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case number 13 dash 10 0 8 and L T and A merchant projects in petitioner versus Federal Energy Revotory Commission.

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Mr. Mitchell for petitioner, Ms.

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Chu for respondent FERC, and Mr. Olive for respondent VTA.

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Mr. Mitchell.

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Thank you.

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May it please the court.

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I'm Jim Mitchell.

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I'm here as the attorney for TNA Merchant Projects in this case.

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As you all know, TNA Merchant Projects has a claim for refunds from the Federal Energy Regulatory Commission.

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A little bit of background is appropriate.

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The generator involved here was Chehalis Generating Company.

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Chehalis Generating Company was providing

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reactive power service without charge to the Bonneville Power Administration for a number of years.

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Subsequently pursuant to agreement with the Bonneville Power Administration, DMA Merchant Projects filed a rate schedule at the FDRC pursuant to a five on the Federal Power Act.

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The rate schedule was filed, the letter of transmittal noted that the rate schedule was being filed as an initial rate schedule

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which meant it was not subject to the FDRC's authority to suspend the rate schedule and order refunds.

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The FDRC ignored that limitation and ruled

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discussed it didn't well they ignored the fact that it was filed as an initial rates good they're over again yes they're moving us they didn't ignore it they were aware right you're doing this I'm sorry they ruled it that it was a really good you're gonna tell us where before we ignored you I'm sorry anyway the FHRC asserted authority to order refunds and

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And subsequently, they ordered my client to refund $2 million to the Bonneville Power Administration.

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TNA Merchant Projects appealed that earlier decision to this court.

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This court ruled that the FERC had overlooked... Well, get to the point.

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You're wasting time.

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You're seeking recruitment.

[00:03:33] Speaker 06:
Yes, we're seeking recruitment.

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And I think we're justified in getting recoupment because the FERC's decision finding that it had authority to

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to require the refunds in the first place, what was a clear error?

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Why was that clear error?

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Section 205C says public utilities must file schedules showing all rates and charges for any transmission or sale.

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So a transmission, it's clear that there was a pre-existing transmission involved here.

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There was service and that Bonneville was an existing customer for the reactor power, no?

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Bonneville was getting reactive power, but there was no rate.

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But there was transmission.

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There was service.

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But the language of the statute is you shall file schedules of rates and terms, conditions affecting rates, but there was no rate.

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Well, the rate was zero.

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There was no compensation.

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Right, the rate was zero.

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So there's transmission, there's a customer relationship, and they were providing it for free, but there was clearly a pre-existing provision.

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There was a document under which the service was being provided.

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Provided, exactly.

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Isn't your best claim here is that through all this massive stuff, FERC has said,

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persons in your client's position had no reason to have notice that this is what we would do.

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And therefore, that is why we are saying there should be recoupment.

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Certainly, yeah, we did not have notice.

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Well, they said that.

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I mean, I read this over and over again.

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I mean, that's administrative law.

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Were you grounding it?

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Because the Supreme Court has said, if you don't have notice,

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There's a real problem.

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And what FERC eventually does in the last couple of opinions that they write is to say, we're making this rule prospective only because there was really no notice that this is where we would go previously.

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The case law has been inconsistent.

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Well, I think we have two arguments.

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I think FERC is right.

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You want to argue that they couldn't reach

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the result that they reach no matter what, no matter when.

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You want to say their interpretation is simply wrong.

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Yes.

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The other argument, I think, pretty clearly based on what I'm looking at is, whether they're right or wrong, they made it absolutely clear that their order is only prospective because in their view, you had no reason to believe that this is what the result would be in this case.

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That's true.

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That's your best argument, it seems to me.

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Well, it is, and the reason why I think the issue of whether the first interpretation was correct or not, it depends on how the second issue, the refund issue, turns out.

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Which refund issue?

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We've asked the FERC for recoupment.

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That's different.

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And that's a party that just fouled this up terribly.

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Recoupment?

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No, I'm being serious.

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We've got to get this straight.

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Recoupment is not the same in terms of art in this context as a refund.

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And the agency, and I will ask the agency, the agency's got it completely wrong in suggesting that Bonneville is seeking a refund under 205.

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They're not seeking a refund.

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I agree with you.

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Unfortunately, as you said, the agency did not agree with that line of thinking.

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And so I don't know where this is going to end up.

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My hope is

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I'm just trying to make sure I understand your argument.

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Are you reading it as I am that the agency has said there was no fair notice to you and therefore we're making this prospective only.

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The prior case law gave you no notice that this might be.

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It's quite apart from your argument that they couldn't reach this.

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I understand that.

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I may or may not agree with that.

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But the other argument, unless I'm missing something, is you had no notice of this.

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And this has nothing to do with a refund under 205.

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This is a recruitment claim.

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That's true.

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And if the FERC had ordered the Bonneville Power Administration to give us back the money that we had been forced to give them in the first place, this case would have ended.

