Ruby LLC
Ruby LLC responds there is no merit to GTN's assertion that Ruby LLC's disclosure of updated cost information in a press release on June 25, 2008, demonstrates the updated cost information was never confidential, and that prior ALJ rulings finding the information was confidential were in error. Ruby LLC claims the updated cost information was confidential prior to June 25. Ruby's parent company, El Paso, had only signed contracts for steel pipe and construction services the day before, on June 24, and Ruby LLC had signed the last of the shipper contracts needed for the project to go forward on June 20. Following these developments, El Paso issued the press release in conjunction with a Securities and Exchange Commission (SEC) Form 8K filing on June 25, which El Paso was required to do because of the materiality of the steel purchase and contractor commitments. El Paso included the updated $3 billion cost estimate in the press release because SEC regulations require El Paso to keep the investment community informed of material transactions.
Ruby LLC agrees with the ALJ's ruling that denied GTN's motion to suspend the hearing following the submittal of Ruby's updated testimony on June 27, 2008, that reflected the contents of the press release issued on June 25. GTN did not move for a delay until the evening of June 29th, more than four days after the press release.88 The ostensible reason for GTN's motion was the need for more time to review Ruby LLC's updated testimony submitted at noon on June 27th.89 Ruby LLC states the revisions simply reiterated information in the press release, with no major new facts. In Ruby LLC's opinion, the real purpose of GTN's motion was to drag out the proceeding in order to undermine the competing Ruby Pipeline.
Ruby LLC notes that the ALJ provided GTN with extra time to cross-examine Ruby LLC's main witness, Thomas Price, just not as much time as GTN would have liked. Regardless, Ruby LLC states that GTN was not prejudiced by the ALJ's actions because GTN never stated what additional information would have been obtained had the ALJ given GTN more time.
We find no merit to GTN's claim that it was denied due process by several ALJ rulings. First, GTN states the ALJ rulings prevented its primary counsel, Manatt, from receiving certain confidential material from PG&E until after the opportunity to file direct testimony had passed. However, GTN's other outside counsel, Hogan & Hartson LLP, had access to the confidential material, as did the relevant GTN witness, well before GTN filed its direct testimony. Thus, GTN was not denied due process on this matter.
Second, GTN alleges it was deprived of due process by several ALJ rulings that denied GTN's motions to compel Ruby LLC to provide information on (1) Ruby LLC's updated estimate of construction costs for the proposed Ruby Pipeline, and (2) the status of Ruby LLC's contracts with potential shippers. These rulings properly took into account the fact that Ruby LLC is competing with GTN's parent company, TransCanada, to build the next large pipeline transporting gas out of the Rocky Mountains. TransCanada is a sponsor of the proposed Sunstone and Pathfinder pipelines. If built, Sunstone will transport gas West and Pathfinder will transport gas East. While cost information for Sunstone has been disclosed publicly, similar information for Pathfinder remains confidential. In light of these circumstances, the ALJ correctly ruled that it would be inappropriate to require Ruby LLC to provide competitively sensitive information to GTN because:
Both TransCanada and [Ruby LLC] are...competing for the same customers...whose commitments to a project will likely determine which one is built. In this highly competitive environment and sensitive stage of negotiations, it would be a significant advantage for GTN and its parent company to know Ruby's current costs while maintaining the secrecy of Pathfinder's rates and costs. With such information, TransCanada will be able to compete effectively knowing Ruby's "bottom line," while Ruby will be without the benefit of the same kind of information.90
Although GTN argues that it needed access to competitively sensitive information about Ruby costs and shipper contracts in order to prepare its case, the ALJ correctly held that such information was of marginal relevance to this proceeding given that PG&E has a 15-year, fixed-price contract with Ruby LLC that is unaffected by changes to Ruby's costs.91 We affirm the ALJ's ruling that the potential for significant competitive harm weighed against disclosure of competitively sensitive information of marginal relevance to this proceeding.
We are not persuaded by GTN's argument that the ALJ should have required Ruby LLC to provide confidential information to GTN's "reviewing representatives" because an earlier ALJ ruling required PG&E to provide confidential information to GTN's reviewing representatives. GTN filed three separate motions to compel Ruby LLC to provide confidential information on Ruby's costs and shipper contracts, all of which were properly denied by the ALJ. GTN waited until its third motion to request that Ruby LLC be required to provide the confidential information to GTN's reviewing representatives. The ALJ correctly denied the third motion for the following reasons:
This is Ruby's third motion to obtain confidential and commercially sensitive cost information on the Ruby Pipeline and its second motion to obtain responses to GTN Data Request Nos. 4-1 and 4-2(b). The only new argument raised in GTN's current motion is that Ruby should be compelled to provide the sought-after information to GTN's reviewing representatives who meet the criteria set forth in D.06-12-030, consistent with an earlier ruling issued by the assigned Administrative Law Judge (ALJ) on April 22, 2008, that required Pacific Gas and Electric Company to provide confidential and commercially sensitive information to GTN's reviewing representatives.
GTN's motion amounts to second and third bites at the apple. There is no reason why GTN could not have made its "reviewing representative argument" in earlier motions, since GTN is represented by obviously competent attorneys from a large and prestigious law firm. The fact that GTN chooses to raise this argument now, after failing to do so in three previous motions, suggests the possibility that GTN may be using tactics that are troublingly similar to vexatious litigation and abuse of process. At the very least, GTN's repeated motions are an unproductive use of scarce Commission resources.
To prevent any further expenditure of Commission time, effort, and resources on matters that were decided in previous ALJ rulings, and to encourage GTN to henceforth raise its arguments in a timely fashion, GTN's motion is summarily denied. (ALJ Ruling Denying GTN's Motion to Compel, dated June 16, 2008, pp. 2 - 3.)
