[00:00:01] Speaker 00:
Case number 18-1114, State of California by and through its Governor Edmund G. Brown Jr., Attorney General Xavier Becerra, and California Air Resources Board at L Petitioners, versus Environmental Protection Agency at L. Mr. Zach for State Petitioners.

[00:00:19] Speaker 00:
Mr. Donahue for PIO Petitioners.

[00:00:21] Speaker 00:
Mr. Hostetler for Respondents, and Ms.

[00:00:24] Speaker 00:
Murphy for the Interveners.

[00:00:28] Speaker 08:
Good morning.

[00:00:29] Speaker 00:
Good morning.

[00:00:30] Speaker 08:
May I please the court?

[00:00:31] Speaker 08:
I'm David Zaft, representing the state petitioners in these matters.

[00:00:37] Speaker 08:
I wanted to call out two people with me at council table.

[00:00:40] Speaker 08:
Sean Donahue, who's representing the Public Interest Organization petitioners and with whom I'll be splitting the petitioners' time.

[00:00:47] Speaker 08:
I also wanted to introduce Robert Wyman, who is one of the attorneys representing the industry petitioners in these cases.

[00:00:55] Speaker 08:
The industry petitioners are wholly aligned in this

[00:00:58] Speaker 08:
in these cases with the state petitioners and the public interest organization petitioners.

[00:01:03] Speaker 08:
Mr. Wyman has not asked for any time this morning, but I wanted to make his presence known to the court, and he is fully prepared and available should the court wish to ask any questions specific to the industry of petitioners, please.

[00:01:17] Speaker 05:
And how are you and Mr. Donahue going to divide the issues?

[00:01:22] Speaker 08:
We haven't divided the issues, Your Honor, although

[00:01:26] Speaker 08:
There is – I can explain when we get into it, but there's one area where I think Mr. Donahue especially wants to focus, which has to do with the withdrawal of the final determination.

[00:01:40] Speaker 08:
So – and I'd like to reserve four minutes for rebuttal.

[00:01:44] Speaker 08:
EPA's revised final determination was blatantly unlawful and causes serious harms that can only be redressed by vacatur.

[00:01:52] Speaker 08:
based wholly on a threadbare record that had never been publicly disclosed.

[00:01:57] Speaker 08:
EPA withdrew its original 2017 final determination and put in its place the agency's formal affirmative determination that the standards for model years 2022 to 2025 are not appropriate under the Clean Air Act based on EPA's conclusions that they are too stringent and too costly.

[00:02:17] Speaker 08:
EPA did this while ignoring thousands of pages of its own records and its prior detailed findings and analysis that rested on a careful synthesis of years of peer-reviewed science, original research conducted by the agency, contributions from the experts at the California Air Resources Board, input from every major automaker, and multiple rounds of public comment.

[00:02:40] Speaker 08:
That action defied the core universally agreed-to function for the midterm evaluation process.

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That whatever may happen, EPA's determination whether to maintain or to change the emission standards would be based upon a single rigorous and publicly shared body of technical evidence and public comment on that record from all of the stakeholders.

[00:03:03] Speaker 08:
Those commitments were codified at Section 12H.

[00:03:08] Speaker 08:
The requirements contained in that regulation were a critical precondition for the stakeholders, including the state of California, to sign on to the agreement to extend the national program.

[00:03:20] Speaker 08:
The revised determination does not come anywhere close to satisfying EPA's commitments or the important procedural and substantive requirements that EPA adopted in Section 12-H.

[00:03:32] Speaker 08:
It also has caused real harms.

[00:03:34] Speaker 08:
The revised determination.

[00:03:36] Speaker 04:
Excuse me, you might be going there at some point, but can you start with the question of finality?

[00:03:41] Speaker 08:
Yes, Your Honor, I'd be happy to.

[00:03:43] Speaker 08:
Starting with the first prong, I think it's indisputable that the revised final determination marks the consummation of the midterm evaluation.

[00:03:53] Speaker 08:
And EPA stated as much when it issued the determination and said that this notice concludes the midterm evaluation under Section 12H.

[00:04:02] Speaker 04:
So I guess we can assume, let's just assume that the denominator is just the determination part of it, and so you get past the first prong.

[00:04:10] Speaker 04:
Just assume it.

[00:04:12] Speaker 04:
Then for purpose of the second prong, I guess my first question is, how does the legal consequence that ensues from the undoing of the determination and the institution of a new determination differ from what happens in the context of the notice of proposed rulemaking?

[00:04:28] Speaker 04:
Because we know that an NPRM under our decisions doesn't count as final agency action.

[00:04:34] Speaker 08:
Well, here what is very different is that the agency has announced its policy.

[00:04:39] Speaker 08:
It's made a formal finding that the standards are not appropriate.

[00:04:47] Speaker 08:
the Clean Air Act, and under the endangerment finding, and under Section 12H, the agency now is required to take action to put in place appropriate standards or standards it believes are appropriate.

[00:05:01] Speaker 08:
So it necessarily now, following from the revised determination, has to take action to change the standards.

[00:05:06] Speaker 08:
Of course, it still retains the standards.

[00:05:08] Speaker 04:
But the standards, it doesn't have to take, it doesn't necessarily have to take action to change the standards, right?

[00:05:12] Speaker 04:
It can take an action under which the existing standards remain in effect.

[00:05:16] Speaker 04:
and they are in effect.

[00:05:17] Speaker 04:
If nothing happens from now on, those standards continue to govern, as I understand it, or is that?

[00:05:22] Speaker 08:
Well, I think the agency would be in quite an awkward and untenable position if it took no action at this point.

[00:05:28] Speaker 08:
It has come out, following this extensive review process, it's issued a formal finding that the standards that it's required to promulgate under Section 202 of the Clean Air Act, it's required to prescribe these standards, it's required to enforce them.

[00:05:43] Speaker 08:
Now it has said those standards are

[00:05:46] Speaker 08:
are not appropriate under the Clean Air Act.

[00:05:48] Speaker 08:
And I think it would be untenable for the agency to just allow the standards to remain given that finding.

[00:05:54] Speaker 05:
Actually, in the notice of proposed rulemaking, they said they were inappropriate and unreasonable.

[00:05:59] Speaker 08:
Yes.

[00:05:59] Speaker 05:
So that's EPA's position going into the rulemaking.

[00:06:04] Speaker 05:
That's their policy.

[00:06:04] Speaker 05:
And the only question is, I know there are cases out there that you cite that say when an agency reaches some determination, it's

[00:06:11] Speaker 05:
follow through in a regulatory fashion has to be consistent with its determination.

[00:06:17] Speaker 05:
The government argues, well, this is a 202A rehearing, as it were, and the agency has retained total discretion.

[00:06:27] Speaker 08:
I think the agency's actions have to comply with the law, and part of that body of law right now is Section 12H, which the agency has never repealed.

[00:06:37] Speaker 08:
The agency, in their papers, I think, are artfully suggesting that they have total discretion to do

[00:06:43] Speaker 08:
anything and to take any action, but they must be consistent with Section 12-H.

[00:06:48] Speaker 08:
They can always change their mind.

[00:06:50] Speaker 08:
Agencies always have the ability to do that, but that does not, the cases are well established, that does not destroy finality in this case.

[00:07:00] Speaker 04:
where the agency says, suppose there's an existing fabric of regulations on the books, and then the agency says, we're noticing a proposed rulemaking, and the reason we're noticing a proposed rulemaking is because we have serious reservations about whether continuation of the existing regulations is appropriate.

[00:07:16] Speaker 04:
And it's just some other agency, they don't have this special 12-H procedure.

[00:07:19] Speaker 04:
And in connection with the announcement of the NPRM, that's the way they describe why they're issuing the NPRM, and they're asking all stakeholders to chime in to determine whether continuation is appropriate.

[00:07:28] Speaker 04:
It seems to me in that situation, a lot of the same things you said are true, which is that the agency will have been on record as saying, boy, we got some serious questions about this.

[00:07:37] Speaker 04:
We're issuing a notice of proposed rulemaking with an eye towards presumably changing these.

[00:07:41] Speaker 04:
But our cases say that in that context, there's no finality.

[00:07:45] Speaker 08:
I think the agency has taken a much more definitive stance.

[00:07:48] Speaker 08:
It's issued a formal finding that is now on its books that followed an extensive, you know, procedurally detailed and highly substantive process that was set up to accomplish this by a date certain.

[00:07:59] Speaker 08:
It's announced that finding.

[00:08:01] Speaker 08:
It's much different than saying we have reservations and we're interested in stakeholder input.

[00:08:05] Speaker 08:
Of course, in the rulemaking process, it will get additional information, but if it is going to change course, it will have to explain itself and

[00:08:13] Speaker 08:
presumably, issue a new determination saying that, look, we've looked at all this and here are all the reasons why we've changed our mind again.

[00:08:20] Speaker 08:
So I think it's very different than a notice of proposed rulemaking.

[00:08:24] Speaker 08:
Here we have what EPA characterizes as an adjudicatory process, that it is now completed and it's issued a formal finding.

[00:08:31] Speaker 08:
It has, I think, fundamentally changed the legal environment.

[00:08:34] Speaker 07:
Can you specify how it's changed the legal environment?

[00:08:39] Speaker 07:
The briefing on behalf of the government and the interveners is actually we're open to keeping the old rule.

[00:08:47] Speaker 07:
And they also are somewhat candid about the not thorough character of the revised determination.

[00:08:59] Speaker 07:
We need to look further into some of these things.

[00:09:02] Speaker 07:
So what is the legal

[00:09:05] Speaker 07:
a fact of the determination as distinct from the pending rulemaking?

[00:09:13] Speaker 07:
You say it takes off of the table, keeping the rule as it is.

[00:09:20] Speaker 08:
Yes.

[00:09:20] Speaker 08:
Or the agency would have to do some work to explain a new position that it adopts.

[00:09:27] Speaker 08:
First of all, I want to say, and I will

[00:09:31] Speaker 08:
EPA has been, I think, quite artful in their brief, saying they have all options open here, and that this whole process and the result really mean nothing.

[00:09:40] Speaker 08:
And I just want to say that's fundamentally at odds with the fact that while they had all of this claimed uncertainty, they nevertheless took this step, which is a legal step in the process.

[00:09:50] Speaker 08:
It concluded the determination.

[00:09:52] Speaker 05:
So I just wanted to... Let me be clear on your argument.

[00:09:55] Speaker 05:
You're saying that the agency, notwithstanding

[00:09:59] Speaker 05:
It's 2018 determination.

[00:10:05] Speaker 05:
In the rulemaking, can completely reverse that determination?

[00:10:12] Speaker 08:
I think it would take a lot of work.

[00:10:14] Speaker 05:
But you are saying it could do it.

[00:10:16] Speaker 05:
In other words, if it explained itself and dealt with everything that was in 2017 and the record and all that sort of stuff.

[00:10:24] Speaker 08:
I could imagine, Your Honor, hypotheticals where unforeseen developments would lead the agency to change course or to alter its course.

[00:10:35] Speaker 05:
But at least in the proposed rulemaking and the documents that it has

[00:10:39] Speaker 05:
put forward, it hasn't given any hint of that.

[00:10:43] Speaker 08:
No, Your Honor.

