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Case number 14-1268, State of Kansas et al.

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Petitioners vs. Environmental Protection Agency and Gina McCarthy.

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Mr. Gustafson for the petitioner, Mr. Himminger for the respondents.

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No, no, no.

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may it please the Court, Adam Gustafson from the states of Kansas and Nebraska, and other petitioners.

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I'm joined by Chief Deputy Attorney General Jeff Cheney of Kansas and by James Condi.

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The states are presumptively required to use EPA's fundamentally flawed model, even though the erroneous vehicular emissions estimates, based on a study designed by Chevron, will delay compliance with the air quality standards.

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That's a recognized injury for standing purposes.

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Because the official release is binding on its face, EPA was required to give notice and an opportunity for commenting.

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It's only binding for someone who's in non-attainment, correct?

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Does it apply if there haven't been new ozone regulations?

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Would it apply to Kansas at all?

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Would you have anything?

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Well, as a matter of fact, the states are required to provide inputs to the MOVES model to EPA under a separate regulation raised in the EPA's brief.

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I assume you don't have any problem providing inputs on your views on that model.

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No, no, I'm sorry.

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The inputs, the data, inputs that go into the model.

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So in some respects, the model is already applicable.

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But the question in this case is whether the state, whether the injury here is imminent.

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And here, every link in the chain of causation is undeniable.

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So the states are already out of compliance with the ozone max.

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That's in the declarations.

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And that's measured by monitors in those states.

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And so by operation of law, those states will have to be designated as non-attainment, and they will have to submit state implementation plans by operation of law after being so designated.

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Is there any discretion at all for the designation?

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No, there's no discretion at all.

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So this is unlike the Clapper case where you have attenuated chain of causation with discretionary judgments at each step of the process.

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Here, there is no room for discretion.

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And EPA doesn't deny that the states exceed the 70 parts per billion levels allowed by the ozone max.

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Can you clarify one thing?

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If you have to do a state implementation plan, you will also have to do a transportation conformity analysis?

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Is that mandatory?

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Yes, that's mandatory.

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And that's for any determination of non-attainment?

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Right, so once the... Mr. Brunetti had said something about moderate nonattainment in his declaration and I wasn't sure why he had that adjective.

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Oh, there are different categories of non-attainment, but for our purposes, there's no difference.

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Once you are not in attainment, you have to do a state implementation plan, and you have to do conformity analysis to demonstrate that any new projects are not going to take you out of compliance with the plan, and that they are consistent with your state implementation plan.

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And if you have the injury, is it ripe?

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When they haven't yet made the designations, you haven't yet had to start drafting a plan?

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Yes.

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The question here is whether there's a purely legal question.

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And this court has already said that the question of whether an agency's renouncement is substantive rule or a policy statement is itself a purely legal question.

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That can be answered today.

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This is the consummation of the agency's decision-making process.

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The EPA even decides not to contest that point.

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It says, even if this is the consummation of the agency's decision-making process.

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And Judge Randolph, in an Appellation Power 1, you wrote that the fact that a law may be altered in the future

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has nothing to do with whether it's subject to judicial review at the moment.

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That the rightness argument, although it's not framed as a rightness argument, but what we'll call the rightness argument raised by EPA is that the agency might change the model at some point in the future of

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But as this Court has held, all laws are subject to change.

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That does not mean that the case is not right.

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And I would direct the Court to General Electric, the EPA, which makes this point very clearly.

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They say that particularly for a model that must be updated periodically to reflect advances in science, it would make no sense to hold that it's not right simply because it might change in the future.

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And in this case, EPA's major revisions to the emissions model have come at four, eight, and nine year intervals.

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So it's very likely that this very model will be in place when the states are required to do this.

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How are we to evaluate as far as the legally binding or I'm not sure if that's the right way of looking at this, but how are we to evaluate the statutory language that allows the state to propose its alternative model?

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Right.

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So why couldn't your alternative model be

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Here's the EPA Moves 2014, but our alternative model is to tweak it in this fashion.

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Basically, prepare an alternative model along the lines of what you would have said in a rulemaking anyway, that it should be changed in this fashion or that fashion.

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Well, to step back a moment, Judge Wilkins, this court has said clearly that the possibility of exceptions to a general rule doesn't mean that the law is not binding.

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So in Alabama power, the court explicitly considered this argument about whether the potential for the EPA to accept alternative models

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might mean that it's merely a policy statement and the court said no.

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It's clearly a substantive rule because there's a presumptively required model and the state has to meet a standard in that case.

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I thought your answer to Judge Wilkins' question, at least what I gathered from your brief, was that the model itself represents the floor.

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and that anything a state proposes has to be equal to it or great?

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That's exactly right, Judge Randolph.

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In fact, the statute requires that the state's alternative model be an improved emissions estimating technique.

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That is, EPA in its discretion

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would have to find that the state's model is better suited to that state's circumstances than EPA's model.

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But that doesn't mean that it's a floor in the sense of, you know, there's a predetermined outcome that if you put that in the model, it has to

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you know, find at least this amount of a certain pollutant, it means that if it's better at estimating than our model, then you can use it.

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So if you can show that your model does a better job of portraying what the real world will be,

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then the statute says you can use it, right?

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Well, Judge Wilkins, I interpret the statute the same way you do, and I think we're in agreement about that.

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EPA says that if the model is better at doing these estimations than EPA's model, EPA has discretion to allow it.

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But as a matter of fact,

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But the question, though, is whether, in practice, if we set aside the fact that this language is binding in the official release.

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And by the way, that should be the beginning and end of the court's analysis.

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But if we move on to the second prong of the substantive binding rule analysis and look to the agency's actual application, we see that the agency has consistently held its rule to be binding.

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There's one state, California, that uses its own model.

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And for Clean Air Act purposes, California is its own country.

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So it's Sierra Club, which is the case that EPA relies on to prove the alleged flexibility of the model.

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In that very case, this court repeated EPA's statement that, quote, that EPA, quote, requires that states use the latest model available at the time a SIP is developed, referring to Mobile 6.

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In that case, EPA's brief said that it requires that any new SIP modeling should be conducted with the new model.

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And in that brief, it said that its conditional approval of the DC SIP, quote, requires that the state submit a revised attainment demonstration using

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the mobile 6 model, the new model at that time.

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So EPA's practice has been to enforce these models as though they are binding.

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But again, the court didn't reach that question because the language is clear.

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I was also going to ask about your compliance costs argument because the declarations are a little

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lacking in specificity about that.

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Have you already incurred compliance costs, training, new software as a result of those 2014?

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I'm aware of no evidence that we've currently incurred those compliance costs, but those costs are imminent.

[00:11:03] Speaker 01:
EPA itself... How do I know that from these declarations or the record?

[00:11:07] Speaker 03:
Well, EPA, the record, the official release itself, that we're challenging, states, EPA states in that release, that the states will have to undergo training on the new model.

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And so the declarations prove that out.

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They show that.

[00:11:22] Speaker 01:
Did they mean all states, or did they mean states that at that time were already in non-attainment?

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I think they meant any states that

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Well, all states that are in non-obtainment, because at the time of the official release, no one was using MOVES 2014.

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And so they're saying that if you're, since all you states have been using the old model, MOVES 2010B, you now will have to get training on MOVES 2014.

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As you would expect, Kansas, like other states, has modelers in its department who are trained on the then-current model, MOVES 2010B.

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And so our declaration shows that those modelers would have to incur additional expenses, additional training at the taxpayer's expense.

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Can you give me, in a nutshell, how this model is employed or expected to be employed?

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by the states, what exactly do they have to do?

[00:12:22] Speaker 06:
Well, the model is... Let me back up a minute.

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The amount of ethanol that's added to gasoline, is that a state determination or a federal determination?

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We are wading into very complicated matters, but that is... I think the short answer is it's a federal determination.

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The EPA has decided that certain fuels can be used for fuel certification when a vehicle manufacturer builds new cars.

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And the law says that you're not allowed to sell fuels that are not

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substantially similar to those fuels.

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So currently, you're allowed to sell E10.

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And because of a waiver, a statutory waiver of that subsim rule, you're also allowed to sell E15.

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And so that's relevant in this case because Kansas has said that if the model was accurate and demonstrated that ethanol reduces these emissions, we would take steps to encourage the sale of E15, a fuel that's legal already, which

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I thought there was a provision in the Clean Air Act that said that the EPA can't dictate the mix of gasoline.

