041118lachemassoc.txt

Transcription

1 1 NINETEENTH JUDICIAL DISTRICT COURT PARISH OF EAST BATON ROUGE STATE OF LOUISIANA CIVIL SECTION LA CHEMICAL ASSOCIATION. V.. NO LA PILOTAGE FEE COMMISSION WEDNESDAY, APRIL 11, 2018 HEARING AND ORAL REASONS FOR JUDGMENT ON ORAL ARGUMENT * * * * * THE HONORABLE TIMOTHY KELLEY, JUDGE PRESIDING APPEARANCES Page 1 FOR

2 BRADLEY MEYERS ANDREW EZELL LARRY MCNUTT PLAINTIFFS CRESCENT RIVER PORT PILOTS ASSOC. LA PILOTAGE FEE COMMISSION KRISTINE M. FERACHI, CERTIFIED COURT REPORTER NO WEDNESDAY, APRIL 11, 2018 * * * * * THE COURT: ALL RIGHT. THIS IS , LOUISIANA CHEMICAL ASSOCIATION VERSUS LOUISIANA PILOTAGE FEE COMMISSION. COUNSEL, MAKE APPEARANCES, PLEASE. MR. MEYERS: GOOD MORNING, YOUR HONOR. BRAD MEYERS AND RANDY YOUNG FOR L.C.A. MR. MCNUTT: YOUR HONOR, LARRY MCNUTT FOR THE LOUISIANA PILOTAGE FEE COMMISSION. MR. EZELL: YOUR HONOR, ANDY EZELL ON BEHALF OF CRESCENT RIVER PORT PILOTS Page 2

3 ASSOCIATION. THE COURT: THANK YOU. WE ARE HERE TODAY ON A WRIT FROM A DECISION ON A DISCOVERY MATTER IN A MOTION TO STRIKE ON AN INTERVENTION THAT WAS FILED IN THIS MATTER. I READ THROUGH EVERYTHING. I AM FAMILIAR WITH THE ISSUES. I AM FAMILIAR WITH THE ARGUMENTS. I EVEN HAVE SOME ADDITIONAL RESEARCH I DID ON IT THAT Y'ALL DID NOT ALERT ME TO, BUT I FELT, BASED ON OTHER CASES THAT I HAVE HAD, THAT I NEEDED TO TAKE A LOOK AT, SO I THINK I AM READY FOR Y'ALL. BRAD, YOU ARE GOING TO DO THIS, BRADLEY? MR. MEYERS: NO, SIR. MR. YOUNG IS GOING TO MAKE THE ARGUMENT. THE COURT: ALL RIGHT, RANDY. JUMP IN. GOOD MORNING, SIR. MR. YOUNG: GOOD MORNING, JUDGE. THANK YOU. JUDGE, AS I WORK THROUGH THIS, I HAVE A FEW DOCUMENTS FROM THE RECORD THAT I WAS GOING TO TALK TO IN PARTICULAR, AND IF IT IS OKAY 3 WITH YOU, I WAS JUST GOING TO HAND YOU THIS VERY SMALL STACK RATHER THAN HAVING TO DIG Page 3

4 THROUGH THE WHOLE RECORD IF THAT IS OKAY. THE COURT: THAT IS FINE. ANY OBJECTION FROM THE OTHER SIDE? THEY ARE PART OF THE RECORD ANYWAY. MR. MCNUTT: NONE, YOUR HONOR. THE COURT: MAKE SURE THEY HAVE A COPY ALSO, SIR. MR. YOUNG: YES, YOUR HONOR. GOOD MORNING, JUDGE. MAY IT PLEASE THE COURT, RANDY YOUNG ON BEHALF OF LOUISIANA CHEMICAL ASSOCIATION, WHICH I WILL ALSO REFER TO AS L.C.A. L.C.A. IS ASKING THE COURT TO EXERCISE ITS SUPERVISORY JURISDICTION TO GIVE L.C.A. THE OPPORTUNITY TO COMPLETE ITS DISCOVERY AND PRESENT ITS CASE ON THE MERITS IN OPPOSITION TO A RATE INCREASE THAT IS BEING SOUGHT BY THE CRESCENT PILOTS. WHAT I WANTED TO DO THIS MORNING IS JUST GIVE UP -- THE COURT: LET ME DO ONE THING THAT I JUST WANT CLARIFICATION ON. IS THIS A RATE AND FEE MATTER, OR IS THIS OUTSIDE OF THAT, A RATE AND FEE? YOU TRY TO ARGUE THAT IT IS A RATE AND FEE, BUT WHAT WE ARE TALKING ABOUT IS ADDITIONAL COSTS ADDED IN Page 4

5 FOR -- OR AT LEAST INCREASE IN COSTS ALLOWED FOR CERTAIN THINGS. SO, IS IT REALLY A RATE AND FEE CASE? MR. YOUNG: YES, YOUR HONOR, I BELIEVE IT ABSOLUTELY IS UNDER THE STATUTE. IF YOU LOOK AT THE STATUTE, AND IT IS THE FIRST PAGE IN THE 4 DOCUMENTS THAT I HANDED OUT, IT STARTS OUT, THE STATUTE STARTS OUT WITH THE ROLE OF THE COMMISSION IS TO FIX AND ESTABLISH REASONABLE AND JUST FEES AND RATES, AND WHEN YOU LOOK AT WHAT IS THE COMPONENT PARTS FOR JUST AND REASONABLE RATES, YOU GO TO SECTION B, AND SECTION B TALKS ABOUT ALL OF THE COMPONENT PARTS THAT MAKE UP THE PILOTED EXPENSES, AND IN THAT SECTION, IN THAT SUBPART B INCLUDES TRANSPORTATION EXPENSES, AS WELL AS THE COMPENSATION FOR THE PILOTS. SO, ALL OF THESE ARE PART OF THE RATEMAKING PROCESS AND PART OF THE JUST AND REASONABLE RATES. THE COURT: ALL RIGHT. SO, THAT KIND OF IN MY MIND ANYWAY, AND PERHAPS THEY DO NOT CONTEST THAT AT THIS POINT, BUT IN MY MIND THAT Page 5

6 OPENS UP SOME ISSUES THAT MIGHT HELP YOU, THAT MIGHT HAVE BEEN CLOSED TO YOU OTHERWISE; THAT IS WHY I ASKED THAT QUESTION. MR. YOUNG: YES. YOUR HONOR, I AGREE. I THINK A MAJOR COMPONENT OF WHAT I AM PRESENTING AND WHAT I AM ARGUING IS THAT IT IS ALL PART OF THE RATEMAKING PROCESS, AND PART OF JUST AND REASONABLE RATES, AND THAT IS WHY THESE ISSUES ARE RELEVANT AND APPROPRIATE. I AGREE WITH YOU. SO, JUDGE, I WAS GOING TO GIVE JUST A FEW BRIEF BACKGROUND NOTES FOR THE RECORD, AND THEN I WAS GOING TO GIVE YOU A ROADMAP OF THE PARTICULAR POINTS THAT I WANTED TO TALK ABOUT THIS MORNING. SO, JUST FOR A FEW BACKGROUND NOTES. THE CASE AT ISSUE IS ABOUT A RATE 5 INCREASE SOUGHT BY THE CRESCENT RIVER PILOTS. BASED ON A MOTION THAT WAS FILED BY CRESCENT, THE PILOT FEE COMMISSION HAS STRICKEN L.C.A.'S GROUNDS FOR OPPOSITION TO THE RATE INCREASE BEFORE WE GET TO COMPLETE DISCOVERY AND HAVE THE HEARING ON THE MERITS. THE PILOT FEE Page 6

7 COMMISSION GRANTED CRESCENT'S MOTION TO STRIKE AND DENIED L.C.A.'S MOTION TO COMPEL DISCOVERY ON ITS DEFENSES TO THE RATE INCREASE. L.C.A. SUBMITS THAT ITS DEFENSES TO THE RATE INCREASE ARE ITS GROUNDS FOR OPPOSITION. THE COURT: AND AGAIN, JUST FOR CLARIFICATION SAKE, AND I APOLOGIZE, I JUST WANT TO CLARIFY THAT THERE IS NO HEARING OFFICER INVOLVED IN THIS; THIS WAS STRAIGHT TO THE COMMISSION, RIGHT? MR. YOUNG: THAT IS CORRECT, COMMISSIONERS. THE COURT: ALL RIGHT. GO AHEAD. MR. YOUNG: L.C.A. SUBMITS THAT ITS DEFENSES TO THE RATE INCREASE OR ITS GROUNDS FOR OPPOSITION ARE RELEVANT, THEY ARE APPROPRIATE, AND WE SUBMIT THAT THE RULINGS OF THE COMMISSION WAS AN ABUSE OF ITS DISCRETION, AND WHAT WE ARE ASKING THIS COURT TO DO IS TO EXERCISE ITS SUPERVISORY JURISDICTION TO, ONE, REVERSE THE COMMISSION RULINGS, AND TWO, REMAND FOR APPROPRIATE PROCEEDINGS ON THE MERITS. JUDGE, TO GIVE YOU A ROADMAP ON THE PARTICULAR POINTS I WANTED TO TALK ABOUT THIS Page 7

8 MORNING, ONE IS, I WANTED TO TALK ABOUT WHY L.C.A.'S DEFENSES ARE RELEVANT AND APPROPRIATE 6 BEGINNING WITH THE STATUTE THAT WE JUST MENTIONED. SECOND, I WANT TO TALK ABOUT, L.C.A.'S DISCOVERY SEEKS RELEVANT INFORMATION THAT IS NARROWLY TAILORED TO ITS DEFENSES AND ITS GROUNDS FOR OPPOSITION. THIRD, I WANT TO TALK ABOUT THE EXERCISE OF SUPERVISORY JURISDICTION IS WARRANTED IN THIS CASE, AND FOURTH, I WANT TO TALK ABOUT WHY CRESCENT AND THE COMMISSION'S ARGUMENTS IN THIS INSTANCE ARE MISPLACED, AND THEN I WOULD LIKE TO JUST RESERVE A FEW MINUTES FOR REBUTTAL IF THAT IS ACCEPTABLE TO YOUR HONOR. THE COURT: ALL RIGHT. SURE. MR. YOUNG: SO, TO START OUT WITH, WHY L.C.A.'S DEFENSES ARE RELEVANT AND APPROPRIATE, AND I HAVE PROVIDED JUST A FEW HANDOUTS FROM THE RECORD, JUDGE, THAT I WANT TO TALK THROUGH, AND THE FIRST ONE IS THE STATUTE, IT IS AN EXCERPT FROM REVISED STATUTE 34:1122. AS I INDICATED A FEW MINUTES AGO, THE STATUTE STARTS Page 8

