[00:00:00] Speaker 03: Case number 23-1288, Stingray Pipeline Company, LLC, petitioner versus Federal Energy Regulatory Commission. [00:00:08] Speaker 03: Ms. [00:00:09] Speaker 03: Proctor for the petitioner, Ms. [00:00:10] Speaker 03: Gall for the respondent. [00:00:15] Speaker 04: Good morning, council. [00:00:17] Speaker 04: Proctor, please proceed when you're ready. [00:00:21] Speaker 01: May it please the court? [00:00:23] Speaker 01: I am Shemin Proctor, representing petitioner, Stingray Pipeline Company, LLC. [00:00:30] Speaker 01: I'd like to reserve two minutes for rebuttal. [00:00:34] Speaker 01: Stingray pipeline system has faced steadily declining volumes to the point where it has very little throughput, almost slightly more than 1%. [00:00:48] Speaker 01: Its costs significantly exceed its revenues. [00:00:51] Speaker 01: Operation and maintenance costs $3.5 million, revenues of only $72,000. [00:01:00] Speaker 01: In light of those circumstances, Stingray petitioned the commission for requested abandonment by sale of its West Cam 509 system to Triton to use for gathering. [00:01:16] Speaker 01: Rather than grant the abandonment request, the commission imposed an onerous condition [00:01:27] Speaker 01: that Stingray either repair segment 3394 or obtain the consent of the shipper that uses that segment. [00:01:39] Speaker 01: Stingray requests that the court vacate and reverse the condition for three reasons. [00:01:47] Speaker 01: First, the record is not adequate to support the commission's decision. [00:01:57] Speaker 01: The commission's reasoning, whether using the abandonment analysis or simply trying to apply the facts and find a reasoned path to its decision, it's not possible. [00:02:15] Speaker 01: And third, the commission's conditioning authority has been exceeded. [00:02:21] Speaker 03: Doctor, so Stingray has the burden of demonstrating that abandonment [00:02:27] Speaker 03: is in the public convenience and necessity. [00:02:30] Speaker 03: And here, Stingway doesn't seem to have provided any evidence about segment 3394 until rehearing. [00:02:45] Speaker 01: Evidence about the segment before. [00:02:49] Speaker 03: Right. [00:02:49] Speaker 03: So, I mean, so FERC imposes the condition in its initial order and it reaffirms that in re-hearing, but it's only at the re-hearing stage that Stingray suggests that, you know, rebuilding segment 3394 is going to be very costly. [00:03:06] Speaker 03: And then, you know, there doesn't seem to be evidence about ERT's need for that segment or, you know, how to balance those things. [00:03:15] Speaker 03: I mean, and isn't that Stingray's burden for the commission? [00:03:19] Speaker 01: Yes, your honor, Stingray does have the burden. [00:03:22] Speaker 01: And Stingray has shown that the demand on its system, including that very bit, small bit of demand that is ERT, ERT's demand is only less than one fifth of the firm demand on the system, which is only 7,000 decathurms per day on a system that's 350,000 [00:03:49] Speaker 01: of capacity, which Stingray submits shows that there is no demand, which means it's not in the public convenience and necessity. [00:03:58] Speaker 01: That's the purpose of explaining how little demand there is on the system. [00:04:04] Speaker 01: In Great Lakes, this court recognized that when applicants like the pipeline Stingray attempt to [00:04:14] Speaker 01: obtained certificates of public convenience in assessing, they're required to show 80 or more percent of demand in order to even have a pipeline certificate. [00:04:25] Speaker 01: Here, the exact opposite is true. [00:04:28] Speaker 01: There is almost zero demand. [00:04:30] Speaker 01: One percent of the throughput is on the system now. [00:04:35] Speaker 01: And so Stingray showing that it has so little demand is [00:04:40] Speaker 01: system-wide and then also with respect to segment 3394, which you specifically asked about, there is literally only one shipper, one firm shipper on that 25-mile segment of pipeline. [00:04:55] Speaker 01: So by showing the absence of throughput on the system and showing how there's only 7,000 decatherms of firm commitments on the system of 350,000, [00:05:10] Speaker 01: That shows that the system is not required for the public convenience and it says demand is the criteria for showing. [00:05:23] Speaker 03: What about continuity of service? [00:05:25] Speaker 01: Right. [00:05:25] Speaker 01: Continuity of service too has to be viewed in the context of demand and the commission's own findings where you look at demand and you look at the costs [00:05:38] Speaker 01: So Stingray's costs are staggeringly higher than its revenues. [00:05:45] Speaker 01: And the commission's own finding in the abandonment order relying on Connecticut states, we will not require a pipeline where the costs exceed its revenues to continue and to operate and maintain a system. [00:06:02] Speaker 01: And yet, then the commission imposed the condition [00:06:06] Speaker 01: that requires exactly that, the repair. [00:06:10] Speaker 01: So repair is part of maintenance. [00:06:12] Speaker 01: So if, because the costs so exceed the revenues, the commission is not going to require a