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The trouble was they didn't order the Bonneville Power Administration to do that.

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So now the question is, what more do we need to do to get our money back?

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you know, if this case is remanded to the FERC, you know, I would hope that they would finally order BPA to give us the money back.

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If they don't, you know, there's at least potentially... Well, they're taking a position that it's a non-jurisdictional entity, and so even though this is the right result, their hands are tied.

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I mean, I got a lot of questions for them on that one, but what's your argument?

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That's essentially what they're saying.

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I mean, look at the case carefully.

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It's a recoupment case.

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It has nothing to do with refund under 205.

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You've already given the refund under 205.

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That has nothing to do with Bonneville.

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So the question is whether or not, as Judge Griffith in one of these cases says, there is a notion of recoupment

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If it's justified, if the agency has explained why a recruitment is due, it can happen.

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Their response seems to be, well, but they're a non-jurisdictional entity.

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And so even though recruitment is justified, our hands are tied.

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And I agree with... Well, what's your answer to that?

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Your analysis.

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That this is a case under Section 205 of the Federal Power Act.

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The regulated identity is Chehalis Generating Company, which is a public utility, a regulated public utility under the Federal Power Act.

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Chehalis was ordered by the FDRC... Yeah, no, no, and I got all that.

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Who would pass that?

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Their response to that line is...

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Okay, but they're non-jurisdictional entities, so even though we agree you're entitled to a recoupment, we don't know what to do.

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My answer is you're not regulating BPA.

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You're regulating Chehalis.

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You have jurisdiction over the rates being charged by Chehalis.

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This case involves rates charged by Chehalis, not by Bonneville Power Administration.

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Which is why it's different from TANK.

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Yes.

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Right.

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Yes.

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The Court of Appeals in the BPA case, the Bonneville Power Administration case, cited in the various briefs.

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So your answer is in the regulation.

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It's like money that was dropped on the floor and Bonneville picked it up and they're claiming, well, we got it, so we're non-jurisdictional so no one can touch us.

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Is that your argument?

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Yes.

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Okay.

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And they're saying you have no authority to order us to give the money back.

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And my position is, yes, Section 309 of the Federal Power Act gives the FERC broad remedial authority to modify, alter, amend its orders to correct any error.

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And it was error for the FERC to order Bonneville to... In light of a lack of notice,

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in part, in my mind.

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I'll stay away from that.

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You've got to make both arguments, seems to me, because you're on tougher ground if you say because they were wrong as a matter of law as opposed to they conceded there was no notice.

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Yes, no, I agree with that.

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My only concern is if I can't get the refunds out of the FARC

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And I need to go to another forum, for example, the Court of Federal Claims.

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I would rather have a definitive ruling that FERC was in error as a matter of law.

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I mean, there's layers of FERC's putative error.

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If FERC didn't give notice that it would have treated this under 205, I thought part of your position was this doesn't create kind of a moral hazard because they can always get this kind of remedy under 206.

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And given that you should have anticipated when the Chehalis rate was not just unreasonable that there might have been review under 206, then why is

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that really a retroactivity problem or a knock notice problem for Chehalis?

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Because the standard for a review under 205 is different from 206.

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Under 205, the filing utility, Chehalis had the burden to approve.

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Under 206, the complaint, either the FERC acting on its own or Bonneville as a complaining party would have had the burden to approve.

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And we don't know how that would have turned out.

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And is there a time limit on bringing the 206?

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There's no time limit on bringing it.

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If the case is brought under 206, the refund period is 15 months.

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If it's brought under 205, the refund period can run as long as it takes for the FERC to issue a decision.

[00:12:44] Speaker 03:
All right.

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Thank you.

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I have nothing more.

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We'll hear from Mr.

[00:13:06] Speaker 02:
Good morning, may it please the court, Susanna Chu for the Federal Energy Regulatory Commission.

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I think it may be helpful to consider that there are two distinct issues presented on appeal and perhaps three if the court considers the new issue that is raised only by intervenor Bonneville.

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The first is what do we call Chalice's May 2005 filing?

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Do we call it an initial rate or do we call it a change rate?

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And that issue, Judge Edwards, I think you rightfully point out, I'm sorry you didn't use these words, but our position is that that issue is moot because

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the commission agrees with jahalas that it would be appropriate for jahalas to recoup the money from bonneville uh... that jahalas may have preferred the commission to call its initial it's filing an initial rate so we no longer have to decide that issue in order to decide the case so the second issue is the jurisdictional issue is recoupment permitted under the law as it stands today that is a live issue and

[00:14:13] Speaker 02:
The commission reasonably read Excel on one hand in Section 309, and on the other hand, Section 201F, and the cases Tank, Bonneville, and Southwestern Power Administration.

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Tank is not this case.

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I understand that Tank, it was an issue of refunds, and recruitment is different.

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It's different.

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Right.

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But still, the commission is here with

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Excel and with Section 309, and the Commission's understanding is that Section 309 doesn't confer independent authority.

