On August 14, 2024, Jeremy Hessler, the Administrative Law Judge presiding over a proceeding involving a complaint by TransMontaigne Partners LLC and TransMontaigne Operating Company LP (collectively, TransMontaigne) against Colonial Pipeline Company (Colonial), issued an order denying a motion filed by Colonial “to Permit Interlocutory Appeal of my order granting [(TransMontaigne Partners LLC v. Colonial Pipeline Co., 188 FERC ¶ 63,008 (2024) (July 22 Order))] TransMontaigne Partners LLC and TransMontaigne Operating Company LP (together, TransMontaigne)’s motion to compel.”

Judge Hessler noted that “Rule 715(b)(2) of the Commission’ Rules of Practice and Procedure (Rule) requires that in deciding whether to permit an interlocutory appeal, the standard stated in Rule 715(a) applies.  Specifically, I must determine whether there exist ‘extraordinary circumstances which make prompt Commission review [of my July 22 Order] necessary to prevent detriment to the public interest or irreparable harm to any person [(18 C.F.R. § 385.715(b)(2))].’”

Discussion

Judge Hessler stated that “Colonial has failed to demonstrate the ‘extraordinary circumstances’ required for an interlocutory appeal to the Commission under Rule 715 [(18 C.F.R. § 385.715)].  Colonial contends that extraordinary circumstances exist because the contested ruling would not allow Colonial to unilaterally redact the irrelevant information in documents that also contain relevant information.  Colonial contends that this irrelevant material ‘could result in significant and irreversible commercial harm to Colonial.’  The July 22 Order is congruent with the Commission’s regulations and Colonial has failed to make a specific showing of why the protective order is insufficient to protect this commercially sensitive material.”

Motion

In its Motion, “Colonial argues that the July 22 Order granting the Motion to Compel was improper because it requires Colonial to provide non-responsive and irrelevant information that was previously redacted in some relevant documents.  Colonial claims that the July 22 Order in effect requires that documents be produced in their entirety and would force irrelevant information to be compelled. … Colonial sets forth three main arguments why its Motion meets the extraordinary circumstances [(18 C.F.R. § 385.715(a) (2024))] necessary for permitting interlocutory appeal.  First, Colonial claims that interlocutory appeal is necessary to prevent detriment to the public interest and irreparable harm to Colonial.  Colonial states that interlocutory appeal is necessary because the July 22 Order impermissibly expands the scope of discovery beyond the standard contemplated in Rule 402 [(see 18 C.F.R. § 385.402(a) (2024))].”

“Second, Colonial argues that interlocutory appeal to the Commission is necessary because relevant authority does not require the production of irrelevant information.  Colonial cites Commission Rule 402(a), which states that ‘participants may obtain discovery of any matter, not privileged, that is relevant to the subject matter of the pending proceeding [(18 C.F.R. § 385.402(a))].’  Colonial notes that the July 22 Order states that the question of whether portions of a relevant document may be redacted is an issue of first impression, and that it cites several federal court decisions disallowing redactions.”

“Finally, Colonial argues that interlocutory appeal is appropriate because the July 22 Order erred in concluding that the Commission’s rules require any document containing relevant information to be produced in its entirety.  Colonial states that redactions like those made to the documents are relatively common in FERC proceedings. … Colonial claims that two ALJ orders permitted redactions based on the limitations imposed by Rule 402 [(citing, e.g., Order Regarding Motions to Compel re Valero Marketing and Supply Company v. Longhorn Partners Pipeline, LP et al., Docket No. OR08-4-000 at P 3 (Oct. 2, 2008))].  Colonial furthermore states that TransMontaigne has not pointed to any section of redacted information as relevant information, demonstrating that the redactions protect irrelevant information. … Colonial posits that redactions are appropriate under Rule 402 because the issue in this case is narrow in scope and because the redactions of the types of documents that are at issue is straightforward.”

Determination

Judge Hessler stated that “[d]iscovery under Rule 402 ‘is intended to be broad in scope [(All Am. Pipeline Co., 70 FERC ¶ 61,210, at 61,658 (1995) (citing Order No. 466, Rules of Discovery for Trial-Type Proceedings, FERC Stats. & Regs. ¶ 30,731 (1987), on reh’g, Order No. 466-A, FERC Stats. & Regs. ¶ 30,766))].’  The information requested in the data request itself need not be admissible, it need only ‘appear[] reasonably calculated to lead to the discovery of admissible evidence [(18 C.F.R. § 385.402(a); PJM Interconnection, L.L.C., 130 FERC ¶ 61,233, at P 9 n.7 (2010); San Diego Gas & Elec. Co., 116 FERC ¶ 61,183, at P 20 n.6 (2006))].’  Additionally, when the Commission lacks a clear evidentiary rule on a given situation, it may turn to the Federal Rules of Civil Procedure for guidance [(Am. Elec. Power Serv. Corp., 145 FERC ¶ 63,008, at P 12 (2013) (citing Oasis Pipeline, L.P., 125 FERC ¶ 63,021, at P 23 (2008)); see also Order No. 466, FERC Stats. & Regs. ¶ 30,731, at 30,550-51)].”

