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Case number 13-1263 at L, Treasurer State Resource Industry Association Petitioner versus Environmental Protection Agency and Gina McCarthy, Administrator, U.S.

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Environmental Protection Agency.

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Mr. Mercer for Petitioner, Treasurer State Resource Industry Association, Mr. McWilliams for Petitioner, United States Steel Corporation, and Ms.

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Berman for Respondents.

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Good morning.

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It pleases the court.

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I'm William Mercer on behalf of Treasure State Resource Industry Association.

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And with my colleague, Marie Durant, we seek a judgment from this court that the rule promulgated by EPA be reversed.

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I'd like to reserve one minute for a bottle, if I may.

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Your Honor, this case is not about the EPA's exercise of its technical expertise and the discretion that this court typically gives that exercise.

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This case is about the failure of EPA to follow its own rules, guidelines, and policy statements.

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And by virtue of its failure of doing so in two different stages of this case, it's committed an arbitrary and capricious act that demands reversal by this court.

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If we look specifically to the two stages of this case, the first stage was the determination that a portion of Yellowstone County, which is largely in Billings, Montana, is now been designated as a non-attainment zone for purposes of a newly promulgated rule for SO2.

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That rule in 2010 led to the non-attainment decision.

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EPA did not follow the recommendation of the state of Montana, and the state of Montana had indicated that it was skeptical and concerned about the quality of the data that would form the basis for the opinion.

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EPA, in a variety of ways, did not balance that data and did not follow its policy statements and its guidelines in reaching the non-attainment decision that it imposed.

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What are the policy statements and guidelines?

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The policy statements and guidelines that we want to refer the court to start with the QAP, which is the quality management plan that's required in 40 CFR, part 58, subsection A, 2.1.

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And that's a far, it's got a five part component test.

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It says all monitoring organizations, in this case the state of Montana, must develop a quality system that is described and approved in quality management plans and quality assurance project plans to ensure that monitoring results do the following.

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A, meet a well-defined need, use, or purpose.

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B, provide... These are very broad phrases, aren't they?

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It's kind of hard to find the sort of specificity that you would like us to find.

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Adequate quality.

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meet a well-defined need, use, or purpose, satisfy stakeholder expectations.

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And D is certainly important as well, Your Honor, comply with applicable standard specifications.

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And so the QAP that EPA relied upon was promulgated by Montana in 1996.

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It dealt with the former standard for SO2.

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And they gave an explanation for that, didn't they?

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And do we require more from them than that?

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Certainly not at the time of the original designation.

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There were concerns voiced about whether that data was reliable because of the calibration.

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And so at the time of the initial designation, we assert that no, that was not something that was balanced.

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And secondly, and I think also of great significance, are the various

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that are set forth in the EPA Handbook, and I'd refer the court to Exhibits, Excerpts of Record, the Joint Appendix, starting at J-156 and going through to 160.

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These are the validation templates that guide right out of the EPA Handbook.

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This is the version from December of 2008.

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And so for instance, when they're talking about operational criteria on page 158, it says the reason for not meeting the criteria must be investigated, mitigated, or justified.

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And the burden is even higher with respect to the critical criteria table.

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And so in excerpts of record 295, in that joint appendix, there is this chart, which sets forth nine, I guess there are just 10 columns there,

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Of those, you've got critical criteria in columns numbered six and seven.

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You have operational criteria that are in columns two, three, four, and five.

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This data was not assessed by EPA, even though that's demanded by this handbook at the time of the original unattainment designation.

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And as you look at this table, which is very significant and was presented to the department by petitioners as part of the petition for reconsideration,

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The 2010 data shows that in those critical criteria columns, six and seven, there were failures on the first three days where they found where there are ranges that exceed the new parts per billion standard.

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Four, which is an operational criteria, there's failure on every one of the days in question except the first day.

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And there are other failures that are represented here as well.

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So when we look at that data and say, your own handbook says that this quality assurance data needed to be considered and needed to either be, in the case of the critical criteria designation, needs to be excluded.

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In the case of the operational criteria, you needed to- When did you all raise that?

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This point about the seven discrete instances of quality assurance problems, when did you all raise that?

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Did you raise it during the public comment period?

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My notes show that you all raised that in your petition for reconsideration, and now are coming back and telling EPA that you didn't consider it at the proper time when you were making the rule.

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Am I right or wrong about that?

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You are correct, Your Honor.

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Good.

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Because I'm not always.

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That's good.

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295 is... Well, that makes a difference here, doesn't it?

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Why doesn't it make a difference?

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It doesn't make a difference because, A, the agency has an obligation pursuant to this before they're going to promulgate a new NACC standard where they're going to make an attainment decision.

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Are you saying they messed up in the person since the fact that you pointed it out later shouldn't get them off the hook?

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They have the primary obligation to ensure that the data that they're utilizing for an attainment decision is accurate and is of an adequate quality.

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They didn't do any of that here.

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And so for that reason,

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This rule needs to be reversed because... Let me ask you one question.

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One of your arguments is that... I'm just calling it your retroactive argument.

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And I didn't quite understand that because the way that I understand the way the act works is you're always going to be relying in part on old

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data, right?

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I mean, a new standard is announced.

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The state has a year to designate.

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What other data is the state going to use, at least in that period of time?

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If it's not old data, there's the retro activity argument.

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Your honor is is

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grounded in the authority in this case is the Supreme Court's decision in Landsgraf, this Court's decision in National Mining Association.

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That's talking about the legal principle of retroactivity, whether you change established vested rights.

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Your argument, as I understand it, I think is at a different level of generality.

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You're criticizing them for using

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data that was collected under previous standards.

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What's wrong with that?

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We complied with the previous standard.

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They now are taking our compliance under the previous standard, and they're applying it and creating a non-attainment zone, which is to our detriment.

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And as the Landsgraf

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So there's not a categorical problem with using old data, right?

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If there is a retroactive effect, the standard is whether the new provision attaches new legal consequences to events completed before it's enactment.

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That seems quite different from looking at data.

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to determine how a particular set of facts fit.

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And Your Honor, the response to that is that Congress, when it wishes to make a statute as it has done in the new source review area, will make a statute and it retroactive at the time of its, excuse me, the regulation effective at the time of its promulgation.

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They didn't do that in this section of the Clean Air Act.

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And so the fact that data that showed compliance is now being used for a permittee who will now be forced to be in a non-attainment zone has a retroactive effect.

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They can use old data though, right?

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Or are you saying they can't use old data?

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They can't use old data.

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They sent that it's going to create a non-attainment zone where compliance and the party didn't have the benefit of being able to know that it needed to have a different standard or otherwise it was going to be in a non-attainment context.

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Can they use it to determine an attainment zone?

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As long as there isn't a retroactive effect to the detriment, then it wouldn't have a negative effect.

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So you're saying they can use it to determine attainment.

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Well, there are other parties in this country who would say an attainment that's not based on a good set of data has consequences for that, whether environmental plaintiffs or something like that.

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So I'm trying to figure out your implications here.

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Well, and so it could be used to the extent that it didn't have a retroactive effect that would be negative, what it would be for some permittee in a non-attainment zone, and for unclassifiable.

[00:10:01] Speaker 09:
But negative isn't the test that Landgraf uses, is it?

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I mean, negative going forward, as in you don't get, you're subject to a new regulatory scheme, is pretty commonplace.

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We have a lot of cases rely on old data to impose prospective regulatory processes.

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And the standard in Landsgraf repeated in National Mining Association is, creates a new obligation, imposes a new duty, or attaches a new disability in respect to transactions or considerations already passed, and then the passage that I already referred to, whether the new provision attaches new legal consequences to events completed before its enactment.

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And final thought on this, and then I've got to rest.

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are the actual emissions from sources after adoption of the rule, right?

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Those are the consequences pitting the land scrap language.

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And I have to say, I don't see the problem.

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And the problem that we're attempting to articulate is this scheme allows for an unclassifiable designation.

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And if there's going to be a negative consequence from compliance under the old regime, that is going to be to the detriment of the permittee and has a retroactive effect.

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It's a negative consequence of compliance.

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It's a negative consequence of the interaction of the real world with the new standards.

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All right, I think I'm out of time.

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You can answer the question if you'd like to, or have you answered it, I'm sorry.

[00:11:35] Speaker 04:
Well, I believe that the point that I'm trying to make is that the statute allows for an unclassifiable designation.

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It allows for attainment.

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It also allows for non-attainment.

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To the extent that old data are being used to the detriment of the permittee, then it has a retroactive effect.

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The other two designations do not.

[00:11:56] Speaker 09:
And I just have one quick question before you sit down.

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Back to the previous argument, do you have an example of a case where EPA relied on failures in data, maybe critical data or critical and operational data, technical failures to say we cannot use that data, throw it away completely without, even though the weight of the evidence would have been reliable?

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Do you have any example where they behave the way you think they should behave?

[00:12:32] Speaker 04:
This Mississippi Commission case that we talked about in our Notice of Supplemental Authority gets at that.

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That's a case where this court said, first of all, EPA did not utilize compliance data for that decision.

