[00:00:00] Speaker 00:
Case number 19-1140 et al, American Lung Association and American Public Health Association Petitioners versus Environmental Protection Agency and Andrew Wheeler, Administrator.

[00:00:14] Speaker 08:
Before counsel starts, I'm just going to give you all a heads up that the court will be taking at least one break, if not more, depending how our arguments go during this proceeding.

[00:00:24] Speaker 08:
And when we do do it, we will do it between sort of the

[00:00:27] Speaker 08:
with the four divided issues that we have in this case, okay?

[00:00:33] Speaker 08:
All right, Mr. Wu, you may start.

[00:00:36] Speaker 04:
Thank you.

[00:00:37] Speaker 04:
May it please the court, Stephen Wu representing the state and municipal petitioners.

[00:00:42] Speaker 04:
For this portion on the repeal, I will be sharing time with Kevin Polancars, who represents the power company petitioners.

[00:00:48] Speaker 04:
I'd like to reserve four minutes for rebuttal.

[00:00:51] Speaker 04:
EPA repealed the Clean Power Plan on the ground that Section 111 unambiguously prohibits the agency from considering available emission reductions that can be achieved by power plants on the electric grid, shifting generation from dirtier to cleaner sources.

[00:01:06] Speaker 04:
But nothing in the statute imposes such an unambiguous prohibition.

[00:01:10] Speaker 04:
To the contrary, the statute's use of the phrase best system is broad language that gives EPA flexibility to consider a wide range of methods that would effectively reduce emissions from regulated sources.

[00:01:22] Speaker 04:
And while the statute does impose constraints on EPA, such as requiring that any system it chooses be adequately demonstrated, it does not impose the constraint that EPA claims is unambiguous here.

[00:01:34] Speaker 04:
The breath of that language contrasts with other provisions of the Clean Our Act that use consciously narrower language to talk about the methods that either EPA or sources can consider, emission limitations.

[00:01:47] Speaker 04:
Section 111 itself elsewhere refers to technological systems.

[00:01:54] Speaker 04:
system, and other statutes talk about control technologies, retrofit technologies, and so on.

[00:02:01] Speaker 04:
But Section 111A1 does not use that limiting language.

[00:02:04] Speaker 04:
And what this shows is that when Congress did want EPA to set emission limits based on a more limited subset of methods, it said so expressly.

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And its decision not to do so in A1 is a meaningful one that should be given credence here.

[00:02:21] Speaker 04:
EPA's ability.

[00:02:23] Speaker 08:
Can I just ask one technical question because it didn't seem consistent to me throughout the briefing.

[00:02:29] Speaker 08:
When you use the phrase generation shifting, are you talking about simply using as the grid might shifting from a coal-fired power plant as a source to a gas-fired power plant or a wind or solar-powered one?

[00:02:47] Speaker 08:
Or are you using that as more of an umbrella term that would include things like credit trading?

[00:02:55] Speaker 04:
So, excuse me, generation, it's a little bit of both.

[00:02:59] Speaker 04:
Generation shifting.

[00:03:00] Speaker 08:
That's the problem in the briefing.

[00:03:01] Speaker 08:
Sometimes they're carved out as two distinct things, and sometimes it's used as an umbrella.

[00:03:04] Speaker 08:
So I just want to make sure how you were using it.

[00:03:07] Speaker 04:
Sure.

[00:03:07] Speaker 04:
And let me try to be specific about it.

[00:03:09] Speaker 04:
Generation shifting, I think, is most accurately understood as referring to the physical ability, the natural ability of plants to shift generation among themselves.

[00:03:17] Speaker 04:
things like trading and credit schemes are ways of taking advantage of generation shifting.

[00:03:22] Speaker 04:
Basically, they leverage the ability of sources to engage in such shifts and use something like a trading market to allocate that generation shifting among all the sources on the grid.

[00:03:32] Speaker 04:
But they're not synonymous in the sense that generation shifting can happen without a trading market.

[00:03:37] Speaker 04:
And there are methods that leverage generation shifting, such as investment in cleaner energy, that don't require some sort of market to be set up either by a state or by the federal government.

[00:03:47] Speaker 04:
I think all that's necessary for regulation that takes advantage of generation shifting is for there to be some decision about what power plants do on the grid can be credited to their emission limitations, whether they're imposed by the state or the federal government.

[00:04:02] Speaker 04:
And in terms of the statutory argument here, I mean, the position that EPA previously took, which is that it had the discretion to consider how power plants operate on the grid and shift generation between them, is particularly appropriate given the regulatory stage at which EPA is making this

[00:04:23] Speaker 04:
system determination.

[00:04:25] Speaker 04:
It's the role of EPA in setting the best system, and the states in establishing standards for performance.

[00:04:31] Speaker 08:
For me, at least, you've been freezing up occasionally.

[00:04:36] Speaker 08:
So this is very hard to do, I know, but if you could back up about 30 seconds in your remarks, because I missed something in there.

[00:04:43] Speaker 04:
Yes, I'm sorry.

[00:04:45] Speaker 04:
I have some remote schooling going on in the background.

[00:04:48] Speaker 04:
I've not been able to stop.

[00:04:50] Speaker 08:
Completely understandable.

[00:04:52] Speaker 04:
All right, well, let me rewind.

[00:04:53] Speaker 04:
I'm sorry.

[00:04:57] Speaker 04:
It's the position that you gave previously.

[00:04:59] Speaker 10:
Go ahead.

[00:05:00] Speaker 10:
You were saying, and it was useful, that all that matters is there be some way to credit to plants the limitations that they achieve, which is usefully clarifying.

[00:05:10] Speaker 10:
Because one of the questions I have is, there's a lot of emphasis in some of the briefing and an entire leak is brief of the grid experts devoted to it.

[00:05:22] Speaker 10:
matter that the grid is integrated when at the end of the day, the regulated actors are the ones who are making decisions and are the target necessarily of both federal and state regulatory steps.

[00:05:41] Speaker 10:
So I guess the question is partly why does it matter?

[00:05:43] Speaker 10:
I understand functionally that it's like makes sort of automatic

[00:05:49] Speaker 10:
shifting as a physical matter.

[00:05:51] Speaker 10:
But in terms of, as you say, at the end of the day, one has to take a measure of who's doing what and who's complying.

[00:05:59] Speaker 04:
Well, that's right.

[00:06:00] Speaker 04:
And I think because the Clean Power Plan and other 111 regulations apply to sources at the end of the day by setting emission limits on them, that that does fit squarely within EPA's authority to regulate such sources.

[00:06:14] Speaker 04:
And where the fact of the electric grid features into that scheme is in this way.

[00:06:20] Speaker 04:
What EPA is basically doing is in setting the stringency of those emission limits, looking out in the world and figuring out what is practically and readily available to sources to achieve those limitations.

[00:06:31] Speaker 04:
And I think the answer to that question, which is what is available for sources, is what the power shifting or the generation shifting ability of the grid answers.

[00:06:40] Speaker 04:
What it says is that sources are able to do things that reduce carbon dioxide emissions, not just by doing things on their own plant, by changing their own equipment, but also by engaging in things that the industry has long engaged in, such as trading and other measures

[00:06:54] Speaker 04:
that result in reductions of emissions from elsewhere on the grid.

[00:06:59] Speaker 10:
And the reason why it makes sense that EPA, given what you've just said, that EPA would have the authority to impose a carbon tax on sources on the grid.

[00:07:13] Speaker 04:
Not directly.

[00:07:15] Speaker 04:
What EPA has authority to do is to issue guidelines for 111B sources to do it itself that result in standards of performance for sources, which means emission limitations.

[00:07:27] Speaker 04:
And what we are debating here is what EPA can consider.

[00:07:31] Speaker 04:
when it sets either the guidelines or the emission limitations itself.

[00:07:35] Speaker 04:
In other words, what it can consider in deciding what is feasible for sources on the grid to attain.

[00:07:42] Speaker 04:
I was saying earlier, that range of options is what really is the crux of this debate here.

[00:07:48] Speaker 04:
What EPA did in the Clean Power Plan was to understand correctly as a fact of the world that

[00:07:54] Speaker 04:
Power plants not only can reduce emission in the grid through their own actions within sort of the four corners of their plan, but also by doing things like purchasing allowances when markets allow it, that reflect a reduction of emissions from elsewhere on the grid, and that accomplish the same objectives as a reduction from the source itself.

[00:08:13] Speaker 04:
And I think that point that I just made about the substitution of that emission reduction is another fact that follows from the unique nature of the pollutant.

[00:08:22] Speaker 08:
Substitution or purchasing an allowance on the grid.

[00:08:26] Speaker 08:
Grids cover lots of states.

[00:08:29] Speaker 08:
Are these allowances purchased from someone on the grid that's in state, or are they out of state, then they're not going to help the state accomplish reductions in emissions.

[00:08:40] Speaker 04:
In the Clean Power Plan, the states had the flexibility to set up trading markets, I think, for themselves.

[00:08:46] Speaker 04:
And I forget now, unfortunately, if they had the ability to partner with each other across state lines on a voluntary basis.

[00:08:53] Speaker 04:
But they certainly weren't compelled to do so.

[00:08:56] Speaker 04:
And again, the point of the trading schemes is to allow sources to achieve emission limitations by purchasing these allowances that represent these emission reductions.

[00:09:07] Speaker 04:
It makes sense for carbon dioxide.

[00:09:09] Speaker 10:
Why are you agreeing with the premise of Judge Malik's question that it wouldn't allow a state to attain its or to meet its requirements if it sources purchased credits from out of state?

[00:09:25] Speaker 10:
I'm not sure.

[00:09:25] Speaker 10:
I'm just not sure whether that follows and be interested in

[00:09:31] Speaker 04:
So where I am, unfortunately, drawing a blank is whether the Clean Power Plan sort of interstate trading.

[00:09:40] Speaker 04:
What I would say is that I don't think anything would matter.

[00:09:43] Speaker 08:
Just as a statutory matter, would it make textual sense if a state could, if every utility in a state kept emitting at full throttle but was buying credits from a different state?

[00:10:00] Speaker 08:
And so the last state's emissions never changed.

[00:10:05] Speaker 08:
But some other state, they had a lot of credits because they have a lot of solar or wind power or something.

[00:10:11] Speaker 08:
It probably stayed where it was too.

[00:10:15] Speaker 04:
So it would make statutory sense.

[00:10:18] Speaker 04:
And more importantly, it would make sense given the nature of the pollutant that's at issue here.

[00:10:22] Speaker 04:
Because what is distinct about carbon dioxide in particular is that it's heartfelt global level, really.

[00:10:28] Speaker 04:
And it's really indifferent to the particular source of the pollutant.

[00:10:32] Speaker 04:
And so if a source is responsible for a reduction of emissions elsewhere in the grid, including in another state, then that action has the same salutary benefit as if the source reduced its own emissions.

[00:10:45] Speaker 04:
And that distinct feature is what makes it particularly reasonable for EPA in the Clean Power Plan to have considered generation shifting and the ability of sources to engage in things like trading as part of the compliance mechanism for establishing these emission limitations here.

[00:11:00] Speaker 04:
And I was saying earlier that it also made sense where EPA sat on the regulatory structure because, again, EPA's reasoning here in the repeal rule is that because states set performance standards for individual sources, EPA's discretion is similarly limited.

[00:11:15] Speaker 04:
what a single source can do.

[00:11:17] Speaker 04:
But what nobody disputes is that EPA, in determining the best system, is not deciding what happens at individual sources.

[00:11:24] Speaker 04:
It is instead establishing guidelines across the sector that states can then implement by establishing source-specific standards.

[00:11:31] Speaker 04:
And so it's particularly appropriate for EPA at that threshold stage to be considering not what is feasible for individual sources, but what happens when sources interact on this interconnected grid, and precisely what EPA did in the Clean Power Plan.

[00:11:45] Speaker 10:
APA does now seem to contest that in disallowing certain options by the states, but we'll get to that later.

[00:11:53] Speaker 10:
Just as a matter of statutory interpretation, both rules are promulgated under the authority of 111 D1.

[00:12:04] Speaker 10:
And given that, what does it matter whether A1 is ambiguous if it's clear that D1 focuses on individual sources?

[00:12:15] Speaker 04:
I think the answer to that is that A1 is the provision that establishes EPA's authority and obligation to make the best system determination.

[00:12:25] Speaker 04:
D1 then explains how states in implementing source specific standards have to issue standards that reflect that best system determination.

[00:12:34] Speaker 04:
But again, A1 explicitly refers to the administrator, says that the administrator shall determine what has been adequately demonstrated for a best system.

[00:12:43] Speaker 04:
And then D1 then sort of reflects that standard upon the states as well.

[00:12:47] Speaker 10:
It's very odd.

[00:12:47] Speaker 10:
I mean, everyone seems to agree this is a definitions provision, that that would be the place that Congress delegates authority to the EPA.

[00:12:59] Speaker 10:
But that is, in fact, your position.

[00:13:03] Speaker 10:
that that's where EPA's role is described insofar as it's described at all.

[00:13:08] Speaker 04:
That's correct, at least on this part.

[00:13:11] Speaker 04:
D1 describes a separate role for EPA, which is to promulgate regulations for states to follow in issuing the state plans.

[00:13:18] Speaker 04:
But again, there's nothing that forecloses Congress from including in what you might call a definitional provision authority for EPA or other agencies to act.

[00:13:27] Speaker 04:
Any number of statutes, including the Clean Air Act and the Clean Water Act,

[00:13:30] Speaker 04:
have substantive definitional provisions that do a lot of the work in defining the scope of the regulatory program and regulated sources compliance obligations.

[00:13:40] Speaker 04:
And we're not relying on an inference from the text.

[00:13:44] Speaker 04:
The text itself says that best system of emission reduction is something that EPA has to demonstrate has been adequately demonstrated and puts in constraints on what EPA has to consider in reaching that best system determination, including considerations of costs

[00:13:59] Speaker 04:
and energy requirements across the grid.

[00:14:01] Speaker 10:
Your brief talks about the language and responding to EPA's arguments and petitioners in support of EPA, saying that it doesn't have to have an indirect object.

[00:14:17] Speaker 10:
But at some level, what the best system is has to contemplate action by regulated parties.

[00:14:26] Speaker 10:
It struck me that there are alternative arguments.

[00:14:30] Speaker 10:
First, no indirect object.

[00:14:32] Speaker 10:
And then if there's an indirect object, it's the operators or the system or maybe the pollution.

[00:14:41] Speaker 10:
And I guess I'm just not following how a regulatory metric that

[00:14:51] Speaker 10:
EPA is coming up with, even though I understand the two steps that the states are the ones that kind of chapter and verse figure out what the sources are supposed to do.

[00:14:59] Speaker 10:
But when EPA comes up with a regulatory metric, doesn't it necessarily have to think about if the regulated parties did such and such vis-a-vis emissions?

[00:15:10] Speaker 10:
That has to then be the object, no?

[00:15:13] Speaker 04:
No, we absolutely agree with that.

[00:15:15] Speaker 04:
And I think that the dispute between the parties is not about whether regulated sources have to be considered in the best system determination.

[00:15:23] Speaker 04:
It is instead about really like how many sources have to be considered.

[00:15:27] Speaker 04:
And I want to make this really concrete.

[00:15:29] Speaker 04:
Our argument in response to this indirect object point.

[00:15:33] Speaker 04:
It's not that application, you can't infer an indirect object from there.

[00:15:38] Speaker 04:
What we are disputing is EPA's argument that in order to understand A1, you can't look at that provision by itself.

[00:15:45] Speaker 04:
But you have to look at D1 and that D1's use of the singular to describe any existing source or any particular source therefore restrains EPA's authority under A1.

[00:15:55] Speaker 04:
That's the textual move that we are rejecting here.

[00:15:58] Speaker 04:
And the reason that that textual move doesn't work is because A1 can be understood by itself, including if you infer from context an indirect object for the word application.

[00:16:08] Speaker 04:
As we point out in our brief, A1 can be understood to be referring to the application to regulated sources or to the emissions that they generate in the plural, which would easily encompass EPA's discretion to consider the way that multiple sources contribute to this global problem of carbon dioxide pollutant.

[00:16:24] Speaker 04:
By contrast, EPA's decision to sort of splice in the D1 definition and its use of the singular to restrain A1 is neither compelled by the text nor does it make sense.

[00:16:34] Speaker 04:
One of the reasons it doesn't make sense is that D1 is only one of the provisions in 111 where the phrase standard of performance is used.

[00:16:41] Speaker 04:
And in provisions like 111B, they don't use the singular to describe standards of performance.

[00:16:46] Speaker 04:
That provision refers to standards of performance for sources in the plural.

[00:16:51] Speaker 04:
And so it doesn't make sense to think that a single provisions use of that phrase in a singular sense restrains EPA's authority under A1 in general.

[00:16:59] Speaker 08:
It also doesn't make sense because, again, we're- You would agree that in formulating the best system, Congress surely wanted the administrator to have in mind

[00:17:12] Speaker 08:
where the boots on the ground are going to be.

[00:17:14] Speaker 08:
I mean, it's not a best system if the people that are going to have to put this into action can't do.

[00:17:22] Speaker 04:
That's correct.

[00:17:25] Speaker 04:
That is correct.

[00:17:26] Speaker 04:
And that is accomplished by A1's requirement that EPA consider what is achievable for these emission reductions.

[00:17:34] Speaker 08:
What's the achievable by whom?

[00:17:36] Speaker 08:
By the state or by the facilities, by the individual facilities, the collective facilities?

[00:17:41] Speaker 08:
I mean, you could end up having the same object issue going on there.

[00:17:46] Speaker 08:
Achievable by whom?

[00:17:47] Speaker 04:
I think by regulated sources, again, in the plural.

[00:17:51] Speaker 04:
And the reason, that's both sort of permissible under this statutory text, and again, sensible for something like carbon dioxide, where what the regulated agency should care about is sort of the overall emissions of that pollutant, not its particular source here.

[00:18:08] Speaker 04:
And I do wanna back up a little bit and make this- Let me just ask you there though.

[00:18:12] Speaker 10:
I mean, I understand that as a policy matter, that the fact that this is,

[00:18:17] Speaker 10:
carbon dioxide needs a lot of constraints that might have made sense and with other more localized pollution don't make sense here, but we're construing a statute that applies trans substantively to all different kinds of pollutants.

[00:18:30] Speaker 10:
So to use that as a basis to infer anything about the statutory language seems to me a non-starter.

[00:18:37] Speaker 10:
Am I misunderstanding how you're using that?

[00:18:40] Speaker 04:
I disagree with that, Judge Pillard, for this reason, which is that 111A1 was written broadly precisely to allow EPA to consider a broad nature of pollutants and to consider industry and pollutant-specific factors for regulation.

[00:18:54] Speaker 04:
And the Jorling amicus for one of the drafters of 111A1 sort of explains this in detail.

[00:19:00] Speaker 04:
I mean, part of the reason for that is that 111 was meant to be sort of a catch-all provision in contrast to the more specific programs that are set up elsewhere in the act.

[00:19:10] Speaker 04:
The other is that it makes sense for Congress to delegate to an expert agency these sort of factual determinations about what is necessary for a certain industry, what is necessary for a certain pollutant to protect the public, which is the ultimate objective of this statute.

[00:19:25] Speaker 04:
I mean, that's precisely what EPA did in the Clean Power Plan.

[00:19:28] Speaker 04:
I mean, I do want to emphasize the concept of generation shifting here is not one that EPA came up by itself or imposed on the industry

[00:19:35] Speaker 04:
you know, unwillingly across the board.

[00:19:36] Speaker 04:
As my colleague will explain in a few minutes, generation shifting and schemes that leverage it, such as trading, were already a part of the industry.

[00:19:44] Speaker 04:
They were used for the industry's own economic purposes, and they were also a key feature of other regulatory programs involving power plants, such as the Casper, the cross-state air pollution rule, the acid raid program, and state programs like the regional greenhouse gas initiative.

[00:19:59] Speaker 04:
And so the idea and what those programs show, even though they're under different statutes for the most part, what they show is that when sources and regulators confronted the question of how you reduce emissions from power plants, one answer, again, as a practical boots on the ground matter is to allow schemes that leverage generation shifting.

[00:20:20] Speaker 04:
And they reason that there has been a convergence on this idea is because the industry has used it, and experience has shown that it is a way of accomplishing emissions reductions in a meaningful way at less cost to both sources and to the economy as a whole.

[00:20:35] Speaker 04:
And it is EPA's rejection of that judgment, not just as a matter of expertise, but as an ambiguous interpretation of the statute that represents the age of this in this case.

[00:20:51] Speaker 08:
The definition of standard performance is 7602L requires continuous system of emission reduction.

[00:21:02] Speaker 08:
Do you agree that that is part of what the obligation is here in setting a standard of performance, the 7602L continuous system?

[00:21:18] Speaker 08:
What's the interaction of those two definitions of standard of performance for purposes of existing sources?

[00:21:24] Speaker 04:
Well, I think that that is meant to foreclose sort of what Congress at the time considered to be just really intermittent sources of regulation.

[00:21:32] Speaker 04:
And I think we do take the position that the types of schemes that we're considering here, that EPA considered in the Clean Power Plan would satisfy that definition regardless.

[00:21:41] Speaker 08:
How does generation shifting do that since it presupposes that one generator stops performing?

[00:21:52] Speaker 08:
fits right within the intermittent concern.

[00:21:55] Speaker 04:
It doesn't presume that they stop generating the way that these credits are generated on like an allowance market, for instance.

[00:22:01] Speaker 08:
I was getting confused between I'm talking about generation shifting legs are just on the grid back and forth between different things without without the credits.

[00:22:09] Speaker 08:
All right.

[00:22:10] Speaker 08:
Sure.

[00:22:11] Speaker 08:
That wouldn't comply with it.

[00:22:12] Speaker 08:
So you have to have a cap and trade program to go with it.

[00:22:15] Speaker 04:
No, let me answer it in this way, is that when a cleaner source, for instance, ramps up its generation on a continuous level in a way that will either generate credits on allowance market or through some other scheme, the natural effect of that increased generation is to reduce the output of dirtier sources on the grid.

[00:22:36] Speaker 04:
That's just a matter of physical reality of how the grid operates.

[00:22:40] Speaker 04:
And so it's not, it's not a situation where like a source will just shut down for six hours or a day, for example, and then that happens to have effects on the rest of the grid because that is, again, not the way that these sources operate in practice.

[00:22:54] Speaker 04:
And the physical feature that these regulations take advantage of is this automatic ability to adjust by dirtier sources when cleaner sources increase their production.

[00:23:06] Speaker 04:
And I think that is sort of the key feature of the Clean Power Plan that EPA is erroneously rejecting here.

[00:23:12] Speaker 04:
I mean, what generation shifting allows is for sources to take advantage of the more efficient generation of energy by other sources on the grid.

[00:23:21] Speaker 04:
And the reason that sources,

[00:23:22] Speaker 04:
have preferred generation shifting and similar schemes in the past is because it's often cheaper to take advantage of another sources more efficient generation than to be compelled to install technology at your own plant.

[00:23:35] Speaker 04:
And because that method has been available, it was entirely appropriate for EPA and it was authorized by the statute to consider the availability of that method of emission reduction in setting emission limits for power plants.

[00:23:47] Speaker 08:
Um, if my colleagues don't have any further questions, we will go on to hear from Mr. Paul and cars.

[00:23:56] Speaker 08:
Did I say that correctly.

[00:23:58] Speaker 18:
Yes.

[00:23:59] Speaker 18:
Can I ask Mr. Wu a quick question or two, Mr. Mr. Where do you think that the CPP is a major role.

[00:24:07] Speaker 04:
We do not think it implicates the major questions doctrine here for a couple of reasons.

[00:24:14] Speaker 04:
One is that it reflects the authority that Congress expressly delegated to the agency to consider the best system.

[00:24:20] Speaker 04:
But the other is that it doesn't impose regulations on anybody other than sources that have long been subject to 111 and to many other provisions of the Clean Air Act.

[00:24:29] Speaker 04:
And I guess the final point I'd say there is that it's also not major because the method that it adopted, which is in dispute here, is not one that was revolutionary.

[00:24:37] Speaker 04:
What EPA did is what it's required to do under the statute, which is to look at practices that are already extant in the industry.

[00:24:44] Speaker 04:
And what the Clean Power Plan did was essentially leverage those existing practices and maybe, or at least the intent was to somewhat accelerate them at the time.

[00:24:52] Speaker 04:
And that sort of incorporation of existing industry practice to impose regulations only on sources that are well within the ambit of EPA's authority does not trigger their major questions doctrine.

[00:25:04] Speaker 18:
Mr. Russo, when the petitioner NRDC called this a groundbreaking policy, do you disagree with that description?

[00:25:13] Speaker 04:
We don't disagree.

[00:25:15] Speaker 04:
I think that description doesn't have to match up with the doctrine of the major questions doctrine.

[00:25:19] Speaker 18:
And I think the reason about when what about when petitioner solar energy association called it historic

[00:25:26] Speaker 18:
and critically needed.

[00:25:27] Speaker 18:
You don't think that's describing a major rule?

[00:25:30] Speaker 04:
It is describing a major rule in the common sense.

[00:25:32] Speaker 04:
But I think those statements have to be understood in context, which is a world in which power plant regulation, and especially of greenhouse gas emissions, had not been a feature of EPA for years, notwithstanding years of evidence that it was causing serious harm to the public.

[00:25:48] Speaker 04:
And so the Clean Power Plan was a major and groundbreaking rule in that it represented an effort by the federal agency to engage with this major problem for the first time.

[00:25:59] Speaker 04:
But that fact, the fact that it was action rather than inaction, which made it significant, does not mean that what the agency was doing was exercising a power that was beyond its delegated authority.

[00:26:09] Speaker 04:
And I think that second part is what explains why this was in the major questions doctrine.

[00:26:15] Speaker 18:
Am I right, and it might not be, that the CPP was not the first EPA regulatory initiative to attempt to address the problems of climate change?

[00:26:35] Speaker 04:
It was not, there had earlier been like the tailpipe rule, for instance, to deal with climate change from automobiles, if that's what you're asking about.

[00:26:44] Speaker 18:
Do you think that this rule compared to the tailpipe rule was major in terms of its scope and impact?