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It doesn't override the exemption of Section 201F.

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I'm not kidding that.

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There's so many silly hypotheticals I could give you where money passed pursuant to so-called refund initially, as it did in this case.

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And everyone in the world would agree, oh my God, how did that happen?

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That's absurd.

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And your argument, the logical extension of your argument, is we could never recoup that money if it's a not.

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That makes no sense.

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There's nothing to me in the statute, the regulations, or the legislative history to indicate that that's what Congress meant to say.

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These non-jurisdictional entities are players under this statute.

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Bonneville was in this case from day one, fighting to get money.

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They are players under this statute.

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So it's absurd to say they can play to grab the money.

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And then at the end, it turns out, well, no, they really shouldn't have been able to pick the money up off the floor and say, well, wait, they're non-jurisdictional.

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So we can't do anything?

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That makes no sense.

[00:15:55] Speaker 02:
So, Your Honor,

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The Commission, you know, just under the statute and under the cases, you know, as they stand out.

[00:16:04] Speaker 04:
Well, you agree that you think the Commission, you agree the Commission says they should get recruitment, right?

[00:16:08] Speaker 02:
Yes, that's correct.

[00:16:10] Speaker 04:
And you agree it was a lack of notice, right?

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The Commission, I read that over and over again.

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It's a strong statement, as I've seen recently from an agency saying, yeah, they didn't have adequate notice.

[00:16:20] Speaker 03:
right right the commission agreed that perhaps chalice did not have notice of that the commission's policy we needed to get back to go i don't really understand why the commission didn't take the position that well they had noticed that they would be subject to review under 206 if not 205 and if that's functionally similar why and why didn't ferck go after them under 206 is it too late as they are they

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try to establish a precedent?

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I mean, do you not make alternative arguments like that?

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Because I guess the concern is, yes, they didn't have notice.

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On the other hand, they were charging a rate that was unjust and unreasonable in the order of 250%.

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So how should it come out at the end of the day?

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And given 206 and given the notice that they should have had some review for the reasonableness of that rate,

[00:17:14] Speaker 02:
Right.

[00:17:15] Speaker 02:
Well, I'm not sure, Your Honor, going back what, you know, what the Commission could have or would have done under Section 206.

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I mean, the case arose under Section 205, and as the petitioner points out correctly, the burden is somewhat different under Section 206.

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So as the case is presented now, it is a Section 205 case.

[00:17:42] Speaker 04:
So the Commission was trying to be mindful and trying not to overreach its jurisdiction, because it was the Commission's... As I read the Commission's statement, they were essentially saying, well, if you all, that is, this panel, can find a way to do the recoupment, help yourselves.

[00:18:00] Speaker 04:
Right?

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That would be within the Court's prerogative, yes.

[00:18:05] Speaker 03:
And you were thinking of Court of Claims?

[00:18:08] Speaker 03:
What were you thinking of?

[00:18:10] Speaker 02:
Well, it's true that Chalice could potentially have a claim against Bonneville that could be brought in a court of claims.

[00:18:21] Speaker 02:
I will note that.

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They may have one right now.

[00:18:24] Speaker 04:
Because we have said in the case law, I realize it wasn't a non-jurisdictional entity, but the case law here says recruitment is a viable motion.

[00:18:35] Speaker 04:
This is not a refund.

[00:18:36] Speaker 04:
We're not directly regulating.

[00:18:39] Speaker 04:
You would not be directly regulating Bonneville.

[00:18:42] Speaker 04:
So I don't understand how that argument with respect to jurisdiction comes into play.

[00:18:47] Speaker 04:
There's no regulation.

[00:18:48] Speaker 04:
These people are always in play here.

[00:18:51] Speaker 02:
Right.

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That is right.

[00:18:53] Speaker 05:
But this is not Article III jurisdiction we're talking about.

[00:18:55] Speaker 05:
We're just talking about... Yes.

[00:18:57] Speaker 05:
The City of Arlington has a lot of discussion about that jurisdiction.

[00:19:00] Speaker 05:
We're talking about the authority of the Commission.

[00:19:03] Speaker 05:
And where the Commission has the entity in front of it for authority purposes of allocating money, why does that authority cease to exist when the allocation is going in the opposite direction?

[00:19:14] Speaker 05:
Right.

[00:19:15] Speaker 05:
Well, Your Honor, is that... I'm not sure I understand any argument of the government that explains why that is.

[00:19:21] Speaker 02:
The commission was just trying to be mindful of the scope of a statutory authority and didn't want to overreach in light of these cases.

[00:19:36] Speaker 03:
Thank you.

[00:19:36] Speaker 03:
And we can hear from Mr Olive.

[00:20:06] Speaker 00:
May it please the court?

[00:20:06] Speaker 00:
My name is Courtney Olive, representing Intervenor Valuable Power Administration.

[00:20:10] Speaker 00:
Two things to clear up right off the bat.