9 OUT WITH, THE ULTIMATE OBJECTIVE OF THE COMMISSION, AND THE ULTIMATE ROLE OF THE COMMISSION AS PART OF THEIR AUTHORITY AND THEIR OBLIGATION IS TO FIX AND ESTABLISH REASONABLE AND JUST FEES AND JUST FEES AND RATES. SO, IT IS ALL ABOUT GETTING TO THE END RESULT OF JUST AND REASONABLE RATES. AND WHEN YOU LOOK AT WHAT IS THE COMPONENT PARTS OF THAT, AS I MENTIONED EARLIER, IT IS SUBSECTION B, AND IT LISTS THE PILOTAGE EXPENSES. ONE OF THOSE IS TRANSPORTATION EXPENSE, AND ANOTHER OF THOSE IS FAIR AVERAGE ANNUAL COMPENSATION, AND THAT SETS 7 THE BASELINE FOR WHAT IS APPROPRIATE TO ADDRESS IN A RATEMAKING PROCEEDING. SO, THAT IS THE STARTING POINT IN MY ANALYSIS FOR L.C.A. THE SECOND DOCUMENT THAT I PRESENTED, JUDGE, IS A RULING OF JUDGE FITZSIMMONS IN A PREVIOUS CRESCENT CASE BACK IN THE 2007 TIMEFRAME, AND THE BACKGROUND ON THAT RULING IS AS FOLLOWS: CRESCENT FILED IN THAT CASE A REQUEST FOR INCREASE IN GENERAL EXPENSES, FIVE PERCENT Page 9

10 INCREASE IN GENERAL EXPENSES, AND ALSO, TO RECOVER SOME COSTS FOR STORM REPAIRS AND STORM RESTORATION COSTS AFTER ONE OF THE HURRICANES. THE COURT: AND HE WAS A HEARING OFFICER? MS. YOUNG: THAT IS CORRECT. THE COURT: NOW, WE HAVE, Y'ALL HAVE CERTAIN RULES REGARDING MATTERS BEFORE HEARING OFFICERS, THE EXTENSION OF WHICH IS NOT MENTIONED IN THE STATUTE WHEN IT GOES BEFORE THE COMMISSION ITSELF, RIGHT? MR. YOUNG: I BELIEVE THAT IS CORRECT, YOUR HONOR. THE COURT: OKAY. WHY DO I CARE WHAT A HEARING OFFICER DID ON ANOTHER CASE? MR. YOUNG: BECAUSE IT IS THE ONLY CASE THAT I AM AWARE OF WHERE THE ISSUE THAT IS PRESENTED IN THIS INSTANCE OF HOW YOU INTERPRET THAT STATUTE, AND THE STATUTE'S DETERMINATION OF JUST AND REASONABLE RATES INCLUDES ALL THE COMPONENTS INCLUDING PILOT COMPENSATION, IT IS THE ONLY INSTANCE THAT I AM AWARE OF BEFORE THE PILOT FEE COMMISSION WHERE THAT HAS COME UP. 8 Page 10

11 THE COURT: DID THE COMMISSION ADOPT THE HEARING OFFICER'S RULING IN THAT CASE? MR. YOUNG: THE HEARING MASTER RULING WAS NOT OBJECTED TO OR APPEALED UP TO THE COMMISSION LEVEL BY THE PILOTS IN THAT CASE, SO IT BECAME THE LAW OF THE CASE, AND THAT IS WHAT WENT FORWARD. THE COURT: OKAY. GO AHEAD. MR. YOUNG: BUT MY POINT OF THIS RULING, JUDGE, IS THAT LIKE IN THIS CASE, IT INVOLVED EXPENSES. LIKE IN THIS CASE, THE PILOTS, WHEN THEY MADE THEIR FILING, DID NOT MENTION PILOT COMPENSATION. LIKE IN THIS CASE, THEY WERE SEEKING TO NOT HAVE TO ADDRESS PILOT COMPENSATION, SO THEY FILED THIS MOTION IN LIMINE SAYING, JUDGE, I DO NOT WANT TO ADDRESS THIS AND I DO NOT WANT INDUSTRY TO RAISE QUESTIONS ABOUT THE PILOT COMPENSATION, AND THE JUDGE INTERPRETED THE SAME STATUTE THAT I AM AND SAID, BUT WAIT A MINUTE, IT IS PART OF THE COMPONENT PART OF JUST AND REASONABLE RATES, SO, YES, IT IS PART OF THE ANALYSIS, AND THAT WAS THE OUTCOME IN THAT CASE. SO, I AM NOT RELYING ON WHAT THE HEARING Page 11

12 MASTER SAID IN THAT CASE. I AM POINTING OUT THAT IT IS THE ONLY PRECEDENT I KNOW THAT INTERPRETS THAT STATUTE, AND IT IS CONSISTENT WITH THE WAY I AM INTERPRETING IT. THE NEXT -- THE COURT: JUST THEN, LET ME ASK YOU ANOTHER QUESTION. JUDGES AND HEARING OFFICERS PERFORM CERTAIN FUNCTIONS, ONE OF WHICH IS TO DECIDE ON 9 RELEVANT EVIDENCE AND TO TAKE EVIDENCE, AND YET AT THE END OF THE DAY, THEY ARE NOT THE FINAL ARBITER ON THE MATTER, AND SO, THE FACT THAT A HEARING OFFICER IN ONE CASE WOULD, WITH REASONS GIVEN, FEEL THAT IT IS OKAY TO ACCEPT THIS EVIDENCE; WHEREAS, IF IT WENT STRAIGHT BEFORE THE COMMISSION, THEY MAY HAVE DONE WHAT THEY DID IN THIS AND SAID, NO, WE DO NOT NEED THAT EVIDENCE; IT IS NOT RELEVANT TO THE ISSUES INVOLVED IN THIS. IT HAS BEEN MY EXPERIENCE THAT IF IT IS NOT A JURY TRIAL, JUDGES TRIAL, JUDGES ARE PRETTY LENIENT WITH ALLOWING CERTAIN EVIDENCE TO BE PRESENTED, AND THEN THEY FILTER IT OUT, OKAY, AND THEN THE FIRST CIRCUIT TELLS Page 12

13 US WHETHER WE SHOULD HAVE FILTERED IT OUT OR NOT, AND THEN MAYBE THE SUPREME COURT WILL RESOLVE IT, MAYBE THEY WILL NOT. IT IS THEIR CHOICE. BUT BY RIGHT THE FIRST CIRCUIT GETS A CHANCE TO GRADE MY PAPERS AT THE COMMISSION LEVEL. A HEARING OFFICER MAY FEEL THAT CERTAIN THINGS ARE RELEVANT. IT MAY GO TO THE COMMISSION AND THEY MAY MAKE A DECISION, AND WE DO NOT KNOW WHETHER THEY TOOK ANY ACCOUNT OF THAT EVIDENCE THAT THE HEARING OFFICER ALLOWED TO COME IN OR NOT, OR WHETHER THEY FELT IT WAS EVEN RELEVANT OR NOT, BECAUSE THEY ARE THE ARBITERS, THEY ARE THE DECISION-MAKERS UNDER THEIR RULES. SO, WITH REGARD TO THIS CASE, I AGAIN GO BACK TO THE ISSUE OF, WHAT DOES IT MATTER THAT A HEARING OFFICER ALLOWED EVIDENCE IN OVER THE OBJECTION OF ONE SIDE WHEN THE COMMISSION MAY 10 OR MAY NOT HAVE LET THAT IN, AND MAY OR MAY NOT HAVE CONSIDERED OR GIVEN IT MUCH CREDENCE OR RELEVANCY IN MAKING ITS FINAL DETERMINATION? I GUESS THAT IS THE QUESTION. SHOULDN'T I BE Page 13

14 LOOKING AT WHAT THE COMMISSION DOES, AND WHAT THEIR HISTORY OF DOING THINGS IS, AND WHETHER THEY HAVE GONE AGAINST THEIR PAST RULINGS AND HOW THEY TREAT THINGS? MR. YOUNG: I AGREE WITH YOU, JUDGE, THAT THE ULTIMATE DETERMINATION IS BASED ON THE STATUTE ITSELF. THE COURT: CORRECT. MR. YOUNG: AND I AM SUBMITTING TO YOU THAT I BELIEVE THE STATUTE REQUIRES THEM TO CONSIDER ALL OF THESE COMPONENTS OF PILOT EXPENSES, AND TRANSPORTATION EXPENSES, AS WELL AS COMPENSATION IN THE DETERMINATION OF THE RATE MATTER. SO, I THINK THAT IS THE ULTIMATE DETERMINATION. I THINK THE JUDGE'S RULING IS ONE THING THAT THE COMMISSION SHOULD BE AWARE THAT THAT HAS HAPPENED FROM A PRECEDENT STANDPOINT, BUT THE ULTIMATE DETERMINATION IS IN THE STATUE ITSELF. THE COURT: WHAT, EXACTLY WHAT IS THE SUBJECT MATTER OF THE COMMISSION'S DECISION SUCH THAT YOU BELIEVE THAT IT IS NECESSARY EVIDENCE? AND THAT THEY DO NOT BELIEVE IT IS NECESSARY? WHY IS THERE A DIFFERENCE OF Page 14