[00:26:54] Speaker 04:
Not in a dramatic sense.

[00:26:58] Speaker 04:
It was major again in the sense that it finally imposed regulations on power plants that are one of the major contributors to climate change.

[00:27:05] Speaker 04:
But both the way that it did it and the sources that it regulated sort of fell well within what EPA had been delegated the authority to do, which is to consider what emissions from power plants cause major problems and to choose those systems of emission reduction that have been adequately demonstrated, which is proven here by the fact that the industry had long been engaging in generation shifting for both its own private purposes and for other regulatory purposes as well.

[00:27:32] Speaker 18:
And I appreciate that, Mr. Wu, and I know that

[00:27:36] Speaker 18:
Um, that, that, uh, you know, well, let me just ask, let me try it one more time.

[00:27:45] Speaker 18:
And I, and, and, um, I'm not, I'm not predicting you will agree, but, uh, I just want to see how I want you to help.

[00:27:57] Speaker 18:
I would appreciate it.

[00:27:58] Speaker 18:
You can help me walk through how, how challenging I think it is to find that a program

[00:28:06] Speaker 18:
of this kind does not meet the test for a major rule.

[00:28:13] Speaker 18:
When it was announced, when the CPP was announced in the White House's East Room, President Obama called it the single most important step America has ever taken in the fight against global climate change.

[00:28:31] Speaker 18:
And he said it was the equivalent of taking 166 million cars off the road.

[00:28:37] Speaker 18:
I understand that EPA had engaged in climate change regulation before some of those regulations involved cars on the road.

[00:28:48] Speaker 18:
Certainly we didn't wake up the day after those earlier regulations and find that there were 166 million fewer cars on the road.

[00:29:00] Speaker 18:
So

[00:29:00] Speaker 18:
If you would, and then I'll let this go with regard to you and your time, but how can something not be a major rule when it's the single most important step America has ever taken in the fight against what I think you and the other parties on your side of this case, and I think even the parties opposing you, most of them at least, would call in terms of climate change

[00:29:30] Speaker 18:
one of the most pressing and consequential issues of our time?

[00:29:39] Speaker 04:
I think the answer is that something can be a significant and very important rule without, as I said, transgressing on the or triggering the special scrutiny that comes from major roles in the constitutional sense.

[00:29:54] Speaker 04:
From the way in which sent it

[00:29:59] Speaker 04:
non-regulatory status quo, which was a situation where, though the Supreme Court held in Massachusetts, the Clean Air Act had long given the agency the authority and the obligation to regulate carbon dioxide and greenhouse gas emissions.

[00:30:12] Speaker 04:
There were, in fact, no such regulations of power plants until, really, the Clean Power Plan came into existence.

[00:30:18] Speaker 04:
And that change in the status quo is what was being heralded by the president and by supporters of the Clean Power Plan, such as the petitioners here.

[00:30:28] Speaker 04:
That is not synonymous with saying that what EPA did was as a legal or constitutional matter, a major exercise of its power.

[00:30:35] Speaker 04:
I think to the contrary, and if you look at the arguments that were made by both EPA and state and other parties in the Clean Power Plan litigation, the argument there was that EPA was exercising well-established powers there.

[00:30:47] Speaker 04:
What made it significant was that it was doing so for the first time to regulate a major problem.

[00:30:52] Speaker 04:
So that's, I think, the way that I would reconcile the significance and the conceited significance of the Clean Power Plan, and with our argument that it fits well within the wheelhouse of what EPA has been delegated the authority to do.

[00:31:07] Speaker 18:
Thanks, Mr. Chu.

[00:31:07] Speaker 18:
I appreciate that.

[00:31:09] Speaker 18:
Thank you.

[00:31:11] Speaker 08:
OK.

[00:31:11] Speaker 08:
Any other questions from my colleagues?

[00:31:14] Speaker 08:
No?

[00:31:14] Speaker 08:
OK.

[00:31:14] Speaker 08:
Then I apologize for the false start, Mr. Pauling-Parris, but we'll hear from you now.

[00:31:21] Speaker 03:
Thank you, Your Honor.

[00:31:22] Speaker 03:
May it please the court, Kevin Polancars for power company petitioners.

[00:31:27] Speaker 03:
Because Mr. Wu will be doing rebuttal for our side, I am not preserving any time for rebuttal.

[00:31:33] Speaker 03:
EPA should have known it took a wrong interpretive turn when it contorted reading of Section 111, led it to conclude that the statute categorically excludes the actual means by which the power sector has been reducing emissions of CO2.

[00:31:48] Speaker 03:
And I want to explain, Judge Piller, you had your question about why it matters.

[00:31:51] Speaker 03:
Generation shifting is the inescapable physical and operational reality of all power plants.

[00:31:58] Speaker 03:
It's how grid operators balance supply and demand at least cost to consumers

[00:32:02] Speaker 03:
taking into account other constraints like transmission and pollution controls.

[00:32:07] Speaker 03:
Power plants are unique in their interconnection to one another.

[00:32:11] Speaker 03:
And that interconnectedness is what makes generation shifting a particularly appropriate system of emission reduction for them.

[00:32:18] Speaker 03:
It also means that regardless how a standard is set, whether it was set based on gas co-firing, whether it was set based on partial carbon capture and sequestration, it's inevitably going to cause generation to shift to lower emitting units.

[00:32:33] Speaker 03:
The Clean Power Plan simply acknowledged this reality.

[00:32:36] Speaker 03:
Generation shifting is also not a radical new approach to emissions control.

[00:32:41] Speaker 03:
Prior rules for this sector under this very section and other sections of the Clean Air Act were based upon generation shifting.

[00:32:48] Speaker 03:
Reading Section 111 to forbid generation shifting requires EPA to do three things.

[00:32:54] Speaker 03:
First, it infers an indirect object for application of the best system where none was specified by Congress.

[00:33:01] Speaker 03:
Second, it places much more weight on the preposition for than it can bear, and then it substitutes two wholly different prepositions, at and to, for the one that's actually provided by Congress.

[00:33:13] Speaker 03:
Third, it tries to shoehorn the definition of standard of performance into 111D1, and to make it fit, it has to cut out 28 critical words.

[00:33:24] Speaker 03:
This is not a plain textual reading at Chevron Step 1.

[00:33:28] Speaker 03:
I want to talk about some of the other rules that were premised upon generation shifts.

[00:33:32] Speaker 08:
Just to back up there, you don't dispute that standard of performance is defined in 7411A1 is the same standard of performance that's referenced and that states are determining in D1, right?

[00:33:48] Speaker 03:
That's correct.

[00:33:49] Speaker 03:
Your performance as it's defined in D1, as it's defined in A1, is where EPA makes the determination of the best system.

[00:33:56] Speaker 03:
And in D1, the state that imposes those standards of performance on- Right.

[00:34:01] Speaker 08:
The state standard of performance has to, in the words of A1, reflect whatever emissions guideline gets spit out at the end of EPA's application of the BSER.

[00:34:12] Speaker 03:
The level of emission reduction achievable.

[00:34:14] Speaker 03:
through application of the best system of emission reduction.

[00:34:17] Speaker 03:
So it can be a standard of any various sort.

[00:34:19] Speaker 03:
And it's important, I think, Judge Millett, to acknowledge that the details of the Clean Power Plan aren't really germane to this argument.

[00:34:26] Speaker 03:
What's really germane is that EPA decided that the statute categorically and unambiguously excludes anything other than what can be done in the four corners of a power plan.

[00:34:36] Speaker 03:
And we disagree with that and think that that's just not supported by the statute.

[00:34:41] Speaker 03:
I'd like to talk about some of the other rules that were based upon generation shift.

[00:34:46] Speaker 03:
Dr. Pillard, do you have a question?

[00:34:47] Speaker 03:
I'm sorry.

[00:34:48] Speaker 10:
I'd like to hear about that.

[00:34:50] Speaker 03:
In the Clean Air Mercury Rule, which was also promulgated under 111D, EPA based the best system on the combination of a cap and trade system and the technology that was needed to achieve the cap.

[00:35:02] Speaker 03:
EPA didn't intend that all the sources would install the control technology.

[00:35:07] Speaker 03:
Instead, they based the stringency of the caps on the availability of what they call dispatch changes.

[00:35:14] Speaker 03:
That's generation shifting.

[00:35:15] Speaker 03:
Also, because the near-term emission cap was set to take effect years before they anticipated the broad availability of the control technology, EPA expressly contemplated that trading would need

[00:35:28] Speaker 03:
to comply.

[00:35:30] Speaker 03:
And other rules for the power sector were also premised on generation shifting and trading, both in setting the stringency of the emissions limits and for purposes of compliance.

[00:35:38] Speaker 03:
This includes the cross-state air pollution rule, where EPA specifically rejected a direct control approach, meaning putting scrubbers on the source.

[00:35:45] Speaker 08:
That's not under 7411.

[00:35:46] Speaker 03:
No, it isn't, Your Honor.

[00:35:49] Speaker 03:
It's under 110 under the Good Neighbor provision.

[00:35:52] Speaker 03:
And the Good Neighbor provision similarly has no express

[00:35:55] Speaker 03:
clear statement that EPA can go beyond the boundaries of the individual source in determining what makes sense to reduce the pollution.

[00:36:04] Speaker 08:
There are others under 7411, I don't mean to interrupt and I'd love to, I want to hear your whole list, but are there others that are under 7411 other than the mercury rule?

[00:36:14] Speaker 03:
Well, the only other one under 7411 that was really premised upon trading is the municipal waste conductor rule.

[00:36:20] Speaker 03:
And that was a joint rule under section 129 as well.

[00:36:24] Speaker 03:
So it's a little bit inept, but under that rule, if a source wanted to elect trading or averaging among units, it had to achieve deeper reductions, a lower NOx limit.

[00:36:35] Speaker 03:
And so there again is an acknowledgement that when there is the availability of going beyond the single source, deeper reductions can be achieved, and that's consonant with the statute.

[00:36:47] Speaker 03:
And beyond the cross state air pollution rule and other rules for this sector, trading is just something that's ubiquitous throughout the Clean Air Act.

[00:36:57] Speaker 03:
In this court upheld in the small refiner lead phase down case,

[00:37:01] Speaker 03:
a standard for lead content and gasoline that was specifically premised on the fact that not all refiners would be able to comply, but that they would need to buy blending components or credits from other refiners.

[00:37:13] Speaker 03:
Another example is just the averaging banking and trading rules for new motor vehicles, which were upheld by this court in NRDC versus Thomas.

[00:37:22] Speaker 03:
There, it's not expressly authorized by the statute at all, but the court says, yeah, this is permissible.

[00:37:28] Speaker 03:
In sum, the flexibility afforded by a trading-based approach has allowed the agency in many contexts under many statutory provisions to set the standard beyond what's achievable by the lowest common denominator.

[00:37:41] Speaker 03:
I want to talk a little bit about the relevance of the singular and the plural, because I think it's really misleading the way that EPA posits this in its brief.

[00:37:53] Speaker 03:
EPA says that in D1, what really matters is that it talks about any existing source.

[00:37:59] Speaker 03:
I mean, first of all, the Supreme Court has made clear that any is an expansive term and can really just mean, you know, some without regard to quantity.

[00:38:07] Speaker 03:
So saying that a state needs to prescribe standards for any existing source can really just mean you need to apply standards to every source in your state and can't provide free passes to some.

[00:38:17] Speaker 03:
That's all it could possibly mean.

[00:38:19] Speaker 03:
But in addition, you know, in D2,

[00:38:22] Speaker 03:
EPA says it's really relevant that in D2 as opposed to D1, it speaks to the plural remaining useful lives of the sources in the category of sources.

[00:38:32] Speaker 03:
So they say, well, D1 speaks in the singular, D2 is in the plural.

[00:38:36] Speaker 03:
But then EPA in the next move says that this distinction is of no consequence

[00:38:40] Speaker 03:
because its authority under D2, that's if it's issuing a federal plan, when a state's failed to do so and it has to go and issue a federal plan in its place, it says its authority to do so would also be circumscribed to measures that can be applied in a singular source.

[00:38:55] Speaker 03:
It either means something that Congress used the singular in D1 and the plural in D2, or it doesn't.

[00:39:02] Speaker 03:
EPA also would have us believe that the title of 111 D is relevant because it speaks of the remaining useful life of a singular source in foliar honors the title reads standards of performance for existing sources plural semi colon remaining useful life of source.

[00:39:20] Speaker 03:
If the title matters at all, then its use of the plural for existing sources completely eviscerates EPA's argument that the clear intent of Congress is reflected by the singular for any existing source in D1.

[00:39:33] Speaker 03:
EPA can't have it both ways and say these distinctions between singular and plural matter unless they don't.

[00:39:42] Speaker 03:
I also want to comment on the indirect object argument, why it makes no sense from our perspective.

[00:39:49] Speaker 03:
EPA says that the primary object in the first sentence of D1 is each state's plan.

[00:39:56] Speaker 03:
They admit that.

[00:39:57] Speaker 03:
And they say grammatically, for any existing source is the indirect object of each state's plan in D1.

[00:40:05] Speaker 03:
But they also then say it's the indirect object of application of the best system in A1.

[00:40:11] Speaker 03:
Concluding that for any existing source is the indirect object of two separate regulatory acts in separate statutory sections is not only not compelled by the statute, it's nonsensical.

[00:40:23] Speaker 03:
And then to make it fit, they have to cut off 28 words from the definition of standard of performance.

[00:40:30] Speaker 03:
it makes no sense if they try to put the whole definition.

[00:40:34] Speaker 03:
And so they cut it off and put an ellipsis in the place where it talks about the Administrator's Act of determining what the best system is.

[00:40:41] Speaker 03:
If the whole definition were inserted, it would imply that the Administrator determines the best system for any existing source, which everyone acknowledges is just not the way that regulation works.

[00:40:52] Speaker 10:
So can you say just a little bit more about that, Mr. Polankaris, how the system works?

[00:40:57] Speaker 10:
And I understand your argument in gross,

[00:41:00] Speaker 10:
we shouldn't take language that's speaking to how states sort of bring the requirements down to the individual regulated entities, but what is usually, and I realize we're talking about this in more detail later, but just to sort of help us get oriented, what is usually the form of the guidance that EPA gives as a result of having

[00:41:30] Speaker 10:
assessed and determined the best system.

[00:41:34] Speaker 03:
We'll talk about that a lot later.

[00:41:35] Speaker 10:
I know, I know, but just give us a, like, because you're in the industry, representing industry, I'm just curious what your understanding is of that in brief.

[00:41:46] Speaker 03:
In this particular instance, Your Honor, it's not all that relevant for this industry because we've only had two rules under 111D, the Clean Air Mercury Rule, which established a very comprehensive cap-and-trade system, and EPA established those budgets, and it was involved in multistate trading, etc.

[00:42:05] Speaker 03:
And then we had the Clean Power Plan under 111D as well.

[00:42:11] Speaker 03:
But the best system must reflect the level of reduction that's achievable through application of the best system of emission reduction.

[00:42:20] Speaker 03:
So that, in my mind, means the EPA needs to look out at the terrain and say, for this particular source category, for the interconnected electricity grid, electrons flow across state lines,

[00:42:30] Speaker 03:
There's no differentiating among them.

[00:42:33] Speaker 03:
We need to determine what constitutes the best system.

[00:42:36] Speaker 03:
We know, unlike other sectors, we know that if you add a new clean source to the grid, just because of the physics and economics that the way the grid works,

[00:42:45] Speaker 03:
Another source, a dirtier source, is going to stop operating and it's not going to be dispatched.

[00:42:51] Speaker 03:
That's different than any other source category.

[00:42:53] Speaker 03:
If you have petroleum refiners and somebody starts producing renewable diesel or renewable, that doesn't mean that somebody else whose market is now being served by renewables can't export it.

[00:43:05] Speaker 03:
That's just not the way the grid works.

[00:43:07] Speaker 03:
We can't export large, vast quantities of power.

[00:43:10] Speaker 03:
And so there's a certainty there that those reductions will occur from the source category.

[00:43:15] Speaker 03:
And so from my perspective, what I would expect and what I think my clients would expect when EPA determines the best system for emission reduction is that they look out and they assess what is actually achievable.

[00:43:26] Speaker 03:
And that's what we wanted EPA to do.

[00:43:28] Speaker 03:
We wanted them to look at

[00:43:30] Speaker 03:
What could be accomplished with generation shifting and in my clients view, something more meaningful could be accomplished than the do nothing rule that was promulgated in replacement of the clean power.

[00:43:43] Speaker 10:
But just, just very briefly, it's you said, you said the word budgets.

[00:43:46] Speaker 10:
So it's some it's some Quantum Quantum.

[00:43:51] Speaker 03:
Yes.

[00:43:52] Speaker 03:
Or federally

[00:43:54] Speaker 03:
I would imagine that given the cooperative federalism framework, it likely would need to be state by state.

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

[00:44:00] Speaker 03:
Those details are really germane.

[00:44:04] Speaker 10:
I know they're not relevant here.

[00:44:05] Speaker 10:
Except, I mean, the reason I'm asking now is because I think that the EPA's argument really depends on this idea that there is some kind of equivalence between the inquiry that's made in determining BSER and the

[00:44:22] Speaker 10:
implementation by the state that there's a kind of one to one correspondence there.

[00:44:26] Speaker 10:
And it just helps me to sort of even at a very general level to understand that to know something about the form in which the BSER is expressed, other than the sort of the descriptive of the physical world, but actually how that's conveyed.

[00:44:43] Speaker 03:
I mean, yes, Your Honor, EPA does take the position that it needs to be equivalent.

[00:44:49] Speaker 03:
And they really bought into that hook, line, and sinker.

[00:44:52] Speaker 03:
You know, four years ago when we had this argument in front of the Embaum Court, we talked about the symmetry provision that, well, if sources were going to comply like this anyways and wanted trading, and they wanted these more robust, flexible mechanisms, then of course that was allowable.

[00:45:07] Speaker 03:
But the other side said, no, we want trading.

[00:45:10] Speaker 03:
We want flexibility, but we want the standard set by what you can only do at a particular source.

[00:45:15] Speaker 03:
And so acknowledging that and in my mind, acknowledging the traction that that argument got in front of the M bound court.

[00:45:21] Speaker 03:
EPA went in the other direction and did what from my client's perspective is really nonsensical.

[00:45:26] Speaker 03:
They completely forbade trading.

[00:45:28] Speaker 03:
I know that's not the subject of this discussion, but it's intimately tied because trading is the corollary of generation shifting.

[00:45:34] Speaker 10:
Putting aside treating a generation, are there any ways to meet the levels established by the CPP without generation shifting?

[00:45:45] Speaker 03:
Absolutely.

[00:45:48] Speaker 03:
And the record reflects that it could have been done, Judge Millett asked me this question four years ago.

[00:45:54] Speaker 03:
The record reflects that it could be done through co-firing with gas.

[00:45:57] Speaker 03:
It could be done through partial carbon capture and sequestration.

[00:46:00] Speaker 03:
And EPA's record also reflected, Your Honors, that it could be done at a cost that EPA deemed reasonable in other regulatory constructs and other contexts.

[00:46:12] Speaker 03:
But they then acknowledged that, well, no one's going to go and do that because instead what the trends are showing is they're going to add lower

[00:46:22] Speaker 03:
emitting generation to the grid.

[00:46:24] Speaker 03:
And the remarkable thing, of course, is that that trend only continued in spades since we last had this argument in 2016.

[00:46:32] Speaker 03:
And the Clean Power Plan's 2030 goals were achieved a decade in advance in the absence of any federal regulation, just going to show that the trends were present, and they proved to achieve the reductions that were always planned to be achieved.

[00:46:47] Speaker 10:
When you say EPA view those costs reasonable in other regulatory contexts, what are you thinking of?

[00:46:52] Speaker 10:
I couldn't hear the question.

[00:46:56] Speaker 10:
Something happened.

[00:46:57] Speaker 10:
Oh, I'm sorry.

[00:46:58] Speaker 10:
I said, when you said that EPA had deemed the costs of co-firing or carbon capture to be reasonable in other regulatory contexts, but also recognized that they still exceeded the BSER it defined in the Clean Power Plan, I was just wondering what you were thinking of when you mentioned the reasonableness of that.

[00:47:21] Speaker 03:
I believe what EPA meant when it said that is that they were in the range of what was deemed acceptable and not prohibitive under other Section 111 rules.

[00:47:32] Speaker 03:
But then considering the criteria of cost and what is the best system, EPA decided that there's this much cheaper available compliance mechanism

[00:47:42] Speaker 03:
and bases for the best system, and that is generation shifting.

[00:47:46] Speaker 03:
And that's why it based the best system upon the availability of generation shifting and trading.

[00:47:53] Speaker 08:
Can I ask, related to that, and in particular, thinking of the co-firing, I didn't see here what had been in the prior case.

[00:48:01] Speaker 08:
In the prior case, there was information in the record that 77% of coal-fired generation is co-owned with natural gas.

[00:48:13] Speaker 08:
And yes, and so is one, just in response to the argument about the expense or infeasibility of, and maybe I'm sorry if I'm jumping ahead to another issue, but of a co-firing, and if you can't ask if it's for someone else, then I will just ask someone else.

[00:48:35] Speaker 08:
But I was trying to, is that still a case?

[00:48:37] Speaker 08:
Has it increased, decreased?

[00:48:39] Speaker 08:
Do you know?

[00:48:40] Speaker 08:
Or is that not in this record this time?

[00:48:42] Speaker 03:
I don't know, your honor.

[00:48:43] Speaker 03:
It may, it may be in the record at Mr. Donahue can probably press.

[00:48:47] Speaker 08:
I will save it for him.

[00:48:50] Speaker 18:
Mr. Poland cars.

[00:48:51] Speaker 18:
Can I follow up on something you said?

[00:48:53] Speaker 18:
You said that, uh, trading is a corollary to, uh, generation shifting.

[00:48:58] Speaker 18:
Um, and, um, I wondered if you could expand, expand on that, uh, especially to, to some, someone like me who is, who's very new to the science of all this.

[00:49:10] Speaker 03:
So,

[00:49:11] Speaker 03:
The way that generation shifting can work and EPA's record reflects that generation shifting is being employed by all forms of utilities from investor owned utilities to publicly owned utilities to municipal and rural co-ops.

[00:49:28] Speaker 03:
What what that means is that you have a co op and they have a coal fired power plant, but then they're also adding Solar and wind elsewhere and that solar and wind is preferentially dispatched by the grid because it has no variable operating costs doesn't cost

[00:49:45] Speaker 03:
When the sun shines and it doesn't cost when the wind blows, whereas coal as a cost.

[00:49:50] Speaker 03:
And so that is how generation shifting works in the context of one particular entity a municipal or utility or cooperative employing itself.

[00:50:00] Speaker 03:
However, if you really want to avail yourself of market efficiencies and my clients love market efficiencies, they're going to say, let's go broader because why just look at what we can do in our own territory here the electricity grid it you know we're all interconnected.

[00:50:15] Speaker 03:
Why don't we look at what can be achieved more broadly by trading with one another?

[00:50:21] Speaker 03:
And this is just so common in the electricity sector.

[00:50:24] Speaker 03:
And it's something that even the folks on the other side, the utilities on the other side, have clamored for for years to say, let's find the most optimal market efficiency result to achieve the reductions.

[00:50:36] Speaker 03:
And usually that is through trading.

[00:50:38] Speaker 03:
But it could be done, Your Honor, at the more micro level of a particular rural co-op or utility saying, hey, we're just going to reduce the dispatch of our coal-fired generation plant by adding more wind or solar in the same territory.

[00:50:53] Speaker 18:
So that's helpful.

[00:50:57] Speaker 18:
And the law on all of this is complex enough.

[00:51:01] Speaker 18:
that I want to make sure that at the very least I get the facts and the science right, especially the facts and the science that is not in dispute.

[00:51:11] Speaker 18:
So with apologies if this question is too elementary, but can you walk me through the process from let's say a miner mines a piece of coal all the way through

[00:51:31] Speaker 18:
I turn on my light switch and not just how things are happening, but who is owning each part of that process.

[00:51:43] Speaker 18:
And let's say Duke Energy buys the coal and they generate it and they transmit it.

[00:51:50] Speaker 18:
But beyond that, can you walk me through that process?

[00:51:57] Speaker 03:
Well, electricity generation and transmission 101 would probably take longer than we have, but it's a very complex process, Your Honor.

[00:52:08] Speaker 03:
varies by state based upon whether you have what we consider a vertically integrated utility, one that is subject to rate regulation by a public utilities commission and rate bases all of their assets and uses those assets as the basis of their generation mix, or whether you have one that participates in RTOs or ISOs, regional transmission organizations and independent system operators, which are established on a regional basis and usually involve those resources, all bidding their resources into a regional market.

[00:52:38] Speaker 03:
And that's what's predominant throughout a lot of the country now.

[00:52:42] Speaker 03:
I'm not quite certain with Duke.

[00:52:44] Speaker 18:
I don't know what they do in Southeast there, but in most- It doesn't have to be Duke.

[00:52:50] Speaker 18:
It doesn't have to be Duke.

[00:52:51] Speaker 18:
Can you just take one of the ICO examples, but ISO examples rather, but the coal gets mined, it gets bought by a coal generating plant, the coal generating plant

[00:53:04] Speaker 18:
converts that coal into electricity, and then what happens?

[00:53:11] Speaker 03:
Well, what happens, your honor, is in a day ahead market.

[00:53:15] Speaker 03:
Let's imagine you're in the PJM market.

[00:53:17] Speaker 03:
That stands for Pennsylvania, Jersey, Maryland.

[00:53:20] Speaker 03:
So if we just call it PJM, that's kind of served to where you guys are.

[00:53:25] Speaker 03:
In the PJM market, there would be a day ahead market.

[00:53:28] Speaker 03:
And so what would happen is that if somebody was going, had a coal fire generating facility there,

[00:53:34] Speaker 03:
And they wanted to generate they would bid into that market and they would bid a bid based upon what their variable operating costs are as well as whatever they needed to recover their capital expenses and

[00:53:49] Speaker 03:
the way that the market operator would then accept the bids in declining order from the lowest cost bid, and that would usually include something that has no costs, like a solar facility or a wind facility, until it gets to what's needed to meet all supply.

