[00:00:01] Speaker 00: Case number 18-1258 et al, Iowa Network Services, Inc., doing business as Orion Network Services Petitioner versus Federal Communications Commission and United States of America. [00:00:14] Speaker 00: Mr. Troup for the petitioner, Iowa Network Services. [00:00:17] Speaker 00: Mr. Hunsetter for the petitioner, AT&T Services, Inc. [00:00:20] Speaker 00: Mr. Sherr for the respondents. [00:00:23] Speaker 01: Good morning, counsel. [00:00:24] Speaker 01: Mr. Troup, please proceed when you're ready. [00:00:26] Speaker 04: Good morning. [00:00:27] Speaker 04: May it please the court. [00:00:30] Speaker 04: My name is James Troup. [00:00:31] Speaker 04: I represent Iowa Network Services doing business as Orion Network Services. [00:00:37] Speaker 04: Orion filed a tariff enforcement action against AT&T and Federal District Court in New Jersey. [00:00:43] Speaker 04: It seeks enforcement of the effective state and federal tariff rates. [00:00:49] Speaker 04: The complaint seeks enforcement of the Section 203 of the Communications Act and the state statutes in Iowa and Nebraska that codify the filed rate doctrine. [00:01:00] Speaker 04: The FCC accepted a primary jurisdiction referral from the district court regarding those referred statutory questions. [00:01:09] Speaker 04: And now AT&T and the FCC have raised numerous procedural arguments asking this court to not reach the merits of the statutory issues. [00:01:21] Speaker 04: It would be a mockery of the primary jurisdiction doctrine. [00:01:25] Speaker 04: If this case goes back to district court, [00:01:28] Speaker 04: without any resolution of the statutory issues that would leave the district court in the same place it was six years ago when this referral proceeding began. [00:01:37] Speaker 04: We asked that this court in the spirit of judicial efficiency to send a clear message to the district court that the rates that AT&T should pay for oriented services are the effective state and federal tariff rates. [00:01:53] Speaker 01: Can I start you off by asking about the filing that the parties made last night [00:01:58] Speaker 01: where there is an indication in a document filed by you and by AT&T that the parties have reached an agreement in principle. [00:02:09] Speaker 01: And I just want to know, what does that entail for our review of the case before we get into the issues that you are about to get into? [00:02:18] Speaker 04: Well, at this point, [00:02:21] Speaker 04: This case needs to proceed until there's an actual final settlement agreement. [00:02:25] Speaker 04: I only learned about the settlement negotiations with AT&T last night. [00:02:28] Speaker 04: There would need to be an agreement with the FCC as well. [00:02:33] Speaker 01: I'm confused. [00:02:34] Speaker 01: Maybe I'm misunderstanding the context. [00:02:37] Speaker 01: You only learned about the negotiations last night. [00:02:39] Speaker 01: I thought, aren't you involved in them? [00:02:42] Speaker 04: I was not involved in the settlement negotiations. [00:02:45] Speaker 04: No, I was [00:02:46] Speaker 04: told last night that there had been progress with AT&T. [00:02:50] Speaker 06: I understand there's been no discussions with the FCC so far, but- Do you mean other council for Iowa Network Services was responsible for talking with AT&T and FCC on the settlement side? [00:03:05] Speaker 04: I believe maybe local council may have been involved. [00:03:10] Speaker 01: My understanding is- Wait, so you're standing up, you're representing the client that's [00:03:15] Speaker 01: the party that's before our court, and the parties have filed a document with us saying that they've reached an agreement in principle, and you're not in a position to say anything about it, even though you represent that party? [00:03:27] Speaker 04: No, Your Honor. [00:03:28] Speaker 04: I have seen the emails back and forth. [00:03:31] Speaker 04: I was shown them last night that showed that they have reached some of the terms. [00:03:38] Speaker 04: The Oran board has not looked at these terms. [00:03:42] Speaker 04: I think it's preliminary. [00:03:44] Speaker 04: at best, the FCC would need to agree that- Well, we can talk to the FCC. [00:03:50] Speaker 01: I understand that, but I guess I'm surprised by the fact that the parties would have filed a document in our court representing that there's been an agreement reached in principle and that then the parties are not, the party's representatives before us are not in a position to tell us whether there's been an agreement reached. [00:04:10] Speaker 01: I mean, you're making it sound like there actually hasn't been an agreement reached because it hasn't gone through [00:04:14] Speaker 01: necessary layers or something, and certain people who represent the parties before us aren't aware of what's going on. [00:04:22] Speaker 04: No, I mean, I saw the emails going back and forth that showed that there was discussions and negotiations and that the parties had reached some agreement on terms, but the way on board of directors has not seen any of this. [00:04:38] Speaker 04: And so I think at this point it would be premature. [00:04:41] Speaker 04: There's been no written settlement agreement. [00:04:46] Speaker 01: Okay. [00:04:49] Speaker 04: And in order to have a settlement in this case, which impacts the tariff rates that apply to all carriers that use Oran services, there would need to be an agreement with the FCC as well, because Oran would need to earn the minimum rate of return to remain in business, the minimum rate of return prescribed by the FCC, regardless of foreborn carrier benchmarking to remain in business, we need some agreement [00:05:15] Speaker 04: regarding the future impact of rates and the rates that apply to all other carriers in order before we could dismiss this case. [00:05:23] Speaker 05: If there were such a settlement reached that Orion would seek to dismiss its petition for review, is that correct? [00:05:32] Speaker 04: If Orion could reach an agreement with both AT&T and the FCC, then there would be a position to [00:05:42] Speaker 04: dismiss the petition for review here. [00:05:44] Speaker 04: Otherwise, if it's just a settlement with AT&T, I think it would be a dismissal of just the district court case in New Jersey. [00:05:54] Speaker 04: So the filed rate doctrine controls this case. [00:05:59] Speaker 04: Mazelon says that the tariff rate is the only legal rate and regardless of any contrary FCC rule, the tariff controls. [00:06:08] Speaker 06: Mr. Troup, can you respond at the outset to AT&T's challenges to Orion's standing? [00:06:16] Speaker 06: How do the not yet final decisions that are being challenged, the first and second order, have a concrete effect on Orion? [00:06:34] Speaker 04: Well, the order is ordered [00:06:36] Speaker 04: going on to change its rates. [00:06:39] Speaker 04: Before it had been ordered to change its rates, it had protection from retroactive refunds. [00:06:46] Speaker 04: Both these tariff orders say that [00:06:48] Speaker 04: the rates aren't awful, even though the SEC allowed the rates to remain effective until compliance filing. [00:06:56] Speaker 06: But my understanding is that Orion hasn't challenged the aspect of the orders that sent them back for Orion to further substantiate its cost calculations. [00:07:09] Speaker 06: And so if that part isn't challenged, then [00:07:15] Speaker 06: The filed rate is not the filed rate. [00:07:18] Speaker 06: It's pending further substantiation by Orion. [00:07:22] Speaker 06: And until that rate is determined, it's not clear whether that rate applies or whether the benchmark rate applies because one doesn't know which is lower. [00:07:31] Speaker 06: So it's just not clear what the concrete effect is on [00:07:37] Speaker 06: Orion, and your briefing focuses a great deal on, well, now you have to do this compliance. [00:07:42] Speaker 06: But the compliance that you're pointing to is with an aspect of the order that I don't see being challenged. [00:07:55] Speaker 04: The tariff