good morning it may it please the court my name is sarah come back i'm carrying on behalf of the petitioner pacific war and i'd like to reserve three minutes of my argument time for a battle if i may thank you utility rates normally are your honor the circumstance here is bonneville had a rate it adopted back in two thousand and two it failed for more than a decade to implement this rate until two thousand and fifteen customers had a no notice of this failure still have good her client not have known that it was in fact redirecting the reservations heatedly over that period thank you so  point but what that we did not have noticed was that bonneville had failed to implement the rate and of course you had the order so that you knew what the real was and you knew you were doing the problem is your honor the reason why we didn't is because we did not notice this error and that the failure to notice the error was reasonable and bonneville itself acknowledges that on page twenty of the e r in it's agency decision document that's the internal client knew or should have known that the practice was applicable to them because they did redirect yes in part your honor and that's  so then so the only possible sort of innocence argument is that there was something so opaque about these bills that you couldn't figure out that they weren't charging you is that when you point well yes yes and there's more to it than that so what to recognize when i impose this decision the reason why customers did not have notice of this failure is not only that it's not apparent on the bill but also because it's not it was not apparent that these redirect actions would trigger their rate for example partial redirect actions as a perfect example well actually the provision at least some point became quite clear about that the provision changed on that and so how can words were really directing it at some point it became perfectly clear about  redirect no your honor we would disagree with that premise we would disagree with that premise bonneville because it failed to implement the rate customers were over the years redirecting reservations without seing any drop in their s t d amounts now if bonneville had had applied this rate correctly from the beginning and customers had seen those drops in their s t d credits customers would have investigated that issue and learned that these types of redirect actions triggered this provision and they would have modified their practices and bonnet so express they recognize that the specific about what about the language was not was not clear in terms of the partial re the so if you look at page sixteen of our opening brief that's where the rate is quoted and it provides there that if a customer requests secondary transmission changes that use the capacity that the f c c will not apply but it does not specify that the f c c will not apply at all so for example if a customer only redirects a small portion of a reservation maybe for a single day this does not state that the in the s t b will be completely lost and that's just one example of this issue so customers they make complex decisions with their transmission and the whole point of this the whole point of this rate was to be impose a penalty on customers to discourage them from redirecting reservations and the fundamental problem with bonds argument or bonneville secession is it recognizes that customers likely would have modified their practices if they had notice of that if they had seen a drop in their s t d amounts they would have changed their practices and bonneville never would be in the position to collect the revenues that it's now seeking the when customers are setting their reservations schedules they do it in a way to makkah to obviously reduce the cost as much as possible so if there had they receive these s t d credits there is no nothing on the bill that shows the redirects it's a single line item that shows that what these s u v s are there's nothing that shows anything being removed if there'd been a sudden drop as a practical matter customers would have changed reservations to for example not not partially redirect a reservation that they could have kept on that line when the dollar consequences be significantly adverse and in fact the one customer who received notice of this issue grant county when they learned the actual impact of what this s t d removal rate was the immediately changed their practice now it turned out that their efforts to do so were not successful but it shows that customers certainly would have modified their practices and certainly bonneville itself recognize it and it would cost me money to help me understand this yes so they scheduled a reservation to have trains for transmission services and then they have to make different decisions as they're going on how to change how to adjust i guess to actual circumstances so they make decisions about whether to redirect power in different ways what they would have done in fact again the customer who had no has tried to do is change those practices so they win lose these credits if bonneville had correctly implemented its rate from the beginning customers would have had that opportunity and the the fundamental problem with this type of retro because they know that the polls they know they didn't write the correct thing and they knew about the policy they knew about the policy in the abstract on the book you're essentially saying as i understand it that they would have assumed that they were being billed in accordance with the policy not that they would have been assumed that they were being built in accordance with the policy right cusswords recently assumed they were being built right and therefore if they thought they had a problem they would if they were trying to save money there would still read change their policy because they're losing money when exactly customers were they were you have to know i mean your assumption is they knew they were losing money not they didn't know they were losing money no your honor the problem is that i'm not sure if i'm understanding your question but the problem is is that customers