[00:10:43] Speaker 05:
Or that it would possibly leave the 2012 standards in effect.

[00:10:52] Speaker 05:
So we don't have that yet.

[00:10:55] Speaker 08:
That's right, Your Honor.

[00:10:55] Speaker 05:
But the government's argument is legally, since it's a 202A proceeding, the agency returns discretion.

[00:11:04] Speaker 05:
And therefore, there is no final agency action.

[00:11:08] Speaker 08:
We disagree with that.

[00:11:10] Speaker 05:
Right.

[00:11:10] Speaker 05:
And I want to pin down specifically what the legal consequences are of what the agency did in the 2018 determination.

[00:11:21] Speaker 08:
Yes.

[00:11:23] Speaker 08:
So first of all, it affects the petitioners in numerous ways.

[00:11:30] Speaker 08:
And I'll give a few examples.

[00:11:33] Speaker 08:
Many of the states have legal mandates or policy goals regarding the amount of greenhouse gas reduction that they must achieve by a certain date.

[00:11:43] Speaker 05:
So I want to pin that down.

[00:11:44] Speaker 05:
As I understand from reading some of the declarations, the states are concerned about the commitments that are in their state implementation plans.

[00:11:54] Speaker 05:
where in order to attain certain national air quality standards, they must reduce certain types of hazardous emissions.

[00:12:05] Speaker 05:
to a certain extent by a certain date.

[00:12:08] Speaker 05:
That's number one.

[00:12:09] Speaker 05:
Number two, they're concerned that given section 177 and the two-year lead time that must be provided, at least for the vehicle year 2022, as soon as EPA issued its 2018 determination, the states had to act

[00:12:35] Speaker 05:
I get those two reasons.

[00:12:36] Speaker 05:
Is there something more the states had to do?

[00:12:39] Speaker 08:
Well, the states also – so the states also have their own requirements.

[00:12:44] Speaker 08:
Some of them are mandated within the state – for instance, the state of California – to achieve certain greenhouse gas reductions by a certain date, and the national program standards provided

[00:12:55] Speaker 08:
a certain amount of those reductions of greenhouse gas emissions and changes to the standards that we believe are now going to come as a result of the revised determination.

[00:13:04] Speaker 05:
I'm trying to address sort of the clapper point that these weren't just voluntary actions by the states.

[00:13:11] Speaker 05:
It wasn't simply a matter of state law.

[00:13:15] Speaker 08:
Well, first of all, you mentioned the six.

[00:13:17] Speaker 08:
But I do want to take issue with the Clapper Point, because one could see, for instance, under Bennett v. Spear, the biological opinion that was issued by the Fish and Wildlife Service, it didn't require the petitioners, who were water purchasers, to do anything.

[00:13:33] Speaker 08:
But nevertheless, it affected in practical and legal ways by

[00:13:38] Speaker 08:
directing another agency to maintain minimum water levels, at some point in the future, those water purchasers were going to be affected.

[00:13:45] Speaker 08:
And the states are similarly situated because we have to achieve certain greenhouse gas reductions by a certain date.

[00:13:52] Speaker 08:
We were receiving those reductions through the national program, and now we will be receiving fewer of those reductions in the future.

[00:13:59] Speaker 04:
So I think that's the scenario.

[00:13:59] Speaker 04:
You don't know that.

[00:14:01] Speaker 04:
I'm sorry?

[00:14:04] Speaker 04:
that assumes that things will change, right?

[00:14:05] Speaker 04:
Because as it stands now, correct me if this is wrong, as it stands now, notwithstanding the determination that said that the standards are no longer appropriate, and I take your point that that's what the determination says.

[00:14:18] Speaker 04:
the underlying emission standards are on the books.

[00:14:22] Speaker 04:
And they remain on the books.

[00:14:23] Speaker 04:
And it's going to take a conclusion of the ongoing rulemaking that undoes those in order for those to no longer be on the books.

[00:14:30] Speaker 04:
Now, I'd also take your point that things are headed in that direction.

[00:14:35] Speaker 04:
And as a practical matter, everybody has to adjust to that reality.

[00:14:38] Speaker 04:
I take that point.

[00:14:39] Speaker 04:
But that's also true in an NPRM context, that you can have that kind of practical

[00:14:43] Speaker 04:
prediction that something's going to happen and then we're talking about percentage likelihood.

[00:14:47] Speaker 04:
But I'm just saying, is it not true that the emission standards that were announced in 2012 are on the books and they will remain on the books unless and until the ongoing rulemaking results in a final rulemaking that undoes them?

[00:15:02] Speaker 08:
To your specific question, yes.

[00:15:04] Speaker 08:
But let me explain why this is different than the NPRM context.

[00:15:08] Speaker 08:
So everybody in 2012, EPA brought everybody to the table and said, we're going to have this review process.

[00:15:14] Speaker 08:
We're going to set this up.

[00:15:15] Speaker 08:
We want you all to join in.

[00:15:17] Speaker 08:
There should be no fighting about the standards that we're going to establish.

[00:15:21] Speaker 08:
And everybody signed on to that, and they signed on to this midterm evaluation process, which was a critical component for the automakers to have this guaranteed review that would be put in place with a determination by a certain date.

[00:15:35] Speaker 08:
And EPA also

[00:15:38] Speaker 08:
made sure that that process would follow certain requirements, and that was very important to, I believe, all of the stakeholders, that EPA follow this rigorous, technically bounded, transparent process.

[00:15:51] Speaker 08:
And the whole goal of that was to create

[00:15:54] Speaker 08:
record and a determination that were consistent and that would point EPA into a particular direction, but not only that it would Once the determination was issued which I think is what makes us fundamentally different from say the NPRM context EPA now there's just like the Bureau of Reclamation was in some way compelled by the biological opinion and

[00:16:19] Speaker 08:
to maintain minimum water levels.

[00:16:21] Speaker 08:
EPA has now bound itself to a certain course that, sure, it could change its mind, but that doesn't destroy finality.

[00:16:29] Speaker 08:
If it wants to change course, it's going to have to withdraw this existing determination or issue some sort of new determination.

[00:16:36] Speaker 07:
So is it, in terms of the relief that you're seeking from this court, it's limited to

[00:16:45] Speaker 07:
reviewing the determination itself.

[00:16:47] Speaker 07:
So in your view, the legal difference between the determination being in place, the revised determination being in place, and the revised determination being reviewed and potentially invalidated, assume on merits you win and it's invalidated as we must for looking at the threshold questions.

[00:17:05] Speaker 07:
With the revised determination in place, the agency is bound

[00:17:11] Speaker 07:
to reduce the stringency of the standards.

[00:17:14] Speaker 07:
By the terms of the determination, they must be either more or less stringent as appropriate, here less given the determination.

[00:17:24] Speaker 07:
The existing rules have been determined to be not appropriate.

[00:17:28] Speaker 07:
And so your view is if you prevail on this petition, that of

[00:17:33] Speaker 07:
I mean, it's a limited victory because they're still going forward.

[00:17:37] Speaker 07:
They still have rulemaking authority to go forward.

[00:17:40] Speaker 07:
But among the array of options is a non-arbitrary choice to stick with the existing standards.

[00:17:48] Speaker 08:
That's exactly right, Your Honor.

[00:17:49] Speaker 08:
We think a decision here, a favorable decision from this court, would give the agency the opportunity to correct course, and we're not saying what that might mean, but it would have to, the action that it would take regarding its standards, it would have the opportunity to ensure that that was not arbitrary and capricious and unlawful, and takes into account

[00:18:14] Speaker 08:
the record that it assembled over three and a half years and that it put out for public comment and pursue a path that complies with Section 12H.

[00:18:25] Speaker 08:
And so you're right.

[00:18:27] Speaker 08:
We're asking for the court only to review the revised determination in this case for its compliance with Section 12H and whether it's otherwise arbitrary and capricious.

[00:18:38] Speaker 05:
So one of the interesting questions in this case to me is,

[00:18:44] Speaker 05:
Do we have to look at 12-H and what it requires in terms of deciding some of these threshold issues, peaking at the merits as it were, because the way EPA wrote its 2018 determination, it sort of tried to have it both ways.

[00:19:11] Speaker 05:
in saying that it concluded that the 2012 standards were inappropriate.

[00:19:20] Speaker 05:
And now we know from the notice on proposed rulemaking, also unreasonable.

[00:19:26] Speaker 05:
But it said the record as it is currently before us raises concerns that we agree should be addressed.

[00:19:40] Speaker 05:
And we're going to do that in our rulemaking.

[00:19:43] Speaker 05:
So part of your argument is, on the merits, is that's not a 12-H determination.

[00:19:54] Speaker 05:
Because EPA has moved the consideration to the rulemaking, what put the cart before the horse, or something like that.

[00:20:05] Speaker 05:
I get my metaphors wrong, but you get my point.

[00:20:11] Speaker 05:
12H says all of these decisions are supposed to be made before EPA reaches the conclusion whether the 2012 standards are inappropriate.

[00:20:28] Speaker 05:
Get what I'm saying?

[00:20:29] Speaker 05:
Whether there's final agency action or not.

[00:20:32] Speaker 05:
The agency says it has taken final action to the extent it has opened up

[00:20:39] Speaker 05:
this 12-H proceeding reached a conclusion in the 12-H proceeding.

[00:20:47] Speaker 05:
And as 12-H says, if the agency finds the current standards are inappropriate, it should proceed to a rulemaking.

[00:20:58] Speaker 08:
Yes, exactly.

[00:20:59] Speaker 05:
They have been... So we do peek at the merits in looking at these threshold issues?

[00:21:04] Speaker 08:
Well, I think this is an unusual case.

[00:21:09] Speaker 08:
It's a very unusual case.

[00:21:12] Speaker 08:
And I think that's right, because when EPA, when you look at the context of this case, brought all the stakeholders together and said, this is what we are going to do, and then it later abandons Section 12H, I think that in and of itself

[00:21:33] Speaker 08:
satisfies the second prong of Bennett because it's basically deprived the petitioners and also I'll just say the state of California, which signed on to this, of the right that the petitioners have that EPA would fulfill in a way what it said it would do.

[00:21:54] Speaker 04:
I'm not sure about that because I guess

[00:21:58] Speaker 04:
You may have a strong argument that what was laid out in 12-H wasn't complied with, and in some ways I think their finality argument doesn't take issue with that.

[00:22:06] Speaker 04:
They're willing to stipulate to the fact that 12-H was just honored in the breach, but their argument is it's still not a final

[00:22:16] Speaker 04:
determination, final agency action for purposes of jurisdiction.

[00:22:19] Speaker 04:
And on that, there's one thing you said that I just wanted to clarify, make sure I understand your argument.

[00:22:24] Speaker 04:
Were you saying that if the pending rulemaking goes through and against predictions, the pending rulemaking doesn't result in a change of the standards, that still the determination, the latest determination, the rise determination would have to be undone?

[00:22:45] Speaker 08:
I think as part of that or separately, the agency would have to issue a new determination or withdraw its existing determination.

[00:22:51] Speaker 04:
I wasn't aware of that.

[00:22:54] Speaker 04:
I thought, why couldn't the agency just explain in the final rulemaking what it's doing?

