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Case number 20-1016 Ed Al, Environmental Defense Fund Petitioner versus Federal Energy Regulatory Commission.

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Ms.

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Karras for the Petitioner Environmental Defense Fund.

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Mr. Robertson for the Petitioner Julie Steck.

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Mr. Viswanathan for the Respondent FERC.

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Mr. Franklin for the Intervener.

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Good morning, Ms.

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Karras.

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Good morning.

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You can proceed.

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Thank you, Judge Tatel.

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Good morning and may it please the court, Natalie cares for petitioner Environmental Defense Fund, I'd like to request two minutes for rebuttal.

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Under the Natural Gas Act for can only approve a proposed pipeline, if it is required by the public convenience and necessity.

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This demanding standard must be satisfied before private companies such as Spire can use eminent domain power to take homeowners' property and permanently alter the natural landscape.

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In the orders below, FERC relied exclusively on a single affiliate precedent contract agreed to behind closed doors and paid for by captive customers in a region with excess pipeline capacity and no new load growth.

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FERC's orders are deficient for many reasons, but I highlight the two most egregious errors today.

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First, FERC relied exclusively on an affiliate precedent agreement signed by a utility with captive customers to demonstrate market need, despite significant warning signs that the affiliate arrangement compromised the probative value of that agreement.

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Second, FERC violated its own certificate policy statement by performing a deficient balancing analysis, which ignored the affiliate projects adverse effects on landowners, the environment, and existing pipelines and their customers and relied on vague and illusory benefits.

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As to the first point, in her dissenting opinion, Commissioner LaFleur stated that the Spire affiliate project is the unusual case of a pipeline application that squarely fails the threshold economic test.

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FERC relied solely on the utility affiliate agreement to find need, ignoring record evidence that significantly undermined the probative value of that agreement.

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What do you think the most significant evidence is that undermines that?

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The most significant evidence, it's a series of factors that illuminate the skewed incentives underpinning the agreement and the market conditions in the area.

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So Spire is a single dominant buyer within the region and can simply pass the costs on to captive customers.

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The region... Under City of Oberlin, they can rely on a precedent agreement, even with an affiliate, absent evidence of self-dealing or

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right?

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So, so what's what's the what's that's why I asked you what's the do you agree with that about city of Oberlin if that's what that says?

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Yes, I agree in that case that the the court referenced the self dealing the the facts in that case are completely different in city of Oberlin there was increased demand and the project the nexus pipeline was supported by a diversity of subscribers.

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And so the question before us is whether for the first

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decision was arbitrary and capricious, in the sense to which it examined the evidence of potential self-dealing, correct?

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Yes, FERC had to look at the self-dealing issue, that is correct.

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So that's why I asked you, what's the strongest evidence from your perspective that FERC should have looked at and didn't?

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The strongest evidence is the comparison of the cost of the transportation capacity that Spire paid Spire, which is 25 cents per decatherms.

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And that is at Spire's brief, page 21, note four, that exceeded the rate for transportation capacity on the neighboring pipeline where Spire turned back the capacity.

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And the cost of that capacity ranged from 10 cents to 22 cents per decatherm.

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And that was in the joint appendix at page 842.

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I'm confused.

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I thought FERC said there was no material difference in the two rates.

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Is that wrong?

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So FERC in the paragraph talking about the delivered cost of gas.

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The delivered cost of gas incorporates both the commodity, the molecules of gas coupled with the transportation capacity.

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If you look at the cost of the transportation capacity alone, it was higher.

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And even if you looked at the delivered cost of capacity, FERC found there was no material difference between the Spire pipeline and the neighboring pipeline.

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And coupled with that, there were significant market conditions.

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The region has a track record of failed projects.

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There is already available excess capacity in the region.

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No other entities bid on the capacity.

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The project provides no meaningful cost savings for customers.

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Buyers turn back the cheaper transportation capacity on the neighboring pipeline.

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The state regulator warned that the region could not support an additional 400,000 decatherm per day project.

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The precedent agreement was the result of internal discussions among Spire, not an open season.

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There was no transparent or competitive process to compare the affiliate project with non-affiliated alternatives.

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Numerous parties protested the project, including the neighboring pipeline and the state commission, and the neighboring pipeline considered joining the project as a co-developer, but ended the discussions when it concluded that the project was uneconomic on a standalone basis.

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As put by council you say that for relied solely on the precedent agreement and i'm not sure i'm completely understanding that didn't they cite other reasons to justify their decision.

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rely enhance reliability and supply supply security reduce reliance on older natural gas pipelines, etc, there were several reasons given not just the precedent agreement right.

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So under the FERC certificate policy statement, the threshold economic question is whether there is market need for the pipeline.

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And to make that finding of market need, FERC relied exclusively on the precedent agreement.

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Parties asked FERC to consider additional evidence on the issue of need and FERC said, no, we disagree, we need not do that.

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That was that paragraph 75, joint appendix 963.

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I know, but what I'm trying to figure out is,

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What weight do I give to these other factors that FERC is reciting to justify its approval?

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The test is confusing as being applied.

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You're arguing past each other or maybe past me.

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On the one hand, there is heavy reliance on the precedent agreement, but on the other hand, FERC does recite other factors.

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So on the one hand, they're just claiming

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a need to go behind it.

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I don't know what that means because they recite other factors that they think supports their approval.

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So the first threshold question is, is there a market need?

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If you can answer that question in the affirmative, then you consider whether the project's public benefits outweigh adverse effects and consider those other factors.

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Now, do you think the absence of market needed or a flat market kills the project?

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that precludes for giving approval?

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That's not my understanding.

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So there could be an example of a project that is needed for reliability.

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There's no record evidence here to suggest that reliability would be compromised if the project was not built.

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Just like if you built... But they're saying reliability will enhance with the project being built.

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Right, so just as if you built 10 additional pipelines to St.

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Louis, all of those pipelines would enhance reliability.

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So FERC must first look to see whether there's a market need.

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FERC found if the project is not built, the Spire Missouri will rely on existing systems in the area.

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No, I understand that, but what I'm trying to understand is the absence of need killing.

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I mean, does that end the inquiry?

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If they show flat demand and no likelihood of increased demand, then FERC should lose in all such cases?

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No.

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There could be a situation where there is no new low growth and a project is proposed for the specific reason to enhance reliability.

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That's not what the project was proposed here for.

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It was proposed.

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I thought your whole point here was

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not that the absence of market need would kill the project, but that it simply requires FERC to look more deeply into whether or not there is self-healing, right?

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Isn't that right?

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So, yes, that first... Did I miss the point of your bold brief?

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No.

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You're not asking... Yeah.

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You're asking for a remand to FERC to examine the evidence of potential self-healing, correct?

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Yeah, you're going to have to answer because I'm now confused as to what point you're relying on.

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Because it sounds like I'm not interrupting, David.

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I want to make sure she answers.

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That's OK.

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Go ahead, Eric.

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It sounds like your principal argument is they relied solely on a precedent agreement in a flat market and with a deal with an affiliate.

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And that should end it, I heard you saying.

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Now, Judge Tatel is asking a slightly different question.

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whether FERC failed to address self-dealing and which is it that you're relying on or how are you weighing them?

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So I would say it's the threshold question is whether there is a market need

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for the pipeline.

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And what FERC did in this case, it looked exclusively at the existence of a precedent agreement.

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It didn't look beyond the fact and consider- Well, that's why I keep asking you, do you think that that ends the inquiry?

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Because there is no need here.

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At least as I understand the record, they can't show a need.

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It's a flat market.

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Unless you define need as increased reliability and such factors, there isn't an increased demand here.

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and I'm trying to understand from you, are you saying that's the end of it?

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If they cannot show an increase in demand to show that kind of a need, that should be the end of the inquiry.

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Is that what you're saying?

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Yes, it should be the end of the inquiry.

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Now, what case says that?

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Well, so I would say that

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The only time you can build a pipeline is if you can show there's going to be increased demand and you've got to meet that increased demand.

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That's what I hear your argument to be.

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Let me just take a step back.

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So I'm not suggesting that there could never be a project where there is flat demand and a project is not demonstrated to meet a need, for example, of reliability or flexibility.

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Like that is an example that could occur, FERC could go down that path.

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That is not what FERC did here.

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It relied exclusively on the existence of the precedent agreement.

[00:11:39] Speaker 03:
By saying that, do you mean if there were actual reliability concerns, like the existing pipeline kept breaking, kept shutting down, or was a very unreliable source, so there was a real problem, then that could certainly demonstrate need, even if there weren't.

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Just to keep getting in what you're already getting has proven to be a problem, even if there isn't an increased demand for gas.

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But in this case, the reliability and flexibility

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I could have already done some was kind of icing on the cake.

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It was just more reliable and more flexibility, which, which any new pipeline can add.

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Is that your point?

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Yes.

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Thank you.

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That, that, that is my point.

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Thank you.

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And then on your, go ahead, go ahead.

[00:12:25] Speaker 07:
So you go ahead.

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I'm going to change the subject.

[00:12:29] Speaker 03:
So I think we're, we're all having trouble analyzing this the role of economic need here.

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I thought it was a sort of,

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both point, and that is first, in the absence, if they, for having said the only basis for economic need is agreement, then it rises or falls on that at that first step.

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And then at the second step, even if we go past that first step, when we get to the balancing, the lack of need also weighs in quite heavily in the balancing test and requires a much higher showing of

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public benefit to make up for the absence of need?

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Am I wrong about that?

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That's correct.

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The two prongs are related in the fact that if there are significant adverse effects as there were here, that requires a heightened demonstration of need.

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As to the questions that you were being asked about the role of economic need just as an independent test by itself, I thought that ordinarily,

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We only look at economic need as a freestanding inquiry when you're talking about an existing pipeline, which we aren't doing here.

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And so really under FERC's certificate policy statement, this should all be a question under the balancing test.

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So you are correct that if this was an existing pipeline, FERC would look to see whether

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you know, other customers would be subsidizing the project.

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But because Spire is a new entrant pipeline, that question, what was not implicated here.

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So FERC has to, under that first question, look at whether there is a market need.

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And here it looked exclusively at the precedent agreement.

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And what role would affiliate abuse

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play?

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Would that just negate a showing of need or does that come into the balancing test?

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Or if we find affiliate abuse and this is the only agreement they're relying on that, does that end the inquiry?

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So it's not just no market need, it's flat need, but there also was affiliate abuse with that.

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And the inquiry would that go into the balancing test?

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So I would look at Commissioner LaFleur's dissenting opinion, where she left affiliate abuse out of the analysis altogether.

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And she simply said- I know, but I'm asking you if there are concerns about, because Judge Tatel was asking about concerns about at least the sufficiency of analysis of whether there's affiliate abuse.

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And I'm trying to figure out where that fits into these different stages of the test we've been talking about.

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The affiliate abuse undermines the probative value of the agreement.

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And so to exclusively rely on the existence of an agreement without analyzing the significant warning signs that compromise the probative value occurs in that first step of the analysis.

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I'm sorry, Judge Taylor, if I could just ask one more question.

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Yeah.

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Are you aware of any FERC cases?

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Sorry?

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No, go ahead.

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Go ahead.

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OK.

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Are you aware of any cases from this court or FERC

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defining what affiliate abuse means?

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And if not, do you have a definition?

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So I would look to the Cove Point decision, 68 FERC, 61128.

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And in that case, it involved a regulated affiliate purchasing storage services from the pipeline applicant.

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So just as Spire, Missouri is a gas utility, you had regulated gas utilities seeking to purchase

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storage services at market-based rates and FERC expressed concern in that case that a regulated affiliate purchaser could purchase servicers above those established in a competitive market.

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And so it denied the rate proposal in that request and found that

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there was a significant concern regarding the threat of affiliate abuse.

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There's a whole host of other cases falling under different statutes that FERC administers where it finds the threat of affiliate abuse and takes action and steps in to address it.

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So it doesn't actually have to find affiliate abuse.

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It's really if it's sort of an eyebrow raising test, if it seems concerning, then that

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takes material error out of a claim of need, as in this case.

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Right.

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It was the threat of affiliate abuse in the Cove Point case that FERC sought to address.

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So they didn't actually go forward and say had to actually find it and prove it.

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It just had, there was kind of a smell test.

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Right.

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It was the economic incentives and the fact that the utilities, excuse me, the affiliates could work in concert together to increase prices to captive customers.

[00:17:34] Speaker 00:
Let me try again to make sure I understand.

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I apologize if I'm not getting your point.

[00:17:42] Speaker 00:
Again, because I hear you starting out by saying they relied solely on the precedent agreement, period.

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I can understand the argument in the abstract, but I'm not sure that's what the record is suggesting.

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They thought a justification for the pipeline was to enhance reliability and supply security, reduce reliance on older natural gas pipelines, reduce reliance upon mature natural gas basins, and eliminate reliance on propane peaks shaving infrastructure.

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Did Fer credit those things?

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So in the initial order, FERC declined to credit those.

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It found that those issues fall within the scope of a business decision of a shipper, and it would not look at it.

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In the rehearing order, in paragraph 24, which Commissioner Glick described as a throwaway paragraph, FERC described those issues as benefits.

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All right.

[00:18:38] Speaker 00:
So I mean, that's my point.

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That you characterize them a certain way to me is beside the point.

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In the rehearing order, when pushed,

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they're resting on it.

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Now, are you saying their reliance on those interests are bogus?

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And if so, how so?

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And if it's not bogus, why isn't their reliance on those interests sufficient to overcome your claim that all they did was rely on the precedent agreement?

[00:19:07] Speaker 00:
That's what I'm trying to understand here, because they did cite these things.

[00:19:11] Speaker 00:
Now, hear what I'm hearing from you.

