[00:00:00] Speaker 00:
Mr. Estrada for the carrier petitioners, Mr. Aduchi for the shipper petitioners, Mr. Glover for the respondents.

[00:00:20] Speaker 02:
Morning, Council.

[00:00:21] Speaker 02:
Mr. Estrada, please proceed when you're ready.

[00:00:31] Speaker 01:
Thank you, Your Honor, and may it please the Court.

[00:00:34] Speaker 01:
The notice and comment issue alone suffices to set aside the 2022 rule and restore the 2020 rule without addressing any other issue for this Court.

[00:00:44] Speaker 01:
From the Consumer Energy Council in 1982 to this Court's Humane Society's decision last year, it is clear that the 2020 rule became law and could only be displaced or repealed by complying with the APA's notice and comment

[00:01:02] Speaker 01:
But even if the APA were not wholly controlling in this case, the 2022 rule must still be set aside because no rehearing could be legally granted a year after the fact in defiance of this courts on bank ruling in Allegheny.

[00:01:15] Speaker 01:
That were all not enough.

[00:01:17] Speaker 01:
If the Deputy Secretary of FERC has the power, FERC says it does, then he is an officer of the United States who was improperly appointed under the Appointments Law.

[00:01:27] Speaker 01:
Let me start with the APA point.

[00:01:29] Speaker 01:
This court held in humane society, the rule becomes law when it is made available for inspection in federal register, even before publication, and even if the contemplated effective rule is in the future.

[00:01:43] Speaker 01:
After that, any change to the rule must comply with notice of comment.

[00:01:48] Speaker 01:
This rule was made available for public inspection on February 12, 2021.

[00:01:54] Speaker 01:
And that was six days before the purported tooling order and four days before publication.

[00:02:03] Speaker 01:
After the rule was made available to the public under Humane Society, it could be changed through rehearing or otherwise in the usual process only by complying with the APA.

[00:02:14] Speaker 01:
The fact that there was a rehearing petition filed, timely or not timely, we can

[00:02:19] Speaker 01:
plus the Allegheny issue separately, does not change any of this.

[00:02:23] Speaker 01:
From consumer energy to Pruitt to Sprint, this court has confronted the same claim by an agency and has consistently pointed out that the fact that rehearing, reconsideration, or a similar process may be available does not change the application of the APA once something has become law.

[00:02:43] Speaker 01:
They refer the court specifically to the consumer energy decision.

[00:02:48] Speaker 01:
Page 446 of the decision and footnote 71 where this issue is discussed, and I will quote, this is important, the court said, Congress did not intend to permit the commission to use the occasion of a petition for rehearing to make any substantive change whatsoever in a rule without providing notice and comment.

[00:03:07] Speaker 01:
The same case went on to say that the very definition of rulemaking in the APA contemplates that it's a process for formulating, amending, or repealing a rule.

[00:03:18] Speaker 01:
And Congress would not have included the repeal of a rule with the definition of rulemaking.

[00:03:22] Speaker 01:
if an agency abandoning its previous work were not meant to be subject also to notice and comment.

[00:03:29] Speaker 01:
Indeed, again, page 46, the court said, it is in those cases where the court has accomplished its work that it be most useful to look for the use of the public to see if there is any percentage to be gained in sort of starting again and changing course.

[00:03:47] Speaker 01:
Likewise, through and I won't go through every case,

[00:03:51] Speaker 01:
There was a reconsideration petition file.

[00:03:54] Speaker 01:
The agency, the APA in this case, responded by saying that it intended to reconsider the actual rule and staying the rule.

[00:04:02] Speaker 01:
This court held that even the stay was effectively an order modifying or repealing the rule and was subject to the APA.

[00:04:10] Speaker 01:
And again, I won't even get into the sprint case, because there was a number of overlapping overhearing petitions.

[00:04:16] Speaker 01:
And ultimately, the agency came to this court on the faith of the assertion that it had to respond to the ability to change the rule on reconsideration.

[00:04:25] Speaker 01:
The court said, what you do is you do you, but you have to comply with the APA.

[00:04:30] Speaker 01:
I think ultimately, you know, if it is the case on the humane society that the agency could not yank the rule before publication, prevent its effectiveness, even though the effectiveness was in the future, I just don't see how the agency could say today that the rule did not become law and it did not have to comply with notice and comment before it jettisoned the rule more than a year later.

[00:04:55] Speaker 01:
I will say another sort of word.

[00:04:57] Speaker 04:
What is the date?

[00:04:58] Speaker 04:
putting all these cases together that you think they could no longer alter the rule for a rehearing?

[00:05:05] Speaker 01:
I think February 12, 2021.

[00:05:06] Speaker 01:
That's when you can look at the Federal Register website.

[00:05:09] Speaker 01:
That's when under Humane Society was made available to the public.

[00:05:12] Speaker 01:
Under the Federal Register website, I can give you the site as well, it was published on February 16, but under the holding of Humane Society, the publication is not legally controlling.

[00:05:21] Speaker 01:
It was the making available to the public on February 12, 2021.

[00:05:24] Speaker 04:
We also have to reconcile

[00:05:30] Speaker 04:
The rehearing here, those principles with the rehearing authority that happens here, and it's only a few agencies that can do this, but have this rehearing authority.

[00:05:43] Speaker 04:
And we have cases that have recognized that they can use the rehearing authority even for notice and comment rules, the Supreme Court,

[00:05:55] Speaker 04:
has referenced their use of rehearing for notice and comment rules and added an I. And so I'm trying to figure out how to reconcile these two systems.

[00:06:07] Speaker 04:
Is there a cutoff date?

[00:06:09] Speaker 04:
When you're dealing with this agency and its statutory scheme, is there a different cutoff date for when they can no longer tinker with rehearing, for example, the effective date?

[00:06:20] Speaker 04:
Or does this have to map directly onto

[00:06:25] Speaker 04:
the Humane Society model, as you've been arguing, which would mean there is no real hearing authority because the publication of the Federal Register would be the beginning and the end on the same day.

[00:06:37] Speaker 01:
Let me make three points, Your Honor.

[00:06:40] Speaker 01:
The first one is that the date of inspection by the Federal Register is, to a large extent, within control of the agency.

[00:06:46] Speaker 01:
The agency can make it available here.

[00:06:48] Speaker 01:
They took 60 days.

[00:06:50] Speaker 01:
If they thought that they wanted to hold the rule pending the hearing consideration, it was up to them to arrange their own affairs so that they could sort of use their own rules to reconsider the rules if they thought that that might be appropriate.

[00:07:03] Speaker 04:
How could they do that before putting it on public inspection?

[00:07:07] Speaker 01:
Well, I think under the Federal Register Act, which is separate from the APA, you are supposed to send it to the agency.

[00:07:14] Speaker 01:
But the agency gets to choose, to some extent, when they will send it to the Federal Register.

[00:07:19] Speaker 01:
Here, in fact, the agency took several weeks to send it to the Federal Register.

[00:07:23] Speaker 01:
And there is no actual deadline, as far as I can tell, the Federal Register Act for them to send it in.

[00:07:29] Speaker 01:
Now, the second point is that I am not saying, and I should not be understood at saying, that agencies cannot change rules.

[00:07:36] Speaker 01:
They can change any rule, whether on rehearing or otherwise, they just have to comply with notice of comment.

[00:07:41] Speaker 01:
And the third point is that, you know, the general rule is that you have to comply with the APA to change a legislative rule.

[00:07:48] Speaker 01:
there are a number of rehearing occasions where there is an occasion for rehearing where the parties are seeking what in effect is a clarification.

[00:07:58] Speaker 01:
And of course, if the agency is able to clarify its work in what would be upheld as an interpretable, that is not subject to the APA.

[00:08:07] Speaker 01:
But ultimately, it would be up to the agency to arrange its affairs, either by withholding the delivery to the federal register

[00:08:15] Speaker 01:
or by alerting the parties that it intends to issue a re-hearing by something other than a tolling order, something that acts upon the re-hearing, and sets a schedule or actually grants a re-hearing with a view given the party's notice as to what it is contemplating doing.

[00:08:33] Speaker 02:
Which one of those is your?

[00:08:35] Speaker 02:
Because the carriers filed sought a re-hearing too.

[00:08:38] Speaker 02:
And does that fit within your last category?

[00:08:41] Speaker 01:
Well, let me see.

[00:08:42] Speaker 01:
Let me say two things about that.

[00:08:45] Speaker 01:
We started hearing on something that I think I would place under the interpretive area, because frankly, the agency had goofed in picking one page versus the other on the 2016 report data, and the agency acknowledged that.

[00:09:01] Speaker 01:
So I think it was like minor

[00:09:03] Speaker 01:
and ministerial, but even if we're not the case, you know, the gotcha point is cute, but sort of irrelevant because in seeking rehearing, we did not tell the agency what process it should use to consider our petition or theirs.

[00:09:17] Speaker 01:
The compliance with the APA is up to the agency.

[00:09:19] Speaker 01:
So it's not as if we sought rehearing and said, oh, if you think you have to comply with the APA to rule for us, please don't.

[00:09:26] Speaker 01:
And so this is sort of like a side point.

[00:09:28] Speaker 01:
And so I don't see what the relevance it has.

[00:09:30] Speaker 01:
But ultimately, I think it falls within what I described earlier, that agencies, of course, have leeway to

[00:09:38] Speaker 01:
engage in interpreted activity that does not engage in legislative rulemaking.

[00:09:45] Speaker 01:
And so that's entirely different.

[00:09:47] Speaker 01:
As I said to Your Honor, I mean, there are other parts of these statutes, not this one, in which there is not the ability to set aside the rule or repeal it.

[00:10:02] Speaker 01:
the ability to modify it.

[00:10:04] Speaker 01:
But keep in mind that under this court's cases, that is not a new rule.

[00:10:08] Speaker 01:
That is a modification to the original rule.

[00:10:11] Speaker 01:
And that has its own appellate consequences.

[00:10:14] Speaker 01:
You have to seek review from that.

[00:10:17] Speaker 01:
Ultimately, I am not bothered at all by the proposition that if the agency puts itself as a main society in the position where you send this to the federal register and it has become law, you have to comply with the APA to change the law.

[00:10:31] Speaker 01:
I mean, I don't think that's a complicated principle for agencies to follow, and they have a number of tools at their disposal to exercise and self-help if they believe that the rules require greater

[00:10:42] Speaker 01:
Now, with respect to the tolling issue, because even if this issue were not completely, you know, dispositive, I just want to emphasize that the agency cannot get past this court's decision in Allegheny either.

[00:10:56] Speaker 01:
You know, there is this question of, well, the ICA, you know, the statute that controls here does not have a 30-day deadline.

[00:11:06] Speaker 01:
And I think, okay, true, but irrelevant.

[00:11:09] Speaker 01:
And in order to understand that, let me just point out that pretty much all of the statutes that the commission administers, the Natural Gas Act, the Federal Power Act, and the Natural Gas Policy Act have this deadline.

[00:11:28] Speaker 01:
In 1947, the commission first had a regulation dealing with the first two that basically tracked the statute.

[00:11:36] Speaker 01:
In 1979,

[00:11:37] Speaker 01:
the commission added a regulation that tracked the national gas policy act that's slightly awarded differently but not really differently.

[00:11:46] Speaker 01:
And in 1982, and this is the key fundamental point here, in order to bring order to all of these statutes, including the ICA, the commission adopted the regulations that issued

[00:11:57] Speaker 01:
here.

[00:11:58] Speaker 01:
And what it said was it was going to have a uniform text to govern all of these in our hearing.

[00:12:04] Speaker 01:
It says, we're going to have a single system for all of these statutes, including the ICA.

[00:12:12] Speaker 01:
Now, that's important for purposes of our reliance on Allegheny for several reasons.

[00:12:18] Speaker 01:
The most obvious is that if you look at page 14 of this court's ruling in Allegheny, right-hand column, these very regulations were at issue in Allegheny because they were also relevant to the natural gas issue in that case.

[00:12:33] Speaker 01:
And what this court said in an opinion by Judge Blatt was that the only thing that these

[00:12:39] Speaker 01:
regulations authorize and delegate is the authority not to act upon on the on the rehearing decision.

[00:12:47] Speaker 01:
And so we know from the holding of Allegheny that is very same regulations were four of the court and construed in Allegheny.

[00:12:57] Speaker 04:
We know as well that the that the dispositive language act upon not to act upon the petition in the ways authorized.

[00:13:06] Speaker 04:
There's a limited

[00:13:07] Speaker 04:
number of ways to act upon a petition specified in the statute there.

[00:13:12] Speaker 04:
And that's what the secretary definitely could not do.

[00:13:16] Speaker 04:
But here you have a statute that doesn't enumerate what it means to act upon a rehearing petition.

[00:13:22] Speaker 04:
In fact, this is also this self-created voluntary process by FERC.

[00:13:27] Speaker 04:
So does it matter?

[00:13:27] Speaker 01:
I accept that, Your Honor, but I have to answer that.

[00:13:32] Speaker 01:
Number one, I think it is fair to say, as you just did, that in trying to figure out what Actupon was, the court read the preceding sentence in the Natural Gas Act in that case.

[00:13:42] Speaker 01:
But ultimately, the court did two things.

[00:13:46] Speaker 01:
It construed the meaning of Actupon and said you have to engage the merits.

[00:13:50] Speaker 01:
And it also construed the meaning of behavior.

[00:13:53] Speaker 01:
hearing and it said, and I will quote, that hunting down the road or announcing an intention to decide something about the hearing application at some specified time in the future, quote, does not fall within the ordinary meaning of hearing or any definition of hearing known to the law.

[00:14:09] Speaker 01:
And so I think like you take that, which is not bound by the proceeding sentence.

[00:14:14] Speaker 01:
But I think the more dispositive point is the point that I started with, which is the 1990 in 1982.

[00:14:21] Speaker 01:
the regulation that was adopted to govern the Natural Gas Act, which was before you.

[00:14:25] Speaker 01:
And this statute, whatever the natural gas may have contemplated in the proceeding sentence, that boiled down in the same regulation that you construed here and that you construed as not authorizing acting upon, you know, the petition on demerits.

[00:14:42] Speaker 01:
So, you know, it may well be for purposes of a hypothetical that, in fact, I wanted to group them all together back then when they had

[00:14:50] Speaker 04:
They thought it was tolling authority under all the statutes.

[00:14:54] Speaker 04:
And then when that went away, the question is whether the tolling authority remained.

[00:15:00] Speaker 04:
They wanted consolidation, but then Allegheny changed the rules, at least as natural gas.

[00:15:07] Speaker 01:
I mean, the unbanked court, in fairness to the commission, did overrule a couple of cases.

[00:15:11] Speaker 01:
The unbanked court, in fairness to the commission, did overrule a couple of cases.

[00:15:15] Speaker 01:
So I guess I would say the commission can be forgiven for having thought way back when that it had this authority.

[00:15:21] Speaker 04:
No, right.

[00:15:22] Speaker 04:
That's what I'm saying.

[00:15:22] Speaker 04:
But they put it together.

[00:15:24] Speaker 04:
But now, once Allegheny said, as to these statutes not going to work, how do we know that's what it meant for the interstate?

[00:15:33] Speaker 01:
Yes, but Allegheny said that as to these statutes and this

[00:15:36] Speaker 01:
regulation and the problem for the commission here is that in 1982 it enacted a regulation that covered that case and this case and that

[00:15:47] Speaker 01:
regulation was an issue in Allegheny, and the language is identical, which is not to say that as a legal proposition in a hypothetical world in a different planet, the commission could not have adopted a different regulation to govern the ICA, but as a legal proposition, having adopted a unitary regulation with identical- The court comes along and sends us to issues A and B, that regulatory definition is foreclosed by statute.

[00:16:15] Speaker 04:
That doesn't mean the court has said,

[00:16:17] Speaker 04:
that regulatory interpretation.

[00:16:20] Speaker 01:
Your application of regulation is foreclosed by Statute C. I mean, I suppose that one could have what I would call a Humpty Dumpty, you know, definition of a regulation where the interpretation of the same words changing changes, you know, different things.