pipeline to undertake or continue to undertake maintenance and operate the system. [00:06:28] Speaker 01: It is completely unreasonable to require the pipeline to make the repair. [00:06:36] Speaker 04: At one point, Stingray indicated that it was going to bring back up this piece, 3390, 3394 piece. [00:06:47] Speaker 04: And if it's so obvious that it doesn't make any sense at all to reconnect it because nothing's going through it and it would cost an exorbitant amount to do it, why was there ever even a thought bringing it back up? [00:07:00] Speaker 01: Well, there's a distinction there, Your Honor, between segment 3394 and the entire system. [00:07:07] Speaker 01: And what Stingray actually said is that it was developing a plan to bring segment 3394 into service. [00:07:16] Speaker 01: So life in the energy company is not static. [00:07:21] Speaker 01: There are a lot of different variables, including, frankly, what that producer is willing to do. [00:07:28] Speaker 01: brief the issue of if in fact that shipper was willing to pay some of those costs, in fact, bear significant amount of the burden because the shipper is frankly the only beneficiary of that, then there would still be the logistics to actually undertake a repair. [00:07:48] Speaker 01: So there are a lot of different factors that go into that. [00:07:52] Speaker 01: So what Stingray actually said was that it was [00:07:55] Speaker 01: It was looking at options to develop a plan to place it back in service. [00:08:01] Speaker 01: It was not until the commission's order requiring mandating that repair. [00:08:09] Speaker 01: that Stingray frankly realized that the commission, first of all, Stingray actually thought that the commission simply had misunderstood abandonment in place versus the abandonment by sale. [00:08:24] Speaker 01: But out of an abundance of caution, it included those repair costs because Stingray had frankly wrongly assumed that the commission would know [00:08:36] Speaker 01: If it's requiring a repair, that's going to cost money. [00:08:40] Speaker 01: And it had already found that it wasn't going to require the pipeline to construct, I mean, to operate and maintain its system. [00:08:49] Speaker 01: So by requiring a repair, you're doing exactly the opposite of what the commission has consistently said it will not require pipelines to do. [00:08:58] Speaker 01: So that's the reason. [00:09:04] Speaker 01: the repair estimate comes up is only after it's mandated that Stingray had to put the segment back into service or obtain the consent. [00:09:18] Speaker 03: Ms. [00:09:18] Speaker 03: Proctor, I had a question about the remedy that Stingray is seeking because Stingray has asked this court to vacate just the condition and [00:09:28] Speaker 03: And I'm wondering if you have any precedent for this court taking such an action. [00:09:33] Speaker 03: I mean, here it seems that FERC made a determination that abandonment is in the public convenience with the condition. [00:09:41] Speaker 03: So what authority would this court have simply to vacate the condition? [00:09:46] Speaker 03: We have to vacate the entire order and then remand to FERC. [00:09:50] Speaker 01: We actually, Your Honor, asked to reverse [00:09:54] Speaker 01: and vacate. [00:09:55] Speaker 01: So our view is that you could reverse the portion of the order that addresses specifically the condition rather than only the. [00:10:09] Speaker 03: But how do we do that? [00:10:11] Speaker 03: I mean, has FERC made a finding that it would be in the public convenience without the condition? [00:10:16] Speaker 03: Yes, Your Honor, it has. [00:10:18] Speaker 03: Where do you read that? [00:10:19] Speaker 01: It's in the order. [00:10:23] Speaker 01: It's in the last paragraph before the section that begins addressing the damaged facilities. [00:10:31] Speaker 01: I didn't bring the number, but in fact, the commission took issue with Stingray's statement that the commission had in fact found that the abandonment was in the public convenience and necessity without the condition. [00:10:52] Speaker 01: that it imposed. [00:10:54] Speaker 01: So, there is a statement in the order, in the abandonment order, Your Honor. [00:10:59] Speaker 03: Okay, maybe when you come back up. [00:11:01] Speaker 01: Yes, when I come back up for rebuttal, I will point out that paragraph. [00:11:07] Speaker 04: Okay. [00:11:07] Speaker 04: Thank you, Council. [00:11:08] Speaker 04: We'll give you a little time for rebuttal. [00:11:10] Speaker 04: Okay. [00:11:10] Speaker 04: Thank you. [00:11:23] Speaker 04: commission. [00:11:42] Speaker 00: Thank you. [00:11:43] Speaker 00: Scal. [00:11:44] Speaker 00: Please the court. [00:11:46] Speaker 00: Stingray misrepresents what these [00:11:53] Speaker 00: Just because Stingray doesn't like one of the conditions, it doesn't transform the commission's authorization into a denial. [00:12:01] Speaker 00: Stingray also misrepresents what the condition actually requires. [00:12:05] Speaker 00: It doesn't force Stingray to make any repairs, despite repeatedly promising to do so. [00:12:10] Speaker 00: Instead, this condition simply respects Stingray's contractual obligations to firm shippers