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You're saying, yeah, Judge, they did in the rehearing, but that's nonsense.

[00:19:17] Speaker 00:
And I'm saying, really, why is it nonsense if the words are written?

[00:19:21] Speaker 02:
So there was significant record evidence undercutting each of those justifications.

[00:19:27] Speaker 02:
So multiple pipe.

[00:19:28] Speaker 00:
So it's arbitrary and capricious because what they claim to be relying on is not supported by the record.

[00:19:34] Speaker 00:
That's your argument?

[00:19:35] Speaker 00:
See, I didn't get that.

[00:19:38] Speaker 00:
I would understand.

[00:19:39] Speaker 00:
That's typical arbitrary and capricious review.

[00:19:41] Speaker 00:
You're saying they claimed in the end analysis to be relying on these four things

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that the other side is relying on, but really the record does not support that.

[00:19:52] Speaker 00:
I didn't read you to me making that argument.

[00:19:54] Speaker 00:
Is that what your argument is?

[00:19:55] Speaker 02:
So I'm saying we can end the inquiry after the first prong, the threshold economic test, we could end the inquiry.

[00:20:02] Speaker 02:
It falls on that prong.

[00:20:04] Speaker 00:
Well, and I asked you, where is there a case that says if you don't have demand, that's the end of the inquiry.

[00:20:12] Speaker 00:
And you said you don't have one.

[00:20:15] Speaker 00:
You don't have any such case.

[00:20:19] Speaker 00:
That's why I don't understand you're saying, you're looking at the precedent agreement and you're saying, but there's no demand and this is with an affiliate.

[00:20:26] Speaker 00:
And so that should end it.

[00:20:27] Speaker 00:
And I'm saying, that's fine.

[00:20:28] Speaker 00:
If you're right, where's their precedent for that proposition?

[00:20:33] Speaker 02:
there has never been a case before FERC with this exact set of facts.

[00:20:37] Speaker 02:
There has never been a single utility affiliate press up.

[00:20:42] Speaker 00:
Okay, so do it this way for me.

[00:20:44] Speaker 00:
I know there isn't any such case.

[00:20:46] Speaker 00:
So now you be the writing judge.

[00:20:49] Speaker 00:
You're now asking us to make up something that has never been done before and what would our justification be?

[00:20:54] Speaker 00:
What would we say?

[00:20:55] Speaker 00:
You're saying

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If the precedent agreement is all they have in a flat market, that's enough to overturn it.

[00:21:03] Speaker 00:
There's no precedent to support that.

[00:21:05] Speaker 00:
How would I write that?

[00:21:07] Speaker 02:
So I would look to this court's decisions in three cases, the Tejas decision and the Missouri Public Service Commission and the Lickley decision.

[00:21:17] Speaker 02:
And those three cases all stand

[00:21:20] Speaker 02:
You know, define for section seven obligation, they all say the court has found that for cannot fulfill its section seven obligation by merely relying on the existence of agreements entered into by retail gas utilities.

[00:21:35] Speaker 02:
Because the utility can simply pass those costs on to captive customers for retains the responsibility of making an independent judgment.

[00:21:44] Speaker 02:
and has the duty to use its Section 7 power to protect the public interest.

[00:21:49] Speaker 00:
Those cases- Okay, you know what?

[00:21:50] Speaker 00:
Let me immediately tell you what I'm thinking as you're saying this.

[00:21:55] Speaker 00:
I'm thinking they have, in the rehearing, relied on the interest cited by the other side.

[00:22:03] Speaker 00:
And you simply respond to me saying, well, that's a blow-off.

[00:22:07] Speaker 00:
Why?

[00:22:07] Speaker 00:
As a judge, how can I just say, well, that's nonsense, unless you show me

[00:22:14] Speaker 00:
that what they've relied on that has been cited by the other side is not supported by the record.

[00:22:20] Speaker 00:
And I didn't hear you to make that argument in the brief.

[00:22:23] Speaker 02:
So may I address that?

[00:22:25] Speaker 00:
Yes, please.

[00:22:26] Speaker 00:
And I'm sorry to press you, but I'm really trying to understand the theory.

[00:22:29] Speaker 02:
So there are significant record evidence undercutting all of those justifications.

[00:22:34] Speaker 00:
And did you argue that in the brief, that it's arbitrary and capricious because the record doesn't support those claims?

[00:22:42] Speaker 00:
I missed it if you did.

[00:22:45] Speaker 02:
Yes, in our reply brief, we talked there.

[00:22:47] Speaker 02:
There are three overlapping obligations here.

[00:22:50] Speaker 02:
There's the obligations under the Natural Gas Act.

[00:22:53] Speaker 02:
There's the obligations under the Certificate Policy Statement.

[00:22:56] Speaker 02:
And then there's the obligations under the Administrative Procedures Act.

[00:22:59] Speaker 02:
And FERC's orders here violate all three of those overlapping legal obligations.

[00:23:05] Speaker 07:
OK.

[00:23:05] Speaker 07:
I thought, Ms.

[00:23:06] Speaker 07:
Kerris, I'm completely confused.

[00:23:08] Speaker 00:
I'm done, David.

[00:23:10] Speaker 07:
Well, I just want to follow up on your.

[00:23:12] Speaker 00:
Yeah, yeah, no, that's fine.

[00:23:14] Speaker 07:
Because I think you focused in on this.

[00:23:15] Speaker 07:
I had understood your position to be that at the first stage of this, that is the market analysis, that the failure here was that FERC did not adequately consider evidence of self-dealing.

[00:23:31] Speaker 07:
Right?

[00:23:31] Speaker 07:
And that we don't even get to the balance.

[00:23:33] Speaker 07:
Isn't that your theory?

[00:23:34] Speaker 07:
And that, and with respect to the four items that, let me ask you that, am I right about that?

[00:23:42] Speaker 02:
Yes, the point that we're making here is that the precedent agreement was not enough and that the threat of affiliate abuse undermine the probative value of that agreement.

[00:23:51] Speaker 02:
So the issues are intertwined.

[00:23:54] Speaker 07:
Under our case law, a precedent agreement with an affiliate is perfectly okay.

[00:23:59] Speaker 07:
Absent evidence of self-defense, correct?

[00:24:02] Speaker 02:
There has never been a case with this set of facts where it was the project is supported exclusively by a utilities captive customers that has never been presented before this court.

[00:24:16] Speaker 07:
And so as commissioner Glick said in his dissenting city of Oberlin, we said, we said a precedent agreement with an affiliate is okay by itself unless there's evidence of self-dealing, right?

[00:24:32] Speaker 07:
That's why I asked you the very first question I did.

[00:24:34] Speaker 07:
I thought the question in this case was whether or not Burke had acted arbitrarily and capriciously in not considering the evidence of self-dealing that you think exists in the record.

[00:24:44] Speaker 07:
And with respect to the four factors that Judge Edwards mentioned, I thought your position was, yeah, commission cited them but didn't actually review them, didn't actually consider them.

[00:24:56] Speaker 07:
Am I wrong about that?

[00:24:57] Speaker 02:
Right.

[00:24:57] Speaker 02:
It was one paragraph.

[00:25:00] Speaker 02:
It was what Commissioner Glick described as a throwaway paragraph.

[00:25:03] Speaker 07:
Yes.

[00:25:03] Speaker 07:
Well, he describes it that way.

[00:25:06] Speaker 07:
But we do a lot of stuff in one paragraph.

[00:25:08] Speaker 00:
Right.

[00:25:10] Speaker 00:
That's not helpful.

[00:25:10] Speaker 07:
We pack a lot into a paragraph.

[00:25:14] Speaker 07:
Sometimes even a sentence.

[00:25:17] Speaker 02:
So I can walk.

[00:25:18] Speaker 02:
If I may, I can walk.

[00:25:20] Speaker 07:
Tell us.

[00:25:21] Speaker 07:
Go back to Judge Edward's question.

[00:25:23] Speaker 07:
What do we do about paragraph 24?

[00:25:25] Speaker 02:
Yes, so there is significant record evidence that undermined all of those justifications.

[00:25:30] Speaker 02:
So first, there was multiple pipelines that already provide Spire, Missouri access to supplies flowing from the Rex pipeline.

[00:25:38] Speaker 02:
And Spire, Missouri already has a transportation path that avoids its seismic zone.

[00:25:42] Speaker 00:
Is this all in your opening brief where you're attacking that paragraph?

[00:25:49] Speaker 02:
In our opening brief, we attacked the

[00:25:53] Speaker 00:
No, no, really, stay with me.

[00:25:55] Speaker 00:
And I don't mean to be a pain, but I really need to understand.

[00:25:58] Speaker 00:
I hear what Judge Tatel just asked you.

[00:26:01] Speaker 00:
It's what I've been trying to ask you.

[00:26:03] Speaker 00:
Did you, in your opening brief, focus on those factors and say there's no record evidence to support those findings?

[00:26:13] Speaker 00:
Because I don't remember it.

[00:26:18] Speaker 02:
So, so we we under we presented record evidence to undermine the claim that the, you know, the regarding the need for the propane facilities that was included in the opening brief.

[00:26:34] Speaker 02:
You know, there is significant additional record evidence to undercut all of those other justifications, if I could walk through that now.

[00:26:42] Speaker 03:
Before you do that, can I just say, like, your second D2 of your opening brief on page 39 is the record does not support Burke's finding of benefits?

[00:26:51] Speaker 00:
That's what I'm trying to find out.

[00:26:52] Speaker 03:
So you did argue in your opening brief.

[00:26:54] Speaker 03:
That seems to be the short answer to Judge Edwards.

[00:26:56] Speaker 03:
You did argue that in your opening brief, that the benefits were not supported by the record.

[00:27:00] Speaker 00:
And you went through that paragraph and those four factors.

[00:27:05] Speaker 02:
So we made the precise point that Judge Millett.

[00:27:09] Speaker 00:
No, no, I hear what Judge Millett and I read the heading.

[00:27:12] Speaker 00:
I'm asking you, did you go through that paragraph and cite those four factors?

[00:27:16] Speaker 00:
I mean, it's a really straightforward APA type argument that we get all the time, either did or you didn't.

[00:27:22] Speaker 00:
An agency relies on four things.

[00:27:26] Speaker 00:
They clearly rely on, they're relying on four things.

[00:27:29] Speaker 00:
They're doing it in the rehearing, but they rely on it.

[00:27:32] Speaker 00:
And all I wanted to know is, do you think in your opening brief, you took that apart and said, one, two, three, four, they're wrong.

[00:27:40] Speaker 00:
There's no record evidence to support it.

[00:27:42] Speaker 00:
You either did or you didn't.

[00:27:44] Speaker 02:
Yes, I think we did make that argument in section D2 of our brief.

[00:27:49] Speaker 02:
We explained that the balancing analysis was completely deficient here.

[00:27:53] Speaker 03:
And he said, because it's a perfunctory assertion of benefits and it was just conclusory with no backing it up.

[00:28:01] Speaker 03:
By far, it didn't back it up.

[00:28:02] Speaker 03:
It just made those statements.

[00:28:04] Speaker 03:
It didn't make any findings.

[00:28:06] Speaker 03:
I check that this is what you mean by perfunctory.

[00:28:07] Speaker 03:
And I think you cite the dissent saying a conclusory sentence stating that there's these benefits, right?

[00:28:13] Speaker 03:
That's the argument.

[00:28:14] Speaker 03:
There was no, I mean, you can be right or wrong about this, but it seems to me an argument that there was no there there.

[00:28:19] Speaker 03:
when Burke invoked those other concerns.

[00:28:22] Speaker 03:
Obviously, the other side may well disagree with that characterization, but that seemed to be your argument to me.

[00:28:28] Speaker 02:
Yes, that is what we were seeking to do and agree.

[00:28:35] Speaker 07:
Let's go on.

[00:28:35] Speaker 07:
If it's OK with my two colleagues, let's go on and hear from the other petitioner.

[00:28:39] Speaker 02:
Yep.

[00:28:39] Speaker 02:
And Ms.

[00:28:39] Speaker 07:
Cash, we'll give you a couple of minutes on your panel.

[00:28:41] Speaker 02:
OK.

[00:28:41] Speaker 02:
Thank you.

[00:28:42] Speaker 02:
Thank you.

[00:28:45] Speaker 07:
Mr. Robertson.

[00:28:47] Speaker 06:
Hey, please the court.

[00:28:48] Speaker 06:
My name is Henry Robertson on behalf of Julie stick late last week the court ordered that the parties be prepared to address mistakes standing.

[00:28:58] Speaker 06:
Oh, we did address it in our opening brief and in the declaration of standing was filed as an addendum to that brief.

[00:29:05] Speaker 06:
And I laid out the case for injury to aesthetic, recreational and safety interests, which are ongoing and also independently procedural standing for procedural injury that may be redressed on remand and reconsideration of the environmental issues.

[00:29:24] Speaker 07:
On your first point, aesthetic injury, she says, your client says that she's injured because she drives by this

[00:29:34] Speaker 07:
an ugly station three times a week, right?

[00:29:38] Speaker 07:
Do you have a case that supports that for Article III injuries?

[00:29:46] Speaker 06:
There is case law on, you know, she said that it is not in keeping with the character of the neighborhood, which is residential and wooded.

[00:29:57] Speaker 07:
But she drives, I'm asking about, she drives past it, she doesn't live next to it.

[00:30:03] Speaker 06:
She drives past it.

[00:30:05] Speaker 06:
She was one half a mile down the road and in order to go.

[00:30:10] Speaker 07:
She says the injury comes from driving past it three times a week.

[00:30:16] Speaker 06:
That is the only route by which she can reach the North South artery in that area.

[00:30:21] Speaker 07:
River you drive.