[00:16:40] Speaker 04:
The only thing it really, the tolling authority to govern was IC.

[00:16:47] Speaker 01:
Let me make two points about that.

[00:16:49] Speaker 01:
I think, you know, I think it would be conceivably possible for the commission to have a separate regulation to govern the ICA subject to a different time standard.

[00:17:00] Speaker 01:
I think it's really legally impossible for the commission to say that it is adopting a unitary standard for all three statutes and then construed the identical language differently, depending on which that is.

[00:17:17] Speaker 01:
Well, I mean, but it said it was adopted.

[00:17:24] Speaker 01:
This is you can look at the release in 1982.

[00:17:27] Speaker 01:
And I guess I should give you the site.

[00:17:29] Speaker 04:
But, you know, the, you know, the whole point of it is to come along and think that it's actually it forbids

[00:17:40] Speaker 04:
the regulation to mean X in under this statute, but that doesn't say it can't mean X under a different statute, but it also covers, it's just, you know, there was some surgery, but that doesn't mean the whole thing.

[00:17:55] Speaker 01:
I don't really find it possible that the language could be in a diet, that the identical language in the same legal document could mean diametrically different things in different contexts.

[00:18:05] Speaker 01:
But accepting that for purposes of the current argument, I will point out that there is another consideration that was present in Allegheny that the court took into account that I think is equally applicable here, which is that what the commission was doing effectively was redlining out the 30-day

[00:18:20] Speaker 01:
deadline out of the rehearing statute in the Natural Gas Act.

[00:18:26] Speaker 01:
And you said, well, OK, you can't do that by this sort of administrative action.

[00:18:30] Speaker 01:
You have to go to Congress to change the statute.

[00:18:33] Speaker 01:
Now, of course, we have the same 30-day deadline in the regulation that indisputably governs

[00:18:40] Speaker 01:
here, and whereas you wouldn't have to go to Congress to change it, we do have the Akarty Principles, this is 1954 in the Supreme Court, that an agency has to comply with their own procedural regulations until they are changed.

[00:18:54] Speaker 01:
And so just as the agency could not redline the third day,

[00:18:58] Speaker 01:
time period of the statute without going to Congress, the agency could no more redline the 30-day period in the regulation without changing the regulation.

[00:19:06] Speaker 01:
And so the same consideration that led the court in Allegheny to say this type of order is insufficient to exercise whatever authority you may have during hearing.

[00:19:17] Speaker 01:
to rehear in this time period for slightly different reasons also applies here.

[00:19:22] Speaker 01:
And so ultimately, I think you could conceivably think of a world in which the commission could have written a different regulation and could have said, I have greater authority under the ICA.

[00:19:33] Speaker 01:
Good luck for them in a future case, but it's not this case.

[00:19:37] Speaker 01:
And the final point I will make on that, because I see that I'm a little bit out, is that if

[00:19:47] Speaker 01:
this were authorized, it would be a significant exercise of authority.

[00:19:51] Speaker 01:
We know under Buckley versus Valeo that any

[00:19:55] Speaker 01:
person that exercises significant authority under the authority of the United States is an officer.

[00:20:00] Speaker 01:
The commission concedes that this is an office that is established by law, because if they are right that the deputy secretary and the secretary have the authority to do what this court said in Allegheny, in fact, they don't, but they are right in this context, let's assume, then this would have been an action executed by an officer that was improperly appointed because it was appointed by the chairman and not the commission.

[00:20:22] Speaker 04:
as you know required by the head of the department and therefore the action will be ineffective on that ground alone under any of these views I don't get to your separate argument that even assuming they could act as they did on rehearing and bypass notice and comment you argue that they did not consider reliance interests and so that was arbitrary it would be arbitrary and capricious for failure to consider reliance interests but

[00:20:53] Speaker 04:
There's no real specification as to what reliance interests there were in this case.

[00:20:59] Speaker 04:
There's nothing, it's just sort of a bland assertion and I think we have cases that have said that's not sufficient.

[00:21:06] Speaker 01:
No, actually, with all due respect, I think that the relevant question here and the relevant sort of head of analysis is whether the commission's failure to comply with the APA can be excused on a no harm, no foul principle because the APA says that the things that don't.

[00:21:25] Speaker 04:
That's a separate argument.

[00:21:26] Speaker 04:
That's a harmless error argument as to failure to engage in notice and comment.

[00:21:30] Speaker 04:
I'm asking you a different question.

[00:21:32] Speaker 04:
That is, assume you're incorrect that they had to do notice and comment.

[00:21:36] Speaker 04:
So assume they were proper, and I'm sorry I wasn't clear, to proceed on rehearing.

[00:21:42] Speaker 04:
I understood you to still have an argument that their decision was arbitrary and comprehensive.

[00:21:48] Speaker 04:
Oh, yes.

[00:21:48] Speaker 04:
Or you have lots of reasons.

[00:21:49] Speaker 04:
Yes, no, no, no.

[00:21:50] Speaker 01:
That is the question on the merits.

[00:21:52] Speaker 04:
Failure to grapple with reliance interests.

[00:21:54] Speaker 04:
Yes.

[00:21:56] Speaker 04:
It's not enough to say they didn't deal with reliance without giving some argument as to what the reliance interest was here.

[00:22:05] Speaker 04:
I mean, the companies were making more money, but that's not a reliance interest.

[00:22:09] Speaker 04:
Normally, one would expect something like contracts were made, investments were made, and there's nothing like that in the record of the briefing that I could see.

[00:22:17] Speaker 01:
Now, the reason why I thought this was tied to the harmless error question, and I think the questions are overlapping, is because in the context of the harmless error, if you were to agree that notice on comment were required, then the only question is, would it have done any good?

[00:22:32] Speaker 01:
And in that case, if there is any uncertainty whatsoever as to what somebody might have said, then you have to take it.

[00:22:38] Speaker 01:
And the point that we have made on the merits are really twofold.

[00:22:42] Speaker 01:
Number one, we were not permitted responded to the hearing.

[00:22:46] Speaker 01:
So we cannot be asked for not having made a full blown argument and all the things that you're identifying for the agency here.

[00:22:57] Speaker 01:
We have pointed out that we had

[00:23:00] Speaker 01:
every expectation based on the wording of rule of order 561 beginning in 1993, that this is a process that occurs only every five years.

[00:23:11] Speaker 01:
I think it is obvious and doesn't actually need even a record that we were not permitted

[00:23:15] Speaker 01:
to provide to the agency that this is a process that leads to investment back to the station.

[00:23:21] Speaker 01:
Because this is a heavily investment-driven area.

[00:23:26] Speaker 01:
And if you have expectations as to what the income streams are going to be based on this done every five years, it's different from the agency doing randomly every couple of years on a different schedule that can be predicted for loans, income streams,

[00:23:40] Speaker 01:
and the like.

[00:23:42] Speaker 01:
To the extent that the agency is going to do this, I think we would say that when the agency first did this, it was in the throes of COVID.

[00:23:52] Speaker 01:
And in fact, in the original record in 2020, we pointed out that even what we were proposing was not sufficiently beneficial to us because we were in a depressed state.

[00:24:05] Speaker 01:
But by the time we got noticed and what would have happened

[00:24:09] Speaker 01:
as to what our expectations and reliance were, in the middle of 2022, people had given up the pretense that inflation was transitory.

[00:24:18] Speaker 01:
And we had a different set of conditions with supply, line issues, and the like.

[00:24:25] Speaker 01:
We could point out all of those things.

[00:24:26] Speaker 01:
So there was investment issues, expectations, the different economic conditions that prevailed in 2022 versus 2020.

[00:24:33] Speaker 01:
And again, I just want to make sure I'm understanding this argument, because it sounds like

[00:24:40] Speaker 04:
At one time you're saying, I would have thought between 2020 and 2022, when the December rule was governing, because of the pandemic and the economic depression, including in the oil industry that came from that, there may not have been.

[00:25:02] Speaker 04:
a whole lot of investment going on.

[00:25:04] Speaker 01:
Maybe you would have been gearing up to do it in 2022, but this new rule came in and- Well, I'm saying two slightly different things, but I think it's worthwhile to keep them separately.

[00:25:16] Speaker 01:
You know, the first one is that the data that the agency considered in coming up with an index in 2020 were unfavorable to us and worked to our detriment because of the conditions that then prevailed.

[00:25:29] Speaker 01:
And that the conditions in 2022, when the agency woke up to the fact that it wanted to do a 180, were also unfavorable to us for different reasons, because inflation was up and there were supply line issues.

[00:25:41] Speaker 01:
So they got us coming and going.

[00:25:44] Speaker 01:
But that shows to the benefits of notice and comment, to go back to the earlier question, because you cannot say that we would not have benefited from being able to point out all of these things when the commission anticipated that it would

[00:25:58] Speaker 01:
it was contemplating a turnabout later to say nothing of all of the issues now being raised by shippers about retroactivity and whether we have to compensate and which of course could have been debated in front of the agency instead of you.

[00:26:14] Speaker 06:
Can I ask, just try to understand the procedural issue here.

[00:26:22] Speaker 06:
Let's suppose we agreed with you on your reliance interest issue.

[00:26:28] Speaker 06:
Would we have to, and we said, okay, we'll grant a petition on those rounds.

[00:26:35] Speaker 06:
Would we have to reach the appointments clause issue?

[00:26:38] Speaker 06:
No.

[00:26:39] Speaker 01:
I mean, as I said earlier, if you agree with us, I mean, on the reliance issue, you mean?

[00:26:45] Speaker 01:
Yes.

[00:26:45] Speaker 01:
I'm not understanding which of the issues.

[00:26:47] Speaker 06:
I mean, it seems.

[00:26:49] Speaker 06:
The arbitrary and capricious because they didn't consider the reliance interest.

[00:26:55] Speaker 01:
I think the appointments clause issue is antecedent to that because their consideration of the merits in 2022 was only made possible by the purported tolling.

[00:27:06] Speaker 01:
And so I think both the Allegheny issue and the appointments clause issue are logically antecedent to that.

[00:27:11] Speaker 01:
If the tolling was ineffective because you blew the 30-day deadline and Allegheny applied, then they never had an occasion to do

[00:27:21] Speaker 01:
a rehearing, they clearly had to do a new rulemaking on the notice of comment.

[00:27:25] Speaker 01:
So these issues as to how they did it and the merits of it are somewhat academic.

[00:27:30] Speaker 01:
And if the officer was improperly appointed, even if the tolling was appropriate, otherwise under Allegheny, the same issue also arises.

[00:27:39] Speaker 01:
Because even if somebody could have told, this person could not.

[00:27:47] Speaker 01:
before you had it in front of you as an appropriate docket for you to consider on the merits you have to have it in front of you and as I said earlier at the beginning it doesn't make any sense to me this isn't like some jurisdictional ordering steel company

[00:28:00] Speaker 04:
It's not like that.

[00:28:03] Speaker 04:
So if an agency order is challenged as being lawfully not authorized for whatever timing issue or wrong process, notice and comment, and there's arguments that it's arbitrary and capricious, and if we say it falls because it was arbitrary and capricious.

[00:28:20] Speaker 01:
Oh, I see what you're saying.

[00:28:22] Speaker 01:
You're saying if you're going to rule for me on another ground that is logically subsequent.

[00:28:27] Speaker 01:
Yes, I agree.

[00:28:28] Speaker 01:
You don't have to reach.

[00:28:29] Speaker 04:
Is that right though, because the remedies could be different in the situation?

[00:28:36] Speaker 01:
I was going to get to that, which is to say,

[00:28:41] Speaker 01:
Ordinarily, if the issue that you're reaching would give me complete relief, yes, there is no necessary order as a distilled company case, but if the issue that is like third in line logically doesn't give me the relief I get from issues one and two, it seems to me is there one and two are logically antecedent and you have to reach them ahead of the arbitrary and compressions issue.

[00:29:08] Speaker 06:
I mean, it seems to me that if, let's suppose, for the sake of argument, you are right on the Appointments Clause issue, then it would seem to me that vacature then of the tolling order, because it was, you know, ultra-virus, so to speak,

[00:29:29] Speaker 06:
Um, then if that's the case, then then the commission doesn't have the authority to act on reconsider.

[00:29:40] Speaker 06:
That is correct.

[00:29:41] Speaker 06:
And you get your, um, the prior order, the December order, so to speak, that you lie.

[00:29:48] Speaker 06:
That is correct.

[00:29:50] Speaker 06:
But if we were to not pass on that issue and say, well, they were arbitrary and capricious

[00:29:59] Speaker 06:
because they failed to act on or consider the reliance interests, they get a do-over, right?

[00:30:12] Speaker 06:
Right.

[00:30:13] Speaker 06:
And you don't want to do over.

[00:30:15] Speaker 01:
You want correct December.

[00:30:17] Speaker 01:
And so that is a lesser form of relief for me.

[00:30:21] Speaker 01:
And therefore, um, from my point of view, I would not accept that unless you reject my previously antecedent, my logically antecedent target.

[00:30:33] Speaker 06:
So the answer to my earlier question is no.

[00:30:36] Speaker 06:
Yeah.

[00:30:37] Speaker 06:
Okay.

[00:30:39] Speaker 04:
Is it true that if we were to, it's all hypothetical, of course, but if we were to remand without vacature for failure to address assorted matters, including reliance, that as a court, there's some case that says the court, we can't do that when you have argued for a vacature remedy.

[00:31:03] Speaker 04:
Would the agency not have the ability to consider the arguments you've pressed here

[00:31:07] Speaker 04:
that would have resulted in greater relief on that.

[00:31:10] Speaker 04:
As part of that remand process, it's going to open things up.

[00:31:13] Speaker 04:
You can do it all again.

[00:31:14] Speaker 04:
And now you're going to have your chance to file things with the agency, which you didn't have.

[00:31:19] Speaker 04:
before?

[00:31:20] Speaker 04:
What cases we can't?

[00:31:21] Speaker 04:
We have to do the other thing.

[00:31:22] Speaker 01:
I'd like to signal, I think, is the line of cases from your court that usually tries to identify whether the errors that the agency has committed are egregious enough to just do a remand or vacate the order.

[00:31:34] Speaker 01:
The general rule under I'd like to signal that it is just a question of clinician.

[00:31:37] Speaker 01:
You send it back with a vacator.

[00:31:39] Speaker 01:
And if it's like a fundamental failure to comply with the law, you vacate it.

[00:31:44] Speaker 01:
But as I said to your colleague Judge Wilkins,

[00:31:47] Speaker 01:
seems to me that that, to me, comes downstream from my APA objection, my Allegheny objection, and my appointment clause objection, because all of those would lead, in my view, to complete vacator and set aside of the 2022 rule under Ally Signal.

[00:32:03] Speaker 01:
And so you would have to conclude that I'm wrong on those three things and only right on the

[00:32:11] Speaker 01:
garbled, you know, the explanation in 2022.

[00:32:13] Speaker 04:
Well, noticing comment violations certainly overwhelmingly tend to result in vacatur, but it's not 100% required.

[00:32:22] Speaker 01:
No, but you have to have a compelling demonstration on the part of the agency that there is absolutely nothing I could have said.

[00:32:28] Speaker 01:
And I just gave you a list of all the things I could have said.

[00:32:31] Speaker 01:
This is discussing the closing pages of the Sprint case, where the court said, and I will quote, if there is any uncertainty at all as to the effect of the failure, you have to set it aside for the good and sufficient reason that if you start excusing failure to comply notice and comment, agencies won't do it.

[00:32:48] Speaker 01:
And so any doubt on this quote always falls on the agency.

[00:32:53] Speaker 01:
And you cannot permit the agency to hypothesize outlandish ways in which this might not have made a difference.

[00:32:58] Speaker 01:
It's up to them to negate the possibility that there was a difference.

[00:33:02] Speaker 01:
And so that's the difference.