rates, they have to allow those tariff rates to remain effective. [00:08:01] Speaker 04: So under the five-rate doctrines, they have to be lawful. [00:08:04] Speaker 04: Under Section 203 of the Communications Act, [00:08:07] Speaker 04: OEM would face penalties if it charged any rate other than the effective tariff rate. [00:08:12] Speaker 04: This court faces a similar situation in an MCI case, which I can find a site for. [00:08:19] Speaker 04: But this court can redress the harm by removing the designation of unlawfulness that is in the ordering clauses of these two orders, because that rate cannot be unlawful if it is in the effective tariff rate. [00:08:35] Speaker 01: Amazing. [00:08:37] Speaker 01: Can I just, I may be just re-asking what Judge Pillard asked, but I just want to make sure I understand the context. [00:08:44] Speaker 01: We don't know yet for the relevant period. [00:08:47] Speaker 01: I know that there's been a subsequent rate post 2019, but the period that's at issue in this case is I think spans 2018 to 2019. [00:08:56] Speaker 01: And as I understand the factual context, we don't know yet whether the governing rate [00:09:00] Speaker 01: is the benchmark rate or the cost base rate, because it's only the lower of the two that's operative. [00:09:07] Speaker 01: And if all your challenges are to the benchmark rate, then we don't know yet whether any of those challenges even matter, because the benchmark rate might not even be the operative rate, if the cost base rates the operative rate. [00:09:18] Speaker 01: And if that's the case, if we don't even know whether the challenges you're making are to a rate that's operative, [00:09:24] Speaker 01: then that starts to sound like something as to which we don't have standing because we may be addressing something that turns out to be a non-issue. [00:09:34] Speaker 04: During 2018 and 2019, the only operative rate is the effective tariff rates, both in the state tariffs and the federal tariff. [00:09:44] Speaker 04: Under Maislin, the fabric doctrine is strict. [00:09:47] Speaker 04: There's only one legal rate, and that's the effective tariff rate, regardless of the lack of cost data. [00:09:54] Speaker 01: That's your argument on the merits, as I understand it, that the filed rate doctrine means that the rate that you submitted is the operative one. [00:10:03] Speaker 01: But I think that's your ultimate merits argument on that issue. [00:10:07] Speaker 01: But isn't there an antecedent question about whether under the FCC's orders, the benchmark rate or the cost bait rate is the lower one, because the lower one is the one that governs. [00:10:18] Speaker 01: And unless we know which one the lower one is, then we don't know whether the challenge is even [00:10:24] Speaker 01: in a ripe state for purposes of either ripeness doctrine or standing doctrine, because we may be addressing a challenge to a non-governing rate. [00:10:34] Speaker 04: In our judicial system, something is not unlawful if there's a lack of evidence in the record to determine unlawfulness. [00:10:44] Speaker 04: Here, the FCC found there was insufficient data to make a determination of what is the just and reasonable rate or what is the unlawful rate. [00:10:52] Speaker 04: So they allowed the tariff rate to remain effective, and that is now the question. [00:10:58] Speaker 06: But isn't it, it's Ariane's burden to justify the rate. [00:11:04] Speaker 06: And so to that extent, there isn't a lawful rate unless and until Ariane either persuades the FCC that it's wrong to require additional evidence, but there was no issue taken with those aspects of the order. [00:11:18] Speaker 06: So that is an avenue that's foreclosed. [00:11:21] Speaker 06: or Orion supplies the missing information. [00:11:24] Speaker 06: So right now, rather than there being a presumptively valid rate in effect, it seems like there is a presumptively unsupported cost-based rate. [00:11:35] Speaker 06: And in 2020, this court held that Orion may be subjected to the transition rules, including the benchmark rate. [00:11:45] Speaker 06: And that's not open to us to disagree with here. [00:11:49] Speaker 04: Well, I think you look at this court face of similar situation MCI versus FCC 627 F2D 322 at 338. [00:12:00] Speaker 04: In that case, AT&T's rates were not supported by sufficient data. [00:12:09] Speaker 04: that the AT&T rates were allowed to remain ineffective. [00:12:13] Speaker 04: In that case, also the AT&T, the FCC said that rate was unlawful. [00:12:17] Speaker 04: This court in that case said the effective tariff rates at the time were the lawful rates and enforceable, and that the statute had to have, I think the court used the word, some flexibility in the joints to allow for the effective tariff rates to apply until there was a compliance filing. [00:12:35] Speaker 04: And that's consistent with Maislin and the filed rape doctrine because there has to be an effective rate. [00:12:43] Speaker 04: And this court can redress the injury of the FCC calling this rate unlawful by removing that, by removing the exposure to retroactive refunds and to ensure that Orion can earn the minimum rate of return that was prescribed by the FCC [00:13:04] Speaker 04: The FCC has a burden of proof under Section 205 to show that this benchmark rate is just unreasonable. [00:13:12] Speaker 04: Because Oran did not in his terrifying propose any kind of rate benchmark that the proponent was the FCC. [00:13:18] Speaker 04: This interpreted, this lower than interpretive rule is no binding legal force because it's just an interpretive rule. [00:13:26] Speaker 04: And Section 205 uses the word shall. [00:13:29] Speaker 04: You shall be able to earn the minimum prescribed rate of return. [00:13:33] Speaker 04: and the benchmark rate violates section 205 on its face because it doesn't allow Orion absolutely to earn the minimum rate return if it's above the benchmark rate. [00:13:45] Speaker 01: Okay, let me make sure my colleagues don't have additional questions for you at this time. [00:13:50] Speaker 01: Yeah, please. [00:13:50] Speaker 05: I just had one other question. [00:13:51] Speaker 05: Mr. Troup, can you explain, did Orion raise those claims before the FCC? [00:13:59] Speaker 05: He claims under 2B, 203C, and 205. [00:14:06] Speaker 04: Yes, we did. [00:14:07] Speaker 04: And AT&T's meritless preclusion argument, they over and over say all the ways that we've raised. [00:14:15] Speaker 05: I'm not asking about preclusion. [00:14:16] Speaker 05: I'm asking about exhaustion under 405A. [00:14:21] Speaker 04: Yes, I'm just saying that AT&T's preclusion argument lists all the ways that we raised the statutory arguments and all the opportunity [00:14:29] Speaker 04: the FCC had to consider them. [00:14:31] Speaker 04: In this case, we are, as an applied statutory challenge, we're saying that the referral order in 2017 was an incorrect rule of law. [00:14:43] Speaker 04: They're applying that incorrect rule of law here. [00:14:45] Speaker 04: And the FCC certainly had the chance to pass upon its own rationale [00:14:52] Speaker 04: in the referral order. [00:14:54] Speaker 04: And this is also not the type of proceeding that where exhaustion even applies. [00:14:57] Speaker 04: It's an investigation. [00:14:59] Speaker 04: It's not the judicial model. [00:15:02] Speaker 04: One did not designate the issues. [00:15:04] Speaker 04: The FCC chose the issues. [00:15:08] Speaker 04: There's an interpretive rule like the fight now case. [00:15:12] Speaker 04: Exhaustion doesn't apply to interpretive type rules like the lower than interpretive rule. [00:15:18] Speaker 04: FCT had the burden of proof under section 205 to show that the foreborn care benchmarking resulted in at least earning the minimum rate return. [00:15:31] Speaker 01: Okay. [00:15:33] Speaker 01: Let me ask my colleagues if they have any additional questions for you at this time. [00:15:36] Speaker 01: Okay, thank you, Mr. Hunt-Setter. [00:15:40] Speaker 03: Good morning and may it please the court, I'm