morning your honor may please the court i'm kevin mckeown counsel for the california attorney general in the california party's mr hunky counsel for city of seattle and i will be sharing time this morning it's our intent we understand we have to keep our own time but it's intent that i'll take the first eight minutes he'll take the next six will each reserve three four revival mr hunky is addressing the excluded evidence issue and i will be addressing the mobile sierra issue this is not a mobile c r case which was my fun just a little bit closer to you thank you so much better thank you that's two better this is not a mobile c r case in a mobile c r case the contract comes first and the complaint comes after that's why in morgan stanley the supreme court referred to buyer's remorse but here the complaint came first before any of the contracts and that distinction makes all the difference for a complaint came first but what was it that came first honor it was the complaint filed in this case and it was directed against by whom but it was directed against all sellers market based rate tariffs who were selling in the pacific northwest when did your client  join in august of two thousand and one year on and how does that fit in the sequence it didn't come first when did it come you wanted the complaint was pending and a complaint was pending a complaint against all sellers selling land at market base rates in that your complaint pending you know we didn't file a complaint we joined the case so your complaint did not come first you joined the cases some point later in time if you have a size what comes first it's worth figuring out what is it that actually came first well you are the the point i want to make is that all sellers in the pacific northwest as of december twenty five two thousand new puget sound had filed a complaint but they didn't know that your client filed any complaint what would puget asked for in the complaint was a cap on rates that any seller in the pacific northwest could charge under the seller's market base rate tariff and under the ws p p agreement if they were selling in the pacific northwest and that covered every sale in the pacific northwest and there was a wreath the refund effective date was december twenty five two thousand so as of december two thousand and five two thousand every seller in the pacific northwest was on notice that the rates charged under their market base rate tariffs and the ws p p agreement were subject to refund yet the sellers here in this case went ahead and took the risk and made sales at market based rates even though they were subject to a refund this court's already addressed the issues that you raised back in the port of seattle case in two thousand and seven when there were all kinds of procedural arguments about when the state joined the case and the fact that the complaint had been dismissed and in december of two thousand because there was there were requests for rehearing pending and the court dealt with all those procedural issues including the inclusion of servers and decided that serves could be in a case that's the state decided that that all the procedural arguments about whether the claims could be made under this complaint were already resolved because the mobile sirrah presumption simply because of this set of facts that the complaint was pending at the time every one of these contracts was entered into the mobile so your presumption just doesn't come into play there's no basis for listen i don't really understand your legal basis for that argument except to say that that's what happened logically most here is that your argument you're out of the argument is that the complaint was pending at the time the sales were made not the reverse i understand that but i'm asking for your support for that argument as to why you think that's the only circumstance in which mo pending and a refund effect a date has passed every sale made subject to the complaint is subject to refund and that's exactly what fuck does all the time when it deals with two o six complaints first initiated why does that speak to what the just and reasonable standard is in this context which is what i understand the mobile sierra doctrine speaks to as clarified by morgan stanley it says it's the application of the same just and reasonable standard in the context of were two parties of contract and why does the fact there's a complaint pending change the fact the two parties of contract it here because you can't presume that a raid is just and reasonable if a complaint is pending a refund effect a day just pass that price is presumed to be just unreasonable you have it because morgan stanley didn't deal with the circumstance morgan stanley and all of the other mobile sierra jurist or writes judgment humans question why is morgan stanley not a couple to this is it simply because the the protest was on file and if so what's the the authority that supports that proposition well i'll give you no example of what firth does all the time is there any authority that supports that proposition your i would say that there is no authority that supports the that the west our case which we cite no proof which is a d c circuit case addresses precisely the situation the mobile c e o issue was not framed in the way it's framed in this case but the facts of that case are identical to the facts of this case what happened was west star five would stretch try any update for its market base rate authority for both looked at it cited to initiate a two zero six complaint proceeding initiate the proceeding set a refund effective date after the refund effective date passed for alternately made the term a nation that certain sales that west are had made were not just and reasonable under the ordinary standard can i ask you questions about the complaint in this case was directed against the seller's market based rate terrorist that's footnote one of the of the complaint and it's well doesn't that just read morgan stanley out of the law if you try to call them all the same you know our position is  mobile c r has never applied in this situation it's never been applied in a situation where how about my question morgan stanley applied the mobile siri doctrine to contractual agreements now they were arguably under terrorists but that doesn't it said the sellers were on notice west or complains shouldn't have to pay refunds and the court said that argument's a nonstarter because the sellers were on notice west  on notice that there was a complaint pending that there was a refund effective date and any sales that made after that time were subject to refund so west are has to pay refunds west star did raise to first in a request for rehearing the argument that mobile  related cases should prevent west our from paying refunds for said that doesn't apply here which is precisely my point first in every one of these cases looks at files its own complaint initiates a two zero six proceeding before the it requires the seller to pay refunds it's just the way folks has done it in west are telling the west ws p p case which every every contract there is under a contract rate answer to my question i can look that up later whether  authority now you don't really answer that he basically said there's not there's flip authority but my other question more precisely was whether west are actually relied on  just quickly go to the second part of the argument and then turn it over to mr hockey and i'll stand up we'll stand on our brief on this issue that the second reason that it makes a difference that the contract was  after the complaint was filed is that section thirty eight of the ws p p agreement in this context works as a memphis clause so when you read