[00:23:00] Speaker 04:
I didn't realize that after the midterm evaluation period is done and the pending rulemaking is going on.

[00:23:09] Speaker 04:
that the determination still has some ongoing legal effect such that it doesn't?

[00:23:14] Speaker 04:
Well, it does.

[00:23:14] Speaker 08:
And let me give one example, and I also want to mention Mr. Donahue, I think, is prepared to address some of these questions that you're raising about the ongoing legal effect.

[00:23:23] Speaker 08:
But for instance, the revised – they issued the revised determination.

[00:23:27] Speaker 08:
They said the standards are not appropriate under the Clean Air Act.

[00:23:30] Speaker 08:
Yeah.

[00:23:32] Speaker 08:
I think interveners or their constituent members would be on somewhat – I don't want to concede anything, but they would have a very good argument that EPA, you can't say your standards are not appropriate and then tell us we have to comply with them.

[00:23:48] Speaker 08:
And so they could bring some sort of challenge demanding that EPA take action consistent with this

[00:23:54] Speaker 08:
final determination.

[00:23:55] Speaker 08:
And similarly, if EPA ultimately – and there's no indication that they're going to do this – ultimately were to find that the existing standards remain appropriate despite their determination, I think in the course of explaining themselves, they would also have to, as they did previously, withdraw the determination that they believe it was no longer the appropriate determination.

[00:24:23] Speaker 04:
Let's just take that hypothetical and then assume it's within the field of vision, even though I take your point that you think it's realistically not.

[00:24:29] Speaker 04:
But on that, why did they have to withdraw the determination?

[00:24:33] Speaker 04:
Wouldn't they just explain that the existing standards are the right standards and we're going to institute them for all kinds of reasons?

[00:24:41] Speaker 04:
And then I don't understand, I didn't, I wasn't aware that there's a separate legal step that says, and therefore we need to withdraw the

[00:24:50] Speaker 04:
revised determination.

[00:24:51] Speaker 08:
Well, I think then that you would have a finding from the agency that's fundamentally inconsistent with the action the agency takes.

[00:24:58] Speaker 04:
That would be true.

[00:24:59] Speaker 08:
Now maybe the action at that point, if they adequately explain themselves, maybe it would supersede the existing determination.

[00:25:06] Speaker 07:
So why is it not, I'm sorry, why is it not just a FOX burden, you know, Encino Motors burden that they have to, you know, I mean if it was a notice and comment rule that said those standards are not appropriate,

[00:25:20] Speaker 07:
all they would need to do to supervene that is to say, oh, actually, on further consideration under the current notice and comment rule, we were wrong.

[00:25:29] Speaker 07:
And I gather that your position is that there's something stickier about this set of regulations and this one-time, very robust midterm evaluation and the determination flowing from it

[00:25:46] Speaker 07:
that somehow is different, and I think that's what we're having trouble appreciating.

[00:25:51] Speaker 07:
Why is that?

[00:25:53] Speaker 07:
If the agency has the authority to make rules, including rules that are very different from its prior rules.

[00:26:02] Speaker 08:
Well, first of all, I do think it does create

[00:26:08] Speaker 08:
a consequence as a result of the burden under FOX TV because the agency has reversed its policy.

[00:26:15] Speaker 08:
And in effect, I think what the agency is trying to do is to put a wall between the agency

[00:26:21] Speaker 08:
the three and a half years of work they did in all their findings and analysis, and the step they want to take.

[00:26:27] Speaker 08:
So if the agency, for instance, had just left the original final determination in place, it would have to meet, I think, a higher burden under Fox TV to explain, if it wanted to change the standards, why it was, you know, it would have to confront and grapple with all of the work that it had done.

[00:26:45] Speaker 07:
And I think- I thought you were saying it's still, because in fact, I mean, I knew you characterized this differently, but in fact, the government

[00:26:51] Speaker 07:
didn't say it was setting aside the TAR and the whole record.

[00:26:56] Speaker 07:
They said they were acting on it and then some.

[00:26:59] Speaker 08:
Well, Your Honor, first of all, the record from the midterm evaluation is not in the docket for the rulemaking currently, and the docket is – it is what it is, and there

[00:27:11] Speaker 08:
they're working on their final rule, that record is not in there at all.

[00:27:17] Speaker 08:
Secondly, I think what EPA said was, well, you know, petitioners, you can comment and you can bring these materials as if they were, you know, materials in a library somewhere to our attention.

[00:27:27] Speaker 08:
These were the agency's own analysis and findings from nearly 18 months ago, detailed findings

[00:27:34] Speaker 08:
that were based on extensive technical record.

[00:27:37] Speaker 08:
And I think we submitted a Rule 28J letter showing what one of the other co-authors of the technical assessment report, how it has treated those findings and analysis.

[00:27:48] Speaker 08:
And it basically said, well, we don't have to consider those in the separate rulemaking dealing with the CAFE penalty.

[00:27:54] Speaker 08:
We don't have to consider those because EPA has issued this revised final determination.

[00:27:59] Speaker 08:
The other thing I want to stress here is

[00:28:02] Speaker 08:
We also think the agency has a chance to still act in a lawful manner and do something that's not arbitrary and capricious.

[00:28:11] Speaker 08:
And we think relief here would cause the agency to

[00:28:18] Speaker 08:
modify its course somehow.

[00:28:20] Speaker 08:
We're not predetermining how that might happen, but we'll get to a better regulatory result because the agency will have to do what it has not done at all and confront its own analysis.

[00:28:35] Speaker 05:
All right.

[00:28:35] Speaker 05:
Why don't we hear from counsel?

[00:28:51] Speaker 02:
May it please the court, Sean Donahue for the Public Interest Organization Petitioners.

[00:28:56] Speaker 02:
I'd like to reserve two minutes for rebuttal.

[00:29:00] Speaker 02:
So we submit that the withdrawal of the 2017 final determination was clearly final.

[00:29:07] Speaker 02:
The 2018 revised determination states, even in the caption, and then three times within, we are withdrawing that 2017 determination.

[00:29:16] Speaker 02:
So it's not as if they say we want to add to it.

[00:29:19] Speaker 02:
It remains our findings, but maybe we'll make some other findings.

[00:29:22] Speaker 02:
formally withdrawn.

[00:29:24] Speaker 02:
EPA's briefing, however, totally avoids that.

[00:29:27] Speaker 02:
The word withdrawal, although repeated in the notice and the legal effect of the notice, one of the two big things the notice does, it withdraws this massive determination and findings, and then it replaces it.

[00:29:41] Speaker 02:
But it's unmentioned at any point in any of their briefing or motions in the case.

[00:29:47] Speaker 02:
And that's not surprising, because they have no good answer for how the original determination could be final and have legal consequences, but its rescission in 2018 not have legal consequences for purposes of Bennett-Brong 2.

[00:30:03] Speaker 07:
It also explains... Well, to be fair, they do have an answer, which is if there's no change, that's the end of that midterm evaluation.

[00:30:10] Speaker 07:
If there's a change, they're saying it just opens a process that ends with the completion of the rulemaking.

[00:30:18] Speaker 02:
removed as agency policy the determination and everything supporting it.

[00:30:25] Speaker 02:
And that's why they're fighting this, because if they wanted to assert their sort of independent authority under Section 202 to dual rulemaking, say they said, the last administration did this determination, we want to do something different.

[00:30:40] Speaker 02:
They could have done that.

[00:30:42] Speaker 02:
It would have raised the serious question why they're ignoring this process that was set up for the very purpose of making these highly detailed technical findings about economics and vehicle technology and pollution control technology.

[00:30:55] Speaker 02:
But they could have tried.

[00:30:56] Speaker 02:
But if they had done that, they would have had to confront

[00:30:59] Speaker 02:
the heightened burden under Fox Television and many other cases to explain departures where the prior agency policy was based on detailed factual findings.

[00:31:09] Speaker 02:
That's what this is about at its core.

[00:31:11] Speaker 07:
But don't they have to because that is still the rule on the books, termination or not?

[00:31:16] Speaker 02:
There is a 2012 rule with a preamble and they have to explain changes from that.

[00:31:22] Speaker 02:
What they're trying to do is erase the update, which everybody agreed was critical given the rapidly evolving technology and all that, that occurred in 2017.

[00:31:33] Speaker 02:
They want to just compare their rollback to 2012, and they're withdrawing this massive factual inquiry.

[00:31:43] Speaker 02:
And we think that is clearly final.

[00:31:45] Speaker 04:
And what do you think happens?

[00:31:46] Speaker 04:
So in the ongoing rulemaking process, if the constituents who are on

[00:31:52] Speaker 04:
unsatisfied with where the NPRM exists, brings into play the 2012 underbrush, and then also brings into play the determination that's now been revised.

[00:32:06] Speaker 04:
And then you have all that information before you.

[00:32:09] Speaker 04:
And that was information that is in your arsenal.

[00:32:11] Speaker 02:
Right.

[00:32:12] Speaker 02:
And that's – I'm sorry.

[00:32:14] Speaker 02:
Well, I think you know where I'm going.

[00:32:15] Speaker 02:
And – Why isn't that enough?

[00:32:17] Speaker 02:
Why isn't – I mean, we could cite – we could bring in the entire revised determination and submit it.

[00:32:21] Speaker 02:
And that's sort of what learned counsel on the other side says.

[00:32:23] Speaker 02:
You can always make this an appendix to your rulemaking comments.

[00:32:26] Speaker 02:
And my response is that's a very different thing, as Mr. Zaff noted.

[00:32:30] Speaker 02:
from the agency having to explain its own.

[00:32:32] Speaker 02:
And the court has said this, like you can deny a rulemaking petition.

[00:32:36] Speaker 02:
I've been reminded of the radio and television broadcasters case from some time ago that when the agency commits itself, and this was a major commitment, that the FOX obligation here, this was

[00:32:49] Speaker 02:
very unusual, this is one of the biggest, the midterm evaluation is one of the biggest sort of undertakings EPA as an agency has made in a long time.

[00:32:59] Speaker 02:
It was four years, it was original research, it was reviewing hundreds of peer reviewed studies, there was a National Academies of Science report that EPA analyzed and ultimately agreed with and incorporated in its findings.

[00:33:14] Speaker 02:
So that burden to explain why are you changing your position

[00:33:19] Speaker 02:
is what's at stake here.

[00:33:21] Speaker 02:
That's what they're trying to learn to counsel.

[00:33:24] Speaker 02:
I think there's lots of ways in which one needs to look at what they actually said in the final determination.

[00:33:31] Speaker 02:
I think my friend on the other side has made this look almost accreditable.

[00:33:39] Speaker 02:
curious about potential changes in the world and there's always uncertainties and an agency can always do better at resolving those.

[00:33:47] Speaker 02:
But that's really not what this is about.

[00:33:49] Speaker 02:
If that had been what it was about, you'd see something very different than a blanket withdrawal.

[00:33:54] Speaker 02:
And we think that withdrawal is the clearest and easiest identifiable legal consequence because if

[00:34:05] Speaker 02:
that has been effectively withdrawn, the legal standard going forward, the legal consequences that will flow from that action are very large, because the agency's burden will be different, and all these sort of technical findings from 2017 will have no status.

