminent shutdown of Campbell, difficulty to reverse that if the last minute one wishes one had the Campbell capacity online, data centers placing new and unprecedented demands on the grid, and then the elevated risk according to NERC. And it seems like if you take out the elevated risk according to NERC that you don't you don't have a basis for 202C.

[01:01:05] Speaker 03:
Do you disagree?

[01:01:07] Speaker 08:
Well, I think in this order... In this order. In this order, the NERC report is a key piece of evidence.

[01:01:15] Speaker 03:
It is. I mean, I read it that way, too, from your position, that you can't just say, you know, there's a lot of data centers coming and some coal plant is shutting down. You know, the long-term planning has done some addressing to replace the coal plant, and, I mean, data centers is putting demands everywhere.

[01:01:32] Speaker 08:
So I think that's right, Your Honor.

[01:01:35] Speaker 08:
All the petitioners' responses to that summer reliability report failed. They have three main responses. Their first, and they reiterated it here today, was to say it's no big deal. Trust us. There won't be a heat wave. There won't be a wind drought. Nothing bad is going to happen. But that's for the secretary to determine, not for environmental petitioners to stand up and say, we know better. For states? Yes.

[01:02:01] Speaker 08:
It's for the Secretary under Section 202 to determine.

[01:02:04] Speaker 03:
So they say one response, no big deal. A second response...

[01:02:08] Speaker 08:
The second response is that both Michigan and MISO approved the shutdown of the Campbell plant back in April of 2022 or spring of 2022. That's, of course, not relevant because we're talking about 2025 conditions. And it's been between that decision to shut down the plant was before all of this, before the surge in demand from data centers before the 2025 report.

[01:02:34] Speaker 08:
And their third, Michigan, but not the environmental petitioners, relies on a post hoc document, a July Department of Energy, July 2025 Department of Energy resource adequacy report. That report was decided after the Campbell order was issued in May, and it doesn't at all support Michigan. It compellingly supports the secretary in the department, It uses two models. First of all, it's not in the record. It's in Michigan's addendum.

[01:03:05] Speaker 08:
It uses two models that are relevant here. One is called the current system model. Michigan thinks it supports them. It doesn't because that model only uses data up to 2024.

[01:03:17] Speaker 08:
So the 2025 data isn't included. It's entirely irrelevant.

[01:03:22] Speaker 08:
Relatedly, that NERC 2025 Summer Reliability Report talks about a surge in demand between 2024 and 2025. This is at JA107 and again at 109. What they say is between those two years, 2024 and 2025, the increase in demand year over year was more than double. So there's a surge in demand year over year.

[01:03:46] Speaker 08:
The 2024 data is completely irrelevant. The second model in that July 2025 report, again, it's Michigan Addendum, is called the status quo model, or the plant closures model. That's the same thing. And it looks forward to 2030. And it says, if all the plants that have announced closure, they all close down, and we have continued demand like we're experiencing, what will happen? And it shows system-wide grid failure by 2030.

[01:04:17] Speaker 08:
So going forward, it's catastrophic, and it's completely irrelevant to the 2025 conditions that we're talking about here. So those are the three responses to the NERC 2025 Summer Reliability Report, and they all fail.

[01:04:33] Speaker 08:
If there are no further questions, I'll submit. Thank you.

[01:04:37] Speaker 06:
Thank you, Counselor.

[01:04:44] Speaker 04:
Mr. Schaff?

[01:04:46] Speaker 04:
Thank you, Your Honor. Zach Schauffer, Intervenors Consumers Energy Company, the Campbell Plant's majority owner. We're here for a limited purpose, so I'm going to try to be quick. We worked closely with regulators and stakeholders to protect our customers while complying with legal obligations. When we agreed to retire the plant in 2022, we vetted our plan with the Michigan Public Service Commission and MISO. Then when the Department of Energy judged that Campbell was necessary because MISO as a whole faced a shortage, we worked hard to bring the plant back from the brink of retirement.

[01:05:18] Speaker 04:
Our limited purpose here is really just to ensure that nothing in this case undermines our ability to recover the roughly $43 million in net costs we incurred under this order. And we're seeking to recover those costs by the other track of Section 202C's two-track scheme, which vests emergency authority in DOE, and then cost recovery issues in FERC. And the reason why I think it can be quick here is that on the issues where we've taken a position, which are pretty narrow, the briefing has converged in a helpful way. So first, everybody agrees that cost recovery is for FERC and belongs in appeals from FERC orders, not in this appeal from DOE's order.

