[00:00:00] Speaker 02: Next stand, please. [00:00:10] Speaker 01: This honorable report is again in session. [00:00:16] Speaker 01: Case number 18-1167, Sierra Club Petitioner versus Environmental Protection Agency at Allen. [00:00:25] Speaker 01: Mr. Summers for the petitioner, Mr. Link for the sponsor. [00:00:42] Speaker 00: Good morning, Your Honor. [00:00:42] Speaker 00: It's Gordon Summers for Petitioner. [00:00:44] Speaker 00: I'd like to reserve four minutes for rebuttal, please. [00:00:48] Speaker 00: May it please the Court. [00:00:49] Speaker 00: We're here today because EPA has authorized permitting authorities around the country to grant permits, grant construction permits, to new and modified major sources that will cause violations of the national ambient air quality standards. [00:01:05] Speaker 00: This morning, I'd like to make three points as to why that is illegal. [00:01:09] Speaker 00: The first is that this court has held in the Alabama power case that the national ambient air quality standards and the influence are thresholds that are not to be exceeded. [00:01:20] Speaker 04: Can we deal with finality first? [00:01:23] Speaker 04: Why is this final agency action, and particularly what legal effect does this memorandum have? [00:01:32] Speaker 00: Absolutely, Your Honor. [00:01:34] Speaker 00: This case is very much like the Scenic America case that this court decided in 2016. [00:01:39] Speaker 00: The guidance that EPA has put forth states EPA's definitive legal interpretation that authorizes permitting authorities to grant permits that otherwise they could not grant. [00:01:50] Speaker 00: And so it allows facilities to be built that otherwise would need to reduce their emissions, [00:01:56] Speaker 04: Where does EPA bind even itself? [00:01:59] Speaker 04: Because you can see that they don't bind states, right? [00:02:03] Speaker 00: Well, there are rules that constrain or withdraw discretion, Your Honor, and there are rules that grant discretion. [00:02:09] Speaker 00: The Clean Air Act doesn't give discretion to permitting authorities to [00:02:14] Speaker 00: grant permits in what EPA considers de minimis circumstances. [00:02:18] Speaker 00: It says simply that they must demonstrate that they will not cause or contribute to a violation. [00:02:23] Speaker 00: EPA's legal memorandum that they've attached and the guidance itself state unequivocally that EPA has interpreted the act such that permanent authorities can now exercise discretion and grant permits in these situations. [00:02:35] Speaker 00: And this is EPA's last word in the process, because it's not EPA, except in certain states where they're administering the program. [00:02:42] Speaker 00: Generally speaking, this is states that now will take this authority, and in fact are taking this authority, to grant permits. [00:02:49] Speaker 06: Are there federal implementation plans now in effect? [00:02:53] Speaker 00: There are several states where EPA administers the PSD program, yes, Your Honor. [00:02:57] Speaker 00: But in most cases, it's states administering this. [00:02:59] Speaker 06: Well, I understand that. [00:03:01] Speaker 00: And so there's no guarantee that review would end up back before this court, because under the PSD program, after a state grants a permit, appeal generally goes to the state courts of appeal, or the state tribunals, and then review even the state implementation plan, not necessarily the federal law itself. [00:03:19] Speaker 00: What about if EPA approves? [00:03:22] Speaker 00: If EPA approves, it could get back to this court or to the regional court where this occurs. [00:03:30] Speaker 00: at citing references for these statutes. [00:03:32] Speaker 00: There are very few instances where PSD appeals have ever made it before this court, in fact, because it generally does not occur that way. [00:03:41] Speaker 00: Typically you would end up with a number of different state interpretations around the country as to how state plans [00:03:48] Speaker 00: do or do not support this, but I should add that many of the state tribunals actually give a great amount of deference to EPA's interpretation of the statute. [00:03:58] Speaker 00: And again, here, EPA has stated that interpretation. [00:03:59] Speaker 05: But again, on the EPA, where EPA has to approve the permits. [00:04:03] Speaker 00: No, Your Honor. [00:04:04] Speaker 05: There's no place. [00:04:06] Speaker 05: The EPA doesn't have to approve any permits. [00:04:07] Speaker 00: Only in a handful of states, Your Honor, where EPA is administering the program. [00:04:11] Speaker 00: And in that case, it's the EPA region that's doing it. [00:04:13] Speaker 00: But generally, it's states that are approving it. [00:04:15] Speaker 05: I understand that. [00:04:16] Speaker 05: But in those cases, those could be appealed to the federal court. [00:04:20] Speaker 00: I believe that's right, Your Honor. [00:04:21] Speaker 00: It would go to the regional court of appeals, not necessarily to this circuit, though. [00:04:27] Speaker 06: If a state permitting authority [00:04:31] Speaker 06: denies a permit, the company has to go to, well, it exhausted its administrative remedies, but then it goes into state court, doesn't it? [00:04:45] Speaker 00: Yes, Your Honor, where the state is implementing the PSD program, that's right. [00:04:50] Speaker 00: I believe Judge Garland's asking about in states where EPA is administering the program there, it would go to the environmental appeals board. [00:04:59] Speaker 06: Oh, oh, oh, okay, okay. [00:05:02] Speaker 06: Yeah. [00:05:02] Speaker 06: Can the state, can the company in the hypothetical challenging the denial of a permit, can they raise questions about the guidance? [00:05:14] Speaker 06: the EPA's guidance? [00:05:17] Speaker 00: They could, Your Honor, and then typically states would, state courts would give great deference to EPA's guidance, and moreover it wouldn't bind EPA around the country when the state courts decided. [00:05:28] Speaker 06: Does Chevron apply to state courts? [00:05:31] Speaker 00: Well, that's a very good question, Your Honor, because EPA is trying to have it both ways here. [00:05:35] Speaker 00: They purport to be filling a gap in the statute, seemingly under that authority, but they're delegating that task to states who, I'm not aware of any precedent that states have such