section thirty eight you see that an amendment that is unilaterally pending affect whether the contractual terms unilag permits unilateral change to the terms that response frank's music entirely non responsive why is the fact that a complaint is pending make this a memphis clause because the request in the complaint was to change the tariff i didn't give either already or wasn't allowed only the right to change the tariff you had the protest on file asking first to change the tariff but that seems to be an entirely different creature that doesn't explain why this is a fit memphis clause does it yes it does your honor because in this context the complaint triggers the procedure in section thirty eight section thirty eight only deals with i don't know if you or your colleague will address it but that has to do with the issue of jurisdiction and i'm interested to know when there are somewhat flexible rule on whether we can take  try to do it quickly because i might my time is running down and i'm taking mr ickes time but understand boaters there are three prongs the first problem is finale folks decisions on these two points the point i just argued on the point that mr hockey is going to argue are final they're never going to change their minds on this we asked for rehearing made that i agree hearing they just issued an opinion five thirty seven they've reconfirmed what they said there this is a final decision it's legal in nature so we're not you're not invading provenance when you look at take this question up for these two questions up and finally the irreparable harm part of voters is satisfied here because under all those cases and the court as you say you honour's is sort of flexible we looking at what the situation is and what we have here is that folks use of the mobile c r standard in this case has resulted in a very elaborate hearing that we've had to address issues that are completely irrelevant court was necessary let me just clarify it's only make sure we understand because let's say that we take your station and then let's just hypothetically say we agree with your analysis i n your view with that especially wipe out the proceedings that we've already had and there would need to be a new proceeding or with the existing evidence be applied to a just and reasonable standard that regard to mo here what would be the practical consequence well when it goes back to fur for it will have to decide the just and reasonable rate to do that we would say it's very easy we don't know what fork exactly is going to do but we would say it's very easy to do first just needs to come up with a price that reflects a proxy price that approximates what the price in the market should have been under the fundamentals in the market we already have to exactly that here for the service transactions that we're talking about because furka is already mitigated these realize you're getting it is time but we have to really understand your stand this so we take jurisdiction but we don't accept your proposition on here and say that they've made a final decision on that but that we came out of the last order would that be the next well that we are getting into mr ickes problem but we'll talk about the excluded evidence but that's exactly what would happen if you if you agree with burke and send it back and say you put the excluded these various parts of evidence that should have been considered then folk is going to have to somehow work that into a new hearing or some procedure to allow for that evidence to be considered ok thank you roger go once but we can put six minutes on the see if i've got that close enough so everybody can hear my name is rex hunky i'm here on behalf of the city of seattle the issues that i want to cover are the evidence that for a excluded that is if you assume that the mobile sierra doctrine does apply here then was fur correct when it excluded a great deal of our evidence from being put on in front of the tail j now let me ask you a procedural question that really just follows up on the question  if we were to say that the mobile sirrah doctrine applies but we were to disagree with you as to whether we should take jurisdiction over various  issues what then would be the procedural posture when the case went back to firm i guess i'm not clear on what evidentiary issues you're referring when you have let's just say we decided not to take jurisdiction over your appeal on that point how are you what then would be what we said most year was well that appropriately invoked in principle what then would happen ok i want to be clear about what you mean when you say  invoked in principle there are really three different things that i think you've raised about mobile sierra the first one is what mr mcewen has talked about which all call mobile sierra doesn't apply on its face for example because of two zero six or because of a memphis clause right the second way to conclude mobile sierra doesn't apply is to find illegal manipulation of the market and there but i think there's complete agreement that that's a basis for of what we've said in the briefs avoiding mobile sierra but there we say we weren't allowed to put on our evidence to prove that and the third way of course to cut overcome it is to show that the public interest standard has been met and again we submit that we were not allowed to put on our all of our evidence to meet those two things the evidence i'm talking about i understand of them what you will address they are really items two and three procedure for i don't know what you want to call it invoking mobile sierra is not improper on its face then of course you are in the position of saying but then we have appropriate evidence that we want to rebut it but let's just say we drew the line in this appeal on the on its face then what would happen well i'm afraid we would submit that that would make the proceeding below then not very useful because we'd still be stuck with the rulings that say we can't put on the evidence that we believe will show illegal mark market mail at manipulation and will show that we've met the public interest standard well why don't you have the opportunity then to seek review of that at the conclusion of the case when we did seek review of it in our petition for rehearing at the outset right as that was a ruling at the outset so we were obliged then to seek rehearing or be barred from raising that so we sought rehearing f no we're not going to change those rulings so we brought them here because as mr mccune was saying in our view these rulings are final that is there's nothing more if we go back as to these rulings that's going to happen first is not going to change position on those particular rulings so they should be decided now if we prevail on and then it changes of course what needs to be done in front of fur if we don't and we don't but i  submit that we should have an opportunity to put in that evidence and that there's no reason to delay a decision on those issues because because first there's been enormous toy here but there's nothing that's going to be done differently so why not resolve those issues now they are here they've been fully briefed they're finally decided they're important to the outcome of the proceedings below there's really no reason to delay at this point well the problem you know that you can although i grant you an administrative agency case is different but you can make the same argument in every case that i think court has made a ruling on the agency made a ruling they're not going to change their mind that seems to me doesn't get to finality in the sense  used to finality well i agree with you looking at this case if i looked at it as a regular piece of civil litigation i think