by allowing Stingray to negotiate with ERT and obtain its consent not to repair. [00:12:22] Speaker 00: At bottom, these orders, they neither force Stingray to continue operating its pipeline nor do they require Stingray to make any repairs. [00:12:35] Speaker 00: Stingray claims that FERC made a finding in its abandonment order that abandonment would be in the public interest without the condition. [00:12:44] Speaker 00: That's not true. [00:12:45] Speaker 00: The commission addressed in the abandonment order separately the facilities that were damaged by the hurricane. [00:12:53] Speaker 00: So in the first part, it discussed generally what was included in Stingray's amended abandonment application and the economic [00:13:02] Speaker 00: Factors that scenery had cited of declining throughput and revenues. [00:13:06] Speaker 00: Then it proceeded to consider the segments that were damaged by the hurricane and it noted the shippers protest that segment 3394 had been taken out of service. [00:13:19] Speaker 00: And at the end of that discussion, the commission concluded that to render abandonment in the public interest, it would impose a condition that Stingray either repair the segment as it had repeatedly promised to do or negotiate a settlement with ERT not to make this repair. [00:13:38] Speaker 03: Where's FERC's reasoning on why this condition is in the public interest? [00:13:44] Speaker 03: I mean, there's overwhelming evidence that this pipeline is not needed by anyone. [00:13:50] Speaker 03: It has a tiny fraction of its capacity being used at this point as the commission recognizes. [00:13:57] Speaker 03: But the commission imposes this condition. [00:14:01] Speaker 03: Where's the reasoning behind that? [00:14:06] Speaker 03: Well, to start- Especially in the rehearing order, where once FERC knows how costly it's going to be to repair this segment, [00:14:13] Speaker 03: I don't see the analysis of how that cost is weighed against all the other evidence of it being in the public interest to abandon this pipeline. [00:14:26] Speaker 00: To back up a little bit. [00:14:30] Speaker 00: Under the Natural Gas Act, the Commission must ensure that any abandonment grants is permitted by the public convenience and necessity. [00:14:37] Speaker 00: And as both this Court and Commission have recognized, a primary consideration under that analysis is whether the requested abandonment would deprive captive customers of service. [00:14:48] Speaker 03: So although it's true that economic factors like declining revenue and throughput would weigh in favor of abandonment, that also has to be balanced against- This line of cases about captive consumers and continuity of service began with a case in the 60s about continuity of service to the public, i.e. [00:15:11] Speaker 03: end consumers, not a single producer of natural gas. [00:15:16] Speaker 03: So, I mean, where's the analysis about the public interest? [00:15:21] Speaker 03: I mean, is there any claim that by not restoring this segment, there will be members of the public who are not able to get natural gas? [00:15:29] Speaker 03: It doesn't seem that that is the case, given the structure of the pipeline and gathering facilities. [00:15:37] Speaker 00: Well, under commission precedent, abandonment that would deprive a firm shipper of service [00:15:45] Speaker 00: has sufficed for the commission to find that it needs to condition abandonment to render it in the public interest or necessity. [00:15:52] Speaker 03: Are there any DC Circuit cases reaffirming that where the only interest is the private interest of a gas producer unconnected to end consumers of natural gas? [00:16:06] Speaker 00: Well, I'm not aware of a... That's a big difference for the public interest. [00:16:11] Speaker 00: I understand. [00:16:13] Speaker 00: While not aware of a specific case with that specific factual pattern in, for example, Michigan Consolidated, the DC Circuit did reaffirm that it's the harm to captive customers along a pipeline that is a prime consideration in this public interest analysis. [00:16:35] Speaker 00: And shippers like ERT, they're under a life of lease contract. [00:16:40] Speaker 00: So in exchange for from service, they have agreed to dedicate their gas reserves to seeing race pipeline for the entire life of those reserves. [00:16:50] Speaker 04: Can I ask a question about that? [00:16:51] Speaker 04: So, as I mentioned in the other argument, the burden is on the. [00:16:56] Speaker 04: party seeking abandonment to justify why a condition like this may not be in the public interest. [00:17:03] Speaker 04: So that may be part of the equation here is that even if conceptually it were possible that you could have a situation in which attaching a condition like this makes no sense because there's no ultimate consumer is going to benefit from it. [00:17:16] Speaker 04: There's all kinds of reasons why this particular kind of condition conceptually might not make sense. [00:17:21] Speaker 04: The commission isn't taking the view that any time there's somebody who has a firm [00:17:26] Speaker 04: what's it called, a firm shipper, where anytime that you have a firm shipper, then [00:17:33] Speaker 