“First, Colonial argues that the July 22 Order expands the scope of discovery ‘well beyond what is contemplated under Rule 402’ since discovery is limited to any matter, not privileged, that is relevant to the proceeding.  I disagree and view the July 22 Order as congruent with the Commission’s discovery regulations. … As relevant here, under Rule 406, any participant may request, inter alia, ‘copies of documents [(18 C.F.R. § 385.406(a) (emphasis added))].’  The use of the word ‘documents’ encompasses the entire document.  The Commission did not limit this right to parts of documents that the responding party, in its discretion, believes to be directly relevant to the discovery request.  Subject to the Commission’s regulations on protecting privileged material, Rule 406 contemplates a copy of the entire document will be provided to a participant if it contains relevant information.”

“This interpretation is strengthened by the fact that the Federal Rules of Civil Procedure (FRCP) also do not grant parties the power to unilaterally redact information on the basis of relevance [(Bartholomew v. Avalon Cap. Grp. Inc., 278 F.R.D. 441, 451 (D. Minn. 2011))].  FRCP 34 concerns the discovery of ‘documents [(Fed. R. Civ. Proc. 34(a))].’  Like Rule 406, it also does not parse documents into subparts such as ‘individual pictures, graphics, paragraphs, sentences, or words within those documents [(Bartholomew v. Avalon Cap. Grp. Inc., 278 F.R.D. at 451-52)].’ … Moreover, Rule 34 requires a party to ‘produce documents as they are kept in the usual course of business [(Fed. R. Civ. P. 34(b)(2)(E)(i))].’  Because copies of documents produced in discovery must be identical to the original documents ‘kept in the usual course of business,’ it follows that a participant must provide unredacted documents as they exist in the party’s possession [(Gen. Motors LLC v. Ashton, 2023 WL 1765711, at *4 (D. N.J. Feb. 3, 2023)].”

Judge Hessler stated that “Colonial argues that I should have followed the decisions of two of my fellow administrative law judges who each reviewed specific recordings or documents in camera and determined the information was not relevant and could be redacted [(citing Order On Redacted Audio Recordings re Puget Sound Energy, Inc. v. All Jurisdictional Sellers of Energy and/or Capacity at Wholesale into Electric Energy and/or Capacity Markets, Docket No. EL01-10-085, at P 3 (July 31, 2013) (McCartney, J.); Order Regarding Motions to Compel re Valero Marketing and Supply Company v. Longhorn Partners Pipeline, LP et al., Docket No. OR08-4-000, at P 3 (Oct. 2, 2008) (Glazer, J.))].  I agree there are times when in camera review of a narrow set of discovery responses by an administrative law judge is highly efficient and needed for a fair hearing process [(see, e.g., Indep. Oil & Gas Ass’n of West Virginia, 21 FERC ¶ 63,030 (1983); Filing of Privileged Materials & Answers to Motions, 141 FERC ¶ 61,049, at P 23 (2012))].  However, I disagree that as a policy, an administrative law judge should act as a middleman reviewing all discovery responses that contain information that is not directly relevant. … Therefore, as Rule 406 uses the word ‘documents,’ like FRCP 34, I find that if a document contains relevant information, then the entire document must be produced as it is kept in the usual course of business subject to the Commission’s regulations on protecting privileged material.  This process yields ‘just, speedy, and inexpensive determination[s] of every action and proceeding [(Bartholomew v. Avalon Cap. Grp. Inc., 278 F.R.D. at 452 (quoting Fed. R. Civ. P. 1))].’”

“Next, Colonial argues that the July 22 Order provides TransMontaigne with ‘unfettered’ access to sensitive business information.  Relatedly, Colonial argues that the protective order is insufficient to protect this information since it believes that counsel for TransMontaigne or employees of TransMontaigne will breach the provisions of the protective order.  Colonial fails to support these contentions with specific evidence. … As an initial matter, even the cases cited in the July 22 Order make an exception for information that if left unredacted, would cause harm to the participant.  Although federal courts have generally found that parties may not unilaterally redact irrelevant pieces of information, certain circumstances may justify leave to redact irrelevant portions of otherwise responsive documents [(see Bartholomew v. Avalon Cap. Grp. Inc., 278 F.R.D. at 452; Hageman v. Accenture, LLP, 2011 WL 13136510 at *4 (D. Minn. June 7, 2011))].”