[00:54:08] Speaker 03:
And then everybody gets that clearing price.

[00:54:12] Speaker 03:
We consider that, you know, that's the clearing price that everybody gets in the market.

[00:54:16] Speaker 03:
And then if the coal fire generator bid at a price that was lower than that clearing price, it the next day would get a dispatch order from the grid operator saying, you need to run your power plant from this time to that time.

[00:54:29] Speaker 03:
And it would combust the coal and the coal would produce steam.

[00:54:34] Speaker 03:
The steam would produce, run a turbine.

[00:54:37] Speaker 03:
The turbine would drive a generator.

[00:54:39] Speaker 03:
The generator would put power onto the grid.

[00:54:41] Speaker 03:
The grid would go from the transmission system to the distribution system.

[00:54:46] Speaker 03:
That's the poles and wires that bring power to your house transmission or the big towers and then you would turn the light and there would be The market operator in that store.

[00:54:57] Speaker 18:
Thank you so much.

[00:54:59] Speaker 18:
The market operator in that story.

[00:55:01] Speaker 18:
Who is that market operator.

[00:55:04] Speaker 18:
Yeah, give an example.

[00:55:06] Speaker 03:
In that instance, it's the PJM market operators, the RTO, the regional transmission organization, the independent system operator.

[00:55:14] Speaker 18:
And who owns the RTO?

[00:55:17] Speaker 03:
So what they do, what they're charged with doing is they're the balancing authority.

[00:55:21] Speaker 03:
They're the ones who are charged by NERC with keeping the lights on.

[00:55:25] Speaker 03:
They're the ones who have to observe protocols and principles to assure that reserves never fall below certain levels and

[00:55:32] Speaker 03:
that power is available and we don't have blackouts.

[00:55:35] Speaker 18:
So the RTO is a government entity of some sort?

[00:55:42] Speaker 03:
Yes, some quasi-public entities.

[00:55:45] Speaker 03:
Sometimes in California, for instance, our independent system operator, which now has a footprint that's broader than the state, is a

[00:55:52] Speaker 03:
quasi-nonprofit entity created by the state.

[00:55:56] Speaker 03:
So they're an interesting breed that's not really a governmental entity, that's a subunit of a state.

[00:56:03] Speaker 03:
They're governed by their principles.

[00:56:06] Speaker 08:
They're heavily regulated.

[00:56:08] Speaker 08:
Yes.

[00:56:09] Speaker 08:
Can I, and so does that mean, just to kind of inject one question, Judge Walker?

[00:56:15] Speaker 08:
Yeah, please.

[00:56:18] Speaker 08:
The coal company that's going to burn that lump of coal that Judge Walker referenced isn't even going to order that piece of coal.

[00:56:27] Speaker 08:
It orders it a day before, a week before, just depending on whatever projections it's getting from, say, PJM?

[00:56:35] Speaker 03:
That's correct, Your Honor.

[00:56:36] Speaker 03:
They probably won't order it if they believe that the price of power on the wholesale markets is going to be below what would sustain their burning of coal.

[00:56:44] Speaker 03:
And that's why there have been so many bankruptcies with coal companies.

[00:56:47] Speaker 03:
And that's why the coal petitioners in this case are objecting to the clean power plan.

[00:56:55] Speaker 18:
When one of these companies, whether it's a coal company or a wind energy company bids into the RTO, you said that the cost of a renewable is free.

[00:57:12] Speaker 18:
Is it no cost, but obviously there is a huge investment in building the infrastructure to generate solar power or wind paneled those those owners do not factor those

[00:57:26] Speaker 18:
capital investment into the cost that they bid?

[00:57:28] Speaker 03:
There are two.

[00:57:30] Speaker 03:
What they would factor in is their variable operating costs.

[00:57:34] Speaker 03:
That would be a lump of coal versus a ray of sun.

[00:57:37] Speaker 03:
But they also project what they need to recover their capital costs as well.

[00:57:42] Speaker 03:
And so usually those capital costs in many jurisdictions for notwithstanding the fact that it takes a lot of money and a lot of capital to build utility scale solar farms and wind farms.

[00:57:55] Speaker 03:
Usually those are lower than the overall overall variable operating costs of fossil generation.

[00:58:01] Speaker 03:
And so those usually get dispatched first.

[00:58:05] Speaker 18:
Okay.

[00:58:06] Speaker 18:
I'm going to shift to the law question or two, unless Judge Blard or Judge Millett have follow-ups on the science stuff.

[00:58:16] Speaker 18:
Do you think that in order for the EPA to have promulgated the Clean Power Plan that, well, I guess I would ask it this way.

[00:58:28] Speaker 18:
Do you think that 7411B is sufficiently ambiguous that

[00:58:36] Speaker 18:
the EPA can promulgate the Clean Power Plan could have?

[00:58:40] Speaker 18:
Or do you think that it unambiguously authorizes the EPA to promulgate the Clean Power Plan?

[00:58:48] Speaker 03:
I don't think it unambiguously authorizes at all, Your Honor.

[00:58:51] Speaker 03:
What we think is that it would be a reasonable construction of an ambiguous statute to interpret what is achievable through the best system is something other than what can be achieved within the four corners of an individual plant.

[00:59:08] Speaker 03:
But it's certainly in no way mandated by the statute.

[00:59:12] Speaker 08:
Just so I understand the exchange, I apologize.

[00:59:15] Speaker 08:
Judge Walker, could you explain what you mean by unambiguously authorized so that it's, is that what you mean, like Chevron one mandated?

[00:59:24] Speaker 08:
Yeah.

[00:59:24] Speaker 08:
That it's just, it's clearly within the range of authorization.

[00:59:28] Speaker 08:
I was confused.

[00:59:29] Speaker 18:
I guess I would, no, I think I asked a confusing question or a question in as confusing a way as I could and then not unintentionally.

[00:59:39] Speaker 18:
I guess my question is,

[00:59:42] Speaker 18:
Do you think that 7411D unambiguously authorizes power shifting, generation shifting?

[00:59:55] Speaker 03:
No, your honor, not at all.

[00:59:56] Speaker 03:
I mean, our view is that the rule must be remanded because consonant with the thrill doctrine and and the DC circuit EPA based its determination upon its erroneous conclusion that the statute unambiguously forbade generation shifting

[01:00:17] Speaker 03:
Our view is EPA needs to go back to the drawing board, and if that is wrong, as we believe it is, go back to the drawing board and figure out, freed of that erroneous constraint of tying its hands and saying, we're just the dutiful statutory servant, we can do nothing.

[01:00:33] Speaker 10:
All right, now I'm confused because I thought it was your position that by broadly delegating through sort of,

[01:00:45] Speaker 10:
failure to specify the indirect object or through the calling on EPA to come up with the best system of emission reduction, that that plainly empowers EPA to do this if it believes for all the reasons the statute requires it to consider that this is the best system.

[01:01:10] Speaker 10:
It doesn't require EPA to say, oh, generation shifting CPP.

[01:01:15] Speaker 10:
But it certainly unambiguously allows the agency to do that.

[01:01:21] Speaker 10:
Or are you saying otherwise?

[01:01:23] Speaker 10:
You're saying, well, we're just not answering that question.

[01:01:25] Speaker 10:
Maybe it doesn't.

[01:01:28] Speaker 10:
But because of where we're at in terms of the posture of this case, we have to send it back, Prell.

[01:01:35] Speaker 10:
Those are two different positions with actually, I think, some moment.

[01:01:41] Speaker 10:
And maybe I'm not being clear, but.

[01:01:43] Speaker 03:
No, Your Honor, and I apologize if I weren't clear.

[01:01:46] Speaker 03:
EPA never really determined, they never grappled with the facts in the record as to what would be the best system based upon the statute of conduct.

[01:01:55] Speaker 10:
The prior question is, and I don't know if you have a position on this, but the prior question is, is the delegation unambiguously present in the case

[01:02:07] Speaker 10:
in the statute for EPA to decide what it thinks the scope of a plan should be.

[01:02:17] Speaker 03:
That I agree with completely.

[01:02:21] Speaker 03:
AEP leaves no dispute.

[01:02:23] Speaker 03:
There's no room for dispute that EPA has the authority to regulate power plant CO2 emissions and to decide how to regulate those emissions.

[01:02:30] Speaker 03:
And, you know, AEP says this is EPA's, it's up to EPA.

[01:02:36] Speaker 03:
And I'm sorry if I was confusing in my response.

[01:02:38] Speaker 03:
We believe EPA has that authority to do that.

[01:02:44] Speaker 18:
There are some things, I think your brief says, and your fellow petitioners who come to the same conclusions say, there are some things under 7411D that the EPA just cannot do.

[01:03:00] Speaker 18:
Um, even if it's trying to achieve the goal of reducing carbon emissions, that's correct.

[01:03:07] Speaker 18:
Right.

[01:03:08] Speaker 03:
Yes, your honor.

[01:03:10] Speaker 18:
Okay.

[01:03:11] Speaker 18:
And I think now in answer to your question and answer in your answer to judge large question, um, you're saying that 74 11 unambiguously allows the EPA

[01:03:31] Speaker 18:
to reduce carbon emissions through generation shifting.

[01:03:39] Speaker 03:
No, I'm not saying that.

[01:03:41] Speaker 03:
You're not saying that.

[01:03:42] Speaker 03:
I feel like it's a kuzan first to some extent.

[01:03:44] Speaker 03:
I'm sorry if I'm being rude.

[01:03:49] Speaker 03:
What I answered Judge Pollard's question is there's a clear statutory delegation of authority in 111D.

[01:03:58] Speaker 03:
for EPA to determine what is the best system.

[01:04:01] Speaker 03:
And AEP affirms that.

[01:04:03] Speaker 03:
It says it's up to EPA to decide whether and how to regulate CO2 emissions from power plants.

[01:04:10] Speaker 03:
Couldn't be any clearer.

[01:04:12] Speaker 03:
End of case as far as whether EPA has that authority.

[01:04:14] Speaker 03:
I believe that was what Judge Pillard was asking.

[01:04:17] Speaker 03:
Your question is to whether EPA unambiguously must employ, if I'm understanding it correctly, must decide that generation shifting is the best system.

[01:04:30] Speaker 03:
I don't agree with that.

[01:04:32] Speaker 03:
I don't think that that's

[01:04:35] Speaker 03:
what I intended to say.

[01:04:36] Speaker 03:
And I'm sorry if I was confusing in my response.

[01:04:39] Speaker 18:
No, I think I do understand now.

[01:04:41] Speaker 18:
And that was not exactly what I was, was the yes or no question I was asking.

[01:04:46] Speaker 18:
But I think you have answered the yes or no question that I was inartfully trying to ask.

[01:04:51] Speaker 18:
So I'm good if my colleagues are.

[01:04:55] Speaker 08:
Any further questions?

[01:04:57] Speaker 08:
All right.

[01:04:58] Speaker 08:
Thank you, Mr. Polankaris.

[01:04:59] Speaker 08:
And now we will hear from, we'll give the EPA a chance here, from Mr. Brightville.

[01:05:05] Speaker 13:
Yes, good morning, your honor.

[01:05:07] Speaker 13:
Jonathan Brightfield from the Justice Department.

[01:05:11] Speaker 13:
Before I get started on the statutory arguments, I want to explain the Clean Power Plan and respond to the suggestion from Mr. Wu that this was a normal application of Clean Air Act Section 111 and not revolutionary, and why this really was the Clean Power Plan and not the Clean Power Standards.

[01:05:36] Speaker 13:
If you go to the Clean Power Plan final preamble, AD FedReg 64-816, it lays out EPA's eight-step process for calculating the state caps in the Clean Power Plan.

[01:05:52] Speaker 13:
And more detail is given throughout the preamble, specifically in AD FedReg 64-808-809 on the various geographic and regional considerations that went into what they did.

[01:06:06] Speaker 13:
And this was, to be sure, I think Mr. Polkart's called trading a complex process.

[01:06:13] Speaker 13:
This was also a complex process.

[01:06:15] Speaker 13:
But as a practical matter, the Clean Power Plan really simplifies and boils down to this.

[01:06:23] Speaker 13:
The Clean Power Plan pulled out a map of America.

[01:06:27] Speaker 13:
It put colored pins in the map where coal plants are, where gas plants are,

[01:06:36] Speaker 13:
where renewable plants are in the year around 2014.

[01:06:40] Speaker 13:
Then they made effectively another map with new pins for where they were projecting and wanted to see America's coal plants, gas plants, and then where they thought there could be renewable plants now eight years into the future.

[01:07:01] Speaker 13:
Then after creating their map, their plan, the CPP

[01:07:05] Speaker 13:
then backed into and calculated state emission caps based on that plan for the future, for eight years into the future, and then told states and industry of America, they need to go out and figure out how to do something.

[01:07:24] Speaker 08:
Is that in the record?

[01:07:25] Speaker 08:
Is that in the record?

[01:07:28] Speaker 13:
It is, Your Honor.

[01:07:29] Speaker 08:
They do out maps and put down pins and then

[01:07:32] Speaker 13:
So I'm simplifying the map.

[01:07:34] Speaker 08:
You mean this as kind of a metaphor or a parable.

[01:07:37] Speaker 08:
Right.

[01:07:38] Speaker 08:
I'm just trying to clear.

[01:07:40] Speaker 13:
Yes.

[01:07:40] Speaker 13:
Yes.

[01:07:41] Speaker 13:
No, no, no.

[01:07:41] Speaker 13:
I'm using a metaphor there.

[01:07:42] Speaker 13:
But yes, in the sites that I just referred you to, you can go and read through the eight-step process.

[01:07:49] Speaker 13:
And in particular, then, you can see the geographic considerations that went into it.

[01:07:57] Speaker 13:
They looked at, and this is on 64808, column two,

[01:08:01] Speaker 13:
When they did their modeling, they looked at resource constraints, such as the resource quality, land use exclusions, terrain variability, distance to existing transmission, population density, system constraints, such as interregional transmission limits.

[01:08:19] Speaker 13:
They went on to say that they considered the projected regional location of the evaluated

[01:08:27] Speaker 13:
renewable energy deployment in this analysis, which shows that the majority of such deployment is occurring in the East.

[01:08:34] Speaker 13:
They then apportioned this renewable energy across the regions and for each of the DESER regions.

[01:08:45] Speaker 10:
So you're pointing, Mr. Breitfeld, to where they're doing assessments of feasibility and cost, and they do a very detailed and rigorous examination of feasibility.

[01:08:57] Speaker 10:
and cost.

[01:08:59] Speaker 10:
But just backing up where you started, I'm a little bit puzzled by the position of the government here, given that there's sort of two models of regulation.

[01:09:13] Speaker 10:
One is kind of a flexible and market harnessing model, where the agency is supposed to be maximally hands off and just say, look, this is where we need to go as a country with

[01:09:28] Speaker 10:
emissions, we need to protect the country, our resources, our people.

[01:09:34] Speaker 10:
You states, and then ultimately you industry, are the wise ones to figure out how we get there.

[01:09:42] Speaker 10:
Now EPA, there's no question, I don't think, that EPA could do what we sometimes disparagingly refer to as command and control regulation, right?

[01:09:51] Speaker 10:
EPA could come in and say to every coal plant, time for carbon capture.

[01:09:56] Speaker 10:
You guys have had implicit subsidy from the public and from future generations for too long.

[01:10:01] Speaker 10:
We want you to capture all the carbon that you're emitting.

[01:10:04] Speaker 10:
There's nothing in 111 D that would prevent that.

[01:10:08] Speaker 13:
Is there?

[01:10:10] Speaker 13:
Absolutely.

[01:10:11] Speaker 13:
There is a lot in 111D that would prevent that, Your Honor.

[01:10:13] Speaker 13:
And I'll walk through the statutory elements.

[01:10:15] Speaker 10:
I mean, we have an argument.

[01:10:16] Speaker 10:
I guess we have an argument.

[01:10:17] Speaker 10:
But just for purposes of my question, assume that one could require co-firing, one could require carbon capture, or one could require, I mean, I know you have arguments against some of these things.

[01:10:32] Speaker 10:
But if we're talking about regulation of emissions that nobody has a right to emit,

[01:10:40] Speaker 10:
then why isn't it the pro-industry, pro-government minimal approach to do it this way, more flexible?

[01:10:50] Speaker 10:
You guys figure out how you wanna get there.

[01:10:53] Speaker 13:
It may very well be that from a policy perspective, Your Honor, but ultimately we're looking at Congress's statute and what Congress hit Clean Air Act section 111 in.

[01:11:03] Speaker 13:
And really Clean Air Act 111, there are parallels between the Clean Air Act and Clean Water Act, Your Honor.

[01:11:09] Speaker 13:
with certain sections relate to overall area planning and then do allow for trade-offs between various areas and emissions trading and averaging and those types of things.

[01:11:20] Speaker 13:
And also in aggregate consideration of water quality contributions in the Clean Water Act section.

[01:11:26] Speaker 13:
This is the technology and technique provision of the Clean Air Act.

[01:11:32] Speaker 13:
And so while there might be policy reasons for why you might wanna have

[01:11:38] Speaker 13:
an area planning regime to backstop this.

[01:11:42] Speaker 13:
At the end of the day, this provision is a command and control technology and technique provision, and has always been that for its 50 years of the Clean Air Act, Your Honor.

[01:11:54] Speaker 08:
And the reason why I'm making the point is- Sorry, I'm confused by what you mean by that.

[01:12:03] Speaker 08:
So that textually, they can't do something like the Mercury Rule, which involved

[01:12:09] Speaker 08:
trading rather than just technology enforcing?

[01:12:16] Speaker 13:
That's right, your honor.

[01:12:17] Speaker 13:
And in fact, EPA has acknowledged that you couldn't do a 111 now, a trading because there is no language with respect to that.

[01:12:26] Speaker 08:
All right, well, but certainly there was a time when EPA thought it could do the mercury rule trading under this very provision.

[01:12:32] Speaker 08:
So I don't know how you can quite go with the, that's the way it's been for 50 years.

[01:12:36] Speaker 13:
Well, except it was very different in that rule, your honor, because in that rule, there actually was a technology and technique requirement for scrubbers in the first instance.

[01:12:47] Speaker 13:
There was a training program.

[01:12:48] Speaker 08:
Well, but I think our plan had heat reducing elements just like you do, and it had trading options.

[01:12:55] Speaker 08:
So that doesn't strike me as, you know, so if you're agreeing that they can do a combination of technology and what Judge Piller described as market-based,

[01:13:06] Speaker 08:
approaches, then that's no different.

[01:13:09] Speaker 08:
And EPA certainly thought that was lawful, and the Mercury Rule was never struck down on that ground.

[01:13:14] Speaker 08:
EPA never argued that that's not something that 7411D allows us to do.

[01:13:18] Speaker 13:
It was vacated on other grounds, Your Honor, but this Court has actually issued a decision since then that is actually very relevant

[01:13:27] Speaker 13:
And it relates, actually, to the municipal incinerator rule, the 111-129 rule that was referenced earlier.

[01:13:35] Speaker 13:
And that's a case, actually, that was cited by the petitioners, the United States sugar case, Your Honor, which, candidly, we did not respond to in our brief.

[01:13:45] Speaker 13:
It reinforces our arguments.

[01:13:47] Speaker 13:
But I didn't note previously that the DC Circuit in the United States sugar case in 2016 actually

[01:13:56] Speaker 13:
in that case, precluded averaging across units in the scope of a single trading facility for essentially the same structural reasons that we made in the connection and that EPA has now made in connection with the Clean Power Plan, Your Honor, and its repeal.

[01:14:15] Speaker 08:
In the sense that- I'm just responding to you.

[01:14:17] Speaker 08:
For 50 years, everyone's known that, right?

[01:14:20] Speaker 08:
EPA didn't know that for 50 years.

[01:14:23] Speaker 13:
That rule was set aside was vacant.

[01:14:27] Speaker 08:
It hasn't been EPA's position.

[01:14:30] Speaker 13:
Is that fair?

[01:14:31] Speaker 13:
It is fair, Your Honor, that in the camera roll, EPA did attempt to incorporate a trading element in.

[01:14:38] Speaker 08:
And if you thought American sugar was direct authority for your interpretation here, I would have expected to see that in your briefs.

[01:14:47] Speaker 08:
I get you have an argument arising out of it that now you've noticed and

[01:14:50] Speaker 08:
I get that, but no one thinks that it has yet been foreclosed by this court.

[01:14:55] Speaker 13:
No, Your Honor, I would have liked to have had it in my brief, too, Your Honor.

[01:15:00] Speaker 13:
I apologize, very sincerely.

[01:15:01] Speaker 08:
No, I'm not talking about that.

[01:15:02] Speaker 08:
I'm just sort of talking about this 50 years everybody's known.

[01:15:06] Speaker 08:
I mean, we never issued a decision in Clean Power Plan.

[01:15:11] Speaker 08:
And the Mercury Rule came up, went down on different grounds.

[01:15:14] Speaker 08:
So this is just an open question.

[01:15:16] Speaker 08:
And it hasn't always been for 50 years in EPA that it's been

[01:15:20] Speaker 08:
solely limited to technological measures?

[01:15:28] Speaker 13:
I acknowledge, Your Honor, that they attempted to incorporate into the compliance mechanisms and the matters in the camera case this.

[01:15:38] Speaker 13:
And they have now, re-examining this statute, committed themselves and also in consideration

[01:15:44] Speaker 13:
of the United States sugar case, which is also cited, it was actually cited by EPA in response to comments when they were addressing these trading issues.

[01:15:54] Speaker 13:
So it was cited by EPA itself, it was cited by the petitioners in their brief, your honor.

[01:16:01] Speaker 13:
So, but, and then with respect to the other provisions.

[01:16:05] Speaker 10:
So, I mean, I think this gets to a point that as I understood it, Mr. Wu made about,

[01:16:11] Speaker 10:
the context and the industry and emission specific nature of different rules.

[01:16:18] Speaker 10:
And I think in American sugar, if we're dealing with hazardous waste at boilers, there are reasons to be more attentive to the local nature of an emission.

[01:16:30] Speaker 10:
And so a trading program, for example, is sort of is indifferent as to where the emissions come out.

[01:16:37] Speaker 10:
And if you're dealing with with haps,

[01:16:39] Speaker 10:
It would make sense that, I mean, I don't think you've foregone much is what I'm saying and not having relied more heavily on American sugar because the facts are quite different.

[01:16:46] Speaker 10:
And it does make sense that you might not be sufficiently attentive to community exposures of something that isn't carbon dioxide and that therefore might be foisted onto a community through trading that in a way that wasn't adequately controlled.

[01:17:02] Speaker 13:
Well, Your Honor, the policy issue did not actually play into the decision.

[01:17:06] Speaker 13:
It was a Chevron step one

[01:17:09] Speaker 13:
interpretation of the statute.

[01:17:12] Speaker 10:
But not 111.

[01:17:13] Speaker 10:
So that was Judge Millett's point.

[01:17:15] Speaker 13:
It wasn't 111.

[01:17:16] Speaker 13:
It was 129, Your Honor, which is a kind of a bolt-on to 111, actually, and not actually 112.

[01:17:25] Speaker 13:
It was kind of a side issue from the bigger dispute that was at issue there.

[01:17:30] Speaker 13:
The site, by the way, is 830.

[01:17:32] Speaker 13:
Fed 3rd, 579 is the general case.

[01:17:36] Speaker 13:
And then the relevant discussion is 627.

[01:17:39] Speaker 13:
to 628, Your Honor.

[01:17:41] Speaker 13:
But the analogy there that holds here and holds to the EPA interpretation in its repeal of the Clean Power Plan, Your Honor, is that under the structure of the statute from a Chevron step one perspective, you had units, which was a separately defined term from the facility.

[01:18:01] Speaker 13:
And because the units

[01:18:05] Speaker 13:
were distinct within the context of the broader facility, Your Honor.

[01:18:09] Speaker 13:
The DC Circuit, your colleagues, held that the statute unambiguously precluded averaging, which is needed and implicit in trading as well, across the various units within a facility.

[01:18:22] Speaker 13:
And that's one of our textual arguments here as well, Your Honor.

[01:18:25] Speaker 13:
There's the 111D is the operational provision in which 111A must be read.

[01:18:31] Speaker 13:
And that's not a novel position that was rolled out in connection with the repeal of the Clean Power Plan.

[01:18:38] Speaker 13:
That was the position of EPA in promulgating the Clean Power Plan.

[01:18:42] Speaker 13:
They said that reading the term existing source together with the instructions as to the best system of emissions reduction,

[01:18:52] Speaker 13:
was an important limitation, Your Honor.

[01:18:54] Speaker 13:
And it was because of that limitation that EPA did and always has read 111D to be the operative provision in which 111A then operates that they then had to make other textual changes, always expanding the authority of EPA in order to arrive at the Clean Power Plan.

[01:19:16] Speaker 08:
The first of those was- Just to be clear, it also operates into B.

[01:19:21] Speaker 08:
When you say 111 operates in the D relationship, it's also a relationship between 111A and B, correct?

[01:19:27] Speaker 13:
There is a relationship between 111D and B, Your Honor, and it's important- Not D and B. I'm talking about A and B. Sorry.

[01:19:34] Speaker 13:
Oh, A and B. Yes, Your Honor.

[01:19:35] Speaker 13:
It's important to note that when A is read into the context of B to respond to an argument about Mr. Wu, that that doesn't make sense.

[01:19:45] Speaker 13:
Actually, to the contrary,

[01:19:47] Speaker 13:
It makes perfect sense.

[01:19:48] Speaker 13:
And in fact, that's the point of why D has to be given a narrower reading, because in B, Congress was providing authority for the regulation of new sources.

[01:19:59] Speaker 13:
And it talked about looking at those sources as a category, as a group, your honor.

[01:20:05] Speaker 13:
Whereas then Congress uses much more precise site-specific language, refers to particular sources, when it moves to B under the Rousseau canon,

[01:20:15] Speaker 13:
that distinction between B and D must be given effect, Your Honor.

