[00:00:00] Speaker 04:
Council, Mr Taylor, please proceed ready.

[00:00:32] Speaker 06:
The entire premise for the new PCG paper pools was that they would provide increased liquidity in the market for responsibly sourced gas and that gas aggregated at the pooling points would likely trade at a premium.

[00:00:44] Speaker 06:
Both Tennessee Gas Pipeline and FERC endorsed this rationale.

[00:00:48] Speaker 06:
The PCG criteria govern who can and who cannot access the pools and all of these benefits.

[00:00:55] Speaker 06:
It's hard to imagine a term that could more significantly affect this FERC jurisdictional service.

[00:01:01] Speaker 06:
and yet FERC has disclaimed oversight of the gateway criteria for the PCG pools altogether.

[00:01:06] Speaker 08:
Council, can I give you a hypothetical which would help me understand your position on standing in this case?

[00:01:16] Speaker 08:
Let's say that I'm a railroad regulator and you are a railway operator.

[00:01:22] Speaker 08:
You're a company that runs trains.

[00:01:24] Speaker 08:
You have a train with two cars.

[00:01:28] Speaker 08:
These cars are identical.

[00:01:30] Speaker 08:
They run

[00:01:31] Speaker 08:
on the exact same timetable, at the same price, and to the same destination.

[00:01:35] Speaker 08:
But car one only carries organic food.

[00:01:40] Speaker 08:
And car two carries any kind of food, organic or otherwise.

[00:01:45] Speaker 08:
You, the train company, decide to post the criteria for defining organic on your website.

[00:01:54] Speaker 08:
Then a farmer who sells organic food sues me, the regulatory agency,

[00:02:00] Speaker 08:
and says that I should require you, the company, to put the definition of organic on a document that's submitted to me, the regulator.

[00:02:11] Speaker 08:
The farmer says the fact that the company is defining organic food could affect the price of organic food.

[00:02:20] Speaker 08:
Has the farmer shown that he has suffered a concrete injury inflicted by me, the regulator?

[00:02:26] Speaker 08:
Have I harmed him by letting the company put the criteria on the website

[00:02:30] Speaker 08:
instead of in a document submitted to me.

[00:02:34] Speaker 06:
I think that if in your hypothetical, the regulator, the filing of the document with the regulator was the predicate for review for those criteria as just and reasonable, then there is a procedural injury in your hypothetical.

[00:02:50] Speaker 06:
The important, the purpose of the public filing requirement and it's a statutory requirement, it's something that's very well established in FERC's own regulations and in the precedence of this court is because that then is prompts the section four proceeding in which the pipeline has to show that this is just and reasonable and FERC then exercises its supervisory authority and determines whether it's just and reasonable.

[00:03:13] Speaker 08:
But how are you harmed if you're the farmer by the fact that the criteria is

[00:03:20] Speaker 08:
put in a website versus.

[00:03:24] Speaker 06:
Because once the criteria is on the website and also in this hypothetical, the regulator has said, not only are we not going to put that in the tariff, but we don't have jurisdiction over it.

[00:03:33] Speaker 06:
We're never going to review.

[00:03:34] Speaker 08:
Well, in my hypothetical, which I think is on point in some respect, I'm a regulator of transportation.

[00:03:42] Speaker 08:
I'm not a regulator of what is organic food.

[00:03:45] Speaker 08:
And FERC is a regulator of transportation of gas, not the qualities of the gas.

[00:03:50] Speaker 08:
So I think that that's apt.

[00:03:52] Speaker 08:
So how are you harmed by me, the regulator, just saying this criteria, which I'm not in charge of, it's on the website and not in the tariff or in the document that's submitted to me.

[00:04:05] Speaker 06:
Because as a customer of the railroad or the pipeline, that Ontario has a procedural interest

[00:04:14] Speaker 06:
in FERC's statutory duty is to protect customers of pipelines against the potential monopoly power of the pipelines.

[00:04:24] Speaker 06:
And so the fact that, so by agreeing that the service can be offered as part of the tariff and then allowing the gateway criteria for the service to be sort of not just deferred, but completely excluded from jurisdiction,

[00:04:42] Speaker 06:
In that hypothetical, the regulator has allowed the railroad to create a market for something that everybody agrees is going to be valuable.

[00:04:51] Speaker 06:
And then has stepped back and said, despite the fact that we're the economic regulator of this entity, we're actually not going to take any responsibility for the gatekeeping criteria for who gets to access or not access the positive premium that everyone agrees is going to exist in this market.

[00:05:07] Speaker 06:
And I think

[00:05:08] Speaker 06:
Just to also take a step back from, I don't want to fight the hypothetical.

[00:05:12] Speaker 06:
I'm happy to continue to discuss it.

[00:05:14] Speaker 06:
But I'm trying to understand the procedural harm, though.

[00:05:16] Speaker 08:
What is the procedural harm?

[00:05:18] Speaker 06:
The procedural harm is that as a producer of gas who ships gas every day on the pipeline and also produces responsibly sourced gas, FERC has said to Antero and other similarly situated producers, we're going to allow this pipeline to create a market that affects, that's a concrete interest, right?

[00:05:40] Speaker 06:
We're in the Luhan hypothetical.

[00:05:42] Speaker 06:
We live next to the dam, right?

[00:05:45] Speaker 06:
We have a concrete economic interest that's going to be direction.

[00:05:47] Speaker 08:
But it affects your interest in what respect?

[00:05:49] Speaker 08:
Because you can still transport your gas the way you always have.

[00:05:54] Speaker 08:
It's the same, I guess, all the same terms.

[00:05:59] Speaker 08:
And it seems to me that given that you can do that, this is just an informational thing.

[00:06:06] Speaker 08:
So how are you harmed by where that information is placed?

[00:06:11] Speaker 06:
So I think this is a distinction that FERC attempts to draw in its brief between what it calls actual transportation, which is like, I understand that to mean physically getting gas molecules from point A to point B. I'm sorry, but even under the pooling program, the pooling arrangement is exactly the same.

[00:06:28] Speaker 06:
But as a scheduling service, it's the same.

[00:06:30] Speaker 06:
But there's this what they call an informational feature.

[00:06:32] Speaker 06:
There's two separate pools.

[00:06:34] Speaker 06:
I mean, there's paper pooling for

[00:06:37] Speaker 06:
ordinary gas and paper pooling for responsibly sourced gas.

[00:06:40] Speaker 06:
Everybody assumes and FERC and Tennessee Gas Pipeline that the responsibly sourced gas is going to trade at a premium.

[00:06:49] Speaker 06:
FERC is the economic regulator, right?

[00:06:50] Speaker 08:
It's not just, FERC's not just- But the trading at the premium is not about the terms and services of transporting the gas.

[00:06:59] Speaker 06:
I would submit that trading at a premium is the type of, I mean, FERC is supposed to- FERC doesn't regulate gas prices, right?

[00:07:07] Speaker 08:
It does regulate the prices that that of transportation of transportation, but not gas prices.

[00:07:13] Speaker 08:
And you're saying that the gas prices are going to change.

[00:07:17] Speaker 08:
We're saying that they focus looking at the prices of transportation would be the same.

[00:07:22] Speaker 08:
It's free.

[00:07:24] Speaker 06:
The scheduling service will be free.

[00:07:25] Speaker 06:
The actual transportation.

[00:07:27] Speaker 06:
I don't want to get hung up on those distinctions.

[00:07:31] Speaker 06:
But what FERC is saying is, I take FERC to essentially be saying, well, look, it's OK as long as you can schedule your deliveries, get your gas molecules from point A to point B. That's actual transportation.

[00:07:42] Speaker 06:
And that's all that we have responsibility for.

[00:07:44] Speaker 06:
But respectfully, that is not their statutory mandate.

[00:07:46] Speaker 06:
They're the economic regulator of pipelines.

[00:07:48] Speaker 06:
Their job is to ensure that when pipelines

[00:07:51] Speaker 06:
offer jurisdictional services and there is no dispute that paper pooling is a jurisdictional service.

[00:07:56] Speaker 06:
that that's offered on a non-discriminatory basis to all of their customers.

[00:08:00] Speaker 06:
And that's the purpose of having these provisions.

[00:08:03] Speaker 06:
This is a non-discriminatory basis.

[00:08:04] Speaker 08:
You can use it or not.

[00:08:06] Speaker 06:
Well, it is discriminatory in the sense that they're saying there's two different pools in which you can trade.

[00:08:14] Speaker 06:
And you can only gain access to the one where the premium will be charged if you meet these criteria.

[00:08:20] Speaker 06:
And yet, we're not taking any position

[00:08:22] Speaker 06:
on what those criteria are, not only now, but indefinitely into the future.

[00:08:27] Speaker 06:
They're saying we have no jurisdiction.

[00:08:28] Speaker 06:
So again, they allow the service to be offered as a

[00:08:34] Speaker 06:
you know, second scheduling service, the paper pooling service in the tariff.

[00:08:38] Speaker 06:
And yet, so that, you know, they recognize that it's a jurisdictional service.

[00:08:43] Speaker 06:
And yet they're saying, well, we aren't comfortable, you know, saying what organic food is or saying what RSG is.

[00:08:50] Speaker 06:
And so we're going to let the pipeline change those criteria at its discretion.

[00:08:54] Speaker 06:
I mean, to put the point a little bit differently, if you're the farmer and you're deciding, do I grow organic food this year or do I not grow organic food?

[00:09:01] Speaker 06:
And actually, you have to plan several years out.

[00:09:05] Speaker 06:
You are not able to rely on the stability of the definition of what constitutes organic food because it can change at any moment subject to that.

[00:09:14] Speaker 08:
FERC is not defining this criteria for the entire market.

[00:09:17] Speaker 08:
They're just saying for purposes of its pipeline.

[00:09:20] Speaker 06:
They're allowing the pipeline to change the criterion at its sole discretion.

[00:09:26] Speaker 08:
But even if that were in the tariff, couldn't change it?

[00:09:29] Speaker 06:
If it were in the tariff, they would have to change it by filing a change, and then FERC would review it.

[00:09:35] Speaker 06:
But it's not immutable just because it's in the tariff.

[00:09:38] Speaker 06:
But FERC is saying that it doesn't have any jurisdiction over this.

[00:09:40] Speaker 08:
So in other words, I'm trying to understand why this is important to you.

[00:09:44] Speaker 08:
Because if your issue is that this creates uncertainty,

[00:09:50] Speaker 08:
It doesn't make it certain if it's in the tariff versus on the website.

[00:09:56] Speaker 06:
What is certain?

[00:09:57] Speaker 06:
So as a customer of the pipeline, the customers are making business decisions with the understanding that FERC is going to do its job as an economic regulator.

[00:10:06] Speaker 06:
And customers rely on the stability that that affords, that there's not going to be discriminatory terms and provisions in tariffs, that they're not going to be changed at will.

[00:10:14] Speaker 08:
Let me ask you then.

[00:10:16] Speaker 08:
Isn't your theory of standing then relying on the speculation that Tennessee is going to change things willy-nilly whenever they want with little notice, even though they have to give you three days notice?

[00:10:29] Speaker 08:
And isn't that speculative?

[00:10:31] Speaker 06:
I don't think our standing is relying on that speculation.

[00:10:34] Speaker 06:
Our standing is relying on the fact that any business that's rational.

[00:10:38] Speaker 06:
is going to take into account the stability of the market conditions and the regulatory picture when it makes decisions.

[00:10:44] Speaker 06:
And if you have a guarantee that the economic regulator for the pipelines is going to supervise, review any changes in criteria and make sure that they're just and reasonable and that you will have an opportunity in that review process to have your say about the changes to the criteria,

[00:11:01] Speaker 06:
then you can make your decisions under those conditions.

[00:11:05] Speaker 06:
If in contrast, the pipeline is able to change the criteria with 30 days notice at its will without that review for justness and reasonableness, then that entirely changes your expectations as a market participant.

[00:11:20] Speaker 08:
I have just one last question on this.

[00:11:22] Speaker 08:
And where can I find this in your opening brief?

[00:11:24] Speaker 08:
Pardon?

[00:11:25] Speaker 08:
Where can I find this theory in your opening brief?

[00:11:27] Speaker 06:
Well, in our opening brief, that's when you're supposed to establish Stanley.

[00:11:33] Speaker 06:
We established in the opening brief that we ship gas on the pipeline, that we are

[00:11:40] Speaker 06:
a producer of responsibly sourced gas.

[00:11:43] Speaker 06:
We also cited in the section on standing, the ANR pipeline case, which I think is a very good analogy because in that case, one of the relevant factors was the pipeline, the pricing had effectively been, the pipeline had been ordered to

[00:12:01] Speaker 06:
raise its rates.

[00:12:04] Speaker 06:
And the customer was aggrieved by that order.

[00:12:10] Speaker 06:
And the court said, you don't have to wait until the actual filing happens, because at that point, it's going to be a fait accompli.

[00:12:17] Speaker 06:
This is your opportunity.

[00:12:18] Speaker 08:
In your view, does every producer or responsibly sourced gas who uses the pipeline have standing?

[00:12:24] Speaker 08:
Even if they don't, they don't even need to say, I'm going to use the PCG pooling pool.

[00:12:29] Speaker 08:
They just have to be a customer

[00:12:32] Speaker 08:
that produces responsibly sourced gas?

[00:12:34] Speaker 06:
Yeah, I think I believe that being a customer who produces responsibly sourced gas, who is, you know, is a sufficiently concrete economic interest under this court's procedural injury cases to give it standing.

[00:12:47] Speaker 06:
And they don't, you don't even have to say, I'm planning to use the paper polling service.

[00:12:51] Speaker 06:
Um, respectfully, no, because the point is that we're not able to even, you know, make those planning decisions against the backdrop of FERC's economic regulation at doing its job.

[00:13:02] Speaker 06:
If there's there's a sort of a chicken and egg problem here, right?