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And this court went on to say it must be collected in compliance.

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Was that state collective compliance data, or was that the private data you're talking about that hadn't been subject to quality assurance?

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I'm going to have to check that.

[00:13:02] Speaker 05:
OK.

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I'll try to address that.

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I'll leave you some time for that.

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Good morning.

[00:13:16] Speaker 02:
Good morning.

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May it please the court, my name is Douglas McWilliams with Squire Patton Boggs and we represent today the United States Steel Corporation.

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I would like to reserve 60 seconds for rebuttal.

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In this case, we're challenging US EPA's final action for the designation of a portion of Detroit, Michigan as non-attainment for the one-hour SO2 standard.

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But just to be clear, your beef with what EPA has done is the failure to designate Monroe County as part of it.

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That is the error that you're claiming, right?

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That's correct.

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The definition of nonattainment includes all areas contributing to nonattainment.

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So to the extent there are areas of Monroe County

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that are contributing to non-attainment in Wayne County in the Detroit, Michigan area, that too has to be included within the boundary.

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Why isn't the EPA's finality argument fatal to your claim there?

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They say we're still looking at Monroe County.

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their uncertainties.

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Perhaps they want to get the data right to make sure everyone's content.

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And so they have made no decision one way or the other on Monroe County.

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Under Section 107D, EPA has three options.

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They can designate an area non-attainment, they can designate an area unclassifiable, or they can designate an area attainment.

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The definition of non-attainment includes any area contributing to non-attainment.

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But there's nothing in the law that tells you where that boundary needs to be drawn.

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It's just that Monroe County

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has to be on a team and at some point in time, but it doesn't tell us where the boundary needs to be drawn, does it?

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Is there any authority for that?

[00:15:12] Speaker 06:
I would say the statutory scheme dictates that the contributing sources define the boundary, that you can't actually... What if EPA is uncertain as to a particular area adjacent to an area that it thinks is clear?

[00:15:28] Speaker 06:
What exactly is the objection to it saying, we're going to wait to reach a final conclusion on this adjacent area until we know better.

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But we'll go ahead with the designation of the area that we're confident belongs as non-attainment.

[00:15:50] Speaker 02:
The area non-attainment, the boundaries of that area, must include those contributing to the non-attainment area.

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Yes, but they're uncertain as to a particular adjacent area.

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If there's an insufficient basis for making the designation for the non-attainment area, then the appropriate classification under 107D is unclassifiable.

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Would you have the same position if they were to decide that the Monroe plant belongs in a different non-attainment area?

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A determination that the Monroe plant belongs in a neighboring one.

[00:16:23] Speaker 09:
The background presumption is that they use county lines to decide attainment areas.

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Not written in stone, but that's a background presumption.

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So if they were trying to figure out whether Monroe County should be its own non-attainment area, and where, let's say they put the Monroe plant in a Monroe County non-attainment area, would you have the same objection you have now?

[00:16:45] Speaker 02:
We would, because the way you draw the boundary for non-attainment determines which sources have to contribute to bringing that area into attainment.

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The statutory scheme... Your argument basically is you want to share the burden here, right?

[00:17:01] Speaker 05:
Precisely.

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Those contributing to the burden should... But what is the authority that says that the non-attainment, that Monroe County needs to be part of the same map

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that's drawn here.

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Why can't there be two separate non-attainment counties?

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My question is a different one than what Judge Williams is asking.

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I think he's got a question, too, about finality.

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But I want to know where your authority is that says that the Monroe County plant needs to be part of the same non-attainment area here.

[00:17:35] Speaker 02:
The authority is the definition of non-attainment.

[00:17:37] Speaker 05:
Do you have examples of instances of case law or anything where that's required?

[00:17:43] Speaker 02:
In the Catawba case, this court determined that the appropriate way to draw non-attainment boundaries was to include all areas contributing to non-attainment.

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But that gets to Judge Millett's question about why can't you have a separate non-attainment area for Monroe County?

[00:18:01] Speaker 09:
That may very well happen.

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What if it's contributing a lot more to Monroe County?

[00:18:06] Speaker 02:
Well, but the boundaries, because they define the sources that have to reduce emissions in order to satisfy attainment, if you leave out a source that's... You don't have to include everything.

[00:18:17] Speaker 09:
If a little whiff is coming over from one plant, but it's really contributing substantially to another county, surely you wouldn't say that, oh no, because some whiffs come over now and then, that has to be in this area.

[00:18:31] Speaker 02:
This is certainly not a situation where... I'm trying to test your analysis here.

[00:18:35] Speaker 09:
It's not that everything that potentially contributes in any amount has to be within the attainment area, does it?

[00:18:42] Speaker 02:
That's correct.

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This court has determined that a significant contribution is an appropriate way for EPA to determine that contribution.

[00:18:50] Speaker 09:
Here we have the Monroe coal fire and we have the default rule of counties and so the county is clearly in non-attainment You don't dispute that and if they're just not sure whether the Monroe plant is a significant source or a Less than significant source for your county and they want to look at what it's doing another county your position is they're paralyzed they can't move until they

[00:19:15] Speaker 09:
They can't designate what is clearly a non-attainment area undisputed by you until they actually figure out everything that's outside and put it in its own place?

[00:19:24] Speaker 02:
At least they have to follow their own methodology for determining if a source is a contributing, a significant contributing source.

[00:19:32] Speaker 02:
Here, the methodology they determined was to evaluate the total emissions and divide it by the distance to the monitor.

[00:19:40] Speaker 05:
When they did that here... Let me take what I see as the problem, so maybe you can address...

[00:19:44] Speaker 05:
my misunderstanding.

[00:19:45] Speaker 05:
It seems to me that you've got two problems.

[00:19:48] Speaker 05:
If you're right that the Monroe County plant has to be part of the same non-attainment area, then I think you run into a finality problem that Judge Williams has raised.

[00:20:02] Speaker 05:
They haven't finished deciding that.

[00:20:05] Speaker 05:
If, on the other hand, it doesn't need to be part of the same area, well then that's

[00:20:11] Speaker 05:
that you have a finality, the issue is final, they've finally drawn the boundary, but it doesn't need to include Monroe Power Plant if it's going to be part of another non-attainment area.

[00:20:23] Speaker 02:
To address Judge Williams' finality issue, we have an opportunity to designate the entire area unclassifiable because there's an insufficient basis to draw boundaries that include all contributing sources.

[00:20:36] Speaker 02:
The 118,000 tons that Monroe emitted when divided by the distance from the Southwest High School monitor made it the third most significant source

[00:20:46] Speaker 02:
in the area.

[00:20:47] Speaker 06:
Is that before or after the 2009 scrubbers?

[00:20:51] Speaker 02:
That's after the – no, that's – I'm sorry, before the 2009 scrubbers.

[00:20:55] Speaker 02:
But even after the 2009 scrubbers, when the emissions were dropped to 47,000 tons, when you divide that by the same distance, they are the fourth most significant source contributing to the Detroit non-attainment area.

[00:21:08] Speaker 09:
My understanding is that, correct me if I'm wrong, geographically at US Steel, they're right near this high school monitor.

[00:21:16] Speaker 09:
Correct.

[00:21:17] Speaker 09:
And you've got Monroe sort of down here, and that between the two of them is an area called Allen Park, which is actually in attainment.

[00:21:26] Speaker 09:
That's true.

[00:21:26] Speaker 09:
There's an Alan Park monitor.

[00:21:28] Speaker 09:
And so your boundary, is your boundary going to skirt around Alan Park, or are you actually saying that whole area has to come in, even though there's this big area between Monroe and this monitor, where the air is an attainment?

[00:21:43] Speaker 09:
So whoever's coming over from Monroe County isn't bothering the air in between.

[00:21:47] Speaker 02:
The meteorology, which is one of the elements that's to be considered in determining the non-attainment area,

[00:21:53] Speaker 02:
indicates that the emissions from Monroe County, with its very high stacks, moves towards the Detroit River, up the river, and impacts the Southwest High School Monitor, even though the impact on the Allen County Monitor is still an attainment.

[00:22:08] Speaker 09:
It's still a significant source.

[00:22:10] Speaker 09:
What your area even is supposed to look like?

[00:22:13] Speaker 09:
gerrymandered around the Allen Park County, so we're skipping over one county altogether and we're going to have two counties separated by another county that are a single non-attainment area?

[00:22:22] Speaker 02:
No, Monroe is adjacent to the Wayne County area.

[00:22:26] Speaker 02:
The boundary between the Wayne County non-attainment area and Monroe does not have any independent area.

[00:22:33] Speaker 09:
Is Allen Park not between the two of them?

[00:22:34] Speaker 02:
It is not.

[00:22:36] Speaker 02:
They share a jurisdictional boundary.

[00:22:38] Speaker 02:
So the air emissions, according to the meteorology and the modeling that we provided in our petition for reconsideration, indicates that those emissions do, in fact, head up the Detroit River and significantly impact the Southwest High School Monitor.

[00:22:55] Speaker 09:
And then – I'm sorry.