i would conclude that it wasn't final but it seems to me that agency cases don't work in the same way at least if you read the case law they do not seem to work in the same way steam stirrers seems to be one where it's not really final in the sense of a civil judgment after a jury trial that kind of  finality the same thing is certainly true of this court's decision and city of freemont where essentially the court said well we're going to decide this now because if we don't and if we send it back then there's a good prospect the province of the agency because they're purely legal issues we're not talking about some discretionary question they're either right or wrong on that issue and on the question of the injury by not going forward if you look at  city of freemont we are similarly position that as a practical matter these things are going to if you make us go back it's going to be injurious it's going to lead to much greater delay in these proceedings which have already been long delayed so i think if you look at the three factors here that the this court has used in trying to determine finality it makes sense to go ahead and rule on these issues this evidence that we for example that all the evidence about the reporting violations and the evidence about market manipulation to demonstrate either that the market was manipulated and therefore mobile sirrah does not apply or in the alternative even if that's not true that we have met the public interest standard but sending us back now i submit is essentially a futile  because not going to change its rulings we're not going to be able to put on this evidence so there's not going to be a different outcome before the ael j or before ferk and then we'll be back here except that will be years down the line i don't see how that in any way advances a fair resolution of this case for anyone though if we ruled against you for example then basically the initial decision that the commission that the commission ruled on in may would by your view essentially become a final decision yes well we would you still have some leeway and issues right and we w this remained issues there when that's over we would petition for rehearing in front of further of course to say that the ale jase determinations were in the correct and the current ones are incorrect we are in the process of preparing a rehearing petition as to the may decision and i'm sure if we prevail for it's going to bring that to this court and if they prevail we are going to bring that to this i just want to make sure understood though if if we were to disagree with you as to whether a legal error was made on these evidentiary issues i thought i heard you say ok you go back because there's summary man anyway in the order submit you want to rule on it now is if we aren't allowed to put in this evidence and you've ruled ok we can't put the evidence in then that's one thing ok but if you if you don't rule on it now we go back we have the remains and we then go to first again we then come to this court again and then this court says yes or no on letting the evidence in if this court says y that evidence should have been in we're back to a nail j again for and i my question was what if we did rule on it now but we ruled against you ok i thought that i and that's what i want to clarify i thought i heard you say well we were course but i think if you put together all the three factors that this court has used before there's not if the way i understand the test it's not a bright line test as you must meet one you must meet two and you must meet three so much as we look at the three factors holistically to decide whether as a practical sensible matter of judicial administration there is sufficient finality that the whatever the ruling is is appealable to this court or questions of taking your time understand i've got another window is there an offer of proof procedure in the administrative hearing comparable to what would have in court such that we know what the body of evidence that you proposed to submit but we're not able to would consist of i don't believe so but i don't believe so there was a reference in one of the briefs i think it may have them may have been head i take it some contractors under utah law i don't i don't think i thought for my understanding it's the other way around that for ruled that it would not decide those kinds of issues because they were state law  may it please the court period for the commission and i would like to see six minutes of my time to the interveners in support of respondent i'd like to address that last point first if i may just so i don't forget about it with regard to the bad faith evidence and whether it had come in or not it is in fact the case that at hearing the commission the a l j admitted evidence of bad faith obligations under state law in order to support the in support of arguments that there was not a valid contract the traditional grounds of contract abrogation frogged arrest bad faith and support of adam because morgan stanley says that the commission could set aside contracts and not apply the mobile's here presumption in those circumstances the commission did allow that evidence in and you can see that actually in the order on initial decision that i submitted by the by twenty eight a letter that the commission just issued several weeks ago at paragraph one forty two the commission discusses the fact that the ale day properly admitted this evidence of bad faith for this purpose and also talks about the fact that its original order in this case could be misread to have precluded the admission of such evidence but it actually is relevant to the issue of whether there is a valid contract and say whether the mobile's here presumption applies so this is an example of the finality issue with in particular with regard to the evidentiary issues because as things played out at hearing things that you might think were final holdings these decisions actually didn't turn out to be what you might have expected for example with respect to the bad faith you could read paragraph twenty five of the rehearing mordor in the commission's orders that issue here to say that bad faith would be excluded but it wasn't in fact excluded it hearing they were allowed to put in that evidence i'm similarly they one of the categories of evidence that they talked about was nonparty conduct whether they could put in evidence of bad actions by non parties to the contract and whether that's relevant to the bible sierra inquiry and the commission said in these orders that it wasn't relevant to the issue of whether they could avoid mobile sierra in other words whether that there was a valid contract or not but it hearing they were permitted to put in the evidence of nonparty bad conduct in support of their arguments on the excessive burden that it violated the public interest and you can see that in the order on initial decision again with the twenty eight day letter it said paragraph two sixteen and that's in support of footnote four of morgan stanley which permits them to argue that manipulation by non parties to the contract is relevant to whether or not there's an excessive burden on consumers so as you see things have played out differently in the hearing then you might  from just reading the orders that are before you which goes to the issue it really is not right for review by the court at this time in there was it with regard to finding perhaps but i think there was a practical point if the issue was sufficiently joined at this juncture we don't decide it we're going to be back here in another three or four years hearing the same arguments from with regard to the evidentiary argument your honor i mean as i was just saying