[01:20:20] Speaker 13:
Now, once you have B and D, and actually, Your Honor, again, to respond to the suggestion that we elipsed 28 words of consequence, I would actually ask the court, if you have it handy, to actually pull out the petitioner's reply brief, where in addendum A,

[01:20:41] Speaker 13:
They engage.

[01:20:42] Speaker 08:
Sorry, which petitioners?

[01:20:43] Speaker 08:
There's a lot of them.

[01:20:45] Speaker 13:
Thank you, your honor.

[01:20:46] Speaker 13:
It's the NGO petitioners reply brief.

[01:20:50] Speaker 13:
So final reply brief of public health and environmental petition.

[01:20:54] Speaker 08:
All right, give us a second.

[01:20:54] Speaker 08:
We got big piles here.

[01:20:56] Speaker 13:
Thank you very much.

[01:20:57] Speaker 13:
I think it would be helpful.

[01:21:01] Speaker 13:
Which page?

[01:21:02] Speaker 13:
You're going to turn to page 30 of the brief, addendum A. Great.

[01:21:08] Speaker 10:
Reply brief of public health and environmental petitioners.

[01:21:12] Speaker 13:
Yes, your honor.

[01:21:13] Speaker 10:
Oh, okay.

[01:21:15] Speaker 08:
Good.

[01:21:16] Speaker 08:
I was panicked because I didn't have one that said NGO.

[01:21:18] Speaker 13:
So yes.

[01:21:21] Speaker 13:
Walker, do you have it as well.

[01:21:24] Speaker 18:
I'm working on it, but you can you can proceed.

[01:21:27] Speaker 13:
What page did you say?

[01:21:29] Speaker 13:
You know, the other thing we could do is, since we're working with technology, I could actually put it up on the screen.

[01:21:34] Speaker 13:
I've done that in other arguments, in other contexts.

[01:21:37] Speaker 13:
I don't know if that would be helpful or not if everyone doesn't have it available.

[01:21:43] Speaker 13:
What page did you say?

[01:21:46] Speaker 13:
I can actually, Judge Pollard, I can actually screen share is one of the little nifty features here of this Zoom.

[01:21:53] Speaker 10:
You can just tell me what page before you do.

[01:21:55] Speaker 10:
Sorry, it's Addendum A, and I think you can talk about it.

[01:21:58] Speaker 13:
Okay, very good.

[01:22:02] Speaker 10:
Hang on, hang on.

[01:22:03] Speaker 08:
All right, I'm getting very confused.

[01:22:08] Speaker 08:
The public health

[01:22:10] Speaker 08:
I've got their opening brief, that's why.

[01:22:11] Speaker 08:
Sorry.

[01:22:20] Speaker 08:
I apologize.

[01:22:21] Speaker 08:
Okay.

[01:22:23] Speaker 13:
Got it.

[01:22:24] Speaker 13:
Okay, so if you turn to addendum A. Do you have a Judge Walker?

[01:22:27] Speaker 08:
Would it help you if he puts it up on the screen?

[01:22:32] Speaker 18:
I believe that

[01:22:35] Speaker 18:
If I don't have it, I'll have it within 10 seconds.

[01:22:38] Speaker 18:
So please don't wait on me.

[01:22:39] Speaker 07:
Talk slowly.

[01:22:41] Speaker 13:
Talk slowly.

[01:22:42] Speaker 18:
All right.

[01:22:43] Speaker 13:
So addendum A engages in exactly the same exercise that, you know, that EPA has engaged in throughout the years and which they disparage is one that you can't do and can't make sense of.

[01:22:58] Speaker 13:
But in addendum A, they do it.

[01:23:01] Speaker 13:
And when you read it, it's long, it's unwieldy.

[01:23:05] Speaker 13:
But it doesn't render something that is incomprehensible, like the 1983 Supreme Court case they had to go looking very hard to identify.

[01:23:16] Speaker 13:
And what they do is akin to what we did.

[01:23:20] Speaker 13:
They leave in the 28 words, but the 28 words don't matter to either their argument or our argument, which is why

[01:23:28] Speaker 13:
We removed them, your honor, to tighten up the number of words in our brief, but they're all here now.

[01:23:34] Speaker 13:
So since that issue has been put on the table, you can now see around.

[01:23:39] Speaker 08:
One of the things they say is it ends up sounding like it's the administrator that's determining the standard for each, right?

[01:23:47] Speaker 08:
The state will do it, but the state must submit to the administrator a plan in which the administrator has adequately determined for, has determined for an existing source.

[01:23:56] Speaker 13:
Yeah, so let me explain how it works because this question was asked earlier and I don't know that the answer was completely clear because there was a question about the standard, okay?

[01:24:07] Speaker 13:
And the way that this statute works and has been interpreted by EPA for years is you identify your category of sources, all right?

[01:24:18] Speaker 13:
And here indeed it's for existing sources and we're dealing with fossil fuel powered electric

[01:24:25] Speaker 13:
utilities, your honor.

[01:24:28] Speaker 13:
And then what you then do is you go back and you say, what's the best system of emissions reduction?

[01:24:35] Speaker 13:
Essentially, what's the state-of-the-art pollution for this category of sources, your honor?

[01:24:44] Speaker 13:
And so in the ACE rule, which we'll come to, EPA has identified heat rate improvement

[01:24:52] Speaker 13:
as the best system, the best technologies and techniques for improving emissions reductions at this category of sources.

[01:25:01] Speaker 13:
So then, now once you've identified the technology, then the technology is then used as the baseline for, again, this is EPA doing this.

[01:25:11] Speaker 13:
We totally acknowledge that, and that's why ultimately the ellipse does not matter.

[01:25:16] Speaker 13:
then what EPA does is they go out and they create standards of some sort that reflect the degree of limitation that's achievable.

[01:25:28] Speaker 13:
So sometimes it may be, we think, as the example, using the example of this record, in the clean power plant, they ultimately backed into a number in order to achieve their planning objective.

[01:25:41] Speaker 13:
They ultimately backed into mathematically a number

[01:25:44] Speaker 13:
that would come down to 1305 pounds of CO2 per megawatt hour, your honor.

[01:25:52] Speaker 13:
So that was the standard in the Clean Power Plan.

[01:25:56] Speaker 13:
In the ACE rule, what the standard for emissions that they came up with were the heat rate improvement index table that is in the ACE rule, your honor.

[01:26:08] Speaker 13:
So they come up with the,

[01:26:11] Speaker 13:
standards that reflect the degree of a limitation achievable.

[01:26:16] Speaker 13:
And then it's ultimately the state in 111D that then sets the final standard, that emission standard that the actual source has to meet.

[01:26:30] Speaker 13:
So that's the way that the statute has been read by EPA continuously from the beginning until now.

[01:26:41] Speaker 08:
It hasn't been a couple of things.

[01:26:45] Speaker 08:
But one is this indirect object theory of application, if I recall correctly, has never before been articulated, included by any one of the 155 petitioners challenging the Clean Power Plan.

[01:27:02] Speaker 08:
Is that correct?

[01:27:05] Speaker 13:
It is correct, Your Honor, which is one of the reasons.

[01:27:07] Speaker 08:
And the EPA then also did not advance

[01:27:12] Speaker 08:
this reading, this plain, apparently plain reading of this statutory language.

[01:27:19] Speaker 13:
Until the clean power plan repeal your honor.

[01:27:23] Speaker 08:
Yes.

[01:27:23] Speaker 08:
Okay.

[01:27:23] Speaker 13:
All right.

[01:27:24] Speaker 13:
They did not advance.

[01:27:25] Speaker 08:
The aspect of your argument is not something you've been doing all longer than anyone else happened to notice.

[01:27:31] Speaker 13:
No, no, not that not that aspect of the argument.

[01:27:33] Speaker 13:
So let me tell you then what they did do in the kind of your Chevron step one argument.

[01:27:38] Speaker 13:
Well, here is what's here is what the Chevron step one argument now ultimately is here with this in front of you, your honor, which is that

[01:27:45] Speaker 13:
What EPA did in the Clean Power Plan, and the CPP preamble acknowledges this, is in order to make generation shifting work in the addendum A, in what you see before you, they had to strike out the word application and insert the word implementation.

[01:28:08] Speaker 13:
And application is narrower than implementation.

[01:28:12] Speaker 13:
Implementation doesn't require an indirect object.

[01:28:16] Speaker 10:
I don't see that.

[01:28:17] Speaker 10:
Are you still talking about page 30?

[01:28:20] Speaker 13:
Yes, place 30.

[01:28:21] Speaker 13:
What line?

[01:28:23] Speaker 10:
I don't see applications struck out anywhere.

[01:28:25] Speaker 13:
No, no, no.

[01:28:26] Speaker 13:
I'm telling you what the CPP interpretation is.

[01:28:29] Speaker 10:
We're not looking at this anymore.

[01:28:31] Speaker 10:
Can I look at the statute and just ask you a couple of questions that I think go to your theory?

[01:28:36] Speaker 10:
Yes, your honor.

[01:28:42] Speaker 10:
You talk in your brief about interpretive first principles, and you mentioned that because 111A1 is entitled definitions, it can't have an independent effect.

[01:28:53] Speaker 10:
And again, I think the petitioners here have said, oh, often definition sections have independent effect and describe things like the scope of the authority of the agency.

[01:29:05] Speaker 10:
And you refer to this as contrary to statutory interpretation

[01:29:10] Speaker 10:
101, what authority should I look to for that proposition that 111A1 by itself unambiguously has to pick up 111D1?

[01:29:28] Speaker 13:
Well, I think it is a standard of legislative drafting that definitions are used as a shortcut to prevent you having to use long,

[01:29:39] Speaker 13:
phraseology in the context of an operative provision.

[01:29:42] Speaker 13:
So I would say that just is basic.

[01:29:44] Speaker 13:
Am I saying it always works?

[01:29:45] Speaker 13:
Right.

[01:29:46] Speaker 10:
No, I was asking a slightly different question, which is your point that it doesn't have sort of legally operative effect, not actually being the place where power is described.

[01:30:01] Speaker 13:
So I'm not sure I understand your question, Your Honor.

[01:30:07] Speaker 13:
EPA unambiguously in the Clean Power Plan, and again, this is in the Clean Power Plan final preamble 64762, column two, acknowledges that these 111A1 has to be read into context with 111D1 in order to make sense of this, and that this is an important limitation of Congress.

[01:30:32] Speaker 13:
They wrote, when read in context,

[01:30:35] Speaker 13:
So we're referring to 111A1 with B1.

[01:30:39] Speaker 13:
The phrase system of emission reduction carries important limitations because the degree of emission limitation must be achievable through the application of the best system of emissions reduction.

[01:30:56] Speaker 13:
The system of emissions reduction must be limited to a set of measures that work together to reduce emissions, Your Honor,

[01:31:05] Speaker 13:
And then they further said at Fedreg 64-720 column two that in another formulation of this same language, EPA interpreted this phrase to carry an important limitation

[01:31:31] Speaker 13:
because the emission guidelines for the existing sources must reflect the degree of emission limitation achievable through the application of the best system of emission reduction adequately demonstrated.

[01:31:44] Speaker 13:
The system must be limited to measures that can be implemented, quote, applied by the sources themselves that, as a practical matter, by actions taken by the owners or operators of the sources.

[01:32:00] Speaker 13:
So EPA fully acknowledged when you take a look at this, at what they did here, they crossed out application and inserted implementation.

[01:32:10] Speaker 13:
They crossed out a existing source and inserted owner operator so that the provision would now read and make sense, establishes standards for- Hang on a second.

[01:32:23] Speaker 08:
For these heat changes that your ACE rule does,

[01:32:27] Speaker 08:
My assumption is that the plant itself isn't doing it, but the owner-operators are making those changes.

[01:32:33] Speaker 08:
The plant itself is a physical building.

[01:32:38] Speaker 08:
The facility, it's not doing anything.

[01:32:41] Speaker 08:
It's an inanimate object.

[01:32:44] Speaker 08:
It's got to be something the owner-operators can do.

[01:32:47] Speaker 08:
Now, you would say at.

[01:32:49] Speaker 08:
their facility or on their machinery, I guess.

[01:32:53] Speaker 08:
But I don't understand, I guess I'm a little confused about the owner operator thing because that's who's always doing either applying or implementing whatever the standards are.

[01:33:05] Speaker 08:
Isn't that right?

[01:33:06] Speaker 13:
Yeah, the distinction there, your honor, and this is the same distinction that was of consequence in the US sugar case where the DC circuit founded Chevron step one that you couldn't average across units is

[01:33:19] Speaker 13:
The distinction there, your honor, is that the sources under the Clean Power Plan, the actual sources don't have to do those things.

[01:33:27] Speaker 13:
Only the owner has to do it.

[01:33:30] Speaker 13:
So the owner may choose to have no system of emissions reduction applied at certain existing sources, and instead do other things, other places, other ways.

[01:33:43] Speaker 08:
And so what you have is you have an- In the sugar core case, it was you had

[01:33:49] Speaker 08:
Much more narrow language and the fight wasn't about use owners versus facilities because it's always the owners operators that are making the changes.

[01:34:00] Speaker 08:
These things don't evolve on their own.

[01:34:02] Speaker 08:
It was there.

[01:34:03] Speaker 08:
You had language, the plain language of the Bart it was that was, by the way, not 7411 7429

[01:34:10] Speaker 08:
which requires EPA to regulate emissions from solid waste incineration units and defines an incinerator unit as a distinct operating unit of a facility.

[01:34:23] Speaker 08:
And so it was in that sense that they said you can't sort of group facilities together in the way that they were for averaging.

[01:34:31] Speaker 08:
But you don't have that language here.

[01:34:34] Speaker 08:
You just have facility and you have

[01:34:39] Speaker 08:
Language.

[01:34:39] Speaker 08:
It says you do you set standards for not at for a facility.

[01:34:46] Speaker 08:
Your language.

[01:34:48] Speaker 08:
I think we've got a grapple with here.

[01:34:51] Speaker 13:
Your honor, you do have you do have parallel language.

[01:34:53] Speaker 13:
First of all, again, 129 they only cite 129 and sugar.

[01:34:57] Speaker 13:
But 129, if you go and pull the statute, is actually a 111 bolt-on that actually is derived from it.

[01:35:04] Speaker 08:
I don't know.

[01:35:04] Speaker 08:
It's not the language in 7411 is all I'm saying.

[01:35:08] Speaker 13:
That's right.

[01:35:08] Speaker 08:
We can agree on that.

[01:35:09] Speaker 13:
You're correct, Your Honor.

[01:35:10] Speaker 13:
But I'm just explaining.

[01:35:12] Speaker 08:
The plain language that barred that plan is not the plain language we're interpreting here.

[01:35:15] Speaker 13:
Correct, Your Honor.

[01:35:16] Speaker 13:
But there are languages that do the same.

[01:35:20] Speaker 13:
There is language that does the same kind of lifting as unique in this structure.

[01:35:25] Speaker 13:
i.e.

[01:35:25] Speaker 13:
the singular, the use of the word particular, your honor, is, and then, but ultimately what you have there is in the first instance.

[01:35:35] Speaker 08:
Can we just take it one step at a time?

[01:35:37] Speaker 08:
I want to get your owner-operator, I guess I'm, again, I'm still just confused as to what that problem was, because it's always going to be something that owner-operators can apply to a facility.

[01:35:51] Speaker 10:
I don't want to interrupt because Judge Muller has a line of questioning.

[01:35:56] Speaker 10:
I want her to be able to return to it.

[01:35:57] Speaker 10:
But I'm confused by why we're spending time on this.

[01:36:00] Speaker 10:
Because in your own brief, EPA says it's a truism that the source does not by itself comply with a regulation.

[01:36:08] Speaker 10:
Its owner does by application of controls.

[01:36:11] Speaker 10:
And I don't think that there's anything turning on

[01:36:18] Speaker 10:
whether it's the source or whether it's the owner of the source.

[01:36:22] Speaker 10:
Well, I guess there is, but I thought you'd already conceded that the owner is the operative actor here.

[01:36:28] Speaker 13:
Yes, but the owner has to act in the context of the existing source.

[01:36:34] Speaker 13:
What the CPB did and where it goes beyond the scope of the statute is that the owner operator is able to comply by doing nothing at existing sources, Your Honor, whereas the statute

[01:36:47] Speaker 13:
requires application of the best system of emission reduction, heat rate improvement, at the source, your honor, to the source, your honor.

[01:36:56] Speaker 08:
Well, that at and to is, again, so now we need to back up there.

[01:37:00] Speaker 08:
It has to be something, a standard of performance, which is just the emission standard for the facility.

[01:37:08] Speaker 08:
I guess I'm having trouble seeing

[01:37:13] Speaker 08:
how a standard of performance and a mission limit for a facility by plain language means application of a technology, a hard technology at the physical plant.

[01:37:29] Speaker 08:
Sure.

[01:37:29] Speaker 08:
Yeah.

[01:37:30] Speaker 13:
Let me just walk through it all the way.

[01:37:33] Speaker 13:
Just reading the provision, your honor.

[01:37:36] Speaker 13:
And if you start at the A on page 30, which establishes, it establishes

[01:37:43] Speaker 13:
standards for emissions of air pollutants, which reflect the degree of emission limitation achievable through the application of the.

[01:37:51] Speaker 13:
Now, here's where we get the dispute.

[01:37:52] Speaker 13:
We have two different examples.

[01:37:54] Speaker 13:
We have the Clean Power Plan example, which inserts effectively the words generation shifting in there.

[01:38:00] Speaker 13:
And then the ACE example, which inserts the words.

[01:38:05] Speaker 08:
Well, the Clean Power Plan also did the heat, some of the same heat rate, heat efficiency, right?

[01:38:11] Speaker 08:
That was block one.

[01:38:13] Speaker 13:
It was block one, Your Honor, but that was... Was there anything wrong with block one in the Clean Power Plan?

[01:38:20] Speaker 13:
The way they implemented block one in the Clean Power Plan was also based on averaging, ultimately, Your Honor, across a regional basis.

[01:38:30] Speaker 13:
It was not based on the implementation at particular sources.

[01:38:34] Speaker 13:
And so, yes, there was.

[01:38:35] Speaker 13:
It's not the same form of heat rate improvement as the heat rate improvement that was then developed and applied

[01:38:43] Speaker 13:
for particular sources by the AISRAW.

[01:38:46] Speaker 10:
So that was textually part of it.

[01:38:48] Speaker 10:
If we had only had Block 1 in the Clean Power Plan, you would still be arguing that it was invalid.

[01:38:55] Speaker 13:
It would still have been invalid, yes, Your Honor, because it was based on regional averaging.

[01:39:00] Speaker 13:
It was not based on it.

[01:39:01] Speaker 08:
What is it that was based?

[01:39:02] Speaker 08:
The heat technology isn't based.

[01:39:04] Speaker 08:
You mean the standard was based?

[01:39:07] Speaker 10:
The guideline that the federal government asked the states to.

[01:39:10] Speaker 08:
The DSER?

[01:39:10] Speaker 10:
Right, right.

[01:39:13] Speaker 08:
VSER was based on averaging.

[01:39:16] Speaker 10:
That is really interesting.

[01:39:17] Speaker 10:
Okay, that's helpful.

[01:39:19] Speaker 10:
That's come into focus.

[01:39:20] Speaker 13:
Okay, so yes, it was based on averaging.

[01:39:24] Speaker 13:
It wasn't based on particular sources, but it was based on average.

[01:39:29] Speaker 13:
I'm tying myself up here a little bit, Your Honor, but it was based on averaging across what the industry could do.

[01:39:37] Speaker 13:
and to create.

[01:39:38] Speaker 10:
Okay, so one could not have, so this, I mean, maybe this gets, we should maybe let this be argued in the later part of the argument where these questions are actually about what is open to the states in terms of implementation flexibility, but that's part of your argument that the BSER in the Clean Power Plan was based on an assumption that there might be some collaboration among

[01:40:07] Speaker 10:
required by states to get better results using only building block one?

[01:40:13] Speaker 13:
So the way the building block one focused in, and again if you go back through the eight step process that's laid out, is they looked at what they thought an average heat rate improvement reduction could be across the category.

[01:40:30] Speaker 08:
and then yeah but the best system always does or are you actually taking the view i had thought you weren't that the best system has to be targeted at individual facilities otherwise i don't the epa has to make sort of a sort of cross-cutting sense of the facilities here what they can do it's setting a single standard is it no you're right your honor i'm i'm clarifying what i said earlier on on how the heat rate improvement factored in so

[01:41:00] Speaker 13:
The way that heat rate improvement was done in the Clean Power Plant was different than how the heat rate improvement was implemented in the context of the ACE role.

[01:41:11] Speaker 13:
And there, it was still technologies that could be implemented at the source.

[01:41:17] Speaker 13:
And then they used that to create a rate that was kind of an average rate for all facilities, Your Honor.

[01:41:23] Speaker 08:
So that was good to there.

[01:41:24] Speaker 08:
That was under your theory, right?

[01:41:25] Speaker 13:
That's OK to there, Your Honor.

[01:41:27] Speaker 13:
And then, but at that point, and that

[01:41:30] Speaker 13:
but at the point at which they then utilized this concept of generation shifting as the best system for building blocks two and three.

[01:41:40] Speaker 08:
I know, but we're only asking about building block one.

[01:41:44] Speaker 13:
Right, but from a statute- It doesn't have a two and three.

[01:41:47] Speaker 08:
If all you had was building block one, who cares about averaging they would do if they had a building block two?

[01:41:53] Speaker 08:
Right, it's- You have to do averaging or a typical sense or

[01:41:59] Speaker 08:
sort of cross view of what's most likely in assembling a BSER?

[01:42:03] Speaker 13:
To create the standard for building block one, you do, Your Honor, yes.

[01:42:07] Speaker 13:
So what I'm talking about here is building blocks two and three, though.

[01:42:10] Speaker 08:
Okay, but the question to you was whether there was a problem with building block one.

[01:42:15] Speaker 13:
So building block one was systems that could be applied to the source, Your Honor.

[01:42:24] Speaker 13:
And so building block one, they said it could- By the owners and operators.

[01:42:28] Speaker 13:
Right.

[01:42:29] Speaker 13:
Well, by the sources, it had to be applied at the sources.

[01:42:33] Speaker 08:
At the sources and by the source.

[01:42:36] Speaker 08:
I'm saying who's doing it at the source.

[01:42:39] Speaker 13:
Ultimately source is a subset of owner, your honor.

[01:42:42] Speaker 13:
And the reason why they had to expand the definition of source to encompass owner was because generation shifting would no longer require that the

[01:42:54] Speaker 13:
That that you had actual reduction what we did no longer look to what was achievable at the source.

[01:43:01] Speaker 08:
Right.

[01:43:01] Speaker 08:
They use the preposition for which is in the statute.

[01:43:06] Speaker 13:
For yet for any existing source, your honor, but the Which is what the statute says

[01:43:12] Speaker 13:
It does say that, Your Honor.

[01:43:13] Speaker 08:
It says- It doesn't say at any existing source.

[01:43:16] Speaker 13:
Well, it says to any, you have to say to any particular source later on in the statute.

[01:43:21] Speaker 13:
So it uses both prepositions at different points.

[01:43:25] Speaker 08:
The preposition for- It's all a good argument for why it's ambiguous.

[01:43:29] Speaker 13:
It isn't, Your Honor, because the one thing that it doesn't do is the statute can't, you can't change the word from the narrow word application to implementation.

[01:43:40] Speaker 13:
You can't,

[01:43:42] Speaker 13:
excise out the words existing source and substitute in that you can set the compliance measure to determine the best system, what the owner or operator is able to do holistically, even if particular sources cannot apply the best system of emissions reduction.

[01:44:00] Speaker 13:
And that's what the Clean Power Plan leaves the statute, is because existing sources cannot apply generation shifting.

[01:44:08] Speaker 13:
Generation shifting applies to the grid.

[01:44:11] Speaker 08:
We are getting way, way, way over time here, and we have a lot of people to argue.

[01:44:16] Speaker 08:
I think you're even coming back again.

[01:44:18] Speaker 08:
So I think what we will do, I want to see if my colleagues have more questions for you.

[01:44:23] Speaker 08:
Otherwise, I think we will let Rosie C jump in.

[01:44:28] Speaker 08:
Trying to see where people are seeing where you are.

[01:44:29] Speaker 08:
Okay.

[01:44:31] Speaker 08:
Is it Judge Pillard or Judge Walker?

[01:44:33] Speaker 08:
Do you have more questions for Mr. Brightville at this stage?

[01:44:37] Speaker 08:
I'm fine.

[01:44:38] Speaker 08:
I apologize.

[01:44:39] Speaker 08:
I could learn from you guys talking all day, but we have to let everyone have a chance.

[01:44:44] Speaker 08:
So, all right, Ms.

[01:44:47] Speaker 16:
C. Good morning, your honors.

[01:44:48] Speaker 16:
May it please the court.

[01:44:49] Speaker 16:
I'm Lindsay C. on behalf of the state and industry, interveners in support of EPA.

[01:44:54] Speaker 16:
Section 111 is about EPA's authority to help ensure that certain regulated sources operate efficiently.

[01:45:01] Speaker 16:
It's not about power to decide which electricity plants get to operate or how much they can produce.

[01:45:07] Speaker 16:
Those are very different questions for an energy planner or a public utility regulator.

[01:45:12] Speaker 16:
They have implications far beyond the environment, and they're squarely within the zone of the state's traditional powers.

[01:45:18] Speaker 16:
Congress and reviewing courts for that matter have been extremely careful not to infringe that zone, even in the context of FERC, which is the federal agency that plainly does have expertise over federal energy issues.

[01:45:32] Speaker 16:
So it would be extraordinary for EPA, for Congress to delegate this authority implicitly to EPA.

[01:45:37] Speaker 16:
In this section.

[01:45:39] Speaker 10:
You see, I have a question in that framework.

[01:45:42] Speaker 10:
And this is a hypothetical.

[01:45:45] Speaker 10:
If carbon capture were equally as expensive or inexpensive as the heat rate improvements that the agency has included within the best system of emission reduction under the ACE rule, you would not think there would be any

[01:46:06] Speaker 10:
bar in the statute to requiring carbon capture?

[01:46:11] Speaker 16:
ER, of course, as long as it's something that's applicable at the source and is something that meets all of the other statutory criteria that EPA has to consider when setting a VSER, know that that would not be the same problem that we have here, where we have a standard that requires changes across the entire regional energy grid.