[00:33:06] Speaker 04:
The other difficulty we have, though, is that at least

[00:33:10] Speaker 04:
One reading of the, I don't know what to call it, I guess the second, the current rule, the 2022 rule was that it found that it quote, must repeatedly use the word must make this change, you address the tax consequences to have a just and reasonable rate.

[00:33:32] Speaker 04:
And if the consequences of vacatur would be to

[00:33:35] Speaker 04:
reinstate with the commission itself seemingly labeled as an unjust and unreasonable rate.

[00:33:42] Speaker 04:
I know it's debated here, but they four or five times use the word must to make it just and reasonable.

[00:33:51] Speaker 04:
We'll have to vacate if the consequences to reinstate what if we read the agency as having said that rate was unjust and unreasonable.

[00:33:59] Speaker 04:
What happens then?

[00:34:00] Speaker 01:
Let me say three things about that.

[00:34:03] Speaker 01:
Assuming that that were true, which it isn't, for reasons I won't get to presently, the remedy of the shippers was to appeal the 2020 rule and show that.

[00:34:14] Speaker 01:
And so it was not to come here later and say, we never exercised our appellate rights, and we would like you to assume something that was never proven.

[00:34:23] Speaker 01:
But the fact is, if you look at the commission's brief in this court, I think page 84, they in fact deny that that's what they intended in the 2020.

[00:34:30] Speaker 04:
Well, that's the commission brief.

[00:34:32] Speaker 04:
I'm reading the commission's words, which is what we have to follow here.

[00:34:36] Speaker 04:
And it is absolutely true that four or five times in the relevant area, they say we must

[00:34:43] Speaker 04:
I think the more relevant point is that even if they were not eating it on appeal,

[00:35:00] Speaker 01:
I think that even if they were not eating that on appeal and walking away from it, they're just wrong in the merits, right?

[00:35:06] Speaker 01:
Because all they were really talking about is the implementation of this court's 2016 decision in United Airlines.

[00:35:13] Speaker 01:
And just to keep firmly in mind what's at issue here, because they're

[00:35:18] Speaker 01:
different mismatch sets.

[00:35:19] Speaker 01:
What was an issue in United Airlines was whether this tax allowance resulted in double counting, and this is important, for pipelines, for MLP pipelines who compute their rates on cost of service basis.

[00:35:35] Speaker 01:
What we're talking about here is indexing.

[00:35:38] Speaker 01:
So, you know, the commission was wrong in a two-fold way.

[00:35:43] Speaker 01:
The United Airlines sort of case and what was an issue in United Airlines with respect to double counting really applies to cost of service rates.

[00:35:52] Speaker 01:
This is index rates.

[00:35:53] Speaker 01:
And so it really has nothing to do with whether with.

[00:35:56] Speaker 04:
They're computed on the base of cost of service.

[00:35:59] Speaker 04:
And once those costs of service are determined, they apply across the board to all pipelines, whether they're MLPs or not.

[00:36:05] Speaker 04:
So everybody was able to elevate their prices.

[00:36:08] Speaker 01:
They are not computed on the basis of order 154B, which is how you compute the cost of service.

[00:36:16] Speaker 01:
They're computed on the basis of some comparison or some, you know, recoverable cost with the other.

[00:36:21] Speaker 01:
In fact, you know, the whole point of, you know.

[00:36:24] Speaker 04:
As the commission explained, and it seemed quite interesting to me, that in fact,

[00:36:29] Speaker 04:
these taxes were in there.

[00:36:30] Speaker 04:
They were part of the information on which the index was based.

[00:36:34] Speaker 04:
And once the index was based on that, it applies to everybody, not just MLPs.

[00:36:39] Speaker 04:
And it elevated it.

[00:36:39] Speaker 04:
And so we have to deal with that.

[00:36:42] Speaker 01:
But the reason why, with respect to MLPs only, United Airlines thought there was the potential for double recovery is because if you do custom service rate making, you get a return on equity.

[00:36:53] Speaker 01:
And the court thought that the taxes were already covered by the return on equity.

[00:36:59] Speaker 01:
indexing sort of compares a set of costs here and a cost of cost here, not return on equity.

[00:37:05] Speaker 01:
And it does it on an industry wide basis.

[00:37:07] Speaker 01:
So with respect to, you know, you may well think that a particular pipeline who did cost of service was engaged in double counting, but you have two problems.

[00:37:15] Speaker 01:
Number one is, you know, the entire industry is not MLP pipelines.

[00:37:19] Speaker 01:
And so therefore you cannot extrapolate for the index.

[00:37:25] Speaker 01:
Right.

[00:37:26] Speaker 01:
Right, you cannot have the tail wag the dog.

[00:37:30] Speaker 01:
one problem, even if they were right.

[00:37:32] Speaker 01:
And number two is you cannot extrapolate from a different methodology that you think might give you a double counting problem to a methodology that's actually not an issue and which was adopted by Congress precisely so that you could simplify and get away from customer.

[00:37:48] Speaker 01:
And so it's a mismatch set.

[00:37:50] Speaker 01:
As I said, I mean, if the shippers thought that there were all these issues, they were welcomed to appeal the 2020 order.

[00:37:59] Speaker 01:
What they can't do is sort of have it be assumed that there's something wrong with it, never having exercised their appellate rights.

[00:38:06] Speaker 01:
The final point that we'll make is that it could be true, hypothetically, because as Port Stetson and the Farmers Union case in 1984, that

[00:38:16] Speaker 01:
Both of these rates are just unreasonable.

[00:38:19] Speaker 01:
I'm not saying they are.

[00:38:20] Speaker 01:
I actually think the 22 are not.

[00:38:23] Speaker 01:
But the court said expressly in Farmer's Union that the mere fact that the commission has one or another, there are a range of reasonableness that the commission could choose, especially when the commission is setting an index for the entire industry.

[00:38:39] Speaker 01:
And so, I mean, I am sorry for the commission.

[00:38:42] Speaker 01:
They should think better about how they write their orders, but they just goofed.

[00:38:46] Speaker 01:
There's a reason they're taking it back.

[00:38:47] Speaker 01:
And they were legally wrong in so many ways.

[00:38:50] Speaker 01:
I don't really have all morning to actually go through them.

[00:38:54] Speaker 06:
Can I just make sure that I understand your appointments clause argument?

[00:38:59] Speaker 06:
The commission says that the duties of the deputy secretary here were purely ministerial.

[00:39:09] Speaker 06:
And let me make sure I understand your response to that.

[00:39:15] Speaker 01:
Okay.

[00:39:16] Speaker 01:
What the commission says is that a lot of what the secretary and deputy secretary does is drug jury.

[00:39:23] Speaker 01:
And so my first answer is there is drug jury even in the most elevated stations.

[00:39:28] Speaker 01:
I think cabinet officers probably sharpen their own pencils and get their own coffee occasion.

[00:39:32] Speaker 01:
But the Lucia case in the Supreme Court,

[00:39:35] Speaker 01:
said expressly, I think there's a footnote on this, Justice Kagan, that merely because you can point to a number of tasks, maybe even a lot of tasks that somebody engages in that might be characterized as those of an employee, doesn't detract from the relevant question is, do you perform tasks that are significant under the law of the United States?

[00:39:55] Speaker 01:
Here, I will start just with the task that the commission claims the secretary and deputy secretary can do here.

[00:40:01] Speaker 01:
Under their view of Allegheny, they can sort of

[00:40:05] Speaker 01:
provide you know the Commission another year to engage in role making in rulemaking without complying with the APA that's surely a very significant power under the law and Buckley versus Baleo said in page 126 that anyone who engages in the exercise of significant authority under the law is an officer even if you exercise

[00:40:26] Speaker 01:
other duties.

[00:40:27] Speaker 01:
I will point out as well that they do other things.

[00:40:30] Speaker 01:
You can call deadlines.

[00:40:33] Speaker 01:
You can rule on motions to intervene, which affect the rights to the party.

[00:40:36] Speaker 01:
You can waive filing requirements.

[00:40:37] Speaker 01:
They accept service or process on behalf of the commission, which binds the commission.

[00:40:41] Speaker 01:
You can set processes for contested audits, which again have effects on primary parties.

[00:40:46] Speaker 01:
In many respects, many of these things are just like clerks of court, which the Supreme Court held in the 1830s are officers of the United States.

[00:40:55] Speaker 01:
Would that be different if the commission were not here insisting that you can extend deadlines for tolling?

[00:41:01] Speaker 01:
I don't know.

[00:41:02] Speaker 01:
But you start with the proposition that by the commission's own telling, they have this immense power to affect my client's rights by changing the rates that they're going to be able to charge without any compliance with procedural rules that otherwise apply.

[00:41:18] Speaker 01:
That's their version of the story.

[00:41:19] Speaker 01:
And if that's not a significant power, I don't know what it is.

[00:41:24] Speaker 06:
And you're reading, of course, of 18 CFR 375.302, which is the regulation dealing with these delegations to the secretaries designee.

[00:41:42] Speaker 06:
you know, all of those things from A to Z and then AA are things that are completely within the discretion of the secretary or the secretary's designee.

[00:41:55] Speaker 01:
Correct.

[00:41:56] Speaker 01:
And just to be clear, I will accept for personal purposes that a lot of those are

[00:42:02] Speaker 01:
ministerial, and drudgery.

[00:42:04] Speaker 01:
I listed for you those from that list that I think have more significance.

[00:42:09] Speaker 01:
As I said, based on the Lucia case earlier, I have no quarrel with the proposition that there is a lot of drudgery even in the most elevated stations.

[00:42:17] Speaker 01:
But I think if you look at all of them, and V, which is the one that's at issue here, is fairly down the list.

[00:42:25] Speaker 01:
The commission could perhaps characterize many of them as drudgery

[00:42:28] Speaker 01:
and ministerial, but not in a case in which the commission's opening bid is this dysfunctionary has the power to affect substantial rights by enabling the commission on his own say so to fail to comply with the APA and completely change the regulatory framework for an industry a year after the fact.

[00:42:49] Speaker 06:
What if the facts were that

[00:42:51] Speaker 06:
the secretary or his or her designee only tolls when the commission tells them to.

[00:43:00] Speaker 01:
Interesting case, I have thought about the hypothetical.

[00:43:04] Speaker 01:
You would have to consider what other duties the Deputy Secretary or the Secretary have.

[00:43:09] Speaker 01:
If the commission had a record that this was an order of the commission itself, I don't think we would have this issue because it would not be this was done by somebody who should be an officer or wasn't.

[00:43:23] Speaker 01:
The argument would be this was done by the head of the department.

[00:43:27] Speaker 01:
we would not get to the officer question.

[00:43:33] Speaker 01:
If the commission had a record to say, this was actually done by the commission itself, here's a vote, we voted to do this, there will still be questions as to whether they comply with Allegheny and the 30-day deadline and the regulation, but you will not have an appointment plus issues because the action will be that of the head of the department and not that of a subordinate who was improperly appointed.

[00:43:58] Speaker 04:
Not every tolling order is going to have a decision that affects substantive rights.

[00:44:02] Speaker 04:
If the tolling was for 48 hours because the printers were broken in the commission's office to get the rehearing decision out.

[00:44:12] Speaker 04:
What makes it consequential here is not the tolling order, but what the commission did and when the commission did it, as I understand your argument, after the tolling order.

[00:44:22] Speaker 01:
I respectfully disagree about 40% with that, Your Honor, because I think your own opinion in Allegheny points out that what makes it consequential is that the commission does this in the vast bulk of cases as a matter of course.

[00:44:38] Speaker 01:
And you can look at the order in this case, which incidentally is a JA954, and you will see that in all respects it is identical in form and in substance and in language to the order that you had in front of you

[00:44:51] Speaker 04:
You know, the problem there was that it was a tolling order itself was consequential because it cut parties off from seeking judicial review to which the statute entitled them.

[00:45:02] Speaker 04:
That doesn't happen here.

[00:45:04] Speaker 04:
As you have said, you know, the carriers could have gone to court with a rehearing petition pending or never even needed to file a petition.

[00:45:12] Speaker 01:
No without a rehearing petition pending.

[00:45:14] Speaker 01:
If they file for a hearing, they can't go to court.

[00:45:17] Speaker 01:
They have to elect the remedies.

[00:45:19] Speaker 04:
But I guess, you know- They're withdrawn after tolling order and they're going to court.

[00:45:23] Speaker 04:
So one, I don't know how often they do this in ICA cases.

[00:45:26] Speaker 04:
Two, it's not having the consequence, the legal consequence that it did there.

[00:45:34] Speaker 04:
And three, tolling orders in any circumstances may not have the legal consequences they did here for it to have.

[00:45:40] Speaker 04:
sort of primary conduct affecting consequences, that sort of depends on what the commission does and when it does it.

[00:45:49] Speaker 01:
No, but I think all I need to show with respect to my argument here is that the textual authorization to the secretary or the deputy secretary allows what happened here, which is right off the 30-day deadline from the regulation here.

[00:46:04] Speaker 04:
And that would mean whoever was in charge of printing out the 2022 decision here

[00:46:10] Speaker 04:
an officer of the United States, because they were part of, they made possible the issuance of the decision in 2022 that changed everything.

[00:46:19] Speaker 04:
That's not how it works.

[00:46:20] Speaker 04:
So we really look at who is responsible for the substantive conduct that affected people in a material, infected legal rights or infected them in a material way that we expect of officers, not employees here.

[00:46:34] Speaker 04:
And it's not simply, it's not just issuing a tolling order under the ICA.

[00:46:38] Speaker 01:
I suggest to you that this is hypothetical, it's sort of far afield from this, but in fact, I think your own survey of the practice of the commission in Allegheny and what happened here demonstrates that in cases where it matters, which is to say, you know, the commission doesn't want to comply with the deadline.

[00:46:54] Speaker 01:
It is the exercise of significant power.

[00:46:58] Speaker 04:
If somebody is coming to complain, this is an entire voluntary hearing.

[00:47:04] Speaker 04:
required as it is under the national gas.

[00:47:06] Speaker 04:
It's not a jurisdictional predicate like it is under the national gas.

[00:47:10] Speaker 01:
It's not voluntary to the adverse party if the commission chooses to grant it out of time a year later.

[00:47:18] Speaker 04:
order issue, but what the commission did afterwards, the commission.

[00:47:21] Speaker 01:
Well, sure.

[00:47:22] Speaker 01:
No, but the, okay.

[00:47:24] Speaker 01:
That's an issue that actually is an issue we haven't spoken about today, which I think sort of adverse to an issue that the commission has barely raised.

[00:47:32] Speaker 01:
But the answer to that question is to the extent that there's any notion that the commission, um, itself act on this later.

[00:47:39] Speaker 01:
So therefore no harm, no foul.

[00:47:42] Speaker 01:
I think the answer.

[00:47:46] Speaker 04:
the consequential duties which you're referring are not from the tolling order itself here.

[00:47:52] Speaker 04:
They were in Allegheny because they cut off the ability to go to court.

[00:47:57] Speaker 01:
No, but under the commission's view, you know, if you had a rule that had been adopted in like on year one and an agency wanted to change it on year

[00:48:08] Speaker 01:
I don't think anyone would contend that the agency would not have to comply with notice and comment to flip back on the rule.

[00:48:15] Speaker 01:
The only fake leave that the commission has is the proposition that the rehearing period was still live and active and permitted them to somehow use the rehearing rule as an escape hatch.

[00:48:27] Speaker 07:
That's also what the commission did.

[00:48:28] Speaker 07:
That's what the deputy secretary did.

[00:48:30] Speaker 01:
That is the effect of the tolling rule.

[00:48:31] Speaker 01:
Because if the tolling was ineffective, at the time the commission purported to

[00:48:35] Speaker 01:
to act, it didn't have the authority.

[00:48:37] Speaker 01:
That's what FEC versus NRA Victory Fund said.

[00:48:40] Speaker 01:
In the FEC case, the Solicitor General tried to ratify the cert petition after the deadline.

[00:48:48] Speaker 01:
And the commission said no.

[00:48:50] Speaker 01:
I mean, the court said no.

[00:48:52] Speaker 01:
In order for you to be able to ratify the action of somebody who actually didn't have the authority, you have to do it within the timeline that it applies.