[00:13:39] Speaker 03:
I'm not aware of that provision, Your Honor.

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It's true that gasoline in different jurisdictions has different components.

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And states are within limits allowed to set their own standards.

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So yes, I think that's right.

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There's a wide variety in what's in gasoline.

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Right.

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But the EPA does set certain requirements, and the ethanol limitation is one such thing.

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And overlying this is a Renewable Fuels Act, or whatever the name of it is, requiring a certain percentage to consist of so-called renewable

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That's right.

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Okay, so I interrupted you, but I just wanted to get that straight.

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I'm not sure I have.

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You're right.

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It's very complicated.

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But would you tell me how the model fits into this?

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What do you do with the model?

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I'm sitting in an office in Topeka, Kansas, or whatever, and I'm trying to figure out what to do with this thing.

[00:14:39] Speaker 03:
Again, this is complicated.

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So the model works in a couple of different ways.

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First, the model generates estimates of emissions effects from the vehicles and fuel in a locality based on vehicle miles traveled and the available fuels.

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In theory, this is how it's supposed to work.

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Those emissions estimates do a couple of things.

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First, they're fed into air quality models

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that one of which was addressed in Alabama Power, which provide estimates of the amount of pollution in the air.

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And so such models are used to determine whether states are in non-compliance, et cetera.

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In addition to that, the states have to, and this is what our focus has been on, the states have to use the model to prove up their plan for coming into compliance with the National Ambient Air Quality Standard.

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So here, Kansas and Nebraska are out of compliance with the 70 parts per billion ozone standard.

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And they have to show EPA, in a state implementation plan, how they plan to get to reach that level.

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So if theoretically, the more ethanol, the less of the six pollutants are emitted, then the state would say, well, one way we can do it is just increase the ethanol percentage.

[00:16:07] Speaker 03:
That's exactly right.

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And you'll find that in our declarations.

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Yeah.

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the states would be using the MOVES model to demonstrate how their plan achieves that.

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And the converse, if the model showed that the more ethanol, the more pollutants, then the state would be in compliance by, or try to reach compliance by reducing the ethanol.

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And that's precisely the problem we're confronted with here, because the current model, contrary to science,

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would indicate that increasing ethanol increases pollution.

[00:16:43] Speaker 03:
That's just not right.

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I mean, you can look at the Anderson study that we cite.

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The first footnotes in that study show 15 or so studies that give results that are the opposite of the results estimated here.

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EPA also argues that this rules a policy statement because it merely implements a pre-existing regulatory scheme.

[00:17:08] Speaker 03:
But this court's rejected that argument in McCluth, and I'd be happy to answer questions about that.

[00:17:14] Speaker 02:
I'm trying to understand.

[00:17:16] Speaker 02:
There's very little discussion of E85 in the briefs.

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Am I correct that E85 gasoline that's 85% ethanol

[00:17:28] Speaker 03:
That's correct.

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Actually, it's about 51 to 81 percent ethanol for reasons that are beyond me.

[00:17:36] Speaker 02:
But it's called an E85.

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That's right.

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Okay.

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Is it created by the splash blending or the match blending?

[00:17:47] Speaker 03:
That's a good question.

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I'm not sure I can give you an authoritative answer to that.

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But in practice, at least for E15, the general practice is for E15 to be created by just adding more ethanol to E10 and the blend stock on which the E10 is based.

[00:18:10] Speaker 03:
E85 is different, and I'm not sure that it's even produced at the refineries every time.

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in corn growing states, I think the fuel is blended at the ethanol plants with the addition of gasoline.

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So you're splash blending, in effect, gasoline into ethanol.

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But I'm not an expert on that.

[00:18:30] Speaker 02:
Well, I guess the reason I'm trying to get to this is that

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You know, I don't know how many cars out there or trucks use E85, but it is a fuel that's available and there are cars that burn it.

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And if indeed it's created by

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the match blending as opposed to the splash blending, and if the government is supposed to, you know, look at the effect of ethanol throughout a range of this full range, then doesn't that undermine your argument quite a bit that this model relies too heavily on match blending instead of splash blending?

[00:19:16] Speaker 03:
Well, there are a couple of questions wrapped up here.

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E85 is not something we focused on because E85 is not sold in great quantities.

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But the science would bear out the same effects that we've demonstrated.

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Higher levels of ethanol tend to reduce the emissions of these pollutants, especially volatile organic compounds and nitrous oxides which produce ozone.

[00:19:42] Speaker 03:
But here, and matched blending, again, is complicated.

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Our complaint with the EPAC study on which the model is based

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isn't that all match blending is necessarily defective.

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The problem is that in this match blending that EPA undertook, they selected an arbitrary set of parameters that produced results contrary to logic.

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So when there is, you could say that match blending happens in actual practice.

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That is, refineries, so for example, when gasoline went from E0, gasoline with no ethanol, to E10, you could say that matched blending happened because the refineries lowered the octane of the blend stock.

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That is, they took advantage of the high octane value of ethanol that was going to be added to that fuel.

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So that's a form of match blending, because they're changing one parameter to make up for the addition of another fuel component.

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The problem is that in the EPAC study,

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EPA didn't match blend for octane, the one parameter that refiners do match blend for.

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Instead, they selected only two points on the distillation curve, that is the curve of temperatures at which various percentages of the fuel distill.

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leaving out an important bump in the middle so that ethanol was blamed for the emissions effects of other components that were added to artificially and arbitrarily match these arbitrary parameters.

[00:21:35] Speaker 03:
These are all technical issues that should be addressed in the agency.

[00:21:40] Speaker 03:
And that is why notice and comment is required here.

[00:21:44] Speaker 03:
The court noted in Alabama Power that especially for complex scientific models like this, notice and comment is especially important.

[00:21:53] Speaker 06:
It's not under the EPA though, or the APA, the notice and comment requirement, right?

[00:22:00] Speaker 03:
We say that the notice and comment requirement of the APA does apply here.

[00:22:05] Speaker 06:
The APA notice and comment provision is specifically excluded under the Clean Air Act.

[00:22:11] Speaker 06:
It's section 7602.

[00:22:12] Speaker 06:
So whatever it is, it's coming from the Clean Air Act, not from the APA.

[00:22:22] Speaker 03:
It's true, Your Honor, that the court has often elided the APA.

[00:22:28] Speaker 03:
I know.

[00:22:29] Speaker 06:
There are cases here talking about the APA.

[00:22:31] Speaker 06:
I know.

[00:22:31] Speaker 06:
But the APA doesn't apply 553 through 557, don't apply to the clean air.

[00:22:37] Speaker 03:
Well, if that is so, Your Honor, I would point the court to the cases you've mentioned, which do apply APA notice and comment standards, at least by analogy, if not explicitly to the clean air.

[00:22:49] Speaker 06:
It's 7607.

[00:22:51] Speaker 06:
And it says that provisions of Section 553 through 557 and the judicial review provision of Title V shall not, except as expressly provided here, apply to actions

[00:23:04] Speaker 06:
which is to which it applies.

[00:23:06] Speaker 06:
So what we're really doing is interpreting.

[00:23:09] Speaker 06:
Maybe we'll borrow from the APA.

[00:23:11] Speaker 03:
I think that's exactly right.

[00:23:12] Speaker 06:
There's some subtle differences, though, in the language.

[00:23:15] Speaker 03:
That may be, Judge Randolph.

[00:23:16] Speaker 03:
I would point out that EPA, in this case, has not argued that there's any distinction at all between the notice and comment requirement of the APA and the Clean Air Act.

[00:23:25] Speaker 03:
That's true.

[00:23:26] Speaker 03:
And the cases that we're citing apply them as if they're interchangeable.

[00:23:32] Speaker 06:
Yeah.

[00:23:32] Speaker 06:
Oh.

[00:23:33] Speaker 06:
You mentioned octane.

[00:23:35] Speaker 06:
I read someplace, I don't know whether this is common, but in one of the states that the premium gasoline doesn't have ethanol in it.

[00:23:44] Speaker 06:
Is that true?

[00:23:46] Speaker 06:
Not as a rule.

[00:23:49] Speaker 03:
Not as a rule.

[00:23:50] Speaker 03:
So it is possible to buy gasoline with no ethanol in some places.

[00:23:54] Speaker 06:
And you're talking about motor vehicles.

