We see Captain Ellerby at the driving range talking to Colin about how Colin will have to investigate everyone in his department to find out who Costello's rat is. It sounds like everyone in the world except Colin is going to get looked into.
Ellerby then asks Colin how the plans for his wedding are going, and Colin says it's all good. So it looks like Madolyn's still planning to marry Colin.
Now we see Billy staking out Frank Costello and tailing him. Costello has the envelope with "Citizens" written on it, and Billy hopes to find the police rat by seeing who Costello gives the envelope to.
Costello meets Colin in a porno theatre and gives him the envelope. At the back of the theatre, Billy watches the conversation—but he can't see Colin's face beneath the ball cap he's wearing.
When Colin leaves the theatre, Billy chases him to get a better look at his face. Just when Billy's about to get to him, though, his phone goes off, and Colin ducks behind a truck. The text to Billy tells him to arrest the guy he's following. So Billy pulls out his gun and goes after Colin.
Meanwhile, Colin waits behind a corner with his knife out. He stabs the next person who comes around the corner, but it's just a kitchen worker. So Colin takes off.
Back at the station, Colin checks the street's security cameras to see if he can make an ID on whoever was chasing him. The camera is too blurry for him to do it, though. We notice at this point that he has also brought the "Citizens" envelope with him to work.