[00:34:22] Speaker 04:
And just to be clear, the legal consequence you see that ensues from the withdrawal is that now FOX operates against the underlying

[00:34:30] Speaker 04:
emission standards which remain the same, which are still the same, and those are still there, and you have to justify moving from those.

[00:34:39] Speaker 04:
But the EPA wouldn't have to justify moving from the revalidation of those with the additional information that attended

[00:34:46] Speaker 02:
The 2017 determination has been rescinded, has been withdrawn, very clear in the order.

[00:34:53] Speaker 02:
I think this is a case where precisely because my friend is so artful and expert, it's important to apply chennery and look at what they actually said.

[00:35:03] Speaker 02:
And I think this is the one, these petitions for review are our opportunity to challenge that effort to rescind the 2017.

[00:35:13] Speaker 04:
But it's the baseline against which FOX operates in other words.

[00:35:16] Speaker 04:
You're saying it's a different baseline when you're looking at what happened in 2017 as opposed to what happened in 2012.

[00:35:21] Speaker 02:
That's right, and that might sound ephemeral.

[00:35:24] Speaker 02:
It's in the context, I think in any context, of course, appellate courts reverse lower courts all the time because they apply the wrong legal standard, too high a burden, too little.

[00:35:35] Speaker 02:
So maybe it doesn't sound ephemeral, but in this context, it's so important because there's all this technical work that needs to be contended with, that EPA, that's laid out, a fraction of it is laid out in the Joint Appendix.

[00:35:51] Speaker 02:
And I want to also emphasize that the status of the 2017 final determination that has been withdrawn will remain important no matter what happens with the rulemaking because that question of is this EPA's determination will matter if they, for example, do nothing.

[00:36:10] Speaker 02:
They would, I think, at some point face legitimate claims from those seeking weakening of the standards that say, you found these standards are too stringent.

[00:36:24] Speaker 02:
You've got to do something.

[00:36:26] Speaker 02:
And if they finalize the rule with a rollback, this question of whether the 2017 determination

[00:36:35] Speaker 02:
was validly withdrawn is absolutely critical.

[00:36:38] Speaker 02:
And again, under 307B of the Clean Air Act, we had to challenge this within 60 days of April 13th, 2018, when it was issued.

[00:36:48] Speaker 02:
So this court is the proper place to be challenging this withdrawal.

[00:36:55] Speaker 02:
And the relief we're seeking is limited to vacating the 2018 revised determination, which would have the effect because that is the notice that withdraws the 2018 determination of

[00:37:11] Speaker 02:
reviving the 2017 determination, and the UK would then face choices.

[00:37:16] Speaker 02:
It could return and reconsider the midterm evaluation, or they could try to proceed under 202.

[00:37:26] Speaker 02:
But if they did that, they would have to confront their own record.

[00:37:28] Speaker 07:
They could only proceed under 202, at least.

[00:37:31] Speaker 07:
I mean, they've said that they are complying with the midterm evaluation rule, or that they were

[00:37:37] Speaker 07:
And that's why they sought to meet the April 2018 deadline, but they couldn't now because that deadline has passed.

[00:37:43] Speaker 02:
That's right.

[00:37:43] Speaker 07:
Unless they created, amended somehow, or re-promulgated 12-H.

[00:37:49] Speaker 02:
It's not unheard of for EPA to have to do something after a deadline, after getting instructions from a court.

[00:37:57] Speaker 02:
But no matter what they do, this question will be critical of whether they've validly withdrawn their 2017 determination.

[00:38:07] Speaker 02:
Can I quickly jump to something that's slightly unrelated that I think may be helpful on the NPRM comparison?

[00:38:14] Speaker 02:
And that is, first of all, most NPRM cases, the first prong of Bennett provides a very easy answer that an NPRM is not a consummation.

[00:38:23] Speaker 02:
It's nothing like this midterm evaluation that was four years with a final determination by the agency

[00:38:30] Speaker 04:
Yeah, I have to say, I'm not sure I completely understand.

[00:38:33] Speaker 04:
I know our cases say that, but then our cases also go on to say that it doesn't meet PRONG 2 either.

[00:38:38] Speaker 04:
But even as to PRONG 1, you could conceive of the NPRM as the consummation of the NPRM process.

[00:38:42] Speaker 04:
So it's not entirely clear to me.

[00:38:45] Speaker 04:
It becomes a little tautological at some point, but there's still the PRONG 2.

[00:38:49] Speaker 07:
But you were going to address PRONG 1.

[00:38:53] Speaker 02:
In this case, I think I respectfully submit problem one should not be that difficult because it's a four-year process that leads to a final determination that, you know, EPA characterized as such.

[00:39:08] Speaker 02:
They, you know, close the record.

[00:39:10] Speaker 02:
They've started a new proceeding, but that doesn't make the first one.

[00:39:14] Speaker 02:
I think it's conceivable that an NPRM could meet Bennett Prom II if the agency said something, some ad hominem characterization of a private individual in an NPRM that caused them all kinds of grief and was problematic and caused legal consequences, but it wouldn't be final.

[00:39:33] Speaker 02:
I don't think there's anything inherent in the idea of an NPRM that it couldn't meet Prom II.

[00:39:37] Speaker 02:
But that's not what we have here.

[00:39:40] Speaker 02:
And because of this formal withdrawal of a detailed finding that EPA concedes was itself final, we think that's quite different.

[00:39:54] Speaker 02:
If there are no more questions, I'd like to reserve the time that I've already burned through.

[00:39:59] Speaker 02:
Thank you.

[00:39:59] Speaker 05:
Good.

[00:39:59] Speaker 05:
Thank you.

[00:40:01] Speaker 05:
All right.

[00:40:01] Speaker 05:
Council for Respondent.

[00:40:07] Speaker 03:
Good morning.

[00:40:07] Speaker 03:
May it please the court?

[00:40:08] Speaker 03:
My name is Eric Costetler from the Department of Justice, and with me at Council's table today is Mark Cataoka from EPA's Office of General Counsel and Erin Murphy representing the interveners.

[00:40:20] Speaker 03:
Your Honors, I would like to pick up on this discussion of finality and focus on that.

[00:40:25] Speaker 03:
Our position is that these petitions are premature and should be dismissed because

[00:40:30] Speaker 03:
This was not a final action, and that meant neither of the two Bennett prawns.

[00:40:35] Speaker 03:
And candidly, we don't think it's even a particularly close call on the Bennett analysis.

[00:40:39] Speaker 05:
And I'd like to... You write your brief as though the agency... You write your brief as though the agency was proceeding in 2018 in making its determination pursuant to 202A.

[00:40:59] Speaker 05:
when in fact the 2018 determination says it's pursuing, it's addressing this pursuant to 12-H.

[00:41:11] Speaker 03:
That's correct.

[00:41:12] Speaker 05:
So we have to take the agency at what it's saying it's doing.

[00:41:17] Speaker 03:
To be sure, the agency was applying its evaluation rule, Section 12-H.

[00:41:22] Speaker 03:
The point we're making

[00:41:23] Speaker 03:
fundamentally is that the plain text of the evaluation rule dictates that a decision to initiate rulemaking is not a final action.

[00:41:31] Speaker 03:
I mean, the only thing he did.

[00:41:33] Speaker 05:
It doesn't actually say that in the 2012 rule, but I get your point.

[00:41:38] Speaker 05:
But I just want to be clear, because you know as well as I do that there are numerous cases, Supreme Court, our court, other circuits, that to be final, a matter doesn't have to be the final step.

[00:41:53] Speaker 05:
in reaching the ultimate goal.

[00:41:55] Speaker 05:
And so here, as you heard me say, I thought the agency was trying to have it both ways by saying we have done the 12-H process and we have reached these conclusions, but it included in its discussion these statements about we have some concerns and we want to address those in the future in our rulemaking.

[00:42:17] Speaker 03:
Right, and the point I'm trying to make, Your Honor, is that the 12-H process was always intended to be structured so that a decision to initiate rulemaking would not be a final conclusion.

[00:42:28] Speaker 03:
I mean, let's look at the first benefit problem, the consummation problem.

[00:42:31] Speaker 03:
The only thing that is at issue in rule 12-H is, should EPA revise the emission standards for model years 22 to 2025 or not?

[00:42:40] Speaker 03:
And EPA hasn't concluded its deliberations on that issue.

[00:42:43] Speaker 07:
Right, although it has.

[00:42:44] Speaker 07:
It has determined that

[00:42:47] Speaker 07:
that the extant rule is not appropriate, the 2012 rule is not appropriate for the back half of the time and that it therefore will be revised to make it less stringent.

[00:42:59] Speaker 07:
It has made that determination and I'm

[00:43:02] Speaker 03:
I do, Your Honor, because the determination isn't dictate what happens in the rulemaking.

[00:43:09] Speaker 03:
The question assumes that EPA is bound to reach the same result in the determination at the end of rulemaking.

[00:43:15] Speaker 03:
It's not.

[00:43:16] Speaker 03:
All of the options are on the table.

[00:43:17] Speaker 03:
EPA can retain the standards, make them more stringent, make them less stringent.

[00:43:21] Speaker 03:
The determination dictates nothing.

[00:43:24] Speaker 03:
And to say the determination.

[00:43:25] Speaker 07:
But I'm curious, I mean, you heard the discussion with your opposing counsel who says, well, one thing that's at stake is the standard against which the new rule will be judged.

[00:43:37] Speaker 07:
And I mean, another way of putting it is, well, why did EPA go to the trouble of going through, putting itself in the traces of the 12-H process and redetermining

[00:43:50] Speaker 07:
the result of the maternal evaluation rather than just initiate, as is its prerogative, a new rulemaking.

[00:43:57] Speaker 07:
Why would the agency do that if it didn't have any effect?

[00:44:00] Speaker 03:
You're correct, Your Honor, that the agency could have just launched into a rulemaking.

[00:44:04] Speaker 03:
I think the agency did this as a matter of good government and transparency to signal to the public what its current thinking was and entertain another round of comment on it.

[00:44:12] Speaker 05:
But it could have done that easily in a notice in the Federal Register.

[00:44:16] Speaker 05:
agencies do that all the time.

[00:44:18] Speaker 03:
But let me address the standard of review issue, because I think this is important.

[00:44:23] Speaker 04:
The only thing EPA has... Why is it so obvious you could have done that?

[00:44:27] Speaker 04:
Because what's the point of having 12-H on the books if you can just circumvent it by doing something else?

[00:44:36] Speaker 03:
Right.

[00:44:36] Speaker 03:
Nothing in section 12-H

[00:44:40] Speaker 03:
compels, takes away EPA's rulemaking authority under Section 202.

[00:44:44] Speaker 03:
So EPA has always retained rulemaking authority to at any time propose the revision of standards, number one.

[00:44:54] Speaker 03:
But getting back to the issue of standard of review, the only thing that EPA has withdrawn here... So is your point it can just ignore its own regulation?

[00:45:05] Speaker 05:
Because 202A is there?

[00:45:07] Speaker 03:
The point is that the determination to initiate a rulemaking is not a final agency action.

[00:45:15] Speaker 03:
That's the point.

[00:45:16] Speaker 03:
Because EPA has not consummated its deliberative process, nor has it changed rights or obligations.

[00:45:21] Speaker 05:
But that's not how EPA itself phrased its determination.