[00:13:05] Speaker 06:
Because, uh, there, you know, in less than until those criteria are, uh, over overseen by FERC, then they've been in

[00:13:16] Speaker 06:
I guess in effect for a year, is that correct?

[00:13:18] Speaker 06:
They have been, but again, without this backstop of FERC oversight, right?

[00:13:24] Speaker 06:
So the point is that now producers are in the position.

[00:13:27] Speaker 08:
I mean, the fact that they've been in effect for a year and... So you don't even have to state to establish standing that you want to use the paper pooling services, but only if FERC oversees them.

[00:13:38] Speaker 08:
You don't even have to say that.

[00:13:40] Speaker 08:
It's assumed.

[00:13:42] Speaker 06:
We have a concrete economic interest in shipping gas, and we're a producer of responsibly sourced gas.

[00:13:48] Speaker 06:
So our procedural injury is that if the criteria are altered, that we wouldn't even have recourse to go to our regulator.

[00:13:57] Speaker 06:
So in that situation, the EPSA case is an analogy.

[00:14:02] Speaker 06:
EPSA had standing.

[00:14:02] Speaker 06:
It didn't have to assert.

[00:14:04] Speaker 06:
or predict that there was gonna be an ex parte communication someday, they had an interest in the proceedings having regularity and integrity that they knew that they were going to be and their members were going to be participating in.

[00:14:17] Speaker 06:
We're a customer of Tennessee, that's undisputed.

[00:14:20] Speaker 06:
And we have an interest in those procedures having their integrity and being overseen by FERC.

[00:14:27] Speaker 06:
And in fact, indeed even taking place, right?

[00:14:29] Speaker 06:
Because now FERC has said these criteria

[00:14:31] Speaker 06:
we don't have jurisdiction over them.

[00:14:33] Speaker 06:
So it's not a situation where we know that there's going to be a future rate filing.

[00:14:38] Speaker 06:
And at that point, there would be an opportunity to challenge the criteria if we have a substantive disagreement with the way that they're framed or if they're changed in a way that we think is arbitrary.

[00:14:47] Speaker 06:
Because FERC is saying we don't have jurisdiction over those.

[00:14:50] Speaker 06:
They're not in the tariff.

[00:14:52] Speaker 06:
We are never going to review that kind of challenge.

[00:14:53] Speaker 03:
So under your view,

[00:14:56] Speaker 03:
Anytime a regulatory agency decides that it's not going to regulate it in an area, then an entity that wants there to be regulation so that it can talk to the agency about what the regulation would be would have a procedural injury.

[00:15:12] Speaker 06:
I wouldn't put it that broadly, Your Honor.

[00:15:14] Speaker 06:
What I would say is that when an agency as here has a statutory duty to ensure that any terms that significantly affect jurisdictional services are included in the tariff so that

[00:15:27] Speaker 06:
it can exercise that statutory duty to ensure justness and reasonableness.

[00:15:31] Speaker 06:
And it shirks that duty by saying, even though this is a gateway criteria, it obviously is going to affect access to this valuable market that we're allowing this pipeline to create.

[00:15:41] Speaker 06:
And therefore you're not gonna have that future opportunity, then there's a procedural injury.

[00:15:46] Speaker 03:
But I guess that goes to whether you have a strong claim on the merits that they have a duty to regulate.

[00:15:51] Speaker 03:
But in terms of just the injury for standing purposes and restability and traceability and restability for standing purposes, it seems like what you're saying is.

[00:16:00] Speaker 03:
If we would be able to talk to a regulator about the degree of a regulation that we wish that they would exercise so that we would have some back and forth with them about that subject matter, that's the kind of procedural injury that gives us standing to seek relief that requires them to regulate in that area.

[00:16:24] Speaker 06:
Uh, I think I, again, I wouldn't put it that broadly because the tariff is itself sort of, you know, it's the, the linchpin of this entire supervisory system.

[00:16:33] Speaker 06:
So the reason why the statute says you have, you know, terms that can, that significantly affect jurisdictional services have to go in the tariff is because then they're filed under section four.

[00:16:43] Speaker 06:
That's where the proceedings happen, where affected parties get input into, you know, whether they're just and reasonable.

[00:16:50] Speaker 06:
Then if they're going to be changed, there has to be another filing in a further proceeding.

[00:16:53] Speaker 06:
So we're not just sort of saying, hey, we want you to reach out and regulate this thing that may or may not be within your jurisdiction.

[00:16:59] Speaker 06:
And we feel a little bit aggrieved that you haven't done it.

[00:17:01] Speaker 06:
It's almost as if this is the predicate for the process that we get.

[00:17:05] Speaker 06:
And the reason why the statute is structured that way is to ensure that FERC can exercise its economic oversight authority and therefore that participants in the market can rely on that backstop and understand that there's not going to be discrimination.

[00:17:18] Speaker 06:
It's not going to be regulated in an arbitrary manner.

[00:17:21] Speaker 08:
That seems to back into the merits argument, though.

[00:17:23] Speaker 08:
because FERC gets to decide what substantially affects the rates, terms and services.

[00:17:29] Speaker 06:
I mean, well, one thing is that for standing purposes, I think this court generally assumes that we are correct on the merits.

[00:17:36] Speaker 06:
But also I would, but I don't think that, I mean, the procedural injury

[00:17:44] Speaker 06:
We can posit, and this is clear in Lujan, right, that the person who lives near the dam doesn't have to show that the environmental impact statement is going to come out the way that they want.

[00:17:54] Speaker 06:
They have an interest in the procedural regularity of the environmental impact because if it goes sideways, then their property is going to be affected.

[00:18:01] Speaker 06:
And again, we have a concrete economic interest here because we produce responsibly sourced gas and we do ship gas on the Tennessee pipeline.

[00:18:09] Speaker 06:
And so in that sense, we have an interest in the procedural regularity.

[00:18:13] Speaker 06:
In this case, it's like the resident near the dam in Lujan or the association in EFSA that knows that it's going to be participating in these proceedings and knows it's going to have concrete interests that are affected and needs to have those proceedings actually take place in the way that the statute is designed for them to do.

[00:18:34] Speaker 05:
Can I ask more standing questions?

[00:18:36] Speaker 05:
Sure.

[00:18:38] Speaker 05:
I do think that they,

[00:18:39] Speaker 05:
overlap a lot with the merits arguments.

[00:18:41] Speaker 05:
Your standing arguments overlap a lot with the merits arguments.

[00:18:45] Speaker 05:
If you're, and I think you have some awfully strong merits arguments, frankly, if the new pooling service is a quote unquote service that Tennessee gas couldn't have created without first approval.

[00:19:02] Speaker 05:
First of all, do you think that's right?

[00:19:05] Speaker 06:
Yes.

[00:19:06] Speaker 05:
It's a service that Tennessee Gas could not have created without FERC.

[00:19:10] Speaker 06:
Correct.

[00:19:10] Speaker 05:
And then you're a gas shipper that wants to access that service, right?

[00:19:16] Speaker 05:
And FERC has said to Tennessee Gas, you can decide who can and cannot access the service, right?

[00:19:24] Speaker 05:
Then it seems like you're injured because you are

[00:19:32] Speaker 05:
in a position where Tennessee Gas can deny you access to the service and Tennessee Gas can only do that unless FERC has blessed the creation of the service that makes that possible.

[00:19:42] Speaker 05:
Yes, I agree with that.

[00:19:44] Speaker 05:
And that's probably all wrong if you're wrong about the merits, if it's not actually the service.

[00:19:50] Speaker 06:
Well, again, this court does presume that we're correct on the merits for purposes of the standing entry.

[00:19:55] Speaker 06:
Pardon?

[00:19:56] Speaker 06:
It was a friendly question.

[00:19:57] Speaker 06:
Yes, right.

[00:19:58] Speaker 06:
And again, that's almost precisely the there's a Columbia gas transportation case where there was a pipeline that was offering paper pooling, but it wasn't in the tariff.

[00:20:07] Speaker 06:
And this is a FERC case.

[00:20:10] Speaker 05:
What's the name of that case?

[00:20:12] Speaker 06:
I can give you the citation.

[00:20:18] Speaker 06:
Columbia Gas Transmission Corporation.

[00:20:20] Speaker 06:
63012, 1992.

[00:20:25] Speaker 06:
So in that case, the pipeline was apparently offering paper pooling, but it wasn't in the tariff.

[00:20:30] Speaker 06:
And so there was no way to know who was getting access and who wasn't getting access.

[00:20:34] Speaker 06:
And so the commission said, no, you have to put this paper pooling into your tariff so that we can be sure that it's being offered in a nondiscriminatory manner.

[00:20:44] Speaker 08:
I will check out.

[00:20:45] Speaker 08:
I just want to follow up on your hypothetical.

[00:20:48] Speaker 00:
OK, sure.

[00:20:49] Speaker 08:
So under Judge Walker's hypothetical, the claim is that by allowing Tennessee to set the criteria, it's a way of barring some people from accessing that pool.

[00:21:07] Speaker 08:
In order to have a concrete entry to your client, wouldn't you have to give evidence, because we're here on an agency review,

[00:21:17] Speaker 08:
that you wanted to enter the pool but were denied based on the criteria they set.

[00:21:22] Speaker 08:
It can't just be a hypothetical.

[00:21:24] Speaker 08:
Some people will be denied access.

[00:21:27] Speaker 06:
Well, I think in the EPSA case, for example, there was no requirement that the producers show that there was going to be an ex parte communication and that it was enough that FERC had passed a regulation that was going to allow those ex parte communications and the association and its members

[00:21:44] Speaker 06:
had an interest because they were going to be participating in proceedings where that rule would be applicable.

[00:21:50] Speaker 06:
Again, this is, and Lujan is clear about this, when it's a procedural injury, you have to still have a concrete interest, which we do because we ship gas on the pipeline and we produce responsible gas.

[00:22:02] Speaker 05:
Can I ask you about a FERC standing case called Great Lakes Gas Transmission?

[00:22:07] Speaker 05:
It's from 1993.

[00:22:11] Speaker 05:
There the court found standing and it talked about present injurious effect on the company's business decisions and competitive posture within the industry.

[00:22:25] Speaker 05:
Can you make an argument that what's going on here has had a present injurious effect on your business decisions and competitive posture within the industry?

[00:22:35] Speaker 06:
Our argument is that at the moment... I think you have made that argument.

[00:22:39] Speaker 06:
Yes, that's precisely our argument.

[00:22:41] Speaker 06:
Spell three came spelled out.

[00:22:42] Speaker 06:
Right, because we produce responsibly sourced gas, we ship gas on this pipeline, and we are looking at a market that everybody understands is going to have benefits.

[00:22:53] Speaker 06:
They're creating a new way to trade RSG with enhanced liquidity

[00:22:59] Speaker 06:
everybody expects it to trade at a premium.

[00:23:01] Speaker 06:
And we are, as competitors in this market, looking at that, and we are unable to evaluate whether the criteria for access to it are going to be stable, whether they're going to be just and reasonable, whether they're going to be supervised by this regulator at all.

[00:23:14] Speaker 05:
But is that a procedural injury?

[00:23:17] Speaker 05:
I'm not sure I'm hung up on whether it's a procedural injury.

[00:23:21] Speaker 03:
Well, I think that's not a procedural injury theory, right?

[00:23:24] Speaker 03:
The one that was in Great Lakes was not a procedural injury theory.

[00:23:28] Speaker 06:
I don't recall the specifics of whether that was categorized as, but I would, I mean, to the extent that we need to, I mean, I think that the procedural injury cases are helpful because they emphasize that, you know, you don't have to show that the decision is going to come out one way or another.

[00:23:44] Speaker 06:
We don't have to prove that Tennessee is going to arbitrarily or discriminatorily change the criteria, right?

[00:23:49] Speaker 08:
Great Lakes involved a regulated party.

[00:23:52] Speaker 08:
The petitioner in Great Lakes was the party being regulated.

[00:23:56] Speaker 08:
not a customer of that party or some third party that's affected.

[00:24:00] Speaker 06:
Yes, but the whole purpose of the regulatory scheme is to regulate the pipelines who have potential monopoly power in order to protect customers like Ontario.

[00:24:09] Speaker 06:
So if anything, you know, I understand.

[00:24:12] Speaker 06:
I just think Great Lakes doesn't help somebody who's not a regulated party.

[00:24:16] Speaker 06:
To the extent that it is.

[00:24:17] Speaker 06:
Which you're not.

[00:24:20] Speaker 06:
And we're certainly actively engaged with FERC in this area.

[00:24:26] Speaker 06:
But also, if anything, we as the customer who the scheme is designed to protect have an even greater claim to the

[00:24:36] Speaker 06:
recognizing the injury that we would suffer if our business decisions in this market are not framed with the backstop of FERC supervision that would- That's one clarifying question, which is, and there may be a difference among the two petitions.

[00:24:49] Speaker 03:
I'm just trying to get this straight in my mind.

[00:24:51] Speaker 03:
For your purposes, do you, is your position predicated on the idea that FERC has to wrap in the criteria into the tariff?

[00:25:03] Speaker 03:
Or would you be okay if they didn't wrap that into the tariff, but then they also didn't wrap in the pulling option to begin with?

[00:25:11] Speaker 06:
We would be okay with both our primary, the primary relief that we requested was that they be directed to incorporate the criteria into the tariffs that they can be supervised.

[00:25:22] Speaker 06:
But if in the alternative on the basis of the jurisdictional concerns that FERC has articulated or for some other reason,

[00:25:28] Speaker 06:
The court decided that everything would be out that would also give us relief and that highlights the fact that you know this paper pooling service is in fact creating value.

[00:25:37] Speaker 06:
Because it is offered by the pipeline under its tariff right there is an ability to create an enhanced liquidity in that market.

[00:25:45] Speaker 06:
And so as long as that's the case, the criteria need to be in the tariff.

[00:25:50] Speaker 06:
Otherwise, if the whole thing is excluded from the tariff, we can go back to the bilateral trade system that currently has been the way that RSG is treated.