discretion. [00:05:46] Speaker 00: That's one reason I believe that EPA's statement here, where they purport to be definitively filling this gap, has legal effect. [00:05:53] Speaker 00: Because this is EPA's last word in the process, and subsequent to that, states will be, and in fact are, applying that interpretation to grant permits. [00:06:02] Speaker 06: What's the difference between the guidance here with respect to particulate matter and 24-hour standard and the guidance that was issued in 2014? [00:06:15] Speaker 00: So one of the key differences here, Your Honor, is that this is an entirely new rationale for significant impact levels that EPA has never before promulgated in this fashion. [00:06:29] Speaker 06: But the SIL, whatever you call it, SIL, is the same as it was in 2014. [00:06:36] Speaker 00: The difference, Your Honor, the only codified SILs are the ones in the Code of Federal Regulations which only dictate when a source's impact is significant, not when it is not significant. [00:06:52] Speaker 00: It's true that sources around the country have been using SILs [00:06:56] Speaker 00: For a long time, NEPA has been trying very hard to find a legal rationale. [00:07:00] Speaker 00: They tried in 96, but through that they tried in 2010, and then admitted to this court that because it required granting permits to sources that would cause violations, it was illegal. [00:07:11] Speaker 06: So the argument is that if it's not significant under the CFR, that doesn't mean it's insignificant. [00:07:18] Speaker 00: That's right, Your Honor. [00:07:19] Speaker 00: It only says in the CFR, these are cases where these impacts are significant if they are above these levels. [00:07:26] Speaker 00: But yes, they've been trying this for years, but it really just won't write. [00:07:31] Speaker 00: The statute does not support that interpretation. [00:07:33] Speaker 00: It's a very clear, bright line standard under the statute. [00:07:38] Speaker 00: These facilities must demonstrate they will not cause or contribute to a violation. [00:07:43] Speaker 00: And EPA here doesn't even contest that sources availing themselves of these sales can and may well be the but for cause of a violation, yet permitting authorities under EPA's interpretation of the statute would have full discretion to grant a permit. [00:07:59] Speaker 05: Additionally... Can you say how what you just said interrelates or relates to their position that they're not saying [00:08:10] Speaker 05: that they're allowing an insignificant amount. [00:08:13] Speaker 05: They're saying that they're allowing an amount that they can't tell, that appears statistically insignificant and therefore is not distinguishable from random. [00:08:23] Speaker 00: Your honor, EPA, I believe used the swimming pool analogy in their brief for this, and the fact is these impacts are additive. [00:08:33] Speaker 00: EPA's variability approach looks at the weather patterns and other natural phenomena that make air pollution go up and down in regions. [00:08:41] Speaker 00: And then they have, in these cases, for these permits, they have very concrete modeling that they admit is extremely accurate that shows these sources will have an impact so significant that it changes the ambient level as measured by EPA's design value approach. [00:08:55] Speaker 05: So I thought, or maybe it's a consequence of the briefs, I thought that they were saying they couldn't tell [00:09:02] Speaker 05: whether the design value has been actually changed or just a randomness of measurement? [00:09:09] Speaker 00: No, Your Honor. [00:09:09] Speaker 00: They admit that these sources will have impacts that do change the design value. [00:09:15] Speaker 06: The issue... Well, the problem, though, is with these two, with ozone in particular, that the problem that EPA has identified for a long time is that neither one [00:09:27] Speaker 06: or emitted into the atmosphere or into the air, they result from a combination of chemicals that, whatever, I forget, nitrogen oxides and volatile organic compounds. [00:09:47] Speaker 06: And so if you have a single source emitting nitrogen oxides, for example, it's very difficult to measure. [00:09:56] Speaker 06: and determined that that source is responsible, this gets back to Judge Garland's question, that that source is responsible for an increase in ozone. [00:10:06] Speaker 06: It may be just because ozone cooks and we just had a very hot summer or we had low temperatures or high temperatures in the evenings. [00:10:18] Speaker 00: There's two points in response to that, Your Honor. [00:10:22] Speaker 00: The first is that EPA admits that the modeling for these sources would show very clearly that there is, in fact, a contribution that may well even be the cause of a violation. [00:10:32] Speaker 00: There's no question here that the modeling is very accurate and shows a real impact from these sources. [00:10:40] Speaker 00: The second point, Your Honor, is that [00:10:43] Speaker 00: EPA would have the statute allow for some kind of culpability analysis. [00:10:48] Speaker 00: And that's exactly what the statute forecloses. [00:10:51] Speaker 00: Congress used the word cause and added or contributed specifically to get away from these questions of who's at fault. [00:10:58] Speaker 00: The point of the statute, as this court has explained in Alabama Power, is to prevent any exceedance whatsoever of these standards to protect areas designated as an attainment. [00:11:08] Speaker 00: And so it doesn't really matter. [00:11:10] Speaker 00: Under Congress's framework, [00:11:13] Speaker 00: whose fault the violation is, if Modeling shows a new source through its NOx emissions or whatever is going to contribute in some way to a violation exacerbating that problem, here the statute would require them to reduce their emissions or use some other method, perhaps offsetting [00:11:32] Speaker 00: before worsening that violation. [00:11:34] Speaker 06: It would agree, though, that we're talking about whether to grant a permit or not for the building or the modification of the facility that emits the precursors to a particular matter or ozen, right? [00:11:50] Speaker 06: Yes. [00:11:53] Speaker 06: Would you agree that a state permitting authority [00:11:57] Speaker 06: would be able to or could grant permits and the upshot would be that it wouldn't result in a violation