the next case for today is two thousand and sixteen six zero four four eight exxon mobil pipeline company versus united states department of transportation at all unfounded violations in little trees pertaining to the one that had a safe history of operation for sixty five years you had one regrettable but unpreventable release retest what you what happens is you have brittle cracks that will fail you have brittle cracks that are two that are not do not fail and are too small to develop over time are those cracks in the history of leaks or at cvs orally or in some of them elsewhere in the susceptibility of e r w path this path to same failure and then it drops that note five that gives a historical discussion of the fact that doctor heath enters methodology and i'll just quote the baker study which we call the baker report was conducted as socialization with dr keith here and the susceptibility analysis described in the baker study is only slightly updated version of the analysis methodology d are presented and the baker report is commissioned by the office of paklin safety it was it is referenced that pages twenty eight and twenty nine of the pincer in forstmann manual say is telling the industry what it told exxon mobil is there is a methodology for determining susceptibility to seem to your in it is in the baker study which is based on dr t first methodology also posing already mentioned several times in his brief so it must be important to him and you respond want that page twenty of the baker's report but i as i think you call it a sin it's fragment it's interesting what council can come up with but it does sorry if i seem related in service hardest out of test failure has occurred the segment is considered to susceptible now that's a page or two before the season t page after the special message knology that is used but that doesn't if if that was the only test where you had failures in habitats there'll be no reason for the rest of the report which goes on at length to say you have to look at the causes there's not an abstract definition of seems like your that's not what we're looking for ness not what the regulations are looking for what the regulations are saying is we want to set up a continual assessment yes this is susceptible to saying things are looking in the future and that's the whole point of the baker report is looking at it and to pin the facts whether you have the key or whether you have corrosion because then we can pinpoint those we can predict those and we can prevent those because we developed a prediction about the last of the pipeline so it's not an abstract because you're agreeing that the regulation is clear the regulation of course tells nobody held to determine susceptibility seen failure is to use dr keeper's methodology which became the baker report i think what you're saying is key that they have told you to use the methodology what is what has been said in the briefing is in fact everyone is to be alert to the risk factors of a particular pipe as shown by a variety of things including what was shown by your testing what is your best statement  from the government prior to this week that if you follow the bake report follow the decision tree you're in a safe harbor because morgan this is how you determine seemed susceptibility the keeper methodology which became the baker study is four point three of the baker study it says the means of determining whether or not the seam of a particular pop line is susceptible to failure are illustrated in figure four point one and it goes on to say figure four point one represents a decision tree that allows one supplying appropriate data to determine if they seem integrity doing is we're telling you that there is a methodology out there that is sufficient for you to use to determine susceptibility to same failure and you look at that particular document and says the means for making that determination is using figure four point one and we have used figure four point one over and over but the agencies interpretation of its regulation is the baker report agency and in this is why a difference really may not matter too much in this case and well that's why i'm here let me explain that because when you say this is what you can do to determine susceptibility the same failure and then you do it is exxon has done a number of times even hired the guy who came up with the methodology to make sure they were doing it right to buy them so while he was doing it and when the agency says this is what you can do to determine this key fact in the regulation that we're not telling you the regulation then if you do it you cannot be held to have violated or to be says subject to a penalty because that would be an unfair surprise for the embassy to say this is what you can do we do it and frankly you're not arguing that it's not possible to misinterpret the agency's interpretation means for determining this under the federal regulations this is a commission by the office of power plants safety and says the means are all with the end figure four point one which we did over and over again and we even hired the man who wrote the methodology that is in the worst in his part of the education and can or morgan to make sure we were doing it correctly and we weren't even beyond that by not just relying upon figure four point one and doing it multiple times but we also ran correct tool we weren't required to run this is the frankly this is the exe it's the frustration of my client we're told to use this methodology we look at them the report and says this is the means for making this determination we use it over and over again we hire the guy who came up with the methodology to make sure we're doing it correctly and he designs our entire program we do more than is required because we do end up running a scene correct tool that is not required english to make