case number one thousand dash level ninety international transmission center versus the federal energy regulatory commission mr street for petitioners misspent a for the respon is not a get out of jail free card for adopting a new task without acknowledging it or for treating it like companies are like cases in the same way and that is what burke has done in this case and i think all we need to see to do that is that all we need to do to look at it to understand that is the st decision in the meeting new york ingrid lyons cases this is not a pig this is not a situation where burke merely look at different facts and different cases instead of meet new york case burke was faced with a company that was a transmission subsidiary of a larger corporate company that hell massive amounts of a affect the integrity of needs investment plan and capital formation and investment processes that says here's the order six hundred and seventy nine right period here's the test that we're looking at as a whole the very next sentence  several facts lead us to this conclusion so here are the facts that are dispositive as to when the orders the seventy nine dollars independence criteria are met all of those next two or three sentences talk about the location and were met but the commission does your street why why you talk about it as changing that test because i understand your argument to be even if it's a tally the circumstances t didn't reflect some of the kinds of information of the commission relied on here with regard to eyes i t c and there just weren't direct challenge and to the decision independence of the companies that issue there so there nothing consistency where she or the commission did have information that caused it to be concerned about i t c driving planning and making operational decision and affecting affiliated generators that kind of evidence that wasn't present in those other cases so i think i have three responses that your honor st of all i think you're correct in thinking of this as a two step argument we  do firmly believe that the commission adopted a new task or a new policy but even if you believe that the commission just consistently applying the same caliber to the circumstances test or whatever you would like to call it  the commission still has to act consistently in the way it applies that new testing process he says and what we have here even assuming the commission validly used this corporate structure tested applied to the i p c companies it has not demonstrated that the i p c companies are less structurally independent then the companies and as you and meet new york new york and grid lines and in fact on the record that we have they are not the i p c companies are not less independent they're in fact at least as independent if not more independent so i take your ideas point that perhaps those issues were not as vigorously litigated in new york and grid lines i would i would respond to that point the court is southwest airlines in baltimore gas and electric which says regardless of how vigorously an issue is litigated the commission's approach to an issue sets the baseline from which the commission has to make reasonable decisions in the future litigated all the structural issues the commission had on the face of its orders in those cases evidence that those transmissions subsidiaries were part of a larger corporate family that home to massive amounts of affiliate generation throughout the united states and yet the commission looked only at the location and the nature of those assets it down somewhat or at a factor that's not present here which is in the market to passage in those cases was you're correct but only to the extent that the commission in those cases looked at the commitment of market capacity as to the affiliated generation with in the same i s o as the transmission company outside of the i s o it did not the burden was on further to show why the i d c companies were less independent i knew that corporate structure passed and that companies need new york and grid lines and the same would go for your honour's point which again for good raising the order about generation just outside of the i am so so here just taking those points syriac them because i think again this is a this is the nd level argument but i think it is a clear clearly persuasively for our clients was concerned in the i p c company's case that the i t c companies had become less independent as a result of the merger and that it gave a couple examples one was that  c companies had a minority representation on their board of directors from their old parent companies but the commission did not compare that with the companies in need new york and good lions if it had made that comparison it would have found that those companies either did not have an independent board at all or they had a board that was majority dominated by the open parent company the commission also said that the i p c companies that become was independent because they could not issue their own common stop they had to look to the ultimate parent company to some extent for financing but again the commission did not compare that with the companies in the you were in good minds and if it had it would have found th having to do so by some additional reasoning for something that looks like an old movies the same as you said your honor they have to grapple with these previous cases where the commission found companies that were similarly in seeking review by the agency you argue that the factual situation here was identical to the factual situations that the commission addressed in new york and therefore its decision was don't quite understand that to be your argument that the corporate structure or board of directors except it was the same and should be at the extent it wasn't and so what is the effect of that on the level of independence that in other words i didn't take you to argue that you know there are hundreds of cases out there and for a test the line up each of them and determine how many members of the board represent certain interests etc but rather that there was a change here and what was the change as to those affected by the merger so you're either out we made i think two essential arguments the commission the st is that with respect to need new york and grid lines we were more independent than those companies even after the merger whether you look at it in terms of whether we had generation of billions with the i s o which we do not or whether you look at it in terms of corporate structure we made that both of those arguments below and again the you're absolutely correct you're going to say something's changed with this merger but that itself is does not answer the question that just leaves out the question the question is under what test means d but we're talking about reasoned decision making and at least before the merger there was one set of circumstances after the the agency says you know the fifty point add it was in appropriate circumstances and change and you're saying essentially for had to match up point by point but just try