were scheduling reservations they were not seeing because bonneville had failed to implement this without notice they weren't seeing drops  has to be not that they were billing incorrectly but that they were billing correctly they knew that this policy wrecked we so that your assumption it must be that they thought bonneville was billing correctly exactly i thought it bonneville was being billing correctly then they knew that if they wanted us to save money they should limit their redirects and so why did that does the fact that they were actually billing incorrectly have any impact on whether they would limit their because they were not seeing the drop in their s u v s so they were talking therefore they knew that they weren't applying the policy no no no no i'm sorry your honor let me let me be clear about this because this is a very important point customers were making decisions about how to schedule their transmission based on the assumption and the understanding that bonneville was correctly applying the policy for if they want to save money they should have fewer redirect and but the problem is is that they were taking redirect actions they weren't that weren't tearing around loss and so it was reasonable for them to assume that those types of actions didn't trigger the policy but i'm assuming that the redirect amounts vary from month to fluctuates up and down you know how much power we are using so google courses goes up and down but all but also how the reservations are scheduled on short distances and what a conference ok suppose you're right about this i'm not even sure right about what because i'm not sure i understand your argument but suppose there is some way in which customers were misled is that the end of the story in terms of whether the decision was arbitrary a purposes so there's a number of different reasons weisshaar which i what there's a number of reasons why are betraying capricious the st is that customers had no notice of the issue and the nd is that bonneville itself had noticed that the issue and it failed to act it received notice of this issue in june two thousand and eleven and june two thousand and fourteen well and knew that there was a problem with respect to customers and when they got the sec i mean their story although i don't know that is supported in the record  record contains no and now assists about why bonneville failed to act in two thousand and eleven in two thousand and fourteen all the court is left with is post hoc rationalization for that in action the a t f acknowledges that bonneville had notice of the words in other words since there's nothing else they could have done at this stage they should have discovered earlier and taking corrective action earlier that what you're saying because otherwise from the same utility the know the the record contains nothing about that what the record does show is that it's clearly in the existing administrative record now we contend it's improper for bonneville to have to change the record on review and to offer new documents outside of the record you know if the court agrees with us on that then the court does not need to address our press motion for discovery we think on the face the decision is are we trying to preach it if this court were to disagree  we have been by retroactively applying the penalty we've lost the opportunity but it's not the only argument bonneville also has a duty to comply with its policies it cannot a doctor rate and simply fail to implement it to get notice of that and fail to a it's prejudice prejudicial to customers and it's also car betraying capricious because it's contrary to its policies and their record really contains no explanation for bonnie bell's and actions all the court is left with is these post hoc rationalization and they're not supported by the existing record and certainly if the court is willing to consider those post hoc rationalization and allow the bonneville to add new documents at this stage in the record the right answer would be a rematch and for for discovery on those your time and you'll get a chance to respond here i prefer that there's my question as i look at the record here the liability for your clients are roughly eight million dollars almost nine million dollars  assuming that you're correct that had you known of the billing practices you would have mitigated in some way and your bill would i'm now making up the number would be four million dollars but you're not asking for that you're asking for to have the entire amount forgiven how do you justify asking for the entire amount to be forgiven we think in a circumstance where an federal agency has failed to follow its policies and failed to act the proper has been there all along i'm sorry it's implementing the rate on a retroactive basis it never implemented it previously but the general rule that the government can go and recruit money that it is so improperly didn't collect is an established rule we would that all is not always exactly it cannot be arbitrary capricious and if circumstance like this where the government is essentially retroactively imposing a penalty now i know the court may disagree on that point but for customers and bought discussions bonneville the final decision letter that was issued to us in october took the position that bonneville would not grant any reduction to us at all now we later learned after we filed this action that bonneville in fact took a totally different stance to another customer and did grant a discount and there's no explanation why it was willing to engage with that customer in terms of settlement discussions and not us but there was no there was an explanation which is that was the cost or that originally bro affair bonneville itself never argued that they never argued that we were sitting on our hands that we knowing that we knew that bond of the west not implementing this raid and we nevertheless year after year after year did these action good morning honors me please the court my name is sarah quito for the bible part ministration and with nick counsel table as christiane also from the with me at counsel table