[00:25:58] Speaker 03:
So it's an all or nothing proposition for you that as long as the orders get vacated, you don't care which way for it goes.

[00:26:05] Speaker 03:
They just can't draw a distinction.

[00:26:07] Speaker 06:
They can't do this half measure.

[00:26:10] Speaker 06:
Our first ask was that they include the criteria.

[00:26:12] Speaker 06:
If everything goes out, we would also be satisfied with that.

[00:26:16] Speaker 05:
You say you're an object of regulation, and then a minute ago you said you're not a regulated party.

[00:26:23] Speaker 05:
What's the distinction?

[00:26:25] Speaker 05:
What line are you drawing?

[00:26:27] Speaker 06:
So, you know, I think the language object of regulation in Lujan is not really expounded upon in that opinion.

[00:26:35] Speaker 06:
But the point, I think the distinction that would be drawn is that sometimes you see cases where there's a attenuated theory of standing based on a procedural injury.

[00:26:45] Speaker 06:
If you go back to, you know, there's a group that's saying, well, if this tax cut is enacted, that's going to de-incentivize the, you know,

[00:26:54] Speaker 06:
production of a certain kind of product.

[00:26:56] Speaker 06:
And we have members who like to visit the lands that are near this.

[00:27:00] Speaker 06:
Those parties are not the objects of the regulation who had the tax cut here.

[00:27:04] Speaker 06:
You have oversight of a market.

[00:27:06] Speaker 06:
Pipelines are the directly regulated entity, but they're regulated for the benefit of the customers who participate in these proceedings on a day-to-day basis.

[00:27:15] Speaker 06:
And so that's why we believe we fall within the object of regulation line.

[00:27:21] Speaker 02:
Thank you, counsel.

[00:27:23] Speaker 02:
Miss O'Neill.

[00:27:33] Speaker 09:
Good morning, Your Honors and may it please the court.

[00:27:35] Speaker 09:
Shannon O'Neill for petitioner EQT Energy LLC.

[00:27:39] Speaker 09:
First, lack of jurisdiction

[00:27:40] Speaker 09:
inability to ascertain the justness and reasonableness of the producer certified gas criteria left it with only one acceptable course of action below.

[00:27:50] Speaker 09:
And that would have been to reject Tennessee gases proposal in its entirety.

[00:27:55] Speaker 09:
Instead, FERC took the unreasoned half measure of allowing Tennessee gas to bifurcate the fundamental criteria from the FERC jurisdictional service they govern.

[00:28:06] Speaker 09:
This harms EQT energy because we're not only a shipper on Tennessee gas, we are the market leader in production of producer certified gas.

[00:28:15] Speaker 09:
And what the proposal that Tennessee Gas Put In Place does is essentially dilute the value of our market-leading gas, because it allows gas with potentially four times as much the methane intensity to be included in this same class of producer-certified gas and potentially trade at the same premium.

[00:28:37] Speaker 03:
Is your, based on your,

[00:28:40] Speaker 03:
position that you're the market leader and so you're particularly disadvantaged by this.

[00:28:44] Speaker 03:
Is your theory of standing the same as the theory you heard articulated earlier?

[00:28:49] Speaker 09:
We have a separate theory of standing, Your Honor.

[00:28:52] Speaker 09:
Ours is specific to the harm to EQT.

[00:28:55] Speaker 09:
As the market leader, we are focused less on uncertainty in the market that might be interjected, given lack of confidence in the criteria that Tennessee might set, especially given, again, that those have been removed from first jurisdictional purview.

[00:29:11] Speaker 09:
Our concern and the harm to us, which commenced as soon as the service went into place, is that we have

[00:29:18] Speaker 09:
the lowest methane intensity gas on the market.

[00:29:22] Speaker 09:
Ideally, the relationship between methane intensity and the premium that gas demands should be inverse.

[00:29:27] Speaker 09:
We have the lowest methane intensity.

[00:29:30] Speaker 09:
We should be able to command the highest premium.

[00:29:32] Speaker 09:
We are harmed when Tennessee, as it's done here, for example, it's as if we're the eighth-class student and they switched mid-semester to pass-fail.

[00:29:42] Speaker 09:
We went from being best in class, having worked very hard, put in the time and effort to get there, to all of a sudden being

[00:29:49] Speaker 09:
considered on equal footing with a B minus student.

[00:29:53] Speaker 09:
That is the harm to us and the value of our past.

[00:29:56] Speaker 03:
But the harm has to be related to the agency's action or inaction.

[00:30:03] Speaker 09:
Correct.

[00:30:03] Speaker 09:
And what FERC has done is allowed Tennessee to put in place the service that perpetuates that harm, despite FERC's acknowledged inability to ascertain whether the criteria that govern access to that service are just and reasonable.

[00:30:20] Speaker 03:
But again, regardless- What would FERC do that would remedy the harm you see from having a pass fail system instead of the A plus system?

[00:30:32] Speaker 09:
And this is what differentiates us from council down the table, your honor.

[00:30:36] Speaker 09:
The only appropriate course of action would be to throw out the proposal in its entirety.

[00:30:42] Speaker 09:
We are harmed regardless of whether the criteria are incorporated in the FERC jurisdictional tariff or not.

[00:30:48] Speaker 09:
because it's the existence of the service that dilutes the value of our gas that harms us.

[00:30:54] Speaker 09:
It is not directly whether or not FERC is able to control the criteria that they keep access to that service.

[00:31:02] Speaker 09:
And so because FERC, as it acknowledges, is unable to evaluate those criteria,

[00:31:10] Speaker 09:
The only appropriate course of action is for them to have rejected the proposal in its entirety.

[00:31:14] Speaker 09:
So we would be asking here that their orders below be vacated and remanded.

[00:31:20] Speaker 03:
And they can't go in either direction for your purposes then.

[00:31:23] Speaker 03:
FERC just can't enter into this field at all.

[00:31:27] Speaker 00:
That's correct.

[00:31:27] Speaker 03:
In other words, they're worried that the other petition is worried that it's a half measure, and you can do the level up or level down.

[00:31:34] Speaker 03:
They wouldn't care.

[00:31:35] Speaker 03:
For you, that's not the case.

[00:31:37] Speaker 09:
That's correct, Your Honor.

[00:31:38] Speaker 09:
FERC does not have the jurisdiction to evaluate the criteria.

[00:31:42] Speaker 09:
They've also acknowledged they lack the expertise.

[00:31:44] Speaker 09:
It's beyond their authority.

[00:31:46] Speaker 09:
So there is no universe where this is appropriately included in the FERC jurisdictional tariff.

[00:31:53] Speaker 08:
What if there were no criteria?

[00:31:55] Speaker 08:
What if they just said you can have a paper pooling thing for RSG?

[00:31:59] Speaker 08:
We'll just let the market decide what that means.

[00:32:03] Speaker 09:
I think that would be a different circumstance, Your Honor.

[00:32:07] Speaker 09:
I don't know under those circumstances, though, what would differentiate that from Tennessee Gas's existing pooling service?

[00:32:15] Speaker 09:
It would be bilateral.

[00:32:16] Speaker 08:
That's what you're saying.

[00:32:17] Speaker 08:
Those are bilateral transactions.

[00:32:20] Speaker 08:
Maybe I don't understand that paper pooling

[00:32:23] Speaker 08:
is it that there's a pooling point.

[00:32:27] Speaker 08:
So all the buyers and sellers who want RSG go to that point.

[00:32:31] Speaker 08:
And within that point, you can't differentiate the A pluses from the B minuses within the pooling point.

[00:32:38] Speaker 09:
So if I can speak to, I think, what was your first question?

[00:32:41] Speaker 09:
What's going on with the pooling service generally?

[00:32:43] Speaker 09:
So this is paper pooling.

[00:32:45] Speaker 09:
So it's, in essence, an administrative construct that exists solely to increase liquidity on the system.

[00:32:53] Speaker 09:
It's kind of like if you put $50 into the ATM, you can get it out somewhere else across town.

[00:32:58] Speaker 09:
It's not exactly the same $50 bill you put in, but you're still getting that same quantity out.

[00:33:04] Speaker 09:
So it's an administrative system that's in place.

[00:33:07] Speaker 09:
And what Tennessee has set up under this proposal is a separate service that provides for that administrative pooling solely for gas that's able to satisfy the PCG, the producer certified gas criteria that they've established

[00:33:22] Speaker 09:
and that are separately now hosted on their website to change at will.

[00:33:27] Speaker 08:
Right.

[00:33:27] Speaker 08:
So I think of it like as a meeting point for the buyers and sellers who want this particular kind of gas.

[00:33:33] Speaker 08:
Sure.

[00:33:34] Speaker 08:
Yeah.

[00:33:35] Speaker 09:
Although, again, there is physical pooling.

[00:33:37] Speaker 09:
So just to differentiate, it's a virtual meeting point of sorts.

[00:33:41] Speaker 08:
But you're saying that in the bilateral market you're currently in, people can differentiate between the A pluses and the B minuses.

[00:33:47] Speaker 08:
But at the paper pooling point, they don't have to because

[00:33:52] Speaker 08:
they're there, they have to meet some minimum criteria to be there.

[00:33:54] Speaker 08:
But within that pool, there's no way to differentiate between the A pluses and the B minuses.

[00:33:59] Speaker 09:
Within the pooling service, that's correct, Your Honor.

[00:34:02] Speaker 09:
All gas that meets the criteria that Tennessee establishes is producer certified gas.

[00:34:08] Speaker 09:
It doesn't matter if it's 0.5% methane intensity or excuse me, 0.05% methane intensity or

[00:34:16] Speaker 09:
0.2% methane intensity.

[00:34:18] Speaker 09:
It is producer certified gas as compared to in a bilateral transaction where we would be able to market the lowest intensity gas that we have available and for certain consumers who are perhaps under independent state or local regulatory.

[00:34:34] Speaker 08:
But aren't you saying that you're harmed by any standard?

[00:34:37] Speaker 08:
Because you guys are the best.

[00:34:38] Speaker 08:
So any standard that lets in the B's and the C's and the D's would harm you.

[00:34:43] Speaker 08:
So any kind of

[00:34:44] Speaker 08:
standard harms you, whether it's by FERC, by Tennessee, or by anybody?

[00:34:51] Speaker 09:
Within our universe of FERC regulatory scheme, yes, Your Honor.

[00:34:55] Speaker 09:
There are no broader governmental standards as to what constitutes responsibly sourced gas at present.

[00:35:01] Speaker 09:
It's possible that might change in the future, but that is wholly outside FERC's jurisdiction to

[00:35:08] Speaker 09:
weighed into, which is precisely what they have done here despite claiming that that's not their intent.

[00:35:16] Speaker 09:
Did that address your question?

[00:35:19] Speaker 08:
Yes, thank you.

[00:35:20] Speaker 08:
I was just trying to, can you just walk me through the chain of, I guess, causation and redressability, et cetera, for your standing argument?

[00:35:29] Speaker 09:
Sure, Your Honor.

[00:35:30] Speaker 09:
So Tennessee gas comes to FERC.

[00:35:33] Speaker 09:
They put forth this proposal.

[00:35:34] Speaker 09:
Initially, notably also in their first go around, FERC threw this out entirely.

[00:35:41] Speaker 09:
That was Docket RP-22-417.

[00:35:44] Speaker 09:
Tennessee Gas came in with the criteria incorporated in the tariff itself.

[00:35:49] Speaker 09:
FERC said, we don't have the expertise.

[00:35:51] Speaker 09:
We don't have the authority.

[00:35:53] Speaker 09:
We can't evaluate whether this is just reasonable.

[00:35:56] Speaker 09:
rejected on those grounds.

[00:35:59] Speaker 09:
Tennessee Gas, seeing value in this proposition, comes back.

[00:36:03] Speaker 09:
They put forth a proposal that they think will comply with what FERC is looking for, and that is with the service itself and the FERC jurisdictional tariff and the criteria that gatekeep access to the service separately hosted on Tennessee's website.

[00:36:19] Speaker 09:
Throughout EQT, in the initial docket and again here, has commented and then protested and requested re-hearing on the grounds that regardless of how that service is set up, we are again harmed because we as the market leader are deleteriously affected whenever there is a

[00:36:41] Speaker 09:
service put in place that dilutes the value of the highest quality top of class gas.

[00:36:47] Speaker 09:
And that is what the service does, because it essentially broadens the field.

[00:36:51] Speaker 09:
Tennessee has taken responsibly sourced gas, put their own sort of title on it, producer certified gas, and allowed that field to encompass not only the top of class gas, but also gas with four times the methane intensity.

[00:37:06] Speaker 09:
And that is a harm to producers such as EQT who have put in the time, the resources necessary to continue to drive down the methane, the relative methane intensity of their gas.

[00:37:20] Speaker 08:
So you're saying Burke allowed Tennessee Gas to post this criteria on its website.

[00:37:28] Speaker 08:
And because that criteria is on the website, some people will buy

[00:37:35] Speaker 08:
I guess, grade B minus or C gas instead of A plus gas.

[00:37:40] Speaker 09:
Yes, Your Honor.

[00:37:41] Speaker 08:
Isn't that speculative?

[00:37:43] Speaker 09:
Your Honor, I know that Berg filed the 28A that shows the report from the past year that no one's entered into this.

[00:37:54] Speaker 09:
But it's not speculative because the fact that that exists

[00:38:01] Speaker 09:
there is still that imminent harm that as time goes by, that service will become.

[00:38:06] Speaker 09:
As soon as you get to as time goes by, we need an imminent harm.

[00:38:10] Speaker 09:
The imminent harm, again, commenced as soon, or the harm commenced as soon as the service went into place.

[00:38:15] Speaker 09:
The fact that no one has utilized the surface thus far is not determinative on a lack of harm.

[00:38:23] Speaker 08:
But are you saying anybody who buys B plus gas subject to

[00:38:28] Speaker 08:
this paper pooling service with the criteria has harmed you?

[00:38:32] Speaker 09:
It's not the customers who buy the gas that have harmed us, Your Honor.