[01:05:57] Speaker 04:
And second, on mootness, both DOE and the petitioners agree that the capable of repetition but evading review exception straightforwardly applies. These orders run 90 days. The FPA's mandatory rehearing period consumes 30 of those before a petition in this court can even be filed. And we already have the same basic dispute recurring in petitions that have sort of piled up before this court. I think the court can say that. make no new law. Maybe one piece to add, Judge Wilkins, in response to your colloquy with the government about the longer-term concerns in the subsequent orders versus the May 2025 order.

[01:06:36] Speaker 04:
If you look at page 42 of the hearing order in this case, it really squarely tees up the dispute about using Section 202C to address issues in the grid over the course of the next several years. So that's in this case, and it's in the subsequent cases that have come before this court. Our one request really is this. Whatever ground the court selects and whatever you say about mootness, we urge you not to suggest that vacature here would somehow entitle petitioners to refunds.

[01:07:08] Speaker 04:
We've briefed in part three of our brief the stronger proposition. We don't think those are legally available, even if the order here is set aside. But we really think the proper approach for this court, given the Federal Power Act's division of authority, if you say anything about refunds at all, which we don't think is necessary, is just to say those disputes are for FERC to address in the first instance. And...

[01:07:33] Speaker 06:
One is, although it sounds like you're about to finish, and I just, it's basically a site check question, which is just to make sure I have the page right, that you pointed to 42 of the rehearing order because it's the juxtaposition between the current order, the order that's under review and subsequent orders.

[01:07:48] Speaker 04:
Yeah, paragraph 42 of the rehearing order, which, you know, tees up these sort of medium-term resource advocacy concerns.

[01:07:56] Speaker 06:
I just wanted to make sure we had the right list. Okay. Thank you, counsel.

[01:08:06] Speaker 06:
Mr. Shagnon, we'll give you the three minutes for rebuttal.

[01:08:09] Speaker 00:
Thank you, Your Honor. So I have a few points I'll try to hit within that three minutes to just clear a few things up. So the first thing I want to say overall is that you heard the government effectively adopting the approach to emergency that we discussed in our earlier portion.

[01:08:28] Speaker 00:
So I just want to make that clear. The second is I'm not standing up here saying that my, as an environmental lawyer's preference for risk is what should govern. I'm saying this court should defer to what MISO and NERC and the states have said about this very problem.

[01:08:46] Speaker 00:
They've repeatedly distorted what that record actually shows. And if you look at a few pieces of that, you can see that there was no resource adequacy problem. So if you look at JA69, that's where the MISO results say they're demonstrated resource adequacy. If you look at the Ramey testimony he mentioned, both at 726 and 739, that MISO executive made clear that there's no resource adequacy problem in the near term or in the future. And resource adequacy is just the idea that there will be enough power to deliver to consumers.

[01:09:20] Speaker 00:
he makes a a lot of references to the nurk assessment he suggests our view is that we are denying that hot weather will occur and other things like that or there won't be storms that's absolutely not true nurk itself accounts for the existence of warm weather and storms and if you look at three pages within the nurk assessment they show uh pretty clearly that the the blackouts that uh the government suggests are going to happen are not. So on JA 118, I mentioned this in my opening remarks, they make clear that the real risk here, the elevated risk here is that reserves, which is again that surplus, might be lower.

[01:09:57] Speaker 00:
But the upshot of that isn't blackouts, it's that these mitigating measures that are well in place that DOE knows about because they're in MISOs tariff and NERC has required some of them, will be used, not that blackouts will occur. He mentions this piece of the NERC report that says that 202 orders might need to be used. He omitted the fact in extreme weather conditions, and our position here isn't that anything needs to change about 202 , and it still can be used in a short-term way. That's exactly what happened one month after this initial order where Duke Carolinas ask for a 42-hour order to deal with a summer heat wave.