[00:22:56] Speaker 09:
Are you done?

[00:22:57] Speaker 02:
I was just going to conclude, unless you have a question.

[00:22:59] Speaker 09:
Well, I actually wanted to back up and talk about standing.

[00:23:01] Speaker 02:
Sure.

[00:23:02] Speaker 09:
What I'm trying to figure out is how would U.S.

[00:23:05] Speaker 09:
steel, the impact, the regulatory impact on U.S.

[00:23:08] Speaker 09:
steel be changed if Monroe County were included in the

[00:23:14] Speaker 09:
non-attainment area.

[00:23:16] Speaker 02:
If the area that includes the Monroe coal-fired power plant is included in the non-attainment boundary, Monroe's coal-fired power plant would be part of the solution.

[00:23:24] Speaker 02:
It would include emission reductions towards the attainment obligations of those sources within the non-attainment area.

[00:23:31] Speaker 09:
It may well have its own regulatory burdens and have to be part of the solution.

[00:23:33] Speaker 09:
How will U.S.

[00:23:35] Speaker 09:
steel be impacted?

[00:23:36] Speaker 09:
Is it that your point

[00:23:38] Speaker 09:
You'll have less regulation, because you're right next to the monitor, or is it a competitive advantage problem?

[00:23:45] Speaker 02:
No, the implications for the reasonably available control measures is that you reduce emissions to the extent necessary to bring the area into attainment.

[00:23:55] Speaker 02:
According to the monitored data right now,

[00:23:58] Speaker 02:
it's clear that the Monroe Power Plant submission reductions have already satisfied the non-attainment problem because the Detroit area is currently in attainment for the SO2 standard.

[00:24:12] Speaker 02:
Because of the way the Michigan State Implementation Plan is structured, you start with the larger sources and gradually move to smaller and smaller sources until you solve the problem.

[00:24:23] Speaker 02:
Well, if you start with the largest source here, it's Monroe.

[00:24:25] Speaker 09:
Well, they're not going to start with just one.

[00:24:27] Speaker 09:
US Steel is also a very large source and would be regulated, I think.

[00:24:31] Speaker 09:
You're not telling us that if Monroe Plant were in, US Steel wouldn't be regulated at all?

[00:24:37] Speaker 09:
It would be within the realm of the statutory scheme for all of the emission reductions to be- In your experience in this area, what are the chances that if Monroe, if the non-attainment area you want were drawn, US Steel would not be regulated at all?

[00:24:52] Speaker 02:
I think the chances are low that the US deal would not be regulated at all.

[00:24:56] Speaker 02:
But it could be regulated differently, which is all we need in order to have standing.

[00:25:01] Speaker 06:
If I understand what you're saying, and I'll simply ask the EPA representative this, RACT, wonderful acronym, depends simply on achieving attainment.

[00:25:15] Speaker 06:
I shouldn't say simply, but depends on achieving attainment.

[00:25:18] Speaker 06:
So that once attainment is achieved,

[00:25:21] Speaker 06:
No further reductions are to be ordered, or need be ordered in any event.

[00:25:28] Speaker 06:
Is that correct?

[00:25:29] Speaker 02:
The definition of reasonably available control technology is, in part, affected by what's necessary to bring the area into attainment.

[00:25:38] Speaker 02:
So yes, you can amend that.

[00:25:40] Speaker 06:
So if 100 units have to be reduced and some new source is brought into the picture and is reducing them by 50, that presumably makes it easier for the other sources.

[00:25:53] Speaker 06:
Correct.

[00:25:55] Speaker 09:
But you've already got

[00:25:57] Speaker 09:
I guess I have two questions from that.

[00:25:59] Speaker 09:
One, Michigan can regulate Monroe, they can regulate plants that are outside the non-attainment area as contributing sources.

[00:26:11] Speaker 09:
They don't have to be in the non-attainment area to be regulated by Michigan, correct?

[00:26:15] Speaker 02:
That's correct.

[00:26:16] Speaker 09:
Is the ability to regulate different?

[00:26:18] Speaker 09:
I'm just trying to figure out why we couldn't all be in the exact same place.

[00:26:21] Speaker 02:
The non-attainment area defines who's required to reduce emissions.

[00:26:25] Speaker 02:
The fact that the state has the

[00:26:27] Speaker 02:
discretion to also include reductions from Monroe is a discretionary fix to a mandatory problem or flaw in this case.

[00:26:37] Speaker 09:
And Michigan has already adopted a final rule?

[00:26:41] Speaker 09:
They proposed the SIP.

[00:26:43] Speaker 02:
It's not a final rule.

[00:26:45] Speaker 09:
It's already proposed?

[00:26:46] Speaker 09:
It's not finalized?

[00:26:47] Speaker 09:
When is it going to be finalized?

[00:26:49] Speaker 02:
after the public comment period at some point in the next year.

[00:26:53] Speaker 06:
Are you advocating for the Michigan authorities that the power plant be brought in as a source of the solution to the Wayne County issue?

[00:27:08] Speaker 02:
We will certainly be commenting on the state implementation plan with regards to its impact on the U.S.

[00:27:13] Speaker 02:
Steel Corporation facilities and to the extent they have that authority,

[00:27:18] Speaker 02:
we would encourage the state to consider the voluntary emission reductions necessary to address Monroe's issues.

[00:27:27] Speaker 09:
But the proposed SIP, does it do, does it propose regulating Monroe at all?

[00:27:34] Speaker 02:
It does not.

[00:27:36] Speaker 02:
So we're asking this court in conclusion to vacate the non-attainment designation for Wayne County based on the record

[00:27:45] Speaker 02:
excluding Monroe, the Monroe power plant was arbitrary and capricious.

[00:27:50] Speaker 02:
We also ask that, based on this record, that this court designate the area unclassifiable until EPA can come up with a reasoned determination for the contributing sources to the Wayne County non-attainment problem.

[00:28:07] Speaker 02:
Thank you.

[00:28:08] Speaker 05:
Thank you.

[00:28:10] Speaker 05:
Good morning.

[00:28:14] Speaker 01:
Good morning.

[00:28:18] Speaker 01:
May it please the court, my name's Amanda Berman.

[00:28:20] Speaker 01:
I'm here representing the United States EPA.

[00:28:22] Speaker 01:
At council table with me is Mike Thrift from EPA's Office of General Counsel.

[00:28:27] Speaker 01:
Before delving into the jurisdictional and merits issues presented here today, I'd like to put these challenges in a little bit of context.

[00:28:34] Speaker 01:
In this rule, EPA designated 29 areas as non-attainment in regard to the 2010 National Ambient Air Quality Standard for sulfur dioxide, a pollutant with localized impact linked to serious respiratory issues.

[00:28:47] Speaker 01:
Petitioners challenge only two of those 29 designations, and the non-attainment status of one of those areas is not really contested here.

[00:28:54] Speaker 01:
Rather, the challenge is really to the non-designation of a neighboring county.

[00:28:59] Speaker 01:
I think this reflects something important about this rule, that it addressed areas that from EPA's perspective were relatively easy calls, where the monitoring data available to the agency clearly showed that those areas exceeded the standard during the 2009 to 2011 period.

[00:29:16] Speaker 06:
I'm not sure that I followed the argument at all.

[00:29:21] Speaker 06:
Let's assume the record shows that EPA got it right, absolutely right, in 27 out of 29 cases.

[00:29:28] Speaker 06:
Does that really shed any light on the other two?

[00:29:31] Speaker 01:
No, I see what you're saying, Judge Williams.

[00:29:33] Speaker 01:
All I'm trying to say is that as a backdrop, from EPA's perspective, I want the court to know that these are areas where we think the monitoring data is very clear.

[00:29:41] Speaker 01:
And I'll go into the record-specific areas, issues that show that.

[00:29:45] Speaker 01:
District Treasurer State tries to undermine the Billings area designation by nitpicking EPA's analysis of the relevant data.

[00:29:53] Speaker 01:
But its analysis of that data.

[00:29:54] Speaker 09:
I mean, let's be fair.

[00:29:56] Speaker 09:
It's not nitpicking.

[00:29:57] Speaker 09:
They're talking about some things that you call them critical criteria.

[00:30:01] Speaker 09:
that weren't met and your own regular rules or handbooks talk about critical criteria.

[00:30:06] Speaker 09:
You know, if you violate the critical criteria, that's very consequential and you shouldn't rely on the data.

[00:30:13] Speaker 09:
Am I understanding now how that operates?

[00:30:15] Speaker 01:
I think so, but I think in that case we have to look at the arguments that were actually made and when they were made here.

[00:30:22] Speaker 01:
In their comments on the rule,

[00:30:24] Speaker 01:
District Treasurer's State made the same sort of very general allegations of operational failures, problematic data that it made in its opening brief here.

[00:30:34] Speaker 01:
And EPA did respond to those in its response to comments.

[00:30:37] Speaker 01:
It's only in the reconsideration petition that the sort of laundry list of alleged discrepancy between the monitoring regulations and the handbook

[00:30:45] Speaker 01:
and the operation of this monitor was identified.