Michael Hunt-Setter representing AT&T. [00:15:46] Speaker 03: Obviously, we're here as a petitioner. [00:15:49] Speaker 03: And I was going to start with the TNT's petition. [00:15:53] Speaker 03: I don't know if the court does have questions about the settlement and the filing that happened to address those. [00:15:59] Speaker 01: Well, I'm just curious as to your perspective on it, given that there's been a document filed with us that says there's been an agreement in principle. [00:16:05] Speaker 01: And of course, we're interested in knowing about that to inform our further consideration of the case. [00:16:11] Speaker 03: No, that's correct. [00:16:12] Speaker 03: And so I became aware of the settlement negotiations earlier this week. [00:16:16] Speaker 03: And then yesterday I saw an email between my clients, you know, negotiator, authorized representative and Ariane CEO. [00:16:24] Speaker 03: And it said, there was an agreement in principle. [00:16:27] Speaker 03: We have an agreement in principle. [00:16:28] Speaker 03: It's not, it's a term sheet of some kind. [00:16:30] Speaker 03: It's not a final written settlement agreement. [00:16:33] Speaker 03: And that has to be executed. [00:16:35] Speaker 03: But under the guidebook, the DC circuit's handbook, we were under the view that we should notify the court as soon as there was a settlement in principle to reach. [00:16:45] Speaker 03: And so we did. [00:16:46] Speaker 01: I appreciate that. [00:16:48] Speaker 01: And I guess my question is, is your understanding of the agreement in principle one that would end the case? [00:16:57] Speaker 03: I think it would. [00:16:58] Speaker 03: It would end all the litigation. [00:17:00] Speaker 03: And indeed, I think the condition in the term sheet is that these two petitions or three petitions for review would be dismissed by the parties because we're the petitioners. [00:17:11] Speaker 03: Obviously, the FCC's party, other people are parties they could [00:17:14] Speaker 03: potentially eject, but it's our two petitions. [00:17:17] Speaker 03: And I think the agreement in principle does call for them to be dismissed once there's a final bit in the group. [00:17:23] Speaker 03: I hope that's all. [00:17:24] Speaker 01: So if the agreement in principle ripens into a final agreement, then your understanding is then the parties would move for a dismissal of their own petitions and thereby ending the matter before us. [00:17:36] Speaker 01: That is absolutely correct. [00:17:37] Speaker 01: Assuming there's no complication with the commission. [00:17:40] Speaker 03: That's absolutely correct, Ron. [00:17:42] Speaker 01: OK. [00:17:42] Speaker 03: Thank you. [00:17:44] Speaker 03: So I would like to turn. [00:17:45] Speaker 06: I don't know if you're at liberty to say this, but just a clarification and just tell me if you aren't. [00:17:50] Speaker 06: But the settlement in principle would not turn on FCC approval or agreement to act. [00:18:04] Speaker 03: Not that I'm aware of. [00:18:05] Speaker 03: I don't believe so, but I did not ask or investigate that specific question, but I don't believe that's the case. [00:18:12] Speaker 03: Is that helpful? [00:18:14] Speaker 06: That is. [00:18:15] Speaker 03: Thank you. [00:18:15] Speaker 03: All right. [00:18:16] Speaker 03: So I'd like to turn to our petition in the case below. [00:18:19] Speaker 03: And I think in the case below, the FCC properly rejected two of Ariane's proposed tariff rates and really reined back in a carrier that was failing to heed to either of the FCC's rate rules. [00:18:33] Speaker 03: Ariane's rates would have continued unreasonable charges that have been going on for several years since at least 2013. [00:18:41] Speaker 03: and those rates were being levied on enormous volumes of traffic associated with an anti-consumer scheme that the FCC refers to as access stimulation. [00:18:52] Speaker 03: However, when it came to calculating the benchmark rate cap that was applicable to Ariane, the FCC let Ariane off too easily. [00:19:01] Speaker 03: Because the FCC's rate calculation violates the text as well as the purposes of the rule, section 3C of the FCC's first rate order should be vacated. [00:19:12] Speaker 03: And let me turn right now to the text of the benchmark rule. [00:19:16] Speaker 03: It provides that the benchmark rate is the rate, quote, charged by the competing ILAC. [00:19:23] Speaker 03: Competing ILAC is century length. [00:19:25] Speaker 03: And on its very face, and this is in JA559, the FCC's order shows that its rate determination, rate calculation is not a rate charged by century length. [00:19:37] Speaker 03: It's instead a hybrid rate. [00:19:40] Speaker 03: It has some century link rates, but in fact, the largest component consists of an Ariane rate. [00:19:47] Speaker 03: And if you look at table one, which is paragraph 43 of the first rate order, it's JA559. [00:19:54] Speaker 03: If the FCC lays out in a table, it's composite rate benchmark. [00:20:00] Speaker 03: And if you look at the line that says per mile, I can pause to make sure that your honors are at the page, but if you look [00:20:10] Speaker 03: at the per mile line, which is I think the third line in the column, the FCC calculator rate for that particular rate element of about 0.003. [00:20:21] Speaker 03: That's not what CenturyLink would charge on these calls at issue. [00:20:25] Speaker 03: It's rather what Ariane would charge because only Ariane is carrying the calls 103 miles. [00:20:33] Speaker 03: The evidence before the commission was undisputed [00:20:36] Speaker 03: that CenturyLink, the competing islet, would provide at most 22 miles of transport. [00:20:41] Speaker 03: And you can see that in paragraph 20 of the FCC's reconsideration order, where they basically concede that the evidence did, in fact, show that CenturyLink would carry at 22 miles at most. [00:20:54] Speaker 06: Mr. Hansider, it's the point 00003 is [00:20:59] Speaker 06: century link, it's the 103.519 miles that's Orion? [00:21:08] Speaker 06: So it's the price per mile from century link? [00:21:11] Speaker 06: Am I right? [00:21:13] Speaker 06: So the price per mile is the century link, and then it's the multiplier distance that's Orion's? [00:21:20] Speaker 06: It's just a question of fact. [00:21:22] Speaker 03: Yeah, just a question of fact. [00:21:23] Speaker 03: So the second column that's, you know, [00:21:27] Speaker 03: Those are all rates drawn from CenturyLink's characters, no dispute. [00:21:30] Speaker 03: And then that third column, which has the 103 miles, that's Arians. [00:21:35] Speaker 03: And then they multiply that together to get the .003 rate, which we think is this impermissible hybrid rate. [00:21:44] Speaker 03: And so because the rules require a benchmark to the rate charged by CenturyLink, the text of the rule requires the FCC [00:21:51] Speaker 03: to use century length miles 22 or less to calculate the composite rate. [00:21:55] Speaker 03: And instead it used this hybrid mismatch to come up with a rate of 003106 for that particular rate element. [00:22:03] Speaker 03: The FCC's argument is that AT&T is conflating rates with charges. [00:22:10] Speaker 03: But table one shows that the mileage right there in the table is part of the composite rate. [00:22:17] Speaker 03: It's not some separate charge that's applied after the fact or some other service that we're purchasing. [00:22:23] Speaker 03: It's part and parcel of the composite rate that the FCC itself calculated. [00:22:28] Speaker 03: So we haven't conflated rates and charges at all. [00:22:32] Speaker 03: The FCC's calculation is also inconsistent with the definition of rate in the rules. [00:22:38] Speaker 03: And the definition of rate provides that the benchmark rate is a composite rate of all applicable charges. [00:22:44] Speaker 03: And it's expressed on a per minute basis. [00:22:47] Speaker 03: There's two primary inconsistencies with the text of the rule here. [00:22:51] Speaker 03: One, this underscores that as to the rules prior