to understand how far reasoned decision making has to go if you well st of all being decision making has to acquire the same basic test do like companies and when you're talking about i p c post merger yes it's different in i p c pretty merger but it's very similar to the way the companies in need new york and reliance already were the companies in it wasn't reaching the same conclusion here it was not enough to say that had been a change as a result of the merger absolutely had a minimum a commission had to do two things st of all it had to explain why it's a by the test that looks at corporate structure here as opposed to a test that looks of the ability to generations location in nature in a basically similar case in the new york grid lines but even if you get past that and you think the commission is validly apply a corporate structure focus test here then it has to show why the corporate structure of i p c c post merger is less independent than the corporate structure of reliance that need new york where both of them are within a larger family here i have a question that has to do with a different procedure will posture of the commission decision and in those two cases from the from the decision here in those cases the commission decision is as on the basis of the application of those transcripts for the atter and it's looking at what it thinks are the most significant sort of big picture independence of rats and making a decision and there aren't repairs and they're challenging yet as i understand are raising the kinds of issues that the repairs here are making so yeah that record could have been more detailed it could have gone into these questions but this is in the context of sort of the initials ability determination and so to i t c had made an application and got the ad or here we have or some time has passed maybe the commission is learning more about the kinds of things that affect independence it may be i mean i gather that the commission has abandoned it it was satisfied with the different set of information no your honor we're not tying the commission's hands here at all you know i think it's slightly overstated to say that the issues were not contested in those cases ratepayers came in in contempt contested the applications for the adders and in fact specifically raised at least the need new york specifically raise the issue of ability ation with the parent company that owns generation assets and the commission fully grappled with this but i think st of all it's important to to answer your question directly which is no we are not saying that the commission cannot now adopt a test that looks more rigorously a corporate structure where that's raised and that's more vigorously litigated in this case absolutely it can do that but it has to openly acknowledge well that meet new york we look at a similar situation of a transco within a larger or her family we look only at the location and nature of generation we've come to see the error of our ways we think it makes sense now to look at corporate structure to assess the orders there seventy nine dollars criteria and here is why that's consistent with the order of six hundred and seventy dollars not here's why that's consistent with the statute that we regulated parties no going forward what the test is a regulated party in the position of the i p c companies would love to meet new york and grid lines and say well we're we're just like those companies  cases ok let me to answer that in three parts your honor st of all these procedural postures are not as different as you're suggesting in in all of these cases the commission had to decide whether to transco within a larger corporate family wasn't titles to a particular level that are in all those cases protesters came in and said no they're not in all of those cases st said here's our order six  nine criteria investment planning capital formation investment process and business structure in one case that said we're going to assess that you're looking at the location and size of the generation assets in another case it says we're not going to look at that at all we're just  at corporate structure so if the commission is going to make that sort of a shift it would it would not need to give a lot of explanation if these cases were clearly different on their facts it might have been able to say this is a different case and playing a different test but where you have a similar corporate structure at its base it had to explain its work and acknowledged that it was making a change and explain why that change made sense but again your honor even if the stafford all of those cases say that you know regardless of whether one hundred cases or more like three or four cases which is what we think is that if you really hear the commission has to show why i like cases are being treated differently if the commission wants to distinguish a case on its back it has to show why those facts are material and why they are different in this case and that's what i did not do here as right  no because if the court rules for us on earth this it will big remain and the commission will have to decide what it is that's there's no i'm sure this time it will at least go through the motions of making the right finding but again the commission this is not affording the outcome one way or the other by any stretch of the imagination because even if it applies the corporate structure test is going to have to show on a grid where lovell why is creating  generators compromised its independence and so i just i just think that if they're not fergus not changing the analysis and if the question is just is it arbitrary and capricious and  to distinguish these cases that the less intensively developed record makes it hard to say vigorously litigated in those previous cases doesn't diminish in any way st duty under section two hundred and six and under administrative law to show why under its new test the i c c companies are independent and the companies need new york and reliance under a new test but it never compared it's never compare to the board it never compared its ability to issue common stock and if you look at baltimore gas and electric and southwest airlines which were cases where the commission told this court well the previous president those issues weren't litigated this court said that doesn't matter burke set up a policy or a test and when st comes the next case it  either adopt a new test or it has to distinguish the cases that it previously addressed as they would be applied under its new test so fur cannot just say the issue wasn't there is it litigated my last point here and i'm pressing  the court's patience but very very last minor point on that question and that is if her had set even to that point down in the record it would have had a closer case if it is said in neat new york and gri these things weren't really contested so we really only looked at the geographic location of the affiliated assets but here we realize the corporate structure is a lot more important and we should all look at that and meet new york and g