15 OPINION? CLEARLY WHAT IS PRESENTED TO THEM IN THEIR MIND DOES NOT AFFECT THESE ISSUES YOU ARE WORRIED ABOUT. SO, IF YOU CAN DEFINE FOR ME A CONTENT OF THE REQUEST BEFORE THE COMMISSION, 11 AND THEN WE WILL GO TO WHY THIS GOES TO IT. MR. YOUNG: OKAY. THE -- CAN I TALK THROUGH ONE MORE BACKGROUND DOCUMENT BEFORE -- THE COURT: SURE, PLEASE DO. I DID NOT MEAN TO INTERRUPT YOUR TRAIN OF THOUGHT, BUT I JUST WANTED YOU TO UNDERSTAND WHAT I NEED TO KNOW IN ORDER TO MAKE A DECISION ON THIS, AS TO WHETHER I DENY THE WRIT OR GRANT THE WRIT, AND A DENIAL OF THE WRIT IS NOTHING MORE THAN, WELL, I JUST DO NOT WANT TO HEAR THIS RIGHT NOW. YOU CAN TAKE IT UP ON APPEAL, OR JUDICIAL REVIEW, THAT KIND OF THING. I JUST WANT TO MAKE SURE EVERYBODY UNDERSTANDS THAT IF I DENY IT TODAY, IT DOES NOT MEAN IT IS NOT PRESERVED FOR YOUR RECORD. IT IS JUST, TODAY IS NOT THE DAY TO DO IT. MR. YOUNG: WHAT I AM TRYING TO TALK THROUGH, JUDGE, AND WHAT I WANT TO GET TO IS -- Page 15

16 I KNOW EXACTLY WHAT YOU ARE LOOKING FOR. WHAT I AM TRYING TO TALK THROUGH IS, HERE IS A COUPLE OF BACKGROUND PIECES. IF WE START WITH THE STATUTE, HERE IS A BACKGROUND PIECE WITH WHAT HAPPENED BEFORE WITH THE HEARING MASTER. HERE IS ANOTHER BACKGROUND PIECE, WHAT HAPPENED BEFORE THE PUBLIC SERVICE COMMISSION WITH THE STIPULATION ON THE TRANSPORTATION EXPENSES, AND THEN HERE IS SPECIFICALLY WHAT L.C.A. SAID THIS, ITS INTERVENTION, AND WHY THAT FITS THE STATUTE ITSELF. I AM TRYING TO LINK ALL OF THOSE TOGETHER AS PART OF THE PATH WHICH I THINK IS WHAT YOU ARE ASKING. THE COURT: YES, THAT IS KIND OF WHAT I AM 12 ASKING. MR. YOUNG: SO, THE NEXT DOCUMENT THAT I HAD, JUDGE, WAS THE STIPULATION, AND THIS WAS BEFORE THE PUBLIC SERVICE COMMISSION, BECAUSE AT THAT TIME THAT IS WHERE THE RATEMAKING WAS HAPPENING FOR THE PILOTAGE EXPENSES -- THE COURT: WHEN DID IT MOVE OVER TO THE FEE COMMISSION? Page 16

17 MR. YOUNG: I THINK 2004 IS WHAT IS COMING TO MIND, JUDGE. IT IS THE STATUTE THAT CREATED THE PILOTAGE FEE COMMISSION, AND BEFORE THAT THERE WAS SOME DIFFERENT PROCESSES THAT INVOLVED BOTH A FEE COMMISSION AS WELL AS THE PUBLIC SERVICE COMMISSION. THE COURT: THANK YOU. MR. YOUNG: SO, THIS STIPULATION WAS TWO THOUSAND -- EXCUSE ME -- IT WAS IN THE 1999 TIMEFRAME. THIS WAS THE PREVIOUS TIME THAT THE TRANSPORTATION EXPENSE ISSUE HAD COME UP FOR A PROPOSED INCREASE, AND THERE IS A COUPLE OF ITEMS IN HERE THAT I WANTED TO REFERENCE. IF YOU LOOK AT THE SECOND PAGE, YOU WILL SEE THAT THE RATE INVESTIGATION BEFORE THE PUBLIC SERVICE COMMISSION IN THAT CASE HAD 12 DIFFERENT SECTIONS AND TOPICS THAT WERE ADDRESSED IN CONSIDERING WHAT IS THE JUST AND REASONABLE RATES. IT INCLUDED ANNUAL PILOT COMPENSATION. IT INCLUDED PILOT EXPENSES. IT INCLUDED NUMBER OF PLOTS. IT INCLUDED THE TRANSPORTATION TARIFF, AS WELL AS A NUMBER OF OTHER POINTS. SO, ALL OF THAT WAS CONSIDERED COLLECTIVELY, AND IT WAS NOT JUST LOOKING AT Page 17

18 13 TRANSPORTATION EXPENSE BY ITSELF IN A SILO. IT WAS LOOKING AT ALL OF THE EXPENSES, AND WHAT IS THE OVERALL JUST AND REASONABLE RATES. IF YOU LOOK AT THE NEXT PAGE, IT IS IMPORTANT THAT IN THIS STIPULATION -- THE COURT: BUT THIS ONE WAS ONLY CENTERED -- THIS ISSUE IS ONLY CENTERED ON THE TRANSPORTATION TARIFF RATES, AND THE IMPLEMENTATION OF A PROSPECTIVE ANNUAL COST-OF-LIVING ADJUSTMENT FOR THE TRANSPORTATION TARIFF RATES, CORRECT? MR. YOUNG: THAT IS CORRECT, AND THAT IS MY POINT, IS THAT WHAT IS HAPPENING IN THIS CASE, THAT THROUGH THIS MOTION TO STRIKE, WHAT IS HAPPENING IS THAT -- AND THROUGH ITS FILING, IS THAT THE PILOTS ARE ATTEMPTING TO FOCUS THIS ONLY ON TRANSPORTATION EXPENSES, AND SAID, THAT IS ALL WE HAVE TO ADDRESS IN THIS CASE. AND WHAT I AM SAYING IS IT IS A RATEMAKING, IT IS A RATEMAKING PROCESS AND YOU CANNOT JUST LOOK TO THAT ONE ITEM. IN A CONTESTED RATE CASE, THERE ARE OTHER ELEMENTS THAT ARE ON THE TABLE AS Page 18

19 WELL THAT ALSO NEED TO BE ADDRESSED, INCLUDING THE PILOT COMPENSATION. THE COURT: IS IT ANTICIPATED THAT IN THIS PROCEDURE BEFORE THE COMMISSION NOW, THAT ANYTHING OTHER THAN THE TARIFF IS GOING TO BE CHANGED? MR. YOUNG: THE PILOTS ARE NOT ASKING FOR ANY CHANGES OTHER THAN THE TRANSPORTATION EXPENSE. THE COURT: RIGHT. 14 MR. YOUNG: AND MY SUBMISSION, JUDGE, IS THAT -- THE COURT: SO, I GUESS THEIR POSITION IS, IF THE ONLY THING INVOLVED IN THIS -- WE ARE NOT LOOKING TO RAISE COMPENSATION, WE ARE NOT LOOKING TO RAISE INVESTMENT ISSUES, WE ARE NOT LOOKING TO INCLUDE ANYTHING, WE ARE ONLY LOOKING AT THIS TARIFF RATE ADJUSTMENT, RIGHT? AND SO, IF WE ARE ONLY LOOKING AT THE TARIFF RATE ADJUSTMENT, WHAT RELEVANCY DOES ALL THE REST OF IT HAVE TO DO WITH IT IF THOSE MATTERS ARE NOT GOING TO BE ADJUSTED? Page 19

20 MR. YOUNG: BECAUSE UNDER THE STATUTE, WHEN YOU LOOK AT WHAT IS JUST AND REASONABLE RATES, AND THAT IS THE ULTIMATE QUESTION AT THE END OF THE DAY, I AM SAYING THAT YOU CANNOT JUST LOOK AT ONE PARTICULAR ELEMENT WHEN IT IS CONTESTED. THAT ALL OF THE OTHER COMPONENTS IN THAT SUBSECTION B ALSO COME INTO PLAY AND ARE SUBJECT TO BEING QUESTIONED AS TO WHETHER OR NOT, OKAY, YOU ARE SAYING YOU NEED X-DOLLARS MORE FOR TRANSPORTATION EXPENSE, BUT WAIT A MINUTE, WE CANNOT JUST LOOK UNDER THE STATUTE AT JUST THAT ONE COLUMN. WE ALSO HAVE TO LOOK AT ALL THESE OTHER EXPENSES, AND SHOULD YOU RECEIVE AN INCREASE IN THIS ONE EXPENSE ITEM, IF YOU HAVE TOO MUCH RECOVERY ON ALL OF THESE OTHER ITEMS, BECAUSE THEN IT BECOMES JUST A SILO DETERMINATION ON THAT ONE ITEM RATHER THAN DOING WHAT I BELIEVE THE COMMISSION IS OBLIGATED TO DO UNDER THE STATUTE, IS ULTIMATELY GET TO JUST AND REASONABLE RATES 15 OVERALL. AND WHEN YOU LOOK AT THE SUPREME COURT CASES, WHEN YOU LOOK AT THE STATUTE, I Page 20

21 BELIEVE THAT IS THE ANSWER THAT IT DERIVES TO. IT IS A RATEMAKING PROCESS AND OVERALL DETERMINATION; NOT JUST LOOKING AT INDIVIDUAL SILOS. THE COURT: OKAY. MR. YOUNG: SO, JUST A COUPLE OF MORE NOTES ON THIS, ON THIS STIPULATION, JUDGE. SO, ON THE SECOND PAGE OF THAT EXCERPT -- THIRD PAGE, IT TALKS ABOUT BEFORE YOU HAVE AN INCREASE IN THE TRANSPORTATION TARIFF AGAIN IN THE FUTURE, THERE NEEDS TO BE A RATE INVESTIGATION, AND THAT IS WHAT WE ARE TRYING TO DO BEFORE THE COMMISSION, HAVE THAT RATE INVESTIGATION AND RAISE THE QUESTIONS -- AND VET THE QUESTIONS AS TO WHETHER OR NOT THIS IS GOING TO RESULT IN OVERALL JUST AND REASONABLE RATES. AND IT IS IMPORTANT TO UNDERSTAND THAT WHEN THE PUBLIC SERVICE COMMISSION WAS IN PLACE AND DOING THIS, THEY HAD A STAFF, AN AUDIT STAFF THAT WOULD GET INTO THE DETAILS, LOOK AT THE NUMBERS. YOU SEE IN THIS DOCUMENT THAT THERE IS A DISALLOWANCE OF NINE HUNDRED THOUSAND DOLLARS WORTH OF COSTS. IN THIS NOW Page 21