of the NACS. [00:12:10] Speaker 06: If the model ensured it would not cause or contribute to a violation, yes, they could. [00:12:14] Speaker 06: So it can be applied in a manner that doesn't violate the National Ambient Air Quality Standard. [00:12:23] Speaker 06: Not the sills, Your Honor, because the problem is... Every time? [00:12:27] Speaker 00: It's... It's not every time, Your Honor. [00:12:30] Speaker 00: It's one of these things where there are certain questions you can only answer knowing certain information. [00:12:35] Speaker 00: So, if Your Honor asked me for directions somewhere, I'd have to know where you were starting from. [00:12:39] Speaker 00: Okay. [00:12:40] Speaker 06: Let me reframe it. [00:12:42] Speaker 06: Is it your position that every time a state grants a permit to a facility that measures the, it emits less than the significant impact level, every time a state grants a permit to that kind of a power plant or whatever, [00:13:01] Speaker 00: It's a violation of the NACS. [00:13:04] Speaker 00: It's a violation of 747583 because they have not shown it won't violate the NACS. [00:13:09] Speaker 00: And there are cases where it will violate the NACS, but it depends on what the current air quality is. [00:13:14] Speaker 06: It depends, yeah, it depends. [00:13:16] Speaker 00: I'd like to say one more thing, actually, Judge Wilkins, in response to your question about finality, which is to mention that also the NRDC case that we cited in our briefs illustrates another way in which this binds EPA. [00:13:28] Speaker 00: EPA has an oversight role under the PSD program, and the effect of this definitive statement is that they've now withdrawn their own ability to exercise that oversight enforcement action, for instance, against a PSD permit granted by a state relying on this. [00:13:44] Speaker 04: How have they precisely withdrawn their enforcement authority or limited their enforcement? [00:13:52] Speaker 00: Well, by taking a definitive interpretation of the statute, they could enforce under another, you know, for another rationale, for instance, but they'd be doing a complete 180 with their own definitive interpretation if they vacated a permit granted on this rationale. [00:14:09] Speaker 00: on the basis that it was granted because the statute allowed it. [00:14:12] Speaker 04: What authority do you have for that other than just, you know, you're saying that they would be? [00:14:17] Speaker 00: Well, that's exactly what occurred in the Scenic America and the NRDC cases, Your Honor, is that effectively the federal agency's position effectively created a safe harbor for permitting authorities or for the states to take a certain action because EPA had said, this is lawful and we want you to do this. [00:14:34] Speaker 00: And it's different than any situation where, for instance, EPA is just forecasting a future interpretation that it will take in its own decision-making. [00:14:41] Speaker 00: Here, they're telling somebody else, you have authority to do this, and we won't stop you. [00:14:46] Speaker 00: That is legal effect. [00:14:48] Speaker 00: Our members, or my client's members, Your Honor, are going to be breathing pollution that violates these standards because of permits granted under this authority. [00:14:57] Speaker 00: Unless this panel has further questions. [00:15:00] Speaker 06: The amounts we're talking about, I don't know if you can trace that to any particular injury to the members of the Sierra Club, but I assume that's the case. [00:15:13] Speaker 06: I have two questions. [00:15:16] Speaker 06: One is why shouldn't we treat this as analogous to a notice of proposed rulemaking without a deadline on it? [00:15:24] Speaker 06: The EPA wants to gather information. [00:15:27] Speaker 06: On its face, that seems like a plausible rationale for putting this out without making it binding. [00:15:35] Speaker 06: And they want to see what the experience will lead to. [00:15:38] Speaker 06: If they just promulgated this as a regulation, then instead of [00:15:44] Speaker 06: 5.0, their evidence that comes in indicates that it should be lower. [00:15:50] Speaker 06: I said 4.1. [00:15:51] Speaker 06: That means they'd have to go through another entire rulemaking. [00:15:55] Speaker 06: So that really makes absolutely no sense whatsoever. [00:16:01] Speaker 06: Why don't you answer that? [00:16:03] Speaker 00: Sure. [00:16:05] Speaker 00: I think the best way to illustrate it, Your Honor, I should clarify that we're not challenging that the number is just a little too high or a little too low. [00:16:13] Speaker 00: It's the fact that they have a number at all. [00:16:15] Speaker 00: The most clearly final part of all of this is that EPA has taken this definitive interpretation of the statute that creates discretion. [00:16:23] Speaker 00: It's sort of a two-step process. [00:16:24] Speaker 00: They've created this discretion, and then they're suggesting an approach which [00:16:29] Speaker 00: is an arbitrary approach, but they're suggesting then an approach for how to implement that discretion. [00:16:34] Speaker 00: And you might look at the cement kilns case that this court decided, where the agency had a rule that created discretion and had legal effect in that way, and then had a guidance to suggest how to implement that. [00:16:49] Speaker 00: They sort of skipped past the rulemaking stage entirely and created discretion from whole cloth that doesn't exist under the statute. [00:16:58] Speaker 00: And they just can't do that in a guidance document. [00:17:03] Speaker 00: It has effect all around the country where these permits are being granted in reliance on this interpretation. [00:17:09] Speaker 06: Is the discretionary aspect of this written into a state implementation plan with respect to the granting of permits? [00:17:19] Speaker 00: I'm not sure about any particular state plan, but I want to clarify that the discretion is a bit of a red herring here, because there are rules all the time that have legal effect by creating discretion for somebody to do something. [00:17:33] Speaker 00: This court, when it accepted EPA's request for a remand in the 2013 Sierra Club case, [00:17:39] Speaker 00: The issue there was that EPA admitted that by requiring the granting in that case of permits that violated the statute, it was violating the law. [00:17:49] Speaker 00: It's really