[00:45:26] Speaker 05:
I know intervenors argue that all this was sort of an invitation to a rulemaking.

[00:45:31] Speaker 05:
That's not the way EPA

[00:45:33] Speaker 05:
phrased what it was doing in 2018 in the determination.

[00:45:39] Speaker 03:
It was a determination, but that begs the question of whether the determination has legal consequences and is final.

[00:45:45] Speaker 03:
And so that's what I'm trying to say, yes.

[00:45:48] Speaker 03:
I mean, EPA in a proposed rule often makes very categorical statements of fact and assertions, but that doesn't mean they are final.

[00:45:56] Speaker 05:
What about the withdrawal of the 2017 determination?

[00:45:58] Speaker 03:
Right, that's what I was trying to get at.

[00:46:00] Speaker 03:
The only thing that's been withdrawn is the decision not to initiate rulemaking.

[00:46:04] Speaker 03:
Now EPA has decided to initiate rulemaking.

[00:46:07] Speaker 03:
The EPA hasn't withdrawn prior technical analyses of the record.

[00:46:11] Speaker 05:
But it says it did.

[00:46:13] Speaker 03:
it withdrew the prior determination not to initiate rulemaking.

[00:46:17] Speaker 03:
That's what's been withdrawn.

[00:46:18] Speaker 05:
But let me say, it didn't say that.

[00:46:20] Speaker 05:
It said we, one, find the 2012 standards are inappropriate, and two, we're also

[00:46:29] Speaker 05:
vacating, withdrawing the 2017 determination period.

[00:46:37] Speaker 03:
Right, but that determination is still there.

[00:46:40] Speaker 03:
It's a matter of public record.

[00:46:41] Speaker 03:
EPA hasn't withdrawn any technical analysis.

[00:46:44] Speaker 05:
So in other words... What did it mean when it said it withdrew the 2017?

[00:46:48] Speaker 03:
It means it reached a new determination.

[00:46:50] Speaker 05:
And what is that?

[00:46:52] Speaker 03:
Previously it determined it was not going to initiate a rulemaking and now it's... You don't think the agency was

[00:46:59] Speaker 05:
trying to avoid its burden?

[00:47:03] Speaker 03:
Yeah, I'm trying to address that.

[00:47:05] Speaker 03:
I've been trying to get to that point.

[00:47:06] Speaker 03:
It was not trying to remove any kind of burden.

[00:47:10] Speaker 03:
That January 2017 determination still stands as a prior final action, just as the 2012 rulemaking was a final action.

[00:47:19] Speaker 03:
stakeholders are perfectly free when and if there's a final rule on judicial review to point to the 2012 rule, to point to the 2017 findings, and make the case that EPA hasn't... You don't think that what Fox operates against changes as a result of the withdrawal of the 2017... No, I don't think this court needs to review a non-final action in order to preserve... No, that's a different question.

[00:47:42] Speaker 04:
That's your finality argument.

[00:47:44] Speaker 04:
I'm just saying that when there's review at the end of the day of what EPA does,

[00:47:49] Speaker 04:
Does the withdrawal of the 2017 determination affect the way Fox operates?

[00:47:55] Speaker 04:
No.

[00:47:56] Speaker 04:
Not at all, you don't think?

[00:47:58] Speaker 03:
No.

[00:47:58] Speaker 03:
It just operates?

[00:48:00] Speaker 04:
It's as if, so for Fox purposes, your view is, can I just finish?

[00:48:03] Speaker 04:
For Fox purposes, your view is the world remains exactly the same as if the 2017 determination were never withdrawn.

[00:48:13] Speaker 03:
in the sense that you're generally comparing final actions to previous final actions.

[00:48:17] Speaker 03:
So in this case, you know, the previous final action you would have would be the 2017 determination when the 2012 rule in the court would be free to look to those and apply Fox.

[00:48:27] Speaker 04:
No, but the 2017 determination, the thing is the 2017 determination was a final action.

[00:48:32] Speaker 03:
Right.

[00:48:33] Speaker 04:
Right.

[00:48:33] Speaker 03:
And so, but then once it's withdrawn, that, I think the point is to be- But not withdrawn in a final way in the sense that EPA hasn't

[00:48:41] Speaker 03:
taken a final action yet.

[00:48:42] Speaker 03:
EPA may retain the standards in this rulemaking, in which case, presumably, all of the petitioners will be happy.

[00:48:50] Speaker 03:
There'll be nothing.

[00:48:52] Speaker 05:
No, but its whole analysis says, in part, we think that the 2017 determination understated the costs

[00:49:04] Speaker 05:
and it talks about some other things it thought were wrong with the 2017 determination.

[00:49:10] Speaker 05:
So when it gets to the final paragraph, it says, we're withdrawing it.

[00:49:17] Speaker 03:
Right.

[00:49:18] Speaker 03:
It is making a new determination, and all of those findings remain preliminary in the sense that EPA hasn't made a final decision as to whether to amend standards or not.

[00:49:29] Speaker 07:
But the way that

[00:49:30] Speaker 07:
I'd be really curious to your response to the petitioner's argument.

[00:49:35] Speaker 07:
The way that the midterm evaluation rule is written, it says that the determination is whether the standards are appropriate or not appropriate.

[00:49:45] Speaker 07:
And if they're not appropriate, the regulation at least pursuant to that scheme is that they shall be made more or less stringent as appropriate.

[00:49:58] Speaker 07:
As appropriate.

[00:49:59] Speaker 07:
less stringent, as appropriate, meaning if the reason that they were held to not be appropriate was that they weren't stringent enough, you're going to have to take it up.

[00:50:07] Speaker 07:
If the reason that they were held to be not appropriate is because they were too demanding, you're going to have to take it down.

[00:50:13] Speaker 07:
And I think there was a point made by environmental petitioners that it's not a tentative proposal.

[00:50:22] Speaker 07:
It's a big deal that was heavily negotiated in the rule that we're going to have one midterm evaluation.

[00:50:28] Speaker 07:
that its rigor is going to be at least as robust as the underlying rule.

[00:50:33] Speaker 07:
And so it makes sense to think that the determination has bite in terms of which direction the ensuing one might go.

[00:50:42] Speaker 03:
I'd like to address that question of what the purpose of this rule was, because I think it's been somewhat mischaracterized by my friends on the other side.

[00:50:50] Speaker 03:
The purpose of the evaluation rule.

[00:50:53] Speaker 03:
Stepping back, in 2012 EPA was setting standards 10 to 13 years in advance and it understood two things.

[00:51:00] Speaker 03:
One, that its technology and cost projections might be off given that long lead time and two, that its sister agency NHTSA hadn't begun promulgating the parallel closely related fuel economy standards for those latter model years because its authority was limited.

[00:51:16] Speaker 03:
as to how many years it could set.

[00:51:19] Speaker 03:
So EPA made a commitment to stakeholders, especially the automobile industry, which requested this, that it would take at least one look by 2018 as whether to initiate a rulemaking to consider new information.

[00:51:32] Speaker 03:
And that was the purpose of the midterm evaluation, to take that look.

[00:51:37] Speaker 05:
But it was... You say especially, and I understand your point, and that's in the record, that the auto industry wanted this midterm evaluation.

[00:51:46] Speaker 05:
But there were others who wanted to be sure that this wasn't just going to be an excuse to lower the standards.

[00:51:52] Speaker 05:
And therefore, 12-H was adopted by the agency.

[00:51:57] Speaker 03:
But that's what I'm trying to get at, Your Honor.

[00:51:59] Speaker 03:
It was never intended as an impediment to the exercise of rulemaking authority.

[00:52:02] Speaker 03:
It was always intended to be a one-way off ramp where

[00:52:07] Speaker 03:
EPA could, it would be a tripwire where someone who wanted a rulemaking might be able to compel EPA to look at new information and commence a rulemaking.

[00:52:15] Speaker 03:
It was never intended as a mechanism whereby

[00:52:17] Speaker 03:
EPA would have to, like, do a rulemaking in advance of a rulemaking.

[00:52:21] Speaker 05:
No, but I think that's why you wrote your brief the way you did, all right, to say this is just a 202A case, and there's no final rule yet, and so there's no final agency action.

[00:52:34] Speaker 05:
And interveners write their brief the same way, as though what was negotiated as part of the 2012 rulemaking, not as an impediment

[00:52:45] Speaker 05:
to a new rulemaking, but that before you cast aside decisions that were reached, and you're free to do that.

[00:52:55] Speaker 05:
No one was saying the agency couldn't do it, but you have to go through a process.

[00:53:01] Speaker 03:
If you look at the preamble to the 2012 rule, it's very clear that EPA envisioned a decision to initiate rulemaking as not being a final agency action and not reviewable.

[00:53:11] Speaker 03:
That in that circumstance,

[00:53:13] Speaker 03:
it would be the final action at the end of rulemaking that would be judicially reviewable.

[00:53:17] Speaker 03:
That was always the intent from the get-go.

[00:53:19] Speaker 03:
It was never intended as a means by which before EPA could even launch into a rulemaking, it would have to make a determination and defend it.

[00:53:30] Speaker 04:
Can I ask about what was intended just with Rule 12-H and what it was supposed to do?

[00:53:35] Speaker 04:
Because it seems to me that 12-H contemplates either the determination that the standards are appropriate

[00:53:42] Speaker 04:
the 2012 standards are appropriate or that they're not.

[00:53:47] Speaker 04:
And just as a matter of ordinary English, suppose I say the following.

[00:53:50] Speaker 04:
I've now taken a look at the 2012 standards.

[00:53:53] Speaker 04:
You know what?

[00:53:53] Speaker 04:
They might be appropriate, they might not be appropriate, and therefore they're not appropriate.

[00:53:58] Speaker 04:
Does that make sense?

[00:54:01] Speaker 03:
Yes, it makes sense.

[00:54:02] Speaker 03:
That makes sense.

[00:54:03] Speaker 04:
I literally say those standards might be appropriate, they might not be appropriate, and therefore they're not appropriate.

[00:54:11] Speaker 03:
I think the point is that

[00:54:15] Speaker 04:
If somebody just said that to you as a matter of ordinary English, what would your response be?

[00:54:20] Speaker 04:
Would you say, oh yeah, totally get it?

[00:54:21] Speaker 04:
Or would you say, I'm completely befuddled.

[00:54:24] Speaker 04:
You've told me they might be appropriate, they might not be appropriate, and therefore they're not appropriate.

[00:54:28] Speaker 03:
If you don't know they're appropriate, then it would make sense to do a rulemaking to examine the issue further.

[00:54:32] Speaker 04:
But then you wouldn't say therefore they're not appropriate.

[00:54:34] Speaker 04:
You'd say, I don't know whether they're appropriate.

[00:54:36] Speaker 04:
And it just seems to me what's happening here over and over in the 11 page document is,

[00:54:44] Speaker 04:
we're supposed to determine, we're gonna start by saying they're not appropriate, and then we're gonna end by saying we're not appropriate, and what we've done in the middle is basically say we don't know whether they're appropriate.

[00:54:52] Speaker 03:
But that's, all right, EPA did conclude they were not appropriate, but that's a snapshot in time.

[00:54:56] Speaker 03:
And you had to.

