[00:00:01] Speaker 04: Case number 18-1172 at L. Natural Resources Defense Council Petitioner versus Andrew Wheeler, Administrator, U.S. [00:00:09] Speaker 04: Environmental Protection Agency at L. Mr. DiMarco for Petitioner NRDC, Mr. Tallent for the State Petitioner, Mr. Carlisle for the Respondent, and Mr. Bradley for the Intervener. [00:00:48] Speaker 03: Good morning, Your Honors. [00:00:49] Speaker 03: Peter DiMarco for Petitioner Natural Resources Defense Council. [00:00:52] Speaker 03: With me at council table is Melissa Lynch. [00:00:54] Speaker 03: I'll be sharing argument time with Joshua Tallent for state petitioners. [00:00:59] Speaker 03: I'd like to reserve two minutes of my time for rebuttal. [00:01:02] Speaker 03: May it please the Court, I'll address two issues. [00:01:05] Speaker 03: First, the EPA guidance issued in this case was issued without notice and comment, even though it's a legislative rule. [00:01:12] Speaker 03: Second, that guidance is arbitrary because the agency failed to consider harms to health and the environment from additional HFC emissions authorized by the guidance. [00:01:21] Speaker 03: In Mexican Flora versus EPA, this court partially vacated the HFC listings in EPA's 2015 rule. [00:01:28] Speaker 03: It vacated those listings only to the extent that they required HFCs to be substituted with safer substances. [00:01:35] Speaker 03: The court, however, upheld as reasonable EPA's decision to add HFCs to its list of prohibited substitutes for ozone-depleting substances. [00:01:44] Speaker 03: And the effect of that was to leave the rule in place, leave the listings in place, with respect to their valid applications. [00:01:50] Speaker 03: barring current users of ozone-depleting substances from switching to HFCs. [00:01:56] Speaker 03: So Mexicam identified two categories of users, current users of ozone-depleting substances, and those who were still subject to the HFC listings, and those who had already replaced with HFCs, who were beyond EPA's regulatory reach. [00:02:09] Speaker 03: EPA's guidance, however, indefinitely suspended those restrictions with respect to both categories. [00:02:15] Speaker 03: In effect, it converted Mexicam's partial vacator into a whole vacator, into a full vacator. [00:02:20] Speaker 03: But EPA couldn't suspend valid portions of the 2015 rule without going through notice and comment. [00:02:26] Speaker 02: What about the agency's argument that guidance isn't final agency action? [00:02:31] Speaker 03: The guidance has immediate legal consequences. [00:02:35] Speaker 03: It creates rights for current users of ozone-depleting substances to switch to HFCs. [00:02:41] Speaker 03: That was a previously unlawful conduct that the guidance allows. [00:02:48] Speaker 06: So one of the points that the agency makes in its guidance is that there's some confusion that's left as a consequence of Mexicam. [00:02:55] Speaker 06: So put aside the part about [00:02:57] Speaker 06: the big divide between whether the user has already switched to an HFC. [00:03:03] Speaker 06: But one of the other points they make is, look, there's situations in which, for example, a user will have multiple substances in its use. [00:03:12] Speaker 06: So it could have some things that are already switched to HFCs and some things that are not. [00:03:16] Speaker 06: where there's still a nose in a depleting substance. [00:03:18] Speaker 06: So if all we had was Mexicam, and then the agency says, Mexicam leaves an ambiguity about what to do in that kind of complicated situation where a user's applying more than one substance. [00:03:29] Speaker 06: And here's the way that we're going to do that in the interim while we issue a rulemaking. [00:03:36] Speaker 06: Would you think that that is final agency action that has to go through notice and comment itself, or is that the kind of ambiguity that the agency gets to deal with in the interim without having its subject to immediate judicial review as final agency action? [00:03:52] Speaker 03: In this case, Your Honor, the agency could have left the HFC listings in effect with respect to their clear applications, current users of ozone-depleting substances, and issued, as I believe Your Honor is suggesting, an interpretive rule or some sort of policy statement with respect to these gray areas at the margins of the two categories identified by Mexican. [00:04:11] Speaker 03: Yes, so that was an option at the agency's disposal. [00:04:12] Speaker 06: And that would not be final agency action? [00:04:15] Speaker 03: That would be an interpretive rule, so it wouldn't have to go through notice and comment. [00:04:20] Speaker 03: However, it might be subject to judicial review, for instance, as an un-arbitrary. [00:04:24] Speaker 06: Arbitrary. [00:04:25] Speaker 06: Yeah. [00:04:27] Speaker 05: Okay. [00:04:27] Speaker 05: Mr. DeMarco, what about the language of the 2018 guidance itself? [00:04:31] Speaker 05: You know, under our precedence, that's often relevant in determining whether something's final agency action. [00:04:36] Speaker 05: And the guidance here talks about the fact that it's in the near term, [00:04:39] Speaker 05: that it's the agency's interpretation pending another rulemaking. [00:04:44] Speaker 05: What do you make of the language of the guidance itself? [00:04:47] Speaker 03: So the fact that the agency indicates that this is a temporary suspension until the agency completes rulemaking doesn't defeat the finality of the action. [00:04:57] Speaker 03: This course precedent has said, for instance, in Appalachian Power, that the fact that an agency might subsequently revise its decision doesn't defeat finality. [00:05:06] Speaker 03: With respect to the fact that [00:05:10] Speaker 03: And the fact that the agency is continuing to consider that policy doesn't defeat finality. [00:05:18] Speaker 05: Here it's not just that they're continuing to consider it. [00:05:20] Speaker 05: I mean, they've issued a series of questions almost similar to something like an ANPRM teeing up a future proposed rulemaking. [00:05:27] Speaker 05: And many of the questions that are raised would directly undermine the temporary position they've taken of the guidance. [00:05:34] Speaker 05: Doesn't that suggest that the guidance is tentative or interlocutory? [00:05:39] Speaker 03: Well, the guidance has immediate legal effects. [00:05:41] Speaker 03: I mean, the whole purpose of the guidance is to tell regulated entities that these HFC listings no longer apply and that they're [00:05:47] Speaker 03: free to change their conduct and engage in behavior that was previously unlawful. [00:05:51] Speaker 03: The agency did engage in a workshop with stakeholders about a year ago, but we still don't have a proposed rule. [00:05:59] Speaker 03: So, again, the fact that the agency continues to consider this and the fact that it might take a position that's contrary with it in the future doesn't change the fact that it has binding legal consequences today. [00:06:13] Speaker 06: And when you're talking about the binding legal consequences, the binding legal consequence that you see as foremost is the consequence that attends a user who is still using an ozone-depleting substance. [00:06:24] Speaker 03: That's correct, Your Honor. [00:06:26] Speaker 03: Particularly in the commercial refrigeration sector, there are hundreds of thousands of commercial refrigerators that continue to use ozone-depleting substances and were still subject to the HFC listings after Mexicam. [00:06:37] Speaker 02: What's your response to the agency's argument that the 2015 regulation didn't distinguish between entities that are using HFCs and entities that are using ozone-depleting chemicals and that it's just not severable, that there's no way to sever the illegal part of this regulation from the legal part? [00:07:07] Speaker 03: That's a distinction that this court made in the Mexican decision. [00:07:12] Speaker 03: It distinguished between current users of ozone depleting substances and current users of HSCs and partially vacated the rule to the extent that it applied to that second category. [00:07:21] Speaker 03: EPA's severability argument is attempting to arrogate to itself the authority to determine severability after this court has already issued a decision leaving the rule in place. [00:07:32] Speaker 03: its severability arguments, it could have presented to the court, for instance, through a petition for rehearing, but since it declined to do so, it was left with the rule as it stood after the Mexican decision. [00:07:42] Speaker 06: What if EPA had anticipated all of this ahead of time and had had a severability, or whichever way you put it, clause in the rule itself that says that, and so we just want this to be an all or nothing proposition. [00:07:56] Speaker 06: So insofar as a court might, on judicial review, invalidate any application of this, our preference would be to have the entire thing [00:08:03] Speaker 06: invalidate? [00:08:05] Speaker 03: Assuming that the court's analysis in Mexicam remain the same, we'd not have to defer to that severability clause in the agency's regulation. [00:08:14] Speaker 03: It would still be within the court's authority to make its own determination about its remedy. [00:08:20] Speaker 03: And if the agency disagreed with that, it could ask the court to reconsider, or it could revise through notice and comment. [00:08:25] Speaker 06: But do you think the court [00:08:27] Speaker 06: When a court's reviewing a rule that has a clause like that, I'm not familiar with that dynamic, by the way. [00:08:31] Speaker 06: I mean, I know what happens with statutes, but if it happened with the regulation, [00:08:34] Speaker 06: Would a court reviewing a regulation that said something like that, then would the court be obligated to say, look, we think the rule is invalid in certain applications. [00:08:45] Speaker 06: Ordinarily, we would invalidate it as applied to those particular situations and leave it standing otherwise. [00:08:52] Speaker 06: But the agency has told us already that actually it views this to be an all or nothing proposition. [00:08:58] Speaker 06: deference to the agency's own assessment of what severability or inseverability will be, we will invalidate the rule in its entirety. [00:09:06] Speaker 03: Agency intent is one of the two prongs of the severability analysis. [00:09:10] Speaker 03: The court would also have to examine whether the regulation could continue to function. [00:09:14] Speaker 03: I just note, Your Honor, that in this case, continuing to apply the rule to current users of ozone-depleting substances serves the purpose of the rule. [00:09:22] Speaker 03: The rule was all about reducing HFC emissions, so continuing to apply it to a subset of the previously regulated entities is completely consistent with the agency's aims. [00:09:32] Speaker 05: I have one other question. [00:09:33] Speaker 05: If the court were to vacate the guidance, as you suggest they should do, do you believe that the EPA would then have discretion [00:09:41] Speaker 05: to not apply the 2015 rule until it completed its new rulemaking? [00:09:47] Speaker 03: The agency would not have discretion to abdicate its enforcement authority under it entirely. [00:09:53] Speaker 03: It could issue an interpretive rule to clarify its approach, but there are clear applications of the HFC listings going forward, again most importantly in the commercial refrigeration sector. [00:10:03] Speaker 05: But could they use their discretion to not apply it until their rulemaking is complete? [00:10:08] Speaker 03: They could use enforcement discretion, for instance, in these gray areas that we've discussed earlier, or