[01:46:29] Speaker 10:
And so too with co-firing of natural gas or of biofuels.

[01:46:35] Speaker 10:
questions of cost.

[01:46:37] Speaker 16:
Yes, Your Honor.

[01:46:38] Speaker 16:
Of course, as we'll discuss much more later, there are significant record-based concerns that justify EPA's decision not to require those here, the same way that EPA didn't under CPP.

[01:46:49] Speaker 10:
And the cost that EPA is supposed to consider, is that cost to the system as a whole, that's sort of average

[01:47:01] Speaker 10:
cost to American rate payers?

[01:47:07] Speaker 10:
Or does the agency have to take into account that maybe a plant is in a very disadvantageous economic situation and that it can't afford to do something that as a social, as an aggregate matter, would actually be good for society?

[01:47:30] Speaker 10:
What's the lens for considering cost?

[01:47:34] Speaker 16:
Yeah, there's a little bit of both in there, and that's because when EPA is setting the best system, it is looking at more of a national focus to see what is adequately demonstrated across the nation.

[01:47:46] Speaker 16:
And there also has to be room for the state to do their important role under 111D, which is to consider source specific factors.

[01:47:54] Speaker 16:
So when EPA is making this best system determination, it has to be something that allows states to have those deviations.

[01:48:01] Speaker 16:
And that's something that CPP did not allow.

[01:48:03] Speaker 16:
The agency there backed itself into an emissions limit that would not allow any sources to actually achieve it in practice.

[01:48:12] Speaker 16:
And we can see that CPP was up front about that, and so were Mr. Wu and Mr. Troncards, that the only way for a source to actually achieve the stringent emission limits would be through something like carbon capture and co-firing, which even in CPP, the agency recognized would not be adequately demonstrated.

[01:48:31] Speaker 16:
So we have something very different here.

[01:48:33] Speaker 16:
We have a type of rule that is trying to change the type of sources that actually operate and how much that they can do.

[01:48:41] Speaker 10:
Well, I mean, that's one way of characterizing it.

[01:48:45] Speaker 10:
But why isn't it also a standard of performance to contemplate that a plant might be performing at 90% or 80% capacity or 50% capacity

[01:49:01] Speaker 10:
I mean, that's something that the plant is doing at its site.

[01:49:08] Speaker 16:
Right?

[01:49:09] Speaker 16:
Yes, Your Honor.

[01:49:10] Speaker 16:
And in fact, as we'll talk about more with the ACE rule, some of the seven options that the agency gave here actually take into account the actual on-the-ground realities that some plants don't operate at 100%.

[01:49:21] Speaker 16:
So the rule actually gives flexibility for plants in that situation to still make efficiency improvements.

[01:49:28] Speaker 16:
But that's different from setting the BSER that tries to make the decision of how much they should operate.

[01:49:33] Speaker 16:
So it's the difference between the class here.

[01:49:35] Speaker 10:
It doesn't actually make any of the decisions about any individual plants.

[01:49:38] Speaker 10:
The states do.

[01:49:40] Speaker 10:
Actually, the way you articulated it actually seemed quite clear to me in that regard.

[01:49:45] Speaker 10:
The federal government is not looking at what's required of individual plants.

[01:49:49] Speaker 16:
Well, Your Honor, it is true that the state set a particular state to performance in this case.

[01:49:55] Speaker 16:
But that's the problem of something like the BSER in the CPP.

[01:49:59] Speaker 16:
It doesn't let the states actually do that because it already prejudged what's achievable in that case by setting an overall average emission limit that any particular unit can't meet.

[01:50:10] Speaker 16:
And it's not even just at the unit level.

[01:50:12] Speaker 16:
CPP was very upfront that even many states would not be able to meet it by trading within the states themselves.

[01:50:18] Speaker 16:
That's why when we look at the methodology behind CPP, again, the agency was very upfront that they knew that trading would have to come from other states.

[01:50:27] Speaker 16:
We can see that at 80 Federal Register 64, 807 through 809, where EPA explains that it's looking specifically at the regional level because it knows that some of these changes, in fact, many of them, can't be achieved on a statewide level.

[01:50:41] Speaker 16:
And that's easy to understand as a matter of geography.

[01:50:44] Speaker 16:
When there's an aggressive push to move away from fossil fuel-fired plants to natural gas and ultimately renewable, we have a very different sort of system.

[01:50:53] Speaker 16:
So a state like West Virginia or North Dakota that's predominantly home fire-based is simply not going to be able to make those changes.

[01:51:00] Speaker 16:
And that results in actual decreases in the number of plants that can operate, which has significant effects for the people of our states.

[01:51:08] Speaker 16:
Those decisions, how many plants we need and what type of plants we need in order to give

[01:51:13] Speaker 16:
fair prices and effective reliability.

[01:51:15] Speaker 16:
That's what states do.

[01:51:17] Speaker 16:
That's what it means to be a public utility regulator.

[01:51:20] Speaker 08:
And CPP was taking that- I guess the whole point here of this statute is that states do that, but boundaries are imposed because when states choose power production sources that pollute, it turns out they don't keep that pollution within their state.

[01:51:40] Speaker 08:
And so it's not as though this is something that's a self-contained entire issue for states alone.

[01:51:48] Speaker 08:
This whole point of the Clean Air Act is there has to be a balance.

[01:51:51] Speaker 08:
And so if it turns out that some state choices, and maybe there's a mix of choices, but some choices within a state, not all of them, are having

[01:52:03] Speaker 08:
deathly consequences for the United States, people in that state and neighboring states and maybe in the entire United States.

[01:52:11] Speaker 08:
And the Clean Air Act gets to step in and set standards for what you're allowed to put into the air.

[01:52:20] Speaker 08:
And then your choice is within that range, right?

[01:52:23] Speaker 08:
You gotta meet that target, correct?

[01:52:27] Speaker 08:
You still have the state discretion, but it has to be, it's subject to,

[01:52:32] Speaker 08:
that target number, and then the state gets to choose.

[01:52:36] Speaker 08:
Maybe we can get to that target using our own forms of regulating the timing of production, the conditions under which production occurs, the technology that's used, or maybe we can't, and then we're going to have to do something a little different.

[01:52:52] Speaker 08:
It's technology forcing, which is what the Queen Eric has long been recognized to be.

[01:52:57] Speaker 16:
Your Honor, when the EPA is fulfilling its purpose to reduce pollution, it's important in the preamble to the act, Congress said that goal is subject to the provisions of the statute.

[01:53:08] Speaker 16:
And we're looking specifically at 111D, which has a more limited purview for the agency.

[01:53:14] Speaker 16:
Even under 111B, for instance, the agency is allowed to have more extreme measures for new sources.

[01:53:21] Speaker 16:
And that makes sense, because when you're starting from scratch, you can require a new facility to incorporate all of the state-of-the-art technology controls that exist.

[01:53:29] Speaker 16:
We don't have the same situation with states, and that's why Congress was very clear to ensure, I'm sorry, with existing sources, and that's why Congress was clear to ensure that states would have the ability to consider what actually exists, what is actually possible for an existing source,

[01:53:44] Speaker 16:
And for states to be able to look at some of the consequences and ripple effects from dramatic changes to the existing composition of energy units within our fleet.

[01:53:54] Speaker 16:
Okay.

[01:53:54] Speaker 16:
I'm sorry.

[01:53:55] Speaker 08:
This is just one time.

[01:53:56] Speaker 08:
Is it just probably just one type of a question to make sure I understand how the statute works.

[01:54:01] Speaker 08:
Between new and existing sources.

[01:54:06] Speaker 08:
When do we ask whether something is new?

[01:54:09] Speaker 08:
Is it every time a new regulation is promulgated?

[01:54:12] Speaker 08:
So something that is a new source under one regulation, say it was a new source under a clean power plan or under some regulation in 19, let's just imagine a regulation in 2010.

[01:54:26] Speaker 08:
They're a new source.

[01:54:28] Speaker 08:
And then a new regulation comes along setting new standards of performance in 2012.

[01:54:33] Speaker 08:
Would those new sources then turn into existing sources?

[01:54:36] Speaker 16:
You know, it depends.

[01:54:37] Speaker 16:
In 111B, it's not only focused on new sources, but also modified sources.

[01:54:41] Speaker 08:
Right, but put that aside either, right?

[01:54:43] Speaker 08:
That's a separate question.

[01:54:46] Speaker 08:
I'm just trying to understand when you're new and when you're existing.

[01:54:48] Speaker 08:
It changes each time a new standard of performance is set, is that right?

[01:54:51] Speaker 16:
No, Your Honor, because if that were the case, whenever EPA issued a standard under any of these provisions, then every source, new or existing, could be retroactively pushed back into the new source bucket.

[01:55:04] Speaker 16:
That would be the distinction between new and existing doesn't have any role in the statute anymore.

[01:55:08] Speaker 08:
When is it new?

[01:55:08] Speaker 08:
Because the new is defined in terms of the timing of when a regulation was promulgated.

[01:55:14] Speaker 16:
Of course, and that has to do with some of the regulations that are initially promulgated under the statute.

[01:55:18] Speaker 16:
But here, of course, there's no question we're talking about what is an existing source.

[01:55:22] Speaker 16:
That's the only authority that he can rely on.

[01:55:25] Speaker 08:
Sorry, you're talking about the initial regulations.

[01:55:28] Speaker 08:
When were they promulgated?

[01:55:31] Speaker 16:
Your Honor, I'm not sure particularly which ones we're focusing on at that point.

[01:55:34] Speaker 16:
There's certainly been different ones at different times the Act was amended.

[01:55:38] Speaker 16:
But respectful, Your Honor, that that's not relevant to decide what matters.

[01:55:41] Speaker 08:
Well, I'm just trying to understand how the statute works.

[01:55:43] Speaker 08:
That's all.

[01:55:44] Speaker 08:
So I guess it may not be relevant, but I don't understand whether it's relevant or not if I don't know how it works.

[01:55:49] Speaker 16:
No, no, no.

[01:55:50] Speaker 16:
Of course, Your Honor.

[01:55:51] Speaker 16:
And here what we do have is the statute is clear.

[01:55:53] Speaker 08:
Are there things within your state that were new and then became existing under a new regulation?

[01:56:02] Speaker 16:
I don't believe that's the case, Your Honor.

[01:56:04] Speaker 16:
I will have to confirm that, and I am speaking again later so I could confirm some of it.

[01:56:08] Speaker 08:
So is existing locked in at like 1990, the last time the statute was amended, or it's defined in terms of regulations, so I'm confused.

[01:56:16] Speaker 16:
Well, I think I may understand where this is.

[01:56:19] Speaker 16:
The question is, when we have a new regulation in place, the question is,

[01:56:23] Speaker 16:
So, for instance, in 2015 when CPP was applied, what existed at that point or what was going to be new at that point going forward?

[01:56:30] Speaker 08:
So I think the things that were new then were now existing under the ACE rule?

[01:56:37] Speaker 16:
I'm sorry, things that were new that potentially there could be some sources that would have been built after the ACE rule that would not be existing.

[01:56:44] Speaker 16:
So that is the way that it could work.

[01:56:46] Speaker 16:
Once you build it at a particular snapshot in time,

[01:56:49] Speaker 16:
Once you have a new source of significant modification, then the new source rules would apply.

[01:56:55] Speaker 16:
But once an existing and a new new source rule comes out at that point, it wouldn't retroactively apply to that.

[01:57:01] Speaker 08:
I'm sorry, I cut off Judge Pillard.

[01:57:03] Speaker 08:
She had a question.

[01:57:05] Speaker 10:
I was just looking at your brief, Ms.

[01:57:08] Speaker 10:
C, and trying to sort of clarify in my own mind the interaction between

[01:57:16] Speaker 10:
your federalism argument that the Clean Power Plan and the interpretation of the statute that's reflected in the Clean Power Plan was an intrusion into the state's traditional authority over regulation of utilities.

[01:57:34] Speaker 10:
And how that interacts with the argument that you make that

[01:57:43] Speaker 10:
that we should interpret the statute to prohibit the states from choosing their own means to implement whatever the federal guideline is.

[01:57:55] Speaker 10:
That we should interpret the statute to prohibit generation shifting or emission trading.

[01:58:01] Speaker 10:
That seems like the opposite of a federalism argument, the opposite of an argument for maximum flexibility on the part of the states.

[01:58:10] Speaker 10:
And I guess I have two questions.

[01:58:12] Speaker 10:
Really, the decisive question is, where do you find authority for that latter position in the statute?

[01:58:20] Speaker 10:
Why would you be foreclosing, arguing that the statute forecloses compliance choices?

[01:58:29] Speaker 16:
If I may, Your Honor, I'd like to be very clear about what the coalition I'm representing is.

[01:58:33] Speaker 16:
It is not arguing on that compliance point.

[01:58:36] Speaker 16:
The primary argument we made in our second brief on the ACE rule is that this issue is not right for judicial consideration.

[01:58:44] Speaker 16:
The question of what might be included in a hypothetical state plan and whether EPA order would not approve it, those are contingent events that may or may not happen.

[01:58:53] Speaker 16:
And this court should resolve that question in the context of any challenge that might be brought to a decision to reject the state plan that included training.

[01:59:02] Speaker 16:
So that is the primary position of a coalition.

[01:59:04] Speaker 16:
and to be candid there is someone.

[01:59:06] Speaker 10:
I appreciate that, but I was really looking at the merits argument that you make that just seems extraordinary to me for a state arguing, you know, maybe we're preempted, but in any event, we can't, we can't meet the standards with these, the full suite of possibilities.

[01:59:28] Speaker 10:
I just, I'm just not sure where that's coming from as a matter of statute or federalism.

[01:59:33] Speaker 16:
Certainly, your honor, and let me be clear, there are two points that we made in our brief where the whole coalition agrees.

[01:59:39] Speaker 16:
I will be candid, there is some disagreement among members of our state and industry coalition on this issue.

[01:59:45] Speaker 16:
The first is that that argument is premised on 116, which is a state's right savings clause.

[01:59:51] Speaker 16:
And what 116 means is nothing in the Clean Air Act says that a state can't have a more

[01:59:57] Speaker 16:
a more aggressive standard, as long as it doesn't conflict with or is preempted by federal law.

[02:00:02] Speaker 16:
And in fact, the petitioners acknowledge that this happens.

[02:00:04] Speaker 16:
In the consolidated Edison brief, page 15, they acknowledge that they engage on that they're subject to generation shifting regimes because of California state-specific requirements.

[02:00:14] Speaker 16:
So 116 is simply serving a separate purpose.

[02:00:17] Speaker 16:
It says that nothing stops states from having

[02:00:20] Speaker 16:
separate compliance, sorry, separate standards under their own laws.

[02:00:25] Speaker 16:
The second point where the coalition argued in our brief is that this court should not hold that EPA is always required to accept every plan that has trading.

[02:00:35] Speaker 16:
And the rationale behind that is once a plan is approved by EPA, it becomes federally enforceable.

[02:00:41] Speaker 16:
And there's something odd about saying that if EPA lacks the authority to mandate generation shifting and trading in its own right,

[02:00:48] Speaker 16:
that can indirectly become a matter of federal law if the state includes it in their plan.

[02:00:54] Speaker 10:
The point is that it would it be, I mean, I think you're saying it should not be free, the states should not be free to do that, but just flagging that that's not entirely clear.

[02:01:09] Speaker 10:
And I asked you about cost and what the unit of assessment is when, and you're understanding under the statute of how EPA is supposed to look when it's designing the best system of emission reductions, supposed to take costs into account.

[02:01:21] Speaker 10:
And it's also needs to take energy needs into account.

[02:01:25] Speaker 10:
And is it your understanding that it does that on a national basis or a grid-wide basis or a state basis?

[02:01:36] Speaker 10:
Does EPA look at the state of West Virginia and assume that West Virginia is being energy self-sufficient or not?

[02:01:49] Speaker 16:
Your honor, that's not part of EPA's mandate at all.

[02:01:52] Speaker 16:
The Supreme Court is very clear when it comes to supply for a state and cost about reliability and cost effectiveness.

[02:01:59] Speaker 16:
That belongs to the states.

[02:02:01] Speaker 16:
That's not something for EPA to set to say how many coal-fired plants West Virginia needs to stay afloat.

[02:02:09] Speaker 16:
That's a different sort of decision.

[02:02:10] Speaker 10:
I'm just referring to, and maybe I'm misreading this, probably I am, in 111A1 where

[02:02:19] Speaker 10:
In setting the best system of emission reduction, EPA is supposed to take into account the costs of achieving reduction, non-air quality, health and environmental impact, and energy requirements.

[02:02:32] Speaker 10:
Is that just the requirements of implementing the changes, not the national energy requirements that might be impaired if, for example, they shut down some facilities?

[02:02:45] Speaker 16:
Your Honor, it's certainly the cost to actually implement them.

[02:02:49] Speaker 16:
But to your question of the effects it would have on the grid, when it comes to considering the incidental effects that a regulation may have, that may be an appropriate consideration.

[02:02:59] Speaker 16:
But that doesn't mean that because EPA has to use that to limit its very clear authority to set environmental regulations, that it can just jump to setting those grid reliability concerns in the first instance.

[02:03:13] Speaker 16:
And that's what we had in CPP.

[02:03:14] Speaker 16:
This isn't a regulatory statute that has some consequences for the electricity grid.

[02:03:20] Speaker 16:
This is a statute that is specifically trying to change that grid.

[02:03:23] Speaker 16:
And that's the important difference, especially from the federalism standpoint.

[02:03:28] Speaker 16:
We can see that... You misspoke.

[02:03:30] Speaker 10:
You don't mean a statute.

[02:03:31] Speaker 10:
You mean the plan.

[02:03:33] Speaker 16:
Yes.

[02:03:33] Speaker 16:
I apologize, Your Honor.

[02:03:35] Speaker 16:
Correct.

[02:03:35] Speaker 16:
And so because we have a best system under EPA that presumes what the result will be in terms of which plants continue to exist and how much they operate, this is different from your traditional energy regulation that has downstream effects.

[02:03:51] Speaker 10:
So you mentioned reliability and you mentioned the potential energy requirements of the actual implementing the BSER, but not

[02:04:05] Speaker 10:
It is not for EPA to consider the sufficiency of energy production nationwide at all.

[02:04:11] Speaker 10:
That's up to the states.

[02:04:13] Speaker 16:
Well, let me clarify my position.

[02:04:16] Speaker 16:
My position is when EPA has a rule and there are going to be broad consequences on reliability, that's certainly a factor that they have to take into account.

[02:04:24] Speaker 16:
That can be part of the broader understanding of what costs are.

[02:04:28] Speaker 16:
But that does not mean that EPA gets to have a rule that is predominantly focused on those type of decisions.

[02:04:35] Speaker 16:
That's the difference we have here.

[02:04:37] Speaker 16:
EPA has to focus on predominantly environmental regulations and then consider the consequences.

[02:04:43] Speaker 16:
What it can't do is enact an energy planning statute and then reverse engineer a standard to make it seem like this is actually in its lane as an environmental regulator.

[02:04:54] Speaker 16:
Even in the context of federal agencies like Burke that do have an admitted expertise here, the Supreme Court is extremely careful to keep the line between what appropriate downstream consequences are and infringing the state's authority.

[02:05:08] Speaker 10:
The EXO decision- We're on the same page.

[02:05:10] Speaker 10:
We're on the same page.

[02:05:11] Speaker 10:
Great.

[02:05:12] Speaker 10:
That's helpful.

[02:05:12] Speaker 10:
Thank you.

[02:05:14] Speaker 18:
Can I I know we're over I know we're over time with with missy but I would like to take a step back if I could missy Assume That And I know you may not agree But assume that the clean power plan Would have come at the expense of as it

[02:05:44] Speaker 18:
predicted 12,000 coal miners jobs and at the expense of 20,000 other jobs in the coal industry under the cost of possibly up to $80 billion over 10 years and assume also that the world is warming and that the warming is manmade and that the consequences are

[02:06:12] Speaker 18:
far costlier than the costs of this plan.

[02:06:17] Speaker 18:
None of that is relevant to how we interpret this statute.

[02:06:27] Speaker 18:
What do you think this case is about?

[02:06:28] Speaker 16:
I think this case is about what type of authority did Congress give the EPA in section 111?

[02:06:37] Speaker 16:
Did it give it authority to make changes in the competition of the nation's energy grid?

[02:06:42] Speaker 16:
That is different authority that belongs to states.

[02:06:45] Speaker 16:
And so when EPA is regulating that way, it's intruding beyond where Congress is delegated.

[02:06:52] Speaker 16:
The costs, of course, are other considerations that would go into that factor.

[02:06:56] Speaker 16:
But the court doesn't even need to get that far because there's not a clear expression that Congress intended to give EPA that authority in the course of time.

[02:07:05] Speaker 18:
And so if I understand you correctly, one of the things this case is about

[02:07:13] Speaker 18:
is both the relationship of Congress to the executive branch and the relationship of the federal government to the states.

[02:07:23] Speaker 18:
Is that correct?

[02:07:25] Speaker 18:
Certainly.

[02:07:26] Speaker 18:
What state do you represent?

[02:07:29] Speaker 16:
From West Virginia specifically, but I also represent a coalition.

[02:07:33] Speaker 18:
The coalition, 21 states, and then the other coalition of 23 states that's against you, what state is the lead state in that coalition?

[02:07:41] Speaker 16:
Mr. Ruiz from New York.

[02:07:43] Speaker 16:
And one of the reasons that we can see the states who have divided under this, not to ascribe any motivations to the other side.

[02:07:50] Speaker 16:
If we look at the distinctions that CPP made, it falls predominantly on states that are coalition.

[02:07:57] Speaker 16:
West Virginia was required to make a 37% reduction in emissions across the board.

[02:08:01] Speaker 08:
I'm sorry, I apologize.

[02:08:02] Speaker 08:
Just like it falls.

[02:08:04] Speaker 08:
I didn't quite hear you.

[02:08:05] Speaker 08:
It falls mainly on states that have, did you say coal production?

[02:08:09] Speaker 16:
predominantly on coal production states, and you see that reflected in the composition of coal production as well, yes.

[02:08:16] Speaker 16:
And so you see the contrast of a 37% reduction versus an 11 or 13 or 19% reduction from states like California and New York in May.

[02:08:25] Speaker 16:
That's how we see this disproportionate effects between the states.

[02:08:29] Speaker 16:
So a state like West Virginia that because of our geography and our access to natural resources is predominantly coal dependent,

[02:08:36] Speaker 16:
is going to be in a much different situation than a state that has the ability already within its state to shift that.

[02:08:42] Speaker 10:
You're not saying that that either bears on the statutory interpretation, right?

[02:08:46] Speaker 10:
I mean, the question is about the statutory language.

[02:08:50] Speaker 10:
And again, lots of policy arguments one way and the other.

[02:08:54] Speaker 10:
But is there any indication anywhere in the Clean Air Act that Congress did not intend

[02:09:05] Speaker 10:
to impose more or less stringent obligations on industry where the industry might be clustered in a subset of states.

[02:09:18] Speaker 16:
There is your honor in the preamble, which says that Congress recognized that it's the primary responsibility of the states to engage on these issues.

[02:09:26] Speaker 16:
And we also see that, of course, in 111D itself, where the EPA sets a procedure, but it's the states who have the substantive standards of performance for each of their sources.

[02:09:36] Speaker 16:
And then the end of that provision is very important, too.

[02:09:39] Speaker 16:
Because when we do that job as states, we shall consider remaining useful life and other source-specific factors.

[02:09:46] Speaker 16:
So we know that source-specific factors, they can turn on things such as where that source is located, what resources it has access to, how costly it would be, for instance, to put in a gas line to engage in coal firing.

[02:10:00] Speaker 16:
Those are source-specific factors that belong to the state.

[02:10:02] Speaker 10:
Right, so the implementation with respect to sources is

[02:10:07] Speaker 10:
We all agree, undeniably, on the states.

[02:10:10] Speaker 10:
But there is a federal role in setting standards.

[02:10:12] Speaker 10:
And in setting those standards, I'm not aware of anything in the act that says the federal government should not set a standard that would end up costing sources in some states more than sources in other states.

[02:10:29] Speaker 10:
Indeed, it would seem that every single environmental, nationwide environmental law and or regulation would have

[02:10:37] Speaker 10:
Different effects in different states.

[02:10:38] Speaker 10:
Is that not right?

[02:10:40] Speaker 16:
Yeah, it is true.

[02:10:41] Speaker 16:
There's no express limitation on that.

[02:10:43] Speaker 16:
But I think we can see, in effect, the statute allows for those sort of considerations.

[02:10:49] Speaker 16:
Because when we're looking at a standard of performance, it has to be achievable.

[02:10:53] Speaker 16:
And if we look again to the textual argument there, achievable applies in both.

[02:11:01] Speaker 18:
I'll finish your sentence.

[02:11:02] Speaker 18:
I'm sorry.

[02:11:03] Speaker 16:
Oh, no, of course, Your Honor.

[02:11:05] Speaker 16:
I'd like to hear what you mean by achievable.

[02:11:08] Speaker 16:
Okay, certainly.

[02:11:08] Speaker 16:
So the argument is the actual standard of performance has to be achievable.

[02:11:14] Speaker 16:
And the only way to give a fact to the way that this appears in both subsection B and D is to say it's achievable by an actual particular source.

[02:11:23] Speaker 16:
There's a lot of focus that's been made on the fact that subsection B talks about sources, but it also talks about... What about if it has to, maybe it has to be achievable by the state in setting

[02:11:36] Speaker 08:
Well, your honor.

[02:11:38] Speaker 08:
Four facilities.

[02:11:39] Speaker 08:
Your honor, even with education, we read it that way as to your argument in that regard.

[02:11:45] Speaker 16:
Well, it certainly wouldn't change anything in terms of whether the CPP repeal was required because the admission standards were not achievable by most states.

[02:11:52] Speaker 16:
And so that would not be enough to salvage the CPP.

[02:11:56] Speaker 16:
But there's also not a textual argument that would allow that result.

[02:11:59] Speaker 16:
Even Mr. Wu admitted when Your Honor had this conversation with him that it must be achievable by the source.