[00:30:47] Speaker 01:
Let's just figure out what's going on here.

[00:30:48] Speaker 09:
I mean, you all know your own handbook.

[00:30:51] Speaker 09:
Are there past instances when you've had violations of critical criteria that the EPA has nonetheless relied in part on that data along with other information and made a weight of evidence determination?

[00:31:06] Speaker 01:
EPA has always used this weight of the evidence approach.

[00:31:09] Speaker 09:
Even when there's violations of critical criteria?

[00:31:12] Speaker 01:
Well, I have to curl with the idea that there's necessarily violations of critical criteria here.

[00:31:17] Speaker 09:
The chart they pointed you to is something that... Okay, just back up and get your answer to the question first, and then I'm happy to hear the details about it.

[00:31:24] Speaker 09:
Is there an instance in which there have been violations of critical criteria, but nonetheless, the weight of the evidence, total evidence warranted use of that data, amongst other data, to make a non-attainment?

[00:31:37] Speaker 09:
decision, or do we have to accept there was no violation of critical criteria?

[00:31:42] Speaker 01:
I don't think you have to accept that there was absolutely no violation of critical criteria.

[00:31:46] Speaker 01:
What EPA is saying here is that it's always followed this idea that what we're looking for is overall compliance.

[00:31:53] Speaker 09:
So where is an example where there was critical criteria violations and yet weight of the evidence prevailed?

[00:32:00] Speaker 01:
I can't identify a case where something was called a critical criteria violation, but I think this is a bit of a red herring because this chart that they pointed you to is something that was given to the agency after, it's not even part of their reconsideration petition, it was given to the agency during discussions afterwards.

[00:32:18] Speaker 01:
And in denying reconsideration, and I point the court to the record at joint appendix page 301, EPA walks through and very specifically responds to each of these, this laundry list of alleged discrepancies.

[00:32:31] Speaker 01:
You know, one that they've pointed to a couple times.

[00:32:34] Speaker 01:
is the fact that performance checks on the monitor in question were on one or two occasions not performed every 14 days as they're supposed to be, but every 21 days.

[00:32:44] Speaker 01:
Now EPA explained in response that in fact in many instances those checks were performed more frequently than required, but in any event on the one time they identify where there's a 21 day window, there are the criteria

[00:32:56] Speaker 01:
measured on either side and the two checks on either side showed that the monitor was working fine during that period.

[00:33:02] Speaker 01:
These performance checks, the point is to make sure that the monitor is functioning.

[00:33:06] Speaker 01:
EPA has no reason to doubt that it was functioning during that period.

[00:33:10] Speaker 01:
So, you know, and I would encourage the court to really look at its pages 301 through the next four or five pages.

[00:33:15] Speaker 01:
EPA very specifically responds to those assertions.

[00:33:19] Speaker 01:
But again, those weren't raised in comments on the rule with that sort of specificity.

[00:33:24] Speaker 01:
Sorry?

[00:33:25] Speaker 08:
Were any of these critical criteria?

[00:33:29] Speaker 01:
I'm not really as familiar with what the line they're drawing between what they call critical and non-critical.

[00:33:36] Speaker 01:
From EPA's perspective,

[00:33:38] Speaker 01:
The things in the regulations, I think those might be called critical because they're regulatory, and EPA's explained that there's a different level of scrutiny applied to discrepancies with the regs versus discrepancies with the handbook, which is just guidance.

[00:33:51] Speaker 01:
So maybe that's where that line is being drawn.

[00:33:54] Speaker 01:
But in any event, EPA has addressed both types of discrepancies in responding to these issues on reconsideration, and I think it did so very comprehensively.

[00:34:02] Speaker 09:
I thought your argument is it doesn't matter if you used weight of evidence before because that was the governing standard when you came in to do this anyhow.

[00:34:10] Speaker 01:
Yes, that standard was put in place in 2013 before comments were due on the proposed rule and before finalization of the rule in question.

[00:34:18] Speaker 01:
So if they had an issue with that standard, it should have been raised then.

[00:34:22] Speaker 05:
I thought your argument also was that that really wasn't a new standard.

[00:34:26] Speaker 05:
It was just a codification.

[00:34:27] Speaker 01:
No, from me-based perspective, it's a codification of a common-sense approach.

[00:34:31] Speaker 01:
EPA's regulations, their monitoring regulations, I mean, they run many, many pages in the Federal Register.

[00:34:37] Speaker 01:
They're very comprehensive and for good reason, but EPA has always taken the approach that one mischeck, one discrepancy is not reason to toss out the data.

[00:34:45] Speaker 01:
I mean, EPA would never have enough data to make any decision if it had to do that.

[00:34:49] Speaker 01:
But I'd like to return to the arguments that Treasury of State actually made both in its comments and its opening brief here, which are broader arguments.

[00:34:56] Speaker 01:
First, that the 1997 Quality Assurance Plan is just too old.

[00:35:01] Speaker 01:
Second, that the monitor wasn't designed for this particular standard.

[00:35:05] Speaker 01:
Third, that the fact that it was recalibrated in 2010 shows that it's not up to the task of generating data for this particular

[00:35:12] Speaker 01:
before that, and fourth, we were just discussing this laundry list of discrepancies.

[00:35:17] Speaker 01:
But regarding those first three things, while EPA agrees that the Montana Quality Assurance Plan was due for a revision, and in fact it has now been revised, that's not a mandatory requirement, and plans don't lapse into disapproval if a state doesn't meet that every five-year guidance.

[00:35:36] Speaker 01:
And EPA's regulations don't require that a monitor be specifically designed for a particular NAC set at a particular level.

[00:35:43] Speaker 01:
The regulatory requirement that's applicable here is that the monitor has to produce adequate quality data.

[00:35:49] Speaker 01:
That's in 40 CFR Part 58, Appendix A, Section 2.1B.

[00:35:53] Speaker 01:
The Coburn Road Monitor meets that relatively low bar.

[00:35:57] Speaker 01:
It's audited regularly, as EPA explained in responding to comments, at levels that are low enough to show that it's up to the task of recording data for a 75 parts per billion standard.

[00:36:08] Speaker 01:
And the fact that it was recalibrated in 2010 doesn't undermine the validity of data recorded before that.

[00:36:14] Speaker 01:
If I tune my viola between pieces during a concert, that doesn't mean that the sound I was creating before was horribly off-key.

[00:36:21] Speaker 01:
I'm just trying to ensure the continued quality of the sound I'm creating.

[00:36:25] Speaker 01:
Now, if we have a presumption to the contrary for emissions monitors, that would create a really perverse incentive for states that might want to have a particular year of data, like the 2010 COVID row data, taken off the books.

[00:36:37] Speaker 01:
And the facts don't warrant that presumption here.

[00:36:40] Speaker 01:
Rather, the monitor was audited before and after the recalibration to ensure that it was able to measure data at this standard.

[00:36:49] Speaker 01:
So collectively, we don't think Treasure State's arguments amount to any more of the sum of their parts, which is zero.

[00:36:55] Speaker 01:
They've not only failed to identify any fatal flaw in the data from the Coburn Road Monitor, they failed to articulate any real substantive issue with that data at all, except that the 2010 data was too high and so should be discarded as outlying.

[00:37:09] Speaker 01:
But the state certified that data.

[00:37:12] Speaker 01:
Montana certified that data for EPA's use.

[00:37:15] Speaker 01:
And so this sort of cherry picking, we think, is just not a rational approach to the designations process.

[00:37:20] Speaker 01:
And it's certainly not an approach that we think EPA should be compelled to take.

[00:37:25] Speaker 01:
I'd like to finally, on the Montana side, just address the retroactivity issue that this court asked some questions about.

[00:37:32] Speaker 01:
I think this court's case law and the Supreme Court's case law is clear that we don't have a retroactivity issue here.

[00:37:39] Speaker 01:
In Landgraf, the Supreme Court explained that relying on antecedent facts is not retroactivity.

[00:37:47] Speaker 01:
Rather, as this court's explained, for example, in the National Petrochemicals and Refiners Association case, the question is whether new sanctions are being imposed on old conduct.

[00:37:57] Speaker 01:
Old conduct isn't being sanctioned here.

[00:37:59] Speaker 01:
We're just using data that was gathered starting before the new act.

[00:38:02] Speaker 09:
Do they have to be sanctions, or are new legal consequences sufficient?

[00:38:09] Speaker 09:
this court has used the term sanctions, so I think it has to... Landgraf didn't use that language.

[00:38:14] Speaker 09:
Landgraf used broader language.

[00:38:16] Speaker 09:
And I think other... I don't think all our cases have been consistent in limiting it to sanctions.

[00:38:23] Speaker 01:
Well, but even so, we're not imposing legal consequences on

[00:38:28] Speaker 01:
pre-NACS conduct here.

[00:38:31] Speaker 01:
We're just using the data.

[00:38:32] Speaker 09:
It's essentially like they're put on probation now based on what happened before.

[00:38:36] Speaker 09:
Now, all right.

[00:38:38] Speaker 09:
All right.