reference to the rate charged by the competing ILEC, this ILEC rate includes the composite of all its charges and thus would include the rate for century length miles, which are 22 or less. [00:23:07] Speaker 03: Second, this definition means as a topology, the two carriers rates need to be equal on a per minute basis. [00:23:16] Speaker 03: what the FCC did here as shown in table one is to equate the two carriers rates on a per mile basis. [00:23:25] Speaker 03: As explained in our brief, it's indisputable that on any two calls that are the same duration, one minute, 10 minutes, an hour, the rate that Ariane charges cannot exceed the century link rate for that same call. [00:23:38] Speaker 03: That's the relevant inquiry and that's the benchmark rate that AT&T put into the record. [00:23:44] Speaker 03: But the FCC acted inconsistently with the tax by examining and equating what both carriers would charge for 103 miles of service. [00:23:53] Speaker 03: That's exactly what Table 1 shows. [00:23:56] Speaker 03: And if a question were, well, what if both carriers charged for 103 miles? [00:24:00] Speaker 03: As Judge Pillock said, it's a matter of math. [00:24:02] Speaker 03: It's right there. [00:24:03] Speaker 03: But that's not the relevant question. [00:24:05] Speaker 03: The relevant question is, what would CenturyLink charge for its [00:24:10] Speaker 03: services, which are, again, the tandem switching and transport services at issue. [00:24:16] Speaker 03: I see my time is up. [00:24:17] Speaker 01: Yeah, can I just ask you one question on the switches? [00:24:19] Speaker 01: This all concerns the benchmark rate, right? [00:24:23] Speaker 01: That's correct. [00:24:24] Speaker 03: And so none of our argument concerns the cost of service. [00:24:27] Speaker 03: Is that what you're asking? [00:24:28] Speaker 01: Well, I thought you did have an argument that concerns the cost of service. [00:24:31] Speaker 01: It's just not this. [00:24:31] Speaker 01: No, I meant none of our first argument. [00:24:33] Speaker 03: We do have a bypass. [00:24:35] Speaker 01: Exactly. [00:24:35] Speaker 01: I'm sorry. [00:24:36] Speaker 01: So I guess my question is this, that as I understand your position, you say that Orion doesn't have standing in your response brief to Arians because we don't know yet whether the benchmark rate or the cost base rate is the governing rate. [00:24:53] Speaker 01: this challenge of yours is to the benchmark rate, then you've got your other bypass argument as a challenge to the cost of service rate. [00:24:59] Speaker 01: But why aren't you subject to the same objection, which is we don't know which of the rates is governing and therefore there's not standing to go forward on either of your arguments because the same problem. [00:25:11] Speaker 03: Yeah, let me address, I do think for us, I think the reason we have standing is again, right now the tariff rate is 0.4 cents or thereabouts. [00:25:22] Speaker 03: And again, under our benchmark calculation, if they had been accepted, the benchmark would be 0.3 cents or even low. [00:25:29] Speaker 03: So I think that gives us standing, because right now we're being charged 0.4 cents. [00:25:34] Speaker 01: And that's, you're being charged that rate, just so I understand the factual context, that's not on a going forward basis after 2019, you're talking about the rate that was in effect for the relevant period for purposes of these challenges, which spans 2018 to 2019. [00:25:50] Speaker 03: No, I actually am talking right now. [00:25:52] Speaker 03: And I guess the one thing to get back, I just wanted to make sure that I answered the question on standing that I think how we're injured today standing here because right now we're being charged 0.4 and we should be charged a benchmark rate. [00:26:06] Speaker 03: But I guess the one thing that I sort of quibble with in terms of how the courts presented it, the way I understand these section 204 proceedings is that the FCC makes the determination and they think [00:26:18] Speaker 03: for this period from 2018 to whenever the INS filed or RM filed a new tariff, and that's kind of over. [00:26:28] Speaker 03: The rate's been declared unlawful. [00:26:29] Speaker 03: If you look at the end of the first rate order, that's what it says. [00:26:34] Speaker 03: Now the FCC is gonna have to conduct more proceedings or approve some kind of refund plan to figure out what customers that paid the tariff rate during the period from beginning in 2018 [00:26:47] Speaker 03: whenever that tariff is superseded, we're going to be entitled and other customers are going to be entitled to refunds. [00:26:53] Speaker 03: But it's over in the sense that for that period, they did not justify that rate under the cost of service. [00:27:02] Speaker 03: And that's why I think we're saying there's no standing. [00:27:04] Speaker 03: I think we agree with everything the court said, but I think it's all the more reason that there's no standing because you can make a ruling and rule in favor of Arion that tariff [00:27:17] Speaker 03: from 2018 to whenever it was superseded is going to remain rejected because they're not challenging any of the cost of service basis on which it was rejected. [00:27:27] Speaker 03: So that's our standing argument. [00:27:29] Speaker 03: I think it's somewhat even more forceful than the way, frankly, the court has presented it based on my understanding of the Section 204 procedures and how they work. [00:27:38] Speaker 06: And that same objection doesn't apply to you. [00:27:41] Speaker 06: Is it because you're challenging aspects of each of the separate prongs? [00:27:46] Speaker 06: And so if we assume you prevail on the merits of both, which is the sort of provisional perspective we take in assessing standing, you have challenges to either. [00:28:03] Speaker 06: one way or another, this case affects you going forward? [00:28:08] Speaker 06: I mean, not going forward in the central rates charge of the future, but it affects how the appropriate rate will be calculated and the nature of a refund. [00:28:16] Speaker 03: I think that's right, your honor, essentially. [00:28:18] Speaker 03: I do think that both arguments affect us. [00:28:22] Speaker 03: That said, I think we would have standing under either argument separately. [00:28:25] Speaker 03: But I do think that you're correct that, again, if the FCC had ruled in our favor [00:28:31] Speaker 03: then we would have had a determination that the benchmark rate was 0.3 or less possibly. [00:28:40] Speaker 03: And again, the fact that they did not make that determination is injuring us right now. [00:28:46] Speaker 06: Right. [00:28:46] Speaker 06: Even if you only were charging some aspect of the benchmark rate and not challenging anything to do with the cost-based rate, the fact that your theory would bring the benchmark rate in below the cost-based rate would entitle you to a bigger refund because it would be below the rate that they collected. [00:29:10] Speaker 03: it would be a bigger refund. [00:29:11] Speaker 03: And right today, we would be being billed less access charges, and we would be paying less access charges. [00:29:16] Speaker 03: And that clearly, I think, is the enduring fact. [00:29:18] Speaker 01: But how do we know that it's below the cost-based rate until we know what the cost-based rate is? [00:29:22] Speaker 01: I thought that's the problem, is that there needed to be more information to figure out what the cost-based rate is. [00:29:28] Speaker 01: So we don't know which one's the lower one. [00:29:31] Speaker 03: Well, I guess you do. [00:29:32] Speaker 03: I mean, again, the FCC, you're right, has not said what the right rate is for purposes of refunds. [00:29:39] Speaker 03: But obviously the benchmark that they calculated is 0.56. [00:29:44] Speaker 03: And then in the second rate or the rate proposed was about three-tenths of a cent just below. [00:29:49] Speaker 03: And so you know that the cost of service in this period at least is the one that's really driving the unreasonable