04: there's always a public interest in having a condition like this, no matter what the demand might be, no matter how often that strip of the pipeline may be being used. [00:17:44] Speaker 04: I don't understand the commission to be taking that position. [00:17:49] Speaker 00: That's correct, Your Honor. [00:17:51] Speaker 04: The order doesn't purport to be saying that. [00:17:54] Speaker 04: But you also don't dispute that there could be situations in which attaching a condition like this might not make any sense, because it turns out this [00:18:03] Speaker 04: He said the pipeline actually isn't going to be put to any productive use from here on out. [00:18:08] Speaker 04: There's no end consumers that are actually going to be affected by it in any way, shape, or form. [00:18:12] Speaker 04: So even if it's true that there's a firm shipper who has a guarantee to use it, if it's not actually being used and there's no productive capacity there whatsoever, it might not make any sense under the public interest to impose this kind of condition in some situations. [00:18:26] Speaker 00: That's correct, Your Honor. [00:18:27] Speaker 00: The commission is not taking a hardline stance that so long as there's one firm shipper [00:18:33] Speaker 00: that would be deprived of service by unconditional abandonment that it can't grant that abandonment. [00:18:38] Speaker 00: There very well may be situations in which the commission would grant unconditional abandonment for a single shipper, but that's just not the situation here. [00:18:45] Speaker 04: And how would that come about practically? [00:18:47] Speaker 04: So if you had that kind of situation, and maybe this is, maybe this case is that kind of situation, but if you had that kind of situation, [00:18:56] Speaker 04: Would the party seeking abandonment then in their request for relief to the commission then come forward with evidence that shows why? [00:19:06] Speaker 04: the circumstances meet that kind of scenario? [00:19:12] Speaker 00: Correct, Your Honor. [00:19:13] Speaker 00: The burden would be on the party seeking abandonment to prove that the interests of this firm shipper are far outweighed by the interest in unconditional abandonment. [00:19:23] Speaker 00: And I would caution that, you know, those circumstances, I can't really speculate as to what that might look like. [00:19:30] Speaker 00: It just simply wasn't the facts before the commission. [00:19:32] Speaker 00: And the commission would have to really think carefully [00:19:36] Speaker 00: about that situation because it would need to, you know, find a reasonable way to distinguish it's decades of precedent holding the other way. [00:19:43] Speaker 03: Well, Ms. [00:19:44] Speaker 03: Gowtho, the commission here provides no reason why it's in the public interest to, for them, you know, for the condition to repair segment 3394, other than the fact that there's a firm shipper who will no longer have access to it. [00:20:01] Speaker 03: And that's the only reason that is given. [00:20:03] Speaker 03: So you might say that the commission is not taking a hardline stance against that, but that's the only reason provided here. [00:20:09] Speaker 03: Continuity of service to a single natural gas producer ERT. [00:20:14] Speaker 03: That's the sole reason for the commission. [00:20:16] Speaker 03: There's no consideration about whether they're really using the pipeline, how much throughput there is, how that's balanced against the overwhelming showing about why there's a need for abandonment. [00:20:27] Speaker 00: Well, I would respectfully disagree with that, Your Honor. [00:20:30] Speaker 03: The Commission did note in its abandonment order that these are life lease contracts that requires that there's no there's no discussion about what is actually, you know, like what sort of use is actually being made of segment 33 94. [00:20:46] Speaker 03: or would be made if it were to be repaired. [00:20:48] Speaker 00: Well, the thing is, in ERT's protest to the Commission, it explained that its gas had been shut in by the outage of segment 3394. [00:20:58] Speaker 00: That and in combination with the data responses that the Commission requested, [00:21:03] Speaker 00: from Stingray about its plans for abandonment demonstrate that up until the outage of this segment, ERT had been shipping volumes consistently for 13 years under its contracts on Stingray's pipeline. [00:21:16] Speaker 00: And it wasn't until this segment was damaged and not repaired that its gas was then shut in and it wasn't able to continue producing gas and serving its customers. [00:21:26] Speaker 03: And I'll note that- Doesn't FERC have to think about what the [00:21:31] Speaker 03: effects are shutting in ERT versus all the interests on the other side. [00:21:38] Speaker 03: So it seems that FERC is basically saying that shutting in one producer's supply is sufficient to impose this condition, because there's no analysis or weighing of the costs and benefits of doing that. [00:21:52] Speaker 00: It's not saying that shutting in one shipper supply is necessarily sufficient. [00:21:59] Speaker 00: And in fact, it granted abandonment because of the declining throughput