no different when they've now authorized the granting of those same permits that violate the law. [00:17:55] Speaker 00: whether or not permitting authorities have something akin to an enforcement discretion, where they don't have to. [00:18:01] Speaker 00: They can throw up their hands and not grant the permit. [00:18:04] Speaker 00: But EPA has authorized that you grant the permit. [00:18:06] Speaker 06: Is there such a thing, in your view, as something that has no significant impact? [00:18:15] Speaker 00: Hypothetically, Your Honor, you could, again, if you consider the necessary information. [00:18:20] Speaker 00: So if you looked at a region that you knew was, you know, [00:18:24] Speaker 00: 10 parts per million away from a standard, you knew there was nothing else getting built, and you knew the contribution of that source was going to be one part per million, you could say, yeah, that won't cause a violation. [00:18:34] Speaker 00: But the statute requires not that you show it won't be a significant violation. [00:18:40] Speaker 00: You must show there is not going to be a violation of the standard. [00:18:44] Speaker 00: EPA doesn't even contend in its legal memorandum [00:18:47] Speaker 00: that you can have sources built under this that are the but-for cause of violations. [00:18:51] Speaker 00: And in fact, that's the intent of this entire guidance. [00:18:55] Speaker 00: They say at JA 11, Your Honor, that part of their goal with this entirely new legal rationale was to allow for sales that can be used even in situations where the max or increment are known to be nearly consumed. [00:19:08] Speaker 00: And at JA-19, they specifically authorized using them in what they call a culpability analysis, where it's shown that the source will be a cause or contributor to a violation. [00:19:20] Speaker 00: And EPA says permitting authorities can grant the permit anyway. [00:19:26] Speaker 00: I see I've passed my time, so I'll sit down. [00:19:29] Speaker 00: Thank you, Your Honors. [00:20:06] Speaker 03: Good morning, Your Honors. [00:20:07] Speaker 03: My name is Brian Link, and with me at council table is Mark Kataoka from EPA. [00:20:14] Speaker 03: The guidance memorandum for significant impact levels at issue in this case carry forward EPA's ongoing efforts in response to the concerns of Sierra Club and others to facilitate the modeling of proposed PSD sources precursor permutin emissions. [00:20:30] Speaker 03: The guidance explains a new legal rationale and technical justification for significant impact levels which had already been used in PSD implementation for decades prior to this guidance. [00:20:45] Speaker 03: But the guidance only recommends the justifications it provides. [00:20:49] Speaker 03: It only recommends the values. [00:20:50] Speaker 03: It does not mandate them. [00:20:52] Speaker 03: It does not require their use. [00:20:54] Speaker 03: The court should dismiss this petition because the petitioner has not met its burden of establishing jurisdiction [00:21:00] Speaker 03: It is not shown that the guidance is a final action under the test in Bennett or that the issues it seeks to present are fit for review here as opposed to in the context of a specific permitting application decision that may apply the guidance. [00:21:15] Speaker 03: To be considered final, agency action must meet two criteria under Bennett. [00:21:19] Speaker 03: It must mark the conclusion of the decision-making process and must have a direct and appreciable legal consequence. [00:21:26] Speaker 03: And both prongs of this test must be satisfied independently, or the guidance is a non-final action. [00:21:32] Speaker 03: Here, at minimum, the guidance clearly fails to meet the second prong of Bennett, because it does not impose any direct legal consequences. [00:21:39] Speaker 03: Just so we're clear, are you conceding the first prong? [00:21:42] Speaker 03: We're not conceding the first prong. [00:21:44] Speaker 03: EPA described its process, and Judge Randolph referred to that accurately as one, in which it would await the development of more information, assuming that some permitting authorities would apply this guidance. [00:21:56] Speaker 03: it would be able to have a better understanding of whether the values it was proposing were suitable for all instances or not based on the results of those case-by-case permitting decisions. [00:22:08] Speaker 03: And at this point, that proposed rulemaking or anticipated rulemaking is still identified on its regulatory agenda. [00:22:14] Speaker 03: So the process isn't finished for purposes of prong one, but I would say that where the petitioners most fail to meet that is under prong two. [00:22:26] Speaker 03: This entire document is written in the form of a set of non-binding recommendations. [00:22:30] Speaker 03: It does not command, as did the guidance in the Appalachian Power case, for example. [00:22:35] Speaker 03: It does not give two options with no discretion to do something else, as did the guidance in the NRDC case that counsel just talked about. [00:22:44] Speaker 03: Here, everything is written in the form of suggestion and encouragement, but EPA makes very clear that states can choose their own approach. [00:22:52] Speaker 03: They could ignore this guidance, and there's no sanction for that. [00:22:55] Speaker 03: They could come up, they could use SILs, but come up with a different lower value, and there's no sanction for that. [00:23:01] Speaker 03: They could use a higher value if they can justify it based on the record and as consistent with the statute. [00:23:07] Speaker 04: Your friend on the other side, though, says that there is legal effect because in an effect creates a safe harbor that wasn't there before. [00:23:17] Speaker 03: I think that that is not quite right, because for one thing, the approach that the petitioners [00:23:25] Speaker 03: would have EPA take and then the one that they are saying is lost here is an approach that would assume [00:23:32] Speaker 03: Any impact, any projected emissions whatsoever from a source automatically are deemed to cause or contribute. [00:23:39] Speaker 03: EPA has never in 40 years interpreted the statute that way in any of its guidance, even before this document. [00:23:46] Speaker 03: And as we argued in the brief, in fact, that reading really would reflect the language that Congress used in the