now looking at it now we have this new task here's why it's consistent with the statute in the regulation if they had set that out it would be a closer case we probably would still be making this argument you believe they didn't they didn't make that binding or explanation in their words below they were making that solely on appeal all right and it didn't in these orders this was always the test it was the test set forth in order six hundred and seventy nine which was itself derived from standards that had been applied to the i t c companies themselves they were held up as the gold standard in six i mean i took the issues of corporate structure and government governance were always at issue or were always part with test there are different factual ways to make the case on the record in an individual case and that is what we have here and in new york and in great lions the commission said based on the record here this is what we're looking at this is what people have raised and it found hearing or paragraph twenty we say evidence in this record and i would add in this case parties on both sides brought in arguments about the corporate structure and governance in a way that that just hadn't been done in the previous cases not only did the complainants raise issues about the i t c companies being less independent compared to their previous selves but the i t c companies brought in their own evidence to try to make the point no our our corporate structure and governance still maintain the same independence well the commission looked at the evidence and was not persuaded by that it said yes you retain a couple of in a minute he said  the commission did it in writing well because i don't think that the commission found those cases to be i think they just found the records in that case to be something different so it looked at what it found in was the commission considering all different aspects of what can be considered an on on the facts of each case it did look at the geographical distance among other things in the initial order it just didn't find that to be the the facts that were is important not only is important but that showed the lesser independents here we just had more evidence here and we still don't have evidence in this record or the previous record but that the next year and grid liant corporate structures were  without or well because the corporate structure isn't the absolute be all end all of the past that's one of many aspects under orders or six hundred and seventy nine gave parties a great deal of flexibility to make the case for their independence in different ways and look at criteria that the commission would look at it didn't set forth a checklist of every item but you must show it so different  focused with with a small standalone company or a standalone subsidiary about where it is and it does to some extent depend on the parties on both sides of each case to compile the record that's before the commission so here's my question respond to that the commission realize in part on the lack of dispute over independence two hundred lines and the next era but what in the posture of applying for the incentive in the st place wasn't it incumbent on the commission whether or not anyone else raised the question to make sure that it had all the information on all aspects of potential relevance so it seems like the commission for some of the burden is clearly on the commission to satisfy itself as to independence and the commission and that posture has tremendous leverage to ask for  the transmission and to explain how you know to and to really probe any internal information it wants about corporate governance internal structure polic so you know i mean i was when i was asking mr st i would say maybe that cuts against him but but it can also be seen to cut against the commission well what i would say st of all we're not arguing that it was not that independence was not disputed it's not like baltimore gas and electric or to some extent san diego gas and electric where there were the abandonment incentive had been involved in a number of cases and and often hadn't been disputed at the time there was a dispute about independence in both and next there especially greed greed greed lantz some somewhat less but next era it's just that the concerns that were raised by the parties that raised in that disputed developed a certain record which is what the commission looked at granting the incentive that's what i don't understand the commission is the decider you're to satisfy itself that there is independence and then i guess the question is if the commission was able to ask everything of relevance and only asked about location and size of of the affiliate who are here participa them why isn't it absolutely within i she sees her i get to say well that's that's what they care about i mean they are they could and did bring in that aspect of the test but they themselves also brought in other things as the complainants but but just to step back for a nd the way this plays out in many of these cases and this one you're right it is procedurally different because it is a complaint that against their existing after having been given on certain premise of independence in maybe cases it's a lot like the cases that we discussed in the san diego case where parties came in with a an array of incentives under order six hundred and seventy nine that they were asking for variety of different rate incenses the abandonment incentive in many cases sometimes a risk based incentive and they came in with all different incentives and and put forth their section to a five showing of why they believe they qualified for it and then there was a lot involved in these cases and the other parties came in and disputed the various aspects that they thought were on warranted and so when you have a lot of flexibility in this very case by case analysis i think judge williams as he often did had the a pretty perfect analogy for this in his dissent in baltimore gas about the past permit cheli of agency cases and the litigant the next case being invited to take a deep dive into the record of some past case that had a bunch of issues to try to say will  stacked would have been different and they're different here but even here when i t c company said no way we are less independent the next era the commission having found on the record here that they were less independen era it's not that the commission was putting the burden on them it's that the commission had found on the facts of this record that they were less independent than their previous iteration which had been not only deserving of the full adder but again the standard that that was set for everyone and if you want to raise a counterargument to the finding with mrs already made we need a record to do that and we didn't have that we have i don't think we even have it now they are as independent as the companies and next year grid lines and so it's a little bit conflating to say yes it may be less independent then it was and i just see was really the question is is it right to line it up