[00:38:38] Speaker 09:
We look back at what you did.

[00:38:42] Speaker 09:
Lots of bad air, and so now you're gonna have to change your conduct and you're gonna have to be subject to all these new regulatory burdens based on what you did three years ago.

[00:38:51] Speaker 09:
And so why isn't that a retroactivity problem?

[00:38:57] Speaker 09:
This isn't, we're affecting your benefits prospectively.

[00:39:00] Speaker 09:
We're actually, as they describe it, being subjected to regulatory burdens that other folks are not based on past conduct.

[00:39:09] Speaker 01:
Well, but I think if that's fresh activity, that would always be true in regard to this sort of designations process, because the data you're relying on to make a designation necessarily has to predate the designation.

[00:39:20] Speaker 09:
Well, maybe the problem here, though, this is the first time you used three years rather than one year for sulfur dioxide.

[00:39:25] Speaker 09:
Is that correct?

[00:39:26] Speaker 01:
Yes, the standard was changed from an annual average of a year.

[00:39:29] Speaker 09:
So is there a problem with that particular overlay, that they didn't have notice about three years, the consequences of

[00:39:39] Speaker 09:
At any given time, three years of data can be used to impose regulatory burdens on us.

[00:39:44] Speaker 09:
So should there at least have been notice of that before you started imposing regulatory burdens?

[00:39:49] Speaker 01:
But they knew that the Coburn Road Monitor was up, and it was measuring sulfur dioxide concentrations in regard to the standards that were in place at the time.

[00:40:00] Speaker 01:
So I think they do have notice.

[00:40:02] Speaker 01:
It's not a newly created regime.

[00:40:05] Speaker 01:
an adjustment of the standard and we're using the data that we have which necessarily is going to predate the new standard to some degree.

[00:40:14] Speaker 06:
Montana shows that, for example, the 2010 data that are problematic, that that was the result of some extraordinary event never likely to be repeated.

[00:40:33] Speaker 06:
Would those who created the SIP bear that in mind in deciding on what cutbacks are necessary?

[00:40:42] Speaker 01:
Well, it is up to the state to decide what has to happen to bring the area into attainment.

[00:40:49] Speaker 01:
With the EPA's approval at the end of the day.

[00:40:52] Speaker 01:
Your Honor, I would note that Montana did make that kind of argument in its amicus brief here.

[00:40:56] Speaker 01:
It tries to link the 2010 data to some control testing that had to be done at an ExxonMobil refinery in the area.

[00:41:04] Speaker 01:
But EPA looked at that and explained that

[00:41:06] Speaker 01:
The exceedances we see in 2010 don't line up with the dates of the testing.

[00:41:11] Speaker 09:
That was sort of a scientific, analytical one.

[00:41:13] Speaker 09:
It wasn't responding to this notice point about the use of three years of data.

[00:41:17] Speaker 09:
I mean, you yourselves have said there are severe consequences to these detainment decisions.

[00:41:23] Speaker 09:
So severe consequences attach.

[00:41:25] Speaker 09:
And so why isn't that, that feels at least a little bit different to me from some of our other cases where backwards looking data has affected the flow of benefits into somebody going forward.

[00:41:39] Speaker 01:
I just don't think it meets that high standard set in Landgraf.

[00:41:42] Speaker 09:
What's a high standard in Landgraf?

[00:41:45] Speaker 01:
Well, rather, it doesn't mean... I think it clearly falls in this category of relying on antecedent facts to make a designation that applies going forward.

[00:41:53] Speaker 09:
At some level, there's got to be a line between... The test is what are the consequences from that past.

[00:42:01] Speaker 09:
the past facts, right?

[00:42:02] Speaker 09:
If past facts are imposing a sentence, criminal sentence, that clearly is out, that's retroactive.

[00:42:09] Speaker 09:
Is it only actual, I'm sorry, penalties or sanctions, or can it be such a distinct and heavy regulatory burden?

[00:42:18] Speaker 09:
Could that ever have sufficient effect to trigger retroactivity concerns?

[00:42:24] Speaker 01:
Could it ever?

[00:42:25] Speaker 01:
I mean, possibly, but I think we have to look what is being sanctioned here.

[00:42:28] Speaker 01:
It's not the past conduct.

[00:42:31] Speaker 01:
What are the consequences attaching to?

[00:42:33] Speaker 01:
They're not attaching to the past conduct.

[00:42:36] Speaker 06:
What you're saying is true, but only if EPA does make an adjustment of the sort that I suggested, namely allowing Montana to explain a way

[00:42:46] Speaker 06:
high figures in a particular test as not going forward and therefore not requiring any changes.

[00:42:58] Speaker 01:
But Your Honor, the state certified the 2010 data for EPA's use, and I think that is an important fact here.

[00:43:05] Speaker 06:
Yeah, but I don't think that gets it what Judge Blood is asking.

[00:43:10] Speaker 01:
Well, I'd point, Your Honor, to the practical consequences then.

[00:43:14] Speaker 01:
You know, under the statutory scheme,

[00:43:15] Speaker 01:
States have only one year to submit proposed designations after a new NACS is put in place.

[00:43:22] Speaker 01:
Even if EPA had kept the NACS at an annual averaging, states wouldn't be able to meet that congressional requirement because, in fact, you need more than one year to get one year of data.

[00:43:34] Speaker 01:
Certification doesn't happen until May of the following year.

[00:43:37] Speaker 01:
So the state would have to wait for an entire new calendar year of data.

[00:43:42] Speaker 01:
for that data to be certified, so you couldn't meet the scheme that Congress has set out here.

[00:43:47] Speaker 01:
If you took this approach that you can't use any data that predates the math.

[00:43:51] Speaker 09:
Well, I think I'm trying to make a different point, and that is simply with respect to

[00:43:58] Speaker 09:
that breadth of the time period that you're looking backwards on, when that was brand new, that hadn't happened before, and no notice was given, and pretty significant regulatory burdens follow from reliance on that data.

[00:44:12] Speaker 09:
Do you have to at one time have notice, we're going to start doing three years back?

[00:44:17] Speaker 09:
So for a couple years you'll do the one year, and then on X year we're going to start doing three years back.

[00:44:22] Speaker 09:
Was there a need for notice in that setting?

[00:44:25] Speaker 01:
I don't think so, Your Honor.

[00:44:27] Speaker 01:
the procedure here in that it proposed a rule, it proposed this change of the NACs.

[00:44:32] Speaker 01:
Everyone had an opportunity to comment on that and challenge it and then

[00:44:37] Speaker 01:
moving after that, it went through the proposal process for the particular designation.

[00:44:41] Speaker 01:
So I think everybody had adequate notice here.

[00:44:44] Speaker 01:
I see my time is actually up.

[00:44:45] Speaker 01:
No, keep going.

[00:44:46] Speaker 05:
Speak to Michigan, please.

[00:44:47] Speaker 01:
Yes, okay.

[00:44:49] Speaker 01:
So I do think we have both a standing and a finality issue here.

[00:44:51] Speaker 01:
U.S.

[00:44:52] Speaker 01:
Steel hasn't shown Article III standing because there's this disconnect between the claim that it's making, the conduct it complains of,

[00:45:00] Speaker 01:
which specifically here is that EPA should have designated the Monroe County area of non-attainment in addition to Wayne County and the harm US Steel fears, which has increased regulatory burden.

[00:45:10] Speaker 09:
Well, why isn't their point perfectly logical?

[00:45:12] Speaker 09:
Imagine that there were only two potential sources.

[00:45:17] Speaker 09:
I know there were others in the area, but it was US Steel and potentially Monroe Power.

[00:45:22] Speaker 09:
All right.

[00:45:23] Speaker 09:
And if they said, so now we have to carry the regulatory burden alone.

[00:45:27] Speaker 09:
We alone must change our operations to get this air level into attainment.

[00:45:33] Speaker 09:
And if you had included the Monroe plant, we'd share the burden.

[00:45:37] Speaker 09:
It would be 50 percent or some percentage based on it, some allocation.

[00:45:41] Speaker 09:
Why isn't that the difference between 100 percent and the shared percentage injury?

[00:45:46] Speaker 01:
Because there's not necessarily a difference here.

[00:45:49] Speaker 01:
The state is not bound by the boundaries of the non-attainment theory.

[00:45:51] Speaker 01:
Wouldn't that be necessary?

[00:45:52] Speaker 09:
Is there a substantial risk of a difference?

[00:45:54] Speaker 09:
Is there a substantial prospect of a difference?

[00:45:56] Speaker 01:
I don't think we can even say that, and I would remind the court that under its recent decision in the Swanson manufacturing case, this burden of showing each of these elements is very much on petitioners.

[00:46:05] Speaker 01:
But I don't think they've met the burden here.

[00:46:07] Speaker 01:
Because we're in a double speculation land right now.

[00:46:13] Speaker 01:
Because not only is it speculative that the state's going to impose any particular burdens on US steel, but it's doubly speculative that the state's going to do that and not impose any burdens on the Monroe plan.

[00:46:25] Speaker 09:
of the word speculative is way overused in standing arguments.