non-attainment NSR provisions, where the statute simply doesn't say it. [00:23:58] Speaker 03: will not cause or contribute. [00:23:59] Speaker 03: It says you have to offset any emissions from the source. [00:24:04] Speaker 03: So there's no sort of new change in the legal regime in that sense. [00:24:09] Speaker 03: EPA didn't have the position petitioners are arguing for. [00:24:12] Speaker 03: All they've done here is provide a different explanation and a better statistical foundation for an approach and a type of screening tool that they were already encouraging the use of prior to this guide. [00:24:24] Speaker 06: How would EPA enforce a [00:24:28] Speaker 06: a rule against a state permitting authority. [00:24:32] Speaker 06: Does EPA review the grant of a permit? [00:24:36] Speaker 03: There's not a mechanism in the Clean Air Act for automatic EPA review of PSD permits. [00:24:43] Speaker 03: It is primarily a state implemented [00:24:45] Speaker 03: EPA does have the authority to issue stop construction notices if it were to determine that that were warranted. [00:24:53] Speaker 03: And obviously, I can't speculate about when and where they would do that. [00:24:57] Speaker 03: But certainly, in this guidance, they've made clear that while they recommend and encourage that these SILs should be sufficient in most circumstances, that there may be cases where more analysis is needed, and it's up to the permanent authority. [00:25:11] Speaker 03: Well, this leads to it. [00:25:13] Speaker 06: I'm going to try to keep this as simple as possible. [00:25:16] Speaker 06: But let's suppose that the guidance is upheld and a state permitting authority takes a look at it and says, well, I think EPA did a lot of studies here. [00:25:26] Speaker 06: We're going to use their SIL. [00:25:29] Speaker 06: And the projections are that this particular plan is going to emit less than the SIL. [00:25:36] Speaker 06: Therefore, we're granting the permit. [00:25:38] Speaker 06: And a citizen suit provision, [00:25:40] Speaker 06: is in the state implementation plan, and a suit is brought against the state permitting authority. [00:25:48] Speaker 06: And that suit would wind up, say it's in Maryland, in Bethesda, would wind up in the Montgomery County Circuit Court, who would be charged with deciding whether the statute, the cause or contribute portion of it, allows the use of an SIL that way. [00:26:08] Speaker 06: That seems really odd. [00:26:10] Speaker 06: that it would have to, it would go to a circuit or a county court and then go up to the Maryland Court of Special Appeals and then ultimately the Court of Appeals of Maryland. [00:26:20] Speaker 06: Is that the way it goes? [00:26:22] Speaker 03: It is in most circumstances and to be clear, [00:26:26] Speaker 03: In all of the states that have an approved SIP with PSD provisions, yes, it would go to state court. [00:26:34] Speaker 03: If it is a state with a delegated federal program or if it's EPA implementing the federal program directly, then it would go to the Environmental Field Board or Circuit Court. [00:26:43] Speaker 03: But I wouldn't say that that's odd. [00:26:45] Speaker 03: You can look, it's right there in the legislative history of 1977, Congress [00:26:50] Speaker 03: planned this, enacted this as a state-implemented program. [00:26:54] Speaker 03: And they talk about the permitting process, and we've got that in the Joint Appendix, and they describe this as a process that states may review on a case-by-case basis to decide whether to grant or deny permits. [00:27:06] Speaker 03: So yes, there are many other provisions of the statute in which things are automatically centralized. [00:27:11] Speaker 03: This is not one of them. [00:27:12] Speaker 03: But I wouldn't say that that's odd. [00:27:14] Speaker 03: It's consistent with what Congress intended. [00:27:20] Speaker 03: To be clear, though, writing this guidance did not authorize in any particular case a decision to grant or deny the permit. [00:27:29] Speaker 03: I mean, the permitting authority has the same burden. [00:27:31] Speaker 03: It cannot simply cite the fact that the guidance was issued and stop its decision-making there. [00:27:40] Speaker 03: Also, I know Council noted in his remarks that the statute does not give EPA authority to grant permits based on de minimis authority, or decision making authority, de minimis exemptions. [00:27:52] Speaker 03: To be clear, this particular guidance didn't rely on that principle. [00:27:57] Speaker 03: The 2010 rule did rely on that principle. [00:28:00] Speaker 03: EPA hasn't disclaimed it here, but it's not the basis on which it's offering a recommendation. [00:28:06] Speaker 03: That basis, of course, we've explained in our brief. [00:28:08] Speaker 03: It's based on [00:28:09] Speaker 03: its construction of the terms cause or contribute. [00:28:12] Speaker 05: I just want to nail this down. [00:28:15] Speaker 05: So when you use the word significant, in this case, you do not mean de minimis, you do not mean some small amount. [00:28:24] Speaker 05: You mean an amount that you can't statistically tell whether it will affect the design [00:28:31] Speaker 03: That is correct, and I do believe Your Honor understood earlier what EPA was explaining in the Joint Appendix, and I would refer particularly to the discussion in pages 47 to 51 of the Joint Appendix. [00:28:45] Speaker 03: EPA talked about statistical analysis, the concept of what's statistically significant or not. [00:28:51] Speaker 03: It explained what's known as the null hypothesis, the idea that [00:28:57] Speaker 03: If a value is not statistically significant from the sample you're comparing it to, then you cannot know with confidence that there's any actual difference or any actual effect. [00:29:09] Speaker 05: So how is that possible if the design value is an arithmetic mean and [00:29:14] Speaker 05: You don't dispute that emissions are actually occurring. [00:29:17] Speaker 05: This is all in the situation. [00:29:18] Speaker 03: Well, emissions are projected to occur, yes. [00:29:21] Speaker 03: Because of course, we're talking here about actual observed. [00:29:25] Speaker 03: We're talking about sources that haven't been built yet. [00:29:27] Speaker 05: But you're authorizing the building of a source that will make an emission, which you are modeling somehow or other. [00:29:33] Speaker 