and revenues on the pipeline. [00:22:05] Speaker 00: However, the condition, it merely respects that Stingray has active firm contracts for service with ERT. [00:22:13] Speaker 00: And to let it abandon. [00:22:14] Speaker 03: That's the only reason, the active firm contracts. [00:22:16] Speaker 03: So that's sufficient. [00:22:17] Speaker 03: Active firm contracts of any amount [00:22:20] Speaker 03: irrespective of how much gas is actually being shipped is sufficient to impose a condition like this. [00:22:26] Speaker 00: It's not necessarily true irrespective of any amount when and I don't want to sort of. [00:22:31] Speaker 03: FERC makes no analysis of the amount or weighing any of it. [00:22:35] Speaker 03: I mean it's in the rehearing order it says we did weigh these things but in the initial order [00:22:40] Speaker 03: They never weighed any of those things. [00:22:43] Speaker 00: It does note that ERT is or had been up until the outage of the segment continuing to ship gas. [00:22:50] Speaker 04: At the time of the initial order, was there any reason to suppose that there was any problem? [00:22:54] Speaker 04: Because Stingray said that, quote, Stingray will communicate its plan to bring segment 3394 back into service in the normal course. [00:23:02] Speaker 04: So at the time of the initial order, without some indication from Stingray, [00:23:09] Speaker 04: that there was a problem. [00:23:10] Speaker 04: Would there have been any unique reason for the commission to doubt that it made sense to bring 3394 back online? [00:23:17] Speaker 00: That's correct, Your Honor. [00:23:18] Speaker 00: Stingray had repeatedly represented the commission throughout this proceeding that it had legitimate intentions of repairing segment 3394. [00:23:25] Speaker 00: Until the re-hearing. [00:23:26] Speaker 04: Until the re-hearing. [00:23:27] Speaker 04: At that point, though, then Stingray does say it's going to cost a significant amount. [00:23:32] Speaker 00: Right. [00:23:32] Speaker 04: I don't know that they introduced evidence. [00:23:33] Speaker 04: Maybe the commission considers that evidence a statement. [00:23:36] Speaker 04: I don't know the answer. [00:23:37] Speaker 00: That's correct. [00:23:38] Speaker 00: It wasn't until the hearing request that Stingray told the Commission for the first time, actually, we don't plan to do anything about this damage segment. [00:23:45] Speaker 00: We're just going to let Triton, a non-jurisdictional entity, decide what to do with it. [00:23:51] Speaker 00: When the commission was actually considering Stingray's abandonment application, they had done so under the mindset that Stingray would figure out how to resolve the situation with 3394 and ERT, whether that was by repairing the segment, like they had repeatedly said that they had plans to do, or by arriving at some sort of settlement with its shipwreck. [00:24:12] Speaker 00: That was the commission's underlying understanding of what would happen with this abandonment application. [00:24:18] Speaker 04: Can I ask this question? [00:24:20] Speaker 04: dovetails with Judge Rao's line of questions. [00:24:23] Speaker 04: So suppose you have a situation in which, at the initial stage, you don't have an affirmative representation by the party seeking abandonment that they intend to bring back online the segment that's in question. [00:24:35] Speaker 04: There's no indication one way or the other, but it's undisputed that there is a segment that is not online. [00:24:43] Speaker 04: and that there's a firm shipper who would benefit from that segment being online. [00:24:47] Speaker 04: If there's just no indication whatsoever about the productive use of that segment, what would happen? [00:24:52] Speaker 04: Well, how would the commission look at that? [00:24:54] Speaker 00: So I don't want to speculate as to what the commission would do under circumstances that weren't before the agency. [00:25:00] Speaker 00: And I would just caution that I'm guessing here that it's possible that the commission would take a different route if seeing rate had never made these representations or if it had been upfront in its initial abandonment application. [00:25:12] Speaker 00: that, you know, it didn't have real intentions of repairing the segment or that it was too costly. [00:25:17] Speaker 00: But the issue is that the commission had analyzed this abandonment application under one understanding of abandonment that Stingray was going to resolve the situation with 3394 and ERT. [00:25:31] Speaker 00: And at the rehearing stage, that's just much too late for Stingray to then say, actually, never mind, we're not going to do anything. [00:25:38] Speaker 00: That's a different abandonment proposal. [00:25:40] Speaker 00: And if Stingray had brought that up earlier, it would have allowed, for example, other shippers or other parties to provide comments and submit evidence. [00:25:50] Speaker 00: to challenge, you know, some of these. [00:25:52] Speaker 04: You said that's a different abandonment. [00:25:54] Speaker 04: That's an interesting point. [00:25:55] Speaker 04: Could Stingray tomorrow, after this proceeding ends, let's just, I don't want to, I'm not saying that