is chris gunn also from the bible powered min we asked the court today to dismiss the petition for lack of jurisdiction and we also ask in the alternative to affirm the decision because it was a reasonable exercise of bottles with already in this case i'd like to start this morning with jurisdiction and then move on to the the agency's decision was that there wasn't that there was an earlier final judgment there was the final decision was announced on september th of two thousand and fifteen and little press really it was not a press release it was issued on what's called the tech forum and that's a communication system the bible uses routinely to inform customers of final actions for example when bonneville adopts a new business practice such as the one i'd issue in this case it really says that information on the tax form but did you invite the agents the companies to come and discuss with you the implementation and the problem and then they did it in the new world is much longer and much more explanatory letter and it seems like a really tough story that's not quite the case so the form notice that announced this decision indicates to customers that if they have any questions they can send it to a particular individual but it did not leave that issue open for reconsideration nor did it request any customer comment and that notice came out also after a couple of months i believe of discussions back and forth between bonneville and pacific or in which bonneville provided all of the information that pacific would need in order to recreate good shape with regard to defending it because you have know your explanations are so paltry at that point it was perhaps a little curt but it did cite specifically to the rate schedule and the business practice and from the agency's position it was just that's right and under the administrative procedure act in an informal adjudication the agency is not required to provide the extent of its full reasoning in every document that it considered when it came to its conclusion it merely needs to state the grounds for denial under five u s c five fifty five and that's precisely what the agency did on september th of two thousand and fifteen or so and i asked why i ask your honour's to consider that notice from the perspective of all of out of transmission customers so for those customers that don't receive this discount that's a temper t be a vile decision itself another vile decision there's always a nd file decision and in that case then the court's review would be limited to bottle of denial of reconsideration it would not extend to the underlying agency action to recoup the discounts in the st place i don't think that makes a whole ledger but were it otherwise customers could simply restart the ninety day clock under the northwest power act simply by sending bondable a letter in order to elicit a response that would make the ninety day period essentially analogy because how long did they write that letter under as a government agency in the inherent authority to recoup funds that it owed under its reno i find it almost inconceivable miti like bonneville would have been in this business for a very long time can't manage its billing any better than you did with respect to this and we don't deny that bonneville made an error in this case in automating its billing system but i do want to point out that there is we do not i mean this is such a weird on record as a record give us any idea what actually even that that's true part of the problem here record as opposed to the breeze that says what happened well part of the difficulty here is that bonneville does not have bail billing data between t yeah so the as the a t f explains bondable did not have the necessary automation to identify and remove the s t d when the qualifying the reservation is redirect them english that's right it was it what we what we it wasn't we didn't have the automation not as you can see from the the invoices that are in the record these invoices are very complex documents this was an aspect of bonneville billing system that was not properly automated when it adopted the billing system that california edison there's nothing actually in the record to support the notion that you didn't realize at the time that this was a generic problem daf did not make the explicit statement that we did not realize at the time that there this was a that this was a a larger problem and that that it was a symptom of a much larger automation area that's correct and so i think if you however read the a t f with the presumption of regularity to which the agency is entitled that silence doesn't necessarily something in the record that seems to say that that you're going to look into this and figure out what the problem was or something like that i believe that the the the revenue analysts at the time reported back to grant that she had corrected the two invoices to other entities which companies can do customers can do that and then those other entities would redirect the reservation letter to from grant county public utilities just average of thousands of teens says that grant  they were misled to their detriment by your mistake and well i'm not sure that that should lead to and i'm limitation entirely of the it almost nine million dollars  does seem to me rather i'll use the word unfair non legal sense but it seems to me rather unfair that there should be held responsible for the entire bill when they say that had we  known what the actual bill should have been we would have done something different and we would not have incurred this entire bill so how do you respond to that i have several responses to that st of all when they every time the pacific court made its marketing decision it did so with full knowledge of the rate schedule and the business practice which is clear that that pacific corp should lose the discount i also want to make pars that statement the news of the billing practice or policy in the abstract but they're saying that they thought that you were billing properly and therefore there you were there was no incentive on them to change what they were doing true