determination. [00:29:59] Speaker 01: But I thought in that period that cost-based rate hasn't been validated either because that's also one as to which more information needed to be supplied [00:30:10] Speaker 03: No, I think there, like I said, I think in both cases, there will have to be a determination of what refunds are owed. [00:30:18] Speaker 03: But what I guess I thought you were saying is, how do we know that the cost of service is the governing rate? [00:30:26] Speaker 03: And it's because what was rejected was a 0.3 tenths of a cent rate. [00:30:32] Speaker 03: And so, by definition in these two periods, the rate's gonna be below [00:30:39] Speaker 03: 0.3 cents. [00:30:42] Speaker 03: And so we know that the cost of service, I mean, again, that's what we're saying. [00:30:46] Speaker 03: If you rule in their favor and say, hey, this benchmark doesn't apply, which obviously we disagree with on the merits, but if you rule in their favor on that, those two tariff rates are going to remain reject. [00:30:59] Speaker 06: because I'm sorry to interrupt you, but isn't it the case that at least conceivably that Orion could support, you know, that the additional data that the FCC wants could either validate the rejected rate or indeed they find something that pushes it higher. [00:31:21] Speaker 06: I don't know. [00:31:21] Speaker 06: We don't know until we know. [00:31:23] Speaker 03: Well, I guess that goes to what I understand the proceeding, which is, again, if you look at [00:31:29] Speaker 03: Paragraph 127 of the first rate order, it says, you know, this investigation as to this tariff is terminated and the rates under investigation in this proceeding are unlawful and subject to potential refunds or over earnings. [00:31:47] Speaker 03: So I think. [00:31:51] Speaker 03: Right. [00:31:52] Speaker 03: And so that's what I'm saying. [00:31:53] Speaker 03: Yes, the FCC, I mean, I think the way it may work, either the FCC will say, here's what we think the rate was based on the evidence, or Ariane will say, here's a refund plan. [00:32:02] Speaker 03: People will comment on it and say it's either right or wrong. [00:32:05] Speaker 03: But I don't think it's open. [00:32:06] Speaker 03: Certainly, AT&T would say, hey, it's too late for this period for Ariane to come in and put in new evidence to support the cost of service rate. [00:32:16] Speaker 03: That's over. [00:32:16] Speaker 03: You're gone. [00:32:17] Speaker 03: You didn't do that. [00:32:18] Speaker 03: The rate is unlawful, and that's frankly why the filed tariff rate has nothing to do with this case. [00:32:24] Speaker 03: The filed rate was declared unlawful. [00:32:27] Speaker 03: And in this period, an unlawful rate can't be enforced, and that's been the law for centuries, or centuries. [00:32:36] Speaker 03: All right, thank you, Your Honors. [00:32:38] Speaker 06: So it cannot cure the lack of evidentiary support. [00:32:41] Speaker 06: I thought it was sent back for that, I'm sorry. [00:32:46] Speaker 06: It can't hear the lack of evidentiary support is what you're saying. [00:32:49] Speaker 03: That's my, that would certainly be AT&T's position that again, the proceedings, I mean, cause in some ways if, I guess if the proceedings not over and we're still trying to figure out what the rate is, I don't even know that this is really a, you would have jurisdiction because obviously you only have jurisdiction over final orders of the FCC under 402A or B. [00:33:14] Speaker 03: But I think it's final because of the reasons that I just said, and that's why you have jurisdiction to refute today, if that makes sense. [00:33:22] Speaker 03: Because I don't think it really is open to them to come back in and say, hey, our rate is reasonable. [00:33:28] Speaker 03: Potentially, they could come back in in their refund plan and say, hey, this is the amount of refund that we're offering. [00:33:35] Speaker 03: And here's why that rate is reasonable for purposes of contrasting what was paid versus what the reasonable rate should have been. [00:33:44] Speaker 03: But that's a much different inquiry than saying, hey, we get to come back in and potentially show that our proposed tariff rate of 0.57 or 0.29 is reasonable. [00:33:56] Speaker 03: I think that's foreclosed. [00:33:58] Speaker 06: So how do I understand in paragraph 122 at page J591 [00:34:07] Speaker 06: We require Orion to file a revised tariff along with revised cost support. [00:34:14] Speaker 06: This is the first, they did that. [00:34:16] Speaker 06: Yeah, they did that. [00:34:19] Speaker 03: That was the first tariff order. [00:34:21] Speaker 06: They did that. [00:34:24] Speaker 03: Yeah, it covered from the time of the initial tariff filing, which I think was in February of 2018. [00:34:30] Speaker 03: And then this order is issued five months later under the statutory clock. [00:34:35] Speaker 03: And then their order, [00:34:37] Speaker 03: because the tariff rate wasn't sufficient, they're ordered to file a new tariff. [00:34:42] Speaker 03: And then at some later date, I don't have that exact date, they file a second tariff and they further reduce the proposed rates of 0.3. [00:34:53] Speaker 03: And then there was a second proceeding, we did it all over again. [00:34:56] Speaker 03: And we said, hey, you still haven't justified your costs. [00:34:59] Speaker 03: The second proceeding only concerned the cost of service. [00:35:02] Speaker 03: because they had already set the benchmark and the rate was, you know, the proposed rate was below the benchmark that the FCC had calculated. [00:35:12] Speaker 03: And that proceeding is also subject to refunds. [00:35:17] Speaker 03: If there's no further questions, then I'll turn it over to Mr. Sher. [00:35:20] Speaker 03: Thank you. [00:35:21] Speaker 01: Thank you, Mr. Hanseter. [00:35:22] Speaker 01: Mr. Sher. [00:35:25] Speaker 02: Good morning, your honors. [00:35:27] Speaker 02: May it please the court, William Sher on behalf of respondents. [00:35:31] Speaker 02: None of Orion's claims is properly before the court. [00:35:35] Speaker 02: Orion's as applied challenge to the benchmark rule is premature because the rule has had no concrete impact on Orion yet. [00:35:43] Speaker 02: The FCC calculated the benchmark in the underlying tariff investigations, but the FCC didn't prescribe the benchmark as the lawful rate going forward. [00:35:52] Speaker 02: Instead, it twice directed Orion to justify its cost-based rate. [00:35:57] Speaker 02: Orion's claims of harm from the benchmark will remain hypothetical. [00:36:01] Speaker 02: And rather than too early, Orient's statutory arguments are too late because it failed to present them to the agency first. [00:36:08] Speaker 02: Orient argued that it can't be subject to the benchmark rule in a prior FCC proceeding, and it ultimately lost that argument in this court. [00:36:16] Speaker 02: Now it's back with various statutory arguments, the crux of which are the same, that Orient can't be subject to the benchmark rule. [00:36:23] Speaker 06: Mr. Sher, can I just stop you there? [00:36:24] Speaker 06: So are you disagreeing with Mr. Hunseter about [00:36:30] Speaker 06: The clarity I mean he's saying that we now know that the cost base rates unlawful the benchmark rate is going to be what applies and it sounds like you're not you're saying it's not clear. [00:36:41] Speaker 06: It hasn't been prescribed. [00:36:44] Speaker 02: In both of the orders on review your honor the SEC. [00:36:49] Speaker 02: Well, the SEC calculated the benchmark rate in the first rate order. [00:36:53] Speaker 02: In both the orders on review, the FCC terminated the investigation without prescribing a rate or identifying a lawful rate. [00:37:04] Speaker 02: Instead, what it did was send Orient, direct Orient to revise its tariff and to provide more support for its cost-based rate. [00:37:15] Speaker 02: Now, after the orders on review, so after these tariff proceedings that are here before you, [00:37:22] Speaker 02: Ultimately, Orion filed a rate that the FCC