[00:46:28] Speaker 09:
It seems to be used any time we think we don't have certainty.

[00:46:31] Speaker 09:
We have to make predictions.

[00:46:32] Speaker 09:
And I don't think that's what speculative means in standing cases.

[00:46:35] Speaker 09:
I mean, you've been doing this for some time.

[00:46:38] Speaker 09:
You're an expert in this area.

[00:46:40] Speaker 09:
What are the chances that U.S.

[00:46:42] Speaker 09:
steel is going to be subject to regulatory burdens once they're within the attainment area?

[00:46:47] Speaker 09:
And is that different from the chances that Monroe Power is going to be in it?

[00:46:53] Speaker 01:
You know, I honestly can't answer those questions, because I'm not the state regulator.

[00:46:56] Speaker 01:
It's up to them.

[00:46:57] Speaker 01:
Is there a good chance that they're going to be?

[00:46:59] Speaker 06:
You're talking a lot heavily on the state regulator.

[00:47:01] Speaker 06:
And I noticed that what, for me, was a critical sentence at page 40 of your brief, speaks only of the state to meet that requirement, attainment.

[00:47:11] Speaker 06:
The state is authorized to impose additional requirements on all facilities that contribute to non-attainment.

[00:47:18] Speaker 06:
But then you also say, you, I mean,

[00:47:25] Speaker 06:
says there's no legal basis states to credit emissions reductions from sources outside the non-obtainment area.

[00:47:38] Speaker 06:
So that seems to, I don't know, that makes it sound as if anything Michigan does by way of tamping down emissions in Monroe County isn't going to count in the EPA assessment of what Michigan is doing.

[00:47:58] Speaker 01:
Michigan's obligation is to submit a plan that brings the area into attainment.

[00:48:03] Speaker 01:
And in doing that, EPA has spelled out in guidance that Michigan can impose obligations on any plant it thinks is seriously contributing to the problem.

[00:48:12] Speaker 06:
What is the meaning of that rock-roof sentence?

[00:48:20] Speaker 06:
Because it sounds as if, yeah, the state can do something.

[00:48:23] Speaker 06:
That's nice.

[00:48:25] Speaker 06:
But it can't.

[00:48:27] Speaker 06:
There's no legal basis to credit emissions reductions from that.

[00:48:32] Speaker 01:
Well, I think that's simply saying that you actually have to achieve non-attainment in the area in question.

[00:48:37] Speaker 01:
You can't say, oh, but we've produced some of that.

[00:48:39] Speaker 01:
Well, that's a funny way of wording it.

[00:48:42] Speaker 01:
I agree.

[00:48:42] Speaker 06:
It seems to draw a bright line between in the area and out of the area.

[00:48:47] Speaker 06:
I have to say, a lunatic scheme, I mean, your sentence here seems so utterly in accord with common sense that I thought I read it broadly to accomplish what EPA was doing, but close checking it turns out that's not so clear.

[00:49:05] Speaker 01:
Well, Your Honor, I think we need to look to what EPA has said in its guidance, and that is that the state can impose burdens on the other party.

[00:49:13] Speaker 06:
But even if we step past the speculative... Of course the state can impose burdens.

[00:49:17] Speaker 06:
I mean, that's... EPA has no objection to states imposing burdens.

[00:49:22] Speaker 06:
The question is whether they count.

[00:49:25] Speaker 01:
The statutory requirement is that they submit a plan that gets the state into attainment.

[00:49:34] Speaker 01:
And that's the basis on which EPA has to approve or disapprove a plan.

[00:49:38] Speaker 01:
So I think that's the critical question.

[00:49:41] Speaker 09:
Have you ever approved a plan in which the state only regulated sources outside the non-attainment area?

[00:49:47] Speaker 01:
I don't know of an instance in which it has done that.

[00:49:49] Speaker 09:
I can't imagine if they came back and said, you know what, we actually really think Monroe is the suspect here.

[00:49:55] Speaker 09:
We're regulating the Dickens out of them, and we're not regulating anybody within the actual non-attainment area that EPA would let that plan through.

[00:50:04] Speaker 09:
Can you?

[00:50:05] Speaker 01:
Well, I think EPA would have to take a hard look at the data.

[00:50:07] Speaker 01:
And to be honest, we know from what we've seen from Montana, that's not the case.

[00:50:10] Speaker 01:
In fact, what Montana is seeing is consistent with what EPA saw.

[00:50:15] Speaker 01:
sorry, Michigan, is seeing as consistent with what EPA saw in that.

[00:50:19] Speaker 01:
It's really the U.S.

[00:50:20] Speaker 01:
steel plant, which is two kilometers from the violating monitor, has very significant emissions.

[00:50:25] Speaker 01:
You know, we do believe that, you know, if we want to turn to the merits here, I mean, I think EPA is on very solid ground when it says that a facility that's... I know, but we're talking about whether they have an injury here.

[00:50:36] Speaker 09:
Yes.

[00:50:36] Speaker 09:
Whether they're injured by this designation.

[00:50:39] Speaker 01:
Well, as I said, you know,

[00:50:41] Speaker 01:
We don't have to use the word speculative, but the requirement is that the injury has to be concrete, imminent, particularized.

[00:50:47] Speaker 01:
I don't think they've met that burden here.

[00:50:49] Speaker 09:
Why doesn't the proposed rule give us, from Michigan's proposed rule, give us pretty good evidence that there's an impact on them?

[00:50:57] Speaker 01:
Well, it is still proposed, and we don't know what the final rule will look like.

[00:51:00] Speaker 01:
But even moving past the injury, I'd point to causation here.

[00:51:03] Speaker 01:
It's really, this is a unique case because we really do have this disconnect between the conduct complained of, and that's the phrase from the Swanson manufacturing case.

[00:51:11] Speaker 01:
And here the conduct complained of is the non-designation of neighboring Monroe County and the injury in question.

[00:51:18] Speaker 01:
So even if we accept that their claimed injury increased regulatory burdens, it's not linked to what they complain of because they don't dispute that they're in a non-attainment area.

[00:51:27] Speaker 01:
If, as they seem to suggest, this court were to order EPA to go back and classify neighboring Monroe County as either attainment or unclassifiable, they'd still be in a non-attainment area.

[00:51:39] Speaker 01:
They'd still face the burdens that come along with that.

[00:51:41] Speaker 09:
That's what I thought you might say.

[00:51:42] Speaker 09:
A redress is a problem.

[00:51:44] Speaker 01:
Well, we think redress is a problem also because the logical, we think the only logical redress here if the court agreed with them on the merits would be to remand to EPA to consider, you know, the designation for Monroe County.

[00:51:57] Speaker 01:
Nobody disputes that Wayne County is not attainment.

[00:51:59] Speaker 01:
I don't see how there could be vacature of the Wayne County.

[00:52:02] Speaker 01:
designation here.

[00:52:05] Speaker 01:
So we do think that there are both causation and regressibility issues as well in regard to the income issue.

[00:52:10] Speaker 06:
I mean, if you accept the proposition that designation is not attainment,

[00:52:18] Speaker 06:
substantially increases the probability that sources within that area will be subject to mandates.

[00:52:28] Speaker 06:
It seems to me, at least conceptually, the causation and redressability are quite clear.

[00:52:34] Speaker 01:
Redressability is only clear if you accept their assertion that the redress here would be vacatur, and I just don't think that's a lot of logic.

[00:52:41] Speaker 06:
No, no, I'm assuming a remand telling EPA to get cracking on Monroe County.

[00:52:48] Speaker 01:
But in that case, Your Honor, Wayne County would still be designated as non-attainment, and U.S.

[00:52:53] Speaker 01:
deal would still then, you know, potentially face obligations related to that.

[00:52:57] Speaker 06:
It would have a better prospect of milder regulations.

[00:53:02] Speaker 09:
Is that true?

[00:53:02] Speaker 09:
I mean, you could go back and say, fine, we told us to look out of the gun Monroe County.

[00:53:06] Speaker 09:
That's a non-attainment area, too.

[00:53:08] Speaker 09:
And that wouldn't affect US Steel in any way, would it?

[00:53:11] Speaker 01:
No.

[00:53:11] Speaker 01:
I mean, the idea that then US Steel is going to have a lighter burden.

[00:53:14] Speaker 01:
I mean, I think that is pure speculation, Your Honor.

[00:53:17] Speaker 01:
Sorry, I'm overusing the word.

[00:53:18] Speaker 09:
No, no.

[00:53:18] Speaker 09:
Let me work there.

[00:53:21] Speaker 06:
So I thought an answer to two earlier questions.

[00:53:25] Speaker 06:
You accepted the proposition that a

[00:53:30] Speaker 06:
EPA, in effect, the states could do what they like, but EPA, in effect, gave priority to reductions in emissions at sources within the area.

[00:53:43] Speaker 06:
And I think U.S.

[00:53:44] Speaker 06:
Steel is asking for an enlarged area, includes Wayne County and Monroe, or at least the power plant.