[00:54:57] Speaker 03:
It's a snapshot in time, and it's not a final determination.

[00:55:00] Speaker 03:
It just flows into a further deliberative process.

[00:55:03] Speaker 07:
But that's just, Ipsy Dixit, you're just asserting that it's not a final determination.

[00:55:07] Speaker 07:
I mean, if that determination is to be reviewed ever, it's now, right?

[00:55:12] Speaker 07:
I mean, when else can it be?

[00:55:13] Speaker 03:
Yeah, no, a determination to initiate rulemaking under this – under this – But that's the notice and comment – that's the notice of opposed rulemaking.

[00:55:20] Speaker 07:
That's the determination to initiate.

[00:55:21] Speaker 03:
This determination, you're correct, is not reviewable because it's not a final agency action.

[00:55:26] Speaker 03:
Ever.

[00:55:26] Speaker 03:
Yeah, absolutely.

[00:55:28] Speaker 03:
It's not like petitioners won't have their day in court to challenge any revision to omission standards.

[00:55:33] Speaker 03:
They will.

[00:55:33] Speaker 00:
They appreciate that.

[00:55:33] Speaker 03:
It's just that that day hasn't arrived yet.

[00:55:36] Speaker 03:
But there's no legal consequence from this determination that's reviewable.

[00:55:41] Speaker 03:
And so that is not a final action.

[00:55:43] Speaker 03:
It's not reviewable.

[00:55:44] Speaker 03:
It will be moot when there's a rulemaking determination.

[00:55:47] Speaker 03:
And indeed, subsequent administrative events have already largely rendered this determination obsolete.

[00:55:54] Speaker 03:
I mean, after this determination,

[00:55:56] Speaker 03:
There was a proposed rule which was based on an evolved administrative record.

[00:55:59] Speaker 03:
We've now had thousands and thousands of comments submitted.

[00:56:03] Speaker 03:
So already the record is way past where EPA was when it made this determination.

[00:56:08] Speaker 03:
It's largely obsolete, and it will be moot completely when there's a final rulemaking action.

[00:56:12] Speaker 07:
When is that anticipated?

[00:56:14] Speaker 07:
I'm sorry.

[00:56:15] Speaker 07:
When is the final rule anticipated?

[00:56:18] Speaker 03:
My understanding, Your Honor, is that it's still anticipated later this calendar year.

[00:56:22] Speaker 03:
It was submitted for interagency review last month.

[00:56:28] Speaker 03:
Yes, Your Honor, did you have a question?

[00:56:31] Speaker 07:
I'm sorry, you were asking about the states.

[00:56:33] Speaker 07:
I did.

[00:56:33] Speaker 07:
You were asking about the states.

[00:56:35] Speaker 03:
If I may, I did want to just make an important point.

[00:56:38] Speaker 05:
Do you want to answer that question?

[00:56:41] Speaker 03:
What was the, I'm sorry, what was the question?

[00:56:42] Speaker 05:
The state's reaction to the 2018 revised determination, given Section 177, and given their commitments in their SIPs,

[00:56:56] Speaker 03:
Right.

[00:56:57] Speaker 03:
Well, the standards haven't been revised yet.

[00:57:00] Speaker 03:
So what they are doing is anticipating a potential action that EPA may take in the future.

[00:57:05] Speaker 05:
Based on EPA signaling where it's headed.

[00:57:09] Speaker 03:
Right.

[00:57:10] Speaker 03:
And in that sense, it would be no different as if EPA had just directly proposed a rule to amend the standards.

[00:57:16] Speaker 03:
That also would have signaled.

[00:57:17] Speaker 05:
Actually, no.

[00:57:17] Speaker 05:
Because we have cases, and even the Supreme Court, saying where the agency has reached a conclusion,

[00:57:24] Speaker 05:
it's supposed to proceed to address the problem it's identified in the conclusion.

[00:57:32] Speaker 03:
Right, but it hasn't reached the final conclusion.

[00:57:34] Speaker 05:
But it doesn't have to be the final point.

[00:57:41] Speaker 05:
That's what I'm trying to get you.

[00:57:42] Speaker 05:
I mean, the Supreme Court has said this.

[00:57:44] Speaker 05:
It's not just the lower court.

[00:57:47] Speaker 03:
The possibility that EPA might amend the standards has always been present.

[00:57:52] Speaker 03:
I mean, even in the January 2000s.

[00:57:54] Speaker 05:
No question about it.

[00:57:55] Speaker 05:
It could have done that, and indeed it had before it not only petitions to reconsider the 2017 determination, but it had petitions for rulemaking.

[00:58:10] Speaker 05:
And it chose to proceed on the former basis.

[00:58:18] Speaker 03:
It – in the interest of good government and transparency, advised the public through this revised midterm evaluation that it intended to change course, yes.

[00:58:26] Speaker 03:
But that did not change the emission standards.

[00:58:29] Speaker 03:
It did not have any legal consequences for any stakeholders.

[00:58:32] Speaker 04:
Can I ask just one concrete question about the way review will come about after – in the event that there's a rule that's adopted?

[00:58:39] Speaker 04:
ultimately that changes things from what 2012 instituted and what 2017 reiterated.

[00:58:48] Speaker 04:
So suppose that the pending rulemaking results in a final rule that changes the status quo.

[00:58:56] Speaker 04:
And then parties seek judicial review of that.

[00:58:59] Speaker 04:
And then part of their argument is,

[00:59:00] Speaker 04:
EPA didn't explain why in the new rule it deviated from all the things that were said in 2017 as to why the 2012 rule, 2012 standards were appropriate.

[00:59:13] Speaker 04:
And then would your answer be, we don't have to actually explain that at all because the thing that happened in 2017 no longer exists.

[00:59:23] Speaker 04:
Or would your answer be, yeah, we have to explain why things changed from 2017 and here's our explanation.

[00:59:29] Speaker 03:
The latter, Your Honor.

[00:59:30] Speaker 03:
I mean, I'm assuming that they've preserved this issue in their rulemaking comments, as they have to do under Section 307, but EPA would have to explain the departure.

[00:59:38] Speaker 04:
From 2017.

[00:59:39] Speaker 03:
Yes.

[00:59:41] Speaker 03:
And I did want to address redressability here, because this is, I think, an important point.

[00:59:45] Speaker 03:
I think it's important to make crystal clear that regardless of

[00:59:49] Speaker 03:
again, what EPA had done in this determination, it would have retained its Section 202 rulemaking authority.

[00:59:55] Speaker 03:
So the rulemaking that is now very far along and advanced and nearing conclusion is not dependent in any respect upon this determination.

[01:00:04] Speaker 03:
And essentially what petitioners are asking for is an advisory opinion because it would have no effect on EPA's rulemaking authority in terms of what's going on with that rulemaking.

[01:00:22] Speaker 03:
Are there further questions I could address regarding any of these issues?

[01:00:27] Speaker 05:
I think we have your position.

[01:00:31] Speaker 03:
Just one other point.

[01:00:32] Speaker 03:
I did want to call attention to that Clean Air Council case because I do think this is remarkably similar to a situation where EPA is acting on a petition for reconsideration or a petition for rulemaking and grants the petition and initiates rulemaking.

[01:00:48] Speaker 03:
It's quite clear that

[01:00:50] Speaker 03:
There are often situations where a denial of a petition for rulemaking would occur, and that would be considered reviewable because it's the end of the decision-making process.

[01:00:59] Speaker 03:
But like Clean Air Council suggests, where EPA initiates rulemaking and makes determinations that rulemaking is required, that's not final.

[01:01:08] Speaker 03:
And that's basically what we have here.

[01:01:10] Speaker 05:
Okay.

[01:01:11] Speaker 05:
Thank you.

[01:01:12] Speaker 03:
Thank you, Your Honors.

[01:01:13] Speaker 05:
We'll hear counsel for interveners.

[01:01:25] Speaker 06:
Good morning.

[01:01:27] Speaker 06:
Good morning, Your Honors, and may it please the court, Erin Murphy on behalf of the interviewees.

[01:01:31] Speaker 06:
The 2018 determination was not final agency action.

[01:01:35] Speaker 06:
It didn't satisfy either of the Bennett prongs because it was the initiation, not the consummation, of a decision-making process, and because it didn't change rights and obligations on the ground.

[01:01:47] Speaker 06:
If I can start with those in reverse order.

[01:01:48] Speaker 06:
I think that the second factor here is particularly clear-cut, and I pick up right where counsel just left off, which is with the Clean Air Counsel case.

[01:01:57] Speaker 06:
as this court made clear in that case and has made clear in many cases.

[01:02:01] Speaker 06:
When an agency decides to grant a petition to reconsider a rule, that is not reviewable final agency action.

[01:02:10] Speaker 06:
The only contexts in which this court will review those kinds of decisions is if the agency takes the additional step of actually changing the law on the ground, holding the rule in abeyance, staying the rule, delaying its effective date,

[01:02:24] Speaker 06:
vacating the rule.

[01:02:26] Speaker 06:
Here the agency did precisely the opposite.

[01:02:28] Speaker 06:
The 2018 determination explicitly says, as had been promised in 2012, that the existing standards remain on the books unless and until there is a new... So typically when an agency grants reconsideration, it doesn't also do something else like withdraw something.

[01:02:46] Speaker 04:
it just grants reconsideration.

[01:02:48] Speaker 04:
It doesn't vacate, it's not like an on-bank, as I understand it, it's not like an on-bank order from a court of appeals where then the decision is vacated while the on-bank proceeding is pending.

[01:02:58] Speaker 04:
And so here the argument that's been made on the other side is this is different because yeah, there's a grant of reconsideration in some sense, but there's also a withdrawal of the determination.

[01:03:06] Speaker 06:
Yeah, and you know, it's a bit of an unusual fact pattern, but I don't think it changes the analysis at all.

[01:03:11] Speaker 06:
I mean, I think what it's equivalent to is if a petition for reconsideration were filed,

[01:03:16] Speaker 06:
and the agency denied it, and then a month or so later said, you know what, we changed our minds and we're going to grant it.

[01:03:22] Speaker 06:
Now, that denial, while it was on the books, would have been final agency action that was reviewable, but the fact that the agency then changes its mind and says, actually, we're going to grant it and we're going to have a rulemaking.

[01:03:33] Speaker 06:
I don't think that somehow then renders what otherwise would clearly be non-final, non-reviewable agency action

[01:03:41] Speaker 06:
reviewable.

[01:03:42] Speaker 06:
It's still just a decision to engage in a rulemaking.

[01:03:46] Speaker 06:
It's the initiation of a rulemaking and decision-making process.

[01:03:50] Speaker 06:
And at the conclusion of that, whoever wants to challenge the rule will be free to make whatever arguments they want to make, consistent with their participation in the process, about the steps along the way and if they think that the agency acted arbitrarily and capriciously in the process or in the way it made different determinations.

[01:04:10] Speaker 06:
as it got to the ultimate conclusion to issue a rule.

[01:04:14] Speaker 06:
But all of that gets at you in the context of a rulemaking.

[01:04:18] Speaker 06:
Those arguments get raised when you have a rule.

[01:04:20] Speaker 06:
They don't get raised along the way.