[00:30:22] Speaker 07:
What's your best case for that?

[00:30:24] Speaker 06:
I don't think I can figure out single out a case at this time.

[00:30:35] Speaker 06:
but it's enjoyment of her property, the character of the neighborhood.

[00:30:40] Speaker 06:
There's also her recreational interests in the park and the safety concern regarding the sharp S curve around the meter and regulator station.

[00:30:53] Speaker 07:
So did the construction of this facility create that sharp?

[00:30:59] Speaker 06:
Yes, it did.

[00:30:59] Speaker 06:
It made it a blind curve at any rate.

[00:31:03] Speaker 07:
The road didn't curve before the construction of the station.

[00:31:07] Speaker 06:
If it did, it was not a blind curve.

[00:31:09] Speaker 06:
You cannot see around that thing that sits there now.

[00:31:13] Speaker 07:
Does she allege that in her complaint?

[00:31:16] Speaker 07:
In her affidavit?

[00:31:19] Speaker 06:
I believe so, yes.

[00:31:19] Speaker 06:
We certainly allege that it was a safety hazard.

[00:31:22] Speaker 07:
No.

[00:31:23] Speaker 06:
There's a blind curve.

[00:31:25] Speaker 06:
We did allege it was a blind curve.

[00:31:28] Speaker 07:
Caused by the construction.

[00:31:29] Speaker 06:
Caused by the construction of the meter and regulator station.

[00:31:33] Speaker 03:
What was there before the meter on that land?

[00:31:38] Speaker 06:
I believe it was woods.

[00:31:39] Speaker 06:
They cut a number of trees before they built it.

[00:31:41] Speaker 03:
You said there were a lot of trees there.

[00:31:43] Speaker 03:
That was sort of the character of the region.

[00:31:47] Speaker 03:
Did the trees obstruct the view around the S-curve?

[00:31:53] Speaker 06:
I don't know.

[00:31:54] Speaker 03:
We don't know that.

[00:31:55] Speaker 03:
So we don't know if the, I get that there's now a building where there were trees and you have a dangerous S-curve.

[00:32:01] Speaker 03:
The question is whether

[00:32:04] Speaker 03:
You could see any letter around the S-curve from trees rather than a building.

[00:32:10] Speaker 06:
I would have to ask her.

[00:32:11] Speaker 07:
Well, no, that's not the right answer.

[00:32:13] Speaker 07:
The answer has to be in her declaration.

[00:32:16] Speaker 07:
And I know I'm about to go beyond the record a little bit, but my walker looked on Google View.

[00:32:21] Speaker 07:
Google, what do you call that thing?

[00:32:23] Speaker 07:
Google Street View.

[00:32:24] Speaker 07:
And he says you couldn't see around that corner even before this thing was built because of the trees.

[00:32:28] Speaker 07:
Now, that's not record evidence, but that's why the declaration has to have something in it about causation.

[00:32:34] Speaker 07:
I mean, the declaration has to state that the construction of this actually caused it.

[00:32:38] Speaker 07:
In other words, that this was not a traffic obstacle prior to the construction.

[00:32:43] Speaker 07:
So that's what causation is all about.

[00:32:49] Speaker 06:
Well, I could consult her and ask to file.

[00:32:52] Speaker 07:
That doesn't help you.

[00:32:53] Speaker 07:
You rise and fall on your declaration here.

[00:32:56] Speaker 07:
That's it.

[00:32:58] Speaker 07:
Maybe it's enough, maybe it's not enough, but you know, we don't have,

[00:33:03] Speaker 07:
We don't have cases where you say, okay, well, it's not enough at oral arguments, so you go talk to the client.

[00:33:10] Speaker 07:
This is the record on which we have to decide Article III standard.

[00:33:16] Speaker 06:
Well, there's precedent for supplementing.

[00:33:18] Speaker 07:
Okay, but so you're agreeing then that it's not in the declaration, right?

[00:33:25] Speaker 06:
No, I don't think it says enough in the declaration about the previous character of that intersection.

[00:33:34] Speaker 06:
But we still have procedural standing.

[00:33:38] Speaker 03:
Can I ask, first of all, I just have a fact question.

[00:33:42] Speaker 03:
And that is, I'm a little confused.

[00:33:44] Speaker 03:
The chain of rock station existed before the construction.

[00:33:50] Speaker 03:
And is that right?

[00:33:53] Speaker 03:
And it was just expanded to this corner in the construction?

[00:33:55] Speaker 03:
Is that what happened?

[00:33:57] Speaker 06:
No, I believe it was brand new.

[00:33:59] Speaker 03:
Is brand new?

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

[00:34:00] Speaker 03:
Cause some of the record evidence indicates that they were connecting to an existing station, but then there was some supplemental construction, but you think the whole thing.

[00:34:11] Speaker 06:
If there was anything there before it was a much smaller, there was a big embankment added on the East side, the river side and, uh, fencing all around and two large, at least two large buildings or pictures in the, uh, I'm sorry.

[00:34:28] Speaker 03:
Go ahead.

[00:34:29] Speaker 06:
I'm done.

[00:34:30] Speaker 03:
And then you mentioned a recreational interest.

[00:34:33] Speaker 03:
Can you?

[00:34:33] Speaker 06:
That relates to the park under which the pipeline was run, where she kayaks and hikes.

[00:34:43] Speaker 03:
Does that prevent her from kayaking or hiking?

[00:34:48] Speaker 03:
The pipeline's underground there?

[00:34:50] Speaker 06:
Yes, it is.

[00:34:52] Speaker 03:
OK.

[00:34:52] Speaker 03:
So she can still hike and kayak without seeing anything?

[00:34:58] Speaker 06:
Yes, she can.

[00:35:00] Speaker 03:
So what's the injury for recreational interest?

[00:35:06] Speaker 06:
Well, during construction, I can't say that it's ongoing.

[00:35:09] Speaker 03:
Oh, so that was one.

[00:35:10] Speaker 03:
OK.

[00:35:10] Speaker 03:
I get during the construction time.

[00:35:11] Speaker 03:
OK.

[00:35:12] Speaker 03:
Thank you.

[00:35:14] Speaker 07:
OK.

[00:35:18] Speaker 07:
Did you have anything else because you're out of time?

[00:35:21] Speaker 06:
Yes.

[00:35:22] Speaker 06:
Well, I just want to say we have independently procedural injury from the NEPA violation.

[00:35:30] Speaker 06:
And that can be remedied on remand to the FERC for reconsideration of the environmental issues.

[00:35:36] Speaker 06:
And that is not affected by the completion of the pipeline of the meter regulator station, but is an independent source of standing.

[00:35:45] Speaker 03:
Can I ask you one thing about your NEPA claim?

[00:35:47] Speaker 03:
And that is the point of this pipeline was to move gas from the Marcella and Utica shales

[00:36:00] Speaker 03:
processes there are mining activities.

[00:36:03] Speaker 03:
And my understanding is those are fracking, are done by fracking.

[00:36:09] Speaker 03:
What was the method by which gas was extracted from previously, but when they were getting gas through the enabled pipeline?

[00:36:21] Speaker 06:
That gas came from down south, and I don't think it's in the record.

[00:36:27] Speaker 06:
I have assumed that it was conventional gas production, but I really can't say for sure.

[00:36:32] Speaker 03:
OK, all right.

[00:36:33] Speaker 03:
So I wanted to clarify whether your upstream effects argument involved a switch from natural drilling to an increase in greenhouse gases associated from the switch from natural gas drilling to fracking.

[00:36:46] Speaker 03:
But it sounds like that wasn't your argument.

[00:36:50] Speaker 06:
Well, that is my understanding.

[00:36:51] Speaker 06:
It is my argument that fracking as a technology has more greenhouse gas effect because it releases methane, fugitive methane.

[00:37:00] Speaker 03:
So you'd have to know where they were getting their gas, whether the gas before came from fracking to be able to argue that that was a cause of upstream effects.

[00:37:08] Speaker 03:
And it sounds like it's not clear on the record whether that argument is relevant here.

[00:37:13] Speaker 06:
I'm not absolutely sure.

[00:37:14] Speaker 03:
All right.

[00:37:15] Speaker 03:
It's my mistake.

[00:37:16] Speaker 03:
Thank you.

[00:37:19] Speaker 07:
Um, thank you, Mr Robertson.

[00:37:25] Speaker 07:
Um, we'll hear from Burke.

[00:37:29] Speaker 04:
Good morning, your honors on this one often on behalf of the commission.

[00:37:33] Speaker 04:
Um, so there's a number of issues to get to.

[00:37:35] Speaker 04:
But before I do, I want to clarify one record point from Judge Molet's question about whether the chain of rocks metering station existed before.

[00:37:46] Speaker 04:
You can look at the, um,

[00:37:48] Speaker 04:
beginning of the certificate order, this is JA 934, paragraph six and seven.

[00:37:55] Speaker 04:
Paragraph six says that there would be, as a result of the project, a reconfiguration of an existing chain of rocks interconnection with Spire, Missouri.

[00:38:06] Speaker 04:
And it describes how this is actually, it's essentially expanding an existing metering station.

[00:38:12] Speaker 04:
So it's not a brand new structure.

[00:38:15] Speaker 03:
So there was already a metering station there, presumably with

[00:38:18] Speaker 03:
pipelines underground running to that metering station.

[00:38:21] Speaker 04:
Correct, correct.

[00:38:22] Speaker 04:
And I think that this issue about the safety hazard and the blind curves, I will say that there's nothing in the affidavit that makes clear when that traffic condition arose, like whether it arose as a result of the project under review or whether it pre-existed the project.

[00:38:44] Speaker 04:
I couldn't tell that from the affidavit.

[00:38:48] Speaker 03:
Thank you.

[00:38:49] Speaker 04:
So, so there are a number of questions of Miss Karis on really two categories of issues one was evidence of abuse when it comes to affiliate agreements and the second one was I think whether or not the commission actually relied solely on the affiliate agreement here and I think there was some focus on paragraph 24.

[00:39:10] Speaker 04:
Maybe I'll start there.

[00:39:12] Speaker 04:
And I think here it's worth clarifying there's a difference between the evidence that is offered or the evidence that the commission relies upon for a showing of need for a project, as well as versus the agency's independent obligation to address opposing views.

[00:39:32] Speaker 04:
And so with respect to this issue, I don't think you can separate those two.

[00:39:35] Speaker 04:
So what the pipeline offered was it offered the affiliate agreement, but then as you all recognize, it offered a number of other rationales as well.

[00:39:43] Speaker 04:
And so what the commission said in paragraph 24- Are you talking about the rehearing decision?

[00:39:49] Speaker 04:
You're talking about rehearing?

[00:39:50] Speaker 04:
Yes, yes, my apologies, yes.

[00:39:54] Speaker 07:
Before you get to 24, did you agree that at least in the original order, those factors did not factor into

[00:40:03] Speaker 00:
Yeah, there's no discussion of them in the original agreement.

[00:40:05] Speaker 07:
They mentioned them at the beginning, but they never analyzed them.

[00:40:09] Speaker 07:
FERC never analyzed them.

[00:40:10] Speaker 07:
They never say that those factors are a significant factor in its decision, right?

[00:40:20] Speaker 07:
It isn't until the re-hearing order that FERC in paragraph 24 seems to actually engage them.

[00:40:28] Speaker 04:
I think I agree with that somewhat, Judge Tatel.

[00:40:30] Speaker 04:
I think the commission certainly looked more closely at these issues.

[00:40:34] Speaker 04:
What does somewhat mean?

[00:40:36] Speaker 04:
So what the commission said in the certificate order, it did recite those rationales offered by the pipeline applicant.

[00:40:44] Speaker 07:
Right, but then it went on and said, look, that's up to them.

[00:40:46] Speaker 07:
Those are business judgment questions.

[00:40:47] Speaker 04:
Right.

[00:40:48] Speaker 04:
And I think that what the commission said was that based on the record before it.

[00:40:53] Speaker 04:
That's not what it said.

[00:40:54] Speaker 04:
That's not what it said.

[00:40:55] Speaker 04:
Well, OK.

[00:40:56] Speaker 04:
I think it said that in the rehearing order.

[00:40:58] Speaker 07:
Right, so we agree it all it rises or falls in every year.

[00:41:02] Speaker 07:
Right.

[00:41:04] Speaker 04:
On those issues.

[00:41:04] Speaker 04:
Yes, I think I read that.

[00:41:07] Speaker 04:
And so, okay.

[00:41:11] Speaker 04:
So, so what the commission said was that the these these fire pipeline offered a number of rationales in support of the project.

[00:41:20] Speaker 04:
And the opposing views were that the pipeline was not needed.

[00:41:24] Speaker 04:
And as a result, um, there would be an overbuilding of, uh, or excess pipeline infrastructure if the project were to be approved.

[00:41:32] Speaker 04:
And so what the commission said in that paragraph 24 of the rehearing order, J a 11 55, it said that, um, it found the, the, the rationales offered by spire sufficient to overcome concerns of overbuilding and based on that record,

[00:41:46] Speaker 04:
it found no reason to second guess the business judgments of the pipeline.

[00:41:52] Speaker 04:
And so I think based on that, based on that record, I don't think it's fair to say that the commission relied exclusively on the affiliate agreement here.

[00:42:01] Speaker 00:
Well, if they're saying nothing more than there's no reason to second guess what has been offered, that's really not an agency doing its own independent

[00:42:11] Speaker 00:
analysis of the factors that would justify this proposal if they have to go further than the precedent agreement.

[00:42:19] Speaker 00:
And it looks like a case where there's, you know, there's no demand.

[00:42:23] Speaker 00:
All you have is a precedent agreement with one affiliate, related affiliate, and the suggestion has been and the possibility of self-dealing and the suggestion is being made in that circumstance first got to do more.