[00:48:58] Speaker 01:
So all of this would be well and good if the commission had purported to act on rehearing within 30 days.

[00:49:03] Speaker 01:
But in so far as they didn't do that, I don't think that this argument actually gets the commission anything.

[00:49:08] Speaker 01:
I mean, the commission can act on rehearing or not on rehearing to change a rule, but they have to comply with the APA.

[00:49:14] Speaker 01:
And if the tolling order reports to give the commission the authority to do that a year later without complying to the APA, it's an exercise of significant authority, if they're right, which requires this person to be properly appointed.

[00:49:30] Speaker 06:
Thank you, Your Honor.

[00:49:31] Speaker 06:
Dr. Williams, do you have a question?

[00:49:34] Speaker 06:
I'm just trying to make sure that I understood your last response.

[00:49:41] Speaker 06:
Are you saying that entering the tolling order in and of itself alters the kind of rights and responsibilities of the parties?

[00:49:58] Speaker 06:
That order itself?

[00:50:02] Speaker 06:
Or are you saying it does so because it allows the commission to alter the rights and responsibility of the parties later?

[00:50:14] Speaker 06:
I think the commission would not be able to do that later absent the tolling

[00:50:21] Speaker 01:
I think I'm saying at least number two, but I think number one would be sufficient.

[00:50:26] Speaker 01:
But I'm certainly saying number two.

[00:50:28] Speaker 01:
I think in cases where the tolling actually does any good from the commission's point of view, it is intended solely and exclusively for the commission to be able to act more than 30 days after the fact.

[00:50:42] Speaker 01:
And so therefore, the intent of the provision is for the commission to be able to act outside of the regulatory

[00:50:50] Speaker 01:
permitted time period, and therefore that itself is the exercise of significant authority.

[00:50:55] Speaker 01:
Whether the commission in fact denies for grants, I think is helpful to the case, but the exercise of giving the commission a time that it would not have under the rule unless the rule is changed is itself the exercise of significant authority.

[00:51:11] Speaker 06:
Thank you.

[00:51:11] Speaker 01:
Thank you, Your Honor.

[00:51:13] Speaker 01:
Thank you, Mr. Trotta.

[00:51:14] Speaker 02:
Mr. Meducci.

[00:51:22] Speaker 05:
Thank you.

[00:51:23] Speaker 05:
Please the court even duty on behalf of shipper petitioners.

[00:51:26] Speaker 05:
I would like to respectfully deserve two minutes.

[00:51:28] Speaker 05:
Model.

[00:51:30] Speaker 05:
It's May 22.

[00:51:31] Speaker 05:
Rehearing order is arbitrary, capricious and an abuse of discretion.

[00:51:35] Speaker 05:
On the issue of shippers ability to be made whole for first air and it's 2020 index order.

[00:51:46] Speaker 05:
Index ceiling rates stand to preclude shippers from seeking relief from the same as directly contrary to its unambiguous regulations and statutory responsibilities and precedent.

[00:51:57] Speaker 05:
FERC's primary defense is a claim of deference.

[00:52:01] Speaker 05:
Shipper petitioners do not dispute that FERC has a degree of deference.

[00:52:05] Speaker 05:
But as Exxon said.

[00:52:07] Speaker 04:
Do your arguments require a vacatur or just remand?

[00:52:10] Speaker 04:
Would your argument require, you said it's contrary to statute, an agency.

[00:52:15] Speaker 05:
The May 2020 order should be vacated.

[00:52:18] Speaker 05:
The January 22 order should be vacated.

[00:52:22] Speaker 05:
The January 22 order should be revised and directed.

[00:52:26] Speaker 05:
That shippers should be provided and placed into the same position they would have been, but for the error created by the 2020 order.

[00:52:33] Speaker 04:
I'm sorry.

[00:52:34] Speaker 04:
So the January 22 order should be vacated?

[00:52:39] Speaker 04:
No.

[00:52:39] Speaker 04:
Or remit?

[00:52:40] Speaker 04:
Well, you just said it was their decision not to allow

[00:52:44] Speaker 04:
I guess the re-hearing decision.

[00:52:46] Speaker 04:
But they did it in both orders.

[00:52:47] Speaker 04:
They didn't allow it in both orders.

[00:52:49] Speaker 04:
Actually, in the January 22 order, it was unclear.

[00:52:52] Speaker 05:
That's why we filed a request for clarification and re-hearing to determine what they actually meant, given that they said, make those rates effective July 1 of the first index year.

[00:53:01] Speaker 05:
But then in the paragraph 106 said, make it effective March 1 of 2022, contrary to their regulations.

[00:53:10] Speaker 05:
So May 22 order should be vacated.

[00:53:14] Speaker 05:
and the January 22 order should be clarified.

[00:53:19] Speaker 05:
Because nothing in the January 22 order actually says that we're precluded from getting relief.

[00:53:26] Speaker 05:
In fact, when we filed our request for clarification, the pipeline industry filed in response and agreed with our position.

[00:53:33] Speaker 05:
So the January 2022 order is actually, in our opinion, clear to the extent that it needs to be consistent with the statute, the regulation.

[00:53:44] Speaker 05:
The May 22 order took it a step too far and indicated that for January 1 through February 28 of 22, the unreasonable index ceiling levels and index rates, ceiling rates, should stay in effect, notwithstanding that they were unreasonable.

[00:54:07] Speaker 05:
FERC has put forth two factors to justify its decision for its action.

[00:54:11] Speaker 05:
One, that such relief would be inconsistent with EPAC's goals of streamlined rate making, and that FERC's, and two, FERC's handling of future complaints would be unduly burdensome.

[00:54:22] Speaker 05:
As to undue burden, FERC's responsive brief has effectively abandoned that argument and does not attempt to support its claim.

[00:54:32] Speaker 05:
This is not surprising, given that the shipper's ability to file a complaint against index rates that are above reasonable index ceiling levels was part of regulations implemented along with all the other comprehensive regulations that put in place the simplified rate-making regime that FERC is defending today, indexing.

[00:54:53] Speaker 05:
It would be illogical to say that a regulation allowing complaints against index ceiling level or index rates above index ceiling levels

[00:55:01] Speaker 05:
is burdensome when it's consistent with the simplified regulations put in place.

[00:55:07] Speaker 05:
FERC's second contention is that retroactive relief would be inconsistent with EPAC's simplification goals.

[00:55:15] Speaker 05:
As found in AOPL and Order 561, simplification and streamlining goals of EPAC 92 were accomplished when FERC established its indexing regime to decrease the frequency of complicated cost-based rate proceedings.

[00:55:30] Speaker 05:
That is all.

[00:55:31] Speaker 05:
Burke's streamlined argument has no bearing on FERC's enforcing the ICA's requirement, including Section 105 of the ICA, that makes it unlawful, makes unreasonable rates unlawful and prohibited.

[00:55:44] Speaker 05:
The goal of administrative efficiency does not free the agency from that requirement.

[00:55:51] Speaker 05:
Burke argues that it never found the 2020 index ceiling levels

[00:55:58] Speaker 05:
and inferentially the 2020 index ceiling rates unjust and unreasonable.

[00:56:05] Speaker 05:
The record doesn't support them.

[00:56:07] Speaker 05:
First, PERT does not dispute that the index factor approved the January 22 re-hearing order is the just and reasonable index factor.

[00:56:16] Speaker 05:
Relatedly, FERC does not dispute that application of the index factor of that index factor for the year, index year 2021 generates the just and reasonable index levels for index year 2021, the entire index year.

[00:56:31] Speaker 05:
Relatedly, FERC does not dispute that the index factor and index ceiling levels, corresponding index ceiling rates resulting from the 2020 order are in error

[00:56:43] Speaker 05:
and that those rates are in excess of the reasonable index ceiling levels generated by the January 22 order.

[00:56:50] Speaker 05:
FERC and this court have made plain in order 561, 561A and in AOPL1 that rates in excess of the index ceiling levels found reasonable are presumptively unjust and unreasonable.

[00:57:05] Speaker 05:
Third, FERC's January 22 hearing order,

[00:57:08] Speaker 05:
specifically made claims and said the 22 index order yielded incongruous and unreasonable results.

[00:57:15] Speaker 05:
It also claimed that failure to include the income tax policy statement is a major flaw and it must be included in order for just unreasonable ceiling levels and rates to be achieved.

[00:57:28] Speaker 05:
Based on the totality of these facts, Burke cannot support a claim that the index factor and resulting index ceiling levels and corresponding rates coming out of the 2020 index order are anything other than reasonable.

[00:57:40] Speaker 05:
Burke's interpretation of its indexing regulation similarly fails to justify this position.

[00:57:46] Speaker 05:
Burke contends it is entitled to allow the index ceiling levels and index rates from the 2020 order to stand in place because index regulations do not otherwise preclude such an outcome

[00:57:58] Speaker 05:
or dictate what the commission should do when acting on re-hearing.

[00:58:03] Speaker 05:
The procedural posture of the case makes the difference.

[00:58:07] Speaker 05:
Perch position is also not sustainable in light of its perch position.

[00:58:11] Speaker 05:
In Waterkeepers, this court addressed a similar theory proffered by.

[00:58:17] Speaker 05:
It said repeatedly that it would reject the notion that the absence of an express proscription allows an agency to ignore a proscription implied by the regulation.

[00:58:29] Speaker 05:
or by the statutory language.

[00:58:30] Speaker 05:
Same principle is applicable here for the agency's interpretations of its regulations.

[00:58:35] Speaker 05:
Here, not only is ignoring an implied prescription in its regulations, it's ignoring a direct statement that it applied to the carrier.

[00:58:46] Speaker 05:
In paragraph 106 of the order of the January 22 order, Bert directed that any pipeline

[00:58:56] Speaker 05:
with a filed rate that exceeds the recomputed ceiling level plus filed to reduce the rate, bring it into compliance with the pipelines recomputed ceiling level as required by section 342.3 E of the commission's regulations.

[00:59:11] Speaker 05:
Section three.

[00:59:12] Speaker 04:
You're right.

[00:59:14] Speaker 04:
The commission concluded that it had to address the tax change as part of the index.

[00:59:27] Speaker 04:
And if they're right, that say either there was a toll-in problem or a notice-in-comment problem that requires vacatur.

[00:59:38] Speaker 04:
What's, and this is just hypothetical, I'm just throwing out, what's the remedy?

[00:59:42] Speaker 04:
Because it would be under your theory, we reinstate the December order, that's reinstating an unjust, a race that, as you read it, the commission found to be unjust and unreasonable.

[00:59:56] Speaker 04:
On the other hand, if they're right, as to at least those two arguments, vacancy would be quite the usual course.

[01:00:06] Speaker 05:
In their case, vacancy would be as a result of that work was wrong in the way it revised the 2020 index back.

[01:00:17] Speaker 04:
Well, either that it had authority to revise it at all, totally an issue.

[01:00:21] Speaker 04:
or that it was going to revise it, it had to go through notice and comments.

[01:00:24] Speaker 04:
So, but just assume one of those is right and it would require a faketure and assume you're out, you don't have to assume it.

[01:00:32] Speaker 04:
I'll assume you're right that the commission found it was unjust and unreasonable, that the rates that didn't factor in the tax change were going to, would be, were unjust and unreasonable from the December order.

[01:00:46] Speaker 04:
What's the remedy?

[01:00:49] Speaker 04:
Normally the vacature, the 2022 order would reinstate the December 2020 rule.

[01:00:58] Speaker 04:
If you read it, the commission found was imposed unjust and unreasonable rates, which of course you just can't do.

[01:01:07] Speaker 05:
The ultimate remedy for shippers would be kicked down the road.

[01:01:11] Speaker 05:
Sorry?

[01:01:12] Speaker 05:
It would be kicked down the road.

[01:01:13] Speaker 05:
Because it would- Take down the road?

[01:01:15] Speaker 05:
Yes, because neither of those rates- Well, what happens in the meantime?

[01:01:20] Speaker 05:
The rate, if there's vacature of the 2022 order and the prior rate goes into effect, pipelines are required to make that rate change.

[01:01:31] Speaker 05:
That rate change would still not be final because you have an ongoing investigation.

[01:01:36] Speaker 05:
When you have an ongoing investigation,

[01:01:39] Speaker 05:
the rate not become final.

[01:01:40] Speaker 05:
Everybody's put on notice that that rate will change.

[01:01:45] Speaker 05:
And once that is final, the remedy there would then take place.

[01:01:49] Speaker 05:
Are those healing?

[01:01:50] Speaker 05:
What's the ongoing investigation?

[01:01:52] Speaker 05:
The ongoing investigation is what is the proper index back?

[01:01:55] Speaker 05:
Here in this case, the five-year index factor is being decided for the full five years.

[01:02:01] Speaker 05:
Everybody was on notice of that from the notice of inquiry to every subsequent order.

[01:02:06] Speaker 05:
Everybody was put on notice of the fact that this proceeding was going to derive an index factor that was going to be applied five-year period, starting July 1 of 2020.

[01:02:16] Speaker 05:
Everybody was on notice.

[01:02:19] Speaker 05:
So when the first order came out in 2020 and it was issued,

[01:02:23] Speaker 05:
work issued its 2021 notice instructing pipelines on how to implement that index factor.

[01:02:31] Speaker 05:
It specifically had a footnote saying, you're doing it pursuant to this order.

[01:02:37] Speaker 05:
This order is subject and pending a rehearing, putting everybody on notice that that rate was subject to investigation and subject to change.

[01:02:45] Speaker 05:
So that when the January 22 order

[01:02:48] Speaker 04:
Well, it's legally operative, right?

[01:02:50] Speaker 04:
It was a legally operative rate.

[01:02:53] Speaker 04:
It was an effective rate.

[01:02:55] Speaker 04:
It was legally binding.

[01:02:56] Speaker 04:
What if the pipeline hadn't complied once it took effect, that the December 2020 rate went into effect at a minimum, effective date.

[01:03:06] Speaker 04:
Once that went into effect, if they hadn't complied and then charged an even higher rate,

[01:03:12] Speaker 04:
They'd have been in violation of this of the statute, correct?

[01:03:16] Speaker 04:
Correct.

[01:03:16] Speaker 04:
That's the difference.

[01:03:17] Speaker 04:
They can be sanctioned, correct?

[01:03:19] Speaker 05:
Correct.

[01:03:20] Speaker 05:
But that's the difference between a legal rate and an awful right.

[01:03:22] Speaker 05:
A legal rate can be Arizona gross legal rate to be filed by a pipeline and put into effect.

[01:03:29] Speaker 05:
A shipper like us can we we can challenge that rate stays in effect, subject to the outcome of that proceeding.

[01:03:36] Speaker 05:
Once the commission rules and says, let's say shippers win,

[01:03:40] Speaker 05:
That rate is modified going back to the data.

[01:03:44] Speaker 05:
If shippers lose, the rate continues on and it's considered now the lawful rate.

[01:03:48] Speaker 05:
That's the J and R rate because the commission said it.

[01:03:50] Speaker 05:
What the commission doing here is nothing more than an extension of what all of these pipelines have been doing all along.

[01:03:57] Speaker 05:
A rate proceeding, indexing is the largest rate proceeding for the carrier industry.

[01:04:02] Speaker 05:
So when that rate proceeding starts, everybody's aware that when the first index factor happens,

[01:04:09] Speaker 05:
It's going to generate an index factor.

[01:04:11] Speaker 05:
It's going to generate ceiling rates.

[01:04:12] Speaker 05:
Pipelines are going to file to put those into effect.

[01:04:16] Speaker 05:
If there's a rehearing and subject to further investigation, that rate is a legal right.

[01:04:22] Speaker 05:
That's all it is.

[01:04:23] Speaker 05:
It's not a lawful right determined to be just and reasonable.

[01:04:26] Speaker 05:
It's a legal right.

[01:04:27] Speaker 05:
And once the investigation is done and the final index factor is arrived at,

[01:04:33] Speaker 04:
That's when it becomes then- When has that legal lawful distinction been applied in a notice and comment context?