[02:12:06] Speaker 16:
And the question is, is it source or sources more as a whole?

[02:12:09] Speaker 16:
We're not looking at the state level or the whole national grid level.

[02:12:13] Speaker 16:
So when we're looking at something, whether it's achievable by a source, there has to be an understanding that makes sense of both B and D. And B talks about thorough standards of performance for sources.

[02:12:25] Speaker 16:
But it's very clear that D talks about a standard that can apply to a particular source.

[02:12:30] Speaker 16:
And so there has to be an understanding that works for both of them.

[02:12:33] Speaker 16:
And the interpretation that petitioners are advancing only makes sense for subsection B and not for D.

[02:12:43] Speaker 18:
Go ahead.

[02:12:44] Speaker 18:
Judge Pillard, please.

[02:12:45] Speaker 10:
You were trying to do that before.

[02:12:50] Speaker 18:
Go ahead.

[02:12:52] Speaker 18:
Missy, is this the Clean Power Plan?

[02:12:54] Speaker 18:
Is it the first time that anyone in the government has contemplated a generation shifting, or a cap and trade, or a significant carbon reduction program?

[02:13:10] Speaker 16:
Under 111D, Your Honor.

[02:13:13] Speaker 18:
Just in general.

[02:13:14] Speaker 18:
I mean, I guess to be more specific in 2009 and 10 did Congress consider doing this.

[02:13:19] Speaker 16:
Of course, I understand.

[02:13:21] Speaker 18:
And yes, this is one of the time Congress did that.

[02:13:27] Speaker 18:
Was the West Virginia have as much power in the House of Representatives as New York and California do

[02:13:38] Speaker 16:
Congress has actually looked at this at a number of times in the past decade and a half.

[02:13:44] Speaker 18:
I'm just trying to walk through some thoughts on this and get your thoughts.

[02:13:51] Speaker 18:
It's obvious, West Virginia did not have as much power as California in the House of Representatives, correct?

[02:13:58] Speaker 16:
Right, certainly.

[02:13:59] Speaker 16:
It's a matter of population.

[02:14:01] Speaker 18:
Right, because of population.

[02:14:03] Speaker 18:
And West Virginia doesn't have as much power as California

[02:14:08] Speaker 08:
They had as much power in the Senate, right?

[02:14:11] Speaker 18:
Right, right.

[02:14:12] Speaker 18:
And so I guess that's my question, Missy, is this how this law, this program, this policy that we are stuck adjudicating today and that the EPA promulgated was debated in Congress and it passed the House, correct?

[02:14:33] Speaker 16:
Correct, Your Honor, yes.

[02:14:35] Speaker 18:
And it did not pass, as Judge Millett pointed out,

[02:14:38] Speaker 18:
It did not pass the Senate, correct?

[02:14:41] Speaker 16:
Correct.

[02:14:42] Speaker 18:
And it's in the Senate that West Virginia has just as many votes as California, correct?

[02:14:47] Speaker 16:
Yes, Your Honor.

[02:14:49] Speaker 18:
And it was supported by the President who's chosen by an electoral college where California has a lot more votes than West Virginia, correct?

[02:14:56] Speaker 16:
Yes, Your Honor.

[02:14:58] Speaker 18:
So if I'm following, in the House and in the electoral college where West Virginia doesn't have much power, doesn't have much

[02:15:07] Speaker 18:
doesn't have a lot of money as a state, doesn't have a lot of people as a state, at least not relative to California, West Virginia lost.

[02:15:14] Speaker 18:
And in the Senate, where West Virginia does have as much power as California, West Virginia won.

[02:15:21] Speaker 18:
Am I right so far?

[02:15:23] Speaker 16:
Yes, you are.

[02:15:24] Speaker 18:
Yeah.

[02:15:25] Speaker 18:
And so do you think that this is an accident of history, that a policy with broad support in, let's say,

[02:15:35] Speaker 18:
the 23 states opposed against you, but not broad support, and the 21 states allied with you made it through the House, but didn't make it through the Senate.

[02:15:43] Speaker 18:
You think it's an accident of history, or do you think it's by design?

[02:15:46] Speaker 16:
I don't think it's an accident of history.

[02:15:48] Speaker 16:
And I think one of the reasons we know that is because there's multiple times that Congress has considered similar measures that would have given this sort of authority expressly to EPA.

[02:15:57] Speaker 16:
And Congress has never adopted that, even though this is an issue of earnest and profound debate.

[02:16:04] Speaker 18:
And one of the whole points of federalism, if I'm right, Ms.

[02:16:08] Speaker 18:
C, is that states that are small and poor don't get trampled on, at least not all the time, by states that are highly populated and rich, correct?

[02:16:23] Speaker 16:
It is true, Your Honor, that the equal dignity of the states is critically important.

[02:16:26] Speaker 16:
And that's one of the rationales behind requiring this express clear language before inferring that Congress meant to delegate this sort of important power to EPA.

[02:16:37] Speaker 18:
And you see, one of the reasons that courts traditionally have not been too aggressive in enforcing federalism principles is because courts have said in cases like Garcia that states have built in structural protections in places like the Senate.

[02:16:55] Speaker 18:
and that the people of those states are represented in the halls of Congress?

[02:16:59] Speaker 18:
Are the people of West Virginia represented in the halls of the EPA?

[02:17:05] Speaker 16:
Not directly, Your Honor, of course.

[02:17:07] Speaker 16:
And certainly, that is our argument that these federalism protections are critically important.

[02:17:13] Speaker 16:
When we have a power of this nature, we do require that Congress both houses seek

[02:17:20] Speaker 16:
clearly to this issue, and that did not happen in this case.

[02:17:24] Speaker 16:
And the fact that this issue about the gravity of climate change has taken nobody by surprise, and I don't need to downplay the importance of those concerns at all, but that there has been repeated and continuous debate in Congress about the best way to deal with that.

[02:17:39] Speaker 16:
And Congress has considered options like what the agency tried to take in CPP and has never authorized that directly.

[02:17:46] Speaker 16:
That's also a strong indication that we shouldn't implicitly read that authority into the language in 111D, which is specifically focused on the ability of states to set specific standards based on their fleet and the particular needs of their units.

[02:18:02] Speaker 16:
those decisions when it comes to the cost of electricity and reliability for our citizens belong to us as state regulators.

[02:18:09] Speaker 16:
And there's no indication that Congress intended to displace that within the Clean Air Act.

[02:18:15] Speaker 16:
And there's certainly not unmistakably clear language

[02:18:18] Speaker 16:
which is what the Supreme Court said as recently as the cow pasture decision this summer, is necessary to make that kind of transformative change.

[02:18:26] Speaker 16:
So whether we look specifically on the federalism clear statement canon, or if we look at this as a way to determine the gravity of the issue for the broader major questions issue, either way we get to the same result.

[02:18:37] Speaker 16:
Congress didn't clearly delegate this type of power to the agency, and there's no room to find an implicit delegation.

[02:18:44] Speaker 18:
And they're all connected with my last question, right?

[02:18:47] Speaker 18:
You're talking about there's a federalism canon and a non-delegation canon and a major questions canon, but you can't create policy unless you get it through the Senate.

[02:18:59] Speaker 18:
The states are equally represented in the Senate, and you can't get around that obstacle by delegating major policy decisions to an administrative agency, right?

[02:19:10] Speaker 16:
Yes, Your Honor.

[02:19:11] Speaker 16:
One of the triggers that can show that this is a major issue is because it has such important constitutional implications when it comes to the relationship between co-sovereigns and our federal system.

[02:19:22] Speaker 16:
That's part of what makes this such an incredibly important issue in addition to the broader consequences that the CPP had.

[02:19:29] Speaker 10:
Missy, can you just take off from me what, in your view, about

[02:19:36] Speaker 10:
this case makes it subject to the Supreme Court's major questions clear statement rule?

[02:19:47] Speaker 16:
Certainly, Your Honor.

[02:19:48] Speaker 16:
The important question in this court's language in the Levin v. IRS decision is what is the nature and scope of the power at play?

[02:19:57] Speaker 16:
And here we have the nature of the power is the ability to act as an energy regulator.

[02:20:02] Speaker 16:
And that type of power belongs to the states.

[02:20:06] Speaker 16:
That type of power has incredibly broad consequences that go beyond just the environment.

[02:20:13] Speaker 16:
In the Brown and Williamson case, for instance, one of the reasons that the Supreme Court found that the FDA would not have implicit authority to regulate tobacco is because they had a very focused mission and mandate that said that if they applied their statute, they would have actually had to ban it altogether and couldn't take a more nuanced approach.

[02:20:31] Speaker 16:
So the port was really concerned when we have implicit delegation to an agency that doesn't have expertise over these issues.

[02:20:37] Speaker 16:
We have the same thing here.

[02:20:39] Speaker 16:
We have EPA that is, of course, focused on the important issues of the environment, but it doesn't have the tools in order to look at all of the consequences that come from a matter of regulating energy policy.

[02:20:51] Speaker 16:
So that's another reason why this is a type of power that triggers the current.

[02:20:56] Speaker 10:
So the EPA needs to focus on environmental

[02:21:00] Speaker 10:
harms and emissions and not on energy policy.

[02:21:03] Speaker 10:
And as long as it's focusing on environmental harms and emissions, there's not a major question.

[02:21:11] Speaker 16:
It has to be primarily what they're doing.

[02:21:14] Speaker 16:
And again, if we can look at the EPSA case, that gives us a helpful picture.

[02:21:19] Speaker 18:
But Misty, I think that isn't your answer inconsistent with utility air, which was, you know, they were, EPA was regulating

[02:21:27] Speaker 18:
pollution and utility air, and the Supreme Court still called it a major question, right?

[02:21:33] Speaker 16:
Yes, Your Honor, and there it was a different sort of issue.

[02:21:36] Speaker 16:
It had to do with the amount of sources there, so that the primary focus there on the nature or scope of the power, that was more of a scope of the power was where the Supreme Court was focusing.

[02:21:48] Speaker 16:
So it's certainly not inconsistent.

[02:21:50] Speaker 16:
It's another way of applying the same standard, because here we're focusing specifically on the nature of the power that's at issue.

[02:21:57] Speaker 16:
That's helpful.

[02:21:58] Speaker 16:
Thank you.

[02:22:00] Speaker 08:
There are more questions because we're getting way over and way behind here on time.

[02:22:03] Speaker 08:
But I certainly it's a really important questions and there's a lot of questions.

[02:22:07] Speaker 08:
So I don't want to I want to make sure everyone has a chance to ask everything they need to know.

[02:22:12] Speaker 18:
Thank you for being patient with with my question.

[02:22:16] Speaker 08:
They're great questions, and we all have lots of questions, because this is very complicated.

[02:22:20] Speaker 08:
So I want to make sure we give everyone a chance to talk.

[02:22:25] Speaker 08:
All right.

[02:22:26] Speaker 08:
Thank you, Ms.

[02:22:26] Speaker 08:
Z. Very helpful to hear from you.

[02:22:29] Speaker 08:
So I think now we're going to have some rebuttal from Mr. Wu.

[02:22:31] Speaker 08:
Is that correct?

[02:22:34] Speaker 04:
Yes.

[02:22:34] Speaker 04:
Thank you, Your Honor.

[02:22:35] Speaker 04:
Just a quick point.

[02:22:38] Speaker 08:
Hang on one second with the courtroom deputy.

[02:22:40] Speaker 08:
Let's give them three minutes, please.

[02:22:44] Speaker 04:
A quick answer to something before I launch into my main rebuttal points.

[02:22:48] Speaker 04:
The Clean Power Plan did contemplate interstate trading as a method of compliance in part because states were already engaged in that.

[02:22:55] Speaker 04:
So that was something that was considered in that plan.

[02:22:57] Speaker 04:
I want to start with some of the criticisms that Mr. Bright Bill and Ms.

[02:23:02] Speaker 04:
C have made about the Clean Power Plan, which I think can be fairly characterized as concerns about the feasibility of some of the standards that were actually set there.

[02:23:10] Speaker 04:
And what's missing, though, is the recognition that that isn't the basis on which this EPA decided to repeal the Clean Power Plan.

[02:23:17] Speaker 04:
What it said was it was repealing it based upon a statutory interpretation that handcuffs the agency into considering only certain types of system of emission reduction measures and others.

[02:23:28] Speaker 04:
And EPA actually acknowledged in the repeal rule that it would reach this interpretation about what it cannot do

[02:23:34] Speaker 04:
even if it were a workable policy to adopt generation shifting, even if we're feasible and achievable by sources and by states.

[02:23:41] Speaker 04:
So that's the interpretation that we are challenging here.

[02:23:45] Speaker 04:
And if this court disagrees that it's an unambiguous interpretation, the repeal rule has to be remanded on that basis alone.

[02:23:52] Speaker 04:
The reason that that interpretation does not follow from the statute here, our principal argument is that A1 can be understood by itself.

[02:23:59] Speaker 04:
And when it refers to the application of the best system of emission reduction, nothing in that statute forecloses EPA from considering methods that might involve more than one source or that take into consideration the indisputable fact that sources on the electric grid are interconnected and engage in generation shifting as a matter of course.

[02:24:17] Speaker 04:
Now, EPA's response to that has both textual and conceptual problems.

[02:24:21] Speaker 04:
The textual problems are from its insertion of the A1 definition into D1, and then using the language in D1 to restrict its own authority.

[02:24:29] Speaker 04:
And at the peril of trying to make a textual argument verbally here, I think the two features of that textual argument that are the most puzzling

[02:24:39] Speaker 04:
are one, what EPA does with the language that says which the administrator determines has been adequately demonstrated.

[02:24:46] Speaker 04:
Because if you actually do insert that into the statute, it incorrectly suggests that the administrator is determining whether for any existing source, some sort of emission reduction is adequately demonstrated.

[02:24:58] Speaker 04:
And they don't do that.

[02:24:59] Speaker 04:
They absolutely do not do that.

[02:25:00] Speaker 04:
And the second textual problem is that nothing in the statute says that the system of emission reduction is applied to or at a source.

[02:25:07] Speaker 04:
This is for sources.

[02:25:09] Speaker 04:
And that proposition, if we're going to be engaging in this level of analysis, provides much broader and more flexible understanding of what it means for a system to apply for a source instead of to or at a source.

[02:25:20] Speaker 04:
But the broader conceptual problem I want to get to is this misconception that an individual source's performance standards can't reflect available methods that might involve other sources.

[02:25:33] Speaker 04:
And it absolutely can.

[02:25:34] Speaker 04:
I mean, just to put in concrete terms, if a performance standard says a source must meet a certain numerical limit for its emissions,

[02:25:42] Speaker 04:
What the Clean Power Plan did was basically acknowledge the full panoply of tools that were available to sources, which involved not just tools that a source could implement on its own, but also tools that were already available and that involved things like emissions trading, where a source would essentially account for emissions reductions elsewhere on the grid that would accomplish the same purpose as its own emission reductions.

[02:26:05] Speaker 04:
And I think what this argument boils down to is whether the statute prohibits EPA from doing so when those sort of generation shifting models accomplish the same results were already used by the industry and were in fact cheaper ways of accomplishing emission reductions than technologies or processes applied at the source itself.

[02:26:24] Speaker 04:
And nothing in the statute prohibits that.

[02:26:26] Speaker 04:
And then finally, I know I'm over my time, but I want to address very, very quickly the sort of the major questions issue that Ms.

[02:26:34] Speaker 04:
C talked about.

[02:26:35] Speaker 04:
This is not a case that triggers that doctrine, and I think you can see that for a couple of reasons.

[02:26:40] Speaker 04:
This is a clean power plant regulated power plants, which are sources that have always been subject to section 111.

[02:26:46] Speaker 04:
So this is not a situation like UARG, where EPA had an interpretation of a statute that reached small sources like schools and others that were never before covered by the agency.

[02:26:56] Speaker 04:
It's also talking about a pollutant, carbon dioxide, which Massachusetts and AEP already recognized was covered by the act and required for EPA to regulate.

[02:27:04] Speaker 04:
So this is not like Brown and Williamson, which has dealt with tobacco, a substance that the FDA had not regulated before and was outside the scope of that statute.

[02:27:12] Speaker 04:
And what we're debating here is a method of emission reduction that EPA adopted from existing industry trends.

[02:27:18] Speaker 04:
So it wasn't even as though EPA were adopting or mandating some measure that was extraordinary or innovative in this industry.

[02:27:25] Speaker 04:
It was doing something that industry was already doing and in fact had asked EPA to do if they were going to impose emission reduction goals.

[02:27:33] Speaker 18:
And then finally- Mr. Wu, if I could interrupt, do you think that the

[02:27:40] Speaker 18:
CPP raises a question of vast economic and political significance.

[02:27:46] Speaker 18:
That's the Supreme Court's phrase.

[02:27:48] Speaker 18:
The question of vast economic and political significance.

[02:27:52] Speaker 04:
not for purposes of the major questions doctrine.

[02:27:55] Speaker 04:
I mean, obviously climate, and let me explain it this way.

[02:27:58] Speaker 04:
Obviously climate change is a matter of important, a very important policy matter.

[02:28:03] Speaker 04:
But what the Supreme Court said in Massachusetts was the fact that it was important, it's important policy question did not mean that it fell outside the scope of the statute there.

[02:28:12] Speaker 04:
That's the case that recognized carbon dioxide emissions had to be regulated by EPA.

[02:28:17] Speaker 04:
And again, the fact that it's beyond question that the statute unambiguously covers these sources and these pollutants is what places it already squarely within EPA's delegated authority.

[02:28:29] Speaker 04:
And the final point I was gonna make.

[02:28:32] Speaker 18:
Do you think that the federal government could accomplish the Clean Power Plan regulatory, make it work?

[02:28:46] Speaker 18:
if the states opted out?

[02:28:52] Speaker 04:
It could under 111 because if a state refuses to do a plan under 111D then EPA comes in and imposes a federal plan.

[02:29:00] Speaker 18:
How would generation shifting on one of these grid that depends on ISOs and RTOs and the things that I was

[02:29:11] Speaker 18:
I've been learning about in the last few weeks and have learned more about this morning and hope to continue learning more about still how, how would regulation of the grid and generation shifting and the ISOs, how would that all work?

[02:29:28] Speaker 18:
If the, if the EPA said to the States, well, you've chosen not to cooperate.

[02:29:33] Speaker 18:
So we're going to do it ourselves.

[02:29:35] Speaker 18:
How would that work?

[02:29:36] Speaker 04:
Well, I suppose EPA would then set up a market if it had to.

[02:29:39] Speaker 04:
And I should say that it's not unusual for that to happen.

[02:29:44] Speaker 04:
I mean, there have been programs, like Casper and others, where if the states won't do it, there can be set up a trading program that operates either within a state or across states to accomplish emission reduction goals.

[02:29:57] Speaker 18:
And this gets to the- What would the states lose if that happened?

[02:30:01] Speaker 18:
Excuse me?

[02:30:03] Speaker 18:
What would the downside of that be to the states?

[02:30:05] Speaker 18:
Oh, the downside of the states is if that happened.

[02:30:08] Speaker 04:
The downside is the states would not have the flexibility that they have under 111D, which is to make judgments for themselves about how to basically allocate something like an emissions budget across the sources within the within the state.

[02:30:21] Speaker 04:
The statute quite appropriately gives states in the first instance, the discretion and flexibility to make that determination.

[02:30:27] Speaker 04:
That's a flexibility we're trying to preserve.

[02:30:29] Speaker 18:
So the choice of the

[02:30:31] Speaker 18:
So the choice of the states have under the CPP is either cooperate and use the machinery of the state to implement a vast federal program that's historic and groundbreaking and critically needed and all the things that petitioners have called it, or don't cooperate and

[02:31:00] Speaker 18:
surrender the autonomy and control that they've exercised as energy regulators for the past decade, probably up to 100 years.

[02:31:15] Speaker 18:
Is that the choice states face?

[02:31:17] Speaker 04:
No, it is not.

[02:31:19] Speaker 04:
And I think it's because what EPA is doing here is not directly regulating energy or telling states what to do with energy mix, but it's trying to reduce emissions of pollutants.

[02:31:28] Speaker 04:
And where the statute appropriately recognizes these distinct roles is understanding that after EPA sets these guidelines that are entirely involved.

[02:31:38] Speaker 04:
Then a state can certainly have the discretion to come in and exercise its existing sovereign authority to make decisions about how to allocate those emissions limitations across the sources within the state.

[02:31:50] Speaker 04:
And I should say a state that declines to do so, far from preserving its sovereignty at that point, is actually declining to exercise its historical power here.

[02:31:58] Speaker 04:
It's simply exiting from an energy market and saying,

[02:32:03] Speaker 04:
in saying, as the statute makes clear, that we don't want to care about what happens with the industries in our states.

[02:32:08] Speaker 04:
And that is a choice the state is, of course, free to make.

[02:32:11] Speaker 04:
But that option does not mean that EPA is therefore disabled from addressing emissions.

[02:32:17] Speaker 04:
And I think this is the key objection that the petitioning states here have with the arguments from the states on the other side.

[02:32:25] Speaker 04:
Which is, of course, emissions from power plants have a relationship to energy production for the simple reason that energy production by these sources are the reason that we have these pollutants in the first place.

[02:32:36] Speaker 04:
But that connection is not by itself enough to mean that EPA is unable to regulate emissions because there's going to be some downstream effect on power plants.

[02:32:45] Speaker 04:
And the EPSA case forecloses that argument.

[02:32:47] Speaker 04:
That was a case that said EPA could regulate wholesale prices on that energy market, even if that affected retail prices that were within the state's control.

[02:32:55] Speaker 04:
I'm sorry for for there's too many, too many agencies.

[02:32:59] Speaker 04:
And I think the very final point on this is I think this highlights sort of our Can I ask just one question in that regard?

[02:33:06] Speaker 08:
I don't mean to interrupt your thought here.

[02:33:07] Speaker 08:
The authority of the federal government to come in and establish a standard performance for emissions within a state.

[02:33:20] Speaker 08:
Was that part of the 1970 legislation or was that added later?

[02:33:26] Speaker 04:
I confess I do not remember the answer to that question, Judge Millett.

[02:33:29] Speaker 08:
I'm sorry, but I- The statutory provision was passed by the states and the Senate and the House.

[02:33:34] Speaker 04:
Well, that's absolutely correct.

[02:33:36] Speaker 04:
And it's not a process that is specific to this statute either.

[02:33:41] Speaker 04:
It's part of, as you're well aware, the cross-state air pollution rule, which specifically involves relationships between the states.

[02:33:48] Speaker 04:
It was a very familiar model.

[02:33:50] Speaker 08:
But the- That surrender of sovereignty has been around

[02:33:55] Speaker 08:
a long time in the Clean Air Act applied in many, many contexts and many provisions and was authorized and passed by the states.

[02:34:03] Speaker 04:
That is correct, repeatedly over the years.

[02:34:05] Speaker 04:
And I should say also repeatedly authorized by the states, repeatedly over the years, has been the dedication to EPA of the authority and the obligation to regulate harmful pollutants from these types of sources.

[02:34:17] Speaker 04:
That's the authority we're talking about here.

[02:34:20] Speaker 18:
Mr. Wu, Mr. Wu, what was the House

[02:34:23] Speaker 18:
What was the House and Senate doing in 2009 and 10 when they spent hours and days and months debating a climate change bill?

[02:34:33] Speaker 18:
If that bill had already been passed in 1970, why were they debating it and trying to pass in the 2009 and 10?

[02:34:39] Speaker 18:
Well, what they were debating, and I apologize.

[02:34:44] Speaker 18:
I know others doesn't always act sensibly, but that seems extreme.

[02:34:49] Speaker 04:
What they were debating was a more aggressive program than even the Clean Power Plan here addresses.

[02:34:53] Speaker 04:
They were debating, and I apologize for getting the details wrong, but what they were debating was, for instance, a nationwide cap and trade scheme that would cut across different industries, not be limited to power plants.

[02:35:03] Speaker 04:
And so the fact that Congress did not enact a far more aggressive program for dealing with climate change does not mean that EPA is foreclosed from exercising statutory authority it already holds when, as I said, it is limited to sources.

[02:35:16] Speaker 18:
There's no category of sources.

[02:35:18] Speaker 18:
There's no category of sources that emit more carbon than power plants.

[02:35:21] Speaker 18:
Is that correct?

[02:35:23] Speaker 04:
I forget if automobiles might actually emit more.

[02:35:27] Speaker 10:
Automobiles are less fun.

[02:35:29] Speaker 10:
And then it's the power sector, not all power, obviously, but fossil fuels.

[02:35:35] Speaker 04:
That's right.

[02:35:36] Speaker 04:
So, so, so it's not.

[02:35:38] Speaker 04:
So yes, so power plants are major, maybe not always the most major one.

[02:35:42] Speaker 04:
But again, what EPA is doing here is not simply implementing the program that Congress was debating in 2009.

[02:35:49] Speaker 08:
And so the fact that they rejected that is not even debate that legislation, did they even take it up?

[02:35:55] Speaker 04:
I don't recall that they may not have.

[02:35:57] Speaker 04:
They may not have.

[02:35:58] Speaker 04:
But again, I think some of these questions go to the perils of relying on congressional inaction to infer what is already extant in a statute.

[02:36:06] Speaker 04:
And so we just don't think that is is relevant to the question here.

[02:36:11] Speaker 04:
But if I could end with this point is, I think the broader big picture problem here is one where ostensibly in service of a statute here, EPA has adopted an interpretation that requires it to turn a blind eye to a meaningful and available way of reducing emissions from a pollutant that it doesn't dispute is extremely harmful.

[02:36:30] Speaker 04:
And that at the end of the day is the core statutory violation here when you get beyond these textual arguments and arguments about the indirect object.

[02:36:38] Speaker 04:
And again, nothing in statute in Congress's dedication to EPA to deal with the harmful effects of air pollution from regulated sources suggests that it meant to shackle the agency in this way.

[02:36:50] Speaker 04:
Thank you.

[02:36:51] Speaker 08:
Any more questions from Judge Walker or Judge Pilley?

[02:36:55] Speaker 08:
No.

[02:36:56] Speaker 08:
Not from me.