on a case-by-case basis. [00:10:15] Speaker 03: But to completely abandon enforcement of the rule, it would at least have to provide a reasoned explanation to do so, Your Honor. [00:10:27] Speaker 03: And let's support us for other questions. [00:10:29] Speaker 03: Thank you. [00:10:40] Speaker 00: Good morning, Your Honors. [00:10:42] Speaker 00: May it please the Court, Joshua Talent, New York State Department of Law, for the state petitioners. [00:10:47] Speaker 00: Nationally, 30 to 40 percent of existing grocery stores and supermarkets currently use ozone-depleting substances in their refrigeration systems. [00:10:57] Speaker 00: But as these remaining ozone-depleting substances phase out under Title VI, these current users will be forced to replace their existing refrigeration systems with new units. [00:11:06] Speaker 00: Those new units will, per force, be designed to use an acceptable substitute for ozone-depleting substances. [00:11:14] Speaker 00: Under the 2015 rule, as upheld by this Court, these supermarkets and grocery stores currently using ozone-depleting substances cannot lawfully switch to prohibited HFCs, but by repudiating the 2015 rule's HFC listings in their entirety and thus allowing this distinct class of users to switch to prohibited HFCs, EPA's guidance is both a reviewable final action under Section 307B1 of the Act and a legislative rule for which notice and comment were required. [00:11:44] Speaker 00: EPA attempts to justify its failure to follow notice and comment procedures here by arguing that the guidance was but the necessary legal consequence. [00:11:52] Speaker 02: What about the language in the guidance itself that Judge Rao pointed out that says this is just temporary, we're going to issue, in fact they've already issued apparently an NPRM. [00:12:06] Speaker 00: This court has held in the past that [00:12:09] Speaker 00: Temporary agency action is not necessarily a bar to finality. [00:12:17] Speaker 00: in effect, suspends compliance obligations for all current users of ozone-depleting substances. [00:12:23] Speaker 00: EPA may be certainly free to issue, well, to engage in rulemaking in the future to address the regulations or the HFC listings in particular and their applications, especially in the sort of more difficult application areas that the agency has identified. [00:12:37] Speaker 00: But that doesn't undermine the finality of the guidance now insofar as it affects the legal rights and obligations specifically of current users. [00:12:45] Speaker 02: So is it your position that the [00:12:46] Speaker 02: The agency's only option was to continue enforcing the 2015 regulation as what was left of it after Mexican. [00:13:03] Speaker 02: It had to continue enforcing it until it issued a new notice and comment regulation. [00:13:11] Speaker 02: They have no interim authority. [00:13:16] Speaker 00: To the extent this court partially vacated the 2015 rules, HS, well, the 2015 rule. [00:13:23] Speaker 02: My question was based on the assumption. [00:13:24] Speaker 02: Your interpretation of our remand, I'm assuming your interpretation of our remand is correct. [00:13:30] Speaker 02: That is, that we left in place the prohibition on users of ozone-depleting chemicals switching to HS. [00:13:40] Speaker 02: Is it your position that EPA's only option [00:13:48] Speaker 02: which issue a new regulation through notice and comment. [00:13:54] Speaker 00: EPA had a number of lawful avenues to pursue in the wake of the court's decision in Mexico. [00:13:58] Speaker 00: It could truly have done nothing and allowed the court's order to stand, in which case regulatory counsel for [00:14:06] Speaker 00: National Supermarket Chain Acts, for example, would have, having read the court's decision, probably not concluded that they were no longer subject to the rule. [00:14:14] Speaker 00: EPA could also, as it suggested, might have done in its papers, issue a narrow guidance saying perhaps that the court's decision should be read not only to apply to product manufacturers, but more broadly to all regulated entities under Title VI. [00:14:27] Speaker 00: Or, as Mr. DeMarco suggested, it could have issued an interpretive rule [00:14:31] Speaker 00: revamping its interpretation of the statutory term replace, which is what the court struck in Mexicum to better record it with the court's decision. [00:14:38] Speaker 00: It could have returned to the court to seek clarification, could potentially have invoked its emergency rulemaking powers. [00:14:46] Speaker 00: It did none of those things, but it could not do. [00:14:49] Speaker 00: is wipe away a legal obligation that remained after this court's decision at Mexican without notice and an opportunity for public comment. [00:15:01] Speaker 05: It doesn't have the sense that it's unequivocal. [00:15:04] Speaker 05: For instance, the guidance says that it's going to consider the retroactive disapproval that was mentioned in Mexican 1. [00:15:11] Speaker 05: It also talks about moving forward with a path of distinguishing between users who have already switched from ozone to pleading substances and those who have not. [00:15:20] Speaker 05: So, I mean, do you think in that situation a regulated entity has certainty that they [00:15:26] Speaker 05: they could switch to an HFC. [00:15:28] Speaker 05: I mean, given that the agency has specifically said that it is considering how to implement those aspects of Mexican 1. [00:15:35] Speaker 00: I grant there is some language in the guidance that is somewhat equivocal. [00:15:39] Speaker 00: But fundamentally, EPA's position in the guidance, this EPA isn't exercising its enforcement discretion. [00:15:45] Speaker 00: It's justified the guidance based on the argument that the court's decision in Mexicam compelled total abrogation of the 2015 rules, HFC listings. [00:15:57] Speaker 