[01:04:42] Speaker 04:
In the notice and- I mean, I get the file.

[01:04:44] Speaker 04:
I would say- That's different.

[01:04:45] Speaker 04:
This is a notice and comment and it's a little weird to say that a notice and comment rule is maybe legal, but not lawful.

[01:04:52] Speaker 05:
In an analogy situation back in 2003, this court remanded the index factor that FERC generated.

[01:04:58] Speaker 05:
And it came back and they said, yes, we're going to change the

[01:05:03] Speaker 05:
It went from PPIFG.

[01:05:04] Speaker 04:
No, I get pursuant to court order.

[01:05:06] Speaker 04:
I'm talking by the agency.

[01:05:07] Speaker 04:
The hypotheticals you gave me before were all agency proceedings, as I understood them.

[01:05:12] Speaker 04:
Right, Kyle, then proceeding before the agency to challenge it.

[01:05:16] Speaker 04:
Correct.

[01:05:16] Speaker 04:
All right, but now we're talking about agency proceeding that went through notice and comment.

[01:05:20] Speaker 04:
The 2003 index rate did go through notice and comment.

[01:05:24] Speaker 04:
So it went up and- No, what I'm talking, sorry, I'm not being clear.

[01:05:29] Speaker 04:
I understand your point about this happens all the time.

[01:05:32] Speaker 04:
Agencies do things and they come up on judicial review and that can change.

[01:05:38] Speaker 04:
That's just the rule of law, right?

[01:05:40] Speaker 04:
It can change or not.

[01:05:41] Speaker 04:
It can affirm or reverse or remand with agency proceedings.

[01:05:46] Speaker 04:
What I'm asking you though is a different question, because I thought your examples were involved in a different situation, which was a filed rate,

[01:05:54] Speaker 04:
is proceeding for the agency.

[01:05:55] Speaker 04:
And then another proceeding before the agency where a shipper comes in and says, hang on, that's not a lawful rate.

[01:06:03] Speaker 04:
And then it gets changed.

[01:06:04] Speaker 04:
All of this is before the agency itself.

[01:06:08] Speaker 04:
What I'm asking now, is there a situation where the commission engaged in notice and comment rulemaking?

[01:06:17] Speaker 04:
And then there was another proceeding before the agency itself that was not notice and comment rulemaking.

[01:06:23] Speaker 04:
that changed that legal rule that had been adopted through notice and comment rulemaking without more notice and comment rulemaking.

[01:06:32] Speaker 04:
Is there a precedent for this?

[01:06:33] Speaker 04:
That exact fact pattern, I'm not sure, but I can tell you the one that's close.

[01:06:38] Speaker 05:
In the 2003 proceeding that was remanded, that started with a notice of comment, notice of proposed rulemaking, and proposed a PPIFG minus 1%.

[01:06:49] Speaker 05:
comments were filed.

[01:06:51] Speaker 05:
They came out with the negative 1.1%, 1%.

[01:06:54] Speaker 05:
Rehearing was filed on that.

[01:06:57] Speaker 05:
Burke did not change its index factor.

[01:07:00] Speaker 05:
The people who sought rehearing then appealed to the court.

[01:07:04] Speaker 05:
All along, that rate, the index, those ceiling levels and ceiling rates went into effect.

[01:07:10] Speaker 05:
They were into effect.

[01:07:11] Speaker 05:
They were both the legal rate, the lawful rate.

[01:07:15] Speaker 05:
They were the legal index ceiling

[01:07:18] Speaker 05:
This court found that Burke had failed to justify its PPIFG minus one.

[01:07:24] Speaker 05:
We mandated it.

[01:07:25] Speaker 05:
Burke, without noticing the comment, there might have been some comments, but if it was an official notice and comment restart, we looked at it and said, you know what?

[01:07:34] Speaker 05:
Right?

[01:07:35] Speaker 05:
We need to change it to a PPIFG with no index differential.

[01:07:41] Speaker 05:
And they said, and we're going to put this into effect.

[01:07:44] Speaker 05:
At the time, the carrier said, in order to correct, you know, help hold to correct that error, what you need to do is you need to retroactively take that index back.

[01:07:55] Speaker 04:
Did they do that?

[01:07:56] Speaker 04:
Was there failure, or they're not failure, was there a decision not to go through notice and comment on remand?

[01:08:02] Speaker 04:
Was that challenged?

[01:08:04] Speaker 05:
No.

[01:08:04] Speaker 05:
No.

[01:08:05] Speaker 05:
There was just, there might have been some comments, but no official notice and comment was done.

[01:08:11] Speaker 04:
So what for this court hasn't or another court has not approved the commission.

[01:08:15] Speaker 04:
Starting with notice and comment and then changing index without notice and comment.

[01:08:25] Speaker 05:
Changing after the remand.

[01:08:27] Speaker 05:
I do not believe there was special notice.

[01:08:29] Speaker 05:
That's all I can tell you.

[01:08:30] Speaker 05:
But what FERC did was then retroactively implement the new index ceiling levels and the index rates starting from July 1 of the very first year of the five-year review period and brought it forward for carriers to then put in place.

[01:08:47] Speaker 05:
The only difference there was that the carriers never asked for any type of financial remedy.

[01:08:54] Speaker 02:
And in that situation, when the case went back to the agency, was the rate still in effect?

[01:09:02] Speaker 05:
Yes.

[01:09:03] Speaker 05:
Those rates were still in effect.

[01:09:04] Speaker 05:
And what happened is that it showed that pipelines could have charged approximately 1% higher.

[01:09:11] Speaker 05:
But pipelines didn't ask for any financial remuneration or recruitment for the lost revenue.

[01:09:16] Speaker 05:
It simply said, what you need to do is retroactively put that in those at index factor and related index ceiling levels into effect July 1 of the very first year of the five-year period.

[01:09:27] Speaker 05:
And then every year, July 1, recompute the ceiling levels until you come to current.

[01:09:33] Speaker 05:
And that current year, even though it was mid-year,

[01:09:37] Speaker 05:
They said you need to make those index ceiling levels effective July 1 of that year, and then you can change your rates point.

[01:09:47] Speaker 05:
I see that I'm out of time.

[01:09:48] Speaker 05:
Do you have any, if there's any further questions?

[01:09:51] Speaker 02:
Thank you.

[01:09:51] Speaker 02:
We'll give you all the time for rebuttal as you requested.

[01:09:54] Speaker 02:
Thank you.

[01:10:08] Speaker 02:
I hear from the commission, Mr. Glover.

[01:10:29] Speaker 03:
May it please the court.

[01:10:30] Speaker 03:
I'm Matthew Lover, and I represent respondent, the Federal Energy Regulatory Commission.

[01:10:34] Speaker 03:
A lot's been discussed, so I'm happy to start wherever the court would like me to.

[01:10:38] Speaker 03:
I can start with what we were just discussing.

[01:10:41] Speaker 03:
I can start with the notice and comment discussion earlier.

[01:10:44] Speaker 03:
I guess.

[01:10:46] Speaker 03:
I might point out that in terms of pipelines, notice and comment theory, they also sought rehearing.

[01:10:53] Speaker 03:
And so if we lost our ability to engage in notice or further adjustments to the index after that rehearing date, they would have been harmed by that as well.

[01:11:03] Speaker 03:
To the Allegheny discussion that you had with Mr. Estrada,

[01:11:07] Speaker 03:
You know, we have read Allegheny as telling us that the Natural Gas Act allows you to act on rehearing in four ways that are specified in the Natural Gas Act.

[01:11:16] Speaker 03:
We've treated the similar Federal Power Act the same way.

[01:11:19] Speaker 03:
We've modified our procedures with those to provide for effective and timely rehearing proceedings.

[01:11:26] Speaker 03:
The Interstate Commerce Act has different statutory text, and so we treat it as not superseding our regulation and preventing us from applying our regulation the same way that we've been applying it.

[01:11:37] Speaker 03:
initially.

[01:11:37] Speaker 03:
And so I don't think that's a, sorry, did I cut you off, Your Honor?

[01:11:40] Speaker 03:
I don't think that's a weird way for an agency to continue using its regulatory interpretation that it had of the regulation from the outset when the court tells that you can't do it under these statutes.

[01:11:51] Speaker 04:
Did the meaning of the regulations text change then after Allegheny?

[01:11:56] Speaker 04:
what it means to act upon rehearing.

[01:11:58] Speaker 04:
Did it change after Allegheny?

[01:12:00] Speaker 03:
No.

[01:12:00] Speaker 03:
We have always believed that to act upon rehearing included the tolling.

[01:12:04] Speaker 03:
That's why we have other regulations allowing for tolling orders.

[01:12:07] Speaker 03:
The court told us in Allegheny that acting in the Natural Gas Act, and we've applied it in the Federal Power Act because they're nearly identical or materially identical, I think is the term I'll use.

[01:12:17] Speaker 03:
We've applied it there as well.

[01:12:18] Speaker 03:
You told us that to act there means these four specified things.

[01:12:23] Speaker 03:
or grant, deny, modify without a hearing.

[01:12:27] Speaker 03:
Was it modify without a hearing?

[01:12:28] Speaker 03:
Apologies.

[01:12:29] Speaker 03:
But there's four right there.

[01:12:31] Speaker 03:
So you told us that our regulation, as we've interpreted it as act means in our regulation, violates the Natural Gas Act.

[01:12:37] Speaker 03:
And so we cannot pull under the Natural Gas Act.

[01:12:40] Speaker 03:
And we don't.

[01:12:41] Speaker 03:
And we've applied that similarly to the Federal Power Act.

[01:12:44] Speaker 03:
But we've maintained a consistent reading of our regulation.

[01:12:47] Speaker 03:
And we think the different statutory text in the Natural Gas Act

[01:12:51] Speaker 03:
does not compel us to read our regulation differently.

[01:12:55] Speaker 03:
You know, we can continue reading it as we do, allowing for tolls.

[01:13:02] Speaker 04:
I was going to go to notice and comment, but that's where I was going to go.

[01:13:07] Speaker 02:
Okay.

[01:13:07] Speaker 02:
Just on, on, on, if we can just start with the notice of comment issues.

[01:13:10] Speaker 02:
So you heard the response to the, your point that the carriers also sought re-hearing, which is that.

[01:13:17] Speaker 02:
Seeking re-hearing is one thing that doesn't specify the procedures under which re-hearing would occur.

[01:13:22] Speaker 02:
And it's always been contemplated that a re-hearing in a context like this or any further proceeding in a context like this that can result in a change to the rate would have to be accompanied by notice and comment.

[01:13:34] Speaker 02:
So I think

[01:13:35] Speaker 03:
This gets to maybe a conflict divisions between what we view as our notice and comment rulemaking.

[01:13:40] Speaker 03:
We view our notice and comment rulemaking as ending upon the conclusion of rehearing and not merely ending upon the initial order, as we call it, the first order that was issued here.

[01:13:51] Speaker 03:
And so I think it doesn't look like, you know, I know that they highlighted.

[01:13:56] Speaker 02:
If you could look at it that way, and I understand conceptually that you could frame it that way.

[01:14:01] Speaker 02:
But the point made is that,

[01:14:04] Speaker 02:
The rate that went into a, the rate that is being reheard is a rate that's in effect as a matter of law.

[01:14:12] Speaker 02:
And so then if the rehearing comes along and can change that, then when you're adjusting something that is in effect as a matter of law, the APA just says you need to go through notice and comment.

[01:14:24] Speaker 03:
Yes, but again, I think that you know to drill down on some of your cases right your cases like Humane Society Rule was published.

[01:14:33] Speaker 03:
There was no sort of ongoing proceedings Well other than it needed to be published in the Federal Register, but it had gone out There was no ongoing proceeding seeking to change that rule.

[01:14:42] Speaker 03:
We had an ongoing proceeding under our regulations We invite rehearing we provide for rehearing we've had rehearing on the five-year index in the past and so

[01:14:51] Speaker 03:
You know we view our notice and comment as an iterative process that starts with initial comments reply comments.

[01:14:57] Speaker 03:
We tell you what our order is then you can seek rehearing and that hearing can include asking to change aspects of the rate, you know the pipelines say they wanted only a technical change, but one of the cases they relied on.

[01:15:07] Speaker 03:
The other thing that I want to talk about a couple times in the blue brief at 20 and 23 was utility solid waste activities group, which told the EPA that it couldn't correct what they said was a fine replacement state with word perfect in one of their regulations because it would change the.

[01:15:24] Speaker 03:
It changed the metrics, like the number that you would count whether surfaces were regulated or not regulated.

[01:15:31] Speaker 03:
And you told them they couldn't fix that without more notice and comment because they completed their rulemaking.

[01:15:36] Speaker 03:
So on pipeline's theory, we can't do anything on rehearing other than perhaps just say, here's a bunch more reasons.

[01:15:43] Speaker 03:
We couldn't give them the relief they want of these technical changes to our rule.

[01:15:50] Speaker 04:
I mean, I don't know that it's

[01:15:52] Speaker 04:
I get your atmospherics point, but you know, whether pipelines are trying to have their cake and eat it too really doesn't address the FERC's obligation to comply with notice and comment rulemaking.

[01:16:05] Speaker 04:
And the one thing I'm trying to understand with this ability to have, you know, it's weird having the IC Act and APA together.

[01:16:14] Speaker 04:
So having the rehearing authority, but also the general notice and comment obligation,

[01:16:22] Speaker 04:
When is it the commission's view that a notice and comment rulemaking that has gone into effect?

[01:16:32] Speaker 04:
It's not in that interim before it goes into effect.

[01:16:36] Speaker 04:
Is there some point at which it becomes so final that they could only change it through notice and comment rulemaking?

[01:16:48] Speaker 04:
Or is there no such point as long as there's an open rehearing petition or a rehearing petition on a rehearing petition or a rehearing petition on a rehearing petition on a rehearing petition through that period?

[01:16:59] Speaker 03:
So I think our position is that it's at the point at which rehearing is completed.

[01:17:05] Speaker 03:
And it's not a sui sponte like, you know, in sprint that the agency got a reconsideration petition a year after this court had actually ruled and affirmed what they had done in their initial rule.

[01:17:15] Speaker 03:
And so there wasn't like a break like that where our rulemaking was completed.

[01:17:18] Speaker 04:
Our view is January 22 or May 22 here because you had a rehearing on the rehearing.

[01:17:23] Speaker 03:
So it would be May 22 as to the issues that were raised in that re-hearing petition.

[01:17:29] Speaker 03:
Those were what would be still live or what we'd still be looking at.

[01:17:32] Speaker 04:
A part of the rule would be legally in effect and require items to come out of the ruling team, but whatever parts of that re-hearing petition was not.

[01:17:39] Speaker 03:
I think that would come from some of this court's cases, including consumer energy.

[01:17:44] Speaker 03:
Yes.

[01:17:46] Speaker 03:
I think.

[01:17:47] Speaker 03:
me back.

[01:17:48] Speaker 03:
I think we would we would need to consumer energy.

[01:17:52] Speaker 03:
Again, it distinguishes case Spartan radio casting and it supports our case, but we think it's the analogous situation here and it distinguish it because there there was a rehearing request concerning whether mission should promulgate the rule regardless of this one house legislative veto and should strike down the one house legislative veto and the commission

[01:18:10] Speaker 03:
didn't do anything that was in that hearing request, didn't address those arguments and instead said, actually, we're just revoking this rule for other reasons that were not sort of discussed in the rulemaking.

[01:18:19] Speaker 03:
And the court said, you know, essentially applying sort of an early version of the logical outgrowth, like you're not doing what was discussed in rehearing.

[01:18:26] Speaker 03:
You're not doing these other things.

[01:18:27] Speaker 04:
That's not really hearing.

[01:18:29] Speaker 03:
Yes.

[01:18:29] Speaker 04:
No, but what I'm asking you is.

[01:18:33] Speaker 04:
When does the rule become

[01:18:38] Speaker 04:
Well, it's final at the time they seek rehearing your regulations.

[01:18:43] Speaker 04:
There's levels of final.