[00:53:52] Speaker 06:
So why wouldn't expansion of the

[00:53:59] Speaker 06:
Wayne County area to include the power plant have a significant probability of less regulatory burden on U.S.

[00:54:08] Speaker 06:
steel.

[00:54:10] Speaker 01:
Well, I don't think expansion is not really the right way to look at it.

[00:54:14] Speaker 01:
These are separate areas.

[00:54:17] Speaker 01:
And the question is, does EPA have to go back and designate Monroe County as either attainment, non-attainment, or unclassified?

[00:54:23] Speaker 06:
Does EPA have the capacity to expand a previous designated area?

[00:54:30] Speaker 01:
It's expanded only in the sense that once you put two non-attainment areas right next to each other, sharing a boundary, we tend to refer to them as one non-attainment.

[00:54:38] Speaker 01:
But it's really looking at each area and saying, is this area either non-attainment or does it contribute to non-attainment in a nearby area?

[00:54:46] Speaker 01:
And it's answering that question specifically for a certain area.

[00:54:49] Speaker 01:
Here it would be for the Monroe area.

[00:54:51] Speaker 01:
So I don't think expansion is the right way to think of it, but again the critical point from our perspective is that Wayne County is still going to be non-attainment and the burdens associated with that are still going to be faced by U.S.

[00:55:02] Speaker 01:
Steel here.

[00:55:03] Speaker 06:
I certainly thought you conceded in response to the less questions that at least a probability can't measure of lesser burdens.

[00:55:16] Speaker 06:
Once you have another big polluter brought in as a source to be controlled.

[00:55:22] Speaker 01:
Your Honor, no, I didn't mean to concede that.

[00:55:24] Speaker 01:
I think if I was conceding something, I would concede maybe the fact that because there is a major source in a non-attainment area, these folks will face burdens.

[00:55:32] Speaker 01:
I wouldn't really dispute that.

[00:55:35] Speaker 01:
I think the idea that they're going to have lesser burdens if we go back and designate Monroe County as non-attainment, I think that is speculation at this point.

[00:55:42] Speaker 09:
Yeah, I think you had conceded that if they were in the same area, then there may be some sharing of the burdens, presumably.

[00:55:50] Speaker 09:
Given the default rule is counties, county lines, then the chance that they would end, if you went back to the drawing table, the chances are that they'd be two separate non-attainment areas anyhow.

[00:56:02] Speaker 01:
Well, if we went back to the drawing table, we'd be looking at designating Monroe County.

[00:56:07] Speaker 06:
But you also said that if you did designate Monroe County, then once you had these two adjacent counties designated, you would de facto treat them as one.

[00:56:16] Speaker 01:
I'm saying that there is this tendency when you have several together, we refer to it broadly as the Detroit non-attainment area, but each area's obligations are based on its particular designation.

[00:56:28] Speaker 09:
So measurements to decide, so imagine we're in a world where you have Wayne County,

[00:56:33] Speaker 09:
non-attainment area, and Monroe County non-attainment area right next to each other.

[00:56:37] Speaker 09:
And everybody back in the office just generally refers to that big old area, non-attainment area.

[00:56:42] Speaker 09:
But when you're testing going forward to see if they've come into attainment, is it still going to be individualized county testing, or is it going to be a macro testing?

[00:56:51] Speaker 09:
That seems important.

[00:56:52] Speaker 01:
I honestly can't answer that question.

[00:56:54] Speaker 01:
In terms of how the geography works here, I did want to point the court to something, and that's at page 16.

[00:57:01] Speaker 01:
674 of the joint appendix where we have a map of these two areas showing the relationship between Wayne and Monroe County.

[00:57:11] Speaker 01:
And this also relates to the point US Steel is trying to make that the fact that we've got these intervening monitors not registering exceedances somehow should be disregarded.

[00:57:22] Speaker 01:
If you see up in Wayne County, which is in green, we've got the little red diamond, and that's the violating monitor.

[00:57:28] Speaker 01:
Now US Steel's plant is one of the

[00:57:31] Speaker 01:
sort of a cream colored dots right by that.

[00:57:35] Speaker 01:
Now Monroe County as you see is well below that and the the plant in question is the dot in Monroe County so I mean I think you know

[00:57:46] Speaker 01:
The conclusion that EPA has drawn here on the merits is a really logical one.

[00:57:49] Speaker 09:
I think it's going to be really important for purposes of the standing inquiry to know how, once you have two adjacent counties as non-attainment areas,

[00:58:02] Speaker 09:
How is attainment measured?

[00:58:04] Speaker 09:
Is it still done county by county, or is it collective?

[00:58:06] Speaker 09:
Because if it's collective, then we're gonna be back in the 100% versus 50% shared burden scenario.

[00:58:13] Speaker 09:
But if they remain, Wayne's County's gotta do its thing, and Monroe County's gotta have its own compliance, then U.S.

[00:58:21] Speaker 09:
Steel's no better off.

[00:58:22] Speaker 01:
We are it's a really tough question to answer because I think that depends on the reasons that EPA if EPA were to find that Monroe County were not attainment it would be the reasons is it because Monroe County itself is not attainment in which case the focus would be on it you know can the state get Monroe County attainment.

[00:58:39] Speaker 01:
But if Monroe County is designated non-attainment because it is contributing to Wayne County, then yes, the measuring would ultimately be a collective one of have these counties collectively brought attainment at the monitoring site in Wayne County.

[00:58:54] Speaker 01:
But we can't answer these questions now because we just don't have the necessary information and the state hasn't gone through the process.

[00:59:01] Speaker 09:
What more information do you need about the Monroe plant?

[00:59:04] Speaker 01:
Well, we don't think we need more information to reach the conclusion that the agency reached here, which is that the monitoring data before it doesn't show that it's nearby and contributing, as the agency has interpreted those very ambiguous statutory terms.

[00:59:18] Speaker 01:
You know, it's 54 kilometers away from the violating monitoring of the local pollutant.

[00:59:22] Speaker 09:
I thought in the Mississippi Commission case, correct me if I'm wrong, I thought there you define nearby as neighboring counties in a metropolitan area.

[00:59:32] Speaker 01:
Well, I would point out that there is- Is that right?

[00:59:35] Speaker 01:
honestly I'm not sure but it doesn't matter your honor and the reason is that's a different pollution I believe ozone ozone it travels sulfur dioxide is localized so here 54 kilometers away is a very significant distance whereas when you're talking about ozone it's not necessarily a significant difference okay so nearby has a

[00:59:55] Speaker 01:
Well, but there's no fixed number.

[00:59:57] Speaker 01:
Chemical-specific meaning?

[00:59:58] Speaker 01:
There's no fixed number, Your Honor, if that's what you're looking for.

[01:00:01] Speaker 01:
But all we're saying here is that it's reasonable for EPA to say, look, we've got some sources really close to the violating monitor, including USDA, with very significant emissions.

[01:00:10] Speaker 01:
Yes, we have another source that's 54 kilometers away that does have significant emissions, but the data doesn't show us that those emissions are getting to the violating monitor.

[01:00:18] Speaker 01:
It's far away, and we've got this intervening Allen Park monitor where there's no violation.

[01:00:22] Speaker 01:
And EPA's, as I think EPA explained in responding to comments, the wind data paper.

[01:00:27] Speaker 05:
How do you respond to your opponent's point that the meteorological conditions explain that, explain why Allen Park is?

[01:00:34] Speaker 01:
I don't think there's any evidence in the record that supports that assertion that the wind is traveling in this sort of L-shaped pattern that's neatly evading the Allen Park and other non-violating monitor as it goes up the river.

[01:00:46] Speaker 01:
I just, EPA, to the contrary, noted that the wind is variable in this area.

[01:00:51] Speaker 01:
It goes in all directions.

[01:00:52] Speaker 06:
BPA is I guess in violation of a consent decree on the timing of its designation of these some non-attainment areas.

[01:01:03] Speaker 01:
It's not in violation of a consent decree, Your Honor, rather there was a consent decree that was recently entered into between EPA and various parties to set a schedule for designating the remaining areas because EPA had not met the three-year statutory deadline.

[01:01:17] Speaker 06:
What's the schedule for?

[01:01:19] Speaker 06:
Where does Monroe County fit on that schedule?

[01:01:22] Speaker 01:
Next summer, July 2016.

[01:01:27] Speaker 06:
The procedure is such that the U.S.

[01:01:29] Speaker 06:
Steel is able to actively participate in that to show – to try to convince EPA that the power plant in Monroe County is materially responsible for the non-attainment in Wayne County.

[01:01:45] Speaker 01:
Absolutely.

[01:01:46] Speaker 01:
As here, you know, the designations will be proposed.

[01:01:49] Speaker 01:
All stakeholders can comment, submit data.

[01:01:52] Speaker 01:
EPA will be looking not just necessarily at monitoring them, but monitoring plus modeling data.

[01:01:56] Speaker 01:
That's when EPA believes it'll have the data it needs to reach a final conclusion and designate that area.

[01:02:01] Speaker 01:
So we don't think, you know, the non-designation can be considered a final agency action here.