22 TODAY BEFORE THE PILOT FEE COMMISSION, THERE IS NO COMMISSION AUDIT STAFF. THERE IS NO HIRED CONSULTANT THAT REVIEWS THESE NUMBERS FOR THE COMMISSION. THE ONLY WAY THAT THESE ISSUES GET VETTED AND THE QUESTIONS GET RAISED IS IF INDUSTRY INTERVENES AND COMES TO THE TABLE AND 16 SAYS, WE HAVE THESE QUESTIONS, AND THAT IS WHAT WE ARE TRYING TO DO IN THIS CASE, AND THEY ARE BEING STRICKEN, AND THE COMMISSION IS NOT WANTING TO LOOK AT THEM, AND THAT IS WHY WE BELIEVE IT IS APPROPRIATE TO BRING THIS WRIT. ANOTHER THING THAT IS IMPORTANT TO UNDERSTAND IS THAT, I CITED TO YOU IN BRIEF AN ATTORNEY GENERAL OPINION. THE ATTORNEY GENERAL OPINION SAYS THAT THE COMMISSION IS NOT EVEN AUTHORIZED UNDER THE STATUTE TO ON ITS OWN SAY, LOOK, I THINK THERE IS A VIOLATION HAPPENING OF THE STATUTE AND JUST AND REASONABLE RATES, AND I WANT TO ORDER THE COMMISSION TO COME IN AND SHOW CAUSE WHETHER OR NOT THEIR RATES ARE APPROPRIATE. UNDER THE, ACCORDING TO THE ATTORNEY GENERAL, THE COMMISSION CANNOT EVEN DO Page 22

23 THAT. THE ONLY WAY IT CAN HAPPEN AND THESE QUESTIONS GET VETTED IS IF INDUSTRY DOES IT, BUT WHEN INDUSTRY COMES TO THE TABLE, IT IS BEING STRICKEN AND SAY, WE DO NOT WANT TO LOOK AT IT. WE THINK THAT IS INCONSISTENT AND CONTRARY TO THE STATUTE. SO, NOW I WANT TO TURN, JUDGE, TO THE, WHAT IS IT EXACTLY THAT L.C.A. WAS RAISING IN THIS CASE, AND WHY WE BELIEVE IT IS APPROPRIATE. SO, THE NEXT DOCUMENT IS AN EXCERPT FROM L.C.A.'S INTERVENTION. YOU SEE THE FIRST THING THAT I AM SAYING IN THAT INTERVENTION IS THAT IF YOU LOOK AT THE STATUTE, WHICH I SHOWED YOU, IT PROVIDES FOR RECOVERY OF TRANSPORTATION EXPENSES. I AM SAYING, WHEN WE LOOK AT THIS FILING, WE DO NOT 17 SEE ANY PROOF OF ACTUAL INCURRED TRANSPORTATION EXPENSE, AND I HAVE LOOKED AT THE FILING OVER AND OVER AGAIN, JUDGE, AND THERE IS NO ACTUAL EXPENSE INCLUDED IN THE FILING. NOW, MR. EZELL FOR CRESCENT HAS A DIFFERENT VIEW, AND HE PRESENTED THE FILING Page 23

24 LIKE HE WANTS TO, AND SO, THAT IS GOING TO BE A QUESTION FOR THE MERITS, DID THEY REALLY PROVE IT OR NOT TO MEET THE STATUTE. BUT WHAT WE ARE SAYING IS, WE DO NOT BELIEVE YOU HAVE, AND WE WANT TO MAKE THAT PART OF OUR CASE, AND WHAT HAS HAPPENED ON THE MOTION TO STRIKE IS, OUR ARGUMENT, OUR POSITION ON THAT HAS BEEN STRICKEN AS IMMATERIAL AND IRRELEVANT AND IMPERTINENT. IF IT IS STRICKEN FROM THE CASE, THEN WHEN I GET TO THE HEARING, THAT ISSUE IS NO LONGER RELEVANT, AND THAT IS THE PROBLEM HERE. SO, MY FIRST POINT THAT I AM MAKING IS, YOU HAVE NOT PROVED THE EXPENSE, AND EVEN THAT GOT STRICKEN. MY SECOND POINT IN HERE IS THAT WHEN WE LOOK AT THE COMMISSION'S ORDER THAT LAST APPROVED THE TARGET COMPENSATION, THE TARGET COMPENSATION WAS APPROVED AT FOUR HUNDRED AND FIFTY-THREE THOUSAND. IN THE VERY FIRST YEAR OF THAT RATE ORDER, THE VERY FIRST YEAR, THE ACTUAL COMPENSATION, WHAT I AM SEEING IN THE EARNINGS DOCUMENTS, WAS NINETY-EIGHT THOUSAND DOLLARS ABOVE THAT. NOW, ON THE MERITS I BELIEVE THAT IF THE EARNINGS CAME IN Page 24

25 AT NINETY-EIGHT THOUSAND DOLLARS ABOVE, THEN THAT MEANS THAT SOMETHING NEEDS TO HAPPEN WITH 18 ADJUSTING THE TARIFF. MR. EZELL IS GOING TO HAVE A DIFFERENT VIEW ON THAT ON THE MERITS, BUT THAT IS THE MERITS. WHAT I AM SAYING IS THAT I SHOULD HAVE A RIGHT; I BELIEVE I DO HAVE A RIGHT UNDER THE STATUTE TO RAISE THE QUESTION BECAUSE TRANSPORTATION EXPENSE AND PILOT COMPENSATION ARE ALL PART OF THAT SUBSECTION B, ALL PART OF THE COMPONENTS OF JUST AND REASONABLE RATES. SO, I SHOULD HAVE THE RIGHT TO RAISE AT THE HEARING WHETHER OR NOT SOMETHING IS WRONG WITH THE TARIFF AND IT NEEDS TO BE RE-ADJUSTED, AND THAT IS WHAT I AM TRYING TO DO, AND I BELIEVE IT IS RELEVANT UNDER THAT STATUTE. THE COURT: ARE YOU SUGGESTING THAT IF A REQUEST IS BROUGHT BEFORE THE COMMISSION FOR ANY ONE SPECIFIC ISSUE OR ITEM SET FORTH UNDER 1122, THAT ALL OF 1122 MUST BE RE-INVESTIGATED AND UTILIZED IN MAKING A DETERMINATION? MR. YOUNG: I DO NOT THINK YOU NECESSARILY Page 25

26 HAVE TO LOOK AT EVERY SINGLE ITEM IN EVERY CASE, BUT I BELIEVE INDUSTRY IN ITS ROLE IS THE ONLY WAY THAT THESE ISSUES WILL GET INVESTIGATED. IF INDUSTRY HAS QUESTIONS ABOUT PARTS OF IT, WE HAVE THE RIGHT TO BRING THOSE QUESTIONS TO THE COMMISSION AS PART OF THE HEARING PROCESS AND SAY, WAIT A MINUTE, YOU ARE ASKING ME FOR THIS PIECE, BUT WE HAVE QUESTIONS ABOUT THIS PIECE, AND THEN VET THE OVERALL PICTURE UNDER JUST AND REASONABLE RATES. THAT IS WHAT I AM SAYING, JUDGE. THE COURT: WHY, AND I WANT TO GET, I WANT 19 TO FIND THE SPECIFIC THINGS I WANT TO ADDRESS, OKAY. YOU POINT OUT THAT THE C.R.P.P.A.'S TRANSPORTATION TARIFF RECOVERED FOR THREE PILOTS IN 2016, THAT IT DID NOT -- IT NEVER EXISTED, AND THEREFORE, MORE THAN 1.35 MILLION IN EXCESS REVENUE IN 2016 FOR THEM ALONE, AND FURTHER, THAT THE C.R.P.P.A. PILOTS ARE EARNING AN AVERAGE OF NINETY-EIGHT, ALMOST NINETY-NINE THOUSAND PER PILOT ABOVE THE APPROVED TARGET, AND THAT REPRESENTS MORE THAN TEN MILLION IN Page 26

27 EXCESS REVENUES ABOVE THE APPROVED TARGET IN WHY IS THAT NECESSARY TO DECIDE THE TARIFF ISSUE? WHY CAN THAT NOT BE BROUGHT BY YOU TO THE COMMISSION FOR CORRECTION SEPARATELY? MR. YOUNG: ONE, I THINK THAT -- LET ME ADDRESS THAT IN PARTS. ONE, I THINK THAT WHEN A REQUEST IS MADE FOR, I WANT TO INCREASE MY EXPENSES ON ONE ITEM, TRANSPORTATION EXPENSE IN THIS CASE, I DO NOT BELIEVE UNDER THE STATUTE THAT THAT CAN BE DONE IN A SILO BY ITSELF WITHOUT LOOKING AT THE OVERALL EXPENSES OR OTHER EXPENSE AREAS THAT ARE QUESTIONED. I THINK WE HAVE A RIGHT AS INDUSTRY TO COME IN UNDER THE STATUTE AND RAISE THOSE QUESTIONS AND GET THEM VETTED, BECAUSE OTHERWISE, JUDGE, IF YOU PLAY THAT OUT, THEN WHAT WILL HAPPEN IS, YOU WILL CONTINUE TO GET THESE, WELL, I WANT TO INCREASE THIS EXPENSE, THAT EXPENSE, THE OTHER EXPENSE, BUT IT DOES NOT MATTER THAT I MAY BE OVER-RECOVERING ON THESE OTHER ITEMS. I AM JUST GOING TO KEEP INCREASING THESE. 20 Page 27

28 THE COURT: BUT DON'T YOU -- YOU UNDERSTAND THEIR ARGUMENT WITH REGARD TO THE SEPARATE ITEMS WE HAVE DISCUSSED, THAT THEY ARE SET AT A SPECIFIC POINT IN TIME BASED ON HISTORICAL DATA, AND THEN WHAT IF TRAFFIC GOES UP AND THEIR COSTS INCREASE BECAUSE TRAFFIC IS UP, SHIPPING HAS GONE UP AND THEY ARE STUCK WITH THOSE RATES, RIGHT? IF SHIPPING GOES UP AND THEY HAVE TO PAY THEM THAT COMMENSURATE WITH IT, ARE THEY REQUIRED TO MEET THE TARGET, IN WHICH CASE THERE IS AN UNDERPAYMENT FOR SERVICES RENDERED BASED UPON THE DATA UTILIZED TO SET THE RATE? MR. YOUNG: THAT IS NOT WHAT WE ARE SEEKING, JUDGE. I THINK WHEN YOU GET INTO THE MERITS, I UNDERSTAND THAT THE PILOTS ARE GOING TO SAY, I HAVE SOME JUSTIFICATION THAT THEY BELIEVE AS TO WHY THEY SHOULD BE MAKING NINETY-EIGHT THOUSAND DOLLARS ABOVE TARGET. I HAVE REASONS THAT I BELIEVE IN TERMS OF THE ACTUAL TARIFF SETTING THAT I BELIEVE THAT THAT SHOULD NOT BE HAPPENING. THAT GOES TO THE MERITS, BUT BEFORE YOU GET TO THE MERITS, THERE IS A QUESTION OF, DO I HAVE A RIGHT UNDER THE Page 28