[00:20:13] Speaker 00:
First of all, the notion that this is merely, excuse me, first of all, the notion that Chehalis is somehow entitled to this money.

[00:20:22] Speaker 00:
As we have explained in our Intervenor brief,

[00:20:25] Speaker 00:
FERC's findings in this case have not changed.

[00:20:28] Speaker 00:
Bonneville was charged an unjust and unreasonable rate.

[00:20:32] Speaker 00:
Chehalis never appealed that finding, never saw the stay of it, never took it up with this court.

[00:20:37] Speaker 00:
That was issued by the full commission in 2008, and it is still on the books.

[00:20:42] Speaker 00:
Now, the Supreme Court said last year in the FERC versus Electric Power Supply Association, when you have a finding like that, that a rate is unjust and unreasonable, the commission must take remedial action.

[00:20:57] Speaker 00:
It is not a discretionary authority.

[00:20:59] Speaker 00:
It is an affirmative duty that the commission must carry out.

[00:21:03] Speaker 00:
So that finding is still in the books.

[00:21:05] Speaker 00:
You also have the same legal conclusion from the commission all throughout this case that this is a changed rate.

[00:21:11] Speaker 00:
Even in the 2013 order when they add this surplus language about, well, we want to absolve Chehalis of liability because our decisions may have not been clear.

[00:21:22] Speaker 00:
Even when they add that, they still say in that order,

[00:21:26] Speaker 00:
We continue to affirm, paragraph 1, we continue to affirm this is a changed rate.

[00:21:30] Speaker 00:
Paragraph 11, we reaffirm this is a changed rate because they should have filed.

[00:21:35] Speaker 00:
So the facts have not changed.

[00:21:37] Speaker 00:
They still should have filed this rate because it was a jurisdictional service.

[00:21:40] Speaker 00:
As Your Honor pointed out, under 888, it was known to be a jurisdictional service for years before Chehalis even interconnected with Bonneville's system.

[00:21:50] Speaker 00:
And that alone, all jurisdictional services must be on file.

[00:21:53] Speaker 00:
Now, whether or not it was a quote unquote rate schedule, doesn't matter.

[00:21:57] Speaker 00:
The statute says that together with all contracts.

[00:21:59] Speaker 04:
Well, you have no problem there, because the agency has done something it rarely does, is to say they had no reason to know this because of our conflicting person.

[00:22:08] Speaker 04:
You can argue until your breath goes away.

[00:22:12] Speaker 04:
That is there.

[00:22:13] Speaker 04:
They have said we reviewed it.

[00:22:15] Speaker 04:
That is a mistake.

[00:22:16] Speaker 04:
And they said, we have now weighed the equities.

[00:22:19] Speaker 04:
It has to be explained.

[00:22:20] Speaker 04:
And we think, and they did it three times.

[00:22:23] Speaker 04:
We re-weighed the equities, and we think the proper result is recruitment.

[00:22:28] Speaker 00:
Well, so that gets to my second point, whether or not recruitment is proper and whether they actually weighed any equities here.

[00:22:35] Speaker 00:
We do not find anywhere in the three decisions of FERC, they merely assert that it would be appropriate.

[00:22:42] Speaker 00:
However, this court's decision on recoupment is the Black Oak case from 2013.

[00:22:46] Speaker 00:
And that places an extremely high bar to recoupment.

[00:22:50] Speaker 00:
It says that because we want to hold, we want to sanctify these refunds that the commission has given, we can't just willy nilly let recoupment occur.

[00:23:00] Speaker 00:
We need to show whether policy reasons outweigh all these negative effects of recoupment.

[00:23:05] Speaker 00:
Here, they do not.

[00:23:06] Speaker 00:
What is being suggested is that Chehalis get back the entire amount of this.

[00:23:14] Speaker 00:
And as Her Honor has pointed out, even if this had been treated as a Section 206 case, that certainly wouldn't have happened.

[00:23:21] Speaker 00:
Now, I've heard some arguments here about, well, the burden is different in that case.

[00:23:25] Speaker 00:
And the burden of proof would have shifted.

[00:23:26] Speaker 00:
You're exactly right.

[00:23:27] Speaker 00:
It is.

[00:23:28] Speaker 00:
However, what was going on in this case

[00:23:30] Speaker 00:
is there was a settlement agreement between Bonneville and three parties, three generators in the Northwest.

[00:23:36] Speaker 00:
Chehalis was one of them.

[00:23:37] Speaker 00:
Chehalis is the only one that didn't follow the formula that that settlement agreement specified.

[00:23:43] Speaker 00:
So it's an objective standard that FERC looked at.

[00:23:46] Speaker 00:
Did they follow the formula set forth in the settlement agreement or not?

[00:23:49] Speaker 00:
So even if FERC had had the burden of proof, under that objective standard,

[00:23:54] Speaker 00:
I mean, it seems highly likely that they either met the formula or they didn't.