[00:23:56] Speaker 06:
But for reasons that should be obvious, I was using my neighbor's snow blower recently.

[00:24:03] Speaker 06:
And there's a big warning on that.

[00:24:05] Speaker 06:
It says do not use gasoline with more than a 10% ethanol content.

[00:24:11] Speaker 06:
And what's the reason for that?

[00:24:12] Speaker 03:
Well, ethanol has been shown to have harmful effects on some of those small engines, lawnmower engines, weed whacker, snowblower engines, and so that's why the pumps are clearly labeled.

[00:24:27] Speaker 06:
You can get non-ethanol gasoline?

[00:24:29] Speaker 06:
Yes, you can.

[00:24:32] Speaker 03:
I couldn't tell you where the nearest station is.

[00:24:38] Speaker 06:
File something for me.

[00:24:41] Speaker 06:
Thank you.

[00:24:54] Speaker 01:
Good morning.

[00:24:54] Speaker 04:
Good morning, Judge Millett.

[00:24:55] Speaker 01:
Good afternoon.

[00:24:56] Speaker 01:
Sorry.

[00:24:57] Speaker 04:
Good afternoon.

[00:24:58] Speaker 04:
It's lunchtime.

[00:24:58] Speaker 04:
And may it please the court, Justin Heminger from the Department of Justice on behalf of respondent EPA.

[00:25:04] Speaker 04:
And with me at council table is Sasmita Dube from EPA's Office of General Counsel.

[00:25:10] Speaker 04:
I'd like to make two basic points today.

[00:25:12] Speaker 04:
And that is I'd like to first respond to the court's questions about standing.

[00:25:16] Speaker 04:
And then second, I'd like to explain why even if the states had standing,

[00:25:20] Speaker 04:
The notice in the model are not final agency actions that are subject to judicial review under 307D of the Clean Air Act.

[00:25:28] Speaker 01:
Before you do that, can I just make crystal clear on one thing?

[00:25:32] Speaker 01:
I take it there's now Moos 2014A?

[00:25:34] Speaker 01:
That's correct, Your Honor.

[00:25:36] Speaker 01:
Is it your position there's absolutely no material change for purposes of this case between 2014A and 2014?

[00:25:41] Speaker 04:
Not a material change, Your Honor.

[00:25:44] Speaker 04:
And so we don't, we haven't argued, we're not taking the position that this case is moot in some way because of the release of the new model.

[00:25:51] Speaker 01:
There's a big world between moot and effective, so is there any impact from those changes to the analysis of the issues before us?

[00:25:59] Speaker 04:
No, Your Honor.

[00:26:01] Speaker 04:
I did want to make one thing clear before making those two points, and that is that our position is not that the states can never challenge the model,

[00:26:11] Speaker 04:
We're not here asking court to insulate the model from judicial review.

[00:26:15] Speaker 04:
Our point is that this is not the proper time and circumstances for this case to be to be brought.

[00:26:23] Speaker 04:
What is the proper time?

[00:26:25] Speaker 04:
Well, Your Honor, we think there are several different avenues that Congress has established, and I believe it was Judge Wilkins that identified one of them.

[00:26:33] Speaker 04:
It's Section 7502C8 of the Clean Air Act.

[00:26:37] Speaker 04:
And I'm jumping ahead to the final agency action part of this, but in fact, these two parts of our argument fit together.

[00:26:46] Speaker 04:
if the states are eventually found to have areas that are designated in non attainment.

[00:26:53] Speaker 04:
And I want to be clear that hasn't happened as of today.

[00:26:55] Speaker 01:
Is there any dispute?

[00:26:57] Speaker 01:
I know you haven't made that you haven't done the paperwork and you haven't done the designation.

[00:27:00] Speaker 01:
But is there any dispute that they are or will be found to be in non attainment within your was a two year window for making that designation?

[00:27:12] Speaker 04:
I think we wouldn't agree that it's clear that the states are going to be found to be in nonattainment.

[00:27:17] Speaker 04:
And that goes to eminency.

[00:27:19] Speaker 01:
We don't... How could it not be clear if their monitors are reporting levels that 70 points per billion or whatever it was that violate the new standards, how could they not be found to be in nonattainment?

[00:27:31] Speaker 04:
Well, I think one answer is non-attainment designations are done by a three-year trailing monitoring period.

[00:27:41] Speaker 04:
EPA is going to make these designations, it's projected to make the designations in October of 2017.

[00:27:49] Speaker 04:
And so you're referring to the Burnetti Declaration from the state of Kansas.

[00:27:54] Speaker 04:
In that declaration, the monitoring years that are identified are 2012 through 2014.

[00:28:00] Speaker 04:
So it's not clear which years will in fact be used for monitoring.

[00:28:06] Speaker 04:
ozone levels change over time.

[00:28:10] Speaker 04:
And so I don't think today that you can definitively say Kansas will be found to have nonattainment areas by EPA.

[00:28:19] Speaker 04:
That's also a separate administrative or agency action

[00:28:24] Speaker 04:
that EPA is going to conduct.

[00:28:27] Speaker 06:
So EPA makes a determination of non-attainment and the state can then seek judicial review of that.

[00:28:35] Speaker 06:
Is that your point?

[00:28:36] Speaker 06:
That's part of it, but we're not even at that point, Judge Randolph.

[00:28:40] Speaker 06:
Let me pose a problem that I don't know the solution to.

[00:28:44] Speaker 06:
The – those actions have to be brought within the geographical territory of the affected area, which would be Kansas and whatever that circuit court is, right?

[00:28:56] Speaker 06:
Yes, Your Honor.

[00:28:57] Speaker 06:
Okay.

[00:28:57] Speaker 06:
There's a provision in the Clean Air Act that requires that any agency action

[00:29:03] Speaker 06:
that has nationwide impact and effect has to be brought exclusively in the DC circuit.

[00:29:10] Speaker 06:
And there's no question that this model has nationwide impact.

[00:29:17] Speaker 06:
So how can it be that each individual circuit

[00:29:20] Speaker 06:
will get review of the validity of it.

[00:29:23] Speaker 06:
The reason for that provision in the Clean Air Act is Congress didn't want conflicts all over the place of nationwide determinations by EPA.

[00:29:33] Speaker 06:
So how do you square that system that you're describing with the statute that requires exclusive jurisdiction in this circuit?

[00:29:44] Speaker 04:
Well, I think this is something that's in the agency's hands.

[00:29:48] Speaker 04:
And that's the point of McCluth.

[00:29:50] Speaker 04:
If EPA had said we're issuing this model as a rule, you have to use the model, here's the notice and comment period, bring your challenge to it within 60 days, then yes, we would agree that challenge would belong here in this court.

[00:30:03] Speaker 04:
But EPA didn't choose that path.

[00:30:04] Speaker 04:
What EPA said is the model is a policy.

[00:30:08] Speaker 04:
We're not making it a rule.

[00:30:09] Speaker 04:
And so that does.

[00:30:10] Speaker 06:
But under the judicial review provision of the Clean Air Act and put aside the APA, it says any final, if this is a final action, let's assume that, any final action with nationwide impact has to be brought exclusively in the D.C.

[00:30:29] Speaker 06:
Circuit.

[00:30:31] Speaker 06:
And I'm quoting.

[00:30:32] Speaker 06:
It's final action of the administrator.

[00:30:36] Speaker 06:
It has to be brought into D.C.

[00:30:38] Speaker 06:
Circuit.

[00:30:38] Speaker 06:
So you go to another circuit in an enforcement action or a review of a non-attainment determination, and the Eighth Circuit says, no, we can't hear this, because that's the D.C.

[00:30:49] Speaker 06:
Circuit's jurisdiction.

[00:30:50] Speaker 04:
Well, that would be if it is a final agency action.

[00:30:52] Speaker 04:
We've said here that this model is not, in fact, a final agency action.

[00:30:55] Speaker 04:
It's only when the model is applied in the context of an individual regulatory action.

[00:31:00] Speaker 04:
And the example that I was using is 7502C8, where a state has submitted a nontainment state implementation plan.

[00:31:08] Speaker 04:
And in doing that, they've chosen to use EPA's model.

[00:31:12] Speaker 04:
And let's say that one of these states brings their challenge in the context of that state implementation plan and says, we disagree.

[00:31:22] Speaker 04:
This isn't the best model.

[00:31:24] Speaker 04:
We want to tweak your model and explain why it's different.