00: And that's, of course, EPA's position in this litigation. [00:16:02] Speaker 00: think that a user of ozone-depleting substances, a supermarket user, for example, who read the court's decision, would not think that the user was no longer subject to the 2015 rules. [00:16:13] Speaker 00: But after reading the guidance, where EPA says explicitly and repeatedly that it will apply the guidance under no circumstances, that user now feels free to change its behavior as a basis. [00:16:24] Speaker 05: To potentially do a rulemaking that takes a different position. [00:16:27] Speaker 00: Potentially, EPA is absolutely free to engage in future rulemaking activity. [00:16:31] Speaker 00: It has not issued a proposed rule yet. [00:16:33] Speaker 00: And we are willing to concede that there are difficult cases of application that could well be and should be addressed in a future rulemaking, but that doesn't undermine the finality of the guidance and it doesn't change the fact that it has changed the legal landscape for at least the current users of those depleting substances to whom the rule should unambiguously apply. [00:16:56] Speaker ?: Okay. [00:16:56] Speaker 00: Thank you. [00:17:07] Speaker 01: May it please the court, my name is Ben Carlisle from the Department of Justice on behalf of EPA. [00:17:12] Speaker 01: At counsel's table is Diane McConkie from EPA's Office of General Counsel. [00:17:16] Speaker 01: The SNAP guidance is not final agency action because it simply articulates the effect of Mexican 1 and therefore lacks legal consequences. [00:17:24] Speaker 02: It is also- Let me just read you a sentence from the NRDC brief and tell me if you think it's inaccurate. [00:17:30] Speaker 02: It says, before EEP, I'm on page [00:17:34] Speaker 02: Before EPA issued the guidance, a business that replaced ozone-depleting substance with an HFC in violation of the 2015 rule ran the risk of an agency enforcement action. [00:17:49] Speaker 02: The guidance eliminated that risk. [00:17:51] Speaker 02: Is that inaccurate? [00:17:52] Speaker 01: Your Honor, I think we believe that's inaccurate because we think that the legal effect of Mexicum 1 was necessarily to vacate the 2015 rule in its entirety. [00:18:03] Speaker 01: As a result, those users would not, in fact, face the risk of an enforcement action. [00:18:07] Speaker 06: You said legal effect. [00:18:08] Speaker 01: Right. [00:18:09] Speaker 01: So you wouldn't know that reading the opinion. [00:18:11] Speaker 01: Your Honor, I think our conclusion when we read the opinion, when we looked at essentially the severability considerations, when we looked at essentially the lack of a regulatory scaffold or basis to draw the broad conceptual distinction in Mexican 1, and it's important to remember that that [00:18:29] Speaker 01: that conceptual distinction is not found anywhere in EPA's regulations as they stand. [00:18:34] Speaker 01: EPA's regulations as they stand prohibit the use of any substance designated as unacceptable by any person. [00:18:44] Speaker 06: But suppose Mexicam was just unambiguous. [00:18:49] Speaker 06: And I'm just willing to assume for present purpose that it wasn't unambiguous. [00:18:53] Speaker 06: But let's make it even less unambiguous. [00:18:55] Speaker 06: Suppose the court just said, [00:18:57] Speaker 06: Just to be clear, to recap our decision, our decision is that the rule is invalid insofar as a user has already switched to an HFC. [00:19:05] Speaker 06: The rule remains valid insofar as a user continues to use an ozone-depleting substance, and EPA can continue to enforce the rule with respect to those applications. [00:19:15] Speaker 06: If it said that, then you would still have the exact same arguments that you make in the guidance, which is that, yeah, the court said that, but, you know, actually, if you look at the rule, it doesn't draw that distinction. [00:19:25] Speaker 06: And we just don't think that it makes sense to draw that distinction, and so we're not going to do it. [00:19:30] Speaker 06: In that situation, would you say that a user should have known that that would have been what you would do? [00:19:36] Speaker 06: Because a user should have been able to say, well, I'm going to apply several ability principles, and I'm going to see that even though the opinion said X, the agency is going to conclude Y. [00:19:45] Speaker 01: Your Honor, I think that's a very different situation than what we have here. [00:19:48] Speaker 01: And I think the answer to that question is, in those circumstances, the Court presumably would have done some sort of separability analysis in determining that the rule remains in effect. [00:19:58] Speaker 06: And I want to... No, I'm not saying... That's not the hypo. [00:20:01] Speaker 06: I'm saying the opinion is exactly the same as it is, except it has a final concluding paragraph that just says, to be clear, here's what we're saying. [00:20:09] Speaker 01: Your Honor, I think that in that case the court wouldn't have done the severability analysis and there might be a basis for EPA to come in and say this actually is in fact unenforceable and seek clarification as it has somewhat similarly done here. [00:20:24] Speaker 01: The fact of the matter in this case though ends up being that because the court didn't say anything to that effect, that in fact is a very different case. [00:20:37] Speaker 01: I think that [00:20:38] Speaker 06: What we've ended up with here is a situation where the court... But I don't know how different it is, because you start your brief by saying these aspects of the court's opinion cannot be implemented in a literal sense. [00:20:51] Speaker 06: The word literal must be doing some work. [00:20:53] Speaker 06: I don't know exactly what it means to say in a literal sense, because literal to me just means what it says. [00:20:57] Speaker 