29 STATUTE TO RAISE THE ISSUE IN QUESTION, AND I THINK THAT IS THE THRESHOLD QUESTION. NOW, WHEN YOU GET TO THE MERITS OF THE ISSUE, IF YOU GO BACK TO HOW THAT RATE WAS SET TO BEGIN WITH, IT WAS PART OF THIS SETTLEMENT PROCESS THAT WE INTERVENED IN, AND THAT WE SHOWED UP AT A STATUS CONFERENCE READY TO SET UP A PROCEDURAL SCHEDULE, TO ASK QUESTIONS 21 ABOUT THAT, VET IT OUT AND HAVE A HEARING ON THAT. THE RATE ORDER GOT APPROVED AT THE STATUS CONFERENCE, AND WE FELT LIKE OUR DUE PROCESS RIGHTS WERE VIOLATED ON THAT. WE APPEALED THAT. IT GOT REMANDED BY JUDGE CLARK, BUT THEN THERE WERE MOTIONS FOR REHEARING FILED, AND THAT IS STILL PENDING BEFORE JUDGE CLARK AT THIS TIME. BUT WHEN YOU LOOK AT THOSE RATE ORDERS, THOSE RATE ORDERS SAY, HERE IS THE TARGET -- THE COURT: HOW LONG HAS THAT BEEN PENDING? MR. YOUNG: AWHILE, JUDGE. THE COURT: IS IT SET FOR HEARING OR WAS Page 29

30 IT SUMMARILY DENIED? OBVIOUSLY IT WAS SUMMARILY DENIED BECAUSE YOU SAY IT IS STILL PENDING. HAS IT BEEN SET FOR HEARING? MR. YOUNG: WE WENT TO HEARING, AND JUDGE CLARK REMANDED THOSE ITEMS AND THOSE RATE ISSUES BACK TO THE COMMISSION, BUT THEN THE COMMISSION AND THE CRESCENT PILOTS FILED FOR REHEARING. THE REHEARING -- THE COURT: I UNDERSTAND. THE QUESTION I HAVE IS, HAS THE REHEARING BEEN SET? MR. YOUNG: NO. NO, JUDGE, IT HAS NOT. THE COURT: HAS ANYONE INQUIRED AS TO WHETHER YOU ARE GOING TO GET A DATE? MR. YOUNG: NOT THAT I AM -- THE COURT: DO NOT WORRY ABOUT OFFENDING A JUDGE. YOU SHOULD NOT WAIT AN ABNORMAL AMOUNT OF TIME. I WILL TELL YOU THAT EACH OF THE CIVIL JUDGE'S UP HERE HAVE APPROXIMATELY 22 FIFTEEN THOUSAND CASES. WE GET ABOUT SEVENTEEN OR EIGHTEEN HUNDRED NEW CASES A YEAR. OUR ACTIVE CASES ARE RUNNING RIGHT AROUND SIX-TO-SEVEN THOUSAND CASES. SOMETIMES THINGS Page 30

31 SLIP THROUGH THE CRACKS. I KNOW LAWYERS DO NOT WANT TO IRRITATE A JUDGE BY SUGGESTING THAT THEY ARE NOT DOING WHAT THEY SHOULD BE DOING, BUT A LOT OF TIMES JUST ASKING THE JUDGE, WHAT IS GOING ON WITH THIS, THEY WILL BE ABLE TO LOOK AND SEE, OH, IT SLIPPED THROUGH THE CRACKS. SO, I AM JUST SUGGESTING SOMEONE MAY WANT TO ASK JUDGE CLARK, HAVE YOU MADE A DECISION ON SETTING A HEARING ON THIS, THAT IS ALL, IN A NON-OFFENSIVE WAY. BUT I THINK WHEN YOU ARE TALKING ABOUT THE 19TH J.D.C., OUR VOLUME IS HIGH THAT THINGS DO SLIP THROUGH THE CRACKS, AND I GUESS I AM JUST TELLING EVERY ATTORNEY HERE, DO NOT BE AFRAID TO CALL THE JUDGE'S SECRETARY AND ASK WHAT IS GOING ON. YOU DO NOT HAVE TO GO RIGHT TO THE JUDGE. CALL THE SECRETARY, BUT FIND OUT. THAT IS NEITHER HERE NOR THERE AND I AM BURNING DAYLIGHT TALKING ABOUT THAT. IT IS ADVICE FOR ALL ATTORNEYS. GO AHEAD. ESPECIALLY IN THIS PARTICULAR DISTRICT. MR. YOUNG: THANK YOU, JUDGE. I APPRECIATE THAT ADVICE. WHEN YOU LOOK AT THAT RATE ORDER FROM THAT PROCEEDING, AGAIN, IN THE Page 31

32 VERY FIRST YEAR IT SET, HERE IS WHAT WE BELIEVE APPROPRIATE COMPENSATION FOR A RIVER PILOT SHOULD BE, AND IN THE VERY FIRST YEAR WHERE IT HAD THE SET NUMBER OF FOUR HUNDRED AND 23 FIFTY-THREE THOUSAND, IT CAME IN AT NINETY-EIGHT THOUSAND DOLLARS ABOVE. SO, WE BELIEVE THAT THE TARIFF SHOULD HAVE BEEN CALCULATED TO BEGIN WITH TO ACHIEVE THAT LEVEL. THE COURT: CAN I BECOME A RIVERBOAT CAPTAIN WITHOUT BEING KIN TO ANOTHER RIVERBOAT CAPTAIN? MR. YOUNG: I AM SORRY, I COULD NOT -- THE COURT: WOULD I BE ABLE TO -- THAT SOUNDS LIKE A LOT OF MONEY, I WOULD LIKE TO DO THAT. CAN I BECOME A RIVERBOAT CAPTAIN WITHOUT BEING KIN TO AN EXISTING ONE? I MEAN, THERE IS A LOT OF NEPOTISM IN THAT SITUATION, ISN'T THERE? IT IS KIND OF INBRED, ISN'T IT? MR. YOUNG: MY UNDERSTANDING IS IT IS NOT AN EASY PATH TO GET ONE OF THOSE POSITIONS, JUDGE. THE COURT: UNLESS YOU ARE A MEMBER OF THE Page 32

33 LUCKY SPERM CLUB. MR. YOUNG: MY UNDERSTANDING IS IT IS NOT EASY TO GET ONE OF THOSE POSITIONS. THE COURT: UH-HUH. OKAY. WE ALL KNOW WHAT GOES ON THERE, AND WE ALL KNOW THAT THAT EVENTUALLY HAS TO BE FIXED, BUT GO AHEAD. MR. YOUNG: OKAY. SO, JUDGE, TO COMPLETE WHAT WAS -- THE COURT: NO OFFENSE TO THE RIVERBOAT PILOTS. JUST IT IS A SITUATION THAT NEEDS TO BE FIXED. GO AHEAD. MR. YOUNG: SO, CONTINUING, JUDGE, AND YOU MENTIONED THIS, IN THIS INTERVENTION FILING I ALSO REFERENCE THE POINT ABOUT WHAT I SEE IN 24 THE DATA IS THEY ARE RECOVERING FOR THREE PILOTS THAT DO NOT EXIST, AND WE BELIEVE THAT AGAIN GOES TO THE WHOLE COMPENSATION ISSUE, AND THAT IS APPROPRIATE TO BE RAISED. IF YOU ARE ASKING ME TO INCREASE THIS EXPENSE, BUT WE BELIEVE YOU ARE RECOVERING TOO MUCH FOR WHATEVER REASON ON THE OTHER EXPENSES, WE SHOULD BE ABLE TO RAISE THAT UNDER THE STATUTE Page 33

34 AND HAVE THAT ADDRESSED. THE COURT: IS THERE NO AUDIT DONE ON THESE TYPES OF THINGS TO DETERMINE WHETHER TOO MUCH HAS BEEN PAID BECAUSE THERE IS NOT AS MANY PILOTS HAD TO BE PAID AS THEY THOUGHT? MR. YOUNG: THERE IS NOT, JUDGE. WE BELIEVE THERE SHOULD BE AT THE END OF THE DAY. THERE ARE SOME OF THE EXPENSE ITEMS, IT IS A PURE FLOW-THROUGH AND A TRUE-UP, AND AT THE END OF THE YEAR, IT IS WHATEVER THE EXPENSES WERE THEY WERE. BUT IN TERMS OF THE NUMBER OF PILOTS, WHAT I AM SEEING IN THE CALCULATION IS THAT THEY HAVE, THEY ARE RECOVERING FOR A HUNDRED AND FOURTEEN, BUT THEY ONLY HAD ON AVERAGE A HUNDRED AND ELEVEN, SO THAT IS A LOT OF DOLLARS FOR THREE PILOTS THAT DID NOT EXIST THAT IS BEING FLOWED TO THE OTHER PILOTS, AND WE BELIEVE THERE SHOULD BE SOME MECHANISM THERE TO MAKE THAT ACCURATE AS OPPOSED TO -- THE COURT: IT JUST SURPRISES ME IS ALL, BECAUSE GOD KNOWS EVERY OTHER GOVERNMENTAL AGENCY, COMMISSION, ET CETERA, HAS TRUE-UP AUDITS EVERY YEAR BY THE INSPECTOR GENERAL, BUT, OKAY. Page 34