[00:31:30] Speaker 04:
In that context, that would be a fine.

[00:31:33] Speaker 04:
And if EPA disagreed,

[00:31:35] Speaker 04:
That would be a final agency action.

[00:31:38] Speaker 04:
That would be the proper time for that state to bring the challenge.

[00:31:42] Speaker 04:
And we acknowledge that could end up being reviewed in another circuit.

[00:31:47] Speaker 04:
But that, in fact, is one of the consequences of the agency's choice to issue this model as policy guidance and not as a rule.

[00:31:55] Speaker 04:
So we acknowledge, and the petitioners bring this up in their reply brief, that there are some efficiency interests

[00:32:01] Speaker 04:
in promulgating the model pursuant to notice and comment rulemaking.

[00:32:07] Speaker 04:
In this case, EPA has chosen a different path because there are other interests, countervailing interests, that make a flexible policy a better choice, both for EPA and, more importantly, for the regulated community.

[00:32:24] Speaker 04:
And so what that means is that, yes, the model is open to attack, and EPA has to defend the model in an individual agency action.

[00:32:36] Speaker 04:
I did want to turn back to standing.

[00:32:42] Speaker 01:
When you talk about flexibility as a policy, do you mean by that the ability of a state to come forward with its own alternative plan?

[00:32:51] Speaker 04:
It's both, Judge Millett.

[00:32:54] Speaker 04:
So a state can submit its own model.

[00:32:58] Speaker 04:
The models are expensive to develop and maintain.

[00:33:02] Speaker 04:
But it also could challenge particular facets of EPA's model.

[00:33:08] Speaker 04:
And EPA would be open to that in the context of whatever that individual agency action is.

[00:33:15] Speaker 01:
What do you mean by they could challenge it?

[00:33:17] Speaker 01:
Just once they're found in non-attainment, they would say,

[00:33:21] Speaker 01:
be found in nonattainment or I don't know what you mean by that.

[00:33:25] Speaker 04:
Well I think that goes to standing because in fact maybe this wouldn't make a difference but if they wanted to challenge the model and in fact they're in nonattainment and as part of that they felt like it was going to affect their bottom line ability to

[00:33:37] Speaker 04:
to reach attainment or to implement a particular policy, which I think is still uncertain given the timeframe and all the moving parts that have to happen.

[00:33:47] Speaker 04:
But if at that point, that would be the time for them to submit the evidence, the extra record material that they've put in the record here, and to make this point to the agency.

[00:34:00] Speaker 06:
How would they do that?

[00:34:03] Speaker 06:
Let's suppose Kansas says, OK, we've looked at this new Department of Transportation study, and this model is just wrong.

[00:34:12] Speaker 06:
We're raising our ethanol requirement to 15%.

[00:34:16] Speaker 06:
And we'll employ the model.

[00:34:21] Speaker 06:
And the model shows that that's going to increase the nitrogen oxide or the sulfur dioxide or CO2.

[00:34:29] Speaker 06:
Now what happens?

[00:34:30] Speaker 06:
Does the EPA come back and say, well, wait a minute.

[00:34:33] Speaker 06:
Now, you can't change the model.

[00:34:34] Speaker 06:
You use it.

[00:34:35] Speaker 06:
If you had an alternative, you should have used that.

[00:34:37] Speaker 06:
So you've waived any requirement or any challenge to the model itself.

[00:34:43] Speaker 06:
Is that the way it'll play out?

[00:34:45] Speaker 04:
Well, we would say that the state should bring that challenge to the model in the context of presenting their city implementation plan to

[00:34:55] Speaker 04:
EPA.

[00:34:56] Speaker 04:
And there are notice and comment procedures that accompany that.

[00:34:59] Speaker 04:
So that would be the time for them to say, the model's wrong.

[00:35:04] Speaker 04:
You need to change it.

[00:35:05] Speaker 04:
And EPA would have to explain why, in fact, the model's right.

[00:35:08] Speaker 04:
And we've acknowledged, if it's a policy, then in fact, EPA has to act as if the model hasn't even been issued.

[00:35:15] Speaker 04:
And it has to explain the science and defend the technical merits of the fuel effect study and the results that the emissions model produces.

[00:35:24] Speaker 04:
And that can happen in that context.

[00:35:25] Speaker 04:
There's my understanding is that there are technical documents that accompany the state implementation plans and Discuss the modeling so EPA does look at the way that a particular state is using the model And how can the state even draft the plan?

[00:35:43] Speaker 02:
If it believes that the model is flawed So

[00:35:52] Speaker 02:
I mean, it just seems, I'm just trying to follow up with Judge Randolph's question.

[00:35:58] Speaker 02:
I mean, if Kansas believes that the model is flawed, then they draft a plan and they're like, there's no way we can really reach attainment unless we do these kind of things that are completely unrealistic because this model is unrealistic.

[00:36:20] Speaker 02:
So do they have an obligation at that point to present some sort of alternative model?

[00:36:26] Speaker 02:
I'm sorry, alternative plan using an alternative model?

[00:36:29] Speaker 02:
I mean, I just don't understand how it's supposed to play out at the time that they have an implementation plan that's due.

[00:36:41] Speaker 02:
And they have to use some model to do that plan.

[00:36:46] Speaker 02:
So they have to create and propose their alternative model at the time that they write their state implementation plan so that they can say, we didn't use your model.

[00:37:01] Speaker 02:
We want you to approve our implementation plan using our alternative model.

[00:37:07] Speaker 02:
That's the only way that they can really

[00:37:10] Speaker 02:
I think the challenge this is to have created their own model, because otherwise, as Judge Randolph said, they're just kind of using your model but trying to poke holes in it.

[00:37:23] Speaker 02:
But that's not really a plan.

[00:37:28] Speaker 04:
There were a few questions in that, and I'll try to answer each of them.

[00:37:32] Speaker 04:
So on the question of what the states can do, there are actually two statutory avenues here.

[00:37:37] Speaker 04:
The first is the one that we've been discussing.

[00:37:39] Speaker 04:
That's section 7502C8, which relates to state implementation plans.

[00:37:44] Speaker 04:
And the states say, well, we would have to provide our own model.

[00:37:47] Speaker 04:
And that's simply not the case.

[00:37:50] Speaker 04:
They could provide their own model, but they also could take EPA's model.

[00:37:53] Speaker 04:
and do what they've done in this context, which we believe is not the proper context for the scientific back and forth, but explain why they think the model's wrong, what needs to be changed, and then present their modeling inputs and outputs based on what they say is the correct model.

[00:38:12] Speaker 04:
And EPA would have to both consider what they've done and also explain why, if it disagreed with that, explain why EPA's version of the modeling is correct.

[00:38:22] Speaker 04:
So that's one avenue.

[00:38:23] Speaker 04:
The other avenue that we have identified is section 7430 of the Clean Air Act, which says that any person, and there's no time limit or time reference here, can come to EPA and say, we have improved emission estimating techniques, and we'd like you to consider those.

[00:38:39] Speaker 01:
Right, but in either of those scenarios, is there any prospect, any realistic prospect that either a plan or a model that was based on the premise that ethanol reduces

[00:38:51] Speaker 01:
the relevant pollution could be accepted by EPA, as long as Moves 2014 is on the books.

[00:38:58] Speaker 04:
Yes, I think that's an open question.

[00:39:01] Speaker 04:
How?

[00:39:01] Speaker 04:
Well, because the states haven't done either of the two options that we just discussed.

[00:39:05] Speaker 01:
But given that the phrasing for the alternative models, and I assume it's the same for plans, is that it has to be at least as good, if not better, than the existing model.

[00:39:17] Speaker 01:
The model provides the operative baseline against which anything they submit is going to be compared.

[00:39:23] Speaker 01:
and will have to pass to be accepted.

[00:39:27] Speaker 01:
And if their whole point is the baseline is fundamentally flawed, then it's just not a fair game from the start.

[00:39:35] Speaker 04:
Well, I think, Judge, this court's jurisprudence on model says that a model has to be as close to reality as possible, and that that's, or approximate reality as closely as it can.

[00:39:48] Speaker 04:
And so if their point is that the science shows that EPA's model is flawed,

[00:39:52] Speaker 04:
and that the more accurate modeling is that ethanol, in fact, improves air quality, then EPA would have to consider that.

[00:40:03] Speaker 01:
But then why do they have to wait?

[00:40:06] Speaker 01:
Why do they have to wait?