[01:04:22] Speaker 05:
Do you agree that the withdrawal of the 27 team determination in no way affects the burden that the agency has to explain its action if it decides that it wants to promulgate a final rule changing the 2012 standards?

[01:04:39] Speaker 06:
Yes, I mean, as a legal matter, the agency has the same FOX versus FCC burden, no matter what has happened along the way.

[01:04:47] Speaker 06:
As a practical matter... So you agree.

[01:04:49] Speaker 05:
I just want to be clear about that.

[01:04:50] Speaker 06:
Yes.

[01:04:51] Speaker 06:
I mean, the same standard applies.

[01:04:54] Speaker 05:
So there would be no burden on the petitioners to introduce the 2017 determination underlying

[01:05:03] Speaker 05:
documents on which the agency relied.

[01:05:07] Speaker 06:
Well, I think that folks in participating in this process would have to call to the agency's attention, hey, you've done all these other things and we think you need to explain yourself in light of them.

[01:05:18] Speaker 05:
But that's my point.

[01:05:19] Speaker 05:
Well, I mean...

[01:05:20] Speaker 05:
take that position.

[01:05:21] Speaker 05:
So you're not exactly agreeing with the government.

[01:05:24] Speaker 06:
I actually don't.

[01:05:25] Speaker 06:
Maybe we misunderstood the government's position differently, but I don't think we have any different view here.

[01:05:31] Speaker 06:
I mean, you know, I can't tell you kind of in the abstract without seeing what the agency is going to say as an explanation and without, you know, looking at a whole record of what people brought to its attention and asked the agency to do, whether they will meet a FOX versus FCC burden.

[01:05:46] Speaker 05:
We're talking about the baseline that the agency has to work from.

[01:05:50] Speaker 06:
I don't think that there really kind of is, in the Fox sense, some one and only one baseline that you operate on.

[01:05:57] Speaker 06:
What you look at is the agency's position in its rule.

[01:06:01] Speaker 06:
Is it a departure from past things the agency has said or done?

[01:06:04] Speaker 05:
And if it is the agency... So you're finessing the question.

[01:06:07] Speaker 05:
I'm sorry?

[01:06:07] Speaker 05:
You're finessing the question.

[01:06:09] Speaker 06:
Well, I mean, I'm trying to give an answer that I think is consistent with the way this plays out in the real world.

[01:06:13] Speaker 05:
And the fact is... No, the question was, do you agree with the government's position?

[01:06:17] Speaker 06:
Well, and I'm not sure you and I agree on the government's position, which makes it a little hard for me to answer that.

[01:06:22] Speaker 06:
But what I would say is, you know, look, right now, there are rules in place.

[01:06:27] Speaker 06:
There are existing standards in place on the ground.

[01:06:30] Speaker 06:
And, you know, EPA acknowledges that if it issues a rule,

[01:06:33] Speaker 06:
that changes those standards, and it's going to have to explain that there were standards, and it acknowledges that, and it can't pretend that there never was anything else on the books.

[01:06:43] Speaker 06:
But this notion that EPA did all of this to whitewash the earlier process and eliminate the 2017 determination so that it would change its Fox burden, I think that's just radically inconsistent with what actually happened here.

[01:06:58] Speaker 06:
What happened, if you take a step back, is there had been a commitment that this mid-term evaluation process was going to play out over another year and a half.

[01:07:07] Speaker 06:
during which stakeholders would be able to bring to the agency's attention studies that we had been conducting for quite some time to explain what we thought were flaws in the technical analysis that the agency had done, what we thought were deficiencies in the record.

[01:07:23] Speaker 06:
And they short-circuited that by issuing a final determination in 2017 more than a year in advance.

[01:07:30] Speaker 06:
So they reopened that process.

[01:07:32] Speaker 07:
Did you challenge that?

[01:07:33] Speaker 07:
Because that was final.

[01:07:35] Speaker 06:
We filed a challenge to it.

[01:07:40] Speaker 06:
We didn't need to proceed with that because once the agency withdrew it, it had the effect of not requiring us all to go litigate about a determination that was not anymore going to be the determination that was on the books.

[01:07:54] Speaker 06:
So the notion that the 2017 determination was clearly and always

[01:08:00] Speaker 06:
lawful.

[01:08:00] Speaker 06:
I mean, it never got to the point of judicial review because they decided that they were going to reopen the rulemaking process.

[01:08:09] Speaker 06:
And at the end of that process, everybody's free to say.

[01:08:12] Speaker 06:
They think that it was arbitrary and capricious to change the standards if the EPA changes the standards.

[01:08:18] Speaker 06:
But once the determination was being taken off the books,

[01:08:22] Speaker 06:
We recognize that it would not be a good use of everybody's time and resources to come and litigate about whether EPA complied with its obligations substantively and procedurally in issuing a determination that was not the final law on the books anymore.

[01:08:39] Speaker 06:
The 2012 standards remain in place, but we decided, let's wait for a rule.

[01:08:46] Speaker 06:
And if we have problems with the rule, we'll challenge the rule, just as petitioners can challenge the rule if they have problems with the rule.

[01:08:53] Speaker 06:
But that's the right step at which to air all of the grievances with the process along the way.

[01:08:59] Speaker 04:
Can I ask one follow-up question?

[01:09:02] Speaker 04:
So with your hypo of the denial of reconsideration followed by the grant of reconsideration, so let's just take that one out.

[01:09:09] Speaker 04:
So an agency denies reconsideration, and in the course of denying reconsideration, it has a bunch of explanations as to why it's denying reconsideration.

[01:09:17] Speaker 04:
New substantive stuff that wasn't in the original thing that's the subject of the motion for reconsideration.

[01:09:23] Speaker 04:
So it fortifies the record, and it says, here's some other stuff.

[01:09:26] Speaker 04:
that explains to you why we're denying reconsideration and then later on it grants reconsideration and after granting reconsideration it changes the role.

[01:09:33] Speaker 04:
Yes.

[01:09:33] Speaker 04:
And is your view that when that ultimate thing is challenged and there's a Fox claim that's made that there's no different than what happened here, that it's going to play out exactly the same way?

[01:09:45] Speaker 06:
Yeah, I think so.

[01:09:46] Speaker 06:
I mean, I think basically what happens is, you know, if the parties that are unhappy with the rule want to say, as part of their efforts to challenge it as arbitrary and capricious, which Fox is just, you know, part of the arbitrary and capricious standard, it's not kind of its own separate distinct claim, but if they want to say part of what makes this arbitrary and capricious is that you previously said all of these things on the record and now you're saying something else,

[01:10:11] Speaker 06:
you know, the agency is going to need to respond to that and confront that if that's comments that are brought to the agency's attention during the process.

[01:10:19] Speaker 06:
And here, you know, I'm fairly confident that they're in the more than, I think, 100,000 comments on this are comments that have been made to EPA that say why people think they should keep the existing standards, why people think the 2017 determinations, right?

[01:10:34] Speaker 06:
There's comments

[01:10:35] Speaker 06:
that actually ask EPA to make the standards more stringent.

[01:10:39] Speaker 06:
You know, there's all sorts of comments here.

[01:10:41] Speaker 06:
Everybody has the ability to bring those things to the attention of the agency.

[01:10:45] Speaker 06:
And the right time to determine whether the agency has adequately addressed what people bring to its attention is when we see what the agency has done and what it has offered as an explanation for what it does in the final rule that it issues.

[01:11:00] Speaker 05:
Thank you.

[01:11:00] Speaker 07:
Why is it that your clients have standing but Tesla doesn't?

[01:11:05] Speaker 07:
Or do you not dispute the standing of the

[01:11:09] Speaker 07:
industry actors on the other side.

[01:11:11] Speaker 06:
So, you know, we haven't challenged standing and part of the reason we didn't, I think that there are petitioners here that have alleged what we consider to be adequate Article III injuries.

[01:11:20] Speaker 06:
I will say, as this litigation has played out and it's been clear now what everybody's positions are, it's very hard for me to understand how anyone has

[01:11:30] Speaker 06:
identified an injury that would actually be remedied by the remedy they seek.

[01:11:36] Speaker 06:
Because all of the injuries they've identified seem to require a remedy that would actually create certainty as to what the standards are going to be.

[01:11:44] Speaker 06:
And so I don't really think anybody has, the remedy they've sought here is not going to do that.

[01:11:50] Speaker 06:
They're not binding the agency.

[01:11:52] Speaker 07:
As I heard them today, what they were saying is putting back on the table the option

[01:12:00] Speaker 07:
of retaining the existing standards was what they're fighting for.

[01:12:05] Speaker 07:
And as they read the Rule 12-H record, it really does say if it's not appropriate

[01:12:16] Speaker 07:
then the agency is committing, to the extent that it's within that process, committing to lowering the standard.

[01:12:21] Speaker 06:
And I think the problem with that is it's just not correct.

[01:12:24] Speaker 06:
I mean, what happened in the 12-H determination is the agency determined, as 12-H requires by its actual terms, that on the record before the agency at that time,

[01:12:35] Speaker 06:
It could not determine that the standards were appropriate.

[01:12:37] Speaker 06:
They were not appropriate on that record.

[01:12:40] Speaker 06:
It then said, in light of that, we're going to have a rulemaking.

[01:12:42] Speaker 06:
In that rulemaking, the agency has said what its preferred position is, but it has sought comment on numerous options, one of which is keeping the existing standards.

[01:12:51] Speaker 06:
I mean, that's actually an option that they put on the table.

[01:12:55] Speaker 06:
I want to be very clear.

[01:12:56] Speaker 06:
I'm not going to advocate for that.

[01:12:58] Speaker 06:
That's not what my clients think would be a reasonable approach here in light of the record.

[01:13:03] Speaker 06:
But as a legal matter, the agency has that authority to consider that option.

[01:13:09] Speaker 06:
And so I don't really see how the remedy that they're seeking would have any legal effect.

[01:13:15] Speaker 06:
it seems to, they think, kind of make it seem more atmospherically like the agency has a different legal burden or a slightly more of an explanation needs to provide or something like that.

[01:13:25] Speaker 06:
It's not going to change any rights or obligations on the ground, and it's not going to change the fact that, which is the basis for their Article III injury allegations,

[01:13:35] Speaker 06:
that they still face uncertainty as to what the rule will be.

[01:13:40] Speaker 07:
By the same token, it's really no skin off your client's nose either because it doesn't change anything.

[01:13:45] Speaker 06:
I think the problem is it kind of does create this very odd dynamic in which basically they're trying to bring back to life something that itself

[01:13:55] Speaker 06:
It was final agency action and never was litigated because it didn't need to be because the agency promptly decided we're going to have a rulemaking.

[01:14:07] Speaker 06:
And so they kind of proceed in their arguments on the assumption that everybody already decided that the 2017 determination not only was final agency action but was lawful agency action.

[01:14:20] Speaker 06:
determination never happened and that's why I think it was actually the agency's choice in taking it off and announcing that it was going to reconsider.

[01:14:32] Speaker 05:
We did file a protective appeal.

[01:14:37] Speaker 06:
It's not still pending because once this played out it didn't really need to be pending anymore but I do think it's worth kind of

[01:14:45] Speaker 06:
recognizing in the context of this that the timeline and how it played out is sort of relevant.

[01:14:50] Speaker 05:
Right, thank you very much.