[00:42:38] Speaker 00:
So it's not enough in the rehearing to just say, at least on question you want it, to just say in passing, well, they propounded these and we have no reason to second guess.

[00:42:48] Speaker 00:
That's not agency analysis.

[00:42:51] Speaker 04:
Well, I think two separate issues there.

[00:42:53] Speaker 04:
Judge Edwards, I think number one, what the agency can rely on, and then number two, I think you also referenced the issue of self-dealing.

[00:42:59] Speaker 04:
With respect to what the agency can rely on, I mean, the certificate policy statement makes clear that number one, servicing existing demand is just as valid a reason to approve a project as servicing new demand.

[00:43:12] Speaker 04:
And that policy statement also makes clear that the commission will always treat a precedent agreement as substantial evidence of demand.

[00:43:20] Speaker 07:
Sorry to interrupt, but what about a case like this where you have a pipeline that's not, A, not serving new demand, and B, providing no better price for the gas?

[00:43:32] Speaker 07:
It's those two factors together that the petitioners say raises suspicions of self-dealing.

[00:43:39] Speaker 07:
And that's what the dissent's all about.

[00:43:42] Speaker 07:
So I'm not sure that the- Before you get to, let me just ask you this.

[00:43:46] Speaker 07:
You want to talk about paragraph 25.

[00:43:48] Speaker 07:
If we're just looking at the decision, the original decision, and all we have is a precedent agreement with an affiliate, and FERC agrees, because FERC agrees that the pipeline doesn't serve new need, doesn't serve new demand, and there are no materially significant cost savings.

[00:44:05] Speaker 07:
FERC agrees with both of us.

[00:44:07] Speaker 07:
So if that's the only record before us, what more evidence do you need to put an obligation on FERC to look carefully at whether there's self-dealing?

[00:44:18] Speaker 04:
Well, I think that the way that the commission has treated contracts with affiliates consistently is that it treats them the same as contracts with non-affiliates, unless there is evidence.

[00:44:30] Speaker 07:
You're missing my question.

[00:44:32] Speaker 07:
It does treat them the same.

[00:44:33] Speaker 07:
I agree with that.

[00:44:34] Speaker 07:
A precedent agreement with an affiliate is fine.

[00:44:37] Speaker 07:
But in a circumstance like this one, where it's not serving new need and there's no price benefit for customers, petitioners are argument.

[00:44:46] Speaker 07:
And I think this is consistent with City of Oberlin.

[00:44:48] Speaker 07:
is that that puts a burden on FERC to look to see whether there's self-dealing.

[00:44:55] Speaker 07:
And FERC didn't do that in the original order, right?

[00:45:00] Speaker 07:
I mean, am I misstating what the law is?

[00:45:04] Speaker 04:
I don't know that the commission has said the burden is on FERC to look for self-dealing.

[00:45:09] Speaker 04:
I think the question is whether anyone has offered any evidence of self-dealing at all.

[00:45:14] Speaker 07:
The point is, what more do you need

[00:45:17] Speaker 07:
than a pipeline, constructing a pipeline for an affiliate where it's not serving the market and providing no price benefit to the customer.

[00:45:25] Speaker 07:
I mean, that just leaves the obvious red flag that this is for the benefit of the shareholders, not the customers.

[00:45:34] Speaker 04:
So that is not how the commission has treated the issue of affiliate contracts.

[00:45:38] Speaker 04:
I mean, even with respect to city of Overland, we have the same record in the sense that there, the court upheld the commission's reliance on the affiliate agreement because there's no evidence of discrimination.

[00:45:52] Speaker 04:
And number two, the pipeline bore the risk of unsubscribed capacity.

[00:45:56] Speaker 03:
Wait, wait, wait, that's not, I'm sorry, Judge Tatel.

[00:45:59] Speaker 03:
There was no argument of affiliate abuse.

[00:46:02] Speaker 03:
in Oberlin, in our opinion, said so.

[00:46:04] Speaker 03:
The affiliate agreements were only half of the agreements.

[00:46:08] Speaker 03:
You had non-affiliate agreements as well, and you had evidence of need.

[00:46:13] Speaker 03:
So it seems to me that what we said there and what happened there bears no resemblance to what's happening here for exactly the reasons Judge Tatel said.

[00:46:22] Speaker 03:
So let's just be careful about what we're saying about what we said

[00:46:26] Speaker 03:
was permissible with respect to affiliate agreements in City of Oberlin.

[00:46:30] Speaker 03:
So taking that understanding of City of Oberlin, I'm interested in your answer to Judge Tatel's question as well.

[00:46:38] Speaker 04:
And I think the question was, what more would need to be shown with respect to abuse or self-dealing?

[00:46:44] Speaker 03:
To have a threat of abuse or self-dealing.

[00:46:47] Speaker 00:
To require FERC to say something.

[00:46:51] Speaker 00:
That's what Judge Tatel's asking.

[00:46:55] Speaker 07:
What is it?

[00:46:57] Speaker ?:
What do you want?

[00:46:58] Speaker 07:
If it isn't these two factors that for concedes exist, what, what, what else could there be that would be more dramatic than this?

[00:47:07] Speaker 00:
Remember, because your, your answer.

[00:47:11] Speaker 07:
I just don't understand.

[00:47:13] Speaker 07:
I don't understand your brief or first argument that this somehow does not raise a flag.

[00:47:19] Speaker 07:
So the red flag, I don't get that.

[00:47:22] Speaker 00:
Yeah, because remember, you started out by saying when you look at that response in the rehearing, FERC was fine because there was no reason for them to go behind anything.

[00:47:31] Speaker 00:
And we're like, really?

[00:47:32] Speaker 00:
And Judge Tatel is asking you very pointedly in this situation where there are no no needs and there are no cost savings.

[00:47:39] Speaker 00:
Is it enough for us to accept your argument that in this situation they offered what they claim to a business reasons and we had no reason to go behind it?

[00:47:49] Speaker 00:
That's strange argument.

[00:47:51] Speaker 03:
Sorry, before you answer and is just title on I've lost his picture.

[00:47:56] Speaker 07:
On the.

[00:47:58] Speaker 07:
Okay, I just want to make sure you're on for the answer.

[00:48:04] Speaker 07:
Okay.

[00:48:07] Speaker 04:
Well, so I think there is, again, a difference between what the commission relied upon here versus the issue of self-dealing.

[00:48:15] Speaker 04:
I think on self-dealing, the commission pointed out that no evidence at all had been offered to question the affiliate contracts.

[00:48:22] Speaker 07:
And the commission's approach, it's- I hate to keep interrupting you, but that's not the petitioner's argument.

[00:48:30] Speaker 07:
The petitioner's argument is that FERC ignored their evidence of potential self-dealing.

[00:48:37] Speaker 07:
FERC can't respond to that.

[00:48:38] Speaker 07:
You can't respond to that by saying, well, you know, FERC said they didn't offer any evidence of self-dealing.

[00:48:45] Speaker 07:
They did.

[00:48:47] Speaker 07:
Their evidence is no market need and flat pricing.

[00:48:52] Speaker 07:
And then what all three of us are trying to get at here is why isn't that sufficient to at least raise a red flag about the possibility of self-dealing with an affiliate?

[00:49:03] Speaker 07:
That's the question we need an answer to.

[00:49:05] Speaker 04:
I think is one reason it is not.

[00:49:08] Speaker 07:
Because if you don't have an answer to that question, then then the case rises and falls on on what the commission said in the hearing.

[00:49:18] Speaker 04:
Well, at least with respect to the issue of abuse, I mean, one issue here is that what the petitioner has cited are cases involving a different set of issues.

[00:49:30] Speaker 04:
So there has not been any cases that they have cited involving approval of certificates of public convenience and necessity.

[00:49:38] Speaker 04:
All those other cases they've cited have involved the commission's review of rates, for example.

[00:49:44] Speaker 04:
So if a party is seeking approval of whether a rate is just and reasonable, then the commission might look more closely at whether there's an affiliate relationship there.

[00:49:56] Speaker 04:
But I guess our point is that they're not, that's not a comparison of like things.

[00:49:59] Speaker 03:
Why, why, why is that not as, as to the risk of affiliate manipulation?

[00:50:08] Speaker 03:
Why is it different whether they're doing it for rates or doing it for

[00:50:12] Speaker 03:
to come up with some evidence of need.

[00:50:16] Speaker 04:
Well, because here the commission's not reviewing a rate directly.

[00:50:20] Speaker 03:
It's reviewing whether... I understand this isn't a rate case directly.

[00:50:23] Speaker 03:
I'm asking you why when it comes to raising eyebrows or setting off the radar, at least the obligation to inquire further, why is it different, whether it's a rate case, they're using the affiliate to

[00:50:38] Speaker 03:
justify to as part of charging a rate or you're talking about using them to establish need.

[00:50:45] Speaker 03:
Why is that different?

[00:50:46] Speaker 04:
Because I guess for one, what the commission is doing here is it's not being asked to review an agreement.

[00:50:55] Speaker 04:
It's being asked to approve an application for a certificate.

[00:50:59] Speaker 04:
So that is different than the commission.

[00:51:00] Speaker 03:
I get that procedurally what they're doing here is different.

[00:51:03] Speaker 03:
I'm asking you not for differences to what FERC is doing,

[00:51:06] Speaker 03:
How is it different as to the concerns about the relationship between Spire and its affiliates, Spire Missouri?

[00:51:15] Speaker 04:
And part of this gets to a slightly different issue, but I think it's worth going there now, which is the commission pointed out that it's not the commission's role.

[00:51:24] Speaker 04:
And actually the state regulator also asked the Christian to clarify that it is not the commission's role.

[00:51:29] Speaker 03:
That's changing who the role is.

[00:51:30] Speaker 03:
Okay.

[00:51:31] Speaker 03:
So your point is that,

[00:51:33] Speaker 03:
This could be just as bad, but at this procedural stage, it's not FERC's job to look.

[00:51:42] Speaker 04:
At this stage, the commission's role is to rely on, if an agreement is offered in support of a certificate to show need, the commission is looking at the existence of the agreement.

[00:51:52] Speaker 04:
It's not reviewing the terms.

[00:51:54] Speaker 04:
In this case, that's up to the state regulator.

[00:51:56] Speaker 03:
You just said the reason they're different is because this is the Missouri commission's

[00:52:02] Speaker 03:
public service commission's wheelhouse, not FERC's to look into abuse, is that right?

[00:52:08] Speaker 03:
No, I thought you said, I misunderstood you then.

[00:52:10] Speaker 04:
Well, I think what I'm trying to say is that it's up to the state regulator to decide whether the terms between the local distribution company and the pipeline are fair within their authority.

[00:52:22] Speaker 04:
I mean, of course, it's the commission's role to assess whether there's a need for the pipeline.

[00:52:26] Speaker 04:
When it's reviewing need, it considers agreements, but it's been the commission's consistent policy that it's not going to treat affiliates differently unless there's evidence offered of abuse.

[00:52:39] Speaker 04:
And that is different than how the commission approaches these sorts of agreements when it comes to affiliate.

[00:52:45] Speaker 03:
Can you define or tell me what would be evidence of affiliate abuse in this context?

[00:52:53] Speaker 04:
Well, it's a little hard in the abstract because the commission said there was no evidence offered here, but I guess one way to look at it, Judge Millett, is maybe with the open season process.

[00:53:03] Speaker 04:
If you had an open season process and you had a company that wanted to bid for transportation service and somehow was denied the ability to do so, and that party pressed forward with rehearing at the commission, I suppose that could be a potential issue where that party would say,

[00:53:22] Speaker 04:
There was an open season, but it actually wasn't fair.

[00:53:24] Speaker 03:
I don't know how the open season doesn't hurt you rather than help you because Spire Missouri didn't participate in the open season.

[00:53:30] Speaker 03:
If it really had a need, it would have shown up in the open season.

[00:53:33] Speaker 03:
It didn't.

[00:53:33] Speaker 03:
It wasn't after the open season was an abysmal failure because nobody wanted this gas at all.

[00:53:38] Speaker 03:
Then, cause them the appeal, the agreement between the affiliate and the parent materializes.

[00:53:46] Speaker 03:
So I don't think that helps you.

[00:53:47] Speaker 03:
But again, I'm asking you, FERC says,

[00:53:50] Speaker 03:
It looks for affiliate abuse at this stage, or even just concerns about it.

[00:53:54] Speaker 03:
I'm not saying whether it's happened or not.

[00:53:56] Speaker 03:
It looks for concerns about it.

[00:54:00] Speaker 03:
I don't know how it can look for concerns if no one can tell me what they mean by affiliate abuse.

[00:54:05] Speaker 03:
Does it mean that we're using the affiliate to create need that wouldn't otherwise exist?

[00:54:12] Speaker 03:
Is that a form of affiliate abuse?

[00:54:16] Speaker 04:
I suppose it could, but I think just to be clear, Judge Mallette, the commission is not going to dig into affiliate abuse whenever there's a potential for affiliate abuse.

[00:54:26] Speaker 04:
I think the concern that was raised by the Environmental Defense Fund is that these kinds of transactions are inherently suspect.

[00:54:34] Speaker 03:
What more evidence would you need here when you have the affiliate relationship?

[00:54:40] Speaker 03:
It's the only agreement.

[00:54:43] Speaker 03:
The affiliate didn't participate in the open season of its own volition.

[00:54:48] Speaker 03:
This agreement appeared only after the open season failed completely.

[00:54:55] Speaker 03:
There's no cost savings.

[00:55:00] Speaker 03:
There are other pipelines already in existence that they wish to diversify their sources.

[00:55:05] Speaker 03:
I don't agree with a number of the premises.