some of these arguments as it turned out at the hearing really they were allowed to put in the evidence that they are now complaining is being excluded  of the some of the arguments may fall out what about most here argument they started with on its face they say it's just not applicable and the commission has taken the position consistently through the proceedings that it is applicable and then of course they have this duty to figure out whether they could rebut the presumption but why shouldn't we at least take jurisdiction over that so that we you know it's like binary switch direct your attention to the papago case which this court relied on and seen voters and in that case papago was talking about finality in the context and the flipside context if you will where a party says that the commission should reject a rate filing because it's contrary to a contract it's contrary to mobil sierra and the commission denies that and lets the great filing go forward to hearing and papago said there are three reasons why that decision would be final denying the mobile sierra claim and letting the rate filing go forward and that's because the mobile sierra would not be at issue in the subsequent rate filing hearing it's and the court had all relevant information to the mobile cear issue before it at the time already and there would be irreparable injury because in that case the person who has the contract is losing their contractual right to that rate the case then and the proceeding basically continues as it has right yes wrong that's right and that we were to rule the opposite then of course that would change the whole shape of what the case is about correct yes your honor it would be a different inquiry and it's kind of baffling to me that at least on the question of the facial issue yes or no whether be applicable it's odd to me that you know sitting voters papago and our other cases that the commission would want to know the answer to that well in certainly your honor we believe that the answer is very simply laid out in morgan stanley and that there were there were not but i mean that you know i actually wasn't in the ninth circuit so i don't when you want to know the answer from the ninth circuit in this case whether th binary thing is a yes or no going forward on this narrow legal issue of mobile so yes your honor we we're happy if you know if the court finds it sufficiently final and you want to make a ruling on this simple threshold issue of are these the kinds of contracts which mobile syrup lies i'm certainly we felt obligated to raise the issue i mean there were certainly finality and you know your brief is like your brief goes this way but as a practical matter i couldn't understand why your head wouldn't go the other way so that's what i'm trying to unscramble and so you're basically saying the commission would not be opposed to jurisdiction on that but then of course i think your next sentence was but we don't have the same view on the evidence on the evidentiary issues right right your honor i just don't think that on the face of these orders given how things have progressed at the hearing and how things have changed that there is enough for you to really rule on the evidence but on the threshold issue it's purely a question of law on the commission's not going to change its mind would you agree with that that's right your honor and we do think it's entirely controlled by morgan stanley and it is morgan stanley clearly directs that the commission is required to apply the presumption of reasonable is to contracts that are to bilateral contracts that are freely negotiated and it clearly says we can only abrogate contracts in the public interest and it clearly says see your defines what it means for the rates to be just in a reasonable and therefore the fact that there's a complaint pending which puts people on notice that just in reasonable rates this is the public interest is the applicable just and reasonable standard in the contract context and mobile and morgan stanley was very clear that it implies the same way regardless of when the complaint is filed at five forty five name they make the point that in rejecting their prerequisite of initial review of the contracts they make the point that it doesn't matter when you challenge the contract it's the public interesting hundred is the applicable was their authority to enter into market based rate contracts they filed a tariff with the commission that would allow them to make market base rate contracts and the commission rejected that filing and s what the commission was was ordering it's refunds between them from the difference between the market based rates that they contracted for and the cost base tariff rates that they were allowed to charge in areas where their market power was not mitigated in so what the commission was saying essentially was you have to refund for these contracts because you didn't have to enter into them in the first place so this goes more to the it's not a ballot contract as opposed to it's we're giving refunds for an unjust and reasonable rate they didn't have authority to enter into market base rate contracts to start off and that's what differentiates west star from injury issues they put these into two boxes whether they should be able to introduce evidence on illegal manipulation and also on the public interest and they say basically they're foreclosed from that and therefore you know it basically ties their hands up in trying to rebut the momo ciera presumption if if they're correct on being more closed at this stage that why wouldn't seems to me to be kind of an extraordinary argument because for example in the remainder paragraphs eighteen and nineteen which is in the california party's excerpts of record thirty three to thirty four in the commission said you can put in evidence of market manipulation you can put in evidence of terrify elations you can put in evidence of the gaming in anomalous behavior all of those sorts of categories they put an enormous amounts of evidence in it hearing about thirty four paragraphs eighteen and nineteen and that's where the commission is talking about the kinds of evidence of manipulation and market power that the parties are allowed to put in but they  put in a considerable evidence on those issues that hearing so i'm perplexed by the argument that they're precluded from putting in evidence on those issues if it's specific to the reporting elations if that's the evidence that we're talking about in these orders the commission said that the reporting violations are not relevant to the question of a boy being mobile sierra because that doesn't buy itself prove anything about whether there was market manipulation that was cosily related to the contract rate which is what morgan stanley required and with regard to public interest with regard to the public interest standard all of these orders say on their face is on the rehearing order paragraph twenty seven which is the california parties excerpts of records at thirteen it says we will allow people to put in any relevant evidence on the question of the public interest now as it happens at the hearing there has not been reported evidence the reporting violations has been allowed but that's you know that's what has transpired at the hearing and that's what's now being discussed in the orders on the rehearing the ael j's initial decision the order on initial decision but you know these orders all they say about the public interest that is the only holding which is you can put in any evidence that's relevant time that issue and so in review of these orders it's very difficult to say there's anything wrong with that whole thing which is you can put in any relevant evidence