[01:10:35] Speaker 00:
And the last point is that if you look at JA, I believe it's 114, there's a suggestion that kind of embraces the surplus on top of surplus idea. They say the risk might be higher if they had stuck. exactly to the reference margin. But they went above and beyond that. They got more. So the last point I'll try to make is about the Morant case, which I think my friend on the other side suggests dramatically supports his position. But there's two pieces of that that I'd like to clarify.

[01:11:06] Speaker 00:
One is that up top in the order on page two makes clear that they were facing an immediate reliability concern. um and the reason that it was an imminent reliability concern in the sense that we've been talking about is when you're talking about transmission lines there's only two if either of those go down the utility would have no other way of solving the problem other than running the morant plant and all sorts of other circumstances there would be other solutions along these mitigation along the lines of these mitigation measures or running some other plant either goes down That's right.

[01:11:37] Speaker 00:
There was two, and there had been recent history where both had gone down, where there's the possibility when you have transmission lines that you want to take one down to do maintenance and other things like that. So it was a very pressing need there. And one other thing he overlooked is that on page nine of that order, the government makes exact sorry, the department makes exactly our point, which is, look, we don't want you to take this DC as an invitation to not do better planning going forward. We expect you're going to really go all out on building a better transmission line because this is not our lane and we don't want to be in it.

[01:12:13] Speaker 00:
And that's all the position we're adopting here in this case, and we think it appropriately is followed. And the very last point I'll say, if I may, is on the idea of my friend said his real concern here is that you can't bring the Campbell plant back. But he also says we're not trying here to engage in resource adequacy planning or generation planning ourselves. And those are fundamentally intention. MISO and the states all looked at whether Campbell was needed to address problems going forward.

[01:12:45] Speaker 00:
They said no. And the reason they said no is because it's a harmful, unreliable plant. The department has a different view now, but it has nothing to do with whether it's needed.

[01:12:54] Speaker 06:
Can I ask one question about the NERC report and the point on J110 about the forecasting the possibility that to a TC authority may be needed. So I take your point that it says specifically contemplates the exercise of 202C authority. And it says 202C may be needed to ensure that sufficient generation is available during extreme weather conditions. That's right. Are you reading that to mean, because you're emphasizing extreme weather conditions, are you saying that it's only contemplating the use of 202C when there's in fact extreme weather and we're going to react in real time to extreme weather?

[01:13:31] Speaker 06:
Or is it saying that 202C may be necessary to make sure that if there is extreme weather, there's going to be sufficient energy available then because the latter would indicate that it would at least leave open the possibility that you may need to use two OTC now because you never know when there's going to be extreme weather as opposed to Let's wait until there's the extreme weather event and then exercise 202C on the spur of the moment then. Or am I missing the distinction you're drawing?

[01:14:00] Speaker 00:
So I'm reading it the first way, which is 202C still will be this last resort backstop. If we look at the weather report and see next week, it's going to be 105 degrees. And that's exactly how it was used, again, a month after this order in this Duke, Carolina's instance.

[01:14:17] Speaker 03:
And there it was used to say...

[01:14:21] Speaker 03:
Fill me in on that you can run without environmental compliance. Explain that, why that matters, and why like, you couldn't bring Campbell back in a dirty mode and just at the last minute?

[01:14:38] Speaker 00:
That's right. And Duke Carolina's is not within the MISO footprint. No, I know that. But what it shows is that was a case where Duke Carolina's saw 1,500 megawatt of generation was currently on outage. And it also confronted there's a heat wave next week. And the response was, which is often a typical response in these circumstances, We're going to allow you to temporarily exceed your permit requirements to allow your existing generation to squeeze out a little more juice.

[01:15:08] Speaker 00:
Recognize that may conflict with environmental regulations, but we'll allow it for 42 hours. And that's typically how 202 has been used. And my friend mentioned that this balance was struck in amending the statute in 2013.

[01:15:28] Speaker 00:
And that's an important reason why we should channel all of these exercises of planning outside of the 202 context, because one, A very important thing that you steer into when you use 202 pretty often is a conflict with environmental law, whereas other pathways will allow you to continue to comply with environmental law, use imports or things like that without creating this legal conflict.

[01:15:53] Speaker 07:
Make sure my colleagues don't have additional questions.

[01:15:55] Speaker 06:
Thank you, counsel. Thank you to all counsel. We'll take this case under submission. Thank you.