[00:23:58] Speaker 00:
You know, the 2008 FERC order in paragraph 11 has seven different things included as charges that they shouldn't have.

[00:24:05] Speaker 00:
So they didn't meet the formula.

[00:24:07] Speaker 00:
So even if the burden of proof were different, we submit that the results would be no different on the 206, except you'd have a slightly shorter time period that refunds would apply to.

[00:24:15] Speaker 00:
So not zero as in this case.

[00:24:19] Speaker 03:
What about the fact that FERC didn't seek them under 206?

[00:24:22] Speaker 03:
Could they do that now?

[00:24:24] Speaker 03:
Defend a more limited recruitment given an offset under 206?

[00:24:31] Speaker 00:
Your Honor, that's a very complicated question.

[00:24:33] Speaker 00:
I would have to let FERC speak to that, whether they would exercise their discretion to do that now or not.

[00:24:40] Speaker 00:
At the end of the day,

[00:24:44] Speaker 00:
FERC is not correcting any legal error here.

[00:24:47] Speaker 00:
It is only making a policy clarification.

[00:24:49] Speaker 00:
Its legal conclusion remains the same throughout this case for all the same reasons, and the unjust and unreasonable finding remains on the books.

[00:24:58] Speaker 03:
Can you just parse the statute 205 for us?

[00:25:02] Speaker 03:
And the tailors brief say, rate, rate, rate, rate, there was no rate.

[00:25:08] Speaker 03:
And your position is that if it's the same service and if it's the same customer and there's a transmission agreement, that's enough.

[00:25:16] Speaker 03:
How does that conform with the language of 205?

[00:25:19] Speaker 00:
Sure.

[00:25:19] Speaker 00:
I'd be happy to walk you through that.

[00:25:22] Speaker 00:
So the last time the court heard this case in December of 2009, this exchange occurred in a oral argument.

[00:25:30] Speaker 00:
And I found it quite helpful to listen to that.

[00:25:32] Speaker 00:
And what was said there, and we would agree with FERC's analysis on this, is, OK, you start with 205E, which says FERC is allowed to suspend and refund

[00:25:44] Speaker 00:
when any such new schedule is filed.

[00:25:47] Speaker 00:
So that's the schedule we're dealing with.

[00:25:49] Speaker 00:
And when it says any such, that reference in 205E backs up to 205D, which says, no change shall be made in any such rate, charge, or contract.

[00:26:04] Speaker 00:
And by the way, the interconnection agreement is the contract that was the initial document.

[00:26:08] Speaker 00:
So no such rate may be made.

[00:26:11] Speaker 00:
without it being on file with the commission.

[00:26:17] Speaker 00:
And then when it says no change, what are we changing from?

[00:26:22] Speaker 00:
Well, we're changing from whatever was on file under 205C.

[00:26:26] Speaker 00:
So Chehalis had a duty, Chehalis shall file, schedule showing all rates and charges, and at the end of the paragraph, together with all contracts, which in any matter of effect are related to such charges.

[00:26:37] Speaker 00:
Shehalis knew full well.

[00:26:39] Speaker 00:
I mean, if you look at the JA, there's a very first document.

[00:26:43] Speaker 04:
It's not the point if we're analyzing this case as a failure of notice and a recruitment question.

[00:26:49] Speaker 00:
Right.

[00:26:49] Speaker 00:
Well, if you're analyzing it.

[00:26:51] Speaker 04:
All you're doing is defending what they say they're going to do prospectively.

[00:26:55] Speaker 00:
Your Honor, if you're analyzing it here.

[00:26:56] Speaker 03:
That is my question, to be fair.

[00:26:58] Speaker 00:
If you're analyzing it purely as a recoupment question, then you need to look at Black Oak and whether the policy reasons outweigh the negative effects.

[00:27:06] Speaker 00:
And here we would say that because of the sanctity of the refund amount, because of the fact that this would not put the parties, leaving Bonneville with zero after it was charged, this unjust and unreasonable rate does not put the parties back in the position that they otherwise would have been.

[00:27:22] Speaker 04:
So what you're saying is

[00:27:25] Speaker 04:
If we don't address the first thing that you were responding to, and we do have to decide this case under recoupment, you'd like the commission to have an opportunity to weigh whether it should be something other than zero that you're left with.

[00:27:38] Speaker 00:
Absolutely, at a bare minimum, yes.

[00:27:43] Speaker 00:
Yes, under this course case law, they would have to do some sort of weighing.

[00:27:48] Speaker 04:
Well, they said they've done the way.

[00:27:49] Speaker 04:
I mean, I'm just trying to understand your argument.

[00:27:52] Speaker 04:
Your argument is they really haven't weighed

[00:27:56] Speaker 00:
Correct.

[00:27:56] Speaker 00:
I mean, they're simply saying, well, Chehalis has pointed out a few of our precedents, even though in two of our prior orders we easily distinguished those precedents.