we're going to go this way, but let's just to carry out the question. [00:26:05] Speaker 04: Let's suppose that the commission prevails at this stage. [00:26:08] Speaker 04: Then after this case ends, could Stingray the next day file an abandonment petition asking for abandonment without the condition? [00:26:15] Speaker 00: Yes, it could re-file, withdraw its current abandonment application and file a new one that this time upfront includes all the relevant information, includes the cost information, explains that it believes that these costs are too high, because then that would give the commission opportunity for a new hearing. [00:26:32] Speaker 04: There's no, you know, claim, or race judicata in the commission context or something that would say, oh wait, you already tried this and you didn't do your job the first time, and so we're just not even going to look at the second. [00:26:44] Speaker 00: As far as I'm aware, that wouldn't be an issue. [00:26:50] Speaker 02: It seems that the fundamental position that you're taking on behalf of the commission is that the commission didn't have the burden to justify the condition. [00:27:04] Speaker 02: Stingray had the burden to demonstrate that it was entitled to unconditional abandon. [00:27:14] Speaker 02: and they didn't meet that bird. [00:27:16] Speaker 02: Is that your fundamental position? [00:27:19] Speaker 00: That's correct, Your Honor. [00:27:21] Speaker 00: Based on what evidence and arguments Stingray actually did provide before the commission below and not just on appeal here, the commission found that the condition continued to be in the public interest. [00:27:34] Speaker 00: to require Stingray either make ERT whole for its contractual obligations or otherwise put in that repair that it had repeatedly represented to the commission that it would make. [00:27:44] Speaker 03: Ms. [00:27:45] Speaker 03: Scow, I mean, to Judge Wilkins' question, that wasn't the reason given by FERC in its rehearing order. [00:27:53] Speaker 03: Sorry. [00:27:54] Speaker 03: That Stingray failed to meet its burden. [00:27:57] Speaker 00: I believe it actually was. [00:28:00] Speaker 00: Give me one second. [00:28:04] Speaker 00: So in the rehearing order, the commission discusses the fact that it is sting-raised burden. [00:28:16] Speaker 00: I believe in paragraph 13, perhaps, it's ultimately sting-raised burden to demonstrate that the abandonment application [00:28:27] Speaker 00: is in the public convenience or necessity. [00:28:29] Speaker 00: And it notes that some of the arguments that stingrays make improperly seeks to shift that burden from stingray to their producers coalition. [00:28:40] Speaker 03: So there's not a conclusion by the commission that they failed to meet their burden. [00:28:43] Speaker 03: The commission simply says that this abandonment with the condition is in the public convenience and necessity. [00:28:50] Speaker 03: That's an affirmative finding. [00:28:52] Speaker 03: It's not a determination of a failure to meet the burden of proof. [00:28:56] Speaker 03: which are two different conclusions. [00:29:00] Speaker 00: I understand, but the commission's reasoning, the logical understanding of that is that Stingray had not met its burden to demonstrate that abandonment was unconditionally in the public interest or convenience. [00:29:14] Speaker 00: And that's also why it says in paragraph 13 that Stingray had improperly sought to shift that burden onto Producers Coalition because it itself had not met that burden. [00:29:28] Speaker 03: But I mean, I guess maybe some of this turns on the chief judge's question, which is could stingray tomorrow file a new abandonment application. [00:29:41] Speaker 00: It could. [00:29:42] Speaker 00: It could. [00:29:42] Speaker 00: And I just want to emphasize again that if this had been properly presented at the outset, we would have had a fulsome hearing in which, you know, Stingray could present its cost estimates, have a detailed breakdown, and it would give the shippers and other parties an opportunity to challenge those estimates and those costs in Stingray's arguments. [00:30:02] Speaker 00: But by sort of trying to sweep this all in at the rehearing stage, it deprives the commission and the other parties of an opportunity [00:30:10] Speaker 00: to fully develop that record, and the commission can't just switch to this different abandonment proposal at this late stage. [00:30:17] Speaker 03: So, Jessica, let me, in the, I mean, I'm just not sure how FERC proceedings, you know, I guess work practically, but at the initial order stage, would Stingray have been aware that FERC was considering this condition, or would the first time that they learned of the condition be when the order issued? [00:30:36] Speaker 00: Well, respectfully, Stingray had, from the very first time, segment 3394 was brought to the commission's attention, already represented that it would develop a plan to return the segment to service. [00:30:52] Speaker 00: So it was, from the outset, aware of the fact that the commission was considering the repair of the segment. [00:30:59] Speaker 00: And in fact, in a data request that the commission made [00:31:03] Speaker 