[00:38:36] Speaker 09:
It's FERC who allowed that service to go into place.

[00:38:40] Speaker 08:
But the service has to harm you in order for FERC to have harmed you by letting it go into place.

[00:38:44] Speaker 08:
So I'm trying to figure out how the service harms you.

[00:38:47] Speaker 09:
So an example, as a customer, I perhaps am under an independent regulatory mandate to go out and procure responsibly sourced gas.

[00:38:57] Speaker 09:
I could do that through a bilateral agreement with EQT.

[00:39:01] Speaker 09:
That's the system that was in place, is in place.

[00:39:05] Speaker 09:
But alternatively, there's this convenient, administratively efficient pooling service offered to me via Tennessee.

[00:39:14] Speaker 09:
And again,

[00:39:15] Speaker 09:
Pipeline infrastructure is not fungible.

[00:39:18] Speaker 09:
It might be the case that Tennessee gases system is one of the only ways for me to procure gas.

[00:39:23] Speaker 09:
So rather than go to the trouble of entering to a bilateral agreement with EQT, instead, I think to myself,

[00:39:31] Speaker 09:
I'll use this administratively efficient pooling service.

[00:39:34] Speaker 09:
I get to satisfy my regulatory mandate.

[00:39:37] Speaker 09:
And on top of that, the service has the imprimatur of a federal government agency's approval.

[00:39:43] Speaker 08:
But why isn't that speculative?

[00:39:44] Speaker 08:
You're speculating what a customer will do in response to this being there.

[00:39:48] Speaker 08:
And they could go to the paper pooling service and buy from you because you could be in the paper pooling service.

[00:39:54] Speaker 09:
They could, Your Honor, but as a participant in the paper pooling service, I'm again not able to.

[00:40:03] Speaker 09:
not able to get the full premium that I would through a bilateral.

[00:40:06] Speaker 03:
You'd be better off if you're in the bilateral role.

[00:40:08] Speaker 09:
Precisely, Your Honor.

[00:40:10] Speaker 03:
Just commercially, that seems like an identity.

[00:40:12] Speaker 03:
You'd be better off if you didn't have to share with everybody else.

[00:40:16] Speaker 03:
Because you can advertise yourself as the very best in the field.

[00:40:18] Speaker 03:
You should only do business with us because we have the very, very best.

[00:40:21] Speaker 03:
If you truly have the courage of your convictions and you really care about being as environmentally conscious as possible, you should come to us.

[00:40:29] Speaker 03:
But your theory doesn't have anything to do with the criteria, actually, being on the website.

[00:40:34] Speaker 03:
It has to do with the existence of the polling option period.

[00:40:37] Speaker 09:
That's correct, Your Honor.

[00:40:39] Speaker 09:
FERC is under a Natural Gas Act mandate to ensure that the regulations, the qualifications, the standards that

[00:40:46] Speaker 09:
pertained to jurisdictional service are things that can review.

[00:40:50] Speaker 09:
And so it abdicated that mandate when it allowed Tennessee to remove those criteria and put them on a website.

[00:41:01] Speaker 09:
But we're, again, agnostic as to what the criteria are.

[00:41:04] Speaker 09:
FERC has no jurisdiction over this area at all.

[00:41:07] Speaker 09:
And the only way we are alleviated from harm is if the service itself, in its entirety, soup to nuts is thrown out.

[00:41:14] Speaker 03:
The service being cooling service.

[00:41:16] Speaker 09:
The producer certified gas pooling service, your honor.

[00:41:18] Speaker 03:
Yeah, right.

[00:41:19] Speaker 03:
Pooling service for the, what's the, you said producer certified gas?

[00:41:25] Speaker 09:
Yes, your honor.

[00:41:26] Speaker 03:
Or RS, whatever the acronym is that's being used.

[00:41:28] Speaker 03:
Yeah, RSG, okay.

[00:41:30] Speaker 08:
Yeah, there's a lot of acronyms.

[00:41:32] Speaker 08:
So you just conceded though that it's efficient and easy and good for the market.

[00:41:36] Speaker 08:
It's just bad for your clients and therefore it should be thrown out.

[00:41:39] Speaker 09:
It's efficient and easier on her.

[00:41:41] Speaker 09:
It's not good for the market because it, no, it removes the incentive to continuously drive towards the lowest methane intensity gas with the promise of the reward of the highest premium.

[00:41:52] Speaker 09:
So those, those things are not, uh, not the same.

[00:41:56] Speaker 09:
It's, it's, it could be the case again, that it's preferable for reason for on the customer side, just for reasons of ease, but it still doesn't, uh, it's still,

[00:42:07] Speaker 09:
depresses the ideal price in the market for the best possible gas.

[00:42:13] Speaker 03:
Right.

[00:42:13] Speaker 03:
I mean, your whole business model presupposes that people are going to act in a disadvantageous way if it's just based on cost.

[00:42:25] Speaker 03:
You presume that people will be willing to pay more in order to get the most environmentally conscious production of gas.

[00:42:35] Speaker 09:
It's beyond a presumption, your honor, because again, many customers are already under increasing regulatory pressure.

[00:42:40] Speaker 03:
You're just operating on that assumption.

[00:42:41] Speaker 03:
And so your idea is, so because we're the best at it, we want to be able to make sure that people can act on the fact that we're the very, very best.

[00:42:50] Speaker 05:
That's correct, your honor.

[00:42:51] Speaker 05:
Can I ask a question about how the pool works?

[00:42:56] Speaker 05:
In my head, I'm imagining something like a wholesaler.

[00:43:00] Speaker 05:
So maybe, actually, before I start the question, I know how a bilateral trade works.

[00:43:06] Speaker 05:
And let's just imagine that it's, let's borrow the spring quartz pork case from last year.

[00:43:13] Speaker 05:
So I know how a bilateral pork trade would work.

[00:43:15] Speaker 05:
There's a pork farmer, and he sells to pork people who kill them.

[00:43:22] Speaker 05:
We'll get the people to eat.

[00:43:23] Speaker 05:
You know what I'm talking about?

[00:43:25] Speaker 05:
Yes, Your Honor.

[00:43:27] Speaker 05:
I'm following.

[00:43:28] Speaker 05:
OK.

[00:43:29] Speaker 05:
Now imagine that there is a bilateral trade.

[00:43:31] Speaker 05:
A wholesaler would take a bunch of different pork producers, combine it into some giant warehouse, and then just sell to retailers from there.

[00:43:45] Speaker 05:
Is that how the pooling service works?

[00:43:50] Speaker 05:
people who produce the gas in a very clean way, people, in other words, the people who do like the free range pork, and there are the people who produce it in a dirtier way, compare that to the not free range pork.

[00:44:04] Speaker 05:
They all sell to this wholesaler where all the pork kind of at that point is the same.

[00:44:09] Speaker 05:
And here in the pool, all the gas at that point is the same.

[00:44:14] Speaker 05:
And then purchasers buy from the pool.

[00:44:18] Speaker 05:
Is that how the pooling service works?

[00:44:20] Speaker 05:
Or is it more like a bilateral trade that just made a little bit more efficient?

[00:44:25] Speaker 09:
I think if I can expand your hypothetical, Your Honor, I think it's close, but a couple key differentiations.

[00:44:31] Speaker 09:
So the whole idea of pooling on a natural gas system, the whole idea of pooling on the natural gas system is to increase liquidity.

[00:44:42] Speaker 09:
It's hard to draw a parallel to this in the pork markets, but it's as if I produced a pig in Texas.

[00:44:51] Speaker 09:
I sold you the pig, but due to the pooling, you're able to procure a pig in Virginia, but basically as quickly as possible.

[00:44:59] Speaker 09:
It's not the same pig, but I sold you a unit of pig.

[00:45:03] Speaker 09:
But we've made it more efficient so that you can get it as quickly as possible, even if it's not exact, literally the same pig I sold you.

[00:45:11] Speaker 05:
That actually does sound more like a bilateral trade that's made more efficient as opposed to kind of buying from a middleman who has pooled all of the manufacturers products.

[00:45:26] Speaker 09:
Well, I think the differentiation, again, Your Honor, is that, again, it's tough with pigs, but it's almost as if there was, in between buyer and seller, there was a amorphous pool of, a virtual pool of pigs.

[00:45:41] Speaker 09:
And what Tennessee Gas has done is it's not just one pool of pigs, it's not your

[00:45:46] Speaker 09:
your organic free range pigs and your confined animal feedlot operation pigs all squished into one well it's it's two separate pooling points we have one pool over here where we have our a plus pigs one pool over here where we just any pig can go in this pool but i but i thought the with the the two pools in other words are the rsgs and then the non rsgs

[00:46:12] Speaker 09:
Correct, Your Honor, or the producer-certified gas, the non-producer-certified gas.

[00:46:16] Speaker 03:
Producer-certified gas, OK.

[00:46:18] Speaker 03:
So for the producer-certified gas, your problem is that where there's a pool, and yeah, it's a pool of only producer-certified gas.

[00:46:26] Speaker 03:
Your problem is that it's a pool of producer-certified gas, but you can't tell how great that producer-certified gas is.

[00:46:34] Speaker 03:
Whereas in a bilateral arrangement, you could, because I would be telling you directly in a one-on-one communication, I'm the best.

[00:46:40] Speaker 03:
But in the pool, is it just impossible to have the pool so that you could tell what the constituent components are of the pool so that you could say, well, in some transactions, you're going to get mine, which is the very best.

[00:46:54] Speaker 03:
But in other transactions in the pool, you're going to get some other mix, which doesn't include mine.

[00:47:00] Speaker 03:
So you're not going to get my dose of the very best.

[00:47:02] Speaker 03:
Does it not work that way?

[00:47:04] Speaker 09:
Generally, no, Your Honor.

[00:47:05] Speaker 09:
I don't think we could rule out some universe in which you could set up an extremely sophisticated pool.

[00:47:13] Speaker 09:
But that's not how this system is set up.

[00:47:16] Speaker 09:
And we would, again, run into the issue where FERC would be without jurisdiction or authority to evaluate whether that was just and reasonable.

[00:47:24] Speaker 03:
I'm just trying to understand practically how the pool works.

[00:47:26] Speaker 03:
Practically how the producer-certified gas pool, then somebody just says,

[00:47:33] Speaker 03:
the buyer, we want to get the benefit of pooling, but we also want it to be producer certified.

[00:47:39] Speaker 03:
So we go to the producer certified gas pool.

[00:47:41] Speaker 03:
And then at that point, the mechanism kicks in and you just get the gas, but you don't know exactly the ultimate source of

[00:47:48] Speaker 09:
the pooled gas that's that's correct your honor because the the participation in the producer certified gas pool all you have to do is again satisfy these criteria uh and so any gas that's in that pool as long as it's below the threshold that tennessee gas is established it's it's good to go but there's there's no specification as to whether it's your a plus again or your b minus it's just that information just isn't available in the pool not not the way the pool is set up your honor

[00:48:16] Speaker 05:
That was my question, but he asked it so much better.

[00:48:20] Speaker 08:
I enjoyed our conversation about pigs.

[00:48:22] Speaker 08:
I have a question.

[00:48:23] Speaker 08:
So I'm guessing that your client does not participate in pools.

[00:48:27] Speaker 09:
We do, Your Honor, because general pooling service has been around for a long time.

[00:48:33] Speaker 09:
And again, it's- So you find your bilateral buyers through a general pool.

[00:48:39] Speaker 09:
Separate transactions, Your Honor.

[00:48:42] Speaker 09:
Gas that we have that participates in pools, because again, most pools are exists strictly for administrative efficiency.

[00:48:48] Speaker 09:
There's no additional criteria that gate keeps your participation in them.

[00:48:53] Speaker 09:
So it makes sense that you would participate in them just for general sales of gas separately for

[00:49:01] Speaker 09:
Customers who for whom gas or certain environmental attributes responsibly source gas is highly desirable.

[00:49:08] Speaker 09:
We enter into bilateral agreements to provide that right because there has to be those customers who think.

[00:49:14] Speaker 03:
Who are so conscious and they wanted to be so self evident that they're conscious that they're going to just ignore the pool altogether because they would have the same view you do, which is.

[00:49:24] Speaker 03:
I want to be able to show that I'm buying only A plus gas.

[00:49:27] Speaker 03:
And so I'm going to enter into bilateral arrangement.

[00:49:29] Speaker 03:
If I did it through the pool, even though it's producer certified, it could be B gas.

[00:49:35] Speaker 03:
So that's why the market still exists for bilateral with you.

[00:49:40] Speaker 03:
Am I thinking about that right?

[00:49:41] Speaker 03:
Or do I have?

[00:49:42] Speaker 09:
That's correct, Your Honor.

[00:49:44] Speaker 09:
But I think, again, we run into the situation or the criteria that Tennessee has fixed.

[00:49:53] Speaker 09:
They're not stagnant or they can change them.

[00:49:57] Speaker 09:
And so they could also continuously make changes to the criteria for participation in their pool and eventually figure out how to

[00:50:08] Speaker 09:
how to make the most possibly appealing option for customers who will turn to that administratively efficient service rather than continue to pursue bilateral agreements.

[00:50:21] Speaker 09:
But all the while, in any circumstance where Tennessee has established what is essentially a false

[00:50:31] Speaker 09:
meaningless standard for what is good, we will still be driving ahead.

[00:50:36] Speaker 09:
But there's no guarantee that due, again, to this disruption in the market, that others will do the same.

[00:50:44] Speaker 08:
So to bring this back to standing and concrete imminent particularized injuries, it seems to me that there are customers out there who want A plus gas.

[00:50:56] Speaker 08:
And that's who you're selling to right now and paying a premium for A plus gas.

[00:51:00] Speaker 08:
And so you're speculating that if there is this lower standard that is set by Tennessee Gas, some of your A plus customers will go there.

[00:51:13] Speaker 08:
Isn't that speculative?

[00:51:14] Speaker 08:
Because if they're motivated enough now to pay premium for A plus gas, as the chief judge said, maybe they won't go to the pool.