[00:55:07] Speaker 03:
Okay, all right, which premise don't you agree with?

[00:55:09] Speaker 04:
So first off, I'm not sure I agree with the point that the open season was a failure.

[00:55:13] Speaker 04:
I think what the commission said was that it's concerned with open season is that there's an opportunity to subscribe for service.

[00:55:19] Speaker 03:
Did anybody say they wanted to subscribe to a gas on this pipeline?

[00:55:26] Speaker 03:
No, but that doesn't make it an unfair process.

[00:55:27] Speaker 03:
If they had come to FERC looking for an authorization with nobody subscribed, that wouldn't have gone very well, would it?

[00:55:34] Speaker 03:
I think the commission's point is that there needs to be- They had to come with somebody wanting some of those gas, didn't they?

[00:55:42] Speaker 04:
Okay, well, I mean, I guess- Is that right?

[00:55:44] Speaker 03:
Maybe I'm wrong.

[00:55:44] Speaker 03:
Does FERC approve pipelines where there's no contracts for it and nobody wants it?

[00:55:50] Speaker 04:
I mean, I assume that would not happen, but- Okay, so they had to come up with something.

[00:55:55] Speaker 04:
Okay, well, I guess my point is that the commission's not focused on when the agreement, when a party decided to enter into an agreement, it's whether there's an opportunity for others to participate.

[00:56:05] Speaker 03:
No, I understand.

[00:56:06] Speaker 03:
That's what we're asking is whether when you have timing like this, does that make it, I understand the commission didn't work.

[00:56:13] Speaker 03:
I think we all understand the commission didn't work.

[00:56:16] Speaker 03:
The question is, if the factors at least that have been recited to you aren't enough to have for

[00:56:25] Speaker 03:
at least express further inquiry.

[00:56:29] Speaker 03:
What more would you have to have?

[00:56:31] Speaker 03:
What more do I have to have?

[00:56:33] Speaker 03:
What evidence would be sufficient?

[00:56:35] Speaker 04:
Okay, so I guess let me put it this way to contrast this with the record we have here.

[00:56:40] Speaker 04:
So if the pipeline offers a number of rationales for a project and opposing parties come forward and respond and those responses don't, and the commission and those responses

[00:56:53] Speaker 04:
fully address and rebut the pipeline's stated rationales, I think that could be something.

[00:56:59] Speaker 04:
That's not what happened here.

[00:57:01] Speaker 04:
And I think, Judge Mallette, one of the issues you pointed out was availability on existing pipelines.

[00:57:06] Speaker 04:
Well, the commission made a finding that there was not sufficient available gas on existing pipelines.

[00:57:12] Speaker 04:
You can look at- What?

[00:57:15] Speaker 03:
Okay, yeah, do tell me that one, because I thought there were plenty of other pipelines.

[00:57:18] Speaker 03:
There are other pipelines.

[00:57:19] Speaker 03:
It wasn't that they didn't have sufficient

[00:57:21] Speaker 03:
that they weren't getting sufficient supply from enable and these other pipelines, but do tell me where they found.

[00:57:26] Speaker 03:
Right, right.

[00:57:26] Speaker 03:
So the only way to get sufficient gas in.

[00:57:29] Speaker 04:
So, so there are so go to the commission finding is that JA 1019 paragraph 213.

[00:57:40] Speaker 04:
And the commission points out a claim by the enable pipeline that it had existing capacity and it says Christian found as one second.

[00:57:49] Speaker 03:
Hang on.

[00:57:49] Speaker 03:
I'm trying to get to the same page you're on.

[00:57:51] Speaker 03:
Sorry, 1019.

[00:57:52] Speaker 04:
Paragraph 213, it's the second sentence.

[00:57:57] Speaker 04:
The commission stated as MRT, that's Enable, as their own comment notes, the Eastline and the Illinois Interstate Pipeline do not have adequate available capacity to meet the needs of the Spire SCL Pipeline project.

[00:58:08] Speaker 04:
And the specific data that it's referring to.

[00:58:11] Speaker 03:
No, no, but there are other pipelines besides Enable.

[00:58:14] Speaker 04:
That's correct, but they're not all serving the same side of this service territory.

[00:58:18] Speaker 03:
Where does it say that?

[00:58:22] Speaker 03:
So where did they analyze all these other pipelines as well?

[00:58:27] Speaker 04:
Well, so the data about not enough existing capacity on the other pipelines, you can find that at a few different places.

[00:58:34] Speaker 04:
There's JA280.

[00:58:36] Speaker 03:
I'm talking about the combined capacity here.

[00:58:38] Speaker 03:
I mean, they either want to diversify or they don't.

[00:58:40] Speaker 03:
But were they not getting enough from Enable?

[00:58:43] Speaker 03:
Was there insufficient supply from Enable?

[00:58:47] Speaker 04:
That's one of the rationales that was offered by Spire.

[00:58:50] Speaker 03:
I know, but it was found by the commission.

[00:58:52] Speaker 03:
I don't care what Spire is saying for this purpose.

[00:58:55] Speaker 03:
What I want to know is, did the commission find that they got to have this new pipeline because they aren't getting enough?

[00:59:02] Speaker 03:
I didn't see that anywhere.

[00:59:03] Speaker 03:
I just saw enhanced reliability and flexibility.

[00:59:07] Speaker 03:
They don't even have enough gas coming through.

[00:59:09] Speaker 03:
Where's that?

[00:59:10] Speaker 04:
I think what I just pointed you to, Judge Mollight, the commission found that the existing options did not have adequate available capacity and- To meet the needs of the Spire STL pipeline project.

[00:59:22] Speaker 03:
Where does it say to meet Spire Missouri's needs?

[00:59:27] Speaker 04:
Well, I don't think it says it that specifically, but the Spire Missouri signed up for 87.5% of the capacity here.

[00:59:35] Speaker 03:
And if you look at the numbers- I know, but was Spire Missouri in need, were they not getting enough gas?

[00:59:40] Speaker 03:
They're the source of need.

[00:59:41] Speaker 03:
We don't ask whether the other pipeline has need.

[00:59:45] Speaker 03:
We're asking whether there's a need for someone to have this capacity that this new pipeline is providing.

[00:59:51] Speaker 03:
So I don't understand why they don't meet the needs of the Spire pipeline project.

[00:59:56] Speaker 03:
Where does it say Spire Missouri's needs weren't being met?

[00:59:59] Speaker 04:
I mean, I'm not sure we have this.

[01:00:01] Speaker 03:
That would have been the first thing first.

[01:00:03] Speaker 03:
What is that, right?

[01:00:04] Speaker 03:
It didn't say it even in your paragraph 24.

[01:00:06] Speaker 03:
It doesn't say that.

[01:00:08] Speaker 04:
Well,

[01:00:09] Speaker 04:
Paragraph 24 does actually, that's one of the issues that's raised.

[01:00:14] Speaker 04:
It says, the inability of current pipelines to provide an additional 350,000 dichoterms per day.

[01:00:19] Speaker 04:
And that's what Spire Missouri signed up for.

[01:00:22] Speaker 03:
And so if you look at- Okay, right.

[01:00:24] Speaker 03:
And additional, but they don't have increased need.

[01:00:27] Speaker 00:
There's no need to support it.

[01:00:29] Speaker 00:
There's no question that they'll produce more, but what we're seeing is they're producing more than is needed.

[01:00:37] Speaker 04:
I don't know that it's more than it's needed.

[01:00:39] Speaker 04:
It's what the customer is asking for.

[01:00:42] Speaker 04:
And part of the reason they're asking for it is to provide, as we've talked about, the more diverse supply options to the region to replace expiring contracts and to replace an aging propane facility.

[01:00:58] Speaker 07:
How's it more diverse if this is their only source of gas?

[01:01:03] Speaker 04:
It's not their only source of gas.

[01:01:06] Speaker 04:
It is, I mean, to be clear that Spire Missouri has gas coming in from, I think, the east side of its territory and from the west side.

[01:01:13] Speaker 04:
And so for example, there are pipelines like, I believe the Missouri Gas Company provides gas from the west.

[01:01:21] Speaker 07:
Let me just ask you an unrelated question about remedy.

[01:01:24] Speaker 07:
I know you don't talk about this in your brief, but some of the other parties do.

[01:01:27] Speaker 07:
If we were to agree with the petitioner here,

[01:01:33] Speaker 07:
and believe that the commission's decision was arbitrary and capricious.

[01:01:41] Speaker 07:
Do you have any view about why we shouldn't also vacate the commission's decision?

[01:01:47] Speaker 04:
I would say under this court's precedent, you should not vacate.

[01:01:50] Speaker 04:
Hopefully it won't come to that.

[01:01:51] Speaker 04:
But this is a scenario where, to the extent there's a concern about whether the commission can provide more explanation on remand, I think it could.

[01:02:00] Speaker 04:
And I think similar to-

[01:02:02] Speaker 07:
you know, what would give us confidence that it could?

[01:02:07] Speaker 04:
Well, I mean, part of the, at least a big part of the argument that's been raised is that the commission only relied on the precedent agreement.

[01:02:18] Speaker 04:
And we pointed out, we disagree with that based on what the commission has said in the record.

[01:02:21] Speaker 04:
But if the court thinks the commission can provide more explanation on that, it can remand for further explanation.

[01:02:28] Speaker 04:
Also point out that this is an operational pipeline.

[01:02:31] Speaker 04:
It's been operational for almost two years.

[01:02:34] Speaker 04:
And so similar to city of Oberlin,

[01:02:37] Speaker 04:
for the reasons that that court outlined it would be disruptive to vacate at this point.

[01:02:43] Speaker 07:
Well, yeah, I agree.

[01:02:44] Speaker 07:
We didn't do that in City of Elba.

[01:02:46] Speaker 07:
But let me ask you about the question of disruption.

[01:02:49] Speaker 07:
Couldn't the pipeline here simply go back to getting its natural gas from its previous sources?

[01:02:59] Speaker 04:
Um, I'm not sure we have a record to show how easy that would be.

[01:03:04] Speaker 04:
Judge table.

[01:03:04] Speaker 04:
I know that this, as I mentioned, but when it's been operational for some time and it's been receiving gas, um, on spire for, you know, roughly two years.

[01:03:13] Speaker 04:
So, um, I think that could be a question that Mr Franklin might be able to address, but we don't have a record for that.

[01:03:19] Speaker 07:
The reason I'm asking is that if we think that this record supports an inference of self feeling, why would we allow the pipeline to continue?

[01:03:27] Speaker 07:
Why wouldn't we?

[01:03:29] Speaker 07:
vacate the decision while commission figures out whether there is self-deal?

[01:03:33] Speaker 04:
No, because I think that you can remand to the commission.

[01:03:37] Speaker 04:
The commission can investigate the issue without having to go to the extraordinary remedy of vacatur, I guess is our point.

[01:03:48] Speaker 07:
Judge Edwards or Judge Maletti, either way, do you have any more questions?

[01:03:50] Speaker 03:
No.

[01:03:51] Speaker 03:
I had one.

[01:03:52] Speaker 03:
Go ahead.

[01:03:53] Speaker 07:
Go ahead.

[01:03:55] Speaker 03:
Judge Edwards?

[01:03:56] Speaker 00:
No.

[01:03:57] Speaker 03:
So on your paragraph 24 and rehearing, one of the things that was credited when you just went through the list that Spire Missouri said, and I'm trying to make sure it sounds like the commission credit all of them.

[01:04:06] Speaker 03:
And that was that it would move capacity or supply away from a seismic zone.

[01:04:11] Speaker 03:
Is that right?

[01:04:13] Speaker 04:
Yes, that's one of the rationales offered by that's something of concern to the commission.

[01:04:18] Speaker 03:
The pipeline's not be not traversed seismic zones.

[01:04:23] Speaker 04:
Um, I think that's, I mean, that's certainly a, uh, uh, I think the commission's point here is that's a valid reason for, um, a supplier to want to diversify its, its source of not just the source of gas, but the path by which it receives gas.

[01:04:39] Speaker 03:
Sorry.

[01:04:40] Speaker 03:
So it's the commission considers that a relevant concern.

[01:04:45] Speaker 04:
Um, I think that's among, yes.

[01:04:46] Speaker 03:
I mean, that's, that's a really listed it.

[01:04:49] Speaker 03:
And I said you're sufficient.

[01:04:51] Speaker 03:
Okay.

[01:04:51] Speaker 03:
I'm not sure why you're arguing with me over this.

[01:04:53] Speaker 04:
No, no, I'm not.

[01:04:55] Speaker 04:
I'm not.

[01:04:55] Speaker 04:
I think my point is that this is among the rationales that commission to overcome over bill.

[01:05:00] Speaker 03:
So it's a relevant concern.

[01:05:02] Speaker 03:
Who authorized who authorized all these pipelines that are going over seismic zones.

[01:05:09] Speaker 04:
Well, I assume the commission would have but obviously that's

[01:05:13] Speaker 04:
before the time of this record?

[01:05:15] Speaker 04:
I can't sit here and explain to you.

[01:05:17] Speaker 03:
We know who authorized all these pipelines over seismic zones.

[01:05:20] Speaker 03:
If you look at a map of pipelines across the United States and seismic zones, there's countless pipelines across seismic zones.

[01:05:29] Speaker 03:
What, in crediting this finding, did FERC mean that it was no longer safe to have a pipeline, that this is a real reliability concern?

[01:05:37] Speaker 03:
Let me just phrase it that, not safe, but it's a real reliability concern if your pipeline crosses a seismic zone?

[01:05:44] Speaker 04:
No, I don't think the commission was making that finding at all.

[01:05:47] Speaker 03:
It wasn't making a finding that that was a real reliability concern.