Judge Hessler stated that “[t]he Commission has explained that it is common practice for parties in a proceeding to use a protective order to gain access to confidential and proprietary information submitted on a non-public basis, while at the same time ensuring such information is neither publicly disclosed nor used by parties for purposes unrelated to their participation in the proceeding [(Tri-State Generation & Transmission Ass’n, Inc., 170 FERC ¶ 61,222, at P 26 (2020) (citing West Deptford Energy, LLC, 134 FERC ¶ 61,189, at P 29 (2011); S. Co. Energy Mktg., Inc., 111 FERC ¶ 61,011 (2005)))].  The Commission further explained that unless an objecting party meets its burden of proof, it is generally presumed that the use of a protective order appropriately balances the interests of filers in safeguarding their sensitive information against inappropriate disclosure and the right of intervenors to access information necessary to allow them full and meaningful participation in a contested proceeding [(Id. (citing West Deptford Energy, LLC, 134 FERC ¶ 61,189 at PP 27-29))].”

“In crafting a protective order, the Commission requires ‘the least restrictive protective order that accomplishes the protective purposes [(Amoco Pipeline Co., 55 FERC ¶ 61,323, 61,960 (1991) (citing Transcontinental Gas Pipeline Corp., 38 FERC P 61,245, at p. 61,832 (1987)))].’  However, the Commission acknowledges that ‘consideration must be given to [the parties’] status as competitors [(Id.)].’  This is because cases at the Commission ‘often place a party’s right to discover relevant information against another party’s desire not to disclose confidential and proprietary information to a competitor [(Mojave Pipeline, 38 FERC ¶ 61,249, at 61,841 (1987))].’  To thread this needle, the Commission recommends safeguards in protective orders such as ‘limiting the people who can review the material to outside counsel or consultants; [or] prohibiting access to the information by employees who could directly use the information to a competitive advantage (such as the employees or representatives who negotiate purchase contracts) [(Id. at 61,842 (citation omitted).’”

Further, “[i]n considering a participant’s request to access confidential information, the Commission has found that it is ‘obligated to balance the interests of a party seeking confidential treatment for information with the interests of parties seeking access to that information [(Tri-State Generation & Transmission Ass’n, Inc., 170 FERC ¶ 61,222 at P 27 (quoting ISO New England Inc., 169 FERC ¶ 61,015, at P 17 (2019)); see also West Deptford Energy, LLC, 134 FERC ¶ 61,189, at P 30 (2011))].’  The ‘burden is on the party seeking to safeguard information to show that the protective order does not adequately protect its interests [(Tri-State Generation & Transmission Ass’n, Inc., 170 FERC ¶ 61,222 at P 27 (citing Empire State Pipeline, 115 FERC ¶ 61,113, at P 7 (2006); Mojave Pipeline Co., 38 FERC ¶ 61,249, at 61,842)].’ … Colonial is aware of this procedure.  In this proceeding, Colonial filed an objection to Mr. Huff, one of TransMontaigne’s witnesses, since he was a consultant for this proceeding but still retained commercial responsibilities for TransMontaigne.  In my order, I found that Mr. Huff’s commercial responsibilities presented an unacceptable risk of inadvertent disclosure of Colonial’s Highly Confidential and Section 15(13) information to its direct competitor, TransMontaigne [(Order Denying the Request of TransMontaigne to Designate Mark S. Huff as a Reviewing Representative of Highly Confidential and Section 15(13) Material (Sept. 6, 2023) (September 6 Order))].  After my order, Mr. Huff quit his job that involved commercial responsibilities for TransMontaigne to solely focus on litigation in this proceeding,” which Judge Hessler allowed (Order Granting Unopposed Joint Motion to Conditionally Approve Mark S. Huff as Reviewing Representative (Oct. 6, 2023)).

“Here, on the other hand, Colonial has not made a sufficient showing that the protective order is insufficient to protect its sensitive business information.  Colonial complains that there is relevant information in presentations that contain multiple, unrelated topics that were made for board members, company executives, or other high-level company personnel.  Colonial points to discovery requests by TransMontaigne that seek Colonial’s long-range plans, all of which contain some relevant information. … But instead of carrying its burden to specifically ‘show that the protective order does not adequately safeguard its interests [(Mojave Pipeline Co., 38 FERC ¶ 61,249, at 61,842)],’ Colonial speculates that counsel for TransMontaigne and employees of TransMontaigne could use the information to advantage TransMontaigne’s business interests, and enforcing the protective order would not avoid the economic harm.  Colonial fails to explain how this information would be disseminated to employees who work at TransMontaigne. As demonstrated in the September 6 Order, neither the witnesses nor counsel for TransMontaigne work for TransMontaigne.”