[00:40:07] Speaker 01:
If they say there's no question they're going to be in non-attainment, and while you've talked about different things, I didn't see anywhere in your brief where you actually answered their declarations assertion that they will be in non-attainment, again, at least in portions.

[00:40:21] Speaker 01:
of the states and so why not get this resolved now before they have to spend a bunch of resources and time fighting it jurisdiction by jurisdiction?

[00:40:36] Speaker 04:
EPA never viewed this as a final agency action.

[00:40:40] Speaker 04:
The agency did not provide notice and comment rulemaking.

[00:40:45] Speaker 04:
So the petitioners have come in with a lot of extra record material and said that the court should consider that.

[00:40:52] Speaker 04:
EPA did not consider that material.

[00:40:54] Speaker 04:
EPA did consider material.

[00:40:56] Speaker 01:
The position is quite clear.

[00:40:57] Speaker 01:
Their view is this model is flawed, and yet this model, there's plenty of statutory and regulatory language that says this model is going to be controlling.

[00:41:07] Speaker 01:
It will be the baseline for comparisons.

[00:41:09] Speaker 01:
You're going to have to prove to us that you meet this baseline or exceed it to have any way to get out of it.

[00:41:17] Speaker 01:
Otherwise, it will be mandatory for you to use going forward.

[00:41:24] Speaker 04:
We don't think they've shown that they imminently have to use the model.

[00:41:27] Speaker 04:
We don't think they've shown an injury, in fact.

[00:41:29] Speaker 04:
And the Brunetti Declaration is the closest that they've come.

[00:41:32] Speaker 04:
But these declarations, again, if we're looking at standing, we're supposed to go back to when the petition was filed.

[00:41:39] Speaker 04:
And at the time the petition was filed, EPA had issued a proposed NACS standard for ozone.

[00:41:46] Speaker 04:
It had not finalized that rule.

[00:41:48] Speaker 04:
And as we stand here today, EPA has still not made, not attained the designations.

[00:41:55] Speaker 04:
They say for the 2012 to 2014 monitoring season, we are in non-compliance, therefore we will be designated.

[00:42:03] Speaker 04:
I think that's speculative and it's too emoted.

[00:42:05] Speaker 01:
Do you submit any declaration that said that they wouldn't be or that there's any substantial risk they won't be found in non-attainment?

[00:42:11] Speaker 01:
There's only what was like 10 days or two weeks, a short time between the petition and

[00:42:17] Speaker 01:
the issuance of at least the proposed OZ regulations, correct?

[00:42:22] Speaker 04:
That was the proposed rule here.

[00:42:23] Speaker 04:
Right.

[00:42:24] Speaker 04:
And so our point is, what they're trying to do is reach through two separate rule makings, two separate final agency actions, and assume that those have taken place, and that then they will have to use the model.

[00:42:38] Speaker 04:
And we don't think that that's imminent.

[00:42:39] Speaker 04:
We don't think that you can assume that... What if they filed this petition today?

[00:42:46] Speaker 04:
The non-attainment designations, the earliest that they will be made, my understanding is October of 2017.

[00:42:55] Speaker 04:
So we're still over a year away.

[00:42:58] Speaker 01:
And do states all just sit, are they supposed to just sit passively and do absolutely nothing with respect to Moos 2014 until they actually get notice from EPA that they are in non-attainment, or is it expected, at least it's suggested, that they're already providing data

[00:43:15] Speaker 01:
to the EPA for purposes of the 2014 operation and that they, you know, you had the whole reason you said you were having this two-year grace period is you're expecting states to start learning it and applying it and start using it.

[00:43:29] Speaker 01:
So that seems a little inconsistent with saying nothing's going to happen for two years or a year and a half.

[00:43:36] Speaker 04:
I wasn't sure what my colleague was referring to.

[00:43:40] Speaker 04:
It apparently is in our brief and references data that we are requiring the state to submit now.

[00:43:47] Speaker 04:
I'm not sure what that refers to.

[00:43:51] Speaker 01:
What about your grace period that you're having this?

[00:43:53] Speaker 01:
This two-year period is sufficient time for state and local agencies to learn and apply new technical guidance and training courses

[00:43:59] Speaker 01:
that reflect news 2014.

[00:44:01] Speaker 01:
That's what's going on right now during this grace period.

[00:44:03] Speaker 04:
Sure.

[00:44:04] Speaker 04:
But again, that applies to states that have to use the model.

[00:44:09] Speaker 04:
These states don't have to use the model.

[00:44:11] Speaker 04:
There's, I believe, one sentence in Mr. Burnetti's declaration that references that they will need to do transportation conformity analysis if they're in moderate non-attainment.

[00:44:23] Speaker 04:
But they have not been found to be in moderate non-attainment.

[00:44:29] Speaker 02:
So what about our probability of harm cases for standing?

[00:44:36] Speaker 02:
Well, you're arguing this is finality or is it standing?

[00:44:40] Speaker 02:
I'm trying to understand what your point is.

[00:44:42] Speaker 04:
We're arguing both.

[00:44:43] Speaker 04:
We're arguing that this case should not

[00:44:46] Speaker 04:
be brought both because the petitioners lack standing and because there's no final agency action for the court to review.

[00:44:55] Speaker 04:
Both of those problems go away if, in fact, these states ultimately in a year, two years or more have to use this model in a non-attainment SIP, if they do.

[00:45:09] Speaker 04:
And we disagree that it's clear that they have to do that.

[00:45:13] Speaker 04:
And our point on immanency is that if you're claiming a future injury, then in fact you face a more rigorous burden.

[00:45:20] Speaker 04:
We don't think that... What do you do?

[00:45:22] Speaker 06:
I asked this in the last case.

[00:45:26] Speaker 06:
What do you do with Massachusetts versus EPA where the injury was projected to be 50 years from now?

[00:45:33] Speaker 06:
They enter each other's shoreline because of the rising sea levels and all that, and climate change.

[00:45:39] Speaker 04:
Well, we've pointed out, Judge Randolph, why we think the states here are entitled to special solicitude with respect to one of their five standing theories.

[00:45:48] Speaker 04:
And they had invoked Massachusetts VPA.

[00:45:50] Speaker 04:
But imminence is alive and well in this court and the Supreme Court.

[00:45:54] Speaker 04:
And we think that there's simply too many steps between.

[00:45:57] Speaker 06:
How is imminence in the Massachusetts versus VPA?

[00:46:03] Speaker 04:
I'm not sure, Your Honor.

[00:46:10] Speaker 04:
I'm not either.

[00:46:14] Speaker 04:
What the states are doing is they're saying, assume as of December 2014 that EPA is going to issue a final NACC standard.

[00:46:21] Speaker 04:
Assume then that within two years after that, EPA will designate us as not a team.

[00:46:25] Speaker 01:
But which of those assumptions is not 100% certain to happen?

[00:46:29] Speaker 01:
I mean, you will have to issue the final NACC with him.

[00:46:32] Speaker 01:
What, a year and a half from now?

[00:46:35] Speaker 04:
The final standard has issued.

[00:46:36] Speaker 01:
I'm sorry, the final non-attainment.

[00:46:38] Speaker 01:
Oh, non-attainment designations.

[00:46:39] Speaker 01:
Determinations, I'm sorry.

[00:46:40] Speaker 01:
That's correct.

[00:46:41] Speaker 01:
But those will be due, you said 2017?

[00:46:43] Speaker 01:
October 2017.

[00:46:44] Speaker 01:
October 2017.

[00:46:45] Speaker 01:
So that's certain to happen.

[00:46:46] Speaker 04:
It is.

[00:46:48] Speaker 01:
Okay.

[00:46:49] Speaker 01:
But not, but.

[00:46:50] Speaker 01:
But your point is it's not certain that any portion of Kansas or Nebraska will be in non-attainment.

[00:46:55] Speaker 04:
That's correct.

[00:46:58] Speaker 01:
How uncertain is it?

[00:47:01] Speaker 04:
I think it's the state's burden to demonstrate that it's likely to happen.

[00:47:08] Speaker 01:
They've come in, they've said, we're done.

[00:47:12] Speaker 01:
We're going to be in violation of it.

[00:47:14] Speaker 01:
They've come in and said we're going to be in violation of it.

[00:47:17] Speaker 01:
Look at these numbers.

[00:47:17] Speaker 01:
They're numbers that there's just no way we're going to be able to meet.