00: three months before its abandonment order, it specifically asked Stingray, hey, what is the status on the repairs to segment 3394? [00:31:11] Speaker 00: And Stingray responded to the commission, we're still in the process of developing a plan. [00:31:17] Speaker 00: It gave no indication whatsoever that the costs of repair might be too high or that it actually no longer intended to place the segment back into service before abandonment. [00:31:29] Speaker 04: So is the upshot that the stingray would have had a reason to know that the commission was focused on on section 3394, but they wouldn't have necessarily had a reason to know that the commission was considering imposing a condition or is it? [00:31:42] Speaker 00: I believe that they would have reason to know that this the commission was considering imposing a condition. [00:31:47] Speaker 00: First, like I mentioned, it had been an issue throughout multiple rounds of [00:31:53] Speaker 00: the shipers. [00:31:55] Speaker 00: Um. [00:31:55] Speaker 00: Protests from the shippers or data requests specifically from the commission on the status of the repair. [00:32:02] Speaker 00: I'll also note that generally I in these proceedings, typically pipelines will negotiate with their shippers ahead of time in advance of abandonment to either arrange alternative service or negotiate with them to terminate their contracts if they're not intending to [00:32:23] Speaker 00: And Stingray itself, with respect to its mainline application in the sole shipper that had its gas shut in in that application, already voluntarily agreed to negotiate some sort of agreement. [00:32:36] Speaker 00: And also in its West Cameron application, had proposed constructing an interconnect [00:32:44] Speaker 00: to another pipeline before abandonment. [00:32:46] Speaker 00: So these are all things that Stingray was aware that the commission would look for it to do, to either construct new facilities or to provide alternative service or reach some sort of alternative with its shippers to negotiate them to terminate their contracts. [00:33:09] Speaker 03: I just have one other question, which is, [00:33:13] Speaker 03: So here the abandonment is not in place. [00:33:16] Speaker 03: It's abandonment by sale to Triton. [00:33:19] Speaker 03: So why couldn't Stingray assume that ERT and Triton could work this out, right? [00:33:26] Speaker 03: Like if there was a commercial need for the pipeline to be repaired, then they could work that out. [00:33:32] Speaker 03: I mean, I understand that after abandonment, it would not be a FERC jurisdictional pipeline any longer. [00:33:38] Speaker 03: But why wouldn't that be a fair assumption? [00:33:41] Speaker 03: Because it's abandonment in sale, the buyer that Triton could negotiate with ERT. [00:33:49] Speaker 00: For precisely the reason you mentioned after abandonment, the commission has no regulatory authority over what Triton does with that damage segment. [00:33:58] Speaker 00: It could very well say we don't plan to do anything with it. [00:34:01] Speaker 00: We never intend to repair, and it just would be outside of the commission's preview. [00:34:05] Speaker 03: But not everything in the universe has to be within FERC's jurisdiction. [00:34:08] Speaker 03: I mean, we have a private marketplace, and if there's a need for a pipeline, if there's an economically beneficial reason to repair the pipeline, it would occur. [00:34:17] Speaker 00: I understand, but as to the, for example, the C Robbins Triton interconnect, that's also something that Stingray negotiated with Triton and it was a condition of abandonment that that interconnect be built before abandonment. [00:34:35] Speaker 00: So here it's simply that, you know, if Stingray wanted to, it could negotiate with Triton [00:34:41] Speaker 00: to repair the segment before abandonment, and that would still satisfy the commission's condition. [00:34:48] Speaker 00: If that's how Stingray wants to achieve the repair, it can work with Triton to make that repair possible. [00:34:54] Speaker 00: The commission would just ask that it be done before abandonment. [00:34:59] Speaker 02: Under the terms of the proposed sale to Triton, [00:35:06] Speaker 02: Did Triton assume the obligations of Stingray with respect to that firm shipper? [00:35:16] Speaker 02: In other words, Stingray had an obligation that presumably it was out of compliance with, and it was out of compliance with its certificate, with its inability to transport the gas of that firm shipper [00:35:33] Speaker 02: um so when it's sold to triton does triton have the same obligation even if they're not bound by a certificate anymore and they're outside of ferks jurisdiction to the best of my knowledge i don't believe that it uh transfers to triton i believe triton may need to execute new contracts with shippers and there is some discussion about that in [00:35:58] Speaker 00: I believe either the abandonment order or one of Stingray's abandonment applications about trying to executing new contracts with the shippers after abandonment. [00:36:09] Speaker 02: So I guess if they had assumed Stingray's obligations, you could say, well, they have to work something out because