[01:05:51] Speaker 04:
I think the point here is that the commission is finding that these are the sorts of issues that, based on the record before it, it's not going to try to second-guess the judgments.

[01:06:03] Speaker 03:
So when it said here these findings are sufficient to overcome concerns of overbuilding, they actually meant what they said in the next sentence.

[01:06:10] Speaker 03:
They've said this list of things.

[01:06:13] Speaker 03:
And we're not going to second guess it.

[01:06:14] Speaker 00:
Right.

[01:06:15] Speaker 00:
Yes, that's exactly right.

[01:06:16] Speaker 03:
That's all I didn't re-hear.

[01:06:18] Speaker 03:
Look, I'm asking you, either you meant it's a real reliability concern to have a pipeline that goes over a seismic zone, or FERC didn't.

[01:06:26] Speaker 03:
And you just said, your answer is, I understood it.

[01:06:29] Speaker 03:
Tell me if I'm wrong, is that Missouri said it was a concern.

[01:06:32] Speaker 03:
And as the second sentence says, we're not going to second guess that.

[01:06:36] Speaker 00:
That's what I've understood you to be arguing all along.

[01:06:39] Speaker 00:
And that re-hearing, they weren't really making findings, I was saying.

[01:06:43] Speaker 00:
These have been asserted.

[01:06:44] Speaker 00:
We're not going to second guess them.

[01:06:45] Speaker 04:
I mean, certainly there's no there's no attempt in the orders to assess by the commission to assess the risk of earthquakes or any of these things on the list.

[01:06:55] Speaker 04:
Any of the that's not I mean, I pointed you to the capacity point.

[01:06:59] Speaker 03:
Well, they listed seismic zone.

[01:07:00] Speaker 03:
Did they mean it or not?

[01:07:02] Speaker 04:
I mean, they they that's that's one of the issues.

[01:07:05] Speaker 04:
They said that's up to the judgment of the shippers to the judgment of the shipper.

[01:07:10] Speaker 03:
Got it.

[01:07:10] Speaker ?:
OK.

[01:07:13] Speaker 07:
Okay.

[01:07:14] Speaker 07:
Thank you.

[01:07:15] Speaker 07:
We will hear from Mr Franklin.

[01:07:20] Speaker 07:
It's fire.

[01:07:21] Speaker 07:
Is that right?

[01:07:21] Speaker 07:
Yep.

[01:07:26] Speaker 05:
I'm sorry.

[01:07:26] Speaker 05:
Can you hear me now?

[01:07:28] Speaker 08:
Yep.

[01:07:29] Speaker 08:
Yep.

[01:07:29] Speaker 05:
Thank you, Jonathan Franklin, representing Spire STL pipeline.

[01:07:36] Speaker 05:
The intervener with me here at a safe distance is Chris Barr, who represents intervener Spire, Missouri.

[01:07:42] Speaker 05:
I'd like to start with what I think is a misconception about what Burke found in its original order.

[01:07:51] Speaker 05:
It did consider the allegations of anti competitive conduct.

[01:07:55] Speaker 05:
What it said was we have a precedent agreement that would

[01:07:59] Speaker 05:
sufficient in itself to show need, but it's between affiliates.

[01:08:04] Speaker 05:
So we're going to look and see if there is evidence having been presented by the petitioners below of anti-competitive conduct.

[01:08:14] Speaker 05:
specifically considered and rejected the argument that there would be unnecessary overbuilding, and it did so by relying on legitimate, nonpretextual statements of need that are undisputed in the record.

[01:08:30] Speaker 05:
And to your question, Judge Edwards, there's nothing in the opening brief of EDF challenging any of these needs except for

[01:08:39] Speaker 05:
And that's obviously incorrect, and it shows to me the precise reason why this was needed.

[01:08:54] Speaker 05:
in facilities is one of the reasons that Spire Missouri gave for needing an additional supply.

[01:09:01] Speaker 05:
It is undisputed and the Council for FERC is correct that know that the needs for that capacity, in other words, to be able to retire the propane peaking facilities, no existing pipeline could meet those needs.

[01:09:17] Speaker 05:
And you can find that, Your Honors,

[01:09:19] Speaker 05:
at page 10188 and 1019 of the rehearing order, which cites the environmental assessment at pages 769 to 772.

[01:09:30] Speaker 05:
You can also find it where... Sorry, I'm sorry.

[01:09:34] Speaker 03:
I just ask you to slow down a little bit, because I don't know my numbering is the same as yours.

[01:09:38] Speaker 03:
So you said the re-hearing order.

[01:09:39] Speaker 05:
I'm sorry, the re-hearing.

[01:09:40] Speaker 05:
I'm looking at the re-hearing order at 108, 101, 101.

[01:09:43] Speaker 03:
Is that the J?

[01:09:45] Speaker 03:
Yeah, the JA.

[01:09:46] Speaker 05:
Sorry, JA1018 to 1019.

[01:09:48] Speaker 05:
1018.

[01:09:49] Speaker 03:
OK, OK.

[01:09:51] Speaker 03:
I'm sorry.

[01:09:52] Speaker 03:
Wait, no.

[01:09:53] Speaker 03:
Hang on.

[01:09:54] Speaker 03:
Wait, so you must mean the original.

[01:09:57] Speaker 03:
Do I have the wrong Jay?

[01:09:58] Speaker 03:
My Jay had your rehearing started on 1144.

[01:10:00] Speaker 05:
I'm sorry, that's the original order.

[01:10:02] Speaker 03:
Okay, so that's what I can do.

[01:10:04] Speaker 03:
It's the original order.

[01:10:07] Speaker 03:
Sorry.

[01:10:09] Speaker 05:
1-8 to 1-9.

[01:10:11] Speaker 03:
Hang on.

[01:10:11] Speaker 03:
1-0-1-8, right?

[01:10:14] Speaker 03:
1-0-1-8 to 1-0-9.

[01:10:15] Speaker 05:
That's okay.

[01:10:17] Speaker 03:
Okay.

[01:10:19] Speaker 05:
And that is citing the environmental assessment, which you can find at pages seven 69 to seven 72.

[01:10:29] Speaker 05:
And then you can also look at pages 953 to 954 of the record.

[01:10:38] Speaker 05:
And this is the cost estimates that the FERC was looking at.

[01:10:43] Speaker 05:
And my only point here, by the way, Your Honors, is to show that all of these cost estimates and all of the environmental assessments were based on the predicate that all parties agreed to.

[01:10:54] Speaker 05:
that in order to retire these propane peaking facilities, something new would have to be built.

[01:11:01] Speaker 05:
Existing pipelines simply could not provide that capacity.

[01:11:06] Speaker 05:
And this is important, Your Honor, because this is where it gets into the question of anti-competitive activity.

[01:11:14] Speaker 05:
What FERC said is we are not going to second, yes, Spire Missouri's decision to retire its propane peaking facilities.

[01:11:23] Speaker 05:
That's within the business judgment of the company.

[01:11:27] Speaker 05:
And what we're going to show is that what we're going to look at is

[01:11:32] Speaker 05:
Are there existing, does the existing pipeline serve those needs?

[01:11:36] Speaker 05:
And the answer is unequivocally no.

[01:11:40] Speaker 05:
Existing pipelines could not.

[01:11:42] Speaker 03:
Can I back up?

[01:11:43] Speaker 03:
Sorry, I'm just missing something here.

[01:11:46] Speaker 03:
Where do I, I'm just not seeing it.

[01:11:50] Speaker 03:
I looked at it and I guess I didn't see it.

[01:11:51] Speaker 03:
Where does it say this is talking about replacing the propane?

[01:11:56] Speaker 05:
It's talking about all of the benefits that the project would provide.

[01:12:02] Speaker 05:
All of the benefits.

[01:12:04] Speaker 05:
all of the benefits, and it's saying those could not be provided without additional facilities.

[01:12:10] Speaker 05:
So what MRT, who's no longer in this case, was saying was, you can do something else.

[01:12:16] Speaker 05:
You don't have to use SPIRE STL.

[01:12:19] Speaker 05:
You can build an additional loop onto the MOGAS pipeline.

[01:12:23] Speaker 05:
You can use some of our facility.

[01:12:25] Speaker 05:
And what FERC found, as a matter of fact, in the environmental assessment and at the pages that I mentioned, is no, you can't.

[01:12:33] Speaker 05:
You cannot do it without building additional facilities.

[01:12:38] Speaker 05:
And by the way, each of those additional facilities would have at least the same, if not more environmental impacts.

[01:12:46] Speaker 03:
What FERC did not do, and what it was not- So I'm on paragraph 212.

[01:12:51] Speaker 03:
And what it says is staff found that use of these facility systems as an alternative would not provide a significant environmental advantage.

[01:13:02] Speaker 05:
That's correct.

[01:13:03] Speaker 05:
But what my point is even going before that is to say that you couldn't.

[01:13:08] Speaker 05:
No, I'm sorry, in the logical analysis that you could not meet the needs that's fire Missouri identified legitimate non-protectual needs could not be met by existing facilities.

[01:13:22] Speaker 05:
And so FERC's entire analysis on the environmental end of things was, let's look at the alternatives and the alternatives all required building new facilities.

[01:13:32] Speaker 03:
But again, we're going with- Are you saying then that even if there was no demand and you didn't even have a precedent, you had no agreement, no precedent agreement?

[01:13:43] Speaker 03:
The commission found that it would still be legitimate because of these other problems?

[01:13:50] Speaker 05:
No, they found it best based on the precedent agreement.

[01:13:53] Speaker 05:
But what they found is there was no anti-competitive conduct because there were legitimate non-protectual needs that could not be met by the existing system.

[01:14:04] Speaker 05:
And I'm going to focus really right now on one of the key ones, and that is the retirement

[01:14:11] Speaker 03:
Yeah, but we don't know that.

[01:14:11] Speaker 03:
We don't know.

[01:14:12] Speaker 03:
I just don't see anything here that lets me know what all we have is the commission says we accept the staff environmental assessment evaluation and elimination of alternatives.

[01:14:22] Speaker 03:
But we don't know what then does that mean they were finding everything was a problem?

[01:14:27] Speaker 05:
What they were finding, Your Honor, was that the needs of Spire, Missouri, that were identified that were legitimate, nonprotectual.

[01:14:35] Speaker 05:
And by the way, all of these needs were identified in FERC certificate policy.

[01:14:40] Speaker 05:
So I'm looking at where they were listed, right?

[01:14:43] Speaker 03:
That's sorry.

[01:14:44] Speaker 03:
Go ahead.

[01:14:45] Speaker 03:
Tell me where you are.

[01:14:46] Speaker 05:
I'm at 61748 of the certificate policy and what they said in certificate policy and this goes back to that.

[01:14:54] Speaker 05:
I'm sorry.

[01:14:56] Speaker 03:
I'm at the certificate policy statement.

[01:14:58] Speaker 03:
Okay.

[01:14:58] Speaker 03:
Sorry.

[01:14:58] Speaker 05:
Yeah.

[01:14:59] Speaker 05:
And it's in the it's quoted in almost every brief.

[01:15:01] Speaker 05:
And what they're saying is that just new demand isn't the only thing that justifies a pipeline.

[01:15:07] Speaker 05:
Right.

[01:15:07] Speaker 05:
It includes access to new supplies, providing new interconnects, improving the interstate grid, providing competitive alternatives, increasing reliability.

[01:15:16] Speaker 05:
Propane peaking facility, and this is in the record, Your Honor, is that at pages, and again, I hate to keep doing JA sites, but at pages 831 to 32, the reason for retiring the propane peaking facility

[01:15:34] Speaker 05:
What is that?

[01:15:35] Speaker 03:
Hang on one second.

[01:15:36] Speaker 03:
What is it?

[01:15:36] Speaker 03:
What document is that?

[01:15:37] Speaker 03:
831, 832?

[01:15:38] Speaker 03:
831, 832.

[01:15:39] Speaker 05:
What document is that?

[01:15:41] Speaker 05:
This is a response that Spire STL, my client gave to FERC.

[01:15:47] Speaker 03:
Oh, okay.

[01:15:47] Speaker 03:
Alright.

[01:15:49] Speaker 05:
And so,

[01:15:50] Speaker 05:
What it shows is the reason they were retiring the propane peaking facilities is that they were the only LDC in the company country that was injecting propane at times into the gas supply.

[01:16:02] Speaker 05:
But newer things like electric vehicle natural gas vehicles and high efficiency boilers can't use that propane mixture.

[01:16:11] Speaker 05:
It's too high, so they needed to retire that and no existing pipeline could meet the demand.

[01:16:17] Speaker 05:
And the only thing that and Judge Edward, this gets to your question.

[01:16:21] Speaker 05:
The only evidence of need that was a challenge in the opening brief was at footnote two of Eds brief and they said, Oh, the propane people.

[01:16:32] Speaker 05:
peaking facility, that's nonsense because you only use it on occasionally.

[01:16:38] Speaker 05:
Well, that's clearly wrong.

[01:16:39] Speaker 05:
Propane peaking facility is necessary.

[01:16:42] Speaker 05:
It was required by the Missouri PUC.

[01:16:44] Speaker 05:
It is needed to supply gas on peak days.

[01:16:49] Speaker 03:
And here, I'd like to give you my right just to follow up there.

[01:16:52] Speaker 03:
Am I right that it was used three days and five years

[01:16:59] Speaker 05:
It's something like that, your honor, and I apologize.

[01:17:02] Speaker 03:
Yeah, but that's the point of the fact is it work those three days.

[01:17:12] Speaker 05:
But they, they have to do it works, but what they have to do.

[01:17:16] Speaker 05:
But they would have to give notice.

[01:17:18] Speaker 05:
And the market is changing.

