As seen in the previous episode, Mulder, clad in scuba gear, inspects (what appears to be) the wreckage of a UFO deep beneath the murky waters of Great Sacandaga Lake in Upstate New York. A bright beam of light penetrates the darkness, illuminating the agent. The light's source is revealed to be a team of frogmen, accompanied by an amphibious craft equipped with large searchlights. Mulder attempts to make an escape, but he is placed under military arrest.

     A wounded Garrett escapes from the Headless Woman Pub. Scully immediately turns her attention to Agent Pendrell, who was caught in the crossfire. Paramedics are called to the scene and Pendrell is transported to a nearby hospital. Skinner tells Scully that Louis Frish is being placed under military arrest (for suspicion of murder and providing false testimony to a federal investigation).

     Mulder is released from jail. The Air Force asserts that Flight 549 collided with a military fighter jet when Frish and his tower co-controller made an error in judgment. Based on the wreckage he saw beneath Lake Sacandaga, Mulder believes Flight 549 collided with a UFO (after it was shot down by a military jet). Scully tells Mulder that Agent Pendrell died of his injuries. Mulder conveys his sympathies.

     Records reveal that Sharon Graffia is not Max Fenig's sister, but an unemployed aeronautical engineer who spent time in mental institutions (where she met Fenig). The agents search Fenig's mobile home. They discover a videotape in which Fenig states that the military salvaged alien technology for use in their own technological applications. He claims to have undeniable, irrefutable proof to back up his assertion.

     Mulder describes for Mike Millar the sequence of events that (he believes) led to the downing of Flight 549. According to Mulder, Max boarded the plane carrying physical proof of the existence of extraterrestrial life. Someone followed him aboard the craft, intending to obtain the object at any cost. But before the assassin could carry out his plot, Flight 549 was intercepted by a UFO. As the UFO began to abduct Fenig, flight controllers ordered a military jet into 549's airspace on a mission to destroy the alien craft. When the Air Force shot down the UFO, the airliner, caught in its "tractor beam," spun out of control and crashed.

     The manager of the trailer park where Fenig lived gives Mulder Fenig's undelivered mail. One envelope contains a luggage claim ticket bearing a three-letter designation for Syracuse. Meanwhile, Scully meets with Sharon Graffia at a mental health center. She admits she stole an object from her employer after Max insisted it could prove the existence of alien life. The object was divided into three parts. Max and Sharon each took a segment, but they were later confiscated.