the determination there is no there is no criticism of how we did four point one in this case how we did the methodology the criticisms as i understand it more reliance on a presumption that doesn't exist that they even argued in opposing a study in this case and was called the black literate page one hundred three of the hearing examination and hearing testimony or informal hearing when it's not even a  are you saying then that it doesn't matter if we give deference to the agencies interpretation of it and make it up it's regulation not the same we shouldn't give any difference to i'm saying that my point is  agency difference is not look to when the agency tells someone to do something in then you do it in they say you violated that's the unfair surprise glume is versus lynch this court very recently said agency that there are number of exceptions to agency difference in the exception in this case is they told us how to do it we did it we got the guy who came up with a methodology to tell us how to do it and we did more than we were to do so it's now an unfair surprise to say we  the regulations so it so even if there was some room for our deference correct nuts the type of deference we're talking about it's our deference that it recognized exception to our deference is the danger of unfair surprise and you do not utilize our deference when there is unfair surprise is that correct is that your position if that's accurate but you have a first position before you get to our deference that you did what was required so it's not there's not room for deference is that correct i'm just trying to make sure that i have your argument let's look at this case too because from our difference which is difference to the interpretation the regulations there's nothing that says  deference to the third party report that they commissioned it let me make it clear we're not arguing in this case we're not here in lots of as as in many situations say we're trying to block a new rule or oh please give us more time to comply with the rules exon wants to know what it's supposed to do and it will do it but it was told what it was supposed to do it was told to use its methodology it was told to look at this report which says this is a means for determining we are the man who came up with the methodology that we're told he used were audited a number of times including two thousand and seven when we have a long seem they are susceptibility analysis going on in no one tells us anything now after the fact they say well the baker methodology than the plot of little pot when in fact if you look at page two in page eight of the baker report clearly anticipates that there is there you look at the at the baker the for letter article twenty three ninety three t that were done the government says all we looked at and i can be corrected in a few minutes were written materials in your m p manual or in anything else that you talk about the very new briefing very detailed statement of how we dealt with evidence of leaks do you incorporate in something in writing that was reviewed by the agency that says exactly what you did that will go through this decision tree if there are leaks will look for fatigue in what a real should says and otherwise is not considered to be a matter of susceptibility is that in something that was reviewed and in some way not objected to by the agency in the record it shows how we completely think your four point one we did it over and over again you look at twelve twenty one twenty two twenty nine fifteen and twenty three ninety it's the pleading our records they were there for three months in two thousand and seven when we're the process of records show that they completed these analyses and we're not relying make clear we're not relying upon just not citing us during inspections and we realize that you can't require they deceive to sachin if you don't you get a free pass if they don't such well in the case a real opponent of them don't or refrigerated services by the d c circuit you have to have some affirmative conduct what we're saying here is the affirmative conduct is the adjudication in the rule announcement that you're supposed to use docrates methodology in that it's part of the baker report and we go to the board and it gives us the means we complete the means and it's an added fact in this case that they audited in this is not an insignificant feature to our our integrity management program they raised no problem and because there was no problem we followed the rule now they're trying to say that because it's real party don't use the baker if they want to change the rule and say we're going to ditch the baker report the agency can do that and  assess the risks in its baseline assessment that it's that is clear language in the regulation and that language required the operator here exxon mobil to take account is not incorporated in the regulations but it is it is set forth as guidance for the industry on how to determine seems to have to deliver and also your brief you call it helpful guidance i think what you're telling us it's on helpful guidance if you rely on i don't think that's right your honor we were council before you the broader question is i'm you talking past each other using the regulation controls and you supposed to be alert to various evidence of leaks exxon says or encode people first says that absolutely we want leaks either cautious a lot of money and so we are following a methodology that you posted on your web site sponsored by you this is to do it this way and i don't have the tween is ever going to meet but it does seem to me you're wedded to this baker report and you can just keep going back to the regulation and say well contraire of the broader requirement is to be safe out there and you weren't alert to the safety problems that were elected that were exposed by the hardest