[01:17:20] Speaker 05:
And that's what I said in the pages I noted, is that more people have electric, excuse me, natural gas-fired vehicles.

[01:17:29] Speaker 05:
And then there are these new high-efficiency boilers.

[01:17:31] Speaker 05:
This is an aging system.

[01:17:32] Speaker 05:
And so what FERC said is, we are not in the business of questioning whether or not an LDC, which we don't even regulate,

[01:17:40] Speaker 05:
has a need to retire its propane peaking facilities we are going to look we're not going to go behind that and that was proper that was proper but we're going to say that that shows that they have a legitimate non-pretextual reason for wanting to sign up to this pipeline that goes beyond demand and if i could give you a real world example let me let me

[01:18:06] Speaker 00:
Can I frame it up just a little bit before you continue?

[01:18:09] Speaker 00:
Sure.

[01:18:09] Speaker 00:
The policy statement to me is strange in the sense that it's kind of all over the place.

[01:18:16] Speaker 00:
But one of the things that I focused on at one point, it's at 61747, rather than relying

[01:18:27] Speaker 00:
on only one test for need, the commission will consider all relevant factors reflecting on the need for the project.

[01:18:35] Speaker 00:
The commission will do this.

[01:18:37] Speaker 00:
These might include but would not be limited to precedent agreements, demand projections, potential cost savings to consumers, or a comparison of projected demand with the amount of capacity currently serving the market.

[01:18:54] Speaker 00:
That's the commission's view.

[01:18:56] Speaker 00:
All right, so now what I'm trying to figure out is, apart from pointing to the precedent agreement, which is only one of the things listed in that sentence, where did the commission in its opening disposition with respect to the certificate analyze these factors and conclude that they all justified giving of the certificate?

[01:19:17] Speaker 00:
Where is that in the original statement by FERC?

[01:19:23] Speaker 05:
Where is it?

[01:19:24] Speaker 00:
not your not your you kept referring to a lot of different documents including submissions that you made i don't want to i don't care about what you submitted i want to know where in the analysis did furt go through those five or six factors and say we've considered them all and this project should go forward where is that can i ask that in two different ways ron and i will get to the answer to your question how do you give the answer

[01:19:48] Speaker 05:
The answer is they didn't need to, and this court has recognized they didn't need to.

[01:19:53] Speaker 05:
I'm reading now from the menacing case at footnote 10.

[01:19:57] Speaker 05:
This court said that while the policy allows FERC to consider all of those things, a precedent agreement is by itself sufficient evidence of need, and that's at footnote 10.

[01:20:09] Speaker 00:
All right, so no, wait a minute.

[01:20:10] Speaker 00:
The same way I pressed counsel on the other side.

[01:20:12] Speaker 00:
So you're suggesting that the precedent agreement

[01:20:15] Speaker 00:
which is what we've been worrying about, is it?

[01:20:17] Speaker 00:
That's all that was required in this case?

[01:20:20] Speaker 00:
And they had a precedent.

[01:20:22] Speaker 00:
Then where is there, the problem was we're all saying to you, whether you like it or not, facially, it looks like this is a case where some kind of balancing

[01:20:35] Speaker 00:
might be required.

[01:20:36] Speaker 00:
Just common sense, intelligent people looking at this would say some kind of balancing is required and the mere existence of a precedent agreement in this situation where there's no demand and an affiliate, I don't know whether there's a self-dealing concern in any event, it reeks of is there anything else?

[01:20:57] Speaker 00:
so that a precedent that you cited doesn't answer my concern because I don't the precedent I don't read the precedent to say where case reeks of a need for more for it doesn't have to give it I don't buy that I'm not selling it here's what I think Judge Tatum might have mentioned this before where there is a precedent agreement between affiliates

[01:21:22] Speaker 05:
FERC does require more and did require more in this case.

[01:21:27] Speaker 05:
It requires a. It, excuse me, requires it.

[01:21:34] Speaker 05:
John, it requires FERC to find that there's no evidence of affiliate abuse or anticompetitive activity.

[01:21:42] Speaker 07:
Mr Franklin, I want to interrupt you that you're making the same argument that for Councilman petitioners argument is that the.

[01:21:51] Speaker 07:
is it first conceded, first acknowledgement of A, no market need and B, no price benefit was by itself sufficient to impose on the commission an obligation to look deeply into this to see if there was self-deal.

[01:22:08] Speaker 07:
That's their argument.

[01:22:10] Speaker 07:
And based on our caseload, that seems to make sense to me.

[01:22:13] Speaker 07:
And what we're all asking you is we can't find in the commission's original order where it did that.

[01:22:21] Speaker 00:
Do you agree with Judge Tatel's premise that in that situation, FERC is required to do more?

[01:22:31] Speaker 05:
I agree that the fork was required to look for whether there was evidence of anti-competitive conduct.

[01:22:40] Speaker 05:
And it did that.

[01:22:42] Speaker 05:
It did that.

[01:22:42] Speaker 05:
It did something extraordinary in this case.

[01:22:45] Speaker 05:
It found that the pricing, it actually asked for pricing information.

[01:22:49] Speaker 03:
Can I just clarify one thing?

[01:22:49] Speaker 03:
You said anti-competitive conduct.

[01:22:51] Speaker 03:
That's not necessarily the same thing as affiliate manipulation.

[01:22:55] Speaker 03:
So can you rephrase your sentence in responding to what we've learned about?

[01:23:00] Speaker 05:
So they had to look for both anti-competitive activity and affiliate abuse.

[01:23:07] Speaker 05:
And they did look for both of those things.

[01:23:10] Speaker 07:
Where do they say to look?

[01:23:13] Speaker 07:
Where do we find in here, what the evidence looks like is that basically, since there is no price benefit, that the benefits of these things go to the shareholders, not the customers.

[01:23:28] Speaker 07:
And you don't have to look for

[01:23:30] Speaker 07:
any other evidence than that.

[01:23:31] Speaker 07:
So why isn't that by itself enough to impose on FERC a burden to explain why they're doing that?

[01:23:38] Speaker 05:
And they did.

[01:23:39] Speaker 05:
And I think they did it at pages 968.

[01:23:42] Speaker 05:
Say that again?

[01:23:45] Speaker 00:
968?

[01:23:47] Speaker 05:
968 to 969 of the record.

[01:23:50] Speaker 05:
So that would be paragraphs 83 to 85.

[01:23:57] Speaker 05:
And this is the original order, not the rehearing order.

[01:24:00] Speaker 05:
And this is where they said the other side, and this is still EDF's argument, at page 22 of their brief they say there is no rational explanation

[01:24:12] Speaker 05:
for this decision to sign on to the project except for advancing the corporate enterprise's interests.

[01:24:20] Speaker 05:
And Herc looked at that argument and said, no.

[01:24:23] Speaker 05:
There is a rational explanation, and the rational explanations are several fold.

[01:24:29] Speaker 05:
This is enhancing reliability, enhancing getting new gas from the eastern part of the country that it could not get before,

[01:24:39] Speaker 05:
that doesn't go through an earthquake zone that doesn't travel hundreds of miles from the south.

[01:24:43] Speaker 05:
And if I might, your honors, I'd like to read to you.

[01:24:46] Speaker 03:
Oh, wait, wait.

[01:24:47] Speaker 03:
You're talking about 968.

[01:24:49] Speaker 03:
That's where they recite fire Missouri's reasons.

[01:24:54] Speaker 03:
And they say all of those issues fall within the scope of the business decision of a shipper.

[01:24:59] Speaker 03:
The commission's policy is not to second guess the business pipeline shippers.

[01:25:06] Speaker 03:
Unless there's evidence of affiliate abuse and they don't do anything more.

[01:25:11] Speaker 03:
So how is that showing that they thought there was affiliate abuse and looked for more?

[01:25:15] Speaker 05:
They didn't think there was affiliate abuse and there was no evidence of it.

[01:25:19] Speaker 05:
What it does show, if I might continue, I'm sorry, Your Honor, I don't want to talk over you.

[01:25:28] Speaker 05:
The reason FERC was correct not to go behind and to second guess the business judgment.

[01:25:35] Speaker 05:
I'll use the propane as a good example.

[01:25:38] Speaker 05:
FERC is not in a position to tell a gas company it cannot retire its propane peaking facilities.

[01:25:46] Speaker 05:
That is within the business judgment of the gas company.

[01:25:49] Speaker 05:
That is something that FERC is not going to second guess.

[01:25:52] Speaker 05:
What FERC is going to do is saying, you have said you want to retire your propane peaking facilities.

[01:25:57] Speaker 05:
We have found and I cited you the pages and their other ones as well.

[01:26:02] Speaker 05:
We have found that that cannot be accomplished.

[01:26:05] Speaker 05:
It cannot be accomplished without some new facility.

[01:26:10] Speaker 05:
So the pipeline serves that need and it shows that the precedent agreement is not merely an anticompetitive grab to to enrich the company at the expense of the ratepayers.

[01:26:25] Speaker 05:
And if I might, I just want to wait on.

[01:26:27] Speaker 00:
We're going in circles.

[01:26:32] Speaker 00:
We're trying to figure out this.

[01:26:36] Speaker 00:
Judge Tatel a long time ago said, look, you have a situation where it's conceded, there's no new demand and it's conceded there will be no cost savings from this project.

[01:26:49] Speaker 00:
And that raises our eyebrows.

[01:26:53] Speaker 00:
Now, I don't know whether it raises an eyebrows about self-dealing, but it raises an eyebrow for me about needs.

[01:26:59] Speaker 00:
And it certainly picks up on some of the points that are in the policy statement.

[01:27:04] Speaker 00:
And you seem to be agreeing that yes, FERC has to respond to that.

[01:27:09] Speaker 00:
And then you say their response is, we're not gonna look at what's been asserted to answer that question.

[01:27:16] Speaker 00:
That's not an answer.

[01:27:18] Speaker 05:
It is an answer to the question, because the argument below, Your Honor, the argument below was, and it is still the argument on appeal, there is no other rational explanation for this pipeline except anti-competitive activity.

[01:27:31] Speaker 05:
And Ferck looked at that argument.

[01:27:33] Speaker 05:
The argument is there is no other rational explanation.

[01:27:37] Speaker 05:
And Ferck said, no, there is.

[01:27:39] Speaker 05:
And if I might, I'd just like to read to you.

[01:27:41] Speaker 03:
Is that what you're going to read to me?

[01:27:44] Speaker 05:
Well, no, FERC said that at the pages I just gave, 967, 968.

[01:27:47] Speaker 03:
They said... Okay, before you... I know you want to read your other thing.

[01:27:50] Speaker 03:
I do want to let you do that.

[01:27:51] Speaker 03:
Can you tell me where they say there's no other rational explanation for this?

[01:27:56] Speaker 05:
They said that there is a rational explanation for it.

[01:28:01] Speaker 05:
That's what I'm saying.

[01:28:02] Speaker 03:
Where they say there is a rational explanation?

[01:28:04] Speaker 03:
Yes.

[01:28:05] Speaker 03:
FERC has inspired us.

[01:28:07] Speaker 00:
Let me tell you what's going through my mind.

[01:28:09] Speaker 00:
You say there is a rational, and then you're going to say they recited

[01:28:14] Speaker 00:
the evidence offered by the proponents of the project, and then they follow that by saying, and we're not going to look to see whether that's right or wrong, because that's their call.

[01:28:24] Speaker 00:
That is an argument.

[01:28:25] Speaker 00:
I don't know how you characterize that, but that's not a winning argument.

[01:28:29] Speaker 00:
There is a rational explanation, but we're not going to check it.

[01:28:34] Speaker 00:
That doesn't make sense to me.

[01:28:36] Speaker 00:
No, no, no, no.

[01:28:37] Speaker 00:
The other side is obviously going to say, yeah, we think we're right, and FERC's not going to look to see whether it is, in fact, right.

[01:28:44] Speaker 05:
They weren't, none of these things were disputed, Your Honor.

[01:28:48] Speaker 05:
None of these benefits were disputed below.

[01:28:50] Speaker 05:
The only argument was you could achieve them through a different series of other pipelines that could have been built.

[01:28:58] Speaker 00:
Okay, so let me home this down in my mind, because this is what I was raising with the other side as well.

[01:29:04] Speaker 00:
Is your argument that the justifications that you offered from the get-go to support the project have never been contested

[01:29:14] Speaker 00:
by the petitioners below or now, that they really have not made a claim that there's no evidence to support those justifications and the justifications were there.

[01:29:23] Speaker 00:
Uncontested FERC has to do nothing.

[01:29:25] Speaker 00:
Nothing more.

[01:29:26] Speaker 00:
Is that right?

[01:29:28] Speaker 05:
Your Honor, that these needs could not be met by existing services, yes.

[01:29:34] Speaker 05:
And the only argument that's made in the opening brief is that footnote two and that relates to the propane peaking facilities.

[01:29:40] Speaker 05:
And that argument is clearly wrong because the fact that they didn't use them very often doesn't mean they didn't need them.

[01:29:47] Speaker 05:
And if I could just, this is what I want to read, Your Honor.

[01:29:49] Speaker 05:
This is from page 833 of the record.

[01:29:53] Speaker 05:
And this is when same part of the record I just identified before this aspires giving to the commission its explanation for why it needs the project.

[01:30:04] Speaker 05:
And one of the key things it said is it's a reliability concern and it said we need it because quote

[01:30:10] Speaker 05:
regional events such as supply freeze-offs, major storms, or extreme cold can create significant regional price spikes in the cost of gas that can be mitigated or avoided completely by having access to multiple differing supply basins in differing geographical regions.

[01:30:28] Speaker 05:
That is undisputed, Your Honor.

[01:30:29] Speaker 05:
There's no dispute.

