[00:00:03] Speaker 00: Case number 12-1224 at L. Midland Co-generation Venture Limited Partnership Petitioner versus Federal Energy Regulatory Commission. [00:00:12] Speaker 00: Mr. Coffin for the petitioner. [00:00:14] Speaker 00: Ms. [00:00:14] Speaker 00: Larson for the respondent. [00:00:16] Speaker 00: Mr. Staffier for the intervener. [00:00:22] Speaker ?: Please report. [00:00:24] Speaker 04: Midland has set forth three independent grounds why Kirk aired in ordering Midland to pay the [00:00:30] Speaker 04: property taxes and operating maintenance expenses on property that was owned by Michigan Electric, which I'll refer to as METC. [00:00:39] Speaker 04: In a minute, I'll turn to Hurt's argument that contracts are effective or enforceable before they're effective. [00:00:48] Speaker 04: And also our point that METC essentially is looking to the wrong party for payment for these charges. [00:00:54] Speaker 04: But first, I'd like to address the breach of the anti-assignment provision of the facilities agreement. [00:00:58] Speaker 04: Because if you agree with us that consumers improperly delegated the students to METC, which is a violation of the anti-assignment provision, then METC's claim, which you told me... Can we spend a little more time on the jurisdictional question before we get to that? [00:01:15] Speaker 04: Okay. [00:01:15] Speaker 04: Well, there's three aspects to it, Your Honor. [00:01:17] Speaker 04: Right. [00:01:17] Speaker 04: Two of which I believe are readily answered. [00:01:21] Speaker 04: As far as the enforceability of the contracts, FERC has agreed there's jurisdiction. [00:01:27] Speaker 04: And there's a good reason why FERC has agreed there's jurisdiction, because FERC actually addressed enforceability in its clarification order and on rehearing of that order. [00:01:37] Speaker 03: So is that... Well, that alone doesn't get us jurisdiction unless they didn't decide those questions earlier. [00:01:44] Speaker 03: They decide those questions earlier and just reaffirmed what they said before, then we don't have jurisdiction. [00:01:51] Speaker 04: Well, Your Honor, they did not address it before. [00:01:53] Speaker 04: They addressed it for the first time. [00:01:54] Speaker 06: Well, the commission says they did address it before. [00:01:58] Speaker 06: You just didn't understand that they had addressed it. [00:02:00] Speaker 04: No, no, no. [00:02:01] Speaker 04: That's the agency's argument, Your Honor. [00:02:03] Speaker 04: The agency's argument is this. [00:02:05] Speaker 04: There is jurisdiction to consider the enforceability of the facilities agreement in the agency agreement. [00:02:11] Speaker 04: And the reason for that is well-founded, which is that the agency did not address that specific issue until the facilities order [00:02:23] Speaker 04: in which case they addressed it in both orders, it was ruled on by FERC for the first time and then properly presented to this court for review. [00:02:34] Speaker 04: Now, as far as the anti-assignment provision, both FERC and MATC do challenge jurisdiction on that, but again, it's not well founded because FERC is looking at the wrong order. [00:02:46] Speaker 04: In the agency, they say, well, it should have been contested in the agency agreement. [00:02:51] Speaker 04: But if you look at the facilities agreement clarification order and in the other order on a re-hearing, FERC, excuse me, the declaratory petition order, FERC specifically addressed the anti-assignment provision. [00:03:14] Speaker 04: Millen sought rehearing of that issue, particularly FERC's ruling that there was a waiver of the anti-assignment provision. [00:03:24] Speaker 04: FERC ruled on that in the omnibus rehearing order. [00:03:28] Speaker 04: We challenged, we sought review of that specific issue. [00:03:32] Speaker 04: It's inappropriate for FERC at this juncture to say, oh, you appealed the wrong order, because they addressed the issue [00:03:40] Speaker 04: Keep in mind that in the agency agreement order, Burke said it would address the other challenges to whether Nancy had it right to payment in the declaratory petition order, which is indeed what in fact Burke did. [00:03:56] Speaker 06: Are