they're testing and so it really isn't the bank report is helpful guidance is aroma but you're saying no i'm not saying i don't know you're on the baker report does provide guidance to help operates determine seems us have to go in and if you read that report in a condo in the context it says give us  related in service or height or static tests fail it has occurred on the segment the segment is considered susceptible and it's also said that at page twenty of the baker report it also says the segment could be susceptible even without anything related failures at page twenty five so what emco is trying to use is used the one flow chart in the baker report as a safe harbor but that is not the baker report is not a safe harbor just because you follow that the whole point of having these performance based regulation is that the operator gets can just to consider the particulars of its pipeline and the specific wrist and with in the scope of the regulations use the best methods the best technology to assess those risks and make its big risk assessment i don't understand what says that they didn't consider and it all it says they have to consider it doesn't say they have to actually do anything after they consider but that's a different topic for a different day perhaps but once they consider that it has to base the assessments right so it just has to make an assessment and they did consider an upset assess but what i but that's that's beside the point right now what i want to know is where it says what you're saying now that they should have done how would they have known this that they needed to do something different than what what they did that was what you all told them to do w report in the keep in your paper both direct that if there is in the text of those reports and papers that if there is a history of steam failures and here in the latest try to static test and two thousand five two thousand  kind of checked boxes to make sure they they had and i am p t they had an integrity management program it was not drilling down looking at the nuts and bolts of that and there's no way they didn't know it even assuming you didn't know it that once th know that there's eleven seem related failures in two thousand and five and two thousand and six what are they supposed to do differently when figure four point one says that the conditions are not present to require them to do something differently what are they so they or do they know they do something differently based on the baker report in a whole read in context and the regulations where the calculation doesn't say to do something differently it says to consider all the  one ninety five point four five to one it says to consider all the risk factors that reflect the risk conditions on the pipeline the operator must consider the it lists number of factors but must consider the results of the previous integrity in system s s m and the pipe size material manufacturing information and seeing type right but it is your parent or that in light of the debt state of the art test i'm not sure where does it what did it say they were supposed to consider in some different manner than they considered well again the baker report if you look at the text it tells you if i see related in service or hydrostatic test failure has occurred the saide mint is considered susceptible basically here even even if you consider it in the general context and the agency doesn't disagree that that is a general scheme it's not a safe harbor to ignore specific respond on your pipeline keir exxon mobil had a doing how would they know if they're acting hard the state of the art expert that added how would they know to do something differently than what they're doing the regulations and the text of the baker report itself told them they should have consider it is that's a different answer no and just consider in the abstract your honor i disagree it says they have to consider but they also must base the assessment schedule on all risk factors that reflect the risk conditions on the pipeline here that the two thousand and five to two thousand and six test failure as a lead in of them showed that that pipe was susceptible to seem fair and they can't rely on the flow chart in the baker report to close their have done it several times here i don't know what exxon or any other pipeline company has to make of this argument obviously you have the regulation and europe your client has said this is the way to interpret that regulation when you actually own the ground literally in the ground and are trying to figure out what to do i'm not saying the interests of the agree are agency on entirely appropriate as the problem in this case showed but this guidance helpful guidance i say in quotes says a certain way to go and i don't think that single sentence is nearly as as as altering in what is said to be the means of determining i'm mean after question similar that before you've answered so i don't know if i'm adding anything to this discussion but you have anything to add to this discussion why this very direct language in the baker report isn't in fact what  report which is actually not in the the pics but it is found at certified index to exhibit b appendix and it goes into a lot of detail discussing why this was and missed application of even of the flow instructed that operators are supposed to revise procedures and assess risk in coordinates with technologies as they change and so the baker report is obviously in the flow chart and there is also not stagnant thing that they can't as as technologies change and an industry guidance improves that they can't keep going back to that year and length of baker report is becoming obsolete over time and so that therefore you have to go beyond the baker report where does where did you tell people that well at a time there is something in the baker report that