[00:28:05] Speaker 00:
But they've pointed out a few of our precedents that suggest that they didn't have notice.

[00:28:10] Speaker 00:
So just due to that fact, we're going to give them all the money back.

[00:28:14] Speaker 04:
I'm assuming that what they've said about a lack of notice is done.

[00:28:19] Speaker 04:
That's my assumption.

[00:28:20] Speaker 04:
They said it, and I'm not confused on it.

[00:28:23] Speaker 04:
This is just me speaking.

[00:28:24] Speaker 04:
I'm not confused on that.

[00:28:26] Speaker 04:
You seem to be saying, well, but then you have to weigh the equities under Black Oak or whatever.

[00:28:31] Speaker 04:
You're saying they haven't really weighed anything?

[00:28:33] Speaker 00:
Is that correct, Your Honor?

[00:28:34] Speaker 00:
They haven't weighed whether the notion of giving this whole refund amount and interfering with the sanctity of when the Commission issues a refund to begin with and makes facts.

[00:28:43] Speaker 04:
This isn't a refund.

[00:28:44] Speaker 00:
Well, but in recoupment, Blackoak says that if you're going to claw back a refund, that's the refund I'm speaking to now.

[00:28:54] Speaker 00:
If you're going to recoup that and claw that back, you've got to weigh the policy reasons.

[00:28:59] Speaker 00:
One last thing that I must say here.

[00:29:01] Speaker 03:
Is there anything other than Blackoak that you would look to on that?

[00:29:04] Speaker 00:
Well, I would certainly also look to the jurisdictional prohibitions on FERC's authority.

[00:29:11] Speaker 00:
Now, the notion that this is not a quote-unquote refund, Judge Edwards, I respect that, and I understand where you're coming from, but you weren't giving...

[00:29:20] Speaker 00:
No, I just, respectfully, I very strongly disagree.

[00:29:23] Speaker 04:
No, I know you do, but you're wrong, because it's the flip of tank.

[00:29:27] Speaker 00:
Okay, well, let me explain.

[00:29:29] Speaker 00:
So in tank, this court said, and FERC had argued, look, all we're doing here is we're correcting a jurisdictional utilities rates, so we need to reach out to a non-jurisdictional.

[00:29:39] Speaker 00:
The court said you cannot do that in tank.

[00:29:41] Speaker 00:
The Ninth Circuit has also said that in bottom.

[00:29:43] Speaker 04:
But the non-jurisdictional entity was in a different posture there than they are here.

[00:29:48] Speaker 00:
Only because this case is sort of backwards.

[00:29:50] Speaker 00:
We're the consumer.

[00:29:51] Speaker 00:
We were not the seller.

[00:29:52] Speaker 04:
Right.

[00:29:52] Speaker 04:
It's critically important in thinking about regulation.

[00:29:54] Speaker 04:
We're not really regulating you.

[00:29:56] Speaker 04:
You have been in this process all... Your client's been in this process all along.

[00:30:00] Speaker 00:
No.

[00:30:00] Speaker 00:
If FERC is asking us to give a refund or to do recoupment, that is regulating us.

[00:30:06] Speaker 04:
Well, you know what?

[00:30:07] Speaker 04:
Then you were regulated when you got the refund in the first place.

[00:30:12] Speaker 04:
The argument makes no sense.

[00:30:13] Speaker 04:
You were there and you said we should get that refund.

[00:30:16] Speaker 00:
I understand.

[00:30:17] Speaker 00:
Okay, so is that regulation?

[00:30:18] Speaker 00:
Bonable isn't allowed and all the power marketing administrations and governmental utilities and municipalities frequently avail themselves of these provisions.

[00:30:28] Speaker 00:
Of course they do.

[00:30:28] Speaker 04:
And so there are effects that's not really regulation of the sort that we're talking about in tank.

[00:30:34] Speaker 00:
Well, if this court looks at Tank and looks at the Ninth Circuit's Bonneville decision, as well as the Redding decision, which we haven't gone into, but it's in a footnote, it will see that Bonneville is the squareest case on this issue.

[00:30:47] Speaker 00:
It says the identity of the seller's controls, not the subject matter.

[00:30:51] Speaker 00:
It doesn't matter that the subject matter.

[00:30:53] Speaker 04:
Sometimes it's loose language that you can read as broadly as you want, but it makes no sense to say that if money

[00:30:59] Speaker 04:
has gone to a non-jurisdictional entity and everyone in the room agrees there's no conceivable way it could have gotten there that the agency can't order recruitment.

[00:31:11] Speaker 04:
That makes no sense.

[00:31:13] Speaker 00:
Your Honor, that is how the statute works under Congress's writing of it.

[00:31:18] Speaker 04:
I can't find anything that says that.

[00:31:21] Speaker 00:
If you look to the Bonneville decision, it is not loose language.

[00:31:24] Speaker 00:
You do not look to the subject matter that is going on.