[01:18:44] Speaker 04:
I know there's final one and final two or whatever, but I'm just legally final such that notice, I'll call it APA final.

[01:18:52] Speaker 04:
Let me call it that.

[01:18:53] Speaker 04:
And that will be a shorthand for it would require notice and comment rulemaking to change.

[01:18:57] Speaker 04:
I think that becomes APA final.

[01:18:59] Speaker 04:
I just want to make sure I understood your answer as to whatever parts were not encompassed within the May 2022 rehearing.

[01:19:08] Speaker 04:
It will become final.

[01:19:11] Speaker 03:
I think 2020 or what if I can 30 days or when if I could what time frame sorry if I could start with kind of a basic example if we should calendar rulemaking and you have 30 days for rehearing and no party files for rehearing that rulemaking is final on the 31st day.

[01:19:27] Speaker 03:
There was no request for rehearing in the.

[01:19:30] Speaker 04:
But in this case, I'm trying to understand.

[01:19:32] Speaker 04:
So in this case, when did it hit that APA finality mark?

[01:19:42] Speaker 04:
Was it January 2022 when you issued a re-hearing decision?

[01:19:49] Speaker 04:
Or was it the re-hearing order?

[01:19:55] Speaker 04:
You had another re-hearing order.

[01:19:56] Speaker 04:
That re-hearing order was only filed within those 30 days.

[01:20:00] Speaker 04:
It might've become effective January 19th, but it didn't because another rehearing petition was filed.

[01:20:06] Speaker 04:
Yes.

[01:20:07] Speaker 04:
But you say any part of the rule that wasn't covered by that rehearing petition became APA final on February 19th?

[01:20:12] Speaker 03:
I think I kind of conflated two concepts, so let me back up.

[01:20:15] Speaker 03:
I probably wouldn't clear this.

[01:20:16] Speaker 03:
It would be final upon the second rehearing order.

[01:20:19] Speaker 03:
No one sought rehearing.

[01:20:20] Speaker 03:
Procedures at work are over.

[01:20:22] Speaker 03:
Rule is final.

[01:20:23] Speaker 03:
Both parties came to the Court of Appeals, different courts of appeals.

[01:20:26] Speaker 03:
We all ended up here.

[01:20:27] Speaker 03:
It would be final at that point.

[01:20:29] Speaker 03:
What I was trying to get at, I think is actually a substantive point that on the second- I'm sorry, we final at which point?

[01:20:33] Speaker 04:
February 19th?

[01:20:34] Speaker 03:
The expiration of the time for re-hearing from the last re-hearing order, what we call the second re-hearing.

[01:20:42] Speaker 03:
So no party sought re-hearing of that.

[01:20:44] Speaker 03:
It was final.

[01:20:44] Speaker 03:
It was not subject to re-hearing at that point.

[01:20:46] Speaker 03:
It was APA final, I think.

[01:20:48] Speaker 04:
I take it it didn't happen here, but if someone files a re-hearing order on February 18th,

[01:20:54] Speaker 03:
So you have your reheard or January 20 2022.

[01:21:06] Speaker 04:
Someone's got 30 days from that.

[01:21:09] Speaker 04:
That's what I was saying.

[01:21:11] Speaker 04:
And so they've got until February 19th to file a rehearing petition.

[01:21:14] Speaker 04:
So February 18th, they file a rehearing petition.

[01:21:19] Speaker 04:
The commission on February 19th issues a tolling order.

[01:21:24] Speaker 04:
And then waits until May 2023, which isn't what happened here.

[01:21:33] Speaker 04:
They wait till May 2023 or May 2024.

[01:21:40] Speaker 04:
And let's say that re-hearing petition was really broad.

[01:21:42] Speaker 04:
It covered a lot of stuff or you had multiple re-hearing petitions.

[01:21:47] Speaker 04:
APA finality is not going to attach until

[01:21:51] Speaker 04:
the commission decides to act in May, well, 30 days after the commission acts in May 2024, unless there's rehearing petitions again.

[01:21:59] Speaker 03:
Yes.

[01:22:01] Speaker 03:
And just to clarify from our view, that's when the rulemaking is completed.

[01:22:07] Speaker 03:
I think that's what you and I were talking about APA finality being different than say final agency action to get to the court of appeals, et cetera.

[01:22:14] Speaker 03:
Yes, that is our position.

[01:22:17] Speaker 04:
How does that not conflict with humane society?

[01:22:20] Speaker 04:
I think he said, hey, hey, hey, hey, wait a minute, wait a minute.

[01:22:23] Speaker 04:
We want to look at this again.

[01:22:25] Speaker 03:
But in Humane Society, they had completed their process.

[01:22:29] Speaker 03:
They had sent the rule out.

[01:22:30] Speaker 03:
It had been published by the federal writer.

[01:22:32] Speaker 03:
Sorry, it had not been published.

[01:22:33] Speaker 03:
I apologize.

[01:22:34] Speaker 03:
It had been out for inspection, I think is the terminology.

[01:22:39] Speaker 03:
I apologize.

[01:22:40] Speaker 03:
Published for inspection.

[01:22:41] Speaker 03:
The court was interpreting there in a rulemaking that the agency was done with.

[01:22:46] Speaker 03:
And then the agency tried to restart it, right?

[01:22:48] Speaker 03:
If you imagine a scenario where we issue an order or a rulemaking, sorry, you know, we complete the rulemaking.

[01:22:55] Speaker 03:
let's say December 17th, 2020, and no one seeks rehearing, 30 days pass, right?

[01:23:01] Speaker 03:
If we wanted to alter that rulemaking on the 38th day by ourselves, that's a new rulemaking proceeding, or we would need to engage in new notice and comment, because by our own understanding of the process, you notice and comment, the rulemaking was completed, and now we're, sua sponte, going to try to address it.

[01:23:21] Speaker 03:
That's kind of what happened a little bit in sprint,

[01:23:24] Speaker 03:
And in Sprint, the court did note that it was leaving open the question whether the FCC there could have adopted the position of the rehearing.

[01:23:33] Speaker 03:
It was a rehearing request a year after this court had ruled and all the way up here on the merits of the positions.

[01:23:39] Speaker 03:
The somebody new salary hearing a year later and couple years after that, the FCC changed its position in a way that no one anticipated.

[01:23:47] Speaker 03:
And the court said it was not leaving open whether the reconsideration like you just adopted the reconsideration motions.

[01:23:53] Speaker 03:
Ozil would have necessitated new rooming.

[01:24:00] Speaker 04:
So the December 2020 order went into effect.

[01:24:03] Speaker 04:
Was it July 1 of 21?

[01:24:07] Speaker 04:
December 2020 order.

[01:24:10] Speaker 04:
The first index went into effect as of July 2021.

[01:24:14] Speaker 03:
In terms of when into effect, like when the index levels were changed.

[01:24:17] Speaker 03:
Yeah, I think.

[01:24:19] Speaker 04:
Pipelines had to start complying with this index level.

[01:24:22] Speaker 03:
Yeah, so we then put out a notice.

[01:24:24] Speaker 04:
I think I'm sorry, go ahead.

[01:24:26] Speaker 03:
So Ian, I think March or April of 2021.

[01:24:29] Speaker 03:
What we do is we put out a notice each year telling you because the index level PPI FG plus or minus something doesn't actually tell you what to multiply your prior ceiling by.

[01:24:38] Speaker 03:
So we do the math and notice and the shippers cited that in the reply brief.

[01:24:42] Speaker 03:
I think at age 18.

[01:24:43] Speaker 03:
We put out that notice saying in accordance with this ruling, which is subject to rehearing, with the first footnote noted that it was subject to rehearing, you should adjust your ceiling levels on July 1, 2020 in accordance with this index factor.

[01:24:57] Speaker 03:
And the index factor ends up being 1.0 something or 0.99.

[01:25:00] Speaker 04:
Right.

[01:25:02] Speaker 04:
And if on July 2, a pipeline didn't comply with that and said, we think we need an even higher

[01:25:13] Speaker 04:
charge a different amount?

[01:25:17] Speaker 04:
Would they have been subject to sanctions?

[01:25:21] Speaker 03:
So there's a couple things that would go on there.

[01:25:23] Speaker 03:
So they file their new rate if they're choosing to index.

[01:25:26] Speaker 03:
And they file that rate.

[01:25:28] Speaker 03:
And the shippers can do what's called protesting it.

[01:25:29] Speaker 03:
So they can challenge that rate and say, I know I'm over time.

[01:25:32] Speaker 03:
They can challenge that rate and say, we think that that rate's above the index level.

[01:25:37] Speaker 03:
It's our regulation, the indexing regulation.

[01:25:39] Speaker 03:
I think it's C1.

[01:25:40] Speaker 03:
We say in a challenge to an index rate, there's sort of two things you could show.

[01:25:43] Speaker 03:
One, that it's above the index level in effect.

[01:25:45] Speaker 03:
Or two, you can show that their cost of service is actually sold.

[01:25:49] Speaker 04:
So they're not doing that.

[01:25:50] Speaker 04:
Yeah, they're not coming in saying we want to justify this by cost of service.

[01:25:52] Speaker 04:
It's like we're just doing.

[01:25:53] Speaker 04:
So on rehearing, it's not final.

[01:25:55] Speaker 04:
We're charging what we think we want to charge, which is a much higher amount.

[01:26:00] Speaker 04:
And you can say shippers could come in, but the commission itself could do an enforcement action, right?

[01:26:04] Speaker 03:
Those two things I was mentioning are what shippers can come in and say in protest.

[01:26:08] Speaker 03:
Sorry.

[01:26:08] Speaker 03:
That's what I meant.

[01:26:09] Speaker 04:
Shippers, if they want, I'm just asking a different question.

[01:26:12] Speaker 04:
Do they have the legal authority without coming in and saying, no, actually we want to do a cost of service and here's our proposed rate.

[01:26:20] Speaker 04:
No, they just start charging this higher amount.

[01:26:24] Speaker 04:
You had a footnote Senate was rehearing.

[01:26:27] Speaker 04:
Can they do that?

[01:26:29] Speaker 03:
No, I mean, in theory they could do that, but they're not then charging the lawful effective rate.

[01:26:36] Speaker 02:
Well, they're subject to enforcement.

[01:26:37] Speaker 02:
And I guess the point is, I think the force of judgment on this question is that at that point, the rape is legally consequential.

[01:26:48] Speaker 02:
Even though it's nominally subject to rehearing, it's legally consequential.

[01:26:54] Speaker 02:
And typically, when it's legally consequential in a way that would allow an enforcement action for failure to satisfy it, then adjusting it after that would occasion notice and comment.

[01:27:05] Speaker 02:
I don't know if I'm going to be able to.

[01:27:07] Speaker 03:
Intercede, but again, I think this gets to our position is that that it's of one notice and comment period and that the rehearing is an opportunity for additional comment in one notice of comment.

[01:27:15] Speaker 03:
Period.

[01:27:16] Speaker 04:
I think it seems that with and I get it's weird situation with the two statutes, but it seems like.

[01:27:22] Speaker 04:
Commission's position wants to say, you know that does that as of July 1 2021.

[01:27:27] Speaker 04:
December 2022 order with its

[01:27:35] Speaker 04:
but not final as to FERC.

[01:27:41] Speaker 04:
They're paying fines.

[01:27:44] Speaker 04:
I assume you can do fines and penalties.

[01:27:48] Speaker 04:
It's got to feel awfully legally final to them.

[01:27:53] Speaker 04:
But if you say no, it's just a suggestion until we're done with rehearing, then that's a very different thing.

[01:27:58] Speaker 03:
But I'm not sure about the specifics of enforcement.

[01:28:00] Speaker 03:
I would think, again, you're charging what would be called a lawful, or not a lawful, a legal effective rate.

[01:28:05] Speaker 03:
And so I think if you're charging a legal effective rate, if you're charging just what the January, what the initial order charged, I think your hypothetical is you're charging above that.

[01:28:14] Speaker 03:
So if you're charging just what that January order.

[01:28:16] Speaker 04:
No, it might have to be quite clear that they are not going to pay for it.

[01:28:23] Speaker 04:
whatever's better for the pipeline, I assume it's more.

[01:28:26] Speaker 03:
I would think if on rehearing, we ended up raising the index level to that, you know, they would have a defense that wasn't an unjust and unreasonable rate.

[01:28:35] Speaker 03:
If he didn't apply it.

[01:28:37] Speaker 03:
Well, true, I guess that would be that would need to be sort of litigated on a complaint proceeding.

[01:28:42] Speaker 03:
But I take your point.

[01:28:43] Speaker 04:
But it can't be in it can say what

[01:28:48] Speaker 04:
The conception we have now is that at least as of the effective date of these rules, they are final for all practical purposes, including enforcement actions by the United States government with adverse consequences.

[01:29:10] Speaker 04:
again, I'm not final for the commission.

[01:29:12] Speaker 03:
I'm not exactly sure what our procedures and sort of what's necessary for enforcement action.

[01:29:16] Speaker 03:
So I would want a cabinet.

[01:29:18] Speaker 03:
There may be defenses.

[01:29:19] Speaker 03:
There may be sort of I'm not sure what's needed.

[01:29:23] Speaker 04:
It's got nothing to do with whether the government's

[01:29:26] Speaker 04:
has the ability to, whether it's a rule that can be, is subject to enforcement by the United States, whether you win is a different thing because there may be some other defense, but it's an legally enforceable rule, rate, index rate at that point.

[01:29:41] Speaker 03:
Yeah.

[01:29:42] Speaker 03:
Again, I think.

[01:29:44] Speaker 03:
In the adjudication scenario, if you were adjudicating your rate or challenging, you're trying to raise your rate, I suppose if in an initial order we said, yes, you should charge this rate and you charge something above that, it would be analogous.

[01:29:56] Speaker 04:
Are you saying it's different from notice in common?

[01:29:58] Speaker 03:
No, I'm not saying it's different.

[01:30:00] Speaker 03:
I'm just trying to think about sort of scenarios where you would see this, where we tell you a rate, but it's still subject to continued proceeding where you know that that rate may change, if that makes sense.

[01:30:08] Speaker 02:
Can I ask this question?

[01:30:09] Speaker 02:
So suppose instead of rehearing,

[01:30:13] Speaker 02:
Because I think what's going on here is the agency is defining the process in a way that suits the agency.

[01:30:21] Speaker 02:
So the agency says, as long as rehearing is still afoot,

[01:30:27] Speaker 02:
then for our purposes, we're still engaged in the process of deciding what the rate's going to be.

[01:30:32] Speaker 02:
And so we don't have to issue notice and comment.

[01:30:34] Speaker 02:
And then from the carrier's perspective, they would say, well, sure, for your purposes, you're defining it that way.

[01:30:41] Speaker 02:
But then we're legally subject to a rate that's on the books.

[01:30:44] Speaker 02:
And so I guess my question is, how far does your theory go?

[01:30:46] Speaker 02:
Because right now, you're saying you could drop a footnote that says, subject to rehearing, things may change subject to rehearing.

[01:30:53] Speaker 02:
And therefore, because it's still in rehearing mode, the APA's requirement of notice and comment hasn't kicked in.

[01:30:59] Speaker 02:
What if the agency just said, well, not subject to rehearing, but as long as we sue Esponte, decide that we're not going to change things?

[01:31:06] Speaker 02:
It's still subject to what we're going to call reconsideration stats slash rehearing.

[01:31:12] Speaker 02:
And therefore, there's no requirement of any kind of notice and comment, even though we may change what's now legally operative.

[01:31:19] Speaker 02:
So I don't think we could.

[01:31:21] Speaker 03:
Again, this goes to, I think Sprint is not the suespante.

[01:31:25] Speaker 03:
Is it Clean Air Council?

[01:31:26] Speaker 03:
There's a few cases where an agency has suesponte.

[01:31:29] Speaker 03:
That utilities group, they suesponte decided they were going to change this one aspect of this PCB calculation on surfaces because it was a word perfect, which many government agencies use.

[01:31:41] Speaker 03:
It was a find-replace mistake.