while that's in the regulations that they are to consider up to date guidance in industry where did you know this is that you thought the baker report was no longer up to so that indicates also that the baker report is that not this is not a relevant modification to the flow chart is it asked you where you told the people beyond notice the baker report will not give you the best state of the art information as you consider because technology is changing we want you to augment that with such and such other things will that's in the regulations and where in the regulations the regulation number  themselves tell that the regulations do not provide instructions on that again that is something that is the baker report as a whole provides instructions on that they were not really deferring to your interpretation of the regulations then because the regulations don't answer the question so there's no outward deference applicable is there well the regulations  we do rely on them for the part that the operator must base the assessment schedule on all risk factors and tells an operator what to consider and if an operator considers those risk factors it will be able to reach that conclusion of whether a pipe is susceptible to seem to fail or so to that extent i think there is our deference on our interpretation of those regulations but the regulation doesn't say what the answer is to the quote it just says you must consider a list of factors and into all knowledge of these factors were in fact considered that they just didn't get the same answer that you wanted them to get all the regulations tell don't tell a operator how to opposed to defer to the agency on this and i'm really honestly perplexed as to what interpretation you've made about the regulation that we're supposed to defer to i think it's our interpretation about how the one ninety far point four five to each one about how an operator is to consider and how to consider that operator is secure how we've discussed that we've been targeted that provision that they need to consider and based on risk assessment on these specific factors raced it on where did you tell you have an interpretation a regulation and this is in every single agency interpretation case we have like this you have a regulation and then you have manifested your interpretation somewhere that someone can go and look it up where is your manifested interpretation of the regulation so that someone ex ante could look it up and know how to comply with the agency's interpretation of the regulation we think in part the plain language of the regulations speaks for itself but there are also well they were not deferring at all then as a first step yes we think the iraq of language on this is clear but there are agency decisions certainly have applied this provision but you're not pointing the court to any specific interpretation of the regulation to which we must defer in this case normally you would have our agency position is this and it's we posted it here and you must defer to us court on and that's what i'm waiting for you to tell me and i don't think you have that know i mean i think on this one provision the plain language here so you're not seeking our deference then you won't care if the language controls well there's other provisions here which exxon has not challenged but there were you know nine violations only six of which and so on those if there were any question it might be a question of definition on this main eat one point you do not believe we're supposed to defer to some interpretation you have you believe the plain language says you win yes and then and then there's all this lead deference in the arbitrary and capricious review of the agency's application of the regulations objecting to three of the nine findings are in no way relevant to what we're talking about in that if since they're not contested they do not uphold your action by  themselves yes i think those three are just not any are we don't since they're not challenged they're completely separate from the things we're not doing anything on that we're not doing on those but those because they stand are not in any way sufficient to uphold the action of the agency only just on those three items not on the rest because they're very independent discrete violation if i understand your question well i guess it's not very clear but i'm your answer seem to understand what not relying on the effect on the audience but it seems to me that the regulation is itself is talking about an agent operator has to schedule a way to deal with the possible problems with the pipeline and to me they came up with a manual which i want to schedule is meant that there was to set out ways in which they were supposed to deal with problems with pipeline safety and specifically the things that we're talking about and they did come up with an i m p man l whatever they called it that set out the methodology that they're talking about so they complied with the regulation if that's what the regulations talking about nobody's assessing that meaning your agency is not assisting in that in any way that matters apparently from what you're saying so for ten years fifteen years or operating a certain way they've set out exactly the way they want to operate and then when there's a problem like this all of this past history i think you're saying is in a way use the words  because there was a problem inspections and these inspection that happened in two thousand and seven was it a very high level did not drill down to the particulars and certainly did not look into how and integrity integrity management program was applied in this case so but no sign of this is an order it would have looked at what they said and they will follow the guidance given by the agency and what it said looks good to me but here there was you know the agency there was no requirement