05: Correct. [00:29:34] Speaker 05: Right? [00:29:34] Speaker 05: OK. [00:29:35] Speaker 05: So how can that not affect the design volume? [00:29:39] Speaker 05: I understand how it might not affect the variability of wind in a certain time, but I understand how it can't affect the air. [00:29:47] Speaker 05: If you add even a tiny amount, you affect the air. [00:29:50] Speaker 03: One way that's perhaps easier to understand is, okay, so sills, these sills can be used both in [00:30:00] Speaker 03: the initial single source analysis, which has largely been the focus of our briefs. [00:30:05] Speaker 03: You take the CIL and you compare that. [00:30:08] Speaker 03: You take the CIL, by the way, using worst case assumptions about what the model did. [00:30:12] Speaker 05: I think that either I'm having a problem today or the microphone. [00:30:16] Speaker 05: I'm hoping it's the microphone. [00:30:19] Speaker 03: There's two different analyses in which you can use a SIL, single source and cumulative. [00:30:24] Speaker 03: Much of our dispute here focuses on that first one, because that screens out projects. [00:30:30] Speaker 03: If you're going to follow these recommendations, and you model the impact of the source using a worst case estimate of what the emissions will be, and then you compare that to the value, and if it's less than the value, you're concluding it's not significant, as you've said. [00:30:47] Speaker 03: But let's say there were a scenario where the source's proposed impact, modeled impact, is higher than the SIL. [00:30:57] Speaker 03: You then could use the SIL as part of cumulative analysis, and I think that second stage helps answer your question, because when you do cumulative analysis, you are then looking at nearby sources, you're looking at background, [00:31:14] Speaker 03: And you're examining whether the proposed impact is going to coincide with the point in time and the place where a violation is going to occur. [00:31:22] Speaker 03: And this is important. [00:31:23] Speaker 03: When we talk about the variability in emissions, there are multiple modeled locations throughout this area, whatever the area of concern is. [00:31:33] Speaker 03: There's obviously a time element. [00:31:35] Speaker 03: The design value is measured over a period of years, not just one day. [00:31:39] Speaker 03: And so, yes, if the source constructs and operates, it's going to add something to the atmosphere. [00:31:47] Speaker 03: No one can deny that. [00:31:48] Speaker 03: But that doesn't mean it's going to have an impact at the point in time [00:31:53] Speaker 03: where it would lead to violation, because it's the particular high variability day or the low variability day. [00:31:59] Speaker 06: I thought the Sierra Club was talking about a different type of cumulative impact, that if there are 15 permit applications pending simultaneously and each one is below the SIL, and you start granting them first come first serve, that eventually you're going to get to a point where [00:32:20] Speaker 06: together they have a significant impact. [00:32:23] Speaker 03: Well, I mean, EPA's guidance does not prevent a permitting authority, and in fact notes and makes clear to permitting authorities that they still have the obligation on a case-by-case basis to look at information like that. [00:32:35] Speaker 03: So certainly... I thought it gave them the option. [00:32:38] Speaker 03: It gives them the option, but there's nothing in the guidance to suggest that you are [00:32:47] Speaker 03: excused from examining relevant information in the record just because the guidance was written and certainly EPA is clear that one thing that may be relevant is are there other sources that are proposed as well or that are adjacent to the proposed source. [00:33:02] Speaker 05: I guess I'm not understanding the guidance well then. [00:33:04] Speaker 05: You're saying that this SIL analysis applies only if there's only a single source being built and otherwise the states can't use it or shouldn't use it. [00:33:14] Speaker 03: No, I wouldn't say that. [00:33:15] Speaker 03: But the way the ABA put it in the guidance is this approach and these values should be sufficient in most cases. [00:33:23] Speaker 03: They didn't say will be sufficient in all cases. [00:33:26] Speaker 03: It said should be sufficient in most cases. [00:33:28] Speaker 03: But it didn't say which cases it wouldn't be sufficient. [00:33:30] Speaker 03: It did not attempt to be prescriptive and to say precisely when a permitting authority should depart, either. [00:33:37] Speaker 03: But it emphasized that they had to. [00:33:38] Speaker 05: And it didn't say what the case-by-case analysis you're talking about is in the way that you're describing it now. [00:33:44] Speaker 05: I'm sorry, Your Honor. [00:33:46] Speaker 05: It mentioned a case-by-case analysis, but it didn't say what that meant. [00:33:50] Speaker 05: It wasn't prescriptive, no. [00:33:53] Speaker 05: Not only wasn't it prescriptive, it wasn't descriptive. [00:33:55] Speaker 05: It didn't say anything like what you just said, that you still have to do a case-by-case analysis. [00:34:05] Speaker 03: Well, no, it did say that. [00:34:06] Speaker 03: I think it didn't attempt to draw out what each conclusion is going to be under each scenario that you might encounter, but it certainly did. [00:34:14] Speaker 03: And I'll refer you to, for example, at pages 20 and 21 of the Joint Appendix, the case-by-case use of seal value should be justified in the record for each permit to ensure an adequate record [00:34:43] Speaker 03: Any decision should incorporate the information in the technical documents, but should consider any additional information in the record that's relevant to making the required demonstration. [00:34:52] Speaker 05: Yeah, so I didn't understand what that meant since EPA is saying the SIL is okay. [00:34:58] Speaker 05: What additional record evidence could there be? [00:35:01] Speaker 03: And I'll get, and again, [00:35:04] Speaker 03: Chant Appendix 4, EPA believes the application of these SILs in the manner described below would be sufficient in most situations for a permanent authority to conclude that a proposed source will not cause or contribute to a violation of an ozone or PM2.5 max or PM2.5 influence. [00:35:23] Speaker 03: It does not, and you know, a determination