“Colonial nonetheless believes outside counsel for TransMontaigne and its independent consultants who were retained for this proceeding will violate the binding terms of the protective order by sending this information to employees of TransMontaigne. … If Colonial believes counsel for TransMontaigne breached a protective order, Colonial may submit the appropriate filing with specific information supporting that allegation. … Colonial’s general concern that TransMontaigne’s outside counsel and independent consultants could violate the protective order applies to every proceeding where sensitive information is routinely exchanged through discovery pursuant to a protective order. Colonial’s argument would essentially create a new category of protected information that categorically cannot be protected by the terms of the protective order, hence redaction.  This approach would allow Colonial unilateral discretion to deem what constitutes sensitive business information, as well as determine whether it is relevant or not.”

Judge Hessler stated that “[s]uch an approach is not in line with Commission principles and the broad scope of discovery in Commission proceedings [(West Deptford Energy, LLC, 134 FERC ¶ 61,189 at P 30)].  As the Commission explained, ‘as an administrative agency, we are bound by the Administrative Procedure Act, under which, in any adjudication, ‘[t]he agency shall give all interested parties opportunity for. . . the submission and consideration of facts, arguments, offers of settlement, or proposals of adjustment when time, the nature of the proceeding, and the public interest permit[.]’  [T]he other parties to this case cannot ‘consider the facts’. . .when they are unable to know what those facts are [(Id. at P 31 (quoting 5 U.S.C. § 554(c)(1)))].’ … Colonial has not provided any evidence of an intent to violate the terms of the protective order or that the protective order is insufficient to protect this information.  Colonial may seek leave to redact sensitive business information if it meets its burden to show that the protective order is insufficient to safeguard that information.”

“Next, Colonial argues that the July 22 Order relieved TransMontaigne of showing the information is relevant.  Colonial improperly shifts the burden to TransMontaigne to prove relevancy for each redaction otherwise it remains redacted.  This is especially egregious since TransMontaigne has little idea what is behind the redactions beyond some of the headings that Colonial left unredacted.  Colonial explains that it voluntarily unredacted some of the headings to allow TransMontaigne to see the general categories of information redacted.  This is not sufficient. … The burden for responding in full to a relevant discovery request is on the responding participant, here Colonial.  Requiring the receiving participant, here TransMontaigne, to prove the relevancy of redacted information improperly shifts the burden to TransMontaigne, creates an inefficient process, and is unfair since the information is unilaterally redacted at Colonial’s discretion without the opportunity for TransMontaigne to review if it is proper.”

In its Motion, “Colonial next argues that the July 22 Order imposes significant discovery burdens on Colonial.  Colonial explains that it has had to respond to more discovery requests in this proceeding compared to the discovery requests it has propounded.  Colonial also believes that the July 22 Order will encourage other litigants ‘to seek broader and less targeted discovery, knowing that such requests likely will result in the production of documents that contain not only information that is relevant. . . but also information that may be useful in other unrelated contexts.’”

“Regarding Colonial’s argument that the July 22 Order creates a burden for responding to discovery, undue burden objections are addressed in Rule 410.  Under that Rule, the objecting participant claiming undue burden ‘must provide the participant seeking discovery with a description of the approximate number of documents that would have to be produced and a summary of the information contained in such documents [(18 C.F.R. § 385.410(a)(2)(ii))].’  If Colonial believes that specific discovery requests impose an undue burden, it may make the appropriate objection and provide the required information to meet its burden of proof.  Colonial has not made a specific showing of undue burden here.”

“Colonial next contends that due to the July 22 Order, litigants will fashion broader discovery to uncover unrelated information.  This, again, is speculative.  Without specific examples, it is difficult to figure out how this scenario would occur.  Under the boundaries of the July 22 Order, these responsive documents contain relevant information, but also contain information that is not relevant. … If Colonial is concerned that a discovery request is seeking only information that is not relevant or is vague, then it may make the appropriate objection for that specific request with the required support.  Colonial has not made such an objection here.  I find Colonial’s concern unsupported.”

Judge Hessler found that “Colonial has failed to demonstrate the ‘extraordinary circumstances’ required for an interlocutory appeal to the Commission under Rule 715 [(18 C.F.R. § 385.715)].  Colonial’s assertions that the protective order does not sufficiently protect its sensitive business information are unsupported.  Accordingly, Colonial’s Motion is DENIED.”

See ¶406-30: Production of Documents for more summaries of orders discussing responses to requests for documents, ¶410-37: Protective Orders for more summaries of orders discussing protective orders, and ¶715-22: Interlocutory Appeals — Denied by ALJ for more summaries of ALJ orders denying motions to permit interlocutory appeal.

TransMontaigne Partners LLC, et al. v. Colonial Pipeline Company, Order Denying Motion to Permit Interlocutory Appeal, 188 FERC ¶ 63,017 (2024) (J. Hessler) [Docket No. OR22-5-001].