[02:36:56] Speaker 08:
All right, I'm going to have a change of plans, courtroom deputy.

[02:36:59] Speaker 08:
I think it's been almost three hours now, so I think we're going to take, unless there's strong objection from anybody, a 10 minute break.

[02:37:10] Speaker 00:
This honorable court is now taking a brief recess.

[02:37:17] Speaker 00:
This honorable court is now again in session.

[02:37:21] Speaker 08:
I think we're ready now to start with the second issue of the case, EPA's authority to promulgate its replacement rule.

[02:37:28] Speaker 08:
And as I understand it, the first person arguing is going to be Mr. Delaquil.

[02:37:32] Speaker 08:
Did I say that correctly?

[02:37:34] Speaker 08:
Please correct me if I'm wrong.

[02:37:35] Speaker 11:
Delaquil, your honor.

[02:37:36] Speaker 08:
Delaquil, I apologize.

[02:37:38] Speaker 11:
And I am the first up.

[02:37:40] Speaker 11:
And I'm arguing on behalf of coal industry petitioners.

[02:37:44] Speaker 11:
And I have two points to make here today.

[02:37:47] Speaker 08:
OK, I'm having a little trouble hearing you.

[02:37:49] Speaker 08:
Can I increase volume?

[02:37:56] Speaker 11:
Is this better?

[02:37:56] Speaker 11:
A little better.

[02:37:58] Speaker 11:
Okay.

[02:38:00] Speaker 11:
The first point is that EPA failed to make a reasoned endangerment determination that greenhouse gas emissions from the fossil fuel fired power sector significantly contribute to air pollution that may be reasonably anticipated to endanger public health or welfare.

[02:38:25] Speaker 11:
And the second

[02:38:32] Speaker 11:
issue raised in the Supreme Court's stay of the Clean Power Plan, that the Section 112 exclusion does not allow EPA to require states to establish standards of performance for sources that are regulated under Section 112.

[02:38:51] Speaker 11:
With regard to the first issue, EPA's fundamental error is that it failed to establish a standard or a set of criteria that provided a reasoned explanation for determining why greenhouse gas emissions in the fossil fuel power sector contribute significantly to dangerous air pollution.

[02:39:17] Speaker 11:
It's not a simple question whether emissions from a particular sector contribute to dangerous air pollution.

[02:39:27] Speaker 11:
It requires EPA to consider issues like whether the contribution should be considered on a global basis or a domestic basis, whether these direct emissions from the sector are what matter or whether indirect emissions from the sector are what matter.

[02:39:46] Speaker 11:
other EPA should be looking at historic emissions, current emissions, or projected emissions.

[02:39:53] Speaker 10:
When you refer to indirect emissions, what are you referring to?

[02:39:57] Speaker 11:
I'm referring to downstream emissions.

[02:40:02] Speaker 11:
And so an example would be

[02:40:06] Speaker 11:
Emissions from the coal-fired power sector could be just the direct emissions from the tailpipe or from the smokestack, where they could consider emissions that are associated with the production of coal or associated with the usage.

[02:40:28] Speaker 10:
Right.

[02:40:29] Speaker 10:
So that's like the biofuels sector grief saying, if you just look at the pipe

[02:40:35] Speaker 10:
at the smokestack, then we're just as bad, if not worse than fossil fuels.

[02:40:40] Speaker 10:
But if you look at the whole life cycle, we're better.

[02:40:43] Speaker 10:
And you would say, well, right, should we look at the extraction, the extractive industry aspect as well as the use or not?

[02:40:51] Speaker 10:
Should we look at the building of the windmills and the solar cells or not?

[02:40:55] Speaker 11:
Well, that's right.

[02:40:56] Speaker 11:
And that just all goes to the issue that this is a complicated problem.

[02:41:01] Speaker 11:
And just looking at one metric,

[02:41:04] Speaker 11:
such as the fossil-fueled fire power plants are the largest stationary source category of greenhouse gas emissions, isn't sufficient to provide a reasoned explanation for why there is a significant contribution.

[02:41:21] Speaker 11:
And another metric that is worth consideration and that EPA ought to consider are the contribution of the sector to the actual harmful effects of the air pollution.

[02:41:32] Speaker 11:
As we noted in our brief – our reply brief at page eight, eliminating all coal-fired power plant emissions in the United States over 30 years was modeled and was estimated to result in one-tenth of one-degree reduction global temperatures over 30 years.

[02:41:52] Speaker 11:
And this is a position, Your Honors, the EPA has itself recently adopted in the context of the oil and gas methane new source performance standards.

[02:42:04] Speaker 11:
We provided a 28-J letter on that standard on August 17th.

[02:42:11] Speaker 11:
And in there, EPA gives an example of a situation where it would need to exercise its judgment

[02:42:20] Speaker 11:
harmful air pollution occurred.

[02:42:23] Speaker 11:
And that was where US methane emissions were 7% of global methane emissions.

[02:42:30] Speaker 11:
And in this case, using 2013 numbers, fossil fuel-fired power plant emissions were less than 5% of global carbon dioxide equivalent emissions.

[02:42:42] Speaker 11:
And that number has declined substantially since 2017.

[02:42:45] Speaker 08:
Are they allowed to look at the contribution to domestic greenhouse gases?

[02:42:51] Speaker 08:
I think they are.

[02:42:52] Speaker 08:
So domestically, what percentage are coal-powered plants?

[02:43:00] Speaker 11:
A percentage of stationary source emissions, percentage of total emissions.

[02:43:05] Speaker 08:
You can give me both.

[02:43:07] Speaker 11:
It's around 20% for total emissions.

[02:43:10] Speaker 11:
I don't have the figure for stationary source emissions off the top.

[02:43:13] Speaker 08:
It would be a lot higher, though.

[02:43:15] Speaker 11:
It would be higher.

[02:43:16] Speaker 08:
One question I have for you is why is the 2015 determination as part of the new source rule where they didn't just say it in passing.

[02:43:28] Speaker 08:
They spent multiple columns talking about that they would also find it.

[02:43:32] Speaker 08:
They don't think they have to, but they also find a significant, they make the significant endangerment finding and that they cause or contribute significantly to that.

[02:43:45] Speaker 08:
coal-fired power plants contribute significantly to greenhouse gases.

[02:43:48] Speaker 08:
Why isn't that sufficient?

[02:43:50] Speaker 08:
Do they have to make it again each time they do a new regulation?

[02:43:54] Speaker 08:
Is that your theory?

[02:43:55] Speaker 08:
I can't be right because you used to regulate somewhere else.

[02:43:59] Speaker 11:
That's not our theory.

[02:44:01] Speaker 11:
Our theory is that the 2015 new source of regulation in danger of finding was necessarily raised by the existing source rule

[02:44:16] Speaker 11:
And in particular, we're referring to section 111D1 little 2, which uses the phrase, to which a standard of performance under this section would apply if such existing source were a new source.

[02:44:32] Speaker 11:
And so we believe that that statutory provision

[02:44:40] Speaker 11:
source standard and that it's not reasoned for the reasons I described.

[02:44:45] Speaker 11:
It may be that as EPA looked at this issue and while EPA spent maybe a column and a half suggesting that there would be a significant contribution from this industry, but it didn't do.

[02:44:58] Speaker 08:
Not just suggesting, saying we have to find it, it's here and here's why.

[02:45:03] Speaker 08:
It's not just suggesting, I mean they lay it out with a lot of detail and evidence.

[02:45:08] Speaker 11:
I think what you're

[02:45:09] Speaker 11:
referring to here is on the third column of 80 Federal Register 64 of 530.

[02:45:19] Speaker 08:
Well, the third column there and the next two columns on the next page.

[02:45:25] Speaker 11:
It does, in some sense, do that.

[02:45:27] Speaker 07:
That's more than a suggestion.

[02:45:30] Speaker 11:
Most of this language is directed to the second part of the endangerment determination, and that is the question of whether greenhouse gases themselves may reasonably be anticipated to endanger public health or welfare.

[02:45:47] Speaker 11:
That's not an issue that we can test in this case.

[02:45:52] Speaker 11:
Our argument is directed to the first aspect

[02:45:57] Speaker 11:
whether there is a significant contribution from this industry.

[02:46:01] Speaker 11:
That is where there is a lack of reasoned explanation.

[02:46:05] Speaker 08:
Well, that's where we have another column.

[02:46:07] Speaker 08:
Likewise, if we were required to find a cause or contribute significantly finding for emissions from fossil fuel-fired EGUs, the same facts that support our rational basis term, which would support such a finding, and then they go through with a lot of details about one-third of all greenhouse gas emissions as much as the next 10

[02:46:25] Speaker 08:
stationary sources added together.

[02:46:27] Speaker 08:
If they didn't have the, we don't think we have to, but we're doing it now, if they said we have to and here's what we have, would this be insufficient?

[02:46:36] Speaker 11:
I do think that would be insufficient, Your Honor.

[02:46:38] Speaker 08:
On what basis?

[02:46:40] Speaker 11:
On the basis that it doesn't grasp, it doesn't tackle the important issues that you have to consider, such as whether you should be looking at historic, projected, or current emissions.

[02:46:56] Speaker 10:
Say a little bit more, Mr. Delacorte.

[02:46:58] Speaker 10:
So I understand your position is that you need to know what the metric is for a significant contribution finding.

[02:47:09] Speaker 10:
And there are lots of different ways to sort of add things up and make the relative assessment of significance and contribution.

[02:47:20] Speaker 10:
And so then there's a question also about the timeliness of your challenge.

[02:47:25] Speaker 10:
And I gather that industry groups of which your clients are members challenged the new source rules.

[02:47:35] Speaker 10:
That's correct.

[02:47:37] Speaker 10:
And is there anywhere in the record that identifies your relationship with those entities?

[02:47:43] Speaker 11:
There is a footnote in our reply brief, and I can represent to this court today that the North American Coal Corporation, one of the coal industry petitioners, is a member of the National Mining Association.

[02:47:56] Speaker 10:
That's not in a declaration, but it might be in the party's statements in the briefs in the earlier case.

[02:48:05] Speaker 10:
So that's a question.

[02:48:06] Speaker 10:
But then there's a question whether it's adequate to have raised it then, but you also raised it in comments on the ACE rule?

[02:48:15] Speaker 11:
That's right.

[02:48:15] Speaker 11:
It was raised in comments on the ACE rule.

[02:48:17] Speaker 10:
And the objection was spelled out in terms of the kinds of criteria that you're talking about now.

[02:48:23] Speaker 10:
You know, we really need to know not just, hey, a lot, six point whatever percent or four point whatever percent, we need to know what you're assessing, you, the agency, we, the industry, is that right?

[02:48:35] Speaker 11:
That's right.

[02:48:35] Speaker 11:
And I believe that the specific comments that raised those points were on footnotes in page eight of our reply brief.

[02:48:44] Speaker 10:
Excited there, yeah, great.

[02:48:46] Speaker 10:
Great.

[02:48:47] Speaker 11:
And the issue of waiver was not raised by EPA.

[02:48:52] Speaker 11:
The issue of waiver.

[02:48:54] Speaker 11:
A waiver through failure to present in the comments was not raised by EPA in this case.

[02:48:59] Speaker 10:
To preserve, right.

[02:49:03] Speaker 11:
And again, I'm sorry, Your Honor, I didn't mean to interrupt you.

[02:49:07] Speaker 10:
Is that jurisdictional, a timely challenge?

[02:49:10] Speaker 11:
A timely challenge is jurisdictional.

[02:49:13] Speaker 11:
The jurisdictional provision for this statute is Cleaner Act Section 307B.

[02:49:17] Speaker 11:
307B has two jurisdictional aspects.

[02:49:22] Speaker 11:
First, that a challenge be raised within 60 days, and this challenge is raised to the ACE rule within 60 days.

[02:49:30] Speaker 11:
And second, that a regulation not be collaterally attacked in a civil or criminal enforcement proceeding.

[02:49:37] Speaker 11:
and this is not a civil or criminal enforcement proceeding.

[02:49:40] Speaker 11:
So given the presumption in favor of judicial review, the fact that we did raise this issue within 60 days in the petition, and the statutory language of section 111 D1 little two, which refers to the new source rule, we believe it is properly presented in this case.

[02:50:04] Speaker 11:
Thanks a couple.

[02:50:05] Speaker 11:
And I'd like to turn now to my second issue, which is the Section 112 exclusion.

[02:50:13] Speaker 11:
And that is that the plain language of Section 111D1 are ZPA from requiring states to establish standards of performance for

[02:50:27] Speaker 11:
sources that are regulated under Section 112.

[02:50:32] Speaker 11:
And this is a plain language argument that derives primarily from the text of Section 111D1 and the phrase which is not omitted from a source category which is regulated under Section 7412 of this title.

[02:50:49] Speaker 08:
I'm sure you know what the issue here is and it's whether you're talking about the plain language

[02:50:55] Speaker 08:
as codified or the plain language of the public law.

[02:50:58] Speaker 08:
And who's got a problem with the public law has two different versions.

[02:51:05] Speaker 08:
Absolutely.

[02:51:06] Speaker 08:
I mean, we went around this issue four years ago.

[02:51:14] Speaker 08:
And so I think rather than just sort of talking about the plain language of the statute, we can just sort of talk about what do we do with

[02:51:23] Speaker 08:
what the when you've got a conflict in the public law and I guess for me rather than sort of labeling things as having different status it would just be helpful if you could explain to me what rule we're supposed to apply when you have two public law amendments one of which both of which would have

[02:51:48] Speaker 08:
significant operative force here and the operative force would be very different.

[02:51:51] Speaker 08:
One would be to maintain the status quo, look at the list of the pollution, like all the other causes there, look at the pollution, whether it's listed as a pollution, a form of pollution.

[02:52:04] Speaker 08:
Or do we go with the least common denominator?

[02:52:08] Speaker 08:
Do we go with, I think as EPA did here, the, well, let's just get something that covers both of them.

[02:52:14] Speaker 08:
What is the rule?

[02:52:15] Speaker 08:
What cases and what rule can you help me analyze?

[02:52:19] Speaker 11:
That's the $10,000 question, isn't it?

[02:52:21] Speaker 11:
So let me tell you our view.

[02:52:23] Speaker 11:
First, we believe this is an issue of law that the court needs to decide to know about.

[02:52:29] Speaker 11:
Chevron has its time and place, but it's based on a delegation of authority to the agency, and we don't believe that there's any delegation of authority to the agency to decide how to reconcile sections 108G of the Clean Air Act amendments of 1990, which led to the language I just read, and section 302A, a conforming amendment that updated a cross-reference in the previous bill.

[02:52:59] Speaker 08:
Second, we do have, just before you go to second, do you have case authority that tells us what, I mean, at the end of the day, this is part of the text of a statutory provision that the EPA otherwise has interpretive authority, Chevron interpretive authority over, but you're right, this one's starting at a, it's not sure that, it's not your usual ambiguity that's delegated to a,

[02:53:25] Speaker 11:
And I think here you have to work.

[02:53:27] Speaker 11:
I don't have a perfect case on this point.

[02:53:30] Speaker 11:
And there's been a lot of ink shed on this topic.

[02:53:33] Speaker 11:
And I don't think anyone has ever come up with a perfect case on this point.

[02:53:37] Speaker 11:
So I think on that question.

[02:53:39] Speaker 08:
Do you have a less than perfect but helpful case?

[02:53:43] Speaker 18:
Uh, uh, your honor, I don't have a specific case that I can point you to on the Chevron point, but I can, can I ask you if this is a perfect, or at least an analogy, if it's not a case that makes any sense and you can tell me if you think it doesn't the, the, the house amendment said, uh, you can't regulate a source if the source is regulated under one 12.

[02:54:10] Speaker 18:
The Senate amendment said you can't regulate pollutants that are regulated under 112.

[02:54:14] Speaker 18:
Here's my analogy.

[02:54:15] Speaker 18:
Tell me what you think.

[02:54:16] Speaker 18:
There's a law like one 11 that says you can pick any numbers from a lottery ball, you know, from one to a hundred.

[02:54:27] Speaker 18:
They're all in there.

[02:54:28] Speaker 18:
You can pick any numbers except you can't pick prime numbers.

[02:54:35] Speaker 18:
And then there's a second amendment that says, except you can't pick odd numbers.

[02:54:42] Speaker 18:
Now, if we read both of these in, if we read them as not conflicting, if we put them both into the statute, do you think that I could pick the number nine?

[02:54:58] Speaker 11:
Absolutely not.

[02:55:00] Speaker 11:
That's an odd number.

[02:55:00] Speaker 18:
Absolutely not.

[02:55:01] Speaker 18:
Right.

[02:55:02] Speaker 18:
Even though it's not a prime number, it's an odd number.

[02:55:05] Speaker 18:
And so then analogizing to this and the House amendment, why wouldn't we say,

[02:55:12] Speaker 18:
111D allows the EPA to regulate, big universe there, but there is an exception.

[02:55:18] Speaker 18:
111D does not allow the EPA to regulate if the pollutant is regulated under 112, and it does not allow the EPA to regulate if the source is regulated under 112.

[02:55:35] Speaker 11:
And Your Honor, I think that is the right way to read this statute if you believe that Section 302A is not a scrivener's error and they're strong.

[02:55:46] Speaker 08:
But I think it depends on, the problem is, if you understood the, you can pick any number, but it primed to mean, you may not pick prime numbers, but you may, and we expect you to continue to include odd numbers.

[02:56:04] Speaker 08:
Those are still in, only prime is out.

[02:56:07] Speaker 08:
And if the other one was only odd is out, prime, non-odd prime numbers are still in, then you're not giving effect to both amendments.

[02:56:16] Speaker 08:
And I think the problem here, isn't it?

[02:56:17] Speaker 08:
It's not quite that simple.

[02:56:19] Speaker 11:
I think that that – and I believe you raised a similar question to that the last time this is argued.

[02:56:26] Speaker 11:
And I think that that example sort of proceeds from a flawed premise.

[02:56:32] Speaker 11:
Section – it proceeds from the idea that there is a Senate version of the bill that has a positive aspect, which is that you cannot regulate listed Section 112 pollutants under Section 111D.

[02:56:46] Speaker 11:
and that it has a negative aspect, which is that you should continue to regulate pollutants that are not listed under section 111, under section 112, under section 111D.

[02:56:58] Speaker 08:
But we're talking about- I know you've got your reasons for that, and I want to hear them, but I just want to say, if the two amendments were understood in Judge Walker's hypothetical as operative in the sense you just described, as in no primes,

[02:57:14] Speaker 08:
but definitely keep odds in, as they've always been there.

[02:57:18] Speaker 08:
And the other one was no odds, but definitely keep prime numbers in there.

[02:57:23] Speaker 08:
Then you would agree that we couldn't just have the solution of ignoring them both.

[02:57:29] Speaker 08:
It's got to turn on what you're about to tell me now.

[02:57:32] Speaker 08:
OK.

[02:57:33] Speaker 11:
That's right.

[02:57:34] Speaker 11:
And if you believe that the other section wasn't a Scrivener's error, then I do think that's right, Judge Millett.

[02:57:41] Speaker 11:
But your question, I think, proceeds from a premise that there's a Senate version of the bill.

[02:57:47] Speaker 11:
I'm not proceeding from any premise.

[02:57:48] Speaker 11:
I'm just asking questions.

[02:57:50] Speaker 11:
Well, and I'm telling you how I understand that question.

[02:57:54] Speaker 11:
It sort of proceeds from the idea that there's a positive and a negative intent to the 302A and to the 108G.

[02:58:03] Speaker 11:
But they're both part of the same bill.

[02:58:06] Speaker 11:
Whatever negative implications you read into things that are not directly addressed by Section 302A, which are pollutants that are not regulated under Section 112, are addressed by the act.

[02:58:23] Speaker 11:
They are addressed, at least in part, by Section 108G.

[02:58:28] Speaker 11:
So you don't have two ships that are passing in the night.

[02:58:32] Speaker 11:
They're both part of the act.

[02:58:34] Speaker 11:
And the negative, what I call the negative implication of Section 108, or Section 302A, the pollutant that is not regulated under Section 112 should be regulated under Section, or at least subject to regulation under Section 111D, is qualified by the House bill, Section 108G, which says that you should not regulate pollutants, regulate

[02:59:04] Speaker 11:
under Section 111D sources in a source category that are subject to regulation under Section 112.

[02:59:12] Speaker 11:
And so read in that way, and this is the way to reconcile the bills that Judge Walker suggested a few moments earlier and that we've argued.

[02:59:22] Speaker 08:
How do I know that 302 is not saying it's a conforming amendment?

[02:59:29] Speaker 08:
which would mean I'm just adjusting this so we don't change the substantive operation of the statute the way it was before, preserving the status quo, just fixing the site to maintain the status quo because we wish that status quo to continue, which would mean you would only apply to listed pollutants.

[02:59:49] Speaker 08:
And so what evidence do I have when you've got this contradiction here that it gave way to the 108G amendment

[02:59:58] Speaker 08:
Or maybe the 108G amendment gives way to 302.

[03:00:01] Speaker 11:
Except that what little legislative history there is in this bill suggests that it was the Senate that gave way, not the House.

[03:00:09] Speaker 08:
Well, the Senate gave way to that, but as long with an amendment and then

[03:00:13] Speaker 11:
But the amendment had to do with judicial review of House reports.

[03:00:17] Speaker 10:
How do we know that?

[03:00:18] Speaker 10:
They didn't receive once the House amendment was in.

[03:00:21] Speaker 10:
It was a different point.

[03:00:23] Speaker 10:
But let me ask you, you make an effort, which I appreciate to say why your reading would make sense.

[03:00:31] Speaker 10:
And you argue in your brief that Congress basically didn't envision, as of the 1990 amendments, that there

[03:00:39] Speaker 10:
would be any non-criteria pollutants that would remain unregulated, but they would just regulate everything under the HAP standard under 112.

[03:00:53] Speaker 10:
And if that's the premise of your argument, I wonder how you explain, so Congress also amended section 112C1 to say that to the extent practicable, the categories and subcategories listed under this subsection shall be consistent with the list of

[03:01:09] Speaker 10:
source categories under 111.

[03:01:12] Speaker 10:
It just seems like if they're getting into how the two overlap and Congress is seeing as its expansion of section 112 as displacing any role for 111D, then why wouldn't it have just said so?

[03:01:31] Speaker 10:
I mean, I should try to explain how the two survive together.

[03:01:39] Speaker 11:
I certainly think that Congress, in enacting the Section 108G with the source category exclusion, certainly didn't see a large role for Section 111D1 to play following the 1990 amendments.

[03:01:57] Speaker 11:
And frankly, that's consistent with… Well, you argued it had no role, actually.

[03:02:01] Speaker 11:
No role.

[03:02:02] Speaker 11:
Well, I think that our argument might have been more qualified than that as to the 112 point.

[03:02:07] Speaker 11:
We also note that greenhouse gases are an uncomfortable fit within section 112 of the Act.

[03:02:16] Speaker 18:
Can you expand on that?

[03:02:17] Speaker 18:
I certainly give that impression from your briefing and others that, you know, at least from your perspective, it would be terrible to regulate

[03:02:28] Speaker 18:
carbon dioxide under 112.

[03:02:30] Speaker 18:
Can you kind of spell that out a bit more?

[03:02:33] Speaker 11:
I think that you have the UR problem even worse under section 112 than you have under the PSD program.

[03:02:42] Speaker 10:
So you're saying they should have regulated only under 112, but they can't realistically regulate it under 112?

[03:02:47] Speaker 11:
I think our brief speaks more generally to what we believe Congress's expectation would be for many source categories and many pollutants.

[03:02:58] Speaker 11:
And to the extent that it was drafted in artfully to suggest that we believe that greenhouse gases should be regulated under section 112, then that is not our position.

[03:03:08] Speaker 18:
So could you interpret it?

[03:03:11] Speaker 18:
I'm sorry, please, go ahead.

[03:03:13] Speaker 10:
If your interpretation of 111D is right,

[03:03:16] Speaker 10:
How would the EPA respond to a situation where an existing source category like landfills that emits hops, it might be emitting mercury, it might be emitting a criteria pollutant like sulfur dioxide and other dangerous pollutants that don't fall into either of those categories like landfill gases.

[03:03:40] Speaker 10:
What's EPA empowered to do with regard to the landfill gases?

[03:03:46] Speaker 11:
So you're asking, what if there is a source category and a substance that threads the needle between the criteria for being listed under section 112 and being listed under section 108 as a Vax pollutant, something that is not so dangerous that EPA can reasonably regulate it under section 112?

[03:04:09] Speaker 10:
The source category has mercury coming out of it.

[03:04:14] Speaker 10:
So it is being regulated.

[03:04:15] Speaker 11:
That's right, but you would have to be referring in your hypothetical to a very specific substance of which I think CO2 is the only one I can think of that may not fit the criteria of a 112 pollutant, which tend to be more dangerous than your pollutants that are regulated under the NAICS program.

[03:04:35] Speaker 10:
So you're saying like landfill gases in that situation, they would have to either be regulated under 112 or Congress would have to act.

[03:04:42] Speaker 11:
Well, I think that's right, or they could be regulated as NACS pollutant potential.

[03:04:48] Speaker 11:
There are a lot of landfills, and it may be that if EPA looked at that issue, that they would look and say, well, that is appropriate to list that pollutant under Section 107, promulgate air quality criteria, and then regulate it that way.

[03:05:05] Speaker 10:
But there's something odd about your interpretation, too, which is the sequencing.

[03:05:09] Speaker 10:
You know, and I know we talked about this last time we had argument on this case that if Congress wanted to avoid what you refer to as double regulation, why would it have created a loophole whereby EPA could regulate a source category under section 111 and under section 112 so long as it does so first under section 111 and then under section 112?

[03:05:35] Speaker 11:
Well, I think that refers to the Section 112D7 of the Act.

[03:05:40] Speaker 11:
And we believe that that provision is a little more limited than you're suggesting.

[03:05:46] Speaker 11:
And we addressed this one at length, I believe, on page 14 and 15 of our reply brief.

[03:05:53] Speaker 11:
But Section 112D7 primarily operates as a saving provision.