[00:51:20] Speaker 08:
They'll just stay in bilateral transactions with you.

[00:51:26] Speaker 08:
And so aren't you speculating?

[00:51:27] Speaker 08:
And then you also said,

[00:51:29] Speaker 08:
Tennessee can change this at their will, this, that, and the other.

[00:51:31] Speaker 08:
Again, speculating.

[00:51:32] Speaker 08:
We don't know what they're going to do.

[00:51:34] Speaker 08:
And in the past year, none of this has happened.

[00:51:38] Speaker 09:
I'll try to address all of your points that you just raised there, Your Honor.

[00:51:42] Speaker 09:
First of all, again, it might still be that customers decide that they want to pursue bilateral agreements.

[00:51:51] Speaker 09:
It's unlikely, though, that given the option between a administratively efficient federally

[00:51:58] Speaker 09:
approved service.

[00:52:00] Speaker 08:
But these are the people who are willing to pay top dollar for your premium A plus gas.

[00:52:06] Speaker 09:
And those customers might do exist, but there are probably also, there are definitely also other customers who will still choose the easier, less, uh, less, uh, good option.

[00:52:20] Speaker 09:
And that harms us nonetheless.

[00:52:21] Speaker 08:
If we lose any customer base.

[00:52:22] Speaker 08:
Maybe they never bought your gas.

[00:52:23] Speaker 08:
Maybe they never bought the B gas.

[00:52:27] Speaker 09:
also is somewhat speculative.

[00:52:29] Speaker 08:
It's not speculative.

[00:52:30] Speaker 08:
It's my point.

[00:52:31] Speaker 09:
But it's sufficient that the harm be substantial and imminent.

[00:52:35] Speaker 09:
And again, given that we are already market leaders.

[00:52:37] Speaker 08:
How is it substantial and imminent?

[00:52:39] Speaker 08:
And concrete.

[00:52:40] Speaker 08:
I guess concrete is the word I'm looking for.

[00:52:43] Speaker 09:
I think it comes back again to we are not speculatively involved in the market.

[00:52:49] Speaker 09:
It's not a question of whether we will or will not be.

[00:52:52] Speaker 09:
Well, you're in it.

[00:52:53] Speaker 09:
But the effect on you is speculative.

[00:52:57] Speaker 08:
The effect depends on what these customers do, and you're assuming they're going to do something that we don't know they're going to do.

[00:53:03] Speaker 09:
Well, that's true of any market, your honor, but I think it's reasonable to to expect customers will behave somewhat rationally and will adopt.

[00:53:15] Speaker 09:
The.

[00:53:17] Speaker 09:
the government approved option rather than continue to spend the time and effort to enter into bilateral agreements.

[00:53:31] Speaker 09:
Uh I see my time is up.

[00:53:32] Speaker 09:
So if there are no further options, I'll.

[00:53:36] Speaker 02:
Request simply that you decade and remain for

[00:53:47] Speaker 02:
Spanta.

[00:53:58] Speaker 07:
Good morning.

[00:53:59] Speaker 07:
I'm Carol Benson for the Commission.

[00:54:01] Speaker 07:
I suspect I'll spend much of my time on the merits, but I would like to make just a few brief points on the standing questions.

[00:54:09] Speaker 07:
We submit that both opening briefs fell well short of petitioners' burden.

[00:54:14] Speaker 07:
They both spilled a lot more ink on reply, which this court routinely finds to be too late.

[00:54:19] Speaker 07:
Ontario introduced an entirely new argument in its reply brief on the procedural injury, which is why we have not had an opportunity to brief that.

[00:54:30] Speaker 07:
And in our view, both parties' tardy efforts still fail to satisfy their burden under this court's standards.

[00:54:36] Speaker 07:
With that said, on the procedural injury, as I said, it's newly raised on reply, the cases involve something like an environmental impact statement, a hearing, ex parte communications, agency procedures.

[00:54:49] Speaker 07:
And I think the court is right at getting it that the argument here is about the merits.

[00:54:55] Speaker 07:
So this procedural injury theory of standing that is really about the commission's merits determination would seem to swallow the standing argument entirely because I can't think of any case where that wouldn't be, where that same argument wouldn't come into play that somehow the commission's merits decision, if you assume that the petitioners are right on the merits, then there's a procedural injury and we don't have to talk about standing anymore.

[00:55:19] Speaker 07:
As far as EQT, I think that the court is right, that it's just speculation upon speculation upon speculation.

[00:55:27] Speaker 07:
Much of it added in the reply brief because it was just glanced upon in the opening brief.

[00:55:33] Speaker 03:
How speculative is it though?

[00:55:34] Speaker 03:
I mean, because uncertainty is not the same thing as speculation.

[00:55:37] Speaker 03:
I mean, we say that injury is sufficiently traceable and redressable all the time when we don't know for sure what's going to happen.

[00:55:45] Speaker 03:
And I think that their position is, look,

[00:55:47] Speaker 03:
We're better off in a world in which there are two options rather than three.

[00:55:51] Speaker 03:
The two options being you have the non-certified gas that's always been there, and you can pull that too.

[00:55:59] Speaker 03:
We don't care.

[00:55:59] Speaker 03:
That's out there.

[00:56:00] Speaker 03:
We're only looking at the market of potential consumers who really care about it being resourced in the way that is environmentally conscious and the most environmentally conscious.

[00:56:10] Speaker 03:
And as to that, we're just better off in a world in which the only option is bilateral.

[00:56:14] Speaker 07:
which still is that world because no one has used, at least as of the July 31st report, and I'm not aware beyond that, but I haven't heard otherwise, that we're still talking about a world of bilateral transactions.

[00:56:28] Speaker 07:
I do want to, this may introduce confusion, and I may not be in a position to completely explain it,

[00:56:34] Speaker 07:
Bilateral transactions can be scheduled through paper pulling as well.

[00:56:38] Speaker 07:
Getting into the mechanics of that, I'm afraid I get beyond my own skis pretty quickly.

[00:56:43] Speaker 07:
But the bilateral transactions, which are the only RSG sales happening still, can actually be doing the scheduling through the paper pulls that exist, the non-PCG paper pull, because nobody's using the PCG one.

[00:56:58] Speaker 03:
I don't understand.

[00:57:00] Speaker 03:
I guess that maybe I missed something that's

[00:57:04] Speaker 03:
obvious, but I thought the whole point of pooling is that you're not in a bilateral transaction.

[00:57:10] Speaker 07:
I think it can be both.

[00:57:11] Speaker 07:
I think you can aggregate it there and aggregate different supplies and cost.

[00:57:17] Speaker 07:
There's more flexibility there, but my understanding is that you can also schedule bilateral transactions through that same paper pooling service.

[00:57:24] Speaker 03:
OK, but then what they care about is then that's sort of like saying, well, there's bilateral and then you could use

[00:57:30] Speaker 03:
this mechanism called pooling to just do the bilateral, too.

[00:57:33] Speaker 03:
That may be true.

[00:57:35] Speaker 03:
But then the point is that you can also do the pooling mechanism to do something other than bilateral.

[00:57:39] Speaker 03:
And it's the existence of that.

[00:57:41] Speaker 07:
But the effect on prices is wholly speculative, not just because nobody's using it.

[00:57:46] Speaker 07:
But even the commission didn't take it as a given.

[00:57:48] Speaker 07:
The commission said that the pipeline says it wants to offer this to its customers because there clearly is a bilateral market so far.

[00:57:56] Speaker 07:
And we think some parties might be interested in the pooling.

[00:58:00] Speaker 07:
The parties interested in the pooling, well the customers are interested in it for their own reasons and that does go to causation and redressability because it really is third party decisions driving this.

[00:58:10] Speaker 07:
The customers have their reasons for being willing to spend more for this gas and the producers have their reasons for wanting to spend more to produce it because they think they can make the premium prices.

[00:58:20] Speaker 07:
None of that is given.

[00:58:21] Speaker 07:
None of that is in an affidavit or anything in this record.

[00:58:25] Speaker 07:
The commission, when parties raised the issue of price premiums, the commission said it's premature because we don't even know.

[00:58:33] Speaker 07:
I mean, we're willing to allow Tennessee to offer this option to its customers, but we're not even making a finding that the premiums necessarily follow.

[00:58:44] Speaker 07:
So even the premium pricing itself is speculative.

[00:58:48] Speaker 07:
all we know about premium prices what what producers have been able to get through the bilateral transactions, but we don't know what this PCG pool might.

[00:58:56] Speaker 07:
what customers it might draw, what producers it might draw, what prices it might produce, what effects that might have on other producers doing bilateral transactions, it's all entirely speculative because it just hasn't happened.

[00:59:09] Speaker 07:
And the commission, I'm looking in particular at J92, the tariff order paragraph 20 in responding to an argument from the amicus in this case, any concerns about potential price premiums at this point are premature.

[00:59:24] Speaker 07:
And then it goes on to say, would not affect the shippers ability to obtain jurisdictional pooling services.

[00:59:29] Speaker 07:
And that brings me to the first point that I'd like to make on the merits.

[00:59:32] Speaker 03:
Can I just, before we go to the merits, just so I understand this.

[00:59:35] Speaker 03:
So let's suppose you have a world in which there's only one way to do, I'm going to get the acronym wrong, RSGPSG.

[00:59:43] Speaker 03:
What's that?

[00:59:44] Speaker 07:
They seem to be similar.

[00:59:46] Speaker 07:
We try to avoid the acronyms anyway, so I'm happy to just say certified gas.

[00:59:50] Speaker 03:
Certified gas.

[00:59:50] Speaker 03:
Okay, so there's only one way to produce certified gas.

[00:59:54] Speaker 03:
So you don't even have a difference between A plus and B and B minus and C. There's only B. That's the only thing that exists.

[01:00:02] Speaker 03:
And we know that there's a bilateral market in which there's people who are buying the B gas because they want to have the certification.

[01:00:12] Speaker 03:
And then the idea is, OK, well, then we're also going to create a pooling market, because there's going to be certain efficiencies realized by that.

[01:00:18] Speaker 03:
Because maybe you're having a bilateral transaction in a one-on-one way, but it could be much more efficiently done on an aggregate basis if you allow pooling.

[01:00:26] Speaker 03:
It's all the exact same thing, but you're just allowing access to a greater number of producers of the certified gas.

[01:00:33] Speaker 03:
If that's true, then if that's the state of the world, then what's speculative about the fact that there's a premium out there for the pooling?

[01:00:41] Speaker 03:
We know that there's a market through the bilateral market.

[01:00:46] Speaker 03:
We know that there's people who will pay a premium in order to get certified gas.

[01:00:50] Speaker 03:
We also can know that pooling, generally, is something that people desire because we already have a non-certified gas market in which pooling is something that people use.

[01:00:58] Speaker 03:
So if we add that pooling component to the certified gas, and we just assume that everybody's producing the exact same certified gas, what's speculative about just knowing that

[01:01:07] Speaker 03:
Well, people apparently want to have certified gas.

[01:01:10] Speaker 03:
People apparently want to have pooling.

[01:01:12] Speaker 03:
So pooling into the certified gas market is something that seems like a good idea.

[01:01:16] Speaker 03:
And it's something that the producers of the certified gas pool benefit from because they'll have a greater ability to reach consumers in an efficient way.

[01:01:26] Speaker 07:
Right.

[01:01:27] Speaker 07:
But what effect it might have on diluting EQT prices is still entirely speculative.

[01:01:32] Speaker 07:
Because all of that makes sense that there should be a market for this and someone should be willing to pay for it.

[01:01:37] Speaker 07:
But we don't know that.

[01:01:39] Speaker 07:
We don't know what they might be willing to pay.

[01:01:41] Speaker 07:
We don't know that the customers wouldn't still differentiate between this bee pool

[01:01:46] Speaker 07:
and the A plus gas that they believe they can get on a bilateral basis from someone.

[01:01:53] Speaker 07:
So we don't have any numbers attached to the idea that there might be premium prices.

[01:01:57] Speaker 07:
There was an expectation by various players in the industry that there would be.

[01:02:00] Speaker 07:
The commission said,

[01:02:02] Speaker 07:
We don't know.

[01:02:02] Speaker 07:
We think that's speculative.

[01:02:03] Speaker 07:
And since this isn't even in our jurisdiction, it's not for us to say what happened here is that Tennessee thought that there was there was an opportunity for it to serve some of its customers with a more flexible or actually not more flexible, because to be clear,

[01:02:22] Speaker 07:
everyone has access to the same free scheduling service and the same paper pulling points.

[01:02:31] Speaker 07:
So the flexibility is the same in that regard.

[01:02:33] Speaker 07:
This was an opportunity where pipelines often come to the commission wanting to add or tweak their pulling and paper pulling services.

[01:02:44] Speaker 07:
It's not altruistic.

[01:02:47] Speaker 07:
They want to attract those customers.

[01:02:48] Speaker 07:
There are numerous pipelines that

[01:02:50] Speaker 07:
that run into these different concentrated production areas and they all want to get producers use our pipeline you know ship your gas on our pipeline so they all want to offer flexible pooling points and pooling options and when pipelines come in to the commission and want to add something to their tariff that they believe will better serve their customers and better attract those customers to them

[01:03:13] Speaker 07:
The Commission generally approves those kinds of flexible additions to their service, with the number one concern being, does it take anything away from existing customers, especially existing firm service customers?

[01:03:28] Speaker 07:
That was a non-issue here because the Commission concluded this changes nothing.

[01:03:33] Speaker 07:
for any existing customers.

[01:03:35] Speaker 07:
It's the exact same service.

[01:03:37] Speaker 07:
And in fact, the commission viewed this and characterized it as an option within the existing pooling service.

[01:03:45] Speaker 07:
And it is specifically, I think it's for hearing order 18.

[01:03:48] Speaker 07:
I can check.

[01:03:49] Speaker 07:
somewhere around 16 or 18 in the rehearing order, actually rejected an argument by someone that it is a separate service.