relevant evidence on the issue of the public interest and they have that evidence has been excluded at hearing but the commission has no walk through you know in these orders doesn't discuss the issue with respect to the public interest at all they only got it even even let me just say if it went back and we didn't decide that and then it comes back i think even if we thought that was there we'd still be looking at it again substantial evidence and the ultimate decision and not what you were saying and this has to do with the argument largely made in the opening comments by petitioners that there was a protest a complaint already pending during this whole period of time why shouldn't that affect the application of mobile ciera because the parties knew at that time there was the possibility of the commission based on that complain acting to find the rates not just in reasonable well because your honor morgan stanley specifies that the just and reasonable standard that applies to contracts is the public interest standard inside the fact that the parties were  the just a reasonable standard would be applied doesn't change the analysis because that standard is the public interest standard and again at some at page five forty five morgan stanley is very clear that it doesn't matter when the contract is challenge that the public interest standard still applies it always is it applies the same way it's just a reasonable standard in the context of contracts is the public interest standard and so we the commissions view is under morgan stanley there's no other option but to apply the public interest standard to these contracts as the commission ever awarded relief in the face of  may please the court kenneth wiseman for the california respondents trance canada and shell and i would ask for three minutes i want to address this question of what evidence was permitted into the record and be a little bit more specific about it because i think it's important to correct the record first orders first of all placed limitations on only three categories of evidence and in fact during the evidentiary hearing the cow parties were permitted to put in  evidence and two of those categories and they weren't detrimentally impacted whatsoever by the inability to put evidence in on the third first they claim they were proof prevented from prison presented test mode testimony that sellers violated obligations of good faith and fair dealing under utah law in fact one of their witnesses provided three hundred pages of prepared testimony and one hundred twenty exhibits to support his allegations that trans canada  apply in determining whether the contracts were that were formulated between the parties and servers were formulated under bad faith in the first the session just about three weeks ago firk acknowledged that it did not permit evidence in concern in good faith obligations under state law but it was very specific that it did allow evidence on bad faith and it ruled that utah law was controlling and it analyzed the contracts and the claims  bad faith including all the testimony that was provided under utah law with respect to its interpretation of bad faith so it simply is not true that they were not permitted to put in that evidence they also claim they weren't permitted to put in evidence concerning the bad acts or misconduct of third parties in fact one of their witnesses sponsored twelve exhibits consisting of almost a thousand pages of materials let allegations and findings of misconduct by twenty entities and individuals who were on affiliated with trans canada or coral and nothing whatsoever to do with either of these companies the third category concerns the reporting violations and i want to as you know those have been considered in lockyer but i want to point out one more item on that the commission your ports it just follows intuitively that if the cow parties could not prove that a seller engaged in market manipulation of our exercise market power then allegations of reporting violations were irrelevant before me with respect to the mobile sea area issue i think where is i think of the court wants to consider that issue i think it's a question of law we don't think it's particularly close question we played it out in the briefs the arguments are not supported by any or any logic what i did want to raise was the question that i think judge mckeown in particular was getting into about the abbot and jury proceedings we do think that it might be a little awkward for the court to try to decide issues of what for did or determining issues of whether the market was functional and compacted of whether supply and demand contributed to the price rises or whether there was abit on civil law license that is absolutely untrue all of that came in at the hearing i was there i  it they were finding spaced on voluminous testimony that the market was functional and competitive that supply and demand function supply and demand functions were responsible for the prices and most importantly seattle had every opportunity to put in any evidence it wanted to that any of the sellers violated the law violated their tariffs engaged in at acts of market manipulation seattle did not put on any such evidence and the judge found that so i really and you know whether you get into that issue or not you really have to understand what the record show is seattle did not put in that affidavit it's the only thing that the commission did exclude was abbott and of reporting violations and that was solely on the basis that they would be superfluous because the report the claim was that reporting violations what mass market manipulation or the accumulation or exercise of market power since seattle had every opportunity to show that directly the commission said why should we add on evidence of reporting violations you can show that directly and they did have every opportunity to show that directly so why isn't whose officially final line for us to assume jurisdiction over i do believe you could decide the issue as to whether ferk was correct in arguing that the reporting violations would be so per floor as given their direct opportunity to do a show on the record will show in fact also that they had every opportunity to show  client any problems with reporting violations and you go back to the first lock your case and there's this discussion about rampant missed warning by rav rampant reporting violations with respect to my client any violations but i  think when california put it forward first they didn't even allegedly reporting violations for one of the periods of time against my client for some what they did allege they were you know minor things that maybe we aggregated some sales but for example in our case we reported every sale we reported every price and of course people knew the price you know you don't need reporting to know what price you were buying get so certainly if in fact reporting were put into the case we would put on a very vigorous defense that any reporting violations even apart from their lack of any causal relationship to any harm they suffered were just not substantial violations if there were violations at all so we would certainly put that on if in fact the court to say they should put that on w think books absolutely correct that that's all irrelevant anyway because they have the chance to show that directly in terms of practicality and i mean in this case comes here three or four years from now we say well the we do think the reporting violations relevant then you have to start all over again so why would you want the answer now as i said i do think that you probably could decide this superfluity question is that a word whether they were superfluous you could