[00:47:23] Speaker 01:
I guess I didn't read it and I can clarify is, you know, on this day we were in non-attainment or even this month we were in non-attainment, but simply that these new ozone regulations, and it may just be the nature of science nowadays, are at a level that they're not going to meet.

[00:47:37] Speaker 01:
And you didn't come back with any declaration that I saw or evidence that they were wrong about that sort of factual statement.

[00:47:45] Speaker 01:
I understand there's been no formal designation.

[00:47:47] Speaker 01:
You haven't even picked the three years.

[00:47:50] Speaker 01:
assuming that those three years are going to involve, you know, be with either three years before the final regulation or include some of this two-year period, if their position is there's just no way we can meet those standards, whatever three years you use, what would be uncertain about their designation as an unattainment?

[00:48:12] Speaker 04:
My point on the modern years is that, in fact, it would be that it's

[00:48:18] Speaker 04:
possible that the modern years will in fact be years that had not occurred yet.

[00:48:24] Speaker 04:
And so for them to say that they are in non attainment in 2017 based on data from 2012 to 2014, skips a step.

[00:48:33] Speaker 01:
Isn't it usually a multi year?

[00:48:35] Speaker 04:
It is.

[00:48:37] Speaker 04:
So I believe it's a three-year trailing, but I'm not sure what those years are.

[00:48:43] Speaker 01:
Could it be entirely prospective, or is the farthest out it could be, 15, 16, 17?

[00:48:50] Speaker 04:
That would be the furthest.

[00:48:54] Speaker 01:
Right.

[00:48:54] Speaker 01:
So if they know they're in non-attainment in 15, and they simply say there should be standards, because of the standards,

[00:49:02] Speaker 01:
that's not going to change.

[00:49:06] Speaker 01:
Does a burden shift to you to counter that standing assertion?

[00:49:13] Speaker 01:
That factual assertion for standing purpose.

[00:49:15] Speaker 04:
Sure.

[00:49:16] Speaker 04:
All I can say is that ozone levels change year by year.

[00:49:18] Speaker 04:
And so they're assuming that they will be found in non-attainment.

[00:49:22] Speaker 04:
And EPA certainly has not made that determination.

[00:49:24] Speaker 04:
And what they're saying is, but I think you could take it a step further.

[00:49:27] Speaker 04:
And we pointed out in our brief that the states have five separate standing theories.

[00:49:31] Speaker 04:
But all of them begin with the assumption that, in fact, they are in non-attainment.

[00:49:36] Speaker 04:
So we think that that's a facial defect, a flaw in all five theories.

[00:49:40] Speaker 01:
Well, that's a little bit clear.

[00:49:41] Speaker 01:
I thought their compliance costs won.

[00:49:43] Speaker 01:
did not, because they have to provide data already, it sounds like, and then if they think, rightly or wrongly, that they're going to be in non-attainment, I assume you would think it's wise for agencies, you'd like them to start now getting ready to apply moves if they think it's going to apply to them rather than waiting.

[00:50:01] Speaker 04:
So the compliance costs doesn't, the declarations, to my knowledge, do not refer to this requirement that I was not aware of to provide data to EPA.

[00:50:13] Speaker 04:
The compliance costs that they're referring to is in fact training that they say that their modelers will use or will need in order to learn how to use this model as opposed to a different model.

[00:50:24] Speaker 06:
Well, EPA says that too.

[00:50:26] Speaker 04:
That's correct.

[00:50:27] Speaker 04:
These are presumably salary employees of the states.

[00:50:32] Speaker 04:
In fact, Kansas has two employees that do this modeling.

[00:50:38] Speaker 04:
Who has two?

[00:50:42] Speaker 04:
Kansas.

[00:50:42] Speaker 04:
The state of Kansas has two modelers that

[00:50:45] Speaker 04:
Whose job is to do this modeling and so when they're saying compliance costs what they're what they seem to be saying is that these modelers will need to get additional training and That training for experienced modelers to move from moves 2010 B to moves 2014 EPA has developed a webinar that it provides on the one through the the internet that's

[00:51:12] Speaker 04:
the extent of the training that they'll need.

[00:51:14] Speaker 04:
So in terms of an actual injury to the states, if these are salaried employees, they're just doing their jobs.

[00:51:22] Speaker 04:
So that's the compliance costs that they're talking about here.

[00:51:25] Speaker 06:
On the question of finality, the final decision, do you think it matters that there's a built-in impetus for EPA not to be changing these models year to year because the states are relying on them and

[00:51:42] Speaker 06:
and gearing up and doing all their whatever they do, so on and so forth.

[00:51:46] Speaker 06:
So, EPA wants to give at least some permanence to the model and not keep revising and revising and revising.

[00:51:55] Speaker 06:
I mean, it would seem to me that the state administrators would pull their hair out because they've just spent

[00:52:02] Speaker 06:
however much time it takes to figure out their implementation plan, and then the EPA pulls a rug out from under them.

[00:52:11] Speaker 04:
Judge Randolph, we think that there's a real tension there, and we think that that's why ultimately EPA has chosen to treat this particular model as a flexible policy and not as a rule.

[00:52:21] Speaker 04:
EPA is trying to balance the need for states to have some models they can use with the fact that the technical, scientific, and even EPA's own rules are constantly changing

[00:52:38] Speaker 04:
on these issues.

[00:52:39] Speaker 04:
To give an example, EPA has, in this model, implemented a recent vehicle, the Tier 3 regulations, lowering the standard for emissions of pollutants from vehicles.

[00:52:53] Speaker 04:
And so states actually, in the state of Maryland, we've included an example in the record where the state of Maryland said, please finalize the MOVES 2014 model as soon as possible so that we can go ahead and

[00:53:04] Speaker 04:
take advantage of the decreases in emissions that this model will show.

[00:53:11] Speaker 04:
So that happens on a rolling basis.

[00:53:14] Speaker 04:
And the Sierra Club, we cited the Sierra Club case because EPA does its best to work with the states and give some lead time, some flexibility with when the states need to begin to use a new model and when they can use EPA's old version of the model.

[00:53:33] Speaker 04:
And so there's

[00:53:35] Speaker 04:
there's an attempt by EPA to sort of, to go out of its way to make this a flexible process.

[00:53:39] Speaker 04:
And we think that benefits the states as much as it benefits EPA to be able to make these changes.

[00:53:45] Speaker 04:
And the example we, I'm way over my time, so I don't want to.

[00:53:50] Speaker 04:
The example we, our Rule 28J letter, as we pointed out in Moves 2014, EPA made

[00:53:57] Speaker 04:
approximately 13 more changes to the model from the MOVES 2014 model.

[00:54:01] Speaker 04:
And some of those are correct errors.

[00:54:02] Speaker 04:
Some of those are to make efficiency improvements to the model.

[00:54:08] Speaker 04:
And so we think that that's a good thing, and it benefits the user community as well as EPA.

[00:54:14] Speaker 02:
And your argument is that if you had to go through notice and comment rulemaking to go from 2014 to 2014A, it would take you a couple years to make every little change, right?

[00:54:27] Speaker 04:
It will certainly chill EPA's flexible process.

[00:54:31] Speaker 04:
EPA communicates with the user community.

[00:54:34] Speaker 04:
There's examples that we've cited to you in the record of them communicating with representatives of these petitioners about the fuel effect study and about their technical objections.

[00:54:42] Speaker 04:
But that's an ongoing process.

[00:54:45] Speaker 04:
And if we're doing notice and comment rulemaking, then EPA can't issue Moves 2014a until it's done

[00:54:53] Speaker 04:
what's required by the EPA.

[00:54:55] Speaker 06:
And I guess your point is too, that any time you find some flaw or some new scientific evidence and you want to change it, that if it's a rule, you're going to have to go through notice and comment rulemaking to even make a minor amendment on it.

[00:55:09] Speaker 04:
That's correct, Judge Randolph.

[00:55:10] Speaker 04:
And the petitioners in their reply brief say, try to distinguish between major revisions to the model and minor revisions.

[00:55:17] Speaker 04:
But the APA is an on and off switch.

[00:55:19] Speaker 04:
It's not, you know, this is a technical amendment to the rule, and this is a true substantive change to the rule.

[00:55:26] Speaker 04:
In fact, if an agency.

[00:55:28] Speaker 01:
But could the Clean Air Act allow a more flexible approach to notice and comment than the APA might?

