My only addition would be to strengthen the answer to #5 - RTOs, even if formed, do not explicity resolve the question of the Native Load Exception.  I think that this is critical to highlight if this issued is raised.
 
Jim

-----Original Message-----
From: Novosel, Sarah 
Sent: Friday, August 24, 2001 4:31 PM
To: Hartsoe, Joe; Robertson, Linda; Shapiro, Richard; Steffes, James D.; Nicolay, Christi L.; Kean, Steven J.
Subject: FW: Order 888 Argument


Please see Lou's email below.  It's rather lengthy, and we will be working with him to help him prepare for oral argument, but to the extent any of you have the time or inclination to read his questions and add your thoughts, your comments would certainly be welcome.
 
Thanks
 
Sarah
-----Original Message-----
From: Palansky, IJay [mailto:IPalansky@wilmer.com]
Sent: Friday, August 24, 2001 4:43 PM
To: Cohen, Louis; 'Jeffrey D. (Dan) Watkiss (E-mail)'; Plotnick, Michael
Cc: Novosel, Sarah; Killory, Ted; Frankel, Jonathan; Palansky, IJay
Subject: RE: Order 888 Argument


See comments below
-----Original Message-----
From: Cohen, Louis 
Sent: Thursday, August 23, 2001 11:17 AM
To: Jeffrey D. (Dan) Watkiss (E-mail); Palansky, IJay; Plotnick, Michael
Cc: Sarah Novosel (E-mail); Killory, Ted; Frankel, Jonathan; Cohen, Louis
Subject: Order 888 Argument


Please think about the following:
 
In a 20-minute Supreme Court argument [the limit will be strictly observed], one needs to be ready to answer questions of all sorts, but one cannot count on being able to make more than 2-3 points, and each of them needs to be clear from the first sentence; points that require development don't work.  In light of that:
 
1.    Should I plan to spend any minutes on the "New York" side of the case, i.e., arguing that *all transmissions over the grids are in interstate commerce and FERC has jurisdiction whether the ensuing sale is wholesale or retail*?  On the one hand, the "NY issue" is more important to Enron than the "Enron issue"; on the other hand, my sense is that we are way ahead on the NY issue after the briefs, and the SG will likely do a good job on it in argument.  My sense is that I should be prepared, if necessary, to utter something like the starred portion of the first sentence of this paragraph, and to defend it against any questions, but should not otherwise plan to get into these issues. 
We should probably also have a canned sentence ready to address NY's wacky preemption argument, which the one that it relied on most heavily in its opening brief.
 
2.    I think my most important tasks are to make clear that (i) this case is about FERC's power to require nondiscriminatory access to the interstate grids (and not about rates or state regulation of retail sales) and (ii) it is important to the nation that FERC have such power.  I need to make these points quickly and vividly, in a way that the Justices will carry away.  That is going to be hard, because theoretical abstractions are not vivid, examples take too long to develop and provoke quarrels about details, and metaphors are generally too inexact.  Please consider whether I am right about the two points being most important, and think about how to make them.
 I think these points are the most important, along with making the Court comfortable with the idea that if they adopted our position they would not be turning upside down a federal/state regulatory division that's been in place for 60 years.  
 
3.    Although in a formal sense our case turns on the Chevron issue (plain language, no ambiguity, hence no room for discretion), my instinct (but I am not at all sure about this) is that I should not plan to devote time to these matters.  First, they are covered well in the briefs.  Second, whether one sees "ambiguity" does not really depend on staring at the language but on understanding what "transmission in interstate commerce" necessarily covers in the present age.  In other words, the way to win the Chevron point is to win the points in the previous paragraph.  Hence I ought to prepare to get the word "unambiguous" in there somewhere in the middle of a sentence, and defend it if necessary, but not do more.  Does this seem right? 
I think it's worth giving a little more attention since this is the key issue below and, ultimately, the issue on which the Court must rest its decision.  We don't want to lose the trees for the forest.  That said, since we've dealt with it at length in the briefs, I don't know that we need much more than a reminder of the issue and the arguments:  FERC asserts that section 201(b) does not unambiguously determine whether transmission bundled with retail sale is a transmission or a "sale of electric energy at wholesale".  It concluded that such transmission is a sale.  The D.C. Circuit erroneously held that FERC's interpretation was permissible.  But transmission doesn't stop being transmission merely because it is sold together with generation:  it is both transmission and a necessary component (query whether "component" is the best word to use) of a retail sale.  Therefore, under the clear language of section 201(b), jurisdiction over all transmissions, including transmissions bundled with retail sales, is vested in FERC.
 
On the related point of NY's position that the wholesale/retail bright line applies to transmission:  in particular light of NY's interpretive gymnastics in its reply (re: 201(a), at p.6), isn't a good one-liner simply that if Congress intended to limit FERC's transmission jurisdiction to transmissions for wholesale, then s. 201(b) would read "The provisions of this subchapter shall apply to the sale of electric energy at wholesale and all associated transmissions" (or something to that effect)?
 
Note:  this issue opens the door to discussion of, among other things, whether the exclusive purpose of section 201(b) was to fill the Attleboro gap; and questions about the structure of the FPA, e.g., the relationship between 201(b) and 211/212, 206(d), etc.
 
4.   What do I do in argument with LP&L?  I find the NGA parallel very compelling, and IF the Court decides to go with us it will have no problem citing and following that case.  On the other hand, the argument does not seem to have persuaded anybody but our team (not CADC for example).  On balance, I am inclined to say "The Court has already decided this issue under the parallel provision of the NGA" and use some time to press that point.  One reason for doing so is that in general it will be much EASIER for the Court just to affirm FERC and CADC than to push thru the complexities and agree with us, but LP&L gives them both a precedent for overruling FERC on its own jurisdiction and a comparatively easy way thru the case. 
Agreed.   
 
5.  I need to understand why FERC's powers and plans to create regional transmission organizations do not fully solve the problem.  I need to get a detailed understanding of the facts, and a one-sentence answer to why there is still a problem.     
The primary answer in our reply is that Order 2000 does not require RTOs, it only encourages their voluntarily formation; and that there's no indication that monopolists will give up their market power unless compelled.  (p. 19)
 
6.  Most important:  What other points (in addition to 2 and 4) does anyone think I need to be sure to make?  Even more important, what points made by NY, SG, EEI, California are most likely to trouble the Court and provoke questions?  Which of them should I plan to answer even if I get no question?
We might also need to address whether our position runs against 60 years of history:  Didn't the states regulate all aspects of bundled retail sales until Order 888?  Does our position mean that FERC historically abdicated its responsibility and the states were regulating without authority?  What is the effect of section 201(a) if not to allow states to continue to regulate the matters that they regulated in 1935?  This may be an issue to broach only if the Court indicates interest, though, since I think it's the toughest one for us to answer.
 
We might also reconsider our position that unbundling is merely an accounting issue.  It seems to me that reversing the position we took in our initial brief will basically hedge our bets:  it makes our affirmative argument a little harder (since we can't simply say that it's crazy to base FERC's jurisdiction on an accounting technique), but it also makes NY's argument harder, since they can't simply say that but for a change in the accounting for electric service the states would still be regulating interstate transmissions for retail sale.  This would also dovetail with some of the other briefs that made a strong argument that unbundling is a major change in electric service necessary to support competition among generators, and something over which the states have never exercised jurisdiction.
 
 Thanks to all for thinking about this.