allowed to go into effect. [00:37:29] Speaker 02: It's a cost-based rate, and I think it's identified in Orion's brief around page 9. [00:37:36] Speaker 01: Then can you help me understand the context? [00:37:41] Speaker 01: The third rate, the one that's been allowed to go into effect is not before us. [00:37:46] Speaker 01: That kicked in sometime in 2019 and has been in effect since. [00:37:50] Speaker 01: So what's before us is the rate that should have been in effect for the period from 2018 to 2019. [00:37:57] Speaker 01: And as to that, it sounds like you're saying there was never a definitive determination of what the rate should have been because both times it came up, the FCC sent it back both times and said, you need to [00:38:12] Speaker 01: present more information to justify the cost base rate. [00:38:15] Speaker 01: That's all correct, Your Honor. [00:38:17] Speaker 01: And so. [00:38:18] Speaker 01: And then if that's true, then I'm still not understanding how we get past the starting gate, because if we don't know what the cost base rate is, because there needed to be more information, then we don't know which is lower, the benchmark rate or the cost base rate. [00:38:34] Speaker 01: And if we don't know which is lower, then we don't know which is the governing rate. [00:38:38] Speaker 01: So a challenge to either of them seems speculative. [00:38:42] Speaker 02: That's correct, Your Honor. [00:38:43] Speaker 02: And so we've made a ripeness argument. [00:38:46] Speaker 02: And I think that ripeness is a time bound approach to standing, but our but our basic point is that there's been no concrete impact. [00:38:56] Speaker 01: Then why doesn't your ripeness argument, if we just assume that it's ripeness slash standing, meaning that [00:39:02] Speaker 01: Things haven't germinated to a point that we know yet which rate is in effect. [00:39:08] Speaker 01: So a challenge to a rate that may not be in effect is unripe, as I understand it, the gist of your argument. [00:39:15] Speaker 01: If that's true as to Ariane's petition, why isn't it also true as to AT&T's? [00:39:20] Speaker 01: Because AT&T is also challenging some rates. [00:39:25] Speaker 01: And it seems like the same logic. [00:39:27] Speaker 01: We heard Mr. Hunstner say that that same logic doesn't apply. [00:39:30] Speaker 01: want to know your perspective on why doesn't the same logic apply because either of the rates that they're challenging, they have a challenge to the benchmark rate and they have a challenge to the cost base rate. [00:39:40] Speaker 01: But the same logic would say, well, we don't know which rate is in effect for the relevant period. [00:39:45] Speaker 01: And so neither of those challenges are right. [00:39:47] Speaker 02: Well, I think in our brief, we conceded the point that if AT&T were to prevail on either of its challenges, one of which is to the benchmark rate calculation, one of which is to the cost-based rate calculation, [00:40:03] Speaker 02: that the rate that was ultimately prescribed after these proceedings would be lower. [00:40:09] Speaker 02: Now it's possible that the FCC ultimately, assuming that this case doesn't settle before that, will have to issue a refund order for the periods that are subject to these two tariff investigations, and it'll have to decide on a [00:40:25] Speaker 02: refund amount and presumably will have to identify what the appropriate rate should have been to determine that refund. [00:40:32] Speaker 02: It's possible that if AT&T were to prevail and were to lower either of those rate calculations that it would have a greater refund. [00:40:45] Speaker 01: That's because of [00:40:50] Speaker 01: the impact on the rate that kicked in in 2019 and is now in effect, or that's because of something that happened from the 2018 to 2019 period. [00:41:02] Speaker 02: I can't speak definitively because the FCC hasn't engaged in the analysis of how to determine the refund, but I don't think that the lawful rate, which is currently in effect and which was approved after the subject orders would necessarily dictate what refunds were owed. [00:41:26] Speaker 02: I think that over the course of the underlying proceedings, [00:41:29] Speaker 02: Orient submitted different proposed cost-based rates. [00:41:34] Speaker 02: I think that the rates fluctuated in part because there were different demand projections because it happened over a period of time and there were changes. [00:41:43] Speaker 02: So I think, again, if and when the FCC has to engage in a refund analysis, it may bring up some different complicated issues. [00:41:52] Speaker 01: So then let me just ask one last question, I think, at least at this time. [00:41:57] Speaker 01: If the reason from the commission's perspective, AT&T's questions get answered is that it has to do with potential implications for the refund, which as you're describing it now is for the 2018 to 2019 period, then why doesn't that same reason also apply to Orion? [00:42:15] Speaker 01: Aren't they also affected by the amount of the refund? [00:42:19] Speaker 02: Well, I would say two things, Your Honor. [00:42:22] Speaker 02: First of all, Orion's challenge [00:42:24] Speaker 02: is solely to the benchmark rate and to the fact that it's subject to the benchmark rate. [00:42:30] Speaker 02: So it's not challenging. [00:42:32] Speaker 02: the calculation of that rate. [00:42:35] Speaker 02: I guess the other thing I would say is that if and when the FCC issues a refund order, and if that refund order orders refunds based on the FCC's calculation of a benchmark rate, which presumably would only happen if AT&T were to prevail, then I believe that Oregon ought to be able to [00:43:01] Speaker 02: challenge that refund order, at that point, there would at least be some concrete impact on it of a benchmark rate, which didn't happen in the order sign review. [00:43:12] Speaker 01: But you don't say the same thing about AT&T, that AT&T could also challenge a refund order and get... I would say the same thing about AT&T. [00:43:21] Speaker 02: But then why? [00:43:22] Speaker 02: Well, I mean, Your Honor, we didn't... [00:43:25] Speaker 02: We didn't challenge either parties standing. [00:43:30] Speaker 02: And in our brief, what we said about AT&T's claims was that they would affect the calculation of either rate. [00:43:43] Speaker 02: and that they would bring the rate lower than the rate that is presently in effect. [00:43:49] Speaker 02: But as I said before, that rate is not before you. [00:43:53] Speaker 01: Right. [00:43:54] Speaker 01: I'm not understanding that aspect of it, because if that rate's not before us, that seems like that could be a separate proceeding that somebody would bring at some point, assuming that you can get past any threshold issues there. [00:44:04] Speaker 01: But we're only talking about the 2018 to 2019 period. [00:44:08] Speaker 01: So that basis kind of drops out, I think, right? [00:44:10] Speaker 01: Because that has to do with something that happened later. [00:44:12] Speaker 01: Yes. [00:44:13] Speaker 01: And we measure standing by reference to the state of affairs at the time that the petitions were filed. [00:44:19] Speaker 01: Yes, that's correct, Your Honor. [00:44:20] Speaker 06: And I mean, right, bracketing, except that it's interesting that despite predictions that the cost-based rate would always be higher, the cost-based rate came in as lower than the benchmark. [00:44:30] Speaker 06: But that just seems like an interesting [00:44:35] Speaker 06: fact but not directly relevant, that what I had understood to be the reason that AT&T believes it has standing even as it assails Orion's standing was that it is challenging both calculuses. [00:44:54] Speaker 06: And so there isn't a situation in which it's [00:45:05] Speaker 06: its case would be irrelevant, which is true with Orion. [00:45:10] Speaker 06: Orion is not challenging the cost-based rate. [00:45:12] Speaker 06: And therefore, if the cost-based rate were lower, that would be the one that prevails. [00:45:18] Speaker 