they've assumed the obligation. [00:36:21] Speaker 02: But you're saying that if they kind of start with this clean slate, [00:36:28] Speaker 02: They may or may not have much incentive to work something out. [00:36:33] Speaker 00: That's correct, Your Honor. [00:36:35] Speaker 00: After abandonment, I'm not sure what incentive Triton would have to remedy essentially what is stingrays breach. [00:36:47] Speaker 04: Sure, Michael, OK, thank you. [00:36:49] Speaker 04: Thank you. [00:36:56] Speaker 04: Mr Proctor will give you the two minutes that you asked for. [00:37:01] Speaker 01: Thank you, Your Honor. [00:37:03] Speaker 01: There was a lot there, so I'm going to try to be very quick. [00:37:08] Speaker 01: The first point I believe you, Judge Rao, mentioned was, and also you, Your Honor, with respect to the rehearing request. [00:37:19] Speaker 01: A rehearing request is meant to serve the purpose of having FERC reconsider the issues. [00:37:29] Speaker 01: And so there is no bar. [00:37:30] Speaker 01: to new information being provided during the rehearing. [00:37:37] Speaker 01: I would also note that the Shipper ERT was part of the Producer Coalition. [00:37:43] Speaker 01: They filed at least three pleadings in this proceeding while it was at FERC and never mentioned any demonstration of harm. [00:37:53] Speaker 01: FERC itself found that, so they easily could have mentioned if they have reserves, if they wanted to flow. [00:37:59] Speaker 01: That did not happen. [00:38:01] Speaker 01: With respect to the single shipper questions that your honors began with, that is exactly the abandonment analysis. [00:38:11] Speaker 01: That the issue is whether the abandonment is in the overall public interest. [00:38:17] Speaker 01: And the abandonments are not prohibited by any harm to a narrow interest. [00:38:24] Speaker 01: So even if there were harm to ERT, and Stingray does not concede that, [00:38:29] Speaker 01: that harm would be to a narrow interest because this case is unlike any other case FERC has seen with overwhelming evidence in favor of abandonment. [00:38:43] Speaker 01: In terms of ERTs. [00:38:46] Speaker 03: Ms. [00:38:46] Speaker 03: Proctor, does Stingray have evidence about the value of rebuilding the pipeline to ERT compared to the cost of bringing that segment back online [00:38:58] Speaker 03: Excuse me, the value to ERT? [00:39:01] Speaker 03: Right. [00:39:03] Speaker 03: You know, so Stingray says it's gonna cost seven to nine million dollars to repair segment 3394. [00:39:12] Speaker 03: Does Stingray have any idea of how much that, you know, having access to that pipeline is worth to ERT? [00:39:20] Speaker 03: Like, what is the economic value of shutting in ERT? [00:39:25] Speaker 01: Your honor, there's no information on the record, but certainly if the segment were of a value above $7 to $9 million, I would assume that ERT would be willing to, or even close to that, ERT would be willing to offer to pay for some of those repair costs. [00:39:46] Speaker 03: But there's no evidence one way or the other? [00:39:50] Speaker 01: No. [00:39:51] Speaker 01: There's no evidence in the record of that. [00:39:55] Speaker 01: As to the question whether Stingray should have known that a condition was going to be attached to the certificate, the answer there is absolutely not. [00:40:05] Speaker 01: Stingray believes that it has carried the burden and that the factual findings as well as Commission's own findings are overwhelmingly in favor of abandonment. [00:40:18] Speaker 01: So when that condition was put on the order, that was when [00:40:23] Speaker 01: Stingray realized the commission doesn't understand that when it's saying it's developing a plan and it does not have an anticipated service date, that is showing difficulty. [00:40:36] Speaker 01: That is not showing an intention to put it in service on a specific date. [00:40:41] Speaker 01: And then I believe [00:40:45] Speaker 01: your honors asked about whether if Stingray could file tomorrow another abandonment application. [00:40:53] Speaker 01: Stingray's application was filed September of 2020 and it received its order in June of 2023. [00:41:00] Speaker 01: So it took 33 months. [00:41:03] Speaker 01: I realize I'm out of time, but that effort would render this entire effort a nullity. [00:41:11] Speaker 01: based on a misunderstanding and misinterpretation of stingrays representations to the commission. [00:41:17] Speaker 01: So I respectfully ask that you would vacate and reverse the condition. [00:41:23] Speaker 04: Thank you, counsel. [00:41:24] Speaker 01: Oh, I'm sorry. [00:41:25] Speaker 01: I apologize. [00:41:26] Speaker 01: Your honors had asked about the site, and I did want to give that, if I may. [00:41:32] Speaker 01: Sure. [00:41:33] Speaker 01: It is JA 282, which is paragraph 48, [00:41:38] Speaker 01: and reads, based on the above, we find that the abandonment by sale to Triton of the West Cameron 509 system is permitted by the public convenience or necessity. [00:41:49] Speaker 01: Thank you. [00:41:50] Speaker 04: Thank you, counsel. [00:41:51] Speaker 04: Thank you to both counsel. [00:41:52] Speaker 04: We'll take this case under submission.