[00:31:27] Speaker 00:
In that case, it was FERC's powers over markets and ensuring just and reasonable rates.

[00:31:33] Speaker 00:
And that's the same thing here.

[00:31:34] Speaker 00:
They're trying to ensure that Chehalis has a just and reasonable rate.

[00:31:38] Speaker 04:
No, they're trying to ensure that money, that anything shouldn't have moved under their authority in the first place.

[00:31:44] Speaker 04:
is put back where it belongs.

[00:31:46] Speaker 00:
Well, then the only tool they have to do that is 309, and 309 does not give them the power, the general power, to trump the specific statutory prohibition in 201F, but no refunds.

[00:31:58] Speaker 05:
If we rule against you on this argument, does your client have a position on whether there is, whether relief would lie in the court of claim?

[00:32:09] Speaker 05:
I'm not telling you you have to concede the case, but we did have jurisdiction.

[00:32:15] Speaker 00:
Do we have a position on whether relief would lie in the court of federal claims?

[00:32:19] Speaker 00:
Well, we would have to wait until a complaint is filed and evaluated.

[00:32:23] Speaker 00:
I'm sorry, I can't.

[00:32:27] Speaker 03:
Are there other entities in parallel situations?

[00:32:33] Speaker 03:
I mean, how broad is the implications of this?

[00:32:36] Speaker 00:
Extremely broad, Your Honor.

[00:32:37] Speaker 00:
So the governmental exceptions in 201F against refunds, and I understand Judge Edwards doesn't say these are not refunds, but any time that for

[00:32:48] Speaker 00:
I'm actually asking a narrow question with respect to this treatment of initial versus

[00:33:04] Speaker 03:
you know, change rate and are there other entities that, you know, did or didn't get review and some amount of withholding of... Right.

[00:33:17] Speaker 00:
Okay, so there are other generators like in Chehalis's position that may not have had notice.

[00:33:21] Speaker 00:
It's unclear on this record how many generators there may have been.

[00:33:26] Speaker 00:
I mean, you may have seen the references that FERC held a technical conference on this to try to figure out what to do.

[00:33:32] Speaker 00:
So there are other generators that may have been in that position.

[00:33:35] Speaker 00:
But on these facts, you know, if you read the Chalice IV order, the 2012 one,

[00:33:41] Speaker 00:
FERC does a very nice job there of explaining why on these facts there was actual notice on Chehalis' part.

[00:33:47] Speaker 00:
I mean, the first document in the JA, their filing letter says, you know, the last two pages, though, they make arguments about why FERC ought to treat it as initial, but they recognize even if the commission treats this as changed, you should do this.

[00:34:00] Speaker 00:
So they knew all along that it was the commission's statutory determination to make.

[00:34:05] Speaker 00:
So I see I'm well over my time, and I appreciate the court's indulgence.

[00:34:09] Speaker 00:
I just want to close with

[00:34:11] Speaker 00:
the notion that under some sort of general recoupment power, as conjured up by 309, that FERC could get around the specific statutory bar on ordering entities of the United States to pay money.

[00:34:26] Speaker 04:
They say pay refunds.

[00:34:28] Speaker 04:
That's not what the order would be.

[00:34:29] Speaker 00:
Well, but, Your Honor, when they are ordering an entity such as the United States or even a municipality, which 201F also exempts, that's a refund.

[00:34:37] Speaker 00:
To give money.

[00:34:37] Speaker 00:
To give money.

[00:34:38] Speaker 00:
That's FERC's only power.

[00:34:39] Speaker 04:
That didn't belong there?

[00:34:41] Speaker 00:
That's for its only power to make us pay money is a quote-unquote refund power, Your Honor.

[00:34:46] Speaker 04:
As opposed to the court's order?

[00:34:48] Speaker 04:
Does the court have that authority?

[00:34:53] Speaker 04:
So the theory is... If this case is properly before us and under our broad remedial authority, do we have that authority?

[00:35:00] Speaker 00:
Oh, does this court have that authority?

[00:35:02] Speaker 04:
Yeah, I don't see how we don't.

[00:35:04] Speaker 04:
4106, we have the authority.

[00:35:06] Speaker 04:
The agency has said, yeah, it's a situation in which money is moved, and it shouldn't have moved.

[00:35:10] Speaker 04:
We made a mistake.

[00:35:11] Speaker 04:
We didn't give notice.

[00:35:12] Speaker 04:
We're acknowledging it.

[00:35:14] Speaker 04:
We're writing it as clearly as it can be written.

[00:35:16] Speaker 04:
We're not sure we can do it.

[00:35:18] Speaker 04:
You sure can.

[00:35:21] Speaker 00:
I would have to brief that issue, Your Honor.

[00:35:23] Speaker 00:
I don't think that's been, that it's been suggested that this court should order the refund.

[00:35:27] Speaker 00:
I mean, FERC has suggested up and down in footnotes that some court, and it's been sort of over, that would be the court's final claim.