decide that whether as a matter of logic if they could show it directly would it add anything to add reporting by a sense that you probably could decide assuming that they had the chance to show what the having the record would convince you that they actually show it is is it a stand alone legal question or does it relate to the evidence that i think probably the best way to answer that question is if you look at and again as a side you know seattle don't even raise any reporting to tell we were ten years into the case to anyway but the argument with respect to reporting was always that the reporting violations masked the exercise of market power and mask this market manipulation activity assuming that is true if you can show that directly you really would it would just be unnecessary and suppose for us to also show the reporting violations that it seems to me as true as a matter of logic and the court could find that or hold that i'm sorry ok thank you west part didn't have a market based rate tariff and it filed one and that that was the context in which the two zero six proceeding a rose but i think if you read the case for case line of cases carefully what you see is that west tar had a market based rate tariff had had it for a while one of the conditions of having such a tariff is to file a try and heal market power update which west our did and when west tar did that but happenstance it also included in a terrifying some other conditions that for as a result of a recent rulemaking one of the companies to put in their tariffs so it did that but what fork one went after when it initiated the two zero six proceeding was not that it was it was the fact that west tar had tripped the market power screen that first had instituted essentially after the lock your preceding sort of the way it worked out but in any event so folk initiated this proceeding against west ares market but existing market base rate tariff and ultimately and set a refund effective date and said in these types of sales that you're making in this part of your area where you serve we think you have market power we're putting anything you do subject a refund if you enter into contracts after this point they're subject a refund and west i went ahead and did it there is functionally no difference between what happened in west tar and what happens in every similar case that first does then this case there if the complaint is filed under under two of six of the a proceeding it's essentially filing a complaint but there's no distinction in the law between a private party finally a complaint like puget or initiating a to a six proceeding they both initiate the proceeding or refund affected data set  things are then sort of in limbo once the refund effective date is set that's the rates are conditional and what doesn't every single one of these cases is set a refund effective date and then investigate and if it investigates and finds that there's market power or that the rates that have been charged in the interim are not just and not just in reasonable it orders refunds that's exactly the case here that's exactly the situation so what folk has done here is completely different agreement and said things have to change in the ws p p agreement and they initiated to a six proceeding said a refund effective date had any contracts been entered into after that refund effective date folk would have applied the just reasonable ordinary just and reasonable standard just as it did in west to our because west thought had entered into contracts after the refund effective date so would focus doing in this case first wealth the first time anything like this has happened it's the first time there's been a a contract entered into after the complaint has filed where the mobile c e o presumption comes up so as i said before in answer to judge mchugh if i'm sergeant your way i mean maybe the first time that doesn't give us an answer to the question why is it what takes us out of morgan stanley what takes us out of morgan stanley is that mor n this issue never rose and morgan stanley what takes us out of morgan stanley is that the normal mobile sierra case every every case you see reported every case that's ever been decided the key issue is that the complaint was filed after the contract was entered into here it's the reverse the complaint was filed before the contract was entered into and just as in west tar what should have happened here is that the complaint gets filed the refund effect of data set and the transactions entered into including contracts any transactions entered into after that refund effective date are subject to refund under the normal just and reasonable standard that's the way first did it in west that's the way it always does it it just singled out this case to impose the mobile zero presumption and it didn't do it until you sent it back on remember thank you for the questions thank you patience or will be submitted portions of settlements that the companies had submitted to the commission to my moving a microphone up just a little bit very good thank you certainly is upper yes i've struggled with these cases because i've tried to i can't reconcile what the commission did in its orders respecting our settlements with all of the other orders that were issued in the case  first rejected the notion of there being a market wide reset of prices when it set the matters for hearing after your remained and that was the essential element of what's been referred to as ripple claims which the commission then wanted to preserve the commission found before ruled on our settlements that virtually of the contracts people entered into in the pacific northwest proceeding were governed by the western system's power who dream and oh by the way if i may reserve three minutes for for rebuttal i'd forgotten  found that all of the cases were subject to the ws all of the contracts were subject to the w s p pede remit and we submitted an affidavit in connection with our settlement that confirmed that all of idaho power contracts were subject to the ws p p a very mn the commission found that if you have a contract that's governed by the w s p peace agreement that the mobile sierra standard would apply once it made that finding it was it was in the territory that when it had a contested subtle it had the it was required by its own rules and procedures to evaluate the contestants limit on the basis of challenges to material facts the challengers to the settlements advance no material facts in disputes and under the commission's paradigm its rules the commission then had to evaluate that contestants of that on the basis of law and policy well if you already decided that the law and policy was that there was no market wide reset essentially there would be no ripple claims that except in  remote hypothetical well then say the market there there will be no market reset but that that question is still before the commission isn't it the commission could conclude that based on the factual presentations made in the mobile c r a presumption doesn't apply it could conclude that except it already had concluded at the time that it ruled or settlement that the presumption did apply and there wouldn't be welcome that but it hasn't happened isn't it still on the table the possibility the commission can conclude after the factual presentations that are made that the petitioners have made the case they need to make for categories two and three is retarding about it before so the presumption doesn't apply perhaps but if it does that it would be ruling it would be changing its prior rulings were that you were ok to say that even the commission isn't asserting that it's the door is bolted shut the commission to the contrary is