Concluding from the previous episode, we see Mulder under the murky water of Lake Sacandaga suddenly illuminated by a bright light which seems to be coming from the UFO wreckage he is inspecting.

It turns out to be a craft with searchlights and a group of frogmen who are trying to capture Mulder. He almost succeeds in escaping but fails miserably.

Meanwhile back at the Headless Woman's pub, we see Garrett walking away with a wound but Scully is not bothered as she has turned her attention to Agent Pendrell who was shot in the previous episode by Garrett. Paramedics quickly arrive on the scene and take Pendrell to a nearby hospital. While this is happening, Skinner tells Mulder (who is under military arrest) that Louis Frish is also being placed under military arrest for suspicion of murder and for providing a false testimony.

Later, Mulder is released from jail and while he leaves the Air Force tell him Flight 549 collided with a military fighter jet when Frish made an error in judgement in the control judgement. Mulder is not satisfied and believes that Flight 549 really collided with a UFO and then was shot down by a military fighter jet which is how it arrived on the bottom of Lake Sacandaga. Scully informs Mulder that Pendrell has sadly died of his injuries.

The agents decide to find out some background info on Sharon Graffia (the woman claiming to be Max Fenig's sister) and they find she is not really Max's sister at all but an unemployed aeronautical engineer who has been living in a mental institution where she actually met Fenig! They later search Fenig's mobile home and discover a video tape where Max claims to have found undeniable evidence that the government has salvaged alien technology and that they are using it for their own benefit.

After all the evidence has been gathered, Mulder explains to Mike Millar what he thought really happened aboard Flight 549. He claims that Max Fenig boarded the plane with the proof he needed, someone followed him in intent to destroy the evidence but was stopped when the plane was intercepted by a UFO, the UFO tried to abduct Fenig but was thwarted when the UFO was shot down by the fighter jet and Flight 549 was caught in the UFO's 'tractor beam' which caused it to crash out of control.

Later, Mulder obtains Fenig's undelivered mail and discovers a luggage claim ticket with a three letter destination for Syracuse. Meanwhile, Scully locates Graffia who tells her that she stole an object from her employer after Max told her it could prove alien life. She also says that the object was divided into three pieces and that they each got a piece which was later confiscated. Mulder goes to the Syracuse airport as directed by the ticket and inside Max's luggage finds the third piece of the object. Mulder boards a plane but is followed by Garrett but Mulder manages to trap him in a bathroom aboard the plane while Mulder rings Scully to tell her to meet them at Dulles Airport. Suddenly, the plane is engulfed in light and Mulder's wristwatch stops running. Garrett steals the luggage with the third piece but Mulder tells him to drop it. He refuses and when the plane lands at the airport, Garrett is not on board. Mulder informs Skinner that Garrett must have caught a 'connecting flight'.