[01:31:43] Speaker 03:
That's what they said.

[01:31:43] Speaker 03:
They suesponte wanted to change it.

[01:31:45] Speaker 03:
And this court said, no, your rule was final.

[01:31:48] Speaker 03:
Then you suesponte came forward and changed it.

[01:31:49] Speaker 02:
That's because I think there wasn't any advance notice that they might do it.

[01:31:52] Speaker 02:
And I guess what I'm saying is,

[01:31:55] Speaker 02:
that the agency just advertises that this, for our purposes, this is something that we can always reconsider.

[01:32:03] Speaker 03:
Again, I think that would be the distinction between our rehearing process, which is you always have the right to file for rehearing, you have 30 days.

[01:32:09] Speaker 03:
If no one seeks rehearing and that expires and we say, here's the index level, we're thinking about this anew in a footnote, or we might think about this anew next year, we've lost the quorum, but again,

[01:32:20] Speaker 03:
you know, that would require new notice and come up because that's a new, we're altering the rulemaking in a new proceeding from our perspective.

[01:32:28] Speaker 03:
Again, I need you to sort of buy our perspective to fail, but from our perspective, the notice and comment wasn't complete.

[01:32:35] Speaker 03:
I think at the start of your hypothetical, the notice and comment is not done until we have acted on rehearing and there's no further rehearing.

[01:32:42] Speaker 03:
Again, as to being able to appeal to this court, when both parties sought rehearing, the rule was non-final as to their ability to get into court.

[01:32:51] Speaker 03:
But in your hypothetical where no one seeks rehearing or we rule on rehearing and then the time expires and we just let the world know like we might change this in the future, we need new notice and comment rulemaking in that scenario.

[01:33:03] Speaker 04:
What if instead you issue a note, there's no rehearing petition?

[01:33:08] Speaker 04:
But on day 30, you wish you a notice that says, hey, the DC circuit just issued a decision today that scrambles how index rates are meant to be computed.

[01:33:22] Speaker 04:
We've got to revisit this.

[01:33:25] Speaker 04:
We're going to revisit this and see if that decision affects the rule we've done here.

[01:33:32] Speaker 04:
Stay tuned.

[01:33:35] Speaker 03:
So in your hypothetical, it's happening on day 30.

[01:33:39] Speaker 03:
Again, I think that the day 30 point is when someone is seeking re-hearing.

[01:33:42] Speaker 03:
It's not our own suespante.

[01:33:43] Speaker 03:
So I think what we could do in that scenario, and I was going to use it earlier.

[01:33:46] Speaker 04:
Well, that was the date you kept bringing me for when something became legally effective absent re-hearing.

[01:33:52] Speaker 03:
Yes, but that's based on someone seeking re-hearing.

[01:33:55] Speaker 03:
It's not based on us, you know, changing an order.

[01:34:00] Speaker 04:
What happens in that hypothetical?

[01:34:02] Speaker 03:
So I think we would have a couple of options.

[01:34:04] Speaker 03:
One would be to take the sort of notice of proposed rulemaking approach.

[01:34:08] Speaker 03:
If the D.C.

[01:34:08] Speaker 03:
Circuit is issued an order saying, you know, you can't use page 700.

[01:34:11] Speaker 04:
You have to go through notice and comment rulemaking at that point.

[01:34:15] Speaker 03:
Yes, I think we would need to go through

[01:34:17] Speaker 04:
But if you did that on, and that would be whether you, if you did it on day two, it doesn't matter if you do it during this 30 day rehearing window, it doesn't matter unless fortuitously for you, someone files a rehearing petition.

[01:34:29] Speaker 03:
Yeah, if you issued that ruling on day two and someone on day three filed a rehearing petition, our notice and comment period is not completed.

[01:34:36] Speaker 03:
If you issued that ruling on day 31, and no one had sought rehearing before that, our notice and comment period is completed.

[01:34:44] Speaker 03:
you know, and someone files a new request for reconsideration or clarification on day 31.

[01:34:49] Speaker 03:
I think we have to have, you know, new comments or it could be that.

[01:34:54] Speaker 03:
I'm not sure, again, I would caveat, like, I think it might be one of the good cause exceptions to having notice and comment.

[01:34:59] Speaker 03:
If you literally told us in a different proceeding that, you know, page 700 must be used, but you must strike out these two lines.

[01:35:05] Speaker 03:
Like, we might be able to just follow it.

[01:35:07] Speaker 04:
Let's clear what the impact is, but there's definitely something you want to say.

[01:35:10] Speaker 03:
Yeah, I guess I was just saying, I'm not sure if you told us exactly what we had to do.

[01:35:14] Speaker 03:
I think that would be a good cause exception.

[01:35:16] Speaker 03:
We don't need more notice and comment to have the parties tell us, yes, follow the court.

[01:35:20] Speaker 03:
We would just follow what the court said.

[01:35:21] Speaker 04:
I might need a notice and comment to see how people interpret what the court said.

[01:35:25] Speaker 04:
So whether a notice and comment kicks in in your view is really dependent upon whether some third party decides to file a re-hearing petition or not.

[01:35:36] Speaker 03:
Because we view that as part of the rulemaking proceeding and so is part of our notice and comment period.

[01:35:41] Speaker 03:
And so if our notice and comment period has not expired, then we don't think we need to start anew.

[01:35:47] Speaker 03:
If it has expired.

[01:35:48] Speaker 04:
But are there other examples

[01:35:52] Speaker 04:
where an agency can engage in notice and comment rulemaking, promulgate in the Federal Register its final rule, and then have a continuation of the notice and comment rulemaking process that only one party gets to engage in and that the rest of the public cannot weigh in on, which is how rehearing works.

[01:36:13] Speaker 03:
So any aggrieved party can raise any issue, I guess I would say.

[01:36:17] Speaker 03:
So you're right, if you're not aggrieved as to an issue, you wouldn't be raising that issue on rehearing, but it's not like only- You don't get to participate in the commission's discussion or consideration.

[01:36:27] Speaker 04:
You don't get to have input into the issues raised in that rehearing petition, which is hard to, at least with our traditional understanding of notice and comment, say that's a continuation of notice and comment.

[01:36:41] Speaker 04:
I'm not aware, but you might be aware of a situation where agencies have such a sort of unilateral single-party role in notice and comment rulemaking, but I was not.

[01:36:53] Speaker 03:
I'm not aware, I think, you know, part of the sort of factual scenario here is we did not go outside of our original notice.

[01:37:00] Speaker 03:
It's not like we changed.

[01:37:01] Speaker 03:
We actually went back to the very methodology that was in the notice at JA.

[01:37:05] Speaker 03:
I think paragraph nine of that notice talks about what we were going to do with data trimming.

[01:37:09] Speaker 03:
I think it's 10 and 11 that talked about what our plan to do with income tax policy.

[01:37:13] Speaker 03:
So we did return to the methodology that we had laid out in the initial order.

[01:37:19] Speaker 03:
So everyone had an opportunity to, sorry.

[01:37:22] Speaker 03:
to comment on that substance, right?

[01:37:26] Speaker 04:
Within the scope of the issues for notice and comment, but ordinarily, again, in notice and comment, if somebody came in and said, here's our ex-party filing,

[01:37:37] Speaker 04:
Don't let anyone else comment on this suggestion we're making to you.

[01:37:43] Speaker 04:
Between the NPRM and the post NPRM, someone comes in and says, here's a filing that we don't think you should let anyone else comment on.

[01:37:52] Speaker 04:
And you just says, that's great.

[01:37:53] Speaker 04:
We're taking all the comments except nobody can comment on companies A, X party filing with us during this notice and comment period.

[01:38:01] Speaker 04:
But we're only going to address the issues that are within the scope of the NPRM.

[01:38:06] Speaker 04:
That wouldn't be noticing consistent with notice and comment rulemaking with it.

[01:38:10] Speaker 04:
Well, I think

[01:38:11] Speaker 03:
To some extent, if you have just one comment period and someone files on the last day of that comment period, and many agencies do, no one gets to reply or respond.

[01:38:20] Speaker 03:
You don't have to show everyone else your comments before you file them.

[01:38:23] Speaker 03:
So some agencies, at the time we were writing the briefing, the two most recent rules when I went to look at regulations.gov were Department of Education rules, and they had both provided like 33 and 30 something else days, a single comment period.

[01:38:35] Speaker 03:
You file on regularly.

[01:38:36] Speaker 04:
They're very different from an agency saying no one else can comment on this proposal.

[01:38:41] Speaker 04:
which is what your rehearing regulations say.

[01:38:44] Speaker 04:
That's a different thing than just saying it's the effect where people are deadline driven and that's what happens.

[01:38:49] Speaker 04:
But to have instead as part of the notice and comment process an agency rule that says this particular type of filing cannot be commented on by anyone else.

[01:38:58] Speaker 03:
No, I understand.

[01:38:59] Speaker 03:
I guess the one point I would make in terms of they could comment, they could seek rehearing if they thought we had done something sort of out of the norm or if they wanted us to revert back to something prior.

[01:39:09] Speaker 03:
And again, this goes to, I think what you ruled in association too, if we do something on rehearing or in the index that no one had any notice was going to happen, we don't contemplate.

[01:39:21] Speaker 03:
That's a problem in the second index

[01:39:24] Speaker 03:
the 2000 if this is a continuation of your notice and comment process and it's it's it's an aspect of it that does not allow other people to weigh in then it's a broken notice and comment process is that what you're telling me no i think they would get enough if we change our position on that rehearing order they could seek rehearing with us um as to that they could uh challenge that in the court of appeals if they think we didn't explain it if they think as in the 2000 order we scrapped the con in

[01:39:50] Speaker 04:
They could, but nothing requires them to under the ICA.

[01:39:53] Speaker 04:
They could come here and sit and say, that's not notice and comment rulemaking.

[01:39:57] Speaker 04:
You can't have notice and comment rulemaking where people are, the agency instructs the public not to comment on a filing.

[01:40:05] Speaker 04:
And right, they could do that, right?

[01:40:08] Speaker 04:
And that would still be just the same question before us.

[01:40:12] Speaker 04:
Would it not?

[01:40:13] Speaker 04:
Whether you can have a notice and comment process where there's a stage when the agency says no one else comment on this input.

[01:40:23] Speaker 04:
And they could do that here.

[01:40:23] Speaker 04:
They don't have to, they could do it before you, but they get to choose under the ICA Act where they want to fight it, correct?

[01:40:29] Speaker 04:
And that's what they've done here.

[01:40:30] Speaker 04:
They've come here and said that this can't be notice and comment.

[01:40:35] Speaker 03:
I think that gets or dovetails with, again, it's not a statutory exhaustion, but, you know, in Tesoro and Exxon Mobil, the 2009 Tesoro, the court said you should be raising these types of issues to the agency.

[01:40:46] Speaker 03:
If they'd raised that with us, we would have responded to their position that they needed the ability to comment.

[01:40:51] Speaker 03:
the 2015 Tesoro, which has a footnote.

[01:40:55] Speaker 04:
Well, we've also said they're not going to know that you've relied on that until you issue your new rehearing decision.

[01:41:01] Speaker 04:
And we don't require them to have raised an issue if they didn't know until you actually decided.

[01:41:07] Speaker 04:
And we do not require in the ICA Act that they perpetually file rehearing after rehearing after rehearing.

[01:41:13] Speaker 04:
They can, it's an option.

[01:41:15] Speaker 04:
But I don't know how we can say that it's time for rehearing number three or number four.

[01:41:20] Speaker 04:
Meanwhile, this law's in effect, and they're going to get enforced against if they violate it.

[01:41:25] Speaker 03:
But your injury was that you didn't get to respond to their hearing request.

[01:41:29] Speaker 03:
I knew you were not going to get to respond to their hearing request.

[01:41:31] Speaker 04:
Their injury is this particular one where the agency has set up a scheme and designed it by their rules and regulations to call it notice and comment, but no one can comment on certain comments.

[01:41:45] Speaker 04:
It just seems, and I understand it's like the answer's in this weird situation, but you call this a continuation of the original notice and comment, but we've sort of had quite sort of, you know, a drop-off here in what looks like a notice and comment.

[01:42:02] Speaker 04:
process.

[01:42:03] Speaker 03:
So again, if your injury is that you did not get to comment at the rehearing stage or you did not get to reply to the other side's rehearing, you could have raised a motion for reconsideration saying this is a rulemaking.

[01:42:12] Speaker 03:
We think that your regulation concerning rehearing as to not allowing responses to rehearing is, you know, inapplicable.

[01:42:20] Speaker 03:
We think the APA supersedes that and we have to get, you know.

[01:42:22] Speaker 04:
I'm not saying what they could have done.

[01:42:23] Speaker 04:
I'm saying did they have to?

[01:42:25] Speaker 04:
Why couldn't the ICAEQ or they don't have to do rehearing at all.

[01:42:29] Speaker 04:
And they say, we couldn't have done it within the first 30 days because we had no idea they were going to rely on this filing to which no one can respond.

[01:42:38] Speaker 04:
And so here we are.

[01:42:39] Speaker 04:
And we can't wait.

[01:42:41] Speaker 04:
We can't keep doing serial rehearings because this index is about to take effect.

[01:42:46] Speaker 04:
And we have to know what we're going to be allowed to charge or not.

[01:42:51] Speaker 04:
This has enormous financial and operational consequences for us.

[01:42:55] Speaker 04:
What's wrong with them coming here and making that argument?

[01:42:59] Speaker 03:
I think, again, the argument, as I understand you're laying it out, is attacking the fact that we only allow parties that are aggrieved to file for rehearing.

[01:43:06] Speaker 03:
I do think they could challenge that regulation.

[01:43:08] Speaker 04:
Oh, not that parties are aggrieved that you don't let other people comment on rehearing petitions, but you're calling this a continuation of notice and comment.

[01:43:14] Speaker 03:
We don't allow a response, I guess, after.

[01:43:16] Speaker 03:
Again, I'm not aware of notice and comment.

[01:43:19] Speaker 03:
Again, in the traditional, a lot of agencies just have the one period sort of

[01:43:24] Speaker 03:
automatically giving the responsive comments.

[01:43:25] Speaker 03:
It's one of the reasons we think that our iterative process is sort of wholesome and allows people to reply.

[01:43:30] Speaker 03:
We could just have initial comments, I suppose, which would look much more like re-hearing where everyone files or maybe they don't file on last day.

[01:43:37] Speaker 04:
You had no re-hearing process that would be here today.

[01:43:40] Speaker 03:
I think the shippers probably would have petitioned for review on the merits issues.

[01:43:48] Speaker 03:
Again, I would emphasize there's no surprise as to the merits issues in terms of what we did and what we came up with here.

[01:43:54] Speaker 02:
I just ask you, um, just on the appointments clause, one question.

[01:43:57] Speaker 02:
Um, so just give you a chance to briefly respond to the submission you've heard and read that for appointments clause purposes, the person is granting the tolling order actually has a bunch of authority that matters because of what can ensue as a consequence of granting the tolling witness.

[01:44:15] Speaker 02:
What happened in this case?

[01:44:17] Speaker 03:
Yes.

[01:44:18] Speaker 03:
Um, so.

[01:44:19] Speaker 03:
I've discussed this internally, so I know you're not supposed to read, but I do have a couple.

[01:44:23] Speaker 03:
I want to be very accurate and clear.

[01:44:26] Speaker 03:
The secretary's role is ministerial, even as to the tolling closet.

[01:44:30] Speaker 03:
A tolling decision is a decision about when the commission will issue a rehearing order.

[01:44:35] Speaker 03:
And so the secretary isn't combing ICA dockets and saying, oh, I think this one merits rehearing, and so we should issue a rehearing order.

[01:44:43] Speaker 03:
And I think it doesn't merit rehearing.

[01:44:44] Speaker 03:
The chairman directed the secretary to issue the tolling order.

[01:44:48] Speaker 03:
The secretary is exercising her delegated authorities.

[01:44:50] Speaker 03:
The chairman is exercising his authorities to manage the administration of the commission and our employees.