06: But what you're basically saying is the court said something, but those aspects of the court's opinion we just can't do. [00:21:04] Speaker 06: So, I mean, you're reading the opinion the same way that I just said that the opinion would be read if they had made the clear statement at the end, and you're still saying that even though that's the way to read the opinion, qua opinion, it just can't be done that way. [00:21:18] Speaker 06: And I'm not necessarily saying you're wrong in that. [00:21:20] Speaker 06: I'm just saying that I don't see the big difference between the hypo that I gave you and reality, because you yourself are reading the opinion to do what I suggested it would make clear that it had done. [00:21:30] Speaker 01: I see, Your Honor. [00:21:31] Speaker 01: I think you're correct that we would still view [00:21:36] Speaker 01: we would still view the regulation as not having the necessary scaffold for EPA to pursue enforcement. [00:21:42] Speaker 01: And there's been discussion, for example, of EPA's enforcement discretion. [00:21:46] Speaker 01: That might be an avenue that EPA would employ in that circumstance where the court has been very clear. [00:21:52] Speaker 01: I think in that case, that might be the rationale that EPA might give for its enforcement discretion. [00:22:00] Speaker 01: In this case, because the court wasn't that clear and we think, [00:22:04] Speaker 01: never considered the severability question, that the opinion itself can be read and should be read in terms of what that regulatory structure actually is. [00:22:14] Speaker 01: So if the court had, in fact, said the rule remains in effect, there might be different avenues that EPA had to take in light of the inability to address the lack of the regulatory basis to draw these distinctions. [00:22:29] Speaker 06: The court did say at 457 and 458, it falls that EPA may bar any manufacturer that still make products that contain ozone-depleting substances from replacing those ozone-depleting substances with HFCs. [00:22:40] Speaker 06: Of course, that aspect of the 2015 rule is not a big deal, and that's just an empirical question about how much it really matters, but the court seems to be clearly saying that aspect of the 2015 rule, we're not touching that. [00:22:51] Speaker 06: What we're touching is other aspects of the 2015 rule, i.e. [00:22:54] Speaker 06: those aspects in which it's dealing with a user who's already switched to an HFC. [00:22:58] Speaker 01: Your honor, I think that that conflates the distinction between, I guess, there's two points to be made there. [00:23:04] Speaker 01: The first is that we view that as a statement of EPA's authority in part, that EPA retains that amount of its authority. [00:23:12] Speaker 01: And the second goes to petitioners, I think, conflation of the court addressing an arbitrary and capricious challenge with the idea that the court explicitly held that some portion of the rule would remain in force. [00:23:25] Speaker 01: And courts often address [00:23:27] Speaker 01: the whole of the challenge in front of them, even if they have issued a broad vacatur, a vacatur that's used broadly. [00:23:35] Speaker 01: I have an example, which is Americans for Clean Energy, in which the court, this is 864 F3 at 713, the court held that EPA exceeded its authority in how it exercised its inadequate domestic supply waiver under the Renewable Fuel Standards Program, and remanded that portion of the rule at issue, but still considered [00:23:57] Speaker 01: excuse me, still considered additional challenges to EPA's treatment of the same waiver and upheld EPA's approach in those respects. [00:24:04] Speaker 01: So I think there's a real difference between saying that the court has looked at the whole case in front of it and found that, yes, it was rational for EPA in light of the comparative risks of HFCs to other substances to list them as unacceptable. [00:24:20] Speaker 01: and actually holding that the rule remains in force and remains enforceable. [00:24:25] Speaker 01: And that issue on the whole was simply never before the court. [00:24:28] Speaker 06: Can I ask one last question along these lines? [00:24:30] Speaker 06: Sure. [00:24:31] Speaker 06: Which is suppose the agency had seen what was coming and the agency ahead of time had a severability or inseverability clause in the rule itself and it would have said, [00:24:40] Speaker 06: Insofar as a court might conclude that this rule is invalid in certain applications, it remains valid in all other applications. [00:24:50] Speaker 06: So it's the kind of severability clause that you often see in statutes that gets to the level of application rather than kind of coherent, syntactical phrases of the kind that you all talk about in your brief. [00:25:01] Speaker 06: So if they had said, we want to do the application one, and the agency had said, insofar as the court invalidates it as to certain applications, it remains valid as to other applications, that would have been fine. [00:25:11] Speaker 01: Your Honor, I think that would signify an agency intent that the rule remain enforceable in those applications. [00:25:19] Speaker 01: And that's certainly something under this court severability precedent that the court would consider. [00:25:23] Speaker 01: But the court would, in fact, have to look at the other factors and whether the rule was, in fact, implementable. [00:25:32] Speaker 01: And the case that I think is on point there is the MDDCDE broadcasters case that we cited in our brief. [00:25:39] Speaker 01: The rule itself, in fact, stated that the agency intended the regulation to be severable. [00:25:45] Speaker 01: The agency asked the courts to sever the invalid aspect. [00:25:47] Speaker 01: There was regulatory text that could be easily treated as stricken, and there was no apparent difficulty in partially