[01:02:08] Speaker 01:
I'm well over my time, so unless this Court has other questions, I will sit down.

[01:02:13] Speaker 05:
Thank you very much.

[01:02:14] Speaker 05:
Thank you.

[01:02:16] Speaker 05:
We'll give you about four minutes for rebuttal.

[01:02:19] Speaker 05:
I'm sorry.

[01:02:24] Speaker 05:
Yeah, I'm sorry.

[01:02:25] Speaker 05:
Are you dividing rebuttal?

[01:02:27] Speaker 02:
I'm sorry.

[01:02:27] Speaker 05:
Are you going to divide rebuttal?

[01:02:29] Speaker 05:
Okay, let's do two and two then.

[01:02:34] Speaker 04:
Judge, I'm going to let you ask about any sort of case that would show nullification by EPA of state data.

[01:02:42] Speaker 04:
And I'd refer you, it's not a judicial case, I'd refer you to Joint Appendix 522, which shows how they nullified data in Iowa as part of the consideration of what to do with a determination under this rule there.

[01:02:55] Speaker 09:
My question, though, is whether they had done that even though the weight of the evidence would have supported reliance on the data.

[01:03:04] Speaker 09:
I'm sure there's plenty of times they've invalidated data all over the place.

[01:03:09] Speaker 04:
In this case, the invalid data could not be validated using the standard procedure found in appendix T because a substantial amount of data had been flagged from 2008, 9, and 10.

[01:03:22] Speaker 04:
The government noted that it seemed to suggest that the burden shifted to the parties to raise every conceivable issue up front at the time of its initial public comment.

[01:03:33] Speaker 04:
And as we cited, page 10 of our reply, EPA retains the duty to examine key assumptions as part of its affirmative burden, and therefore must justify the assumption even if no one objects to it during the public comment period.

[01:03:46] Speaker 04:
That's from Appalachian Power 135, F3791.

[01:03:52] Speaker 04:
I also would like to go back to questions about the QAP and the significance of the QAP.

[01:03:58] Speaker 04:
Joint Appendix 175 sets forth the Montana QAP that was in place at the time.

[01:04:05] Speaker 04:
We need to start with the language on 165A.

[01:04:08] Speaker 04:
All data shall be traceable to a primary standard.

[01:04:11] Speaker 04:
And then the objective, which is set forth on the next page, 6.22.

[01:04:17] Speaker 04:
And then back to the language that you and I talked about, Judge Griffith, 2.1b.

[01:04:21] Speaker 04:
The government wants to talk about how that needs to be adequate quality, but the key language that they're leaving out is provide data of adequate quality for the intended monitoring objectives.

[01:04:30] Speaker 04:
And so these monitoring objectives on 165 and 166

[01:04:34] Speaker 04:
were not applicable given the new standard.

[01:04:38] Speaker 04:
They were using the old standard, and the data therefore didn't comply with the requirement.

[01:04:42] Speaker 06:
Isn't that a narrow, very arbitrarily narrow reading of the objective?

[01:04:47] Speaker 04:
Well, Your Honor, you've got it very clear.

[01:04:50] Speaker 04:
All data shall, mandatory language, shall be traceable to a primary standard.

[01:04:54] Speaker 04:
And then the specifics here and the fact that they were collecting data throughout all of 2009 and through August of 2010

[01:05:04] Speaker 04:
that was not calibrated to the new standard.

[01:05:06] Speaker 04:
They were still using the standard that had been in place since the QAP was implemented in 96.

[01:05:10] Speaker 04:
So the viability of that data is in great question and again was not weighed by the agency.

[01:05:17] Speaker 06:
Intuitively seems to me for that to be meaningful you've got to show that somehow or other the focus on the earlier standard means that the data

[01:05:27] Speaker 06:
obtained are budged, inaccurate, improper for testing against the new standard.

[01:05:37] Speaker 06:
I just don't see why that should be the case.

[01:05:39] Speaker 04:
Well, I think the best evidence of the significance is that the state, in fact, did begin to collect a different level of data based upon the new standard in August of 2010.

[01:05:50] Speaker 04:
So, they realized that they needed to change what they were monitoring in order for it to be meaningful and to be adequate quality, and yet we've got all this data from before August of 2010 that's being measured at the old standard, and the record suggests, at least comments we made, that that data is jeopardized as a result.

[01:06:12] Speaker 04:
And finally, I'd like to refer the court also to page 17 of the brief where we noted the data collection for the purposes of comparison for the NACs requires more stringent requirements.

[01:06:24] Speaker 04:
Of course, the context here is we were very close.

[01:06:27] Speaker 04:
in terms of attainment or unclassifiable.

[01:06:30] Speaker 04:
We were very close.

[01:06:31] Speaker 04:
And so all of these errors, as you begin to aggregate them, are very significant because we're in the margin of error.

[01:06:37] Speaker 04:
The major source of SO2, as is reflected in the record, had said that it was going to be mothballed.

[01:06:44] Speaker 04:
And so in that larger context, all these factors did not lead the EPA to make Elson County unclassifiable, which was the right outcome.

[01:06:54] Speaker 04:
And their decision, because of failure to follow their own handbook, is arbitrary and capricious.

[01:06:59] Speaker 05:
Thank you very much.

[01:07:07] Speaker 02:
The meteorological data that we refer to is in the record at Joint Appendix 661 to 670.

[01:07:14] Speaker 02:
It's in fact DTE's presentation.

[01:07:16] Speaker 02:
DTE is the owner of the Monroe Power Plant.

[01:07:20] Speaker 02:
And in their presentation, they are trying to explain why in 2009 when the U.S.

[01:07:25] Speaker 02:
steel plant was shut down, due to economic concerns,

[01:07:29] Speaker 02:
that there were still violations at the monitor.

[01:07:32] Speaker 02:
And the conclusion that DTE's own engineer came to was that the meteorological consequences of their emissions had impacts at the Southwest High School Monitor.

[01:07:44] Speaker 02:
I think there's a slippery slope problem here.

[01:07:46] Speaker 02:
If we accept EPA's interpretation of 107D, they can presumably set a boundary around a single source.

[01:07:58] Speaker 02:
and wait until later for the rest of the sources to be brought into the non-attainment designation.

[01:08:04] Speaker 02:
They're not restricted by jurisdictional boundaries.

[01:08:07] Speaker 02:
In fact, in this case, on the record, the Wayne County boundary is not a jurisdictional-based boundary.

[01:08:13] Speaker 02:
They use roadways to determine the boundary around the non-attainment area.

[01:08:18] Speaker 02:
So if you allow EPA to set an area around a single source and leave out all the rest of the sources, they're choosing the winners and losers.

[01:08:28] Speaker 02:
They're choosing those that are required to reduce emissions to help that area immediately.

[01:08:33] Speaker 06:
I understand what you're saying.

[01:08:36] Speaker 06:
I guess I'm still not sure why, two things.

[01:08:43] Speaker 06:
EPA's apparent uncertainty about long-run, long-row

[01:09:02] Speaker 06:
BPA's decision on whether to include Monroe County precisely on the basis that the power plant there causes exceedances in Wayne County.

[01:09:14] Speaker 02:
BPA's determination of the area contributing to Wayne County in Monroe is not a separate designation.

[01:09:22] Speaker 02:
It's part of the non-attainment boundary for Wayne County.

[01:09:28] Speaker 02:
And even if we take the proposition that EPA has the authority to separate the designation in a later time period, that also imposes a burden on those that are within the initial designation.

[01:09:43] Speaker 06:
I see that as to your standing claim.

[01:09:48] Speaker 06:
I don't see it as to the finality issue.

[01:09:52] Speaker 06:
At least it seems to me it's more complicated as to the finality issue.

[01:09:57] Speaker 02:
Well, EPA, if they're allowed to separate those designations by a matter of years, which is what they're asking this court to bless,

[01:10:06] Speaker 02:
means that the obligations for U.S.

[01:10:08] Speaker 02:
Steel will be in stone, in a set, and required well before they complete any analysis on the Monroe Power Plant.

[01:10:17] Speaker 02:
And by doing so, U.S.

[01:10:19] Speaker 02:
Steel will be required to reduce emissions to compensate for the emissions for the Monroe Power Plant to extend their contributing.

[01:10:26] Speaker 09:
How long does a state implementation plan, what is the time period for a state implementation plan?

[01:10:31] Speaker 02:
The obligation is that we have to meet the standard within five years from the date of designation.

[01:10:36] Speaker 09:
Is the plan itself usually a five-year plan, or is it revisited and amended annually based on progress, intervening circumstances?

[01:10:44] Speaker 02:
The SIF does have opportunities for it to be reevaluated periodically, but not within the five-year period.

[01:10:51] Speaker 09:
Not within?

[01:10:53] Speaker 02:
No, my understanding is that it's a five-year obligation to meet the attainment standard based on the SIP.

[01:10:59] Speaker 02:
If at the end of that five-year period you haven't met attainment, there's an obligation to do more.

[01:11:09] Speaker 05:
Thank you very much.

[01:11:10] Speaker 05:
The case is submitted.