35 25 MR. YOUNG: WHICH IS WHY WE ARE TRYING TO GET TO THE TABLE TO BE ABLE TO ADDRESS IT, JUDGE. THE COURT: I DO NOT ASK THESE QUESTIONS BECAUSE I AM INQUISITIVE. I ASK THESE QUESTIONS BECAUSE THEY ACTUALLY DO GO TO THE ISSUE INVOLVED IN YOUR CASE AS TO WHAT EVIDENCE SHOULD YOU BE ALLOWED TO PUT BEFORE THE COMMISSION ON AN ITEM THAT APPEARS ON ITS FACE TO BE A SINGLE ITEM THAT IS NOT RELEVANT TO THE OTHERS. SO, I MEAN, THEY ARE NOT ASKED TO BE FUNNY. THEY ARE NOT ASKED BECAUSE I AM INQUISITIVE. I KNOW THE ANSWERS TO MY QUESTIONS BEFORE I ASK YOU, TRUST ME. THEY ARE ASKED TO TRY AND HELP YOU TO SAY, WELL, YOU KNOW WHAT? THIS IS THE SAME SORT OF THING HERE, AND THIS IS WHY WE NEED YOU TO REVIEW THIS. I AM JUST LETTING YOU KNOW WHY I AM ASKING THE QUESTIONS. REALLY, I AM NOT TRYING TO BE HUMOROUS. I AM NOT TRYING TO SATISFY MY OWN CURIOSITY. I AM VERY MUCH AWARE OF THE ANSWERS OF EVERY QUESTION I ASK. Page 35

36 NOW, YOU MAY NOT HAVE BEEN BEFORE ME IN THE PAST, OR IF YOU HAVE YOU KNOW THAT I PLAY DEVIL'S ADVOCATE ON BOTH SIDES. I AM GOING TO ASK YOU QUESTIONS THAT YOU DO NOT LIKE, I AM GOING TO ASK THEM QUESTIONS THAT THEY DO NOT LIKE. PLEASE DO NOT TAKE MY QUESTIONS AS ANY INDICATION OF HOW I INTEND TO RESOLVE, OR WHAT I AM THINKING, OKAY, BUT I THINK THEY HAVE TO BE FLESHED OUT, AND THAT IS WHY I ASK QUESTIONS, OKAY. 26 MR. YOUNG: THANK YOU, JUDGE, AND I AM TAKING THEM AS AN OPPORTUNITY TO EXPLAIN MORE, AND I AM TRYING TO. BUT THAT GOES TO THE VERY HEART OF WHY WE HAVE RAISED THESE ISSUES, IS THAT WE THINK IT DOES NEED TO BE ADDRESSED. WE THINK THE EARNINGS COMPENSATION LEVEL NEEDS TO BE ADDRESSED. THE RECOVERY FOR PILOTS THAT DO NOT EXIST NEEDS TO BE ADDRESSED, AND WE THINK THEY NEED TO BE ADDRESSED IN THIS PROCEEDING. THE COURT: AND I DO UNDERSTAND ALL OF THAT. I UNDERSTAND. ALL THE BRIEFS WERE VERY, VERY GOOD BRIEFS, BUT ONE THING THAT THEY Page 36

37 RAISED IS WHETHER OR NOT I EVEN HAVE JUSTIFICATION TO LISTEN TO THIS AT THIS TIME. DO YOU HAVE A RIGHT TO FILE A WRIT TO THE DISTRICT COURT ON AN ISSUE. IF YOU LOOK AT STATUTORY CONSTRUCTION, YOU WOULD THINK WHEN YOU LOOK AT 1122(D)2 AND 5, THAT -- I AM LOOKING FOR THE PART THAT TALKS ABOUT -- BINGO. IT IS P.F.C. RULE EXCUSE ME -- 12:902 A AND B, SPECIALLY B(3). ONE COULD ARGUE FROM A STATUTORY CONSTRUCTION PERSPECTIVE, AND THIS HAS TO DO WITH WRITS FOR REVIEW FOR INTERLOCUTORY RULINGS, A REQUEST FOR REVIEW OF INTERLOCUTORY RULINGS, AND IT SAYS UNDER A, EVERY RULING BY THE HEARING PANEL OR HEARING MASTER SHALL BE SUBJECT TO A REVIEW BY THE COMMISSION ON ITS OWN MOTION, IN A, AND B IT SAYS, ANY PARTY MAY APPLY FOR IMMEDIATE REVIEW OF AN INTERLOCUTORY RULING WHICH MAY BE OBTAINED ONLY UPON A SHOWING OF IRREPARABLE HARM. NOW, THAT IS APPLYING FOR REVIEW BY THE 27 COMMISSION, BUT THERE IS NOTHING THAT SAYS IN THE STATUTES WHEN THE LEGISLATURE IS Page 37

38 CONSIDERING REVIEWS OF INTERLOCUTORY MATTERS AND GIVES YOU AN AVENUE TO REVIEW AN INTERROGATORY RULING BY A HEARING OFFICER, IT DOES NOT GIVE YOU THE RIGHT TO HAVE A DISTRICT COURT REVIEW YOUR INTERLOCUTORY RULING. THE SUGGESTION WITH REGARD TO HOW YOU GET TO THE DISTRICT COURT IS UNDER 1122(D)11 WHICH SAYS, A RIGHT TO APPEAL A FINAL DECISION OF THE COMMISSION. WHERE DO YOU HAVE THE RIGHT TO BE HERE ON AN INTERLOCUTORY DECISION? MR. YOUNG: CAN I TAKE THOSE ONE AT A TIME, JUDGE? THE COURT: SURE. MR. YOUNG: FIRST LOOKING AT 12:902, 12:902 BY ITS VERY TITLE SAYS COMMISSION REVIEW OF INTERLOCUTORY RULINGS BY THE HEARING PANEL OR THE HEARING MASTER. SO, THAT WHOLE SECTION DOES NOT APPLY HERE WHERE WE HAVE A CASE THAT IS BEING HEARD DIRECTLY BY THE COMMISSION. THE COURT: CORRECT, CORRECT, BUT THE THOUGHT PROCESS ON STATUTORY CONSTRUCTION IS, THEY HAVE THOUGHT, THE LEGISLATURE HAS THOUGHT ABOUT REVIEW OF INTERLOCUTORY DECISIONS, AND IT HAS DETERMINED THAT WE WILL GIVE YOU A REVIEW Page 38

39 OF AN INTERLOCUTORY DECISION IF IT IS BY A HEARING OFFICER. WE WILL GIVE A REVIEW BY THE DISTRICT COURT IF IT IS A FINAL DECISION. SO, ACTUALLY, IT IS NOT -- IT IS THE RULES, THEIR OWN RULES SAY, WE WILL GIVE YOU A REVIEW OF AN INTERLOCUTORY DECISION BY A HEARING OFFICER, 28 BUT THE STATUTE SAYS, YOU GET A RIGHT TO APPEAL A FINAL DECISION. MR. YOUNG: THAT IS CORRECT. THE COURT: WHERE DOES YOUR RIGHT TO, WHERE DOES YOUR RIGHT TO BRING A WRIT TO THE DISTRICT COURT COME FROM? MR. YOUNG: FIRST, JUDGE, I AGREE WITH YOU, THESE RULES ARE THE COMMISSION'S RULES. THIS PROCEDURE FOR INTERLOCUTORY PROCESS IS NOT IN THE STATUTE. THIS IS PART OF THE COMMISSION'S RULES. IN TERMS OF THE PATH TO THIS COURT, I AGREE WITH YOU ALSO THAT 34:1122, 11 THROUGH 13 PROVIDES THE PROCESS FOR ONCE YOU HAVE A FINAL DECISION AND YOU ARE ON APPEAL. WHAT WE ARE TALKING ABOUT NOW IS GRANTING A WRIT, AND I Page 39

40 UNDERSTAND YOUR QUESTION IS, SO HOW DO WE GET HERE ON A WRIT? JUDGE, THE LEGISLATURE SET UP THAT THE 19TH J.D.C. IS OUR APPELLATE COURT. IT IS OUR NEXT LEVEL, AND SO, I BELIEVE THAT AS PART OF THAT ROLE AS THE APPELLATE LEVEL COMES THE ABILITY TO CONSIDER A WRIT IN THE EXERCISE OF SUPERVISORY JURISDICTION AS NEED BE ON INTERLOCUTORY RULINGS. IT IS PART AND PARCEL OF THAT DESIGNATION AS BEING THE APPELLATE COURT. THE COURT: YOU KNOW WHY I AM ASKING THE QUESTION? I MEAN, THAT IS ONE OF THE THEIR DEFENSES TO THIS WRIT IS, THAT I DO NOT HAVE JURISDICTION TO DO IT. OKAY. I JUST WANTED TO GET YOUR TAKE ON IT BEFORE I LET THEM GO. MR. YOUNG: YES. 29 THE COURT: SO, YOU THINK THAT BECAUSE WE ARE THE APPELLATE COURT TO THE COMMISSION BY STATUTE, THAT WE HAVE A SUPERVISORY ROLE OVER EVERYTHING THAT THEY DO? MR. YOUNG: I DO. THE COURT: OKAY. Page 40

41 MR. YOUNG: AND THEN IF WE GET TO A FINAL DECISION ON APPEAL, THEN THERE IS THAT PATH THAT CAN BE FOLLOWED UNDER THAT STATUTE, BUT BEFORE YOU GET THERE, I BELIEVE THAT THERE IS ALSO INHERENT IN THAT AUTHORITY AS THE APPELLATE COURT THE RIGHT TO SUPERVISORY JURISDICTION. THE COURT: DO YOU BELIEVE THAT THE CODE OF CIVIL PROCEDURE APPLIES AT THE COMMISSION LEVEL UNLESS OTHERWISE ABROGATED OR CHANGED? MR. YOUNG: I BELIEVE IN THIS CASE WHAT HAPPENED WAS THAT THE PILOT FEE COMMISSION CAME IN, AND THAT WAS ONE OF MY DOCUMENTS TO SHOW YOU WHEN THEY SAY LAW AND WHEN THEY QUOTED TO THE COMMISSION IN THEIR FILING SAYING WHAT IS AT ISSUE IN THIS ARGUMENT, MOTION TO STRIKE, THEIR LAW SECTION GOES STRAIGHT TO CODE OF CIVIL PROCEDURE ARTICLE 964. THE COURT: YES. CLEARLY THEY UTILIZED THE CODE OF CIVIL PROCEDURE WITH REGARD TO THEIR MOTION TO STRIKE, AND THEY DEPEND UPON THE INTERPRETATIONS OF THAT MOTION TO STRIKE IN DECIDING IT. THEY SUGGEST THAT THE CODE OF CIVIL PROCEDURE DOES NOT APPLY WHOLEHEARTEDLY Page 41