you separately challenging the agency order? [00:04:00] Speaker 06: You're challenging that, right? [00:04:01] Speaker 04: Yes. [00:04:01] Speaker 06: Yes, Your Honor. [00:04:03] Speaker 06: So your client Midland, you're not a party to the agency agreement, right? [00:04:08] Speaker 04: That's correct. [00:04:10] Speaker 06: The commission ordered Midland to pay under the facilities agreement, right? [00:04:17] Speaker 04: That is correct. [00:04:19] Speaker 06: They didn't order... So why do you have standing? [00:04:25] Speaker 06: How are you in any way harmed? [00:04:27] Speaker 06: In other words, even if we agreed the agency order was something wrong, how would it affect Midland? [00:04:32] Speaker 04: Look at it two ways, Your Honor. [00:04:33] Speaker 04: First of all, Perk said that the rates that Nancy's trying to collect here... The what? [00:04:38] Speaker 04: Perk said that the rates that Nancy's trying to collect were established by the SOTA agreement. [00:04:45] Speaker 06: Right, not the agency agreement. [00:04:47] Speaker 04: Right, and our position is that's not appropriate because one utility cannot incorporate by reference the rates of another. [00:04:56] Speaker 06: No, you're missing my point. [00:04:58] Speaker 06: I don't understand why the agency agreement to which Midland is not a party and under which Midland was not ordered to pay anything, why Midland has any interest in that. [00:05:09] Speaker 06: Why you're injured by it. [00:05:12] Speaker 04: Because that agreement represented the violation of the anti-asylum provision of the facilities agreement. [00:05:18] Speaker 06: Oh, okay. [00:05:19] Speaker 06: That's your best answer? [00:05:22] Speaker 04: Yes, sure. [00:05:23] Speaker 04: But keep in mind that the defenses were raised as far as the anti-assignment provision were addressed by FERC, not in the agency agreement order, but rather were addressed by it in two separate orders. [00:05:32] Speaker 04: That is, the facilities agreement clarification order and the declaratory petition order. [00:05:39] Speaker 04: So FERC did reach the issue. [00:05:42] Speaker 04: FERC did rule on it. [00:05:43] Speaker 04: It was then raised on a re-hearing. [00:05:45] Speaker 04: FERC addressed the issue as far as the anti-assignment provision and the enforceability of the contract. [00:05:53] Speaker 04: The agency agreement really is only relevant here insofar as we're contesting first conclusion that METC's rights were set by the facilities agreement. [00:06:02] Speaker 04: Even if you agree with FERC on that issue, you still have the other issues as far as the anti-assailant provision, which of course is a provision of the facilities agreement, and the enforceability, which FERC didn't address in the agency agreement order, but rather in the other two orders. [00:06:22] Speaker 04: Now, turning back to the anti-assignment issue, as I said, address the issue in its declaratory petition order and in the clarification order. [00:06:40] Speaker 04: Both cases addressing whether, first of all, they had one order that was not appropriate [00:06:55] Speaker 04: of that particular issue, and it was addressed by FERC in the omnibus rehearing order. [00:07:02] Speaker 04: FERC then also said in the rehearing order, it basically raised two particular defenses. [00:07:09] Speaker 04: One was that consumers had retained some certain duties under the facilities agreement, and also that the facilities agreement contemplated that consumers could have agents. [00:07:23] Speaker 04: We took on both propositions in our appeals brief to this Court. [00:07:29] Speaker 04: FERC did not defend on the basis of the grounds that set forth in the order before the agency. [00:07:35] Speaker 04: FERC instead came up with a new argument, which is, oh, there's no jurisdiction that can center this argument. [00:07:41] Speaker 04: But that's not the ground that was advanced by FERC in this omnibus re-hearing law. [00:07:47] Speaker 04: FERC essentially has come up with a new ground on appeal, which this Court specifically rejects. [00:07:53] Speaker 04: This court has been categorical that the H.C. [00:07:57] Speaker 04: has to wire fall on the specific grounds that