arguing that all this evidence about bad faith is coming in so the possibility remains that the commission could decide that although in theory mobile c r applies based on the evidence presented the presumptions bend over comment mobile sirrah does not apply and if that happens why i wouldn't the commission want to leave the door open to revisit the settlement that you wanted to approve the because ultimately when we deal with settlements we are trying to resolve uncertainty if we all knew the answer at the beginning of chapter one there wouldn't be a need for settlements the idea of settlements is to restrict all the litigation to balance the needs of litigation against the practicalities of continuing commerce and continuing activity and moving ahead we've been at this activity for almost fifteen years and the commission has and we went through an exercise does anybody have any claims against idaho power there were a couple of cats and dogs and we settled those and now what we're left with is this intangible hypothetical speculative but these are all the commissions characterizations of ripple claims how they would want to count keep the door open for things that it essentially rejected in its earlier orders is is it's irreconcilable it's not rational decision making the commissions set the ground rules for these cases and then decided our settlement on completely different grounds it didn't make sense to me and it doesn't make sense to me if we as i say if if we if we knew what the outcome was going to be there wouldn't be a desirability of settlement and the commission decided at one point that the first of our two settlements was an uncontested settlement well the only part that was uncontested they approved the part was contested they disputed it and they did and they altered challengers positions that then changed the analysis that the commission is required under its rules to give a settlement that was clearly an uncontested subtle under uncontested settlements the commission is supposed to  between the competing interests under the tree on what is treat each of the two settlements separately or two we recognise now that they're both on the table that is for let me break that down if we take the first sound money take your argument that gee it's not uncontested because you've knocked out the term that there was a dispute about if if we would send that back i mean you want us to treat that separately and disregard the fact that you now struck a deal with power x the challenger you want to stiff you the first of all by itself or do you want to stiff you them both together and say we should treat them to together as an uncontested southam i think even when we filed the second petition we had we had asked for them to be consolidated they are inextricably linked and we and we recognize that and that's kind of how i boil their argument so do you they say that these ripple claims are a loser and you agree with that i think they're largely a loser either theory that somebody is found to have committed an act of wrongdoing or charge rates that constitute an excessive burden could somehow be imputed to upstream sellers without taking account into account individual conduct and individual portfolios of sales well you can conjure up a remote hypothetical but it's really unlikely though you want us to take both petitions and treat them the on the other sat on my right so i mean is it is a question of holding one in a bans and fight my and finding out the answer is the answer the same and i think they just proceed in sequence i think that because because the second one what the commission  for its decision in the second one was its orders in the first one i think if the first one falls the second falls the second one could fall on its own because there was there was certainly no opposition  one one other thought that that hadn't occurred to me in all candor until i was reading the commission's brief on my flight out here was that if you see fit to remain in this case this is not the most complicated case and i think the court has the equitable jurisdiction to tell the commission why don't you get back to us in sixty days and tell us if there's any reason why you can't decide this in in short order this this is a settling case this is this is not the prolonged litigation that is being considered for the for the other segment of the case and as i say i hadn't really noticed that ira account i had a vague recollection of the mobile oil corporation case that the commission cited from one nine hundred seventy four but as i read it and read read it it seemed that the supreme court thought that you had very broad equitable jurisdiction and it's i think a little enough good morning says that it's you for the federal energy regulatory commission your honour's with respect to these settlements which i believe everyone agrees  linked nothing has changed in this case with respect to ripple claims i do hope our seems to believe that it is entitle to more than the benefit of its bargain with tacoma and power x to clear the the settle the commission's conditional approval of these settlements gave idaho power the benefit of its bargain with its counter parties the transactions between idaho power and  the one hand and i hope power and power x on the other hand are are settled but these ripple claims they still there still is a possibility that they could arise and  the commission has said that they are speculative but that's because ripple claims cannot arise until refunds are ordered they are contingent on the issuance of a refund and as you know the proceedings are still ongoing and nobody else stepped up to object to the settlement so presumably the parties that would be adversely affected as a result of ripple claims didn't think it was important enough to say anything well you honors with respect to thing to me i can't help but be concerned that the position being taken by the commission is going to discourage settlements by parties because you're basically saying well you can settle with the parties just settle with but you're locked in this room forever no your hon r the commission absolutely wants to encourage settlement so how does this not just how does this not discourage settlements and if nobody else steps forward to say hey wait i might get screwed because of this then why should the commission prevent a party from getting out of the room well the commission has approved the settlement between the parties and i think that it's very reasonable to approve the settlement between the parties because they're the ones who are able to settle their own transactions but the commission has an independent obligation to consider whether a settlement is fair and reasonable and in the public interest and this public interest consideration applies whether you call the settlement contested or uncontested but there is a regulatory difference between contested and contested right there are the provisions addressing settlements  have different provisions for contested versus uncontested but the commission has substantial discretion in applying these rules and in turn on other words if somebody says this is contested the commission can say it's not really right in the paper and say that in in the past the commission has addressed certain settlements that were  and actually has addressed them as uncontested so what's the authority to do that i mean it how can you pretend that an objection doesn't exist it's like saying ok well we re character it says objection or hundred eighty seven decision from the d c circuit the court affirmed the commission orders that approved a settlement involving trans alaska pipeline there were objections but the commission in that case