[01:44:56] Speaker 03:
And so it's not a freestanding sort of discretion that the secretary is exercising.

[01:45:00] Speaker 03:
It's a decision about when we would time our orders, similar to when the chairman decides when to have a vote, whether something's going to be at a specific open meeting or whether they're going to have a notational vote.

[01:45:12] Speaker 03:
He schedules that.

[01:45:13] Speaker 03:
the tolling determinations, the scheduling of whether we're having a rehearing order.

[01:45:17] Speaker 03:
If I can give sort of a, not a perfect analogy, but in our post Allegheny practice, I think we've explained to the court a couple of times.

[01:45:24] Speaker 03:
Again, the notice is the end of the proceeding.

[01:45:27] Speaker 03:
I don't mean to say that, but we have two different types of notice.

[01:45:29] Speaker 03:
One will be one paragraph saying, you know, rehearing is deemed denied because it's been 30 days and we didn't act on it under the natural gas.

[01:45:37] Speaker 03:
Sometimes we add a second paragraph saying,

[01:45:39] Speaker 03:
pursuant to I think federal power cuts 825 l natural gas act at 717 are we retain concurrent jurisdiction with the court until the record is filed and we intend to issue a you know follow on order that you know whether to add that second paragraph is the determination about when and if we're going to issue a hearing order.

[01:45:57] Speaker 03:
The secretary isn't looking at the natural gas act and federal power act rehearing petitions and saying I think this one the commission should act on I think that when the commissioner you know

[01:46:04] Speaker 03:
I think this one, the commission should issue a later order if it still retains jurisdiction on.

[01:46:11] Speaker 03:
And that one, it shouldn't issue a later order.

[01:46:13] Speaker 03:
Or I think that the order in this one is so complex, it's going to be scheduled more than 30 days out.

[01:46:17] Speaker 03:
So we need the two-paragraph Allegheny notice.

[01:46:19] Speaker 03:
Secretary is not out there similarly in the ICA, combing these dockets and making these determinations.

[01:46:24] Speaker 03:
These are order scheduling determinations that are made by the chairman.

[01:46:28] Speaker 03:
Secretary is, under her delegated authority from the commission,

[01:46:32] Speaker 03:
I'm going to forget the regular 7, I think the 7 85 here.

[01:46:36] Speaker 03:
I apologize.

[01:46:37] Speaker 03:
I'm sure she is exercising that delegated authority from the commission to issue the toll in order.

[01:46:43] Speaker 03:
But it is ministerial.

[01:46:44] Speaker 04:
No, no.

[01:46:44] Speaker 04:
In order is issued by the deputy secretary without direction from.

[01:46:51] Speaker 03:
I'm not aware of any without direction from the chairman.

[01:46:54] Speaker 03:
I asked as to this order and you know,

[01:46:59] Speaker 03:
because it did seem odd.

[01:47:00] Speaker 03:
I didn't know if we had some sort of standing directive that always told ICA cases.

[01:47:05] Speaker 03:
But I was told as to this order, the chairman directed the secretary to issue a tolling order.

[01:47:09] Speaker 03:
The attorneys working and the commission staff working with the commissioners on drafting orders are the ones that would have a sense of how long the order is going to take.

[01:47:21] Speaker 03:
And they would be advising the chairman on that.

[01:47:26] Speaker 03:
sort of going through these and making independent judgments or sort of discretionary calls on that.

[01:47:32] Speaker 03:
I did have one other clarification.

[01:47:35] Speaker 03:
Judge Mallette, I think you rightly pointed out that the order, the first rehearing order at paragraph 17 says that the index must incorporate the change.

[01:47:46] Speaker 04:
I think- Four or five times, right?

[01:47:48] Speaker 03:
Yes.

[01:47:49] Speaker 03:
It's clearly, I think it's twice in that paragraph and I do believe it's once or twice later.

[01:47:53] Speaker 04:
It's on J969, 970.

[01:47:55] Speaker 04:
There's another must on 972.

[01:47:57] Speaker 04:
Yeah, let me see, 973.

[01:48:04] Speaker 03:
In responding to the shipper's contention at page 84 of our brief, clearly I used.

[01:48:10] Speaker 03:
less precise or inaccurate language, not meaning to sort of displace what the commission had done there.

[01:48:16] Speaker 03:
I should have used must rather than should in the second sentence, but we weren't making a declaration as to each individual rate.

[01:48:23] Speaker 03:
Like the point I was trying to make was we said that the index level will be just and reasonable to produce just and reasonable rates needed to incorporate this.

[01:48:30] Speaker 03:
We didn't say, and we've looked at all of the rates being charged.

[01:48:33] Speaker 04:
If it didn't incorporate it, it would result in unjustified.

[01:48:37] Speaker 04:
Yes.

[01:48:37] Speaker 03:
But we didn't look at all of the individual rates charged and make some sort of determination as to those individual rates.

[01:48:43] Speaker 03:
And the second part, again, you know, rather we determine adjustment reasonable index.

[01:48:48] Speaker 03:
I used should there.

[01:48:48] Speaker 03:
I should have said must.

[01:48:49] Speaker 03:
You're right.

[01:48:50] Speaker 03:
The order says must.

[01:48:51] Speaker 03:
That's bad drafting on my part.

[01:48:52] Speaker 03:
Incorporate the income tax policy change.

[01:48:54] Speaker 03:
And we decided, consistent with prior index reviews, that it was more appropriate to trim the data.

[01:48:58] Speaker 03:
So we also had the data trimming on rehearing.

[01:49:01] Speaker 03:
We actually also changed, we accepted one of the rehearing positions from pipelines as to using some updated data.

[01:49:07] Speaker 03:
They said we had used some outdated data.

[01:49:09] Speaker 03:
So we made some other changes.

[01:49:11] Speaker 03:
The only two methodological changes were the income tax and the middle 50, middle 80.

[01:49:15] Speaker 03:
We made some other changes in the rehearing.

[01:49:18] Speaker 03:
And the point I was trying to make, which clearly I didn't do well, was we weren't commenting on individual rates.

[01:49:22] Speaker 03:
We were commenting on what the index level must be for it to be producing just and reasonable rates and what a just and reasonable index level was.

[01:49:29] Speaker 03:
And that as to that one change, we were saying it would be unjust and unreasonable not to have incorporated that.

[01:49:34] Speaker 03:
But we did make some other changes.

[01:49:36] Speaker 03:
Sorry.

[01:49:36] Speaker 03:
Sorry.

[01:49:36] Speaker 04:
Can the index itself be unjust and unreasonable?

[01:49:39] Speaker 04:
Because I'm trying to understand what you're saying.

[01:49:40] Speaker 04:
Because the index is then used by its pipelines to set rates.

[01:49:46] Speaker 04:
And the theory that it could end up being just and reasonable for that pipeline because of the cost approach.

[01:49:54] Speaker 04:
But does the indexes, so since the index is not actually a rate, it's a mechanism for setting a rate.

[01:50:04] Speaker 04:
Does the statute require the index to be just and reasonable?

[01:50:08] Speaker 03:
I think we know.

[01:50:10] Speaker 03:
Yes, we certainly in the Federal Power Act, we had a recent case distra in the Federal Power Act where there was a challenge of what's the actual rate.

[01:50:18] Speaker 03:
But we treat the policies, practices, et cetera, around our rates as needing to be just and reasonable as well under the Federal Power Act.

[01:50:25] Speaker 03:
I think we would certainly treat it the same here.

[01:50:28] Speaker 03:
And you're right, an individual pipeline.

[01:50:29] Speaker 04:
You might treat it that way.

[01:50:30] Speaker 04:
Does the statute require it as in it would be illegal to reinstate the December 2020

[01:50:38] Speaker 04:
index if you've deemed that to produce unjust and unreasonable rates at least in some circumstances.

[01:50:46] Speaker 03:
I think if you remanded to us or if you know there had been no appeal but we Sue Esponte came back and said we like the prior index you know but we don't explain why it's now just and reasonable we just say we like the prior index start using that.

[01:51:01] Speaker 03:
you know, people would absolutely be able to come here and say, you said, I mean, they'd have an APA arguments about changing position without explanation, but you said that was unjust and unreasonable.

[01:51:09] Speaker 03:
How can you allow this?

[01:51:10] Speaker 03:
And, you know, we're looking, you're saying now just charge an unjust and unreasonable rate or just an unreasonable index, which will result in unjust and unreasonable rates.

[01:51:19] Speaker 03:
So I think we need the index to be just and reasonable and procedural sound, et cetera.

[01:51:23] Speaker 03:
And to be just and reasonable has to produce just and reasonable rates as well.

[01:51:29] Speaker 02:
Thank you.

[01:51:33] Speaker 02:
Go to rebuttal now.

[01:51:35] Speaker 02:
Mr Strada, we'll give you two minutes for rebuttal and see where it goes.

[01:51:39] Speaker 01:
Your honor, I'll try to be very quick.

[01:51:41] Speaker 01:
Let me just say at the outset, I think that Ferg's counsel has made clear that the wolf comes as a wolf.

[01:51:47] Speaker 01:
I would say under their view, they don't have to comply with notice and comment, and they don't have to comply with the 30-day rule.

[01:51:55] Speaker 01:
So long as the process is ongoing in their view, whatever that may mean, they can take a year, two years, three years, four years, five years.

[01:52:02] Speaker 01:
They could announce at the end of the period that they thought better of it and redo it.

[01:52:07] Speaker 01:
Mr. Alduchi's view, we have to give him back everything that we collected under the original view.

[01:52:13] Speaker 01:
There is no support in the case law under the APA for this, and there is no support under the ruling.

[01:52:21] Speaker 01:
As to the APA, this court in consumer energy expressly dealt with the claim by the agency that the original notice and comment provided prior to promulgation

[01:52:33] Speaker 01:
was sufficient to cover the order of revocation.

[01:52:36] Speaker 01:
This is at the top of page 46.

[01:52:38] Speaker 01:
The court said, no, the APA requires you to provide notice and comment before you repeal, something that is already effective.

[01:52:45] Speaker 01:
If the notice and comment provided prior to the rule promulgation were meant to be sufficient, the statute never would have included repeal of the rule within the definition of rulemaking.

[01:52:55] Speaker 01:
And so that claim is answered.

[01:52:57] Speaker 01:
I think, of course, it also follows a form of jury from the main society.

[01:53:00] Speaker 01:
This notion that we could always sort of like file for, you know, re-hearing on our own, I think has been answered.

[01:53:05] Speaker 01:
But for good measure, in Kennecott Corp, this is page 1019 of the opinion, this court said, no, the point of notice and comment is to, for the agency to do it in advance.

[01:53:16] Speaker 01:
Petitions for reconsideration are insufficient to comply with the APA.

[01:53:22] Speaker 01:
This is page 1019.

[01:53:24] Speaker 01:
Permitting the submission of views after the effective date is not substitute for the right of interested parties to make their views known to the agency in time to influence the rulemaking process in a meaningful way.

[01:53:35] Speaker 01:
And so, again, under the commission's view, they could be sitting on a rehearing application from the Reagan administration, and irrespective of the fact that the Berlin Wall fell, and the world is entirely different,

[01:53:46] Speaker 01:
people would not be entitled to comment.

[01:53:49] Speaker 01:
Again, that's not how the world works.

[01:53:51] Speaker 01:
I think the only thing that I heard on Allegheny is, this is our own interpretation of the language, is not responsive to the two fundamental points that, however, you know, the commission might have exercised its option to adopt a different rule.

[01:54:05] Speaker 01:
The regulation it did adopt has the word, you know, rehearing and act upon that was also interpreted by this court.

[01:54:10] Speaker 01:
And, you know, they take out, you know, the, the, um,

[01:54:13] Speaker 01:
the 30-day deadline, which is not actually sort of allowed.

[01:54:20] Speaker 01:
And ultimately, as Mr. Olucchi did say, this is the most important rulemaking in the industry.

[01:54:29] Speaker 01:
And everybody expects this to happen every five years.

[01:54:32] Speaker 01:
Well, precisely.

[01:54:34] Speaker 01:
That is point one in our grievance.

[01:54:36] Speaker 01:
It should not have happened, and the commission should have known better.

[01:54:39] Speaker 01:
Thank you.

[01:54:41] Speaker 01:
Thank you.

[01:54:42] Speaker 02:
Mr. Adichie will give you the two minutes that you asked for.

[01:54:48] Speaker 05:
Thank you, Your Honor.

[01:54:48] Speaker 05:
Hopefully, I won't take the full two minutes.

[01:54:51] Speaker 05:
Just to clarify one point, Judge Millett was indicating about the character of a rate that is put into place as part of the five-year index review.

[01:55:01] Speaker 05:
Now, on that point, we discussed in 2003.

[01:55:05] Speaker 05:
Now, the history of that 2003 is informative, and I just want to read it to you.

[01:55:09] Speaker 05:
In the first five-year review, the Commission departed from the averaging methodology applied in order to fix it, 561, en route to a decision maintaining the index of PPI FG minus one.

[01:55:21] Speaker 05:
That was in 2000.

[01:55:23] Speaker 05:
They issued that.

[01:55:25] Speaker 05:
The decision was appealed and the D.C.

[01:55:26] Speaker 05:
Circuit remanded it, holding that the Commission had not adequately justified its change in methodology.

[01:55:32] Speaker 05:
That was in 2002.

[01:55:33] Speaker 05:
On remand, the Commission decided to return to the order 561 methodology

[01:55:38] Speaker 05:
which resulted in an index of PPI FG with no differential.

[01:55:44] Speaker 05:
That was in 2003.

[01:55:45] Speaker 05:
The order was affirmed by the DC Circuit in Flying J Inc.

[01:55:51] Speaker 05:
363 F3rd, 495 in 2004.

[01:55:55] Speaker 05:
As of 2004, you had your final and your legal lawful index factor.

[01:56:06] Speaker 05:
Prior to that, the pipelines had to put in place the index factor associated with PPI of G minus one.

[01:56:14] Speaker 05:
When they put that into effect, they had two choices.

[01:56:17] Speaker 05:
One, fight FERC say it's too low, or they could make a filing with FERC for a cost of service rate that gave them something.

[01:56:26] Speaker 05:
During that whole process, however,

[01:56:29] Speaker 05:
Burke had always made a claim, starting with an SFPP decision in the 1990, that if there is an error, we will keep you whole.

[01:56:37] Speaker 05:
And in this current proceeding, the carriers actually filed and said, we need to be kept whole.

[01:56:46] Speaker 05:
We want the ability to file a surcharge if this court overturns the January 22 order.

[01:56:54] Speaker 05:
Burke said,

[01:56:56] Speaker 05:
The proposal you presented is inequitable, but we're going to leave open the option of a surcharge for the carriers to be held hold.

[01:57:05] Speaker 05:
Now, we, in the context of the December 2020 order, felt that it was not appropriate and had missed things and was an error on rehearing.

[01:57:16] Speaker 05:
We overturned that based on the law, based on the data set, based on the existing record.

[01:57:23] Speaker 05:
They were required to change that rate.

[01:57:25] Speaker 05:
We want to be kept whole, because that's what the commission normally does.

[01:57:29] Speaker 05:
If there's an area to be kept whole.

[01:57:32] Speaker 05:
The only difference here, and that's why we're the petitioners here, is that FERC has arbitrarily decided to not allow shippers to be made whole.

[01:57:41] Speaker 05:
But in that same context, have some inconsistency by saying that the carriers might be kept whole.

[01:57:47] Speaker 05:
We think it should be uniform.

[01:57:49] Speaker 05:
We think the proper remedy is to say, once that index factor is determined to be just and reasonable, and you have the index ceiling levels, which are J and R, you compare it against that rate that's in place.

[01:58:02] Speaker 05:
To the extent it's lower, that means that higher rate is unjust and unreasonable, and we should be entitled to those regions.

[01:58:09] Speaker 02:
Thank you.

[01:58:09] Speaker 02:
Thank you, Council.

[01:58:10] Speaker 02:
Thank you to all Council.

[01:58:11] Speaker 02:
We'll take this case under submission.