it set forth in the order of the rehearing. [00:08:05] Speaker 04: And in this case, Burke has abandoned those arguments, has made no effort to defend them whatsoever, and instead has relied on the defense that there's no jurisdiction to consider them. [00:08:16] Speaker 04: Again, a defense that did not advance in either the original order or the order of the rehearing. [00:08:24] Speaker 04: METC and consumers, the two intervenors, also have not defended the grounds set forth by FERP in the omnibus free hearing order. [00:08:35] Speaker 04: They also have hanged their hat on the notion that there's no jurisdiction. [00:08:41] Speaker 04: So essentially, you have the arguments presented in our brief unrefuted, undenied, unchallenged. [00:08:48] Speaker 04: Therefore, it's appropriate to reverse on that basis alone. [00:08:53] Speaker 03: Well, not if there's no jurisdiction. [00:08:55] Speaker 03: They didn't have to raise a jurisdictional argument below. [00:08:57] Speaker 04: I beg to differ, Your Honor. [00:08:58] Speaker 03: This is about the jurisdiction of this Court. [00:09:01] Speaker 03: Their arguments are about the jurisdiction of this Court. [00:09:04] Speaker 04: No, Your Honor. [00:09:05] Speaker 04: There's a case, if I could refer the Court to it, in which the same thing, essentially raised on appeal for the first time, oh, we should not have considered this issue in our order of rehearing because we shouldn't have raised it in an earlier order. [00:09:21] Speaker 04: This Court rejected that motion. [00:09:23] Speaker 04: saying that no, that FERC cannot raise the first time on appeal a jurisdictional challenge. [00:09:29] Speaker 03: A jurisdictional challenge to its own jurisdiction, but not a jurisdictional challenge to our jurisdiction. [00:09:34] Speaker 03: It can't be that FERC can waive our jurisdiction. [00:09:38] Speaker 04: Right, but the jurisdictional predicate, Your Honor, is that the issue be presented to the agency on rehearing. [00:09:43] Speaker 04: Right. [00:09:44] Speaker 04: Which is exactly what occurred here with respect to both the enforceability issue and the anti-Semite provision. [00:09:50] Speaker 03: It has to be on rehearing and it has to be within the time set by the statute. [00:09:56] Speaker 04: Correct. [00:09:58] Speaker 03: There's no challenge as far as timeliness with respect to the... Well, the argument that it's a collateral attack is an argument that time ran on the time in which you had to appeal to this court or seek a rehearing below and then appeal to this court. [00:10:15] Speaker 04: Only with respect to the argument on Order Number 2003, Your Honor. [00:10:19] Speaker 04: They've raised three distinct jurisdictional challenges. [00:10:25] Speaker 04: As far as order number 2003, the argument is that that issue should have been presented as a petition for rehearing of these facilities agreement orders. [00:10:37] Speaker 04: With respect to the enforceability, again, the agency's position is that it was presented properly. [00:10:43] Speaker 04: in response to METC's petition for clarification and a rehearing of the Facilities Agreement order. [00:10:51] Speaker 04: FERC then considered that on rehearing after FERC clarified or modified its earlier order to say that indeed the Facilities Agreement and agency agreement were enforceable prior to their effective date. [00:11:07] Speaker 04: that we saw a re-hearing in this competition, and we can address that in a re-hearing. [00:11:11] Speaker 04: That's an enforceability question. [00:11:12] Speaker 04: That's the enforceability question. [00:11:14] Speaker 03: Can I ask you, on the enforceability question, what is it that you think the consequences of this should be? [00:11:21] Speaker 03: If it was unenforceable, does that mean you get reimbursement for everything you paid between 1988 and 2004? [00:11:28] Speaker 04: That is not the relief side here. [00:11:30] Speaker 03: But why not? [00:11:31] Speaker 03: You would be entitled to it, is that right, under your theory? [00:11:36] Speaker 04: Arguably you can make a distinction. [00:11:39] Speaker 04: That could be one consequence, but arguably you could say that if the consumer consciously, willfully