06: So all the challenges that it raises to the application of the benchmark rate would be advisory on our part. [00:45:27] Speaker 06: But what I'm not clear about is, when I had not previously observed, it was Mr. Hunseter saying that he doesn't think there is any further cost information that's going to bear on the nature of this refund. [00:45:40] Speaker 06: And I thought I heard you say the opposite. [00:45:46] Speaker 02: I don't think, I agreed with Mr. Huntsetter's characterization of what would happen in terms of, I don't think that there's going to be any, there's not going to be any further proceedings before the commission regarding the period at issue in the investigations before you, whereby the commission will have the parties come in to try to establish what the lawful rate should have been during that time. [00:46:13] Speaker 02: The cost-based rate. [00:46:15] Speaker 02: The cost-based rate. [00:46:16] Speaker 02: But the commission will have to determine some basis on which to order any refunds that may be owed. [00:46:24] Speaker 06: Meaning it will have to determine what the two rates are. [00:46:29] Speaker 06: Or if there's, I thought Mr. Hunt said it was saying the whole notion of a cost-based rate is off the table because Oria never came up with [00:46:38] Speaker 06: the data that would be required to support a lawful cost base rate. [00:46:42] Speaker 06: Therefore, we default to the benchmark rate. [00:46:47] Speaker 02: I don't think that's necessarily the case, Your Honor, because ultimately, Orion made the showing that the commission directed it to make in the two orders. [00:47:01] Speaker 02: ultimately a cost-based rate went into effect. [00:47:04] Speaker 02: So it's not impossible or out of the realm of possibility that the commission could determine that the appropriate cost-based rate for the 2018-2019 period was the basis on which to order any refunds. [00:47:21] Speaker 05: And in that case, Orion wouldn't have [00:47:25] Speaker 05: And in that case, Orient's challenge wouldn't apply to that because they haven't challenged the cost-based rate. [00:47:31] Speaker 01: Correct, Your Honor. [00:47:32] Speaker 01: Because they've only challenged the benchmark rate. [00:47:36] Speaker 01: But that makes it sound like we don't know yet whether for 2018 to 2019, the governing rate for purposes of calculating refunds is the benchmark rate or the cost-based rate. [00:47:48] Speaker 01: It could still be either one. [00:47:50] Speaker 02: Yes, I believe that's true. [00:47:53] Speaker ?: Yeah. [00:47:54] Speaker 01: If that's true, then, and if that's the reason that Orion's claim is either right or doesn't have standing, I think they sort of seem to blow down to the same thing here, the way you're looking at it, then it's still not apparent to me why that's not equally true with AT&T. [00:48:12] Speaker 01: I guess one way to ask the question is this, suppose from the commission's perspective, just suppose that the only challenge AT&T was making was to the benchmark rate. [00:48:20] Speaker 01: and they don't have the challenge of the cost base rate. [00:48:23] Speaker 01: It's just not in the case. [00:48:24] Speaker 01: I know that it is, but let's just assume that it's not. [00:48:27] Speaker 01: Then would you be making the same argument for AT&T as you would be for Orion? [00:48:34] Speaker 02: I mean, I think that that implicates Judge Pillard's idea that it was because AT&T was challenging both. [00:48:46] Speaker 02: I'm not certain. [00:48:48] Speaker 02: That's the case. [00:48:49] Speaker 02: I mean, our approach to it. [00:48:54] Speaker 02: I mean, from my perspective in looking at these cases, when we began briefing and going through the threshold issues, I had difficulty with this. [00:49:04] Speaker 02: Section 204 has a specific provision that these tariff investigation orders are final and appealable, regardless of the outcome. [00:49:16] Speaker 02: So there was no issue as to finality. [00:49:18] Speaker 02: And the fact that AT&T was arguing for a lower benchmark rate that might ultimately make a difference to it seemed important to us. [00:49:31] Speaker 02: So I don't know that if AT&T was only challenging the one that would have made any difference in terms of our analysis, which may have been insufficient as this whole colloquy is pointing out. [00:49:43] Speaker 01: Can you explain to me the difference? [00:49:46] Speaker 01: I take it you continue to think that the Orion challenge to the benchmark rate is unripe? [00:49:53] Speaker 01: Correct. [00:49:54] Speaker 01: Then why do you think that the AT&T challenge to the benchmark rate is ripe? [00:50:02] Speaker 02: I don't want to sit here and advocate for its rightness. [00:50:09] Speaker 02: It's possible for me to make a distinction only based upon the existence currently of a cost-based rate that's in effect [00:50:21] Speaker 02: Now, that rate, as you recognized before, isn't before the court presently. [00:50:27] Speaker 02: But that's the distinction, the factual distinction, the contextual distinction that we had in mind and that would make a difference, I guess, if it did make a difference, if it were relevant. [00:50:42] Speaker 06: You're talking about the cost-based rate for 2019. [00:50:45] Speaker 02: I'm talking about the cost-based rate for the period after these tariff investigations, which is presently in effect and doesn't bear on this case. [00:50:56] Speaker 01: And so, and I guess what I'm still missing, and it's very possible that I'm not understanding the context correctly, but I'll just ask you to help me, is the basis that you've just thrown out for, that you've just offered for a potential distinction between Ariane's position and AT&T's position vis-a-vis a challenge to the benchmark rate is that [00:51:16] Speaker 01: Well, if you take into account the fact that there's a cost-based rate in effect for 2019 forward, then that might have implications that would somehow make AT&T's challenge to the benchmark rate ripe. [00:51:27] Speaker 01: And I guess what I don't understand then is then why would that not equally be true of Orion's challenge to the benchmark rate too? [00:51:34] Speaker 01: What I'm not understanding is why they don't stand or fall together no matter what consideration we take into account. [00:51:40] Speaker 02: I guess the distinction I would make with respect to Orion is that [00:51:44] Speaker 02: Oriens. [00:51:46] Speaker 02: What Orion is challenging is we shouldn't be subject to the benchmark rate. [00:51:52] Speaker 02: There were two tariff investigations, neither of them prescribed the benchmark rate. [00:51:57] Speaker 02: Ultimately, after this case, a cost-based rate went into effect and is now in effect. [00:52:05] Speaker 02: So we don't know it's contingent on future events whether Orion will ever be subject to the benchmark rate. [00:52:13] Speaker 02: Since Orion isn't challenging the cost-based rate, [00:52:16] Speaker 02: There's no impact even on what happens after this case. [00:52:22] Speaker 01: Isn't that also true of AT&T's challenge to the benchmark rate though? [00:52:28] Speaker 01: It seems like everything you just said would be equally true of AT&T's challenge to the benchmark rate. [00:52:39] Speaker 02: Yeah, I think I'm not going to continue to advocate a distinction. [00:52:46] Speaker 02: I think I'm going to concede that sitting up here, I can't identify a distinction. [00:52:51] Speaker 02: I would just point out that with respect to Orion and the threshold objections, [00:53:02] Speaker 02: We've made a rightness argument with respect to Orients as applied challenge, but with respect to their various statutory arguments, we've also made four or five objections, which are separate bars. [00:53:17] Speaker 02: I see that I'm out of time. [00:53:19] Speaker 01: Can I just ask you, I just want to ask you one last question, which is not a different topic, if I could. [00:53:25] Speaker 01: It doesn't sound like you have an awareness, the commission has any awareness of