to tell the agency in the agency since you didn't even know of those eleven seam failures in the hydrostatic testing in two thousand and five two thousand and six when they did the audit otherwise you know they certainly would have looked into that and raised it with the company there was a lot of back and forth between the agency than the  you have some closing comment for if i have three questions ok so you want to be domestic questions before you make your comment if we determine the company did not violate subsection one for failing to consider various risk factors it's not foreshadowing  argument oh do you can agree that the rest of the contested violation should be overturned no we are not we believe that for seven or eight are wholly separate from these teams failure susceptibility determination as the ones we put to one side already know we're lost once in five six and nine they have a challenge at all for seven and eight are unrelated as we explained in our brief to the team failure susceptibility and they have raised no specific challenges to the road in the images yes and we're seven and eight that they haven't raised specific challenges to support in part the damages if you look at the penalty order the agency breaks down by each violation and ok second question regarding whether the agency based decision on substantial evidence what evidence did the agency have to contradict the testimony of dr keith the agency relied on its own employee experts qualifications i'm familiar with the with the record on this but i don't see that we know anything about these experts it's a make them experts it's not on the record they weren't there was no qualification is expert but it was agency personnel who work and have experience in these and by day to day operations know that so so their day to day operations and they were challenged your position is they were challenged in their expertise at the hearing and so it doesn't matter i mean they weren't challenge ok and i don't raise an objection that they were there but that that's correct so they were qualified to contest it so there would be evidence in the record to support the bit brittle we deal with a lot of it not just the d c circuit that has lots of these and i know where your honor the company was compelled to which ok my last third question is what in the record tells the company that the company was compelled to label the pipeline as susceptible to see failure its we've asked this question in various ways throughout this argument but what in pipe that's already known to have problems and the one nine hundred eighty four leak past those are the facts that compel it what is the where is the rule where does it compel it  i'd say it's one ninety five point four five to one again that the operator most base the assessment schedule and all writs factors that reflect the risk conditions on the pipeline segment and then they are also required if the pipe is susceptible in determ susceptible in the regulations that then to do it can and it seem assessment every five years so the risk factors themselves compel the answer that it's susceptible that's correct your honor and so i can read these risk and so here just in closing i see your amount of time your honour's that here because of those same for failures increasing number of seem to others over time at reduced pressures compel the operator here to make a who came up with the methodology in who helped write the report doesn't understand it in can't apply it then there's no fair notice i'm not sad that agency can't disagree with doctor has to be factored in as well and the good offices of the good intentions of dr keith are really are in play here but i don't i do see me that it's not controlling what he thought was the right way to interpret th look at the four hundred forty four page manual which is sixteen fifty three that shows all the things that exxon did to consider so yes yes you're right we are arguing that we considered these and that's all that the regulations require as far as hydra tests the make it clear that four point one says if you have had a test failures then you take certain pay us down four point one there's nothing in four point one which is the means for determining seem  the it does seem to me that what the real problem here is from the government before and they're experts viewpoint what you found is hydrostatic testing bank report notwithstanding was troubling in an expert should have known it was troubling oh yeah you have the methodology and whatever else you have wisely and ably talked about but you've got to go beyond that for the regulation decide is are not here that exxon should have done more and in their expertise the agency says you time to pin that defects in other words cracks that are going to grow because of fatigue when you pressure cycle you take the pressure up you take the pressure down this pipeline didn't have it they always looked at that or do you have corrosion at the seams if you have those kind of things and you can troubling when you have had retests leaks that's something you're looking for because you're taking care of little cracks that are going to fail and then the other brittle cracks if they're there they're not small enough i mean they're small enough that they're not going to grow that's something to tell you that something's going to happen in the future that you need to make your continual assessment and you need to use either had a test or you need to use an insulin seeing tool so that they're not troubling they're part of the process and part of the analysis my time is up the the violations each one of the violations if i may just add to all the violations were challenging if we had run the ts in line tool ten months earlier there would be no violations all of them fall if there is not seen susceptibility because in that situation you're