found that the objections were really appropriately addressed at a later moment in time so when this case you've got twice there have been settlements presented to the commission and the commission approved them while changing the terms by striking a particular term how can that not be deemed contested well me if the commission changes that what the parties proposed to it even if nobody else from the outside world comes in and complains that it's not not rubber stamping what was put in front of them right well that the commission has has substantial discretion and with respect to the can they call white black i mean what is the meaning of uncontested in this world this is the world where public utilities are non governmental utilities i mean they can call white black but what  uncontested mean here with respect to the core of the settlement between the actual settling parties that are before the commission those issues were not contested and then  like what's the support you know they basically modify for modifies the agreement with tacoma so how what is the authority we should look to that says you know for can do this this is within for believes it would be beneficial to evaluate the settlement under a contested settlement contested standard versus an uncontested standard that the public interest is the same under either standard and the contested settlement standard is a more stringent standard it's more protective of contesting parties but it doesn't benefit the settlement proponent so well let's just take his hypothetical or like possible proposal what if we agreed with him and said you know these did say contested and you can't just change white to black and turn contested into uncontested you got to go back and if there contested then you go under trailblazer in if if it's exactly the same as you're saying then you could do that in sixty days right i'm i don't believe you would take the question very long to address the issue i mean the thing is you know under under trailblazer the first the threshold question is whether the settlement is in the public interest or not and the commission has determined that right wingers are not in place or has some meaning in other words we don't divide contested  one contested for no reason at all you invoke trailblazer in a contested situation right yes and that's too because it's a more stringent it's a heightened standard to protect the contesting parties and  then in your view the commission probably would come out the same but it would be no problem if it were remained in for the commission to proceed under troubles or if i don't believe it would take the commission honor i was just going to raise that issue that no one is well at this point power x and p p o have had their issues carved out they've had their own deals with i don't know powers so at this point it's would you asking the question kind of under trying to sort this out and i'm kind of driven to the big question you tell us that firk has the power improperly so to review any settlement for the public interest what's the public interest here who is it that burke is acting to protect in saying no to the price to the settlements as they were offered to the commission in the first instance and that a comma settlement power x complyin they now struck a deal with power up so that complaints resemble a gone so in the condition that we now have who is the who is the commission protecting right while your honor's the commission has made very clear and it's an announced time and again throughout this proceeding that ripple claims are being preserved but whose claims are those so it's and who are those people well there are as you know the this was a very active market in the pacific northwest northwest and on average electricity was traded on average six times between the point of generation to the ultimate wholesale purchaser in the chain so in the event that the commission orders refunds if the commission orders any party within this chain to to pay refunds there is a chance that that party is that party who we're talking about here any of the remaining parties in the case none of them filed any protester challenge to this except power x and they've now been taken care of well understood but there are other parties along the chain if we actually get to the point where they are ordered to pay refunds i mean i believe the honors their position is that they are not liable for refunds so and they also do know that the commission has expressly preserved repl claims and in fact all the parties including idaho power leave with respect i don't know that's just it's not the intention of the commission to not allow parties out of the room but but isn't that exactly what is happening here that the commission has given this party the full benefit of its bargain and there is no there are no other settlements the commission has approved many settlements in this case in this proceeding none of them as far as i know have purported to strike the third party claims and you know to preclude the commission from committing could even considering such triple claims so the commission's decisions with respect to idaho power are perfectly consistent with all of the decisions it's issued on settlements in this proceeding for the questions thank you we'll give you three minutes thank you actually if we had approval of a settlement like this which is what i think if if you see fit to remand this to the commission and they act on it and reconsider and they everybody else in the room everybody else in the room the the settlement provisions actually spoken terms of a series of mutual releases not one way leases it wasn't just that other parties were waiting claims against us we agreed that we would waive claims against all the other parties if the commission approved that kind of settlement my conjecture and you know i've been doing this case now for a decade and a half is that it would be the model for a host of under the trailblazer standard there are four stages that they go through analytically under the uncontested standard they have they have more discretion but it's not on travel discretion they have to articulate how they go public interest and then we check through the other three and then we come out exactly the same are you going to be right back here if if they do a good and cogent analytical job and concluded that the settlement should be rejected and have to evaluate it on the basis of what kind of job they did we didn't launch these appeals just because they ruled against us we we initiated these appeals because they ruled against us  we thought was an indefensible fashion ok of the they just told us or the commissions council has told us that they've been lots of other settlements the other settlements don't entail the kind of complete peace that you're seeking the get out of the round the mutual releases of all other parties it's one thing to say you've got major releases with parties and you contract in with tacoma power x but you're apparently seeking releases from everybody else just as you're willing to say and we won't pursue them have other settlements contained that have been approved by the commission contained that term or no because all of the other settlements in the pacific northwest cases came after the and present a broader settlement to the commission unless the commission changed its mind about broader settlements so you're seeking a complete piece that nobody else has gotten and nobody else has tried to now but they've settled on terms that the seed into the fact they're locked into the room yes thank you for your consideration thank you for your arguments on the cases turtle be submitted for decision and will be in recess for the morning