[01:30:30] Speaker 07:
Yeah, but what the Commission, Mr. Franklin, what the Commission said in response to that was that's the company's business decision.

[01:30:35] Speaker 07:
We're not going to look behind it.

[01:30:37] Speaker 05:
Right, but there was no dispute, Your Honor.

[01:30:40] Speaker 00:
Your claim is that those justifications were never challenged.

[01:30:45] Speaker 00:
That's the heart of your argument.

[01:30:47] Speaker 05:
It is a very important part of our argument.

[01:30:50] Speaker 00:
No, no, I understand the argument.

[01:30:52] Speaker 00:
I want to make sure that I'm hearing you now.

[01:30:54] Speaker 00:
That's the crucial part of your argument.

[01:30:56] Speaker 00:
If there is some claim here, they never contested what we offered and we clearly offered something.

[01:31:01] Speaker 05:
And I'll say it.

[01:31:02] Speaker 05:
I'll go even further and say they didn't contest it on appeal in their opening brief for sure.

[01:31:08] Speaker 00:
Well, I raised it.

[01:31:10] Speaker 05:
And I will tell you that it is public.

[01:31:12] Speaker 05:
Well, I spread public knowledge that exactly what I just read to you happened last month.

[01:31:18] Speaker 05:
There was a freeze up in Texas where gas supplies literally froze up at a time of peak demand so that the Texas governor issued an order saying gas cannot leave the state of Texas unless it is not being used to supply electricity there.

[01:31:36] Speaker 07:
I thought the Texas governor said the whole thing was because of the wind turbines failing.

[01:31:41] Speaker 05:
No, it's actually the gas was incredibly important.

[01:31:48] Speaker 05:
He didn't say that?

[01:31:49] Speaker 05:
I thought he said the whole problem was because of the windmills thing.

[01:31:53] Speaker 05:
The order that he gave was about gas, Your Honor.

[01:31:56] Speaker 05:
The order he gave was saying no gas can leave Texas unless it can't be used for electricity.

[01:32:03] Speaker 05:
Now, if the petitioners had had their way, the Spire SDL pipeline would never have been built.

[01:32:09] Speaker 05:
and said city of st louis this entire metropolitan area would have remained captive to the mrt system that drove that drew gas from those same areas which meant that exactly what was predicted at page 833 of the record would have occurred i mean we can look at the record and make our own judgment about whether as you say the petitioner has never challenged

[01:32:35] Speaker 05:
Exactly, but my point is this, no market study, so they're saying you have to do a market study.

[01:32:42] Speaker 05:
No market study FERC could have done would have predicted that there would have been record cold and a gas crisis in Texas in the year 2021.

[01:32:51] Speaker 05:
for three or four years later.

[01:32:53] Speaker 05:
That's the business judgment of the company.

[01:32:55] Speaker 05:
But what FERC did say is, we're going to look to see, are there legitimate non-protection?

[01:33:01] Speaker 07:
Did the pipeline, did your clients say, well, we need this new capacity because the system might freeze up in the future?

[01:33:09] Speaker 05:
Yes, that's exactly what I read to you at page 833 of the record exactly in exact those exact words your honor in those exact words and the reason was 834 of the record, it had happened before in 2011 and the point I'm making is.

[01:33:25] Speaker 05:
that FERC said, we're not going to second guess the company's business judgment on these things.

[01:33:32] Speaker 05:
Now, if the other side had said, this is a bunch, it's a load of hooey, it's never going to happen, it couldn't happen, there's no reliability issues, then the FERC might have looked at it.

[01:33:42] Speaker 05:
But they never did that.

[01:33:43] Speaker 05:
And they certainly, your honor, Judge Edwards in particular, they certainly haven't done it on appeal.

[01:33:49] Speaker 05:
They have nothing in their vote.

[01:33:51] Speaker 03:
Can I back you up to page 832?

[01:33:55] Speaker 05:
Yes.

[01:33:55] Speaker 05:
Paragraph C. To find that, your honor.

[01:34:00] Speaker 03:
I don't know if 26 makes you feel better, but it's JAA-32, so it's the page before the one you've been talking to us about.

[01:34:07] Speaker 05:
OK, I'm getting there.

[01:34:15] Speaker 05:
Yes, yes, ma'am.

[01:34:16] Speaker 05:
I'm there.

[01:34:17] Speaker 03:
And paragraph C, the second line.

[01:34:21] Speaker 03:
The decision has already been made to retire the propane system.

[01:34:26] Speaker 03:
So that was made before.

[01:34:28] Speaker 03:
It sounds to me.

[01:34:32] Speaker 03:
Let me just finish my question.

[01:34:36] Speaker 03:
The decision had already been made to retire the propane system before this fire pipeline came along.

[01:34:44] Speaker 03:
And the reason they want, oh, no, that's not what I mean.

[01:34:47] Speaker 03:
It hadn't already been made to retire.

[01:34:48] Speaker 05:
That's what they, that's what they wanted to do, your honor, but they couldn't do it without the spire.

[01:34:54] Speaker 03:
Why didn't they show up in the open season saying we need this Burke?

[01:34:58] Speaker 03:
You're all wrong.

[01:34:58] Speaker 03:
This isn't, I know needs flat.

[01:35:00] Speaker 03:
The only, we need this to replace our propane system.

[01:35:04] Speaker 03:
Why didn't they show up in the open season saying that?

[01:35:06] Speaker 05:
They said it in their application to FERC.

[01:35:09] Speaker 05:
It's one of the key things they said, Your Honor, and they were in the open season.

[01:35:12] Speaker 05:
They already had a precedent agreement before the open season.

[01:35:15] Speaker 05:
This is the key.

[01:35:15] Speaker 03:
No, that's not what the record said.

[01:35:17] Speaker 03:
The record says the agreement came out after the open season.

[01:35:20] Speaker 03:
They may have started talking before the open season, but the record says the agreement with Spire Missouri came after.

[01:35:26] Speaker 03:
Around the same time as.

[01:35:28] Speaker 03:
The evidence says, because all we say is they had already planned

[01:35:32] Speaker 03:
to retire this propane system.

[01:35:34] Speaker 03:
Do they have any other?

[01:35:35] Speaker 03:
So you're saying they didn't have any?

[01:35:38] Speaker 03:
I just don't know what has already been made.

[01:35:40] Speaker 05:
What I'm saying, Your Honor, is they could not do it.

[01:35:43] Speaker 05:
And only recently, it's about 90% retired now.

[01:35:46] Speaker 05:
They could not do it.

[01:35:49] Speaker 05:
They could not do it without this pipeline.

[01:35:51] Speaker 05:
So if FERC had denied them the approval they were seeking, they would not have been able to retire the propane peaking facility.

[01:35:59] Speaker 03:
And it says that they could not have done it.

[01:36:00] Speaker 03:
This was the only way is said where?

[01:36:04] Speaker 05:
It's not the only way there were.

[01:36:06] Speaker 05:
So MRT, and this gets back to those pages that we were having trouble with finding earlier on.

[01:36:11] Speaker 05:
There were other alternatives offered by MRT, but all of them.

[01:36:16] Speaker 03:
But not just MRT, there's other pipelines too, including some that connect to REX.

[01:36:20] Speaker 03:
That's why I'm rather confused.

[01:36:22] Speaker 05:
Right, but FERC rejected all of those alternatives in its environmental assessment.

[01:36:27] Speaker 03:
No, it didn't say they didn't provide significant environmental advantage.

[01:36:31] Speaker 03:
didn't say they weren't good or even more cost efficient.

[01:36:35] Speaker 05:
The point I'm making now, Your Honor, is a more fundamental one, and that is that the existing pipeline systems, the ones before SPIRE STL, could not give the demand that was needed to retire the propane peaking facilities.

[01:36:52] Speaker 05:
They could not.

[01:36:53] Speaker 05:
All of those alternatives that we're talking about, the ones that were evaluated in the EAs, they all involve building new facilities, looping other pipelines, putting additional pipelines through.

[01:37:06] Speaker 05:
The existing systems could not handle it, and that is undisputed.

[01:37:10] Speaker 05:
There is no dispute.

[01:37:12] Speaker 05:
Nobody can give it to you because it's not there.

[01:37:15] Speaker 05:
The capacity that was needed to retire the propane peaking facilities could not be provided on the existing system.

[01:37:24] Speaker 05:
So there was a need for this pipeline.

[01:37:27] Speaker 05:
They had shown a necessity for this pipeline.

[01:37:30] Speaker 05:
Then they looked at the environmental impacts and said, we're evaluating the alternatives.

[01:37:36] Speaker 05:
What are the alternatives?

[01:37:37] Speaker 05:
All of them involved building something else.

[01:37:41] Speaker 05:
That's why the no-action alternative was rejected.

[01:37:44] Speaker 05:
They all involved building something else.

[01:37:46] Speaker 05:
And we're going to say, in our expert judgment, the SPIRE STL pipeline, which doesn't cost materially more, is sufficient.

[01:37:54] Speaker 05:
So it is, in fact, exactly what you want FERC to be doing.

[01:37:58] Speaker 05:
You don't want FERC to be coming in.

[01:38:00] Speaker 05:
And frankly, I'm not hearing Your Honor saying that this is true.

[01:38:03] Speaker 05:
You don't want FERC to be coming in and saying to Spire, MO.

[01:38:07] Speaker 05:
You've told us you want to retire your propane peaking facilities.

[01:38:10] Speaker 05:
And Judge Millett, as you said, they'd already made that decision that they wanted to do this.

[01:38:16] Speaker 05:
This court is not in a position, FERC is not in a position to tell the company it can't do that.

[01:38:22] Speaker 05:
You have to keep this stuff in place when you're telling us that it has operational difficulties.

[01:38:30] Speaker 05:
We're also saying,

[01:38:32] Speaker 05:
You're telling us you need reliability because there might be a major freeze off or a storm or cold weather, page 833 of the record.

[01:38:40] Speaker 05:
FERC is saying we're not second guessing that because nobody has told us and there's no evidence that that's a pretext, that that's some sort of a made up thing.

[01:38:52] Speaker 05:
What is what FERC is saying is yes, when there is an affiliate agreement, we're going to look a little bit more.

[01:38:58] Speaker 05:
We're going to say is there evidence of self dealing or or is there evidence of anti competitive activity here?

[01:39:04] Speaker 05:
There was not and there was not because there were legitimate unrebutted non pretextual reasons for doing this that could not be met.

[01:39:14] Speaker 05:
Could not be met by existing systems.

[01:39:16] Speaker 07:
OK, Mr Franklin, I mean, unless either of my colleagues have another question, I think we've got your partner.

[01:39:23] Speaker 07:
um so thank you is that right judge mullet judge edwards are you okay yes yes okay so um uh miss karst you can take two minutes thank you thank you and mr robertson you can take

[01:39:41] Speaker 02:
Thank you.

[01:39:41] Speaker 02:
So I just want to clarify one point.

[01:39:43] Speaker 02:
Our opening brief attacked what FERC said was its rationale regarding need.

[01:39:49] Speaker 02:
FERC said it relied on the contract.

[01:39:51] Speaker 02:
It had to do more because the contract is supported by captive customers.

[01:39:57] Speaker 02:
On FERC's brief, for the first time, it said these factors were extra contractual evidence of need.

[01:40:04] Speaker 02:
And our reply brief rebutted all of those.

[01:40:08] Speaker 02:
The Supreme Court explained in the Atlantic refining case that because the commission's task under Section seven of the Natural Gas Act is so crucial and has such far sweeping consequences.

[01:40:19] Speaker 02:
If there is a situation where an application probably would not be in the public interest, a certificate should not be issued.

[01:40:27] Speaker 02:
Here, as Commissioner Glick explained, the record is patently insufficient as there is neither evidence that the SPIRE project is needed nor that its limited benefits outweigh its harms.

[01:40:39] Speaker 02:
FERC is supposed to act as the guardian of the public interest.

[01:40:43] Speaker 02:
Its blinkered reliance on precedent agreements

[01:40:45] Speaker 02:
to satisfied market need has gone too far in this case.

[01:40:50] Speaker 02:
The viability of existing pipelines is threatened, captive customers now pay higher rates, and EDF members' land has been taken and damaged while Spire continues to pay itself millions of dollars per year based on an unneeded and legally unjustified project.

[01:41:06] Speaker 02:
We respectfully ask the court to vacate FERC's orders to ensure this damaging precedent does not stand.

[01:41:14] Speaker 02:
Thank you, Your Honors.

[01:41:15] Speaker 07:
Thank you.

[01:41:17] Speaker 07:
Mr. Robertson, do you need a minute or not?

[01:41:20] Speaker 06:
Yes, please.

[01:41:21] Speaker 06:
I disagree with Mr. Franklin regarding the no action alternative.

[01:41:25] Speaker 06:
It was not denied by FERC because it didn't build anything, but because FERC defined the project in exactly Spires terms, which they are not allowed to do.

[01:41:35] Speaker 06:
This is an example of the procedural injury that we suffered.

[01:41:39] Speaker 06:
The EA, the certificate order, the order under hearing are a medley of inconsistent and contradictory justifications for evading NEPA.

[01:41:51] Speaker 06:
And for example, they simply refused to consider the climate impacts that we were trying to challenge because they defined cumulative impacts as necessarily local.

[01:42:02] Speaker 06:
But global warming is

[01:42:03] Speaker 06:
global in nature and must be considered in that context.

[01:42:07] Speaker 06:
And I'll leave it at that.

[01:42:14] Speaker 06:
Thank you.

[01:42:15] Speaker 07:
All right.

[01:42:15] Speaker 07:
Well, thank you.

[01:42:17] Speaker 07:
So the case is submitted.

[01:42:18] Speaker 07:
Thank you all.