[00:35:33] Speaker 04:
Well, of course, when I saw some court, it was this court.

[00:35:35] Speaker 04:
It's probably before us.

[00:35:38] Speaker 00:
Again, Your Honor, I would have to ask that we have a further briefing on that issue.

[00:35:43] Speaker 00:
I urge this Court to look at the Bonneville case, the notion of whether it's the identity of the party.

[00:35:48] Speaker 00:
In that case, it was a seller, not a consumer.

[00:35:51] Speaker 00:
So granted, things are flip-flopped here, but it does not matter.

[00:35:53] Speaker 00:
The subject matter does not give for power.

[00:35:56] Speaker 04:
No, I think when you're looking at precedent, it does matter what the facts are.

[00:35:58] Speaker 00:
Well, absolutely, Your Honor, but the outcome

[00:36:03] Speaker 00:
first subject matter power, whether it be over ensuring that rates are just and reasonable as it was trying to do in Bonneville or trying to do some form of recruitment as it as it says ought to happen here in its view and its policy view.

[00:36:18] Speaker 00:
Um, the bottle decision from the Ninth Circuit says it doesn't matter to a one F still arson.

[00:36:25] Speaker 00:
Thank you very much for all of course.

[00:36:29] Speaker 03:
All right.

[00:36:30] Speaker 03:
Thank you.

[00:36:33] Speaker 03:
As Mr Mitchell have time remaining.

[00:36:39] Speaker 03:
If you'd like to, you don't have to, but if you'd like to take rebuttal time.

[00:36:45] Speaker 06:
I thank the court for its indulgence in this case in response to some of the comments made.

[00:36:52] Speaker 03:
Yeah.

[00:36:54] Speaker 03:
We can hear you fine.

[00:36:56] Speaker 06:
You know, as was just discussed, the Bonneville case made very clear that first jurisdiction governs the seller, not the buyer.

[00:37:05] Speaker 06:
In this case, Chehalis was the seller.

[00:37:07] Speaker 06:
Chehalis is the regulated entity.

[00:37:12] Speaker 05:
If it doesn't govern the buyer, the buyer here is vulnerable.

[00:37:18] Speaker 05:
That's right.

[00:37:19] Speaker 05:
If you're right about that statement, how can you win it?

[00:37:23] Speaker 06:
because the FERC is regulating the rates charged by Chalice.

[00:37:31] Speaker 05:
Right now they're ordering every two months.

[00:37:34] Speaker 06:
They're correcting their order to put the parties in the situation they would have been if the FERC can make the proper decision.

[00:37:43] Speaker 05:
What you would say is the subject matter creates the authority of FERC.

[00:37:46] Speaker 06:
FERC has the authority to correct its orders, as in the Black Oak case.

[00:37:53] Speaker 04:
Well, I mean, that's your story's point under the statutory provision that the other side said doesn't apply, is it says that the agency can correct, amend its orders, yeah.

[00:38:04] Speaker 04:
And if a beneficiary of an order is there and they have the authority to correct an order, I mean, that's the argument you're making.

[00:38:11] Speaker 04:
then the beneficiary who benefited initially but took the refund is still remaining subject to, well, wait, we made a mistake.

[00:38:19] Speaker 04:
You've got to give it back.

[00:38:20] Speaker 04:
That's correct.

[00:38:21] Speaker 04:
It's an interesting question.

[00:38:23] Speaker 06:
And in response to the concerns about the FERC's evaluating whether and to what extent recoupment is proper, if they do have the authority, the FERC, as Your Honor Judge Edwards observed,

[00:38:38] Speaker 06:
I have already addressed that issue.

[00:38:40] Speaker 06:
It looked at the blackout case and the need to balance the equities and said in this case, the equities were in favor.

[00:38:48] Speaker 04:
The blackout doesn't get us to the last point.

[00:38:50] Speaker 04:
Does the analysis somehow change because it's a non-jurisdictional entity, unfortunately?

[00:38:55] Speaker 04:
So, and I mean the answer, your answer is or 309 or whatever it is, has to be taken for what it says.

[00:39:03] Speaker 04:
They were willing to take the money on our authority.

[00:39:06] Speaker 04:
We gave them an ordered refund on our authority and they took it on our authority and didn't quibble that they were non-regulated.

[00:39:12] Speaker 04:
Well, we can tell them you made a mistake and we're ordering that it be returned because we made a mistake.

[00:39:17] Speaker 06:
That's your argument.

[00:39:18] Speaker 06:
That's right.

[00:39:18] Speaker 06:
Plus, I would note again, the exemption in section 201 of regulation of government entities applies only to part two of the Federal Power Act.

[00:39:29] Speaker 06:
Section 309 is part three of the Federal Power Act.

[00:39:32] Speaker 06:
So there is no exemption such as on those things.

[00:39:36] Speaker 06:
Thank you very much.

[00:39:39] Speaker 03:
Cases submitted.