[01:03:57] Speaker 07:
It is the exact same service with effectively an organic label attached to it.

[01:04:02] Speaker 07:
It's just a different, you might be selling, I could get lost in the metaphor there.

[01:04:08] Speaker 03:
It's the exact same service as the pooling service that was already available.

[01:04:12] Speaker 07:
Yes, it's free.

[01:04:13] Speaker 07:
It's the same pulling points.

[01:04:15] Speaker 07:
It's voluntary.

[01:04:18] Speaker 07:
So it is the exact same service.

[01:04:20] Speaker 05:
They're heightened criteria for entry, right?

[01:04:23] Speaker 07:
It's the same service.

[01:04:24] Speaker 07:
It's the heightened criteria to get a label that you can stick on it, but it's the exact same service.

[01:04:28] Speaker 07:
With the heightened criteria for entry.

[01:04:31] Speaker 07:
with a different criteria, but the commission said not for entering.

[01:04:34] Speaker 07:
The commission didn't view it as a separate service.

[01:04:36] Speaker 07:
It viewed it as a label, an informational feature is what it called.

[01:04:40] Speaker 07:
It's a marketing label that you could get this label that you could attach to it, which you could also get on your own.

[01:04:47] Speaker 05:
What if it had been the first pooling service?

[01:04:50] Speaker 05:
So imagine a world where there's only bilateral trades and then Tennessee Gas says, well, I think it'd be great to have a pooling service for certified gas.

[01:05:01] Speaker 05:
And so they get FERC's, you know, they file tariff, they get FERC's approval for creating this service.

[01:05:08] Speaker 05:
I think you would recognize that's a service.

[01:05:09] Speaker 05:
And they say, the criteria for entry for this service will be put on our website.

[01:05:13] Speaker 05:
We can change it whenever we want, as long as we give 30 days notice.

[01:05:17] Speaker 05:
Would that be okay?

[01:05:21] Speaker 07:
Well, it depends.

[01:05:22] Speaker 07:
Are you talking about the PCG criteria?

[01:05:23] Speaker 07:
So it wouldn't be for anybody but PCG.

[01:05:26] Speaker 07:
Yeah.

[01:05:27] Speaker 07:
I think then, because no one else is able to get this pooling service, I think that the commission would find that, likely find that unduly discriminatory.

[01:05:35] Speaker 07:
But the fact that everybody can access the same.

[01:05:38] Speaker 07:
Why would they find it unduly discriminatory?

[01:05:39] Speaker 07:
Because it would have the non-PCG producers wouldn't have access to pooling.

[01:05:43] Speaker 07:
In the same way that they don't have access to this PCG pooling service.

[01:05:46] Speaker 07:
But they have access to the pooling service.

[01:05:48] Speaker 07:
They have access to different pools, a separate pool.

[01:05:50] Speaker 07:
that it's not separate.

[01:05:51] Speaker 07:
They have access to the same pooling service, but not the label.

[01:05:54] Speaker 05:
I don't want to get hung up on labels and argue with ship.

[01:05:57] Speaker 07:
But well, we're using labeled them, but it is an informational feature.

[01:06:01] Speaker 07:
The commission did not see it as a different service because it is the same scheduling service from all the different points.

[01:06:07] Speaker 07:
As it is in the regular points.

[01:06:12] Speaker 07:
You can trade at the same point and get the same service, but you don't get the label.

[01:06:15] Speaker 07:
You don't get the informational label that this has a certification from Project Canary or the other one.

[01:06:22] Speaker 05:
Even the dirtiest producer of gas can trade in the PSG pooling service?

[01:06:27] Speaker 07:
No, they can trade at the exact same pooling points at the exact same rates and get the... It just sounds like two different pools.

[01:06:33] Speaker 07:
Well, the commission didn't view it that way.

[01:06:35] Speaker 07:
It viewed it as a label.

[01:06:36] Speaker 07:
That's why we're here.

[01:06:37] Speaker 07:
Well, yes, but the commission does get some discretion on this kind of issue when it looked at whether it significantly affected.

[01:06:44] Speaker 05:
Its discretion depends on pointing out material differences between this and our precedent that says when you do this, it's a pool.

[01:06:52] Speaker 05:
And labeling it an informational feature is not a substantive material difference.

[01:06:57] Speaker 05:
It's a label.

[01:06:59] Speaker 07:
It is, because all of the scheduling service and all of the pulling points are the same.

[01:07:07] Speaker 03:
Can I ask this question?

[01:07:08] Speaker 03:
Maybe it's a way to tease out whether it's just labeling.

[01:07:10] Speaker 03:
Maybe it's totally off, and just tell me if you think it is.

[01:07:14] Speaker 03:
But suppose that for some reason there's a market out there for buying gas from producers whose corporate name starts with the letters beginning A to M, and just don't want to buy gas from anybody whose letters are from N to Z.

[01:07:30] Speaker 03:
And if the commission allows, and there's pooling, there's pooling out there already before it turns out that there's this emergent market of people who only like initial letters in the alphabet as opposed to latter letters in the alphabet.

[01:07:42] Speaker 03:
And then the commission says, okay, apparently there's this thing out there.

[01:07:45] Speaker 03:
So we'll allow there to be a pool that's limited to producers whose names start with A to M. And we'll create that, we'll allow that pooling product to exist.

[01:07:56] Speaker 03:
monitor when somebody decides whether their corporate name begins with A, B, C, or M, or Z. That's up to them.

[01:08:01] Speaker 03:
They can figure out.

[01:08:02] Speaker 03:
Apparently, buyers care about that.

[01:08:04] Speaker 03:
So we'll just let that happen.

[01:08:05] Speaker 03:
We're not going to police the criteria at all.

[01:08:07] Speaker 03:
We're just going to allow this separate market, this separate pooling product to exist.

[01:08:14] Speaker 03:
Is that similar to the way the commission is thinking about what this is, or is that hypothetical just totally off?

[01:08:22] Speaker 07:
As long as we're saying that

[01:08:25] Speaker 07:
Excuse me, N through Z still have access to all the same pulling points and all the same transportation, same rates, charges, terms, everything.

[01:08:32] Speaker 03:
And it's just a label.

[01:08:33] Speaker 03:
It's just a convenience for those consumers who care whether your name starts with A, B, or Q, D. I think that

[01:08:48] Speaker 07:
I think that the commission, I mean, unless you can find something discriminatory in it, if some were being denied service, if suddenly the companies that start with P don't get to use the polling point number 19, or we're somehow.

[01:09:03] Speaker 03:
They still have access to all the same pools.

[01:09:05] Speaker 03:
It's just a label.

[01:09:06] Speaker 03:
Not going to have access to those consumers who care about the fact that their name starts with P, with whom they wouldn't do a bilateral arrangement anyways, because their name starts with a P. Right.

[01:09:14] Speaker 03:
So they want the benefit of the polling.

[01:09:16] Speaker 07:
Yeah.

[01:09:16] Speaker 03:
But they want to be able to

[01:09:18] Speaker 03:
based on a criteria that the commission, by hypothesis, just doesn't care about.

[01:09:23] Speaker 07:
Right.

[01:09:23] Speaker 07:
And I think that the commission would say that doesn't significantly affect the service under the Natural Gas Act.

[01:09:30] Speaker 03:
Commission would just view that, even though there is now a different pool, because there's a pooling product for only A to M. Well, there's a label that those customers would see.

[01:09:41] Speaker 07:
But as long as all the terms of service are the same and no one is being boxed out or charged something different,

[01:09:49] Speaker 03:
And to be clear, the buyers who care about A to M are willing to play a premium for that, because for whatever reason, they really care about it.

[01:09:56] Speaker 03:
Right.

[01:09:57] Speaker 03:
Is that the way the commission's viewing this?

[01:09:59] Speaker 03:
That we don't care about the preference.

[01:10:03] Speaker 03:
But apparently, some people have the preference.

[01:10:05] Speaker 03:
And pooling's a good thing.

[01:10:07] Speaker 03:
So we're just allowing a pooling mechanism that allows consumers to give effect to their preference.

[01:10:12] Speaker 07:
I think that's right.

[01:10:13] Speaker 07:
It's not that the commission doesn't care, but the commission said, well, the commission does say we don't have jurisdiction to.

[01:10:18] Speaker 07:
Right.

[01:10:19] Speaker 07:
Right.

[01:10:19] Speaker 07:
So I guess it's kind of like saying we don't care.

[01:10:21] Speaker 07:
Yeah.

[01:10:21] Speaker 00:
We can't.

[01:10:22] Speaker 07:
Yes.

[01:10:22] Speaker 07:
We can't care.

[01:10:24] Speaker 07:
I think that's yeah.

[01:10:26] Speaker 07:
As long as again, the main thing it's saying the commission is looking at

[01:10:30] Speaker 07:
does this significantly affect the service?

[01:10:33] Speaker 07:
And if they're still getting the same service and it's not harming anyone who already had the existing service, if it's just a label added onto the existing service, then I think the outcome would be the same.

[01:10:46] Speaker 03:
I mean, there's still a cooling product out there to which

[01:10:49] Speaker 03:
It's a new pooling product that didn't exist.

[01:10:51] Speaker 07:
It's just a new label, but all the service that you get is when you say service, you mean transportation service.

[01:10:56] Speaker 07:
What do you mean?

[01:10:56] Speaker 07:
Yes.

[01:10:57] Speaker 07:
Well, with pooling in particular, it's scheduling.

[01:11:00] Speaker 07:
It's it's and I don't fully understand how that works, but it is the sort of administrative like scheduling how it's.

[01:11:08] Speaker 07:
I think for accounting, it's sort of the gas is from this point, even though it really was from a different receipt point.

[01:11:15] Speaker 07:
And then, of course, there is also the transportation service in the pipeline, which isn't even an issue in this case.

[01:11:22] Speaker 08:
When we're looking at what needs to be included in a tariff, we're looking at things that significantly affect

[01:11:27] Speaker 08:
rates, charges, and service.

[01:11:29] Speaker 08:
And when we're talking about service, we're talking about the service that FERC has jurisdiction over, which is the transportation.

[01:11:35] Speaker 07:
Yeah.

[01:11:35] Speaker 07:
And here, it isn't physically moving the molecules in the pipeline because that is part of the transportation service.

[01:11:42] Speaker 07:
It's not an issue here.

[01:11:43] Speaker 07:
It is the paper pulling points, which are just an administrative kind of a fiction of collecting all the gas and saying it's at this point virtually.

[01:11:53] Speaker 07:
So yeah, it's just the scheduling.

[01:11:55] Speaker 08:
Because something like,

[01:11:56] Speaker 08:
you know, what is the quality of the molecules in the pipeline is something that affects service broadly defined, but it's not what service means to FERC.

[01:12:07] Speaker 07:
Well, it is actually gas quality standards.

[01:12:10] Speaker 05:
That was part of the terror.

[01:12:12] Speaker 05:
I thought that that was part of a terror.

[01:12:13] Speaker 05:
I could be wrong.

[01:12:14] Speaker 07:
So gas quality standards are a very different thing.

[01:12:16] Speaker 07:
They're not about producer certified.

[01:12:18] Speaker 07:
Work regulates that all the time.

[01:12:19] Speaker 07:
Yes, it has to.

[01:12:21] Speaker 07:
There's a difference between producer certified and that.

[01:12:23] Speaker 07:
Sure.

[01:12:24] Speaker 07:
All the gas that goes in the pipeline has to meet whatever that pipeline's gas quality standards are, which is why it does have to put those standards in the tariff, because it can deny you access to putting your gas in the pipeline.

[01:12:36] Speaker 07:
Now, what percentage of this natural gas flow

[01:12:40] Speaker 07:
is a liquefiable hydrocarbon like butane or propane.

[01:12:44] Speaker 07:
Because if it gets cold and those condense out, they can obstruct the pipeline or corrode the metal.

[01:12:50] Speaker 07:
So gas quality standards are the physical properties of the gas that is being transported.

[01:12:56] Speaker 07:
Producer certified gas is entirely about what happened at production in terms of, well, specifically here, it's about the methane intensity.

[01:13:04] Speaker 07:
It's about the methane emissions from the production of the gas.

[01:13:08] Speaker 07:
That happens at the well.

[01:13:10] Speaker 07:
or the facilities near the well.

[01:13:12] Speaker 07:
But that gas, when it's delivered to Tennessee, has to meet the same standards for butane, propane, whatever.

[01:13:18] Speaker 08:
But it's not the gas.

[01:13:20] Speaker 08:
It's how it was produced.

[01:13:22] Speaker 07:
Yes.

[01:13:22] Speaker 07:
So it's a label about how it was produced.

[01:13:24] Speaker 07:
But there can't be any dispute in this case that the gas going into the pipeline is physically the same, with the same low levels of liquefiable hydrocarbons that could actually hurt the pipes.

[01:13:37] Speaker 08:
Burke doesn't have jurisdiction over production of gas.

[01:13:40] Speaker 08:
That's right.

[01:13:40] Speaker 08:
And so when you talk about services under this statute, it cannot relate to production.

[01:13:46] Speaker 07:
That's right.

[01:13:47] Speaker 07:
That's right.

[01:13:49] Speaker 08:
So, so when we're talking- It affects services in the sense that we need to look at it under the statute.

[01:13:55] Speaker 08:
Right.

[01:13:55] Speaker 08:
It's about production.

[01:13:56] Speaker 07:
Because once they're transferring gas to the customer, it's like all the other gas and it has to meet the same standards for the liquefiable hydrocarbons that might be in it.

[01:14:06] Speaker 07:
And whatever happened at the wellhead with regard to methane emissions is important to some customers and there are certifications for that.

[01:14:15] Speaker 07:
But the gas that's physically being transported

[01:14:19] Speaker 07:
is exactly the same.

[01:14:20] Speaker 07:
And that's why the gas quality standards are an entirely different thing that are for jurisdictional because they are about the pipes and the gas stream moving through the pipes.

[01:14:29] Speaker 07:
And this is about how was your gas produced before it got to that point?