that a proposed source does not cause or contribute can only be made on a permit specific basis after consideration of the permit record. [00:35:35] Speaker 03: If there's evidence in the record for a particular application that there are other sources that may also add to emissions locally, clearly that's something that would be relevant. [00:35:48] Speaker 05: What does it mean on JA19 where it says, the preliminary analysis described in the prior paragraph shows a significant impact [00:35:58] Speaker 05: That's where it shows that permitting authorities may choose to use the recommended SIL values in a cumulative impact analysis. [00:36:07] Speaker 05: What does the main mean there? [00:36:11] Speaker 03: Historically, for many years, earlier significant impact values have been used at a single source stage to initially screen out. [00:36:23] Speaker 03: used by PSD applicants. [00:36:25] Speaker 03: To be clear, the process hasn't changed. [00:36:28] Speaker 03: Where you would use this and how hasn't changed. [00:36:30] Speaker 03: So the only thing that's [00:36:32] Speaker 03: new here is just the way that EPA articulated its recommended legal rationale and the statistical foundation. [00:36:39] Speaker 03: But the basic approach of using a significant impact level of some type for a single source analysis and for cumulative, that's not a new thing. [00:36:48] Speaker 03: Previous SILs would include, for example, those that are still in existence under the 2010. [00:36:53] Speaker 05: Previous SILs were not [00:36:56] Speaker 05: The word S in CIL did not mean statistically insignificant. [00:37:01] Speaker 05: Statistically significant. [00:37:02] Speaker 03: This is the first instance in which specifically EBA used an approach based on statistical insignificance. [00:37:09] Speaker 05: So just if you can help me with this. [00:37:12] Speaker 05: So how does the CIL apply in a circumstance where you're close to the increment already? [00:37:27] Speaker 05: you're close to the NAC and the implement already. [00:37:31] Speaker 05: Are you saying that? [00:37:31] Speaker 03: I think it would work in the same way initially, because the point of the analysis and what you've been suggesting is that you're learning something about whether this source can be said to cause or contribute to anything. [00:37:47] Speaker 03: And that conclusion may hold whether the background [00:37:56] Speaker 03: air quality concentrations are lower or higher, because the question you're trying to answer isn't, what's the quality of the air in this area? [00:38:03] Speaker 03: The question you're trying to answer is, what is this source doing? [00:38:06] Speaker 03: What is it going to cause or contribute? [00:38:09] Speaker 03: The terms imply some causality. [00:38:11] Speaker 03: So this is an attempt using the concept of data that's statistically insignificant. [00:38:18] Speaker 05: What is EPA's position if there are 10 new construction projects proposed? [00:38:23] Speaker 03: I don't think this guidance does not give a concrete and binding answer as to what you do when there are 10. [00:38:30] Speaker 03: It does leave it to the permitting authority to make a decision to look at what information is available on the record. [00:38:37] Speaker 05: Is it a recommendation if it doesn't meet the SIL, that would be sufficient? [00:38:45] Speaker 03: I don't think we can say. [00:38:47] Speaker 03: EPA has recommended an approach while making clear that there are maybe case-by-case circumstances where other information has to be included. [00:39:00] Speaker 06: You know, what does that mean? [00:39:02] Speaker 06: It means you're not telling us what the standard is. [00:39:05] Speaker 06: And of course, we decide each case by case by case. [00:39:08] Speaker 06: But the question is not what the inclination is. [00:39:11] Speaker 06: The question is, what's standard supply? [00:39:13] Speaker 06: What's standard supply when the situation is, as Chief Judge Garland just described it? [00:39:20] Speaker 06: What are the standards? [00:39:20] Speaker 06: How do you determine whether to use a SILL or not? [00:39:25] Speaker 03: Well, and again, I think you can [00:39:29] Speaker 03: the question isn't only you can use a SIL and you can still also consider other information in the record. [00:39:35] Speaker 03: And if it's in the record, you have to consider it if it's relevant. [00:39:39] Speaker 03: So I don't know that it's in either or. [00:39:42] Speaker 03: A permitting authority may use these SILs, but when there are permit applications in which there is evidence of the type you're talking about, such as a large number of other [00:39:54] Speaker 03: geographically proximate sources, if that's the right word. [00:39:58] Speaker 03: They may be looking at that as well and making a decision whether in that case it still makes sense to grant the permit solely based on finding that. [00:40:07] Speaker 06: How predictive have these models been? [00:40:12] Speaker 03: The models are used for multiple air regulatory programs, not just this one. [00:40:20] Speaker 03: And this particular analysis, the statistical analysis, was peer reviewed here. [00:40:24] Speaker 03: And EPA responded to the peer review comments and made adjustments as appropriate. [00:40:29] Speaker 03: Are they perfect? [00:40:30] Speaker 03: I don't think I could ever say that. [00:40:32] Speaker 03: You said what? [00:40:33] Speaker 03: I don't think I could ever say that any model is perfect. [00:40:36] Speaker 03: So there's always going to be some degree of uncertainty. [00:40:37] Speaker 03: Some are better than others. [00:40:38] Speaker 03: Right. [00:40:39] Speaker 03: And of course, [00:40:41] Speaker 03: One of the things the PSD statutory provisions do is requiring the VA every three years to convene reviews of its modeling with the public. [00:40:50] Speaker 03: So there is an ongoing process of improving and refining them as we go. [00:40:56] Speaker 03: Many years ago it wasn't possible to model the precursor emissions to PM2.5 and ozone, now it is. [00:41:05] Speaker 05: I can get that this is all done based on analysis of national ambient air quality, correct? [00:41:11] Speaker 05: That's correct. [00:41:12] Speaker 05: How's that consistent with E1 and E2? [00:41:17] Speaker 05: E1 and E2, which talk about at the proposed site. [00:41:25] Speaker 03: The