it's somewhat nonsensical because if they were making their decisions to redirect knowing that they would lose the discount that means that they were assuming that they were losing the discount all along so the fact that they weren't means that they received a windfall at the expense of all of animals other transmission customers i don't i don't care about their last part i understand anytime somebody gives a windfall get the it's not somebody else i get that but i'm not quite sure i'm understanding you you're saying that they knew and they knew they were being billed improperly on they were taking advantage of that is that on the record that's not in the record and we don't know that because we don't this is an a p a clay case and we don't have the benefit of discovery from pacific are sort of known  it's not it's not even that they should have known it's that they made their marketing decisions knowing what the rate schedule provided and the fact that the bills did not reflect what the rate schedule provided doesn't change the fact that when they made those marketing decisions they did so with knowledge that they should lose the discount in this record do we about the actual what the bills look like we do have the bills in the record from what you could actually understand from them so their bills are in the record there they're about eighty pages apiece there's i think three to three thousand pages i believe bills and they're a little technical or a little difficult to see but what the bills do is there is a report in each one that documents the short distance discount pacific or perceived what it does not do is reflect their actual redirect decisions but that information is available to pacific or not and the impact on the redirect as well so what it would do is in southern california edison saw when it raised the issue in two thousand and fourteen years what would they have seen much of the city they would see a reduction in the dollar amount of their short distance discount and see that but they would have seen that had it been done but it wasn't done that's right so therefore there is no line on their net but other than the fact that it isn't there it's simply the absence of any line with regard to the region rick there would still be a line but customers actual transactions are not printed on the bills but that information is all obviously available to customers it's their own marketing decisions that impact the thing that is on the bill is this the amount of the short  distance i believe it's to lynyrd it also by the individual reservations that customers have so pacific corp gets the discount on several different reservations and i believe those are listed so when they read  if they knew that they had redirected that reservation well then they should have known that that was wrong that's right ok when i have another question i gather that internally which nobody knew what the time but now that we see the record there was a very close vote as to whether to recoup all the money or we've coop or do it on a case you know not to go to the individual people and try to find out whether they really were impacted and what and to what degree the agency's decision was instead of so there was a an option  and that option was to essentially engage in group negotiate in a group negotiation in order to arrive at a negotiated number of the voters like one person just for us or something yeah if i forget ultimately it's the chief operating officer who makes the decision because of the dollar amount that's involved apple is really close that's right but that does not render this arbitrary and capricious because at the end of the day they jance he has the authority to recoup the discounts according to its rate adulation i'm sorry what was the explanation for rejecting that option i don't know that they articulated in a a reason for rejecting that option instead what they felt was that  it was more important to maintain the integrity of the rate schedule under the rate do we adopted rate schedule as well as to comply with the agency's existing and stated clear business practice that i think your hon or was referring to earlier when you were asking what was the articulation change in some point or was it always the same there was a business practice change in two thousand and five and at that time the business practice was changed to read that if the reservation qualifies for a discount and all or a portion is redirected for any time during a month the discount will not be applied that month it's clarified it was clarifying least if anybody was confused from two  thousand to two thousand and five by two thousand and five it was really no basis for that's exactly correct and how far back should be and how far back is this willing go in this case remind me well in this case we had information going back to two thousand and ten we went to we went tw from two thousand and nine that's right and i also want to add quickly that the removal of a discount does not equate to a penalty when the discount is removed it just means that customers pay the at cost transmission rail you can call it what you want more money it's loss of a discount that's right and the other problem of course with regard with respect from the perspective of the companies is that they build their customers based on what their costs were and something that bonneville considered when it made its decision but there is no indication from pacific corp it did not provide us with any evidence to indicate that it was actually harmed in this regard be given the this the size of  operation eight million seven hundred thousand dollars over five years wouldn't necessarily have an impact on its rates but isn't sure checking a rigid position rather than the negotiating position that was the alternative it wouldn't make any difference well as part of the as part of the decision bonneville expected that customers could dispute the decision under the tariff and under that tariff dispute the chair or the recruitment if they wanted to dispute the recoupment they had thirty days under the tariff in order to proceed with the dispute