42 TO THE COMMISSION'S ACTIONS. NOW, WE ALL KNOW THE CODE OF CIVIL PROCEDURE PROVIDES FOR A WRIT 30 TO A SUPERVISORY COURT. I TAKE IT FROM THEIR POSITION IS THEY DO NOT BELIEVE THAT PART OF THE CODE OF CIVIL PROCEDURE PERTAINS TO THEM WHILE THE PART OF THE CODE OF CIVIL PROCEDURE REGARDING MOTIONS TO STRIKE DOES PERTAIN TO THEM, WHICH, OF COURSE, IS YOUR REPLY ARGUMENT, HOW CAN IT HAVE IT ONE WAY AND -- YOU CANNOT HAVE IT BOTH WAYS, WHICH IS WHY I ASKED YOU, UNLESS SPECIFICALLY REFERENCED OTHERWISE AS A DEVIATION FROM THE CODE OF CIVIL PROCEDURE AND THEIR RULES, DOES THE CODE OF CIVIL PROCEDURE APPLY TO COMMISSION PROCEEDINGS? MR. YOUNG: AND JUDGE, I THINK TO THE EXTENT -- THE COURT: A LOT OF RAMIFICATIONS TO YOUR ANSWER, YOU KNOW THAT? MR. YOUNG: THERE IS, AND I AM THINKING. TWO LEVELS. NUMBER 1 IS, AS YOU JUST TALKED THROUGH, TO THE EXTENT THE COMMISSION RELIED ON THE CODE OF CIVIL PROCEDURE AS URGED BY THE Page 42

43 CRESCENT PILOTS TO DO A MOTION TO STRIKE UNDER THE CODE OF CIVIL PROCEDURE, THEN WHY SHOULDN'T IT ALSO LOOK TO THE CODE OF CIVIL PROCEDURE FOR THE WRIT PROCESS? BUT I THINK STEPPING BACK AND THINKING ABOUT THE LEGAL ANALYSIS, I THINK THE STARTING POINT FOR ME IS THAT THE LEGISLATURE IN THE STATUTE MADE THIS COURT THE APPELLATE COURT, AND I THINK PART OF THAT, WHAT COMES ALONG WITH THAT IS THE SUPERVISORY JURISDICTION. THE COURT: THEY CERTAINLY, THEY CERTAINLY IN -- THE LEGISLATURE I SHOULD SAY IN 1122(D)11 31 REFER TO THE CODE OF CIVIL PROCEDURE WITH REGARD TO HOW THESE CASES SHOULD TAKE PRECEDENCE, AND SAYING IT TAKES PRECEDENCE OVER EVERYTHING EXCEPT THOSE MATTERS UNDER 1573 AND R.S. 23:847. NOW, THAT IS THE LEGISLATURE TELLING THE DISTRICT COURT, YOU CANNOT PUT THIS BEHIND A JURY TRIAL. YOU ARE GOING TO HAVE TO INTERRUPT THINGS TO DO THIS, AND I UNDERSTAND THAT. ARE THERE ANY OTHER REFERENCES TO THE UTILIZATION OF THE CODE OF CIVIL PROCEDURE IN Page 43

44 THAT STATUTE, IN THE STATUTES REGARDING THE COMMISSION, OR IN THE COMMISSION RULES THAT LIMIT THE USE OF THE CODE OF CIVIL PROCEDURE? AND I ASK THAT QUESTION BECAUSE THERE ARE, UNDER THE ADMINISTRATIVE PROCEDURES ACT, THERE ARE EXCEPTIONS TO THE CODE OF EVIDENCE, FOR EXAMPLE, ET CETERA, BUT THERE ARE SPECIFIC LEGISLATIVE STATEMENTS OF YOU ARE NOT -- YOU DO NOT HAVE TO STRICTLY ADHERE TO SUCH AND SUCH. IT WOULD SEEM TO ME THAT IF WE HAD A CODE OF CIVIL PROCEDURE, IT APPLIES UNLESS THE LEGISLATURE SAYS IT DOES NOT, RIGHT? CAN YOU FIND ANYWHERE WHERE IT SAYS THE LEGISLATURE DOES NOT? I COULD NOT. MR. YOUNG: NO, JUDGE, I AM NOT AWARE OF -- THE COURT: THAT IS A SOFTBALL BY THE WAY IN CASE YOU DID NOT RECOGNIZE THAT. MR. YOUNG: I SEE IT COMING, AND I APPRECIATE IT. I HAVE NOT SEEN ANYTHING THAT SAYS YOU CANNOT APPLY IT. AND WHERE I WAS GOING Page 44

45 THE COURT: CAN OR CANNOT. WE ARE TALKING ABOUT SHOULD, MUST. MR. YOUNG: I THINK YOU START WITH THE STATUTE. YOU HAVE THE APPELLATE JURISDICTION, THEN IT COMES LOOKING TO THE CODE OF CIVIL PROCEDURE FOR GUIDANCE, AND I THINK YOU CAN DO THAT IS WHERE I WAS GOING WITH MY THOUGHT PROCESS FROM OUR LEGAL ANALYSIS, JUDGE. I DO NOT SEE ANYTHING THAT SAYS THAT YOU CANNOT DO THAT. THERE ARE OTHER REFERENCES IN THE COMMISSION RULES THAT TALK ABOUT LOOKING TO THE CODE OF CIVIL PROCEDURE AND LOUISIANA LAW IN TERMS OF EVIDENCE AND ADMISSIBILITY AND LIBERALLY CONSTRUING THOSE AND THOSE SORTS OF THINGS, BUT I DO NOT SEE ANYTHING THAT SAYS YOU SHOULD NOT LOOK TO THE CODE OF CIVIL PROCEDURE FOR GUIDANCE. THE COURT: I AM SORRY. GO AHEAD, SIR. MR. YOUNG: SO, WHERE I WAS GOING ULTIMATELY IS THAT I BELIEVE YOU CAN AND SHOULD LOOK TO THE CODE OF CIVIL PROCEDURE FOR GUIDANCE IN TERMS OF HOW YOU APPLY THE SUPERVISORY JURISDICTION, BUT THE SUPERVISORY JURISDICTION ITSELF COMES FROM THE GRANT OF Page 45

46 BEING THE APPELLATE AVENUE OF COURT. THE COURT: I UNDERSTAND YOUR ARGUMENT ABOUT WHY THIS INFORMATION WOULD BE RELEVANT, BECAUSE IF YOU GO TO STATUTE 1122, IT SETS OUT, IT DEFINES THIS AS A PART OF FEES AND RATES, SETTING FEES AND RATES, AND SO, IF YOU ARE GOING TO LOOK AT ONE ASPECT OF IT, YOU SHOULD LOOK AT THE EFFECT THAT THE OTHER ASPECTS SET 33 FORTH IN 1122(B)1. WHAT AFFECT THEY MIGHT HAVE ON IT, OR WHAT AFFECT IT MAY HAVE ON THEM. AND SO, THAT WOULD MAKE YOUR INQUIRY RELEVANT, AND THEREFORE, THEIR MOTION TO STRIKE BEING GRANTED ERROR, RIGHT? I UNDERSTAND THAT ARGUMENT. THAT IS THE JURISDICTIONAL ISSUE I WANTED TO TALK TO YOU ABOUT; YOU HAVE HELPED ME WITH THAT. IS THERE ANOTHER PART OF THE ISSUE THAT YOU THINK I SHOULD KNOW ABOUT? YOU ARE GOING TO GET ANOTHER BITE AT THE APPLE BECAUSE YOU ARE THE ONE THAT IS BRINGING THE WRIT. MR. YOUNG: THE OTHER TOPICS, JUDGE, AND I AM GLAD TO PROVIDE MORE INFORMATION AS YOU MAY Page 46

47 WISH, IS WE TALKED ABOUT THE MOTION TO STRIKE, AND ONE OF THOSE DOCUMENTS I SHOWED YOU, THEY INVOKED IT. THAT IS THEIR LAW. SO, I HAVE SOME INFORMATION ON THE STANDARD FOR A MOTION TO STRIKE, BUT YOU PROBABLY ALREADY KNOW THAT, BUT I AM GLAD TO TALK THROUGH IT IF YOU WISH. YOU ALREADY HAVE THAT BACKGROUND. THE COURT: YES. MR. YOUNG: THE IMPLICATIONS IF IT IS STRICKEN, IT IS OUTSIDE THE CASE. AGAIN, I KNOW YOU HAVE THAT BACKGROUND. THAT THE EXERCISE OF SUPERVISORY JURISDICTION IS APPROPRIATE BECAUSE UNDER THE HURLEY STANDARD IN CASES FROM THE FIRST CIRCUIT, YOU HAVE THAT BACKGROUND ALREADY, OR WOULD YOU LIKE ME TO TALK THROUGH THAT? THE COURT: NO. I AM FAMILIAR WITH THAT VERY MUCH. IT IS BASICALLY A TWO-PRONG ISSUE. 34 MOST PEOPLE THINK THAT THE HURLEY STANDARD BASICALLY SAYS IT IS RIPE FOR REVIEW IF IT WOULD TAKE CARE OF THE -- RESOLVE THE ISSUE IN ITS ENTIRETY AND END THE DISPUTE, BUT THAT IS Page 47