[01:14:35] Speaker 03:
Why does FERC exercise jurisdiction over the pooling, the availability of pooling to begin with?

[01:14:45] Speaker 03:
Because it does have.

[01:14:45] Speaker 03:
One of the petitioners say,

[01:14:47] Speaker 03:
We don't care if Burke decides just not to get into that mix.

[01:14:53] Speaker 03:
And then so it's out of the ballgame altogether, both as to that and as to the criteria.

[01:14:57] Speaker 03:
But the problem is that Burke's drawing a distinction between making available the pulling option and regulating the criteria.

[01:15:08] Speaker 07:
So they have for you.

[01:15:09] Speaker 07:
I mean, I think they still want access to the pooling points for getting their gas.

[01:15:14] Speaker 03:
Well, not for certified gas, because they only produce.

[01:15:17] Speaker 07:
Well, but they still have to get it to their customers.

[01:15:18] Speaker 07:
And it has to get to the pipeline somewhere.

[01:15:20] Speaker 07:
And that involves the pooling points.

[01:15:22] Speaker 07:
I guess maybe they don't want to aggregate it with someone else's and look for their customers there.

[01:15:27] Speaker 07:
But pooling points, both physical and virtual, have a lot to do.

[01:15:33] Speaker 07:
I get kind of hazy here.

[01:15:35] Speaker 07:
But the gas has to get from the well to the interstate pipeline.

[01:15:38] Speaker 07:
somewhere.

[01:15:39] Speaker 07:
And it interconnects at certain points.

[01:15:43] Speaker 07:
But my understanding, at least, especially with paper pulling points, is that we kind of create a, I hope I'm not getting this wrong, but we create a fiction that says this gas came from here.

[01:15:56] Speaker 07:
Really, it came from here.

[01:15:58] Speaker 07:
It had to get to here for purposes of prices and the transportation rates in particular.

[01:16:08] Speaker 07:
I don't even know for what else, but we're going to say it started here because you've got a whole spider web or maybe more of a radius kind of thing of pipelines.

[01:16:15] Speaker 07:
And we have to say the gas started from some point.

[01:16:17] Speaker 07:
So we have these pulling points that collect the gas from different parts of the production area.

[01:16:22] Speaker 03:
That's my understanding.

[01:16:23] Speaker 03:
Even though it's virtual.

[01:16:25] Speaker 03:
We treat it as if it's actual physical transportation.

[01:16:28] Speaker 07:
And that's why we treated it as it since it is in relation to the transportation service, we do treat it as transportation under the Natural Gas Act.

[01:16:35] Speaker 03:
And that's why the that's why the agency asserts.

[01:16:39] Speaker 03:
Yes.

[01:16:40] Speaker 03:
Dominion over that part of it, but then doesn't assert dominion over the criteria.

[01:16:45] Speaker 07:
That's right.

[01:16:46] Speaker 07:
And even with paper pooling, I think, and I believe the Council has some cases on this, that we don't even necessarily, in some cases, we haven't necessarily required the exact pooling points to be in the tariff.

[01:17:00] Speaker 07:
We've allowed that to be on the website too.

[01:17:02] Speaker 07:
Where the commission really requires things to go in the tariff is when it's going to deny you access potentially.

[01:17:09] Speaker 07:
If it's something that,

[01:17:12] Speaker 07:
is going to deny someone access.

[01:17:13] Speaker 07:
It might be the terms in which interruptible service can be interrupted.

[01:17:16] Speaker 07:
It might be moving an entire pooling zone or changing a pooling zone boundary.

[01:17:21] Speaker 07:
Those kinds of things, those are the cases where the commission has said this has to be in the tariff because

[01:17:27] Speaker 07:
the producers and the customers need to know that the gas can get into the pipeline, or they need to know in advance what are the terms under which we're going to be denied.

[01:17:39] Speaker 07:
So those cases have been about getting access to the pipeline, and that's what's different here.

[01:17:43] Speaker 07:
There's no denial of access to the transportation services.

[01:17:47] Speaker 07:
There is an informational label that you may or may not get.

[01:17:51] Speaker 07:
From the pipeline's criteria, you can, of course, get your own certification.

[01:17:56] Speaker 05:
Wasn't that true?

[01:17:57] Speaker 05:
in Columbia Gas and other cases where a pooling service was being created.

[01:18:06] Speaker 05:
And one argument that failed was, well, nothing is really changing here because you could always make bilateral trades.

[01:18:14] Speaker 05:
Everybody has the same access to the pipes, whether they want to do bilateral trades or whether they want to be in the pooling service.

[01:18:24] Speaker 05:
And we said, no.

[01:18:26] Speaker 07:
No, because scheduling is a service too.

[01:18:28] Speaker 05:
And that's where I was saying if the- If scheduling is a service, why isn't access to the scheduling service?

[01:18:34] Speaker 07:
Because everyone still has access to scheduling.

[01:18:37] Speaker 07:
It's like I was saying, in response to the A through M and through Z, as long as the producer that begins with R or the shipper that begins with R can still access the service and have the exact same terms.

[01:18:48] Speaker 05:
The Tennessee Gas had an A through N pooling service.

[01:18:51] Speaker 05:
And they said to everyone, this is an A through N pooling service.

[01:18:53] Speaker 05:
And then it turns out they actually allow QRS.

[01:18:58] Speaker 05:
Would the A through N producers have

[01:19:01] Speaker 07:
an injury and would they would they have a good argument that I think that would only we don't even allow that as long as N through Z also had access to the same scheduling service.

[01:19:12] Speaker 05:
I mean, they can't be fine with.

[01:19:16] Speaker 07:
If if if we had said that it wasn't something that has to be in the tariff because it doesn't significantly affect the service, then I'm not saying that's begging the question.

[01:19:24] Speaker 05:
But imagine that as the gas creates the chief judges hypothetical and a through in pooling service.

[01:19:30] Speaker 05:
And it says, but we're going to put the criteria for entry on our website.

[01:19:36] Speaker 05:
And it starts out saying A through N.

[01:19:38] Speaker 05:
And then later it changes it.

[01:19:39] Speaker 05:
And it says, this is still an A through N pooling service.

[01:19:43] Speaker 05:
This is for customers who want to buy A through N, but it turns out that they're allowing QRS on there as well.

[01:19:51] Speaker 05:
It seems to me that the A through N producers who had a good thing going and now have to compete with the QRS, number one would have standing, but then you agree with that.

[01:20:04] Speaker 07:
Oh, they'd have standing in some kind of case, but I don't think it would be a natural gas act case.

[01:20:08] Speaker 05:
Okay, put a pin on that.

[01:20:09] Speaker 05:
And then do you agree that that would be kind of something that FERC would not allow?

[01:20:14] Speaker 07:
Again, if those criteria weren't something that significantly affected service under the Natural Gas Act to begin with, I don't think they'd have a FERC case.

[01:20:26] Speaker 07:
I'm not saying they wouldn't have some kind of recourse against the pipeline at some point.

[01:20:31] Speaker 07:
tort or something, but it wouldn't be a third now, please.

[01:20:34] Speaker 03:
So can I, can I, I thought you're put aside standing because I, that I'm, I, the, the reason, um, I think these, this hypothetical is illuminating at least for me is because it goes to the merits, the agency's flexibility on the merits.

[01:20:48] Speaker 03:
So let's put aside standing and then a judge Walker's hypo.

[01:20:51] Speaker 03:
I thought that your answer on whether

[01:20:54] Speaker 03:
the fact that Tennessee allows QRS into this nominally A to N pool is something that FERC would care about.

[01:21:01] Speaker 03:
Isn't the answer?

[01:21:01] Speaker 03:
No, FERC doesn't care about that.

[01:21:03] Speaker 07:
I mean, because.

[01:21:04] Speaker 07:
Well, I meant to see.

[01:21:05] Speaker 03:
Otherwise, I don't know how you can defend what's happened with the criteria in this case.

[01:21:11] Speaker 03:
Because here, if it turns out that Tennessee has some criteria, and then those criteria are just being mismanaged, and the label turns out to be false,

[01:21:21] Speaker 03:
That's by dint of FERC's not exercising jurisdiction over the criteria.

[01:21:26] Speaker 07:
because they didn't significantly affect the service, it still wouldn't significantly affect the service.

[01:21:31] Speaker 03:
Right.

[01:21:31] Speaker 03:
So I think you have to be comfortable with the notion that at that point, there's nobody can come to the agency and say, hey, step in here.

[01:21:38] Speaker 07:
I'm sorry if I didn't, I meant to, that is what I meant to say.

[01:21:42] Speaker 03:
I just want to make sure that, if I'm understanding the hypothetical correctly, that that works position is that no, this is just something that's out there for you all to work out.

[01:21:50] Speaker 07:
It doesn't significantly affect, right, that's exactly right.

[01:21:54] Speaker 08:
So if we were to disagree with you and remand this case, then there would just be no pooling service for PCG, right?

[01:22:01] Speaker 08:
Because one of the petitioners said we should order you to assume jurisdiction over this, which I think the more correct thing would be just to remand and say what you've done is not consistent with.

[01:22:12] Speaker 08:
the act or whatever.

[01:22:13] Speaker 08:
And then you probably just would not allow the pooling service because you're not going to.

[01:22:19] Speaker 07:
I believe that would be the outcome.

[01:22:21] Speaker 07:
If this court said that notwithstanding the commission's discretion, that this case is somehow more like Keyspan Ravenswood than it is like the Public Service Commission of New York or City of Cleveland.

[01:22:37] Speaker 07:
If it's Keyspan Ravenswood and the commission has to say this significantly affects service, then I think it likely would say no.

[01:22:52] Speaker 07:
The only reason I even hesitate is because in the earlier order, the rejection order, I think it was April of 2022, the commission in that case when Tennessee had included the criteria in the filing, the commission said,

[01:23:07] Speaker 07:
We don't even know how we would judge this.

[01:23:10] Speaker 07:
You, the pipeline, haven't given us any basis to judge this.

[01:23:13] Speaker 07:
And it did say in a footnote that if there were industry imposed standards or standards imposed by someone else, whether it's some other federal agency or the industry had come together and said, this is our standard.

[01:23:26] Speaker 07:
And Tennessee just wanted to put that.

[01:23:30] Speaker 07:
it comply with those standards.

[01:23:34] Speaker 07:
I think the commission indicated in that case we might say this is okay because it fits those industry standards.

[01:23:41] Speaker 07:
I'm looking at

[01:23:42] Speaker 07:
JA 346, it's footnote 13 in that order.

[01:23:47] Speaker 07:
So that's the only reason I even hesitate because certainly the commission is not, based on these orders, the commission is not looking to suddenly say we can regulate this and make our own decisions about it.

[01:23:58] Speaker 07:
But whether they could somehow get it in based on this, I don't know, based on that footnote.

[01:24:04] Speaker 05:
I'll ask two, I think, quick questions and maybe yes or no.

[01:24:08] Speaker 05:
Did Tennessee Gas list its quality standards only on its website and change them whenever it wanted to?

[01:24:16] Speaker 07:
The gas quality standards?

[01:24:17] Speaker 07:
No, there are numerous cases.

[01:24:18] Speaker 07:
I think they all are called indicated spurs.

[01:24:20] Speaker 07:
They're cited in our brief and in the orders that because that is something that can deny you, they can turn away your gas and say you're not coming in.

[01:24:30] Speaker 07:
That has to be in the tariff because that goes directly to service.

[01:24:34] Speaker 05:
Okay.

[01:24:34] Speaker 05:
And then second, let's say we disagree with you about whether this new cooling thing is a service.

[01:24:42] Speaker 05:
I know you don't want us to disagree with you, but let's say we decide it's a new quote unquote service.

[01:24:48] Speaker 05:
At that point, do you still contest that the criteria governing access to the service significantly affect that service?

[01:24:59] Speaker 07:
Yes, because even if it is a service, the commission, because the rates and the scheduling service and the pooling points are all exactly the same and the label doesn't affect any of those jurisdictional aspects.

[01:25:18] Speaker 07:
I think that the commission would still say that the criteria could be on the website instead of in the tariff.

[01:25:27] Speaker 07:
And now if the option had different pulling points instead of the 20 that we already have for everyone, which you can also use for that, if it added 21 and 22, but these are just PCG points, then we've got a whole different story and they wouldn't be getting the exact same service.

[01:25:44] Speaker 07:
Or if we, I think, well, yeah, I'll leave it at that.

[01:25:48] Speaker 02:
Thank you, Council.

[01:25:50] Speaker 02:
We'll hear from the interveners, Council Dow.

[01:25:56] Speaker 02:
Mr. Corman.

[01:25:57] Speaker 02:
Thank you, Your Honor.

[01:26:08] Speaker 01:
Thank you, Your Honor.

[01:26:08] Speaker 01:
May it please the court, Paul Corman for the interveners, Project Canary and Tennessee Gas.

[01:26:12] Speaker 01:
But based on the questions, I think I'm here mostly for Tennessee Gas.

[01:26:15] Speaker 01:
This is not a new service, okay?

[01:26:18] Speaker 01:
The best way to see that it's not a new service is to refer to JA 18 and 19.

[01:26:26] Speaker 01:
Those are the redlined tariff sheets that Tennessee submitted.

[01:26:30] Speaker 01:
Those are the pages that specifically identify the pooling points.

[01:26:35] Speaker 01:
You will notice that there are no red lines in the identification of the points.

[01:26:40] Speaker 01:
There are no points added, no points subtracted, and no points are changed.

[01:26:44] Speaker 01:
The only red lines you'll see on those pages versus a very short reference that says these are the same points as for the PCG service as they offer the regular service.

[01:26:55] Speaker 01:
So there's really, there's no difference in the pooling at all.

[01:27:01] Speaker 01:
Also, this is not completely divorced from the tariff.

[01:27:06] Speaker 01:
The tariff references the EBV posting in two places.