There is no merit to GTN's argument that public disclosure of Ruby's costs and the status of its shipper contracts in a press release issued by El Paso on June 25, 2008, demonstrates the information was never confidential and that the ALJ's rulings were erroneous. The issuance of the El Paso press release on June 25 (Exhibit Ruby-20) followed closely on the heels of Ruby LLC having signed contracts on June 24 for steel pipe and construction services, and having signed on June 20 the last of the binding shipper contracts needed for the Ruby Pipeline project to go forward.92 These signed contracts marked the conclusion of Ruby LLC's negotiations with suppliers and customers, and ended the need for Ruby LLC to keep confidential its estimated construction costs and the status of shipper contracts. The fact that such information was confidential prior to the signed contracts is demonstrated conclusively by GTN's parent company, TransCanada, keeping similar information confidential for the competing Pathfinder pipeline.
Third, we find no merit to GTN's claim that the ALJ committed legal error when, following the El Paso press release, the ALJ directed Ruby LLC to update its written testimony to reflect the information in the press release. The update affected only a small portion of Ruby's testimony. It is not unusual for ALJs to allow updated testimony during a hearing in response to new developments.
In the same vein, we find no merit to GTN's claims that the ALJ committed legal error by (1) giving GTN two business days to submit written testimony responding to Ruby's updated testimony, and (2) denying GTN's motion to suspend the proceeding for 30 days so that GTN could review and respond to Ruby's updated testimony. The updated testimony provided by Ruby LLC was narrow in scope and pertained, for the most part, to the peripheral issue of pipeline construction costs.93 The ALJ provided GTN with adequate time to prepare a response and correctly ruled that there was insufficient justification for suspending the hearing for one month for a peripheral issue.94
To support its claim of procedural error, GTN cites Southern California Edison Co. v. Public Utilities Commission ("SoCal Edison").95 SoCal Edison addressed a situation where the Commission adopted a regulation that was not proposed until late in the proceeding. The Court stated: "Neither the preliminary scoping memo nor the scoping memo suggested that the scope of issues to be addressed included consideration of a proposed prevailing wage requirement."96 The Court held that "three business days was insufficient time for the parties to respond to the new proposals."97 SoCal Edison does not apply here. The updated testimony submitted by Ruby LLC did not raise an entirely new issue as was the case in SoCal Edison, but merely provided updated information regarding a minor issue that was explicitly identified as being within the scope of this proceeding in the assigned Commissioner's Scoping Memo.98
We find no merit to GTN's claim that the ALJ, by directing Ruby LLC to update its testimony, ignored the deadline for submitting testimony set forth in the Scoping Memo. The Scoping Memo states that the adopted schedule may be revised by the assigned ALJ.99 The ALJ properly used his discretion under the Scoping Memo. We similarly find no merit to GTN's claim that the ALJ violated Rule 13.8. As GTN correctly notes, once prepared testimony has been served, Rule 13.8 prohibits the submittal of additional prepared testimony without good cause. We agree with the ALJ that there was good cause to update the record to reflect more recent information.
Finally, we find the ALJ acted properly when he ended GTN's cross examination of Ruby LLC's main witness, Thomas Price. The schedule for the hearing, which GTN had agreed to, provided GTN with 60 minutes to cross examine Ruby's witness. The ALJ ended GTN's cross examination after 78 minutes, which exceeded GTN's allotted time by 30%.100 The ALJ twice informed GTN that it had exceeded its allotted time and that GTN needed to wrap up its cross examination. As noted by PG&E, at the time this occurred, the hearing was running behind schedule. These circumstances convince us that the ALJ acted reasonably by ending GTN's cross examination of Ruby's witness.
Reid recommends that the Commission require El Paso to file an annual compliance report that explains (1) whether El Paso has complied with U.S. Department of Transportation (DOT) pipeline regulations, and (2) any relevant findings by DOT related to DOT regulations. Reid believes the reporting requirement is necessary in light of a major outage on El Paso's Cheyenne Plains Pipeline in 2007 that lasted nearly two months.
Ruby LLC was the only party to respond to Reid's recommendation. Ruby opposes the recommendation.
We decline to adopt Reid's recommendation. El Paso has a vast network of interstate pipelines, most of which does not serve California or affect California gas markets. Thus, most of the information required by Reid's proposed report would have no relevance to California. Moreover, it appears that most or all of the information in the report would pertain to matters entirely outside of the Commission's jurisdiction.
Although the Commission has no authority over Ruby Pipeline operations, we are concerned about the impacts an outage could have on California. To ensure the Commission is kept apprised of outage events, we will approve PG&E's application with the condition that PG&E provide prompt responses to Commission requests for information regarding outages on the Ruby Pipeline.
88 5 TR 461: 11-13.
89 5 TR 461: 17-21.
90 ALJ Ruling Denying Supplemental Motion to Compel dated May 16, 2008, pp. 4 - 5.
91 Id., pp. 3 and 6.
92 Exhibit Ruby-16, p. 4, lines 18-27.
93 As stated previously, the issue of the Ruby's estimated pipeline construction costs is of marginal relevance to this proceeding because PG&E has a 15-year, fixed priced contract with Ruby LLC that is unaffected by changes to Ruby's costs.
94 5 TR 468-69.
95 140 Cal. App. 4th 1085, 45 Cal. Rptr. 3d 485 (2006).
96 Id. at 1105.
97 Id.
98 Scoping Memo, p. 5, Issue 3.g. Although the issue of estimated construction costs is within the scope of the proceeding, it is not a central issue in the proceeding.
99 Scoping Memo, p. 9.
100 The hearing video shows that GTN exceeded its allotted time by 18 minutes.