[00:55:31] Speaker 04:
So Judge Muller, that's a good question.

[00:55:34] Speaker 04:
I think it ties into Judge Randolph's question to my colleague.

[00:55:38] Speaker 04:
We don't think that this falls under the Clean Air Act's judicial review provisions or standard in section 7607D that Judge Randolph was asking about.

[00:55:50] Speaker 04:
We think that this is an agency action that would be governed by the EPA, just as a general matter.

[00:55:56] Speaker 06:
So... I'm not sure I followed that.

[00:56:04] Speaker 06:
If it's not within

[00:56:07] Speaker 06:
Was it 7207?

[00:56:08] Speaker 06:
7607D.

[00:56:08] Speaker 06:
7607, yeah.

[00:56:14] Speaker 06:
If it's not within that, and 706 doesn't apply of the APA, unless specifically stated, then it's not subject to judicial review under any, not the APA.

[00:56:31] Speaker 06:
I think that's where your argument leads.

[00:56:35] Speaker 06:
Let me ask you, under what provisions of the Clean Air Act was this model formulated?

[00:56:45] Speaker 04:
It's Section 7430.

[00:56:49] Speaker 04:
And that's the provision we've cited to the legislative history from it was enacted in 1990.

[00:56:54] Speaker 04:
And we've cited to the legislative history of the Clean Air Act amendments there for that, because.

[00:56:59] Speaker 04:
7430.

[00:56:59] Speaker 04:
Section 7430.

[00:57:01] Speaker 04:
Okay.

[00:57:03] Speaker 04:
And that was in connection with a congressional inquiry.

[00:57:06] Speaker 04:
At that time, EPA stated very clearly that it treated the vehicle emissions model as a flexible policy and not as a rule.

[00:57:15] Speaker 04:
And so it was open to challenge in an individual agency action.

[00:57:19] Speaker 04:
And that was the position the agency took decades ago.

[00:57:23] Speaker 04:
And that's the position that it's taking here today.

[00:57:30] Speaker 01:
All right.

[00:57:30] Speaker 01:
Thank you very much.

[00:57:31] Speaker 04:
Thank you very much.

[00:57:35] Speaker 01:
Mr. Christophson, we'll give you, I think, two minutes for rebuttal.

[00:57:39] Speaker 01:
Can you focus on the standing concerns about whether or not you actually will be found in nonattainment?

[00:57:47] Speaker 03:
Yes, Your Honor.

[00:57:48] Speaker 03:
As you pointed out, EPA has pointed to no evidence to contradict the declarations in this case, which say that in the opinion of the director of air quality,

[00:58:02] Speaker 03:
in Kansas's Department of Environment and Health, that the states will be in non-attainment.

[00:58:09] Speaker 03:
That's uncontradicted.

[00:58:11] Speaker 03:
And so there's no basis for this court to credit the possibility that... It says you were using data from 2012 to 2014 in the Bernetti Declaration.

[00:58:27] Speaker 03:
Yes, Your Honor, but there's nothing to indicate that there's less traffic now.

[00:58:31] Speaker 01:
So now where do you indicate that whatever years are chosen, we're going to be found in non-attainment?

[00:58:40] Speaker 03:
Well, all we have to show here is a substantial likelihood.

[00:58:44] Speaker 03:
And there's no reason to think that there's going to be less pollution in the air tomorrow than there is today.

[00:58:52] Speaker 01:
They just said ozone levels change all the time.

[00:58:56] Speaker 03:
Ozone levels change in response to traffic and in response to industry.

[00:59:00] Speaker 03:
And climate.

[00:59:02] Speaker 03:
And temperature.

[00:59:04] Speaker 03:
That's true too.

[00:59:05] Speaker 03:
So ozone levels could rise because of climate change.

[00:59:09] Speaker 03:
Right.

[00:59:10] Speaker 03:
But there's nothing to indicate that ozone levels will go down by themselves.

[00:59:13] Speaker 03:
That's why EPA has established this national ambient air quality standard.

[00:59:20] Speaker 00:
What do you have to say about compliance costs?

[00:59:23] Speaker 00:
Is it just a webinar?

[00:59:25] Speaker 03:
This is the first time I've heard about a webinar.

[00:59:29] Speaker 03:
The official release states that employees who use these models will have to get training.

[00:59:36] Speaker 03:
And the declarations that we submitted state that training will cost money.

[00:59:42] Speaker 01:
And that's sufficient or sell code those sorts of compliance costs you haven't you haven't shown us when you're actually going to incur those costs I don't know precisely when but as you pointed out before a formal finding of non-attainment or would you wait until they they actually find the

[01:00:00] Speaker 01:
that some portion of Kansas and Nebraska is in non-attainment before doing that.

[01:00:05] Speaker 03:
Well, as I pointed out, the states actually will have to use the model because they have to give their inputs.

[01:00:11] Speaker 01:
But that's nowhere in a declaration.

[01:00:13] Speaker 01:
It sounds like that, or if you can tell me where that's in the record that you already told me about that.

[01:00:17] Speaker 03:
Well, in EPA's brief on page 56, they cite a Fedreg 8787.

[01:00:23] Speaker 03:
That's that rule made from promulgated 40 CFR 51.15, which requires the states to provide their model inputs to EPA.

[01:00:35] Speaker 03:
And so that happens now.

[01:00:40] Speaker 01:
I'm sorry, where?

[01:00:41] Speaker ?:
Sorry.

[01:00:42] Speaker 01:
So page 56 of EPA's agreement... Well, do we know that those are inputs from states that are already in non-attainment or from all 50 states regardless of status?

[01:00:51] Speaker 03:
Well, it's for the purpose of EPA building its national emissions inventory.

[01:00:56] Speaker 03:
And I don't think it distinguishes between attainment and non-attainment states.

[01:01:00] Speaker 03:
But our standing case is resting... You don't think that you're not certain?

[01:01:03] Speaker 01:
This is not our standing case, Your Honor.

[01:01:08] Speaker 01:
We don't want us to rely on this as a compliance cost injury for standing purposes.

[01:01:14] Speaker 03:
We think that adds to what we've already proven.

[01:01:16] Speaker 01:
If we thought it was important, do you know that you have actually already had to provide inputs or will imminently as a state that has not yet been designated?

[01:01:27] Speaker 06:
I do not know the answer to that.

[01:01:29] Speaker 06:
Is it true that Kansas has only two modelers that will be affected by this?

[01:01:37] Speaker 03:
That's what the declaration says.

[01:01:42] Speaker 03:
But to distinguish this case from Massachusetts VEPA, regardless of the court's opinion about Massachusetts VEPA, this is a case in which the states themselves are suffering a regulatory injury

[01:01:57] Speaker 03:
The model will make it harder for them to comply with the ambient air quality standards.

[01:02:04] Speaker 01:
Only if you're found to be in non-attainment.

[01:02:06] Speaker 03:
That's right.

[01:02:07] Speaker 03:
And there's nothing to contradict our statements that we will be in non-attainment.

[01:02:14] Speaker 01:
What's a harm to you from not waiting and challenging it in the format that they propose?

[01:02:19] Speaker 03:
Your honor, the EPA today suggests that there may be some way for us to challenge moves without putting forward an alternative model of our own.

[01:02:28] Speaker 03:
But when I listen to the description, it sounds a whole lot like putting together an alternative model.

[01:02:33] Speaker 01:
And in fact, there is no...

[01:02:36] Speaker 01:
Obviously, you do the model thing, but the other thing you could do is come forward with a state implementation plan, and your state implementation plan would explain, here's how this is going to get us in compliance.

[01:02:46] Speaker 01:
Now, we know under MOVES you're going to think this doesn't get us in compliance, but that's because MOVES is wrong for A, B, C, and D reasons, and when you fix that,

[01:02:54] Speaker 01:
such as our use of ethanol will actually get us in attainment sooner.

[01:02:59] Speaker 01:
But you can actually do it through the format of pressing for acceptance of your sip.

[01:03:06] Speaker 01:
And if they reject it, then you'll have a challenge.

[01:03:08] Speaker 03:
Well, that is what Mr. Heminger said.

[01:03:11] Speaker 03:
And that would be great.

[01:03:12] Speaker 03:
But that's not what the statute actually allows.

[01:03:17] Speaker 03:
The statute allows alternative models when they are improvements on the existing model.