48 ONLY PART OF IT. THE OTHER PART IS JUDICIAL ECONOMY, COST OF LITIGATION, ET CETERA OF NOT REACTING TO THE -- NOT ACCEPTING THE WRIT AND MAKING A DECISION ON IT, AND THE -- BECAUSE AT THE END OF THE DAY, IF YOU DENY A WRIT, ALL THOSE SAME ISSUES ARE EVENTUALLY GOING TO COME BACK, BUT IF THE WRIT IS DECIDED IN A CERTAIN WAY, IT ENTIRELY CHANGES THE COURSE OF HOW THE LITIGATION IS PRESENTED AND IT REQUIRES THE REST OF THE LITIGATION TO BE REMANDED BACK AND DONE ALL OVER AGAIN CONSIDERING THOSE ISSUES, AND THAT IS THE PART OF HURLEYS THAT YOU BELIEVE SHOULD BE INVOKED HERE. MR. YOUNG: ABSOLUTELY, JUDGE, AND FROM A FUNDAMENTAL FAIRNESS STANDPOINT IN TERMS OF HAVING THE CASE GO TO HEARING WITHOUT OUR OPPOSITION ISSUES BEING RAISED, AND THEN CLEARING A PATH FOR AN APPROVAL, AND THEN THE RATE INCREASE GOES INTO EFFECT, AND THEN WE HAVE TO ADDRESS ALL OF THOSE ISSUES ON APPEAL AFTER THE RATE INCREASE HAS GONE INTO EFFECT. SO, WE BELIEVE THE APPROPRIATE THING TO DO WAS TO BRING IT TO YOUR HONOR NOW RATHER THAN WAIT UNTIL THE END. Page 48

49 ANOTHER ASPECT THAT I HAD LISTED TO ADDRESS, YOUR HONOR, IF YOU WOULD LIKE MORE INFORMATION ON IT, IS THE CRESCENT AND THE COMMISSION'S ARGUMENTS IN TERMS OF THE STANDARD 35 OF REVIEW, AND WHAT HAPPENS AFTER A CASE VERSUS AT THIS STAGE ON SUPERVISORY WRITS, AND I AM HAPPY TO ADDRESS THAT OR I CAN SAVE IT FOR REBUTTAL, AS YOU WISH. THE COURT: YOU CAN SAVE IT FOR REBUTTAL. MR. YOUNG: OKAY. THANK YOU, JUDGE. THE COURT: THANK YOU. BOY, I BET YOU HAVE BEEN THINKING ABOUT MY QUESTIONS, HAVEN'T YOU? COME ON UP. TELL ME WHAT YOU HAVE GOT ON YOUR MIND. I UNDERSTAND YOUR SIDE OF IT, TOO. MR. MCNUTT: THANK YOU, JUDGE. THE COURT: I THINK I TRIED TO ARTICULATE PART OF YOUR SIDE OF IT, AND I DO HAVE SOME QUESTIONS FOR YOU, BUT I WANT YOU TO GO AHEAD AND ENLIGHTEN ME. MR. MCNUTT: WELL -- THE COURT: AND IF I INTERRUPT, WHICH I TEND TO DO, I APOLOGIZE ON THE FRONT END. Page 49

50 MR. MCNUTT: NO. I ENCOURAGE INTERRUPTION BECAUSE I AM JUST ABOUT FROZEN SOLID HERE AND I HAVE PREPARED SOME REMARKS THAT ARE PROBABLY NOT APPROPRIATE GIVEN THE LINE OF QUESTIONING THAT HAS GONE ON. FIRST INTRODUCE MYSELF, MY NAME IS LARRY MCNUTT. I AM THE ADMINISTRATOR OF THE PILOTAGE FEE COMMISSION WHO IS ACCIDENTLY ITS COUNSEL AT THIS POINT IN ITS HISTORY, AND THAT IS WHAT BRINGS ME BEFORE YOU TODAY. YOUR HONOR, YOU FIRST ASKED THE QUESTION OF MR. YOUNG HERE THAT, IS THIS A TOTAL RATE CASE OR IS IT AN ISSUE OF JUST ADJUSTING A TRANSPORTATION TARIFF, WHICH IS A COMPONENT PART. 36 THE COURT: RIGHT. MR. MCNUTT: WHAT THE FEE COMMISSION RULED ON, AND WHAT WE REGARDED AS MOSTLY A PROCEDURAL HEARING AND ISSUED ITS INTERLOCUTORY RULING WAS THAT INDEED IT WAS JUST A MATTER OF EXAMINING WHETHER THE TRANSPORTATION TARIFF AS IT PRESENTLY IS SET UP AND WAS SET UP BY THE PUBLIC SERVICE COMMISSION WELL BEFORE THE FEE Page 50

51 COMMISSION CAME INTO EXISTENCE, THE EXAMINATION SHOULD BE LIMITED TO THAT MECHANISM AND WHAT IS THE APPROPRIATE ADJUSTMENT OR UPDATE OF THAT IF AT ALL. THE COURT: TO THE EXTENT, TO THE EXTENT THAT ANY OF THE ISSUES THAT THEY WOULD LIKE TO RAISE FROM AN EVIDENTIARY POINT OF VIEW TO TRY AND EXPLAIN WHY IT SHOULD NOT BE INCREASED, HOW DO Y'ALL RECEIVE, HOW DO Y'ALL RECEIVE YOUR COMPENSATION FOR DISTRIBUTION? IS IT A LUMP SUM PAYMENT FOR EVERYTHING UNDER YOUR FEES, OR ARE THERE SPECIFIC PAYMENTS FOR EACH ELEMENT UNDER 1122(B)? MR. MCNUTT: THAT WOULD GO TO THE -- AND BY YOUR FEES, I AM GOING -- AGAIN, I AM EMPLOYED BY THE FEE COMMISSION. I CAN FANTASIZE ABOUT BEING A RIVER PILOT -- THE COURT: I UNDERSTAND. MR. MCNUTT: -- BUT I AM ONLY ANSWERING FROM THE POSITION -- THE COURT: THEIRS I MEAN. I SHOULD SAY THEIRS. MR. MCNUTT: RIGHT. THE ACTUAL BILLING OF THE FEES OCCURS AT THE LEVEL OF CUSTOMER TO FEE Page 51

52 37 COMMISSIONER. THE COURT: I UNDERSTAND, YES, BUT WHAT I MEANT WAS, PAYMENT TO THEM, MADE A SPECIFIC CHECK FOR TRANSPORTATION EXPENSES EACH MONTH, A SPECIFIC CHECK FOR MAINTAINING NECESSARY EMPLOYEES, ONE FOR CONSUMABLES, ONE FOR PENSIONS, ONE FOR -- I SUSPECT IT IS NOT. I SUSPECT IT IS JUST A LUMP SUM OF MONEY THAT IS SENT TO THEM IN PAYMENT FOR THEIR FEES. MR. MCNUTT: I AM GOING TO CLAIM BLISSFUL IGNORANCE OF THE PARTICULARITIES OF THEIR BILLING PROCEDURES, BUT I WOULD TEND TO AGREE WITH YOU. THE COURT: SO, IF HYPOTHETICALLY IT IS A LUMP-SUM PAYMENT FOR THEIR USE, AND THE ELEMENTS THAT MAKE UP THOSE LUMP SUMS ARE SET OUT AS ELEMENTS TO BE CONSIDERED IN THAT, WHY IN THE WORLD IF YOU WANT TO ADJUST ANY ONE OF THEM SHOULD YOU NOT LOOK AT ALL OF IT TOGETHER TO DETERMINE WHETHER IT IS APPROPRIATE TO RAISE A FEE ON A CERTAIN ASPECT? WHY WOULDN'T YOU TAKE THAT INFORMATION? UNLESS YOU ARE PAYING Page 52

53 EACH OF THEM SEPARATELY UNDER A SEPARATE ACCOUNTING SYSTEM FOR JUST THE TARIFF FEE, OR JUST THE PILOT COMPENSATION, YOU ARE ACTUALLY GIVING THEM A LUMP SUM OF MONEY THAT IS BASED ON CERTAIN ELEMENTS, AND THEN THEY UTILIZE IT AS THEY SEE FIT, BUT THEY JUSTIFY THEIR UTILIZATION BY THE STATISTICS THEY GIVE YOU TO SUPPORT EACH OF THOSE SEPARATE CATEGORIES. WE DO NOT KNOW NECESSARILY IF THEY PAID THAT MONEY SOLELY TO THAT PARTICULAR CATEGORY, OR WHETHER 38 THEY TAKE SOME FROM ONE CATEGORY TO SUPPLEMENT ANOTHER CATEGORY THEY MIGHT BE LIGHT IN, OKAY. SO, IF YOU ONLY SEND THEM THE ONE CHECK, WHY SHOULDN'T THE ENTIRETY OF THE STRUCTURE BE RELEVANT TO AN INQUIRY AS TO WHETHER ONE ASPECT SHOULD BE INCREASED? IT SEEMS TO ME IT IS ENTIRELY RELEVANT. IT HAS EVERYTHING TO DO WITH WHETHER OR NOT THE COMMISSION SHOULD RAISE A PARTICULAR ASPECT -- RAISE A FEE BASED UPON ONE PARTICULAR ASPECT, BECAUSE IF YOU DO NOT EXAMINE ALL OF IT AND HOW THEY INTERRELATE, HOW CAN YOU MAKE AN INFORMED DECISION ON WHETHER IT Page 53

54 IS APPROPRIATE TO INCREASE THAT ONE LEVEL? SPECIALLY WHEN THEY WOULD LIKE TO PRESENT EVIDENCE TO YOU THAT THEY ARE ALREADY GETTING A MILLION-AND-A-HALF DOLLARS MORE THAN THEY SHOULD BE GETTING BECAUSE THEY HAVE THREE LESS PILOTS THAN YOU ARE PAYING THEM FOR, OKAY. SO, HOW CAN IT BE IRRELEVANT? I JUST DO NOT UNDERSTAND HOW A DECISION TO STRIKE IT COULD HAVE BEEN MADE. IT REALLY, AT THE END OF THE DAY, YOU CAN SEE THAT I AM NOT REALLY UNDERSTANDING HOW YOU COULD NOT TAKE THAT EVIDENCE, AND WHY YOU WOULD NOT TAKE THAT EVIDENCE. HOW CAN YOU POSSIBLY MAKE A DECISION ON ONE ASPECT WHEN YOU ARE NOT PAYING THEM SOLELY JUST ON THAT ASPECT SEPARATELY AND TAKING A SEPARATE ACCOUNTING JUST ON THAT ASPECT AND ADJUSTING JUST THAT PARTICULAR ASPECT OF THE RATE STRUCTURE, BUT YOU ARE PAYING FOR ALL OF IT TOGETHER BY TAKING INTO ACCOUNT THESE SEPARATE ASPECTS, AND THEY 39 ALL WORK TOGETHER TO COME DOWN TO A FEE THAT THEY ARE PAID, RIGHT? Page 54