implementing the regulation. [00:25:56] Speaker 01: And the court still held that the invalid provision was not severable because it found. [00:26:02] Speaker 06: Right, that's my question. [00:26:03] Speaker 06: And if EPA had done that in this case, who would say that the proper resolution for a court would be to say too bad? [00:26:07] Speaker 01: I think that looking at the regulatory structure in this case, that EPA's view is there's simply not a scaffold there that allows it to implement concretely the broad conceptual distinctions. [00:26:25] Speaker 01: I don't want to prejudge that case because that statement doesn't exist, but I think my response is yes, I think that it's very likely we would be saying that in light of the inability to implement that and notwithstanding that statement, the rule may in fact not be separable, that the whole rule would have to fall in those circumstances. [00:26:45] Speaker 05: Well, I had maybe in part a related question. [00:26:50] Speaker 05: So if you could just clarify, is EPA's view that Mexicam 1 effectively invalidated the entire 2015 rule, or is it your view that given some of the ambiguity and the difficulty of implementing Mexicam 1, [00:27:12] Speaker 05: that that is how EPA is interpreting that in the interim pending rulemaking. [00:27:19] Speaker 01: Your Honor, I think that honestly it's both to some extent and the questions are not wholly distinguishable because I think [00:27:28] Speaker 01: Our view is, in fact, that if you do the separability analysis that the court and all parties overlooked in Mexican 1, that what you would find is, in fact, that the whole of the rule should have fallen. [00:27:45] Speaker 01: And that playing into that is that when you look at these complex distinctions that actually implementing that decision would require, you find there's no basis for them. [00:27:57] Speaker 01: And that's why even NRDC in its past briefing said that implementing the rule would require complex distinctions among categories of users that aren't found in the statute of the regulations. [00:28:09] Speaker 01: But I also think that [00:28:10] Speaker 01: at the end of the day, this is an interim guidance in which EPA is essentially setting forth its approach. [00:28:22] Speaker 01: I think that would be an alternative basis. [00:28:25] Speaker 05: The distinction, I suggest, though, does it not go in part to the finality question? [00:28:31] Speaker 01: It does to some extent, Your Honor, because obviously, whether a rule is [00:28:38] Speaker 01: the consummation of the agency action and the agency's final statement of its position is one of the benefit factors. [00:28:45] Speaker 01: And so it's certainly the fact that this is an interim guidance document, that this isn't the agency's final statement of its position, is something that the court should consider and that could lead the court to find that the rule is not final. [00:29:00] Speaker 02: Let me just try to continue this line of questioning. [00:29:04] Speaker 02: When I first asked you about finality, my first question, your answer was, it's not final, because it was Mexican 1 that invalidated the whole rule. [00:29:16] Speaker 02: Suppose I don't agree with that. [00:29:18] Speaker 02: Suppose I read our decision as, in effect, sort of shrinking the universe of regulated parties to those still using ozone-depleting chemicals. [00:29:36] Speaker 02: And that after our decision, they, under the rule, cannot switch to HFCs. [00:29:41] Speaker 02: Now, if I view it that way, isn't this rule final and the guidance final? [00:29:47] Speaker 02: Even though it's interim, the fact is that under it, I'll say this as a question, isn't it true that under the guidance, a entity using an ozone-depleting chemical can switch to an HFC without the risk of an enforcement action, whereas before it, it could not? [00:30:12] Speaker 01: Your Honor, I think if we accept the premise of your hypothetical that you disagree with, then yeah. [00:30:18] Speaker 01: That's why hypotheticals are here. [00:30:20] Speaker 02: So accept my hypothetical to answer my question. [00:30:24] Speaker 01: Yes. [00:30:26] Speaker 01: Based on that premise, I think you would find legal consequences. [00:30:30] Speaker 01: I think by definition, if you disagree with our reading of Mexicum 1... You would concede this is a final regulation. [00:30:36] Speaker 02: We would concede it has... A reviewable regulation because of its legal consequences, even though it's interim, right? [00:30:43] Speaker 01: Your Honor, I think that's right. [00:30:44] Speaker 01: I think that even if the court finds that our reading is just flat out wrong, it is very likely a reviewable agency action. [00:30:56] Speaker 02: Did you have more? [00:31:00] Speaker 01: If the court has no further questions, we would ask that the petitions be denied. [00:31:04] Speaker 02: OK, thank you. [00:31:14] Speaker 07: May it please the court, Keith Bradley, for the interveners? [00:31:18] Speaker 07: I'd ask the court to recognize the difficult spot that EPA was in after Mexicam won. [00:31:24] Speaker 07: This regulatory program has from the beginning been about sector and function and chemicals and substances have been banned or restricted on that basis. [00:31:36] Speaker 07: What petitioners are asking for is essentially a user or a unit or product or something else based regulation. [00:31:45] Speaker 07: And it's not so easy to get there from where the program already was. [00:31:48] Speaker 02: I thought their argument was that any [00:31:52] Speaker 02: Correct me if I'm wrong, but I thought their argument was that any company using an ozone-depleting chemical at any time could not switch to HSA. [00:32:10] Speaker 07: I think that is their argument, Your Honor, but I think [00:32:15] Speaker 07: They've alighted the difficulty of that