paid, then the remedy should be the time down your refund. [00:11:48] Speaker 04: But that's a different proposition where a customer's object to paying and FERC is claiming it has the ability, the power to compel the customer to pay. [00:11:57] Speaker 03: So from 2004 to 2010 when you didn't pay, right? [00:12:00] Speaker 03: That's correct. [00:12:01] Speaker 03: You don't think you owed anything at all. [00:12:02] Speaker 03: You should have free service for that period? [00:12:05] Speaker 04: Yes, and that's exactly the same result that this court reached in San Diego Gas and Electric. [00:12:12] Speaker 04: I was exactly on point, Your Honor. [00:12:15] Speaker 03: Is that the case in which no invoices were sent during the period? [00:12:18] Speaker 04: No, that's the Excel case. [00:12:19] Speaker 03: I see. [00:12:21] Speaker 04: San Diego Gas and Electric was a case in which [00:12:33] Speaker 04: The customer complained that the consequence of FERC declining the given waiver was that it would be out of pocket $3.3 million. [00:12:41] Speaker 04: This court said, well, that may seem somewhat punitive, but we're not going to hold that FERC abuses discretion in declining the given waiver. [00:12:53] Speaker 03: But we didn't hold on what the consequences would be. [00:12:56] Speaker 04: No, the consequences were addressed, but that was the consequence. [00:13:09] Speaker 04: And indeed, FERC's argument, if I could turn to the enforceability issue, is that somehow, well first of all, I should point out that the statute does not hold, and certainly neither FERC nor METC have [00:13:32] Speaker 04: there's any language in the Federal Power Act which gives the agency the right to declare that a contract which is not yet in effect is nevertheless enforceable. [00:13:42] Speaker 04: Neither METC nor FERC have supported any regulations issued by FERC which supports their argument that something that's not yet in effect is nevertheless enforceable. [00:13:53] Speaker 04: METC and to a lesser extent FERC instead rely on some older cases from this court [00:14:11] Speaker 04: cases have essentially been lost any vitality in the wake of later cases from both this court and the Supreme Court. [00:14:18] Speaker 04: The predicate for the earlier cases was the notion that the Mobile Sierra Doctrine, the older Supreme Court cases, somehow require that you enforce contracts even if not on file with the agency. [00:14:32] Speaker 04: But more recently, that proposition has been rejected. [00:14:36] Speaker 04: In San Diego Gas and Electric, the [00:14:39] Speaker 04: petitioners there argued that if you don't hold it for abuse of discretion and refusing to give a waiver, then you're going to violate the Mobile Sea Arrogant. [00:14:53] Speaker 03: Was the prior notice case unlawful then? [00:14:55] Speaker 04: I'm sorry? [00:14:56] Speaker 03: Was the first decision in prior notice unlawful? [00:15:00] Speaker 03: Because there it allowed, if it thought that the rates were just and reasonable, all it required back was the refund of the time value, right? [00:15:11] Speaker 04: That's correct. [00:15:12] Speaker 04: It did not address the issue of whether FERC could compel a customer which had not paid to do so. [00:15:20] Speaker 04: The whole point of a time value refund is that the customer has indeed paid if there's been no payment by the [00:15:27] Speaker 04: because it's based on the interest assessed on the actual payments by the customer. [00:15:33] Speaker 03: But I'm still stuck on the idea of why that shouldn't compel for a customer who has paid a refund of the entire amount, if it's true that there was no effect. [00:15:45] Speaker 03: If the rates from the beginning were not valid because they weren't filed, why shouldn't the remedy in every case be, if you've paid, [00:15:55] Speaker 03: give you all the money back, not just the time value. [00:15:59] Speaker 04: One can make argument that isn't government remedy, but that's not the relief we're seeking here, Your Honor. [00:16:02] Speaker 03: I know, but it doesn't imply that something about the original agreement is effective. [00:16:09] Speaker 04: Not at all. [00:16:09] Speaker 04: And I