proposed source still has to collect ambient air quality monitoring data, and that doesn't change based on this guidance. [00:41:36] Speaker 03: So in that sense, you are looking at local atmospheric conditions as well. [00:41:44] Speaker 05: But the modeling doesn't have to be done using the source at the site? [00:41:49] Speaker 05: because apparently that's not what you're doing. [00:41:51] Speaker 05: You're using a national SIL, right? [00:41:52] Speaker 03: The SIL value was determined using, looking at air quality variability nationwide, but a proposed PSD source applying for a permit is going to have to gather air quality monitoring information local. [00:42:10] Speaker 03: All right, okay. [00:42:10] Speaker 03: We have a question? [00:42:13] Speaker 03: At your arms. [00:42:18] Speaker 05: Soon there's no remaining time. [00:42:22] Speaker 05: You can take two minutes. [00:42:27] Speaker 00: Thank you, Your Honor. [00:42:28] Speaker 00: I'll try to be very brief. [00:42:31] Speaker 00: First, with respect to the question Your Honor was just asking about 7475E, I'd refer Your Honor to the Sierra Club case from 2013. [00:42:39] Speaker 00: It explains that that monitoring must be done for purposes [00:42:44] Speaker 00: of the analysis under 7475A. [00:42:47] Speaker 00: If I understand EPA's position now, it's that sources still have to do that monitoring, but they can still conclude completely ignoring that monitoring that a source won't cause or contribute to a violation. [00:42:59] Speaker 00: Which gets me to my next point, which is that when EPA says that SILs suffice in most cases, [00:43:06] Speaker 00: I read that as a concession that they don't actually show there won't be a cause or a contribution from the source. [00:43:15] Speaker 00: This really isn't an issue of statistical significance. [00:43:18] Speaker 00: What they've done is they've imported the variability approach from that body of statistics, but we know from the modeling that these sources will cause or contribute. [00:43:28] Speaker 00: And it's just that cause or contribution will just add to whatever variability is going on already in the region. [00:43:35] Speaker 00: It's just more cause to be concerned. [00:43:38] Speaker 00: There's really no question. [00:43:39] Speaker 06: And again, if instead of Sierra Club, the states had brought in action here complaining about the guidance document, what would the legal analysis be of whether it was final? [00:43:52] Speaker 06: It would be the same, Your Honor. [00:43:55] Speaker 06: Well, I wonder about that. [00:43:56] Speaker 06: Isn't the answer to the states? [00:43:58] Speaker 06: What are you complaining about? [00:44:00] Speaker 06: You're not required to follow this. [00:44:02] Speaker 06: So there's no case of controversy here. [00:44:06] Speaker 00: Well, actually, your honor, that's not quite right, because a lot of this pollution travels, and so you might have one state that recognizes this problem would lead to violations, and a neighboring state could use sills, authorize permits that actually cause or contribute to violations in the plaintiff's state. [00:44:23] Speaker 00: So I agree it's an issue here for us. [00:44:25] Speaker 06: Are you talking about the ozone transport region? [00:44:28] Speaker 00: Well, ozone does travel, yes, Your Honor, and so does PM. [00:44:32] Speaker 00: But I agree with Your Honor that it is even more concerning for us as plaintiffs, because as regulatory beneficiaries here, we have even less say in this process, and both EPA and states are authorizing permits under this guidance, which [00:44:49] Speaker 00: emit pollution that harms our members. [00:44:51] Speaker 06: Well, the states have a very distinct interest, because if they get in violation of the NACs, then all kinds of restrictions begin to apply to them that would not otherwise apply. [00:45:05] Speaker 00: That's right, Your Honor, but I believe that's just a separate issue. [00:45:10] Speaker 00: The interveners made a point about how there's these incentives for states to use their SIP to worry about these violations. [00:45:18] Speaker 00: And the Sierra Club case from 2013 forecloses that, as does the Alabama Power case, which told very clearly that this pre-construction permitting program under 7475A3 is the central mechanism in the act to prevent and avoid violations of the standards. [00:45:37] Speaker 00: Thank you, Your Honors. [00:45:38] Speaker 05: Can you just say, I'm sorry, I'm still not completely following the government's response with respect to what happens if the SIL is near the increment or if it's used up some of the increment. [00:45:51] Speaker 00: Sure. [00:45:52] Speaker 05: That issue and the cumulative effect either with respect to existing construction or new construction. [00:46:02] Speaker 00: I would refer your honor to J11, where EPA says that EPA's intention with this new method was to derive soil values that are more universally applicable to a range of conditions, including those where a substantial portion of the NACS or PSD increment is known to be consumed. [00:46:19] Speaker 00: And as Your Honor pointed out, there is no safety valve in here for when on this case-by-case approach. [00:46:26] Speaker 05: I'm sorry, that JA11? [00:46:28] Speaker 00: Yes, in the second paragraph under analytical foundation. [00:46:32] Speaker 00: It's the second to last sentence in that paragraph, Your Honor. [00:46:37] Speaker 00: Got it. [00:46:37] Speaker 00: Thank you. [00:46:38] Speaker 00: Go ahead. [00:46:38] Speaker 00: I would also refer your honor to EPA's legal memorandum because the real issue in this case is that EPA's legal approach determines that permitting authorities can deem a source not to cause or contribute to a violation even when it does. [00:46:56] Speaker 00: That is the crux of it, is that they can now, under this culpability analysis, grant a permit even though a source [00:47:04] Speaker 00: causes a violation, is the but for cause of a violation. [00:47:06] Speaker 00: And whether or not they have some loose discretion to, you know, on a whim not do that, this guidance authorizes them to grant those permits unequivocally. [00:47:18] Speaker 00: That is unlawful. [00:47:21] Speaker 00: Thank you. [00:47:22] Speaker 00: We'll take the matter under submission. [00:47:23] Speaker 00: Appreciate it. [00:47:23] Speaker 00: Thank you.