Contract analysis

I. Purpose of Letter We write to advise the Metropolitan Transit Development Corporation ("MTDC") regarding the legal and practical consequences of the Federal Transit Administration's ("FTA") rescission of Grant No. IL-2023-0067-00, in the amount of Seventy-Eight Million Five Hundred Thousand Dollars ($78,500,000), as communicated to MTDC by formal Notice of Grant Rescission dated June 12, 2023. As you are aware, Ca

II. Background and Procedural History To place our recommendation in its proper context, we summarize below the relevant background concerning the FTA grant, the scope of the electrification project, and the ICC regulatory proceeding. A. The FTA Grant and Project Scope On January 9, 2023, the FTA issued a Notice of Award under the Low- and No-Emission Vehicle Program, authorized pursuant to 49 U.S.C. § 5339(c), award

III. FTA Grant Rescission — Events and Legal Effect A. Congressional Funding Lapse On June 8, 2023, the congressional continuing resolution that had provided interim authority for certain categories of federal discretionary spending, including transit capital funding under the FTA's competitive grant programs, expired without the enactment of a successor appropriations measure or a further continuing resolution. The

IV. Analysis of Available Options We have considered three potential courses of action available to MTDC in light of the Grant rescission. We analyze each below and set forth our recommendation. A. Option 1: Withdraw Verified Petition Without Prejudice (Recommended) Under this option, C&H would file a Motion to Withdraw the Verified Petition in ICC Docket No. 23-0214 without prejudice, and would request that ALJ Lind

V. Procedural Mechanics of Withdrawal Assuming MTDC authorizes the recommended course of action, C&H will proceed as follows:

1. Preparation of Motion. C&H will prepare and file a Motion to Withdraw Verified Petition Without Prejudice in ICC Docket No. 23-0214 (the "Motion to Withdraw"). Draft versions of the Motion and the accompanying proposed order are enclosed with this letter for your review. We welcome any comments or revisions you may wish to suggest prior to the filing.

2. Proposed Order. The Motion to Withdraw will be accompanied by a Proposed Order Granting Withdrawal Without Prejudice for ALJ Lindquist's consideration. The Proposed Order will provide for the withdrawal of the Verified Petition without prejudice to MTDC's right to refile, the vacation of the June 28, 2023 evidentiary hearing date, and the closure of ICC Docket No. 23-0214.

3. Grounds for Withdrawal. The Motion will set forth the grounds for withdrawal, including the FTA's rescission of Grant No. IL-2023-0067-00, the resulting lapse of project funding, and the MTDC Board of Directors' June 14, 2023 vote authorizing the withdrawal.

4. Service on Parties. Service of the Motion and Proposed Order will be made on all parties of record in accordance with ICC procedural rules, including: (a) ICC Staff Counsel Ellen R. Dempsey, Esq.; (b) Hargrove, Peck & Tillotson LLP, as counsel for Prairie Shore Electric Company (Attn: Andrew S. Peck, Esq.); and (c) Rosenberg & Dietrich LLP, as counsel for the Clean Air Transit Alliance (Attn: Diane L. Rosenberg, E

5. Filing Date. Our target filing date for the Motion to Withdraw is June 19, 2023. This target is intended to allow sufficient time before the currently scheduled June 28, 2023 evidentiary hearing date for ALJ Lindquist to act on the Motion and, if the Motion is granted, to vacate the hearing date in an orderly fashion. To achieve this target, we will need to receive MTDC's formal written authorization no later than

6. Anticipated Ruling. We anticipate that ALJ Lindquist will rule promptly on the Motion given the approaching evidentiary hearing date and the clear factual basis for the withdrawal. As noted above, we do not anticipate opposition from any party of record.

VI. Preservation of MTDC's Rights and Work Product A critical advantage of the recommended withdrawal without prejudice is the preservation of MTDC's right to refile a petition concerning the same or substantially similar subject matter at a future date, should federal funding be restored through a new congressional appropriation or should alternative financing be identified. This right is preserved by operation of t

VII. Impact on Related Agreements and Advisors The Grant rescission and the recommended withdrawal of the ICC Petition have implications for several of MTDC's contractual relationships and advisory engagements in connection with the Phase 1 Project. We address these below. Draft Infrastructure Cost-Sharing Agreement — Prairie Shore Electric Company. As noted in Section II.B above, the draft Cost-Sharing Agreement bet

VIII. Engagement and Billing Status For your reference, we provide the following summary of the engagement and billing status for C&H Matter No. 1031-00002. The C&H engagement was subject to a capped fee of $385,000 for the regulatory proceeding through final order. This fee cap was established at the outset of the engagement and was intended to cover all professional services rendered by C&H through the conclusion o

IX. Request for Authorization In light of the foregoing analysis and our recommendation that MTDC proceed with the withdrawal of the Verified Petition without prejudice, C&H respectfully requests that MTDC, through its General Counsel, provide formal written authorization directing C&H to file the Motion to Withdraw Verified Petition Without Prejudice in ICC Docket No. 23-0214. We request that such authorization be p

X. Conclusion We sincerely regret the circumstances that have necessitated the interruption of the Phase 1 electrification project, which represents a critical component of MTDC's sustainability mission and service to the public. The loss of the FTA Grant is a consequence of factors entirely outside MTDC's control, and MTDC's diligent efforts to advance this project through the regulatory process are well documented

1. Draft Motion to Withdraw Verified Petition Without Prejudice

2. Draft Proposed Order Granting Withdrawal Without Prejudice Depot Location | Address | Planned New Load Capacity North Garage | 4501 West Lawrence Avenue, Chicago, IL 60630 | 18 MW West Garage | 1200 South Cicero Avenue, Chicago, IL 60804 | 15 MW South Garage | 7800 South Vincennes Avenue, Chicago, IL 60620 | 12 MW Combined New Load | 45 MW Attorney | Role | Hourly Rate Patricia Dunmore | Engagement Partner | $1,05