as a practical matter. [00:32:19] Speaker 02: Why is it difficult? [00:32:22] Speaker 02: I didn't get – explain that to me. [00:32:24] Speaker 07: Let me give you an example. [00:32:25] Speaker 02: Yeah, give us some examples. [00:32:27] Speaker 07: So let's suppose I operate a fleet of cars, some of which have – the AC systems are using HFC refrigerants, some of them are using ozone-depleting substances. [00:32:37] Speaker 07: I've got 50 of each kind of car. [00:32:40] Speaker 07: I have replaced some of the cars. [00:32:44] Speaker 07: Whether you say that I am a user who has replaced the ozone depleting substances requires further work about the meaning of replace. [00:32:52] Speaker 02: Don't you just do it car by car? [00:32:56] Speaker 02: That's one. [00:32:57] Speaker 02: The cars that have already replaced them, they're free. [00:32:59] Speaker 02: The cars that haven't, they can't switch to HFCs. [00:33:02] Speaker 02: Why is that confusing? [00:33:04] Speaker 07: That's one potential answer, but so then... Why is that a confusing answer? [00:33:08] Speaker 07: It's not a confusing answer, I'm not suggesting that it is. [00:33:10] Speaker 02: Isn't it quite clear that that solves the problem? [00:33:13] Speaker 07: It does solve the problem, but I don't think that's the only way to solve the problem. [00:33:18] Speaker 02: EPA's guidance says they're issuing this because it's confusion. [00:33:22] Speaker 02: You just gave me an example. [00:33:24] Speaker 02: I came up with an answer, which you said is clear. [00:33:27] Speaker 02: What's the confusion? [00:33:29] Speaker 07: I don't think that it is confusing about different ways you could answer the question. [00:33:32] Speaker 07: My point is that which one is a policy judgment that EPA has made. [00:33:36] Speaker 06: But doesn't that go to the point that I think the other side actually said would be fine, which is that there are going to be [00:33:44] Speaker 06: situations that are complicated. [00:33:46] Speaker 06: And in those interstices, it might be okay for the agency to come up with a regime that's going to govern for the interim period. [00:33:53] Speaker 06: What the agency can't do is just to say, as a blanket matter, it doesn't matter if somebody hasn't switched yet to an HFC. [00:34:01] Speaker 06: The rule's still invalid. [00:34:02] Speaker 06: And that's what the agency did. [00:34:04] Speaker 06: So you're still going to have these situations. [00:34:06] Speaker 06: I think the one that you posit is one in which it's maybe complicated to some extent to figure out what the relevant user is. [00:34:14] Speaker 06: And that's exactly one of the situations that the agency points out. [00:34:18] Speaker 06: But I think the other side said at the beginning of its argument, yeah, well, we get that. [00:34:21] Speaker 06: And that's the kind of zone in which maybe the agency has some room to operate. [00:34:25] Speaker 06: But what it can't do is the blanket. [00:34:27] Speaker 06: measure that it undertook in the guidance. [00:34:29] Speaker 07: So with respect, Your Honor, the blanket measure that they took is not to say that the rule itself is invalid. [00:34:36] Speaker 07: It's to say that EPA will not be applying that. [00:34:38] Speaker 07: And I think we all agree that that means the EPA will not be enforcing it. [00:34:42] Speaker 07: So this is really a non-enforcement guidance. [00:34:44] Speaker 06: But only in the sense that every time you say a rule is going to be [00:34:50] Speaker 06: we're going to deem invalidity to apply to the entire rule, that's always non-enforcement because the consequence of that is you can't enforce. [00:34:57] Speaker 06: What EPA didn't say is we have only a limited number of resources. [00:35:03] Speaker 06: to allocate across all of our enforcement programs. [00:35:05] Speaker 06: What we're going to do now is, as a matter of enforcement discretion, we're going to decide that we're not going to enforce these applications of this rule. [00:35:13] Speaker 06: They didn't do that. [00:35:14] Speaker 06: Had they done that, it would be a different case. [00:35:15] Speaker 06: I'm not necessarily saying how that would come out, but I think you're trying to say that this case is that one, and that seems different to me. [00:35:26] Speaker 07: There are many reasons to exercise enforcement discretion. [00:35:29] Speaker 07: Priorities and resources is one. [00:35:30] Speaker 07: In this case, they decided not to enforce because they wanted to go down the road of doing rulemaking instead of working it out on a case-by-case basis. [00:35:40] Speaker 02: Do you think an agency has that? [00:35:43] Speaker 02: I was going to ask you this because you answered Judge Schwinn-Lawson's earlier question the same way. [00:35:51] Speaker 02: Do you think an agency that has a statutory program that's operating under an issued regulation can choose to stop enforcing it because it plans to change the program in the future? [00:36:05] Speaker 02: Do you think it has that authority? [00:36:06] Speaker 07: I do think it has the authority to take a pause on enforcement, yes. [00:36:10] Speaker 02: You have many cases that say that's not accurate, that an agency cannot simply suspend the enforcement of a program, that it can only do that through another notice of conduct rulemaking. [00:36:26] Speaker 02: Do you have a case that says that? [00:36:29] Speaker 02: What's your best case which says that you think an agency can do that? [00:36:33] Speaker 07: Well, so I'm going to rely entirely on the Heckler v. Cheney line in which, and I would like to make a distinction if I could. [00:36:40] Speaker 02: Yeah, sure. [00:36:41] Speaker 07: Between an agency's simply announcing, here's a rule, we're just never going to enforce this. [00:36:48] Speaker 07: We don't like that law. [00:36:49] Speaker 07: No, no, that wasn't my question. [00:36:50] Speaker 02: But this case where it's temporary. [00:36:51] Speaker 02: That wasn't my question. [00:36:53] Speaker 02: My question was, do you think an agency which wants to revise a regulation can stop enforcing it in the interim? [00:37:00] Speaker 02: And if so, what case supports that? [00:37:02] Speaker 07: I don't have a case to put in front of you right now, other than the General Heckler v. Cheney line, and I would also like to… You mean prosecutorial discretion? [00:37:11] Speaker 07: Exactly. [00:37:12] Speaker 07: And I'd also like to stress, if I may, that this is a case where there is another enforcement happening. [00:37:19] Speaker 07: I'm not going to suggest that there are citizen suits every day, but any citizen, including the petitioners, that believes that this rule is still in effect after Mexicum 1, [00:37:28] Speaker 07: can bring suits to the extent they are standing and EPA can't stop. [00:37:31] Speaker 02: OK, but that doesn't affect whether or not this guidance is filed, does it? [00:37:37] Speaker 02: That's not related to that question. [00:37:40] Speaker 02: Correct? [00:37:41] Speaker 07: With respect, I think it does relate to that question to the extent we ask whether it is an enforcement policy or not, although there are many ways also to do that. [00:37:51] Speaker 06: So just to be clear, the upshot of your argument then would be that Mexicam doesn't even matter. [00:37:55] Speaker 06: Because if the court had never issued a decision in Mexicam, let's just say Mexicam 1 is non-existent. [00:38:03] Speaker 06: And then the agency just says, we're going to reconsider what to do with the 2015 rule. [00:38:09] Speaker 06: And, but while we're reconsidering it, we're just not gonna have that, we're gonna act as if that rule is not in effect. [00:38:17] Speaker 06: you would say, that's enforcement discretion, that's interim, that's non-final and non-reviewable. [00:38:23] Speaker 06: And so the rule just stops being, we're going to treat the world as if the rule doesn't exist until the time that EPA reaches the culmination of whatever process it's occasioned. [00:38:36] Speaker 07: I take your point. [00:38:37] Speaker 07: I think one difference that I would point out is if there were no Mexican 1, [00:38:42] Speaker 07: or if we go back to your hypothetical Mexican one, we're very clear about what it did. [00:38:49] Speaker 07: After some years, if EPA continued not to enforce and continued not to enforce, perhaps there would be an action with law to say you are not undertaking your special duty. [00:38:57] Speaker 07: But that would be off in the distance itself. [00:38:58] Speaker 06: Right. [00:38:59] Speaker 02: Two years is not that time. [00:39:00] Speaker 07: You would say it's the same thing. [00:39:01] Speaker 07: Yeah, two years is not that time. [00:39:02] Speaker 07: But in light of that, right. [00:39:05] Speaker 02: All right. [00:39:08] Speaker 02: OK. [00:39:08] Speaker 02: Thank you. [00:39:09] Speaker 02: Thank you. [00:39:10] Speaker 02: Let's see. [00:39:10] Speaker 02: Did Mr. DeMarco have any time left? [00:39:14] Speaker 02: Okay, you can have two minutes. [00:39:24] Speaker 02: Pardon me? [00:39:24] Speaker 02: For both of them. [00:39:25] Speaker 02: Okay, great. [00:39:26] Speaker 02: You can take two minutes, Mr. DeMarco. [00:39:28] Speaker 03: Thank you, Your Honor. [00:39:30] Speaker 03: On the issue of whether or not this was an interlocutory decision or not, I direct the Court's attention to Clean Air Council versus Pruitt, which said that the EPA stay at issue in that case was essentially an order delaying the rule's effective date, and this Court has held that such orders retain amount to amending or revoking a rule and found that that was sufficient to establish finality there. [00:39:49] Speaker 03: Here, the 2015 rule established effective dates for each of the end uses covered by the HFC listings, and the EPA guidance has the effect of eliminating those effective dates, or at least suspending them. [00:40:02] Speaker 03: And also, in terms of a timeframe, we're talking about a suspension that's been in place for a year. [00:40:09] Speaker 03: We estimate that about 100,000 commercial refrigerators have been able to transition from ozone-depleting substances to HFCs in that period. [00:40:17] Speaker 03: There's nothing in the record about that. [00:40:21] Speaker 03: We offer an expert declaration, Your Honor, in our standing addendum. [00:40:27] Speaker 03: Thank you. [00:40:28] Speaker 03: The court, with respect to the meaning of the arbitrary and capricious holding in the case, the court said exactly what it was doing as it was transitioning from the first part of its opinion with the statutory authority holding to the second part about the arbitrary and capricious. [00:40:41] Speaker 03: It said, our conclusion that the 2015 rule must be vacated, requires manufacturers to replace HFCs, does not answer the question whether EPA reasonably removed HFCs from the list of safe substitutes in the first place. [00:40:52] Speaker 03: This wasn't a holding in the alternative. [00:40:54] Speaker 03: The idea was that there was still part of the rule in place, and the court needed to decide if EPA had acted reasonably. [00:41:01] Speaker 03: Finally, I'd just note, Your Honors, that we acknowledge that there were gray areas here. [00:41:07] Speaker 03: But the court doesn't need to decide the full range of options that was available to EPA in the wake of Mexchem. [00:41:13] Speaker 03: It just needs to decide that Mexchem left part of the rule in place, and EPA suspended it without notice and comment. [00:41:19] Speaker 03: We'd ask the court grant the petitions for review, and they'd take the guidance. [00:41:23] Speaker 02: Thank you, gentlemen. [00:41:24] Speaker 02: Case is submitted.