resolution process in that process customers could have provided bonneville with additional information to indicate that final perhaps didn't assign the appropriate way to a particular factor in by saying there was no give a final decision and that's correct but if pacific corp had presented us with evidence that we felt needed to be reconsidered we could have reopened that decision and reconsidered it at that time but they didn't provide us with any evidence all they did was allege general error in the gypsies decision and suggested we don't have the authority to make this review from you if you will when was the policy about redirect  bonneville start making huge mistake with respect to billing well we know that the the rate schedule changed in two thousand and two the business practice then was updated in two thousand and five the actual error that we're here to talk about today is is part of the automated system that was rolled out in two thousand and ten we don't actually know what was occurring between twenty million twenty two thousand and eight meaning time in which the billing system was changing over sochi i believe that in the root cause analysis at pacific or provided to the court they were able to look at two thousand and eight and it there's some spotty evidence that the record that's not in the record that's in the four what i'm trying to figure out of the period before two thousand and ten whether pacific war was getting a break for which recovery has not been sought is there anything we can record that will help us understand that unfortunately we don't know now we do know that in prior to two thousand and nine bonneville had a policy in place that was referred to as sheltering and that was a manual adjustment to invoices but essentially mimic to redirect without being a redirect we know that revenue analysts that bonneville when they did this sheltering to a reservation that had the discount on it they did remove the discount so it wasn't a redirect it was a little bit different we were we were manually applying the provision but that that is something that is reflected in a two thousand and six e mail that we added as extra record material thank you that's the issue that you would would you put two minutes on the clock  thank you your honor unless the court has questions about jurisdiction i don't plan to address your assertion first i'd like to start with a post hoc rationalization set bonneville has offered for ten action in two  there is nothing in the record that suggests that the a t f itself recognizes the bonneville failed to implement this rate the explanation that bonneville failed to act in two thousand and eleven that is also not in the a t f it is nowhere in the record why bonneville failed to act now bonneville has claimed that the reason why it didn't act was that it reasonably understood that this was a one off situation recently understood suggested bonneville investigated this issue and made  determination that it was just a fact and one customer again the a t f does not even explore this issue it simply acknowledges that bonneville failed to act after getting the notice and what we know now is that bonneville in fact did not investigate the issue was or maybe the next to last one of those was about something similar to this called a look back but that went through a whole ministration procedure yes with hearings and  participation and so on what is there about the statute that permitted this to have you know arguing that the procedures here were enact on invalid but why the difference do you have any notion part of the i think of a fundamental problem that we have with one of those decision is that it failed to engage in any kind of administr process with customers in fact in this case it's claiming that it made a final decision before customers even had a chance to respond at all in fact one of the was not quite that unreasonable it did allow us to request information but engage in no formally ministry of process and in fact many of them pose the final decision it did not disclose many of the facts that we know today we didn't know you know a but the point is that it's difficult when an agency engages in knowing ministre to process and does not transparent about the circumstances leading to its decision it makes it very difficult for customers to respond and evaluate that decision you know about that would have required them to go  formal notice to come and process they were not required to but in that situation the other thing i unlike the other case i'm not you know i'm not sure if it was required in the other case actually because i don't believe that that was circumstances but it's analogous it's a situation where an agency adopted a rule that required customers to file certain reports customers did not appreciate that they didn't file the report an agency of tried to impose a retroactive penalty the court in that case said it's arbitrary and capricious or actually remanded for the court for the agency to consider whether it was fair in those circumstances given the lack of notice to customers and we we think that case is fairly analogous to this one this was a case where bonneville the question of whether it where it is in the record that customers had lacked notice is twenty were bonneville itself recognized that customers over the years may have continued their redirect practices since did not exclude the s c d in these circumstances so fond of the in fact at the time of its decision expressly recognize the point that we are making and it nevertheless acted without failing to consider i'm sorry without considering that  including the lack of news to customers and the bonneville failure to act over the years so certainly a remand would be appropriate and we certainly would urge that to the extent that this court is willing to allow or to entertain post hoc rationalization so that the the right answer in those circumstances to the extent that the record is not adequate to explain these issues that the right answer there would be a real man to the agency for further investigation and ability for pacific or to engage