against next year and grid lines and if it's right then have you satisfactorily in this record distinguished the considerations in this case considerations and i think because of the records in the different cases we are trying to compare apples and oranges we don't have that record such a record about corporate governance why next time on your head isn't that your fault you had every parag have to develop and request whatever record you want  o i think in these incentive cases when when companies come in asking for a lot a lot of different incentives and they're disputed and litigated by a lot of  actual evidence about involvement in the different boards and the decision making i don't know that we always have the record about that if someone hasn't raised the concern so we have have any  parties raise the kinds of petitions with respect to grid lines for next year that are raised here with respect to i t c m is part of your position that if concerns develop that should that should  occur i think that's right i know that there's been some concern including expressed by the dissent in this case about next era i don't know how much of that has to do with actual involvement in corporate governance and the right to control that raise concerns here i think it's because next there is a very large company with a lot of subsidiaries and so people so some parties have raised concerns that that just  and your honor did make reference to be the notice of proposed rulemaking for earlier this year which i guess appears on its face to stem from some concerns that subsidiaries of of that said if a party came in with that kind of concern about the corporate governance of next era i think that the commission in such a two or six proceeding would absolutely look at the record before it and and probably objections were made to continuation of the fifty point at or which was based on a level of independence now there is a merger so the commission says at a minimum there is no longer that level of and so to the extent that right and approve the fifty point at are based on a level of independence it's changed and we need to figure out what would be appropriate and i gather the commission came to somewhat of a compromise on that coming to this twenty five  point at or so at that point the commission because with the argument essentially that you're no longer as independent so the commission comes out with a decision a petition for rehearing is filed all right is it the commission's point that given sort of the pastor of this case and the a record that would basically counter what the commission had determined and what the the complaining parties had argued is that what we're trying to get at here i mean i understand the point it's two of the six the burdens on the commission but the nature of what is before the commission here was  complaint and the commission itself was not engaging in an independent inquiry of its own under two hundred and six is that your argument i did i don't think that was our argument i think our argument was in the st order we made a finding based on the various aspects of various criteria under order six hundred and seventy nine and we made the finding that you were less and independent i t c companies are less independent than they were then and then was the basis for their existing at or on rehearing the i t c companies said among other things we are more independent than new york and good lions so we should be treated the same as them so on that argument i mean the commission said we don't have the evidence in this record although i don't know if the commission said it if when we look at next era and greg lyons we don't have evidence of any such record in those orders either so i think well the commission said you say you're more independent but you don't even say how and most of the pages that the petitioner cite in their read here request where they showed how they were more independent than x they're actually just explanations of why they believe they're still independent there are arguments about i t c companies there's very little about next the next era in those materials or in the record of this case so the commission is saying if you're going to say you're more independent than someone else we need more to go on because we're not seeing it but we do have the factual finding we need as to your own  follow up to my question about whether the commission has authority on its own initiative if it determined that and it couldn't reconcile its treatment i t c with its treatment of grid lines that but but the commission would be able to and i did want to mention earlier just again the commission does have the ability under two of six to challenge an existing atter and just to show that they have the commission has i think waited for parties to bring these cases to it remember that two of these companies had one hundred basis point out or that was given in the early two thousand and in two thousand and fifteen in the i t c midwest case the commission made the policy determination that the full at or is now fifty it did not make any effort to reach out and do it to a six and reduce everyone else's outers to fifty so i think it isn't looking to do that but  as opposed to just remain and what's your position on that you should be entitled on reason to look at the record that is currently before you before the commission as distinct from vacate or which would basically allow everybody would develop that record further and look for the parties to develop that further but i don't see any reason it wouldn't build on the existing record i guess maybe my question wasn't clear i think the commission is in would have ramifications for ratepayers because i don't know the exact dollar amount i know there are dollar amounts in here but i don't know in the period of this case what the dollar amount is i do know that the difference between the fifty point five basis point after and the twenty five that the commission still granted i'm sorry between one hundred and twenty five hasn't been that full amount  for some time i think because there was also a cap on the upper zone of reasonableness for the entire return on equity but i know there's ongoing litigation regarding that and i think that there is a period at which  the difference between the base rate of return on equity and be the one of reasonableness cap is wider so that it actually would go from twenty five dollars to one hundred and fifty dollars so it could have a very large impact for rate payers for whatever period of time that would apply my posing counsel started off with her argument by sitting corporate structure has always been a test for her we would dispute that because in older cases these were purely independent companies that were not within occurred structure at all but let's just accept that statement for a moment why and need new york and great minds would there be no analysis of those companies corporate structure even though paragraph four and five of gridlock never meet new york talk well i don't think i would characterize them that way and