[01:27:11] Speaker 01:
in the tariff section itself, in section 2.3B on JA-15, and then in the form of service agreement, which is also included in the tariff on JA-22, they both reference the EBB as the place to find the criteria.

[01:27:30] Speaker 01:
It's very similar to what this court found acceptable in the Hackett T case, I hope I got that right Judge Walker, in where

[01:27:39] Speaker 01:
the court was satisfied because the commission exercises discretion that something didn't need to be in the tariff, but you could find it in the tariff where to go to look where to go look for it.

[01:27:50] Speaker 01:
So I think it's very similar.

[01:27:52] Speaker 01:
It's very similar to Hickety.

[01:27:54] Speaker 01:
And the points are this are part of the same.

[01:28:00] Speaker 01:
So let me talk about how the pooling actually works, because there were a lot of questions about that.

[01:28:05] Speaker 01:
And I'm not a scheduler, but

[01:28:07] Speaker 01:
Gas can come to these pools from various places as a scheduling convenience.

[01:28:12] Speaker 01:
Tennessee is just a transporter, and all the commission regulates is the transportation.

[01:28:17] Speaker 01:
But because you have this aggregation of gas at a similar point, people can buy and sell their gas.

[01:28:25] Speaker 01:
They can buy and sell their gas, and they do bilaterally.

[01:28:31] Speaker 01:
Today, tomorrow, however long they want to, EQT can say, I have the cleanest gas out there.

[01:28:37] Speaker 01:
You should pay me a premium.

[01:28:39] Speaker 01:
Okay?

[01:28:39] Speaker 01:
They can do that today.

[01:28:40] Speaker 01:
They can continue to do that.

[01:28:42] Speaker 01:
Then the gas, leave the PCG aside for one moment.

[01:28:47] Speaker 01:
The gas is aggregated.

[01:28:50] Speaker 01:
The shipper who has title to the gas is going to move the gas, nominates it on Tennessee's system, and the gas is then transported to wherever the end user is.

[01:28:58] Speaker 01:
All that happens with this service is there's a piece of paper, an informational feature, a bolt on that says the gas that producer X delivered into this pool is responsibly sourced gas, is PCG.

[01:29:14] Speaker 01:
So a buyer who cares about that can say, okay, I'm going to buy it from that person.

[01:29:20] Speaker 01:
And I'm going to have that person transport, I'm going to have that gas transported on Tennessee.

[01:29:27] Speaker 01:
You know, as the 28J report indicated, currently nobody's using the service, and I can represent to the court that that remains true as of Monday.

[01:29:37] Speaker 01:
And I think to switch off the standing for one moment, all of the harm, well, the word harm appears in the briefs multiple places, but they don't say where the harm is.

[01:29:51] Speaker 01:
Where is the concrete injury?

[01:29:52] Speaker 01:
Where is the certainty?

[01:29:54] Speaker 01:
that something is going to happen.

[01:29:55] Speaker 01:
Everything is, well, if other pipelines adopt different standards, the market will fracture.

[01:30:00] Speaker 01:
Well, that's an if.

[01:30:01] Speaker 01:
That hasn't happened.

[01:30:03] Speaker 01:
If local distribution companies like Tennessee's standards as opposed to something else, well, my guess might be worth less.

[01:30:11] Speaker 01:
If state commissions give some credence to the Tennessee standard, then my guess might be less somewhere else.

[01:30:16] Speaker 01:
It's all a series of conjecture of the type that this court

[01:30:21] Speaker 01:
has found inappropriate in standing cases in the Kansas Corporation Commission, Florida Audubon Society Commission, all of which are cited in our brief.

[01:30:29] Speaker 01:
So I do think that the standing goes to all the various ifs.

[01:30:35] Speaker 01:
At the time you thought this was a new service, correct?

[01:30:41] Speaker 01:
We've always referred to it.

[01:30:42] Speaker 01:
We really always refer to it, I think, as an information feature.

[01:30:45] Speaker 01:
I think they might say about labels.

[01:30:48] Speaker 05:
Again, I'm trying to not dwell on the labeling.

[01:30:51] Speaker 05:
I thought that you filed a post tariff with FERC that said, here's a new service and here's what the criteria for certification will be.

[01:30:59] Speaker 01:
It's an add-on service.

[01:31:02] Speaker 01:
I mean, it's quite, I hate to say this, but some of this is advertising, Your Honor.

[01:31:07] Speaker 01:
And it's, you know, it's, it's substantively, it's really,

[01:31:11] Speaker 01:
the same service with a piece of information, with information and information.

[01:31:14] Speaker 05:
Then why did you go to FERC and say, I need you to approve this proposed tariff that has the criteria for certification in it?

[01:31:22] Speaker 01:
Actually, Your Honor, at the beginning, the first filing, the company proposed that the criteria be on the EBB.

[01:31:32] Speaker 01:
Subsequently, a number of the customers- The EBB?

[01:31:34] Speaker 01:
Electronic bulletin board.

[01:31:35] Speaker 01:
I'm sorry, where it is now.

[01:31:36] Speaker 01:
Website.

[01:31:37] Speaker 01:
The website.

[01:31:38] Speaker 01:
Okay.

[01:31:39] Speaker 01:
Sorry, old name.

[01:31:41] Speaker 01:
Subsequently, a number of the customers complained and said, we think it ought to be in the tariff.

[01:31:45] Speaker 01:
So the company was customer friendly.

[01:31:47] Speaker 01:
We filed to put it in a tariff.

[01:31:51] Speaker 01:
We went to the commission and the commission said, no, the commission does not think it belongs in the tariff because it's a characteristic of production, which we don't regulate.

[01:32:02] Speaker 01:
It's just an information feature.

[01:32:04] Speaker 01:
So take it out of the tariff, and there we are.

[01:32:08] Speaker 01:
I wanted to get to your question about the gas quality a few minutes ago.

[01:32:13] Speaker 01:
I totally agree with counsel for the commission.

[01:32:17] Speaker 01:
It's an access issue.

[01:32:18] Speaker 01:
In a number of those cases, which are all indicated shippers versus somebody, the commission was very clear that one of the major problems was the pipelines in those cases were trying to use postings on their website to override the tariff.

[01:32:34] Speaker 01:
That's not the case here.

[01:32:35] Speaker 01:
We have a tariff provision, a tariff points to where to find this on the website.

[01:32:42] Speaker 01:
And we think it's as well within the kind of discretion the commission has to determine what should be in the tariff and what should be on the website.

[01:32:52] Speaker 01:
This is certainly of less significance than the items this court upheld in City of Cleveland and Public Service Commission of New York, which are cited in everybody's brief.

[01:33:03] Speaker 01:
Those were cases in which the criteria that was not in the tariff could control access to the service.

[01:33:11] Speaker 01:
That's not the case here.

[01:33:15] Speaker 02:
Thank you, counsel.

[01:33:16] Speaker 08:
Can I ask a question?

[01:33:17] Speaker 08:
Why do you think nobody's using the service?

[01:33:19] Speaker 08:
Why is nobody using the service?

[01:33:22] Speaker 01:
I'm not a gas trader either, but I think they're doing bilateral transactions for all we know.

[01:33:27] Speaker 01:
I don't know.

[01:33:28] Speaker 01:
I don't really know.

[01:33:32] Speaker 02:
Thank you, counsel.

[01:33:33] Speaker 02:
We'll get each of petitioners counsel two minutes for rebuttal.

[01:33:38] Speaker 02:
It's Taylor first.

[01:33:42] Speaker 06:
Thank you, your honor.

[01:33:44] Speaker 06:
First, I'd like to speak to this idea that this doesn't affect the actual transportation and that it's therefore somehow something that FERC is entitled to be agnostic about.

[01:33:53] Speaker 06:
If you read the Coke Gateway FERC decision, it talks about FERC's policy, right?

[01:33:57] Speaker 06:
They actually had, it was order 636, I believe, although I could be wrong about the number, that they don't want pipelines to create obstacles to pooling.

[01:34:05] Speaker 06:
This is something that the commission cares about because pooling facilitates the market for gas.

[01:34:12] Speaker 06:
So the idea that it has to block physical molecules from entering the pipeline itself before is something that FERC as the economic regulator should be concerned with.

[01:34:22] Speaker 06:
I think it's just not sustained by FERC's own past writings in this area.

[01:34:28] Speaker 06:
Then to speak for a moment to the hypothetical about the companies with A through M, I think that an important distinction here

[01:34:36] Speaker 06:
is that everyone at the outset thought companies that start with A through M, their gas is going to be valued more highly.

[01:34:47] Speaker 06:
Everybody thinks there's going to be a premium for this gas.

[01:34:49] Speaker 06:
And in fact, in order to obtain a company name,

[01:34:52] Speaker 06:
with A or through M as the first letter, you have to invest millions of dollars in getting a certification that you qualify for that.

[01:35:00] Speaker 06:
I don't think under those conditions, FERC, again, as the economic regulator of the pipelines, is entitled to just take a step back and say, well, we don't really care if people are later going to be able to say, well, my name starts with Q, but I'm going to put myself in the A through M pool.

[01:35:15] Speaker 06:
And then there's not going to be any FERC oversight there.

[01:35:19] Speaker 06:
The other point that I'd like to make is that even if this is just an informational feature, or we use some other semantic label to describe it, or this court agrees that it's an add-on to the existing service, it still significantly affects that service for the same reasons, right?

[01:35:33] Speaker 06:
There's an economic premium that is associated with this gas.

[01:35:37] Speaker 06:
There's also an economic premium associated with the liquidity, right?

[01:35:40] Speaker 06:
Everybody says this is going to make it easier to do these trades.

[01:35:43] Speaker 06:
And so at that point, whether you call it an informational feature or a new service, it significantly affects customer access to these pools and the premium that they may or may not be able to access there.

[01:35:57] Speaker 02:
Thank you, council.

[01:35:59] Speaker 02:
Ms.

[01:35:59] Speaker 02:
O'Neill will give you your two minutes.

[01:36:08] Speaker 09:
Your honors, I'd like to speak to the idea that these are

[01:36:12] Speaker 09:
the same service, they're not.

[01:36:14] Speaker 09:
They are two separate services.

[01:36:16] Speaker 09:
And I think there's a couple of distinctions that are important to keep in mind when we're thinking about that.

[01:36:22] Speaker 09:
First of all, again, these criteria exist that govern access to the producer certified gas service.

[01:36:29] Speaker 09:
Those criteria are not applicable to the general pooling service, which is available to any shipper that requests it.

[01:36:35] Speaker 09:
And I think perhaps more tellingly, I know that Council for Tennessee Gas pointed to the red lines in their tariff.

[01:36:43] Speaker 09:
JA15, that's the beginning of those red lines, that shows the parts of the PCG pooling service option that remain in the tariff, although the criteria have been bifurcated.

[01:36:54] Speaker 09:
And provision 2.3 subpart C introduces independent audit and enforcement criteria that are specific to the producer certified gas pooling service.

[01:37:05] Speaker 09:
Those do not apply to the general pooling service.

[01:37:09] Speaker 09:
And that is just another aspect of what differentiates.

[01:37:12] Speaker 09:
Again, it sets us apart.

[01:37:13] Speaker 09:
The producer certified gas pooling service is a separate idea from the general pooling service that is governed by these criteria that FERC does not have the jurisdiction or the expertise to evaluate.

[01:37:29] Speaker 09:
The second thing I want to touch on is your question, Your Honor, about why no one has utilized the service.

[01:37:35] Speaker 09:
Hey, this service has been litigated now for over a year.

[01:37:41] Speaker 09:
It's reasonable in that time that parties might want to wait and see what's going to happen.

[01:37:46] Speaker 09:
Tennessee Gas obviously still thinks someone's going to use the service and that it has value.

[01:37:52] Speaker 09:
If they didn't, they wouldn't have proposed it from the outset.

[01:37:55] Speaker 09:
They wouldn't have come back in in the second docket.

[01:37:58] Speaker 09:
And they wouldn't still be litigating it here.

[01:38:01] Speaker 09:
There are parties in the market that see the service as having value.

[01:38:04] Speaker 09:
And as long as that is true, that it stands to potentially harm the premiums available to participants in that market.

[01:38:12] Speaker 09:
Thank you, Your Honors.

[01:38:14] Speaker 05:
I know it's been a long argument, but I am

[01:38:21] Speaker 05:
Part of FERC's purpose is to, you know, encourage efficiency and fairness and, you know, a regular pooling service, everyone in the room agrees serves purpose.

[01:38:34] Speaker 05:
And if you're right, then

[01:38:37] Speaker 05:
there will not be a pooling service for cleanly produced gas.

[01:38:46] Speaker 05:
And what that means is, of course, yes, there will still be bilateral trades, but there will be fewer trades if it has to all be bilateral than it would be if there's a pooling service for this.

[01:38:58] Speaker 05:
That's the whole point of a pooling service, to increase the number of trades, make trading more efficient, I think.

[01:39:04] Speaker 05:
So assuming that every trade has a gain for both sides, how would it be consistent with FERC's purpose and mandate if at the end of the day what we're left with is a regime where there can never be a certified pooling service?

[01:39:21] Speaker 05:
And that means a lot fewer trades, which means a lot fewer gains from trade.

[01:39:28] Speaker 09:
Your honor, although in an aspirational higher realm of thinking, we would want to encourage those trades, again, to increase movement of producer certified gas and drive the market towards the lowest methane intensity product.

[01:39:44] Speaker 09:
The fact remains that those areas are not within FERC's jurisdiction.

[01:39:49] Speaker 09:
So although it's within their mandate to protect

[01:39:53] Speaker 09:
customers on these pipelines and oversee transportation service.

[01:39:57] Speaker 09:
It's not within their statutory mandate to encourage any specific economic outcome or weight into the commodity markets, which I think is getting at what you're describing.

[01:40:08] Speaker 02:
Thanks.

[01:40:09] Speaker 02:
Thank you, Council.

[01:40:09] Speaker 02:
Thank you to all Council.

[01:40:11] Speaker 02:
We'll take this case under submission.