guess, answer your question about if that's indeed the whole of the prior notice, is it valid and the answer is no. [00:16:17] Speaker 04: Congress set forth a specific process [00:16:20] Speaker 04: for a contract to be enforceable before its effective date. [00:16:23] Speaker 04: And that's the – it gave the agency waiver authority. [00:16:28] Speaker 04: The Federal Power Act says that the agency has a right to waive the 60-day notice requirement. [00:16:34] Speaker 04: In this case, there was no waiver given. [00:16:37] Speaker 04: FERC apparently regrets the fact there's no waiver and now wants to argue that the waiver is irrelevant. [00:16:44] Speaker 04: that the contractor is nevertheless enforceable prior to the effective date that the agency selected. [00:16:50] Speaker 04: They don't have this statutory authority, Your Honor, with all due respect, to do that. [00:17:05] Speaker 01: May it please the court, Karen Larson, for the respondent, the Federal Energy Regulatory Commission. [00:17:10] Speaker 01: Chief Judge Garland is correct that the practical consequence of Midland's position is that the invalidation would result in the invalidation of the entirety of the facilities agreement for the period prior to the filing. [00:17:24] Speaker 03: And what do you say to their argument that San Diego Gas allows that? [00:17:28] Speaker 01: San Diego gas is distinguishable. [00:17:31] Speaker 01: San Diego was a waiver case. [00:17:33] Speaker 01: The court was examining whether Burke correctly denied waiver in that case. [00:17:38] Speaker 01: And the consequence in that case of the denial of waiver was such that San Diego was stuck with only an effective date that Burke gave was the direct result of the contract that the utility San Diego had entered into. [00:17:55] Speaker 01: The terms of that contract [00:17:57] Speaker 01: essentially provided that the effective date was the FERC effective date. [00:18:04] Speaker 01: The language of the contract in that case limited the result in that case. [00:18:11] Speaker 01: So San Diego has no bearing on the case at hand here. [00:18:15] Speaker 03: Can I ask why, on the jurisdictional point, FERC argues that [00:18:25] Speaker 03: that Midland can't challenge the reasonableness of the facilities agreement rates and can't challenge the validity of the agency agreement. [00:18:33] Speaker 03: You don't seem to really address the question of whether they can challenge the enforceability of the facilities agreement. [00:18:41] Speaker 03: Intervener says that they can't. [00:18:43] Speaker 03: What is FERC's position on whether they can challenge the enforceability of the facilities agreement? [00:18:48] Speaker 01: On that issue, FERC chosen is briefed to focus on the merits of the issue. [00:18:54] Speaker 03: I assume I don't give you a choice because we don't have a choice. [00:18:58] Speaker 01: There is definitely a question of whether there is jurisdiction, as the interveners pointed out, for them to even challenge at this point the issue of enforceability. [00:19:10] Speaker 01: In the Facilities Agreement order, FERC, which is the unchallenged order, FERC clearly [00:19:16] Speaker 01: imposed its remedy for violations of 205. [00:19:21] Speaker 01: And that remedy is the time value refund remedy. [00:19:25] Speaker 01: And a natural predicate of that remedy is that the contract for the period prior to the filing is valid enforceable. [00:19:35] Speaker 02: And so... Just for verification, to make sure I understand what you're saying. [00:19:50] Speaker 02: amount anyway that that is what you're saying right that's correct okay thank you [00:19:57] Speaker 01: You're welcome. [00:19:59] Speaker 01: As to the enforceability, FERC's determination that a contract prior to it being filed with FERC is still a valid enforceable contract is a conclusion that is consistent with court precedent in Borough of Lansdale and Capaña de Gas, where this court has held that the regulatory force of a contract arises before and survives in the absence of the filing of the contract. [00:20:24] Speaker 01: Midland's position here is the same position that the court rejected in borough of Lansdale. [00:20:30] Speaker 01: The idea