i don't think st characterizing that way but if they are questions of corporate structure it is certainly is looking at very different questions of corporate structure in the i p c case where is looking at the structural relationship of the transco companies to its parent company when it comes to capital raising when it comes to way the board is formulated when it comes to whether a common stock can be issued none of those traditional classical corporate structure issues were considered at all in neat new york and red lines where they just talked about the nature of the size of the assets and to respond to the its initial order and we showed it out by reference to both the public filings in the new york and grid lines and by reference to public internet websites those companies were were less independent  reason for a lockout after was because of the independence now that's changed and the question is what fraction the current after is no longer appropriate is it your position then that at that point you raise the neat new york our position was only developed on rehearing no we need in our in our opening argument in our answer to the complaint be put on the evidence of our corporate structure and we said that we are functionally independent because we have our own board majority controlled by our own people we have the ability to issue debt we don't have interference from the parent company in our planning and cetera et cetera so we made all those arguments in the open that we're just like me new york i'm not a god i understand you described yourself all right in response to the complaint but it's a question about  it that you were taking the position that if you didn't prevail then you would be being treated differently than me to new york yes merger it has to show why they have become less independent than the similarly situated companies and meet new york and good life that was a burden on bourke as a matter of section two hundred and six an administrative law mr what's your remy sure so my understanding is of the orders were vacated there were there would be a return to the existing after that was in place however that would be subject to pending litigation about the overall  without big picture but assuming that option is on the table that only has been applied when st just has to give more explanation for a result that it likely is going to be able to sustain and from everything we know about and chantelle do not agree but that nonetheless is our precedent as one of the things we take into account here is the disruption that they i may have used an imprecise occur in that instance i think what i would say is that the fifty point in the one hundred points after they're relevant to the respective companies would come back into pla y at the time who are vacated the orders so i don't think there would be any retrospective my understanding is there would be no retrospective relief and i may have used the wrong word i can certainly confirm that and oh no  are no what i'm focusing on now is it's not our president in that regard but in terms of when you're before ferk you're able to prevail in the sense of for ordering refunds and that type of thing that's what the recall word signal to me in terms of disruption but you're talking about a forward remedy i gather that you retain the fifty points you have and then for what has the burden to explain why it pertains that you're not entitled to it that's correct adders that were previously in place to the extent that's not inconsistent with any refund order f are no longer collecting on the basis of that are we have not been collecting on the basis of that or for a long time as a result of these orders  yes question about that and there is wouldn't it be your position that a remedy then would be that you would be entitled to reach back for that period which i'm justified and collect and the  three i p c companies two of them went into the st proceeding below with a one hundred dollars basis point after one of them went into the proceedings below or the fifty percent basis fifty basis point after they were course all reduced to twenty five as a result of this order so if these orders were vacated one of them would go back up to fifty the other people would go back up to one hundred dollars and we would we would argue that certainly at that time we would be that we would be entitled to anything retrospective it would be whatever is consistent with birds authority in order refunds as a result of international waters and you know i think that would be perfectly consistent with i have this is just one more question and i apologize jazz that i'm keeping everyone so long but if and i understand it's not your position but if derek standard wasn't changing they have a standard under which they look at all factors relevant to independence and but their applications over time are growing more nuanced you said oh of course their ability to apply their standard wouldn't be frozen as long as they adequately explained is that an accurate recap of your position yes i think so for example you did accept our position that there's sort of train passed here without acknowledgement or explanation purposes of this appeal we're not saying it's something to believe couldn't do that as a matter of the regulation or as a matter of is that you were saying that if they want to evolve or make their test more nuanced then they just have to face up to it and say we're changing our test we're more explicitly looking at all circumstances d we're presently going to look at corporate structure in this way then that capital formation investment process he's looking at more facts and i think of any totality circumstances yes you know in one case you have how are you now comparative how different employees treated differently to show discrimination in another case you have direct evidence in the rd case you have sequence of events i mean you don't require every kind of evidence in every case but the standard may nevertheless be the same your argument is that they can they can become more detailed in the evidence they look at but they still have to explain that they are doing that where the commission made those arguments and this court says there still has to be an adequate reasoned explanation of an evolving past even a test that's not a radical departure and of course even under that theory under the new test it would have to show why light companies are being treated alike and not being differently not treated and that's what we think they also fall short on here but i guess if i could just wrap up and it may be again resisting the premise of the question a little bit but very briefly i would just say we completely agree that the commission has always parroted the order six hundred and seventy nine criteria is always said we're evaluating investment planning processes capital formation and business structure but if you read paragraph if you want to meet new york it says here's how that test is met it's met only by looking at geography it's a completely different situation into the i d c company's des