[01:03:23] Speaker 03:
So, but EPA in this very case... So you don't want to take them up on the offer?

[01:03:29] Speaker 03:
No, Your Honor, that would not satisfy the states because this model, for example, took 10 years, the underlying study took 10 years to do.

[01:03:39] Speaker 03:
The states are not in a position to do a rival study like that.

[01:03:43] Speaker 01:
No, I understand that.

[01:03:44] Speaker 01:
I'm really focused on whether you can challenge this through your state implementation plan.

[01:03:48] Speaker 03:
We don't think that's that's possible because the state that EPA has already said that it's doubled down on its reliance on this model and on the very emissions factors that we're complaining about.

[01:04:01] Speaker 03:
So we say that these factors are based on on match blending of parameters that

[01:04:09] Speaker 03:
real refiners don't match blend and that the results are wrong.

[01:04:12] Speaker 03:
EPA says the results are right.

[01:04:15] Speaker 03:
If we're in a SIP scenario where we put together a non-conforming SIP and say, EPA, we think you should accept this anyway because your model is flawed, this very case demonstrates exactly why EPA would say no.

[01:04:28] Speaker 03:
And we'd be directly injured there because the penalty for that is a federal implementation plan.

[01:04:36] Speaker 01:
Couldn't you then bring the same actions challenging their denial of your state implementation plan?

[01:04:43] Speaker 01:
Is there a mechanism for doing that?

[01:04:45] Speaker 03:
We would have to.

[01:04:46] Speaker 03:
Well, so this is what would play out.

[01:04:47] Speaker 03:
First, EPA would propose to deny our state implementation plan.

[01:04:52] Speaker 03:
We would file comments on

[01:04:55] Speaker 03:
the proposed denial of the implementation plan, you know, laying out the reasons why we think the model is wrong.

[01:05:01] Speaker 03:
And under the law, putting showing why our model is right.

[01:05:07] Speaker 03:
Of course, we don't have a model.

[01:05:09] Speaker 03:
And then EPA would finalize its disapproval of the SIP, and then we would go into court.

[01:05:17] Speaker 03:
And as Judge Reynolds pointed out, it wouldn't be this court, even though the model we're challenging here is one of nationwide credibility.

[01:05:24] Speaker 01:
Would you be forbidden to bring that challenge here?

[01:05:26] Speaker 01:
Would you have to bring that in the Eighth Circuit?

[01:05:30] Speaker 01:
Or would you have a choice?

[01:05:33] Speaker 03:
Your Honor, I think it's very unlikely that the courts would hold that.

[01:05:37] Speaker 03:
I think the statute requires you to bring it in the 8th Circuit.

[01:05:40] Speaker 01:
Even if it has the national implications?

[01:05:43] Speaker 03:
Well, I think that's right.

[01:05:44] Speaker 03:
And I think the EPA would say this is a local implementation plan.

[01:05:50] Speaker 06:
What is the percentage of ethanol required or used in Nebraska and Kansas now?

[01:05:59] Speaker 03:
Well, there's E10 available.

[01:06:03] Speaker 03:
And in some places, but not universally, you can get E15.

[01:06:07] Speaker 03:
It's the minority fuel.

[01:06:10] Speaker 03:
And in some cases, there's E85 as well.

[01:06:13] Speaker 03:
But E10 is, by and large, the predominant fuel in use.

[01:06:18] Speaker 06:
And your point on the non-attainment, I just want to be clear about this, is that if you apply this model to E10,

[01:06:27] Speaker 06:
that you'll be in non attainment.

[01:06:29] Speaker 03:
So our our complaint about the model is that it says that if the state were to switch to be 15.

[01:06:36] Speaker 03:
that pollution would go up instead of going down, as would actually happen.

[01:06:41] Speaker 03:
So the states are constrained in their policy choices.

[01:06:45] Speaker 03:
They'd like to encourage E15 use through tax incentives or other mechanisms.

[01:06:51] Speaker 03:
And they're not able to do that, because under the model, that would actually increase pollution.

[01:06:59] Speaker 03:
No one is saying that minor error corrections would need to go through notice and comment.

[01:07:03] Speaker 03:
We didn't make up the terms major and minor.

[01:07:06] Speaker 03:
These are the terms that EPA has applied to its models.

[01:07:11] Speaker 03:
And they have not denied that this one moves 2014 as a major revision to the prior model.

[01:07:17] Speaker 02:
But the revisions that have been done in the past

[01:07:21] Speaker 02:
were not promulgated through formal notice and comment.

[01:07:26] Speaker 03:
Well, that's in dispute, Your Honor.

[01:07:30] Speaker 02:
We've actually... How is that in dispute?

[01:07:33] Speaker 02:
Show me in the record where they've said this is a formal rulemaking.

[01:07:37] Speaker 03:
EPA has issued these models through advanced notice in the Federal Register.

[01:07:45] Speaker 03:
And then it's often inviting public comment and workshops.

[01:07:50] Speaker 03:
These are all in our briefs.

[01:07:51] Speaker 03:
And it has finalized the models through what it calls a notice of availability.

[01:07:57] Speaker 03:
Although it's not denominated.

[01:07:59] Speaker 05:
That's what we did here.

[01:08:00] Speaker 05:
I'm sorry.

[01:08:03] Speaker 03:
So there was no prior notice.

[01:08:05] Speaker 03:
All EPA did was issue a final rule in the form of a notice of availability with no prior notice, no invitation to comment, no public workshop.

[01:08:15] Speaker 03:
And EPA says that those old notices, advanced notices, did not adequately satisfy notice and comment.

[01:08:24] Speaker 03:
I was puzzled to hear that.

[01:08:26] Speaker 03:
EPA has taken contrary positions in the past.

[01:08:29] Speaker 03:
Judge Millett, in the first EPA decision that you wrote, another Sierra Club case, EPA took the decision that

[01:08:36] Speaker 03:
notices of data availability could satisfy the notice requirement.

[01:08:42] Speaker 03:
And the West Virginia case that we cite is an example of a notice of data availability satisfying the requirement for notice and comment.

[01:08:50] Speaker 03:
So I don't see any reason to distinguish a notice of the advanced notices in this case.

[01:08:59] Speaker 02:
Well, notice is only part of it, right?

[01:09:02] Speaker 02:
Notice and comment requires an agency to do

[01:09:06] Speaker 02:
certain things to get comments and then to respond to those comments and then to explain their rationale.

[01:09:14] Speaker 02:
That's exactly right.

[01:09:15] Speaker 02:
That's only the first step.

[01:09:17] Speaker 02:
I guess what I'm saying is where do I see in the record that they've always followed all of those steps with these prior promulgations?

[01:09:25] Speaker 03:
We showed that with regard to

[01:09:29] Speaker 03:
I don't know that it's always clear exactly how many comments they received and responded to.

[01:09:34] Speaker 03:
It is clear for at least one of the models, and it might be mobile 6.

[01:09:39] Speaker 03:
I'm not sure.

[01:09:40] Speaker 03:
EPA notes that they received 15 sets of comments and that they modified the model in response to it.

[01:09:47] Speaker 03:
That sounds like notice and comment to me.

[01:09:50] Speaker 03:
In this court's decision in Environmental Defense Incorporated, the court assumed that models like this, Moos 6.2 in that case, would have to go through notice and comment

[01:10:08] Speaker 03:
if they were applied in a new context.

[01:10:11] Speaker 03:
In that case, hotspot analysis for particulate matter.

[01:10:15] Speaker 03:
And the court noted that EPA had satisfied that requirement, specifically by accepting comment on the appropriateness of Mobile 6.2

[01:10:25] Speaker 03:
and explaining why it was inappropriate to use Mobile 6.2 in this context.

[01:10:31] Speaker 03:
So I think EPA has in fact used notice and comment here.

[01:10:35] Speaker 03:
But even if there were some technical flaw in its past notice and comment, the agency's past failures do not excuse its current failures.

[01:10:49] Speaker 03:
the current procedural failures.

[01:10:51] Speaker 03:
On the legislative history of 7430, we've shown that in that case, EPA was responding to an attack on the adequacy of its notice and comment from American Petroleum Institute and from the Government Accountability Office and the Government Accounting Office.

[01:11:10] Speaker 03:
And so that's exactly the kind of post hoc rationalization that McClough says this court is not to consider.

[01:11:18] Speaker 03:
There are no further questions.

[01:11:20] Speaker 01:
Thank you.