that a contract has no binding force on the parties until filed and accepted by FERC. [00:20:38] Speaker 01: With respect to FERC's discretion under Section 205 of the Federal Power Act, the Section 205 of the Federal Power Act gives FERC broad discretion with respect to the notice and filing requirements, the statutory notice and filing requirements [00:21:00] Speaker 01: Specifically, looking to the language of Section 205D, the restrictive preface of the notice requirement provides that unless the commission otherwise orders, that's one grant of discretion. [00:21:15] Speaker 01: Under Section 205C, [00:21:18] Speaker 01: The language of the statute provides that under such rules and regulation as the Commission may prescribe, every public utility shall file with the Commission within such time and in such form as the Commission may designate. [00:21:33] Speaker 01: The Ninth Circuit in Montana Consumer Council found that this language in Section 205 provides overall flexibility for FERC to make exceptions to its filing and notice requirements. [00:21:47] Speaker 03: Can I interrupt for a minute? [00:21:49] Speaker 03: Opposing counsel said something. [00:21:50] Speaker 03: I'm not sure I'm getting it. [00:21:51] Speaker 03: I'm going to try to paraphrase it. [00:21:53] Speaker 03: That FERC did not complain that the various petitions for a rehearing weren't made at the right time and in the right place. [00:22:04] Speaker 03: I thought Ferck's position was that they weren't made at the right time and in the right docket, and that Ferck had said that below. [00:22:12] Speaker 03: Is that wrong or right? [00:22:14] Speaker 01: That's correct. [00:22:15] Speaker 01: FERC, in its orders below, with respect to their challenges to the actual rates that they're being charged, FERC found that they belatedly raised them in the wrong proceeding, that they were trying to raise those rate arguments in the agency agreement proceeding. [00:22:36] Speaker 01: And that was incorrect because FERC had made the determination regarding the justice and reasonableness of the rates in the [00:22:42] Speaker 01: facility order, facilities agreement order in that separate proceeding. [00:22:46] Speaker 01: And that's the order that Midland did not seek rehearing of. [00:22:52] Speaker 01: Does that answer your question? [00:22:54] Speaker 03: Yes, and what about the claims opposing the agency agreement? [00:22:59] Speaker 01: Again, they in [00:23:02] Speaker 01: It was puzzling, but in the agency agreement proceeding, Midland did not challenge the validity of the agency agreement in that proceeding. [00:23:14] Speaker 01: On its request for rehearing of the agency order, in the agency order, the commission accepted [00:23:22] Speaker 01: the agency agreement on their request for a hearing of that order, they did not raise that issue. [00:23:30] Speaker 01: All there is in their request for a hearing of the agency agreement order is a footnote in the background section that is just insufficient to meet the statutory prerequisites to have jurisdiction here to raise that issue here at court. [00:23:50] Speaker 01: The footnote is at JAA 521, and all it says, again it's in the background section, it says, Midland's discussion of the agency agreement should not be construed as acceptance of its terms, as noted in earlier submissions, as submissions presumably in other dockets, the agency agreement was executed without Midland's consent and in violation of a non-assignment provision of the facilities agreement, [00:24:17] Speaker 01: But that's not even framing an argument or even trying to incorporate that argument by reference, which is prohibited anyways. [00:24:26] Speaker 01: So they do not have under Federal Power Act Section 313 jurisdiction to now assert that objection here at the court. [00:24:43] Speaker 01: And Petitioner, also a question here, the ongoing vitality of the older cases that Burke cited. [00:24:54] Speaker 01: Presumably he's referring to Borough of Lansdale, Campana de Gas, even Borough of Elwood City. [00:25:01] Speaker 01: I would say that those cases are ongoing and strong precedent that firmly have established that contracts are binding, notwithstanding