the negotiations as to which we received a document yesterday. [00:53:31] Speaker 01: And so I'll just assume that, but you of course are free to tell me otherwise are free not to. [00:53:36] Speaker 01: But my question is this, if the both petitioners decide to dismiss their petitions because they've reached some sort of accord that in their view enables them to withdraw the petitions, are you aware of any reason that the commission would then stand in the way of the case going away? [00:53:56] Speaker 01: either would have the authority to do that or would want to? [00:53:59] Speaker 01: No, absolutely not. [00:54:03] Speaker 01: Okay, unless my colleagues have additional questions for you, Mr. Scherr, we'll give them the rebuttal time. [00:54:10] Speaker 01: Thank you. [00:54:12] Speaker 01: Thank you, Your Honor. [00:54:13] Speaker 01: Mr. Troup, we'll give you one minute of rebuttal. [00:54:16] Speaker 04: Thank you, Your Honor. [00:54:18] Speaker 04: Two things I want to correct. [00:54:20] Speaker 04: First of all, all this talk about rejection. [00:54:24] Speaker 04: Rejection only occurs before tariff goes into effect. [00:54:27] Speaker 04: There was no rejection in this case. [00:54:29] Speaker 04: There's questions about what cost-based rate was in effect in 2018, 2019. [00:54:33] Speaker 04: The cost-based rates that were in effect were the tariff rates that were filed. [00:54:38] Speaker 04: The FCC's order say those rates remain effective until the compliance tariff filing. [00:54:44] Speaker 04: So those cost-based rates in 2018 and 2019 were effective. [00:54:50] Speaker 04: As far as standing at rightness, this case will not get any more right [00:54:53] Speaker 04: ORNM will never file a cost-based rate above a benchmark as long as that's going to incur penalties and prosecution, but it has a right under Section 205 to file a rate that allows it to earn the minimum rate of return prescribed by the FCC that is required to stay in service. [00:55:14] Speaker 04: With respect to the refund benchmark in Part 65 of the FCC's rules provides earnings review [00:55:22] Speaker 04: Retroactive rate making is improper. [00:55:24] Speaker 04: They can't go back and change the rate with respect to benchmark 205 only allows them to do that prospectively. [00:55:32] Speaker 04: We can't go back in 2018, increase our rates. [00:55:35] Speaker 04: They can't go back in 2018 and reduce the rates which were effective. [00:55:40] Speaker 04: That's unlawful retroactive rate making. [00:55:43] Speaker 04: Thank you, your honor. [00:55:45] Speaker 06: But they can order a refund. [00:55:48] Speaker 04: Under Part 65 of the FC's rules, there's a procedure for refunds. [00:55:53] Speaker 04: You look at the rate of return and new data is, that's a whole new proceeding. [00:56:00] Speaker 04: And that involves even different years from 2018, 2019. [00:56:04] Speaker 04: The rules specify the two-year monitoring period for their earnings. [00:56:09] Speaker 04: That's not 2018, 2019. [00:56:12] Speaker 04: No new data is going to be involved in the 2019, 2018 rates. [00:56:18] Speaker 04: The orders say that those investigations were terminated. [00:56:22] Speaker 04: And any changes to those rates by saying, okay, now we're going to do a refund based on a benchmark retroactively, that's retroactive rate-making. [00:56:34] Speaker 04: That's improper. [00:56:34] Speaker 04: The SEC can only prescribe a new benchmark or new rate, respectively, under Section 205. [00:56:43] Speaker 01: Okay, unless my colleagues have additional questions for you, we'll hear from Mr. Huntsetter for his one minute of rebuttal. [00:56:53] Speaker 03: I'd like to turn back to the standing point. [00:56:55] Speaker 03: I think our position is consistent with what Judge Teller articulated that we think the combination of the two challenges to the cost of services to the benchmark mean that there is standing for us because again, [00:57:13] Speaker 03: we'll know that the, I mean, again, potentially, well, if we prevail, then that does affect the range of refunds that are available to us. [00:57:23] Speaker 03: So I think that's our position on standing and why we have standing. [00:57:28] Speaker 03: On the other hand, like I said, if Ariane prevails and you assume that they've prevailed, those tariffs are, and it sounds like we're in agreement, they're gonna remain rejected and they're never gonna come back into effect. [00:57:40] Speaker 03: And so there's never any redressability [00:57:43] Speaker 03: as a result of this court's actions that it would take on our institution. [00:57:48] Speaker 03: So that's the time. [00:57:48] Speaker 06: But if it prevails, it's challenging the benchmarks. [00:57:53] Speaker 06: If it prevails, it affects the size of the gap between what it builds and what it's entitled to. [00:58:04] Speaker 03: It does. [00:58:05] Speaker 03: It would affect the size of the gap. [00:58:06] Speaker 03: But again, we know that, again, right now, it's at 0.5634. [00:58:13] Speaker 03: And again, we know because they rejected a rate that was far lower than that benchmark of 0.3 or a little bit below 0.3. [00:58:24] Speaker 03: Whatever rate is set for the refund, I think it's fair to say it's going to be below 0.29 because they already rejected a 0.29 rate. [00:58:33] Speaker 03: And I don't think they can go back and revisit that and say, hey, we actually think the rate is 0.4 or 0.6. [00:58:39] Speaker 03: So I do think it's going to be below or then [00:58:43] Speaker 03: to nine, the last proposed tariff rate that was at issue in the second grade order. [00:58:48] Speaker 03: And so that's why I think, like I said, there's really no redressability. [00:58:51] Speaker 03: I mean, yes, the gap would close, but again, that gap has no real impact or would never have any real impact, I think, if that's how I understand it. [00:58:59] Speaker 06: I think the gap had a major impact on the size of it. [00:59:02] Speaker 06: It's the same thing you care about. [00:59:04] Speaker 06: It has an impact on the size of the potential refund. [00:59:09] Speaker 03: It does for us in terms of the refund, but I think for them, [00:59:13] Speaker 03: Like I said, we know their rate. [00:59:15] Speaker 03: I mean, they've conceded, they've conceded, and I have some feedback, I apologize, but they've conceded that the 0.3 rate, I mean, there's been a finding that the 0.3 rate is unlawful. [00:59:28] Speaker 03: And so no matter what happens to Ariane's claims, in this period, they'll never get a rate above 0.3. [00:59:37] Speaker 03: And so that's why I'm saying I think there's no redressability. [00:59:40] Speaker 03: Even if the gap narrows, there's really no redressability [00:59:43] Speaker 03: it doesn't affect the tariffs lawfulness or the refunded. [00:59:48] Speaker 06: It doesn't affect the cost-based tariffs lawfulness, but since they're challenging, I guess what you're saying is they're not challenging the level of the benchmark. [00:59:57] Speaker 06: They're challenging its applicability at all. [01:00:00] Speaker 03: That's correct. [01:00:01] Speaker 06: And that way, if they were challenging the level of it, they would have standing for the same reason you do. [01:00:06] Speaker 06: But because they're challenging its existence without [01:00:15] Speaker 06: And you're saying we kind of know the neighborhood that it's in and we know that... Lost it, sorry. [01:00:29] Speaker 03: Okay, no, I do think that that's correct. [01:00:31] Speaker 03: We sort of know the neighborhood that it's in and that, like I said, no matter what, if you rule that they're subject to the benchmark or they're not subject to the benchmark, nothing is going to change in either of the two therapy proceedings. [01:00:45] Speaker 03: And I think that's kind of the end of the matter for already. [01:00:47] Speaker 03: Thank you. [01:00:50] Speaker 01: Okay. [01:00:50] Speaker 01: Thank you, counsel. [01:00:51] Speaker 01: Thank you to all counsel. [01:00:53] Speaker 01: We'll take this case under submission.