[01:14:52] Speaker 05:
All right, Council for Petitioner States.

[01:14:59] Speaker 08:
Your Honor, a few points and where I'd like to begin is

[01:15:02] Speaker 08:
There's a real fundamental inconsistency between, I think, what my esteemed colleagues on the other side are saying and actually the actions they've taken.

[01:15:12] Speaker 08:
And so Ms.

[01:15:15] Speaker 08:
Murphy just said that the withdrawal did not affect anyone's

[01:15:22] Speaker 08:
rights or obligations and yet when the final determination was issued in 2017 what the Alliance put in their petition for reconsideration is quote for the auto industry the final determination may be the single most important decision EPA has made in recent history so if if they concede that the final determination the 2017 final determination is

[01:15:46] Speaker 08:
was a final action that had legal consequences and that's certainly consistent with that statement, then I don't see how it could be that the withdrawal of that, if the final determination created legal consequences, I don't see how the withdrawal could not also create legal consequences, especially in the context of this case.

[01:16:09] Speaker 04:
That seems like that's equally true of denial of reconsideration followed by granted reconsideration.

[01:16:13] Speaker 04:
Because what a party would say is, this is a huge deal if this stays on the books, and then reconsideration is denied.

[01:16:21] Speaker 04:
It's a really huge deal.

[01:16:23] Speaker 04:
And then it's followed by a granted reconsideration, and you could make the same argument, which is to say,

[01:16:27] Speaker 04:
It's just a grant of reconsideration, and it reverses something that everybody agrees was a big deal, and therefore this must be a big deal too.

[01:16:33] Speaker 04:
But the grant of reconsideration isn't final.

[01:16:35] Speaker 08:
But the 2017 final determination did not alter anyone's rights or obligations in any way.

[01:16:42] Speaker 08:
I mean, I think it does have legal consequences, and it's a final action.

[01:16:47] Speaker 08:
Let me withdraw what I just said and phrase it a little differently.

[01:16:50] Speaker 08:
It did not change the standards.

[01:16:52] Speaker 08:
So it had legal consequences, but the idea that in order to have legal consequences, EPA's action has to have changed the standards, I think, is at odds with the intervener's position that the determination

[01:17:05] Speaker 08:
in 2017 was the most important decision EPA had taken.

[01:17:09] Speaker 07:
Right, and the difficulty is that if you take the framework of the 2012 rule, including the midterm evaluation process, as the universe, then it's momentous what happens at the midterm evaluation.

[01:17:24] Speaker 07:
And when everybody's at the table and playing that game, all the stakeholders are like, we had the midterm evaluation, we had

[01:17:34] Speaker 07:
our say, and whether the rules were more demanding, less demanding, everyone's at the table, then it seems hugely consequential.

[01:17:44] Speaker 07:
But once they say, we are the agency, and we have the ability to play a totally different game, and we're going to do that now, if they're willing to take that hit as a matter of public relations and politics, they can do that.

[01:18:01] Speaker 08:
They have codified their commitments in a regulation that they're bound to follow.

[01:18:07] Speaker 07:
So in setting up the new game, they have to do some new codification, and they're willing to live with that.

[01:18:13] Speaker 08:
Well, and they could have.

[01:18:14] Speaker 08:
They could have repealed or amended Section 12-H, but they did not do that.

[01:18:19] Speaker 08:
They have to live within the requirements that they put into law in the regulation.

[01:18:24] Speaker 07:
Aren't they, in effect, doing that in their new rule?

[01:18:30] Speaker 08:
amending section 12h?

[01:18:32] Speaker 08:
That wasn't in the MPRM.

[01:18:34] Speaker 07:
Or kicking it to the curb?

[01:18:36] Speaker 08:
Well, and that's why we're here, Your Honor, because they're kicking it to the curb.

[01:18:40] Speaker 08:
And that change itself, I would say, is also something that has legal consequences for everyone, including stakeholders, including the automakers, who signed up for this regulatory regime.

[01:18:59] Speaker 08:
This is, again, I think an unusual case, and we have to consider the entire context and understand that EPA bound itself, and it wouldn't make sense to say that EPA could then walk away from those requirements that it put in writing in the regulation and that we could never as

[01:19:18] Speaker 08:
Mr. Haasfetler said, we can't challenge it now.

[01:19:22] Speaker 08:
We can never challenge it.

[01:19:23] Speaker 08:
They committed all of these procedural violations and substantive violations, and he's saying there's just no relief.

[01:19:29] Speaker 08:
The other thing I want to mention along those lines is this was a, as you said, like a momentous effort and an effort that I think we want agencies

[01:19:38] Speaker 08:
to be able to do to have this kind of tool in their toolbox.

[01:19:42] Speaker 08:
But if agencies can simply abandon their existing regulations and requirements and change course, I think it's going to be hard to get a whole host of stakeholders, including one of the largest national industries, several of the states,

[01:19:59] Speaker 08:
industry actors on both sides of the standards together to agree to this sort of procedure.

[01:20:06] Speaker 08:
Agencies have to be held to what they're committed to.

[01:20:10] Speaker 07:
Both Mr. Hossettler and Ms.

[01:20:11] Speaker 07:
Murphy have said, oh, we do have to live with that.

[01:20:15] Speaker 07:
That is a big elephant in the room in which we operate in the new rulemaking.

[01:20:20] Speaker 07:
They've both said that.

[01:20:21] Speaker 07:
It doesn't change the – I mean, they disagree with your position.

[01:20:24] Speaker 07:
They say it doesn't change

[01:20:25] Speaker 07:
the box burden, it doesn't affect the ability to deploy all that information in challenging, in the process of this new rulemaking, challenging the new rulemaking.

[01:20:37] Speaker 08:
Well, but then why didn't they do that in the revised determination?

[01:20:40] Speaker 07:
They acted as if... Tom, they wanted to put people on notice early because lead time is really important.

[01:20:45] Speaker 08:
Your Honor, I'd like to address a couple of things there.

[01:20:47] Speaker 08:
One, they had 13 months, and they issued a total of something like 16 federal register pages.

[01:20:53] Speaker 08:
They had lots of time to do this work, and this is one of the administration's highest priorities when it comes to the environment.

[01:20:59] Speaker 08:
They could have put out additional evidence that they wanted to include in the TAR, put it out for public comment.

[01:21:06] Speaker 08:
They could have complied with Section 12H.

[01:21:08] Speaker 08:
And I submit, Your Honor, that would have been good government.

[01:21:14] Speaker 08:
the other thing and I lost my train of thought for a second, but

[01:21:20] Speaker 08:
I'm gonna, hopefully I'll remember it.

[01:21:22] Speaker 08:
There was one other, there were a couple of other things I wanted to mention.

[01:21:25] Speaker 08:
Mr. Hostetler has proposed on behalf of EPA that this is always supposed to be some sort of bifurcated standard that would apply one way if there was one determination and another way if there was another.

[01:21:36] Speaker 08:
There's nothing like that in section 12H, nor in the preamble.

[01:21:40] Speaker 08:
There is one set of requirements that applies to any determination it makes, and I just want to submit, it would make no sense to set that up because

[01:21:48] Speaker 08:
A different administration could have just said, well, we're not going to release the tar for public comment, and we're going to embark on a rulemaking to strengthen the standards.

[01:21:57] Speaker 08:
And I submit that interviewees would be up here claiming, hey, we have rights under Section 12A.

[01:22:02] Speaker 08:
You can't just do that.

[01:22:04] Speaker 08:
Moreover, the entire process was put in place to have some sort of stability for all of the actors that they could count on, that there would be this process that everybody would follow.

[01:22:14] Speaker 08:
There would be this record that would be a common record that everybody

[01:22:18] Speaker 08:
would be able to comment on or contribute to.

[01:22:20] Speaker 08:
The other issue I want to raise is that there were procedural injuries here that cannot be addressed in a subsequent case down the road.

[01:22:37] Speaker 08:
They need to be addressed now.

[01:22:38] Speaker 08:
In fact, I think all of our injuries really need to be addressed now.

[01:22:42] Speaker 08:
We submitted our petitions within the time provided for

[01:22:48] Speaker 08:
And the idea that we should have just waited and brought these things up in a future proceeding just doesn't make sense.

[01:22:58] Speaker 05:
All right.

[01:23:00] Speaker 05:
Thank you.

[01:23:01] Speaker 05:
All right.

[01:23:01] Speaker 05:
Council for Public Interest Organizations.

[01:23:07] Speaker 02:
I would just suggest that Council for Respondents have suggested that the withdrawal of the 2017 determination

[01:23:14] Speaker 02:
was effectively meaningless for purposes of standard of review, and I would suggest that if that's true, if that's now their position, they shouldn't object to the vacatur of the rescission in 2018.

[01:23:27] Speaker 02:
I think it would be appropriate to take the 2018 Federal Register notice at its word.

[01:23:35] Speaker 02:
I think a heavy dose of Chenery and the bar on sort of post-hoc massaging of agency actions is really warranted here.

[01:23:45] Speaker 02:
The suggestion that the revised final determination was in some sense agnostic about where the standards should go, I don't even think that's – it's necessary to view that determination as committing the agency to a particular reduction in standards, but the suggestion that that's what was going on, I will just note

[01:24:08] Speaker 02:
that the day, at the same time that revised final determination came out, the administrator of the agency on his official Twitter account said that they were taking this action because the standards were too high and needed to be rolled back.

[01:24:21] Speaker 02:
I know that reliance on Twitter is controversial and problematic, and I've been castigated by my learned friend for bringing in something.

[01:24:29] Speaker 02:
It is in the record of this case, but it wasn't in the administrative record, but I think there's a certain

[01:24:34] Speaker 02:
of realism is fair when the agency head is actually reaching out to the public and explaining the agency's actions.

[01:24:45] Speaker 02:
I think the theory spun out today that Fox will come into play in undiminished form is problematic.

[01:24:55] Speaker 02:
I mean, Fox operates on policies that are in effect.

[01:24:58] Speaker 02:
And yes, I think even the concessions that have been made today, which seem very significant, I think they don't distinguish between the agencies reversing its pending policy position

[01:25:11] Speaker 02:
and the underlying findings and simply the obligation to explain someone's comment instead of back in the past you did something else.

[01:25:19] Speaker 02:
There is a duty to respond to comments and to not be arbitrary and capricious, but as Fox and many other cases make clear, it's a very different thing when you're reversing your existing policy.

[01:25:31] Speaker 02:
And finally, I would just suggest that I would note that when questioned about what standard would apply to the review of a final rule and whether the 2017 findings would be something the agency had to respond to in full, with a full Fox burden, I think Mr. Hostetler said something like, it's hard to answer that in the abstract.

[01:25:59] Speaker 02:
We submit that the right thing to do here is vacate this very flawed and final action.

[01:26:06] Speaker 02:
But if there are anything to that idea, the proper action would be to hold this case in abeyance until the question is not abstract.

[01:26:18] Speaker 02:
If there are any further questions, I would like to step down.

[01:26:22] Speaker 02:
Thank you very much, Your Honor.

[01:26:24] Speaker 05:
All right.

[01:26:24] Speaker 05:
Thank you very much.

[01:26:25] Speaker 05:
We'll take the case on Lou Bosman.