their violations of Section 205 of the Federal Power Act. [00:25:22] Speaker 01: And with respect to even the Mobile Sierra Club and the Supreme Court rather recently and Morgan Stanley has again enunciated the importance of the Mobile Sierra doctrine and the importance of contracts in the regulatory schema under the Federal Power Act. [00:25:45] Speaker 01: If there's no further questions by the court. [00:25:50] Speaker ?: No. [00:25:50] Speaker 01: I'll let my intervenors have a chance. [00:26:03] Speaker 05: Thank you, Your Honor. [00:26:04] Speaker 05: My name is John, our staff here, and I'm here this morning on behalf of the intervenors, Michigan Electric. [00:26:09] Speaker 03: Can you address the jurisdictional question that you addressed in your brief? [00:26:12] Speaker 05: Yes, I will. [00:26:14] Speaker 05: There are three jurisdictional questions. [00:26:16] Speaker 03: The one that you addressed. [00:26:18] Speaker 05: The one that we raised is this. [00:26:20] Speaker 05: The question that [00:26:21] Speaker 05: that MCV is trying to appeal here is the issue of whether or not contracts can be viewed as valid and enforceable prior to their filing with the Commission. [00:26:34] Speaker 05: It's our opinion that certainly they can on the [00:26:41] Speaker 05: effectively in the September 17th facilities agreement order that MCB was a party to, in case they were a party to, but which they chose not to seek rehearing of and didn't pursue their claim about pre-filing invalidity. [00:26:59] Speaker 05: In that proceeding, we think they should have. [00:27:03] Speaker 05: I think we addressed that in our brief. [00:27:04] Speaker 05: The argument is very clear. [00:27:09] Speaker 05: cases, which counsel just referred to, and under the prior notice policy, contracts that are filed late are presumed to be valid prior to their filing. [00:27:24] Speaker 03: What about the distinction between the prior notice was a case where the money had been paid and this is a case where it hasn't been paid? [00:27:33] Speaker 05: Well, Your Honor, what that boils down to is the question that if it's [00:27:43] Speaker 05: then the party to the contract who was not obligated to file it has the right, in and of itself, just the sole right to say whether it's going to comply with the contract or not. [00:27:57] Speaker 05: And FERC has never suggested that the position of the counterparty in a late-file contract should [00:28:06] Speaker 05: And I don't think it's a valid distinction, and that's so for a couple of reasons. [00:28:10] Speaker 05: First of all, remember, when you're dealing with the prior notice order, you're dealing with a situation where you have a signed valid contract between two parties freely entered into, not talking about fraud, not talking about anything like that. [00:28:24] Speaker 05: So you have that, number one. [00:28:25] Speaker 05: And number two, you have rates that are just and reasonable rates. [00:28:29] Speaker 05: Well, what possible valid reason would there be for one party to all of a sudden say, oh, [00:28:47] Speaker 05: to simply walk away and make the validity of the contract dependent on whether he chooses to walk away and be a bad actor or chooses to live up to his obligations doesn't make any sense. [00:28:59] Speaker 05: Also, if you go with that approach and say that the, you know, whether or not the party wants to pay under a valid contract that's just and reasonable, that's the controlling factor. [00:29:11] Speaker 05: And basically you're saying that parties are modifying the statute by their own conduct. [00:29:17] Speaker 05: In other words, it would be illegal under the statute to require a party to pay if he says he doesn't want to pay, even though the contract's just and reasonable and was freely entered into. [00:29:29] Speaker 05: But if the party agrees that he wants to pay, then it's valid. [00:29:32] Speaker 05: Well, then you're saying that the statute applies differently. [00:29:35] Speaker 03: Well, it depends on whether it's been filed. [00:29:37] Speaker 05: Well, yeah. [00:29:38] Speaker 05: But in either case, the contract hasn't been filed. [00:29:40] Speaker 05: And under the prior notice order, [00:29:45] Speaker 05: prior notice order, the contract is valid, so long as the counterparty agrees that it's willing to recognize it as valid. [00:29:52] Speaker 05: But if the counterparty, like Mr. Coffey's client... Well, you could solve the problem by filing the contract. [00:29:58] Speaker 05: I have no question about it. [00:30:00] Speaker 05: Yes. [00:30:01] Speaker 05: And, you know, if we could go back in time, that's what we do. [00:30:06] Speaker 05: But the problem here is that that didn't happen. [00:30:09] Speaker 05: And the commission is confronted with this all the time. [00:30:16] Speaker 05: because of the privacy of private contracts under the Federal Power Act, I don't think the Commission really would have the authority to issue a blanket rule that says contracts that are validly entered into and are otherwise just and reasonable are invalid and unenforceable because they weren't filed. [00:30:33] Speaker 05: I don't think they could say that. [00:30:34] Speaker 03: But the Lansdale Court... I think we have that argument. [00:30:37] Speaker 05: Let me... I want to make one more point. [00:30:39] Speaker 05: The Lansdale Court didn't say that ends it. [00:30:41] Speaker 05: It didn't say you're a home scholar. [00:30:47] Speaker 05: And that's what the commission has done in the prior notice order. [00:30:51] Speaker 03: Okay. [00:30:51] Speaker 03: Other questions from the bench? [00:30:53] Speaker 03: No. [00:30:53] Speaker 03: Okay. [00:30:53] Speaker 03: We have the argument. [00:30:54] Speaker 03: Thank you. [00:30:55] Speaker 03: Thank you. [00:30:55] Speaker 03: Is there any time left? [00:30:57] Speaker 03: We'll give you two minutes. [00:31:02] Speaker ?: Thank you, Your Honor. [00:31:05] Speaker 04: First, Your Honor, I just want to turn back to your big point here. [00:31:06] Speaker 04: Before I question the Council, for the agency about the agency's position on jurisdiction, I just would like [00:31:16] Speaker 04: No, I agree. [00:31:19] Speaker 03: That's why I asked the question. [00:31:20] Speaker 03: I was giving them a chance to change their mind about jurisdiction since the question of raising jurisdiction with us is not one that anybody can waive. [00:31:28] Speaker 03: That's all. [00:31:29] Speaker 04: Again, Your Honor, our position would be that the issue was raised for the first time or addressed for the first time by the agency in its clarification order. [00:31:37] Speaker 04: and then address the rehearing in the omnibus rehearing order and therefore it could be properly preserved. [00:31:41] Speaker 04: But I'd also like to turn back to the anti-assignment provision because there seems to be an assumption that FERC addressed that or should have addressed that in its agency agreement order. [00:31:56] Speaker 04: Our quote, our acceptance of the A.C. [00:31:58] Speaker 04: agreement is not a determination that Missionary Electric has rights enforceable against Midland to collect and repay payments that Midland is obligated to make under the Facilities Agreement. [00:32:10] Speaker 04: That question is properly part of the docket number EL11-2 proceedings. [00:32:17] Speaker 04: And indeed, it was in the EL11-2 proceedings that FERC did address the anti-assignment provision. [00:32:25] Speaker 04: It's inappropriate for the agency at this point to say, oh, you shouldn't have believed our footnote. [00:32:31] Speaker 04: You should have sought re-hearing. [00:32:35] Speaker 04: When FERC got around to addressing the issue in the document, which they said they would address it, [00:32:43] Speaker 04: Rehearing was timely sought, and the issue was then addressed anew in the omnibus rehearing order. [00:32:49] Speaker 02: Come back to that footnote you were just talking about. [00:32:52] Speaker 02: Do you have a JA reference for that? [00:32:54] Speaker 04: It's JA4, Your Honor. [00:32:56] Speaker 02: JA4. [00:32:56] Speaker 02: Okay, thank you. [00:32:59] Speaker 04: I see my time is up. [00:33:01] Speaker 04: Thank you, Your Honor. [00:33:03] Speaker 03: Let me give Judge Santel a chance to find it if he wants to. [00:33:16] Speaker 03: Okay, thank you. [00:33:17] Speaker 03: We'll take the matter under submission.