[03:05:59] Speaker 11:
You already had five Section 111D standards at the time of the Clean Air Act Amendments of 1990, and consistent with the Act's general approach to saving and anti-vax sliding, Congress clearly did not want to displace those existing standards.

[03:06:19] Speaker 11:
And that's apparent, we believe, from the text of 112D7 and the phrase promulgated under this section, which is a past tense phrase, as well as from certain specific references in that section, such as the reference to part C or D, which was something else that was carved out of the section 112 program as part of the 1990 amendments.

[03:06:47] Speaker 11:
would therefore not arise in the future.

[03:06:50] Speaker 11:
And the final operative phrase in section 112D7 is other applicable requirement established pursuant to section 7411.

[03:07:02] Speaker 11:
And in our view, the section 112 exclusion is an applicable requirement that prevents the section 111D standard.

[03:07:13] Speaker 11:
And reading that specific language

[03:07:18] Speaker 11:
as a carve out begs the question about whether these are or are not applicable requirements.

[03:07:27] Speaker 08:
Thank you.

[03:07:28] Speaker 08:
Are there more questions from Judge Pillard or Judge Walker on this?

[03:07:32] Speaker 08:
I'll pass.

[03:07:34] Speaker 08:
No, please.

[03:07:35] Speaker 08:
I want questions to be asked.

[03:07:37] Speaker 18:
I am curious if you don't regulate carbon under 712 and you don't regulate it under 7, sorry, under 112, you don't regulate it under 111,

[03:07:47] Speaker 18:
Where do you think the EPA can regulate it?

[03:07:52] Speaker 11:
I think there are plenty of places to regulate carbon, even under our reading.

[03:07:57] Speaker 11:
And section 111 goes only to 111D.

[03:08:01] Speaker 11:
The section 112 exclusion doesn't go to 111B new source standards, which still potentially could be made for carbon, including from this sector.

[03:08:14] Speaker 08:
There's not going to be any, we're told there's no new coal power plants coming.

[03:08:17] Speaker 11:
No, but there are new gas-fired power plants.

[03:08:20] Speaker 08:
No, new coal or oil ones, I assume.

[03:08:24] Speaker 11:
Well, I think my clients certainly might hope that someday there would be.

[03:08:28] Speaker 11:
But I think if we all knew for certain what energy sources would be used in the future, we should all be in the financial world, not the oil world.

[03:08:40] Speaker 18:
Well, let me see if I understand you correctly.

[03:08:44] Speaker 18:
You're saying that for a currently existing unmodified

[03:08:47] Speaker 18:
power plants that emit carbon, there is a way for EPA to regulate them or there is not?

[03:08:57] Speaker 11:
There is a way for them to be regulated consistent with the tailoring rule and what you are allowed after the case for large stationary sources if they are modified within the meaning of that program.

[03:09:14] Speaker 11:
Then there is

[03:09:16] Speaker 08:
They're modified, but if they're not modified.

[03:09:18] Speaker 08:
Not modified, but I don't mean to step on George Walker's question.

[03:09:24] Speaker 11:
EPA could potentially delist under Section 112.

[03:09:29] Speaker 11:
And this goes back to, I think if you go back to the time of the AEP case, there was a fork in the road.

[03:09:37] Speaker 11:
EPA could have chose to pursue the 112 path and live with the 112 exclusion, which was noted in footnote seven of the AEP decision, where EPA could have gone the route of section 111D and for its own reasons, it went the 112 route.

[03:09:51] Speaker 11:
Do you list the pollutants or do you list the source?

[03:09:54] Speaker 08:
Oh, I'm sorry, Judge Wilkert, it's your question.

[03:09:56] Speaker 02:
No, please, please, Judge Wilkert.

[03:09:58] Speaker 11:
You delist the source.

[03:09:59] Speaker 08:
Greenhouse gases aren't listed pollutants under section 1.

[03:10:02] Speaker 08:
Right.

[03:10:03] Speaker 08:
So then your clients wouldn't get regulated at all for any hazardous air pollutant they emit.

[03:10:11] Speaker 08:
Any hazardous air pollutant they emit if they delisted.

[03:10:15] Speaker 11:
I think that's right.

[03:10:16] Speaker 11:
Well, the power plants wouldn't be.

[03:10:18] Speaker 11:
I actually represent the coal industry producers who aren't directly subject to regulation under this section.

[03:10:27] Speaker 05:
Can I get to that later?

[03:10:31] Speaker 18:
Judge Millett's question was my question too.

[03:10:33] Speaker 18:
And then my follow up is a few moments ago, you were talking about 7412D and the way that that fits into the kind of the sequencing.

[03:10:45] Speaker 18:
But am I now understanding your answers to me and Judge Millett to be that if the EPA wanted to regulate

[03:10:54] Speaker 18:
existing power plants that emit carbon.

[03:10:58] Speaker 18:
The EPA could delist them on, let's say, Monday as sources under 7412.

[03:11:05] Speaker 18:
They could regulate them on Tuesday under 7411D.

[03:11:14] Speaker 18:
And then they could list them again on Wednesday as sources under 7412.

[03:11:23] Speaker 18:
I guess, number one, and I know it wouldn't really be Monday, Tuesday, Wednesday, but you get the point.

[03:11:28] Speaker 18:
Is number one, is that what you're saying?

[03:11:30] Speaker 18:
And number two, if that is what you're saying, how is that sensible at all when you could just cut out some of those steps and get the same results?

[03:11:41] Speaker 11:
First, I think that hypothetical is a little bit unrealistic in that I think it would be difficult to support a reasoned decision to delist and then list in that manner, given some symmetry between the criteria for listing and delisting.

[03:11:58] Speaker 11:
But there are other programs that potentially could be applied to existing coal-fired power plants.

[03:12:05] Speaker 11:
Potentially, if greenhouse gases fit the criteria for a NAICS pollutant under Section 107, they potentially could be applied to existing coal-fired power plants.

[03:12:18] Speaker 18:
What about 115?

[03:12:23] Speaker 18:
Do you have any thoughts on whether the EPA could regulate existing power plants that emit carbon under the international regulatory regime that's allowed in Section 115?

[03:12:35] Speaker 11:
115 raises a host of other issues, and I'm generally familiar with it and the Her Majesty's case from the Sixth Circuit, which I think is the primary case interpreting that provision.

[03:12:46] Speaker 11:
I think that that probably requires a type of one-to-one symmetry in reductions that we haven't seen under the current international agreements.

[03:12:58] Speaker 11:
But subject to a more careful review of that specific section, it is possible that an appropriate international agreement that had parallel reductions from signatory countries could qualify.

[03:13:13] Speaker 11:
And that would also involve the political branches in the process in a way that would be salutary.

[03:13:22] Speaker 08:
So Judge Millett.

[03:13:23] Speaker 18:
I'll stop.

[03:13:25] Speaker 18:
Judge Millett, I know you had.

[03:13:26] Speaker 08:
You know, I just think you had a lot of potential is potentially.

[03:13:29] Speaker 08:
In fact, you seem to be quite clearly saying potentially at every in every clause.

[03:13:34] Speaker 08:
And so what I would just like to know.

[03:13:36] Speaker 08:
Is your client have a view.

[03:13:38] Speaker 08:
A position as of now on whether without a potentially

[03:13:45] Speaker 08:
on whether you could be regulated under NAICS 115 or something else, or is a position that, no, it's fine to say it.

[03:13:54] Speaker 08:
Courts could agree or disagree.

[03:13:56] Speaker 08:
I just would like to know your client's position, because you all deal with all these statutes more often than I do.

[03:14:03] Speaker 11:
I'm arguing on behalf of multiple petitioners in this case.

[03:14:09] Speaker 11:
And as a result of that, I don't think that I can give you that answer, Judge Millett, because I haven't had those

[03:14:19] Speaker 08:
Nope, I understand that.

[03:14:20] Speaker 08:
Thank you.

[03:14:21] Speaker 08:
I apologize, Judge Walker.

[03:14:23] Speaker 08:
I jumped in a couple of times.

[03:14:24] Speaker 08:
Do you have more questions?

[03:14:25] Speaker 18:
No, I appreciated it.

[03:14:27] Speaker 18:
It was helpful to me.

[03:14:28] Speaker 18:
And I have no more questions.

[03:14:30] Speaker 08:
Judge Priller, do you have more questions?

[03:14:32] Speaker 08:
No, thank you.

[03:14:33] Speaker 08:
OK.

[03:14:33] Speaker 08:
Thank you very much, Mr. De Laquill.

[03:14:36] Speaker 08:
De Laquill.

[03:14:37] Speaker 08:
De Laquill, did I get it right that time?

[03:14:38] Speaker 08:
You did.

[03:14:39] Speaker 08:
Thank you, Judge.

[03:14:39] Speaker 08:
The second time.

[03:14:40] Speaker 08:
I apologize.

[03:14:41] Speaker 08:
And now we're going to hear from Mr. Hazy Antich.

[03:14:45] Speaker 08:
Did I say that correctly?

[03:14:47] Speaker 01:
Yes, you did, Your Honor.

[03:14:48] Speaker ?:
OK.

[03:14:49] Speaker 01:
Good morning, Theodore Hadjiantich for Petitioners, Robinson et al.

[03:14:53] Speaker 01:
I reserve two minutes for rebuttal.

[03:14:55] Speaker 01:
May it please this court.

[03:14:57] Speaker 01:
In 2009 and again in 2015, EPA made formal findings that carbon dioxide in the ambient air endangers human health and is emitted from numerous and diverse mobile and stationary sources.

[03:15:12] Speaker 01:
Having made those findings, EPA is not permitted to circumvent max by first regulating under the supplemental source category program section 111.

[03:15:23] Speaker 08:
Could you start, I apologize, but could you start

[03:15:26] Speaker 08:
before we can get to your very interesting legal arguments with the standing question that's been raised.

[03:15:32] Speaker 08:
Otherwise, we're just not allowed to entertain those questions.

[03:15:38] Speaker 01:
So the Sindelar Declaration goes through numerous examples of TPPF standing and competitive enterprise institute standing.

[03:15:48] Speaker 01:
But I'll focus on one specific example with regard to TPPF.

[03:15:53] Speaker 01:
Long before the ACE rule was promulgated, Texas Public Policy Foundation provided counseling, advocacy, and litigation services to its existing clients who favor the full use of fossil fuels.

[03:16:08] Speaker 01:
The ACE rule seeks to limit the use of fossil fuels specifically in the context of the electricity generation.

[03:16:15] Speaker 01:
The rule caused existing pro-fossil fuel clients to seek greater help from the foundation to further their efforts to encourage more rather than less use of fossil fuels throughout the economy.

[03:16:29] Speaker 01:
It's required the foundation to spend more time and more resources providing services to those existing clients.

[03:16:38] Speaker 08:
What kind of services?

[03:16:41] Speaker 08:
Did you submit any affidavits or declarations to support your standing argument?

[03:16:47] Speaker 01:
Yes, the declaration of Greg Sindelar, who's the chief operating officer of Texas Public Policy Foundation.

[03:16:57] Speaker 01:
So in terms of what kinds of existing clients, the very clients.

[03:17:01] Speaker 08:
Not clients, services.

[03:17:02] Speaker 08:
Sorry, I don't want to get into clients.

[03:17:05] Speaker 01:
Oh, OK.

[03:17:05] Speaker 01:
Well, as I said, counseling, litigation, and advocacy services for those who favor more rather than less use of funds.

[03:17:16] Speaker 08:
What do you mean by counseling?

[03:17:20] Speaker 08:
Do you mean counseling them how to undertake litigation or advocacy efforts, or is there some sort of distinct counseling separate from litigation and advocacy?

[03:17:29] Speaker 01:
Well, as the Sendalard Declaration sets forth, TPPF has a major client-oriented program, life-powered, that basically provides clients with advice, litigation services, as well as public advocacy services in terms of expanding rather than contracting the use of fossil fuels.

[03:17:56] Speaker 01:
These are existing long-term clients

[03:17:59] Speaker 10:
These are, this is sort of legal advocacy, policy advocacy, trying to make the terrain more hospitable to use of fossil fuels over time as a legal matter and a policy matter.

[03:18:13] Speaker 01:
It is that, but it also is with regard to advocating on behalf of specific clients, some of which are on our Robinson Petitioners client list now, with regard to how

[03:18:27] Speaker 01:
fossil fuels may be used more with regard to their specific businesses.

[03:18:33] Speaker 01:
In comes the CPP first, followed by the ACE rule.

[03:18:37] Speaker 10:
The difficulty, Mr. Hazianich, is under our circuit's precedent, advocacy activities and litigation activities, as you know, are generally, you know, effects on those are generally not considered to be a basis for standing.

[03:18:53] Speaker 10:
So I think we're just really trying to get at

[03:18:55] Speaker 10:
Is there some service provision like what was recognized to support standing in Havens?

[03:19:00] Speaker 10:
Or is there only advocacy in the sense that our circuit precedents would say, don't give a basis for standing?

[03:19:10] Speaker 01:
Well, there is service, at least in connection with litigation.

[03:19:15] Speaker 10:
Because that's not something that our circuit

[03:19:18] Speaker 10:
recognizes.

[03:19:19] Speaker 10:
That's what I'm saying.

[03:19:19] Speaker 10:
And that's why we keep probing so that you can tell us which services do survive.

[03:19:28] Speaker 01:
I do believe that the circuit has recognized litigation.

[03:19:34] Speaker 01:
And let me just give you one moment to turn to that.

[03:19:41] Speaker 01:
Haitian refugee center V. Gracie, DC Circuit 1987 found injury in fact for an organization providing litigation services in connection with deportation proceedings.

[03:19:55] Speaker 01:
The challenged agency action was an interdiction order that impaired its daily litigation work.

[03:20:01] Speaker 01:
So here we have ongoing litigation for a number of clients who encourage the use of fossil fuels, not only generally as a matter of policy, but with regard to their specific business interests.

[03:20:19] Speaker 01:
Some of those clients are clients in this case, and there are others as well.

[03:20:24] Speaker 01:
And so as the CPP came down the pike, these clients turned to us and said, hey, wait a minute.

[03:20:33] Speaker 01:
We want more rather than less fossil fuels used.

[03:20:37] Speaker 01:
And and that the this CPP is going to impact our business because it's it's you It requires less fossil fuels.

[03:20:48] Speaker 01:
So We go back again.

[03:20:50] Speaker 08:
You just cited a case and I'm sorry.

[03:20:52] Speaker 08:
Is that which case was came a citation again?

[03:20:56] Speaker 08:
Okay, 1987 Grayson, is that sorry?

[03:21:01] Speaker 01:
Okay, thank you, your honor.

[03:21:04] Speaker 01:
So, so they came to us, basically, what are we going to do about the CPP and an increased federal incursion into

[03:21:13] Speaker 01:
the lesser use of fossil fuels.

[03:21:19] Speaker 01:
We were forced to counsel them on how they could deal with the CPP.

[03:21:26] Speaker 01:
We were forced to counsel them on how other aspects of their efforts to increase fossil fuel use

[03:21:35] Speaker 01:
would be impacted by this.

[03:21:38] Speaker 01:
And that increased our costs and increased the level of difficulty and effort by which the foundation was required to service its existing clients.

[03:21:50] Speaker 01:
So it's not a situation of choosing to shift resources to deal with new issues.

[03:21:57] Speaker 01:
It's a situation of increasing resources to deal with clients existing issues exacerbated first by CPP and now by ACE.

[03:22:10] Speaker 18:
If you were in the business of consulting, advising on OSHA compliance, and then Congress passed a new law that increased workplace safety rules,

[03:22:27] Speaker 18:
So then as a result, you now have more things you need to advise your advisees about.

[03:22:41] Speaker 18:
You think you would have standing there, challenge Congress's occupational safety and health workplace new legislation?

[03:22:52] Speaker 01:
Yes, to the extent that we had existing clients for which we were providing OSHA services, and these existing clients were impacted, subject to this new OSHA law, certainly.

[03:23:07] Speaker 01:
Our level of effort would be increased as a result of the new law for the existing clients.

[03:23:13] Speaker 01:
We're not going to tell these clients, we're not going to deal with that.

[03:23:16] Speaker 18:
Why wouldn't we, at least in a legal matter, define you as

[03:23:21] Speaker 18:
an advisor for, let's say the new laws were passed in 2019, we would define you as an advisor of pre 2019 workplace safety rules.

[03:23:37] Speaker 18:
And so long as you stayed an advisor pre 2019 workplace safety rules,

[03:23:44] Speaker 18:
you wouldn't have anything extra to do after 2019.

[03:23:46] Speaker 18:
Now, if you decide to become a different advisory group, if you decide to change and become a pre and post 2019 workplace safety rules advisory group, then yes, you've got more to do, but that's a choice you made.

[03:24:02] Speaker 18:
It's not an injury that's inflicted on you by the statute.

[03:24:07] Speaker 01:
I understand your point, Your Honor.

[03:24:09] Speaker 01:
But our situation is different.

[03:24:12] Speaker 01:
Our situation is we have existing clients that don't only rely on us for compliance, if you will, with existing fossil fuel energy requirements.

[03:24:25] Speaker 01:
We have clients that rely on us to advise them on how they can increase the use of fossil fuels

[03:24:34] Speaker 01:
across the board.

[03:24:35] Speaker 01:
For example, let me give you a specific example.

[03:24:38] Speaker 01:
Liberty Packing Company is a manufacturer of tomato paste from raw tomatoes.

[03:24:47] Speaker 01:
And they use natural gas to fire their boilers.

[03:24:52] Speaker 01:
And they are seeking in California, which is a very difficult thing to do, to increase the availability of natural gas, of fossil fuel, for their facility.

[03:25:06] Speaker 01:
Without the ability to use fossil fuels, they're out of business.

[03:25:11] Speaker 01:
But they're looking for us to make sure that

[03:25:16] Speaker 01:
We advise them to take steps to increase the world, the potential of their use of fossil fuels.

[03:25:24] Speaker 08:
And they say here, here's a lot of kind of steps litigation lobby lobby and

[03:25:31] Speaker 01:
Well, we don't lobby.

[03:25:33] Speaker 08:
No, do you advise them?

[03:25:36] Speaker 08:
Do you advise them to engage in advocacy and litigation?

[03:25:39] Speaker 01:
Yes, we do.

[03:25:40] Speaker 08:
And what else?

[03:25:41] Speaker 08:
What other kind?

[03:25:41] Speaker 08:
But I don't want details as to a particular client.

[03:25:43] Speaker 08:
I'm just really trying to get the categories.

[03:25:45] Speaker 08:
What else?

[03:25:45] Speaker 01:
Sure.

[03:25:45] Speaker 01:
Well, we refer them to engineers, scientists with whom we work on a steady basis, which we've also done in the context of the CPP.

[03:25:57] Speaker 01:
And I mean, basically we're a one-stop shop for these clients.

[03:26:04] Speaker 01:
They're basically small businesses.

[03:26:06] Speaker 01:
We're not talking about large entities, but small businesses that feel the crush of regulating fossil fuels, which they've been using for decades.

[03:26:19] Speaker 01:
And here comes the issue.

[03:26:20] Speaker 01:
Do your clients pay you?

[03:26:22] Speaker 01:
We're a not-for-profit organization.

[03:26:25] Speaker 01:
We are not paid by our clients, no.

[03:26:28] Speaker 08:
Can I ask you to look at paragraph five of Greg Sindler's declaration?

[03:26:35] Speaker 01:
Yes, I wish I had it in front of me.

[03:26:38] Speaker 08:
So among other things, the foundation's mission is to promote, defend, and ensure liberty, personal responsibility, property rights, criminal justice reform, greater educational opportunities, balanced environmental regulation, free speech, states' rights, energy sufficiency, free enterprise,

[03:26:57] Speaker 08:
That's a long list.

[03:26:59] Speaker 08:
I'm trying to imagine a regulation you could challenge.

[03:27:04] Speaker 01:
Well, as Mr. Sundelar's declaration also says, and I think he's got an entire paragraph or maybe two or more on our life-powered division.

[03:27:17] Speaker 08:
I'm just asking if that's what you do.

[03:27:20] Speaker 08:
And that's among other things.

[03:27:21] Speaker 08:
So that list is not comprehensive, apparently.

[03:27:24] Speaker 08:
what regulation isn't going to affect free enterprise, liberty, personal responsibility, property rights?

[03:27:36] Speaker 01:
I think it's a matter of degree, Your Honor.

[03:27:38] Speaker 01:
So we concentrate to a very large degree on energy issues.

[03:27:47] Speaker 08:
So this description is not then...

[03:27:49] Speaker 01:
Well, no, it's accurate.

[03:27:50] Speaker 01:
It's just a question of degree.

[03:27:52] Speaker 08:
Well, I don't know how much degree you have to have for standing.

[03:27:55] Speaker 08:
And what makes you do more the fact that the whole argument would be we'd rather concentrate on environmental laws, but you pass the regulation over here that affects it's a net neutrality that affects someone's free speech.

[03:28:06] Speaker 08:
So now we're having to spend more time on net neutrality than we did this.

[03:28:10] Speaker 08:
So you could intervene there.

[03:28:12] Speaker 08:
You could not intervene.

[03:28:14] Speaker 01:
Those are one offs, but our, our service.

[03:28:18] Speaker 08:
Imagine a regulation that wouldn't fall within this paragraph.

[03:28:23] Speaker 08:
At least a business regulation.

[03:28:25] Speaker 01:
No, I mean, it's broadly defined.

[03:28:27] Speaker 01:
But what I'm saying is that our services for our existing clients substantially take up a tremendous amount of our time with regard to fossil fuels and the income.

[03:28:41] Speaker 10:
You're referring to, as you say, or as Mr. Simmiller says in his declaration, you're referring

[03:28:50] Speaker 10:
to services like legal counseling, referral and advocacy, testifying before Congress, submitting comments to EPA, combating federal regulation of carbon dioxide.

[03:29:02] Speaker 10:
When you talk about services that are relevant to this case, that's the kind of thing you're talking about?

[03:29:06] Speaker 01:
Yes, those are included among the kinds of things that we're talking about, as well as litigation.

[03:29:12] Speaker 01:
I didn't hear whether you listed litigation, but certainly litigation is a major component of that.

[03:29:18] Speaker 10:
I'm done.

[03:29:19] Speaker 01:
Um, if I may, I just like to spend one moment with regard to petitioner competitive enterprise Institute and they're standing.

[03:29:29] Speaker 08:
I'm going to do

[03:29:31] Speaker 08:
One quick minute on that, and then if you want, we'll give you like one minute on, one or two minutes on the merits, but then we're going to need to move on.

[03:29:38] Speaker 01:
OK, so thank you.

[03:29:39] Speaker 01:
This court's decision on August 14 in a case called Competitive Enterprise Institute v. FCC reaffirmed a long line of cases by finding that the Institute was injured, in fact, by regulations that would affect the market actions of third parties.

[03:29:56] Speaker 01:
Here, that very petitioner

[03:29:59] Speaker 01:
has shown that the ACE rule will increase the cost of retail electricity alleged as an injury to itself.

[03:30:08] Speaker 01:
So I'd like to go back to the merits argument.

[03:30:11] Speaker 01:
And frankly, I'm not sure how much of this I went through, but I'll be very quick.

[03:30:16] Speaker 01:
I'm not sure how much of this you heard.

[03:30:18] Speaker 01:
But in 2009 and again in 2015, EPA made formal findings

[03:30:24] Speaker 01:
that carbon dioxide in the ambient air endangers human health and is emitted from numerous and diverse mobile and stationary sources.

[03:30:33] Speaker 01:
Having made those findings, EPA is not permitted to circumvent NAICS by first regulating under the supplemental source category program of Section 111.

[03:30:43] Speaker 01:
That was explained by the Second Circuit in Trane, by the Ninth Circuit in National Audubon Society, and by district court in this circuit in Zuck,

[03:30:51] Speaker 01:
which was affirmed by this court in a one-page summary opinion in 2014.

[03:30:56] Speaker 01:
Earlier, this court took a similar approach in Kennecott.

[03:31:01] Speaker 01:
Those decisions are consistent with the Supreme Court's instructions in Whitman regarding the relative functions of sections 108 and 111.

[03:31:09] Speaker 01:
Now, EPA asserts that section 111D's prohibition

[03:31:14] Speaker 01:
against regulating NAICS pollutants is the same as permission to regulate non-NAICS pollutants.

[03:31:20] Speaker 01:
That's a classic example of the logical fallacy of denying the antecedent, which was rejected by this court twice, in New England power and in agri-processor, and by Justice Scalia in his concurring opinion in the Supreme Court's Canning case in 2014.

[03:31:38] Speaker 01:
Here, EPA falls for that same logical trap.

[03:31:42] Speaker 01:
Consider this, a law prohibiting you from painting your one story house white is not the same as permitting you to paint it green, where the law also says that only two story houses may be painted green.

[03:31:56] Speaker 01:
And that's what we have here.

[03:31:57] Speaker 01:
Prohibiting one type of action under Section 111D is not the same as permitting another type of action that's foreclosed by the antecedent provision, Section 108.

[03:32:08] Speaker 01:
Thank you.

[03:32:09] Speaker 08:
Any more questions from Judge Piller or Judge Walker?

[03:32:12] Speaker 10:
You mentioned, Mr. Hadzi, another CEI case that you said just recently was decided.

[03:32:19] Speaker 10:
Did you file that with us under 28J?

[03:32:23] Speaker 01:
I was not counsel for CEI in that case, no.

[03:32:27] Speaker 08:
No, but did you say it supports your standing here?

[03:32:30] Speaker 10:
Did you submit it to us as a supplemental authority?

[03:32:35] Speaker 01:
I'm sorry.

[03:32:36] Speaker 10:
Did you cite it in your brief?

[03:32:39] Speaker 01:
No, it's a case that was just decided August 14th of this year.

[03:32:44] Speaker 10:
And our procedure is that if there's an authority that you want to bring to our attention that comes out after the briefing, that you submit it to us as a supplemental authority.

[03:32:51] Speaker 10:
with a letter under Rule 28J.

[03:32:54] Speaker 10:
And that's what I was asking, is whether you had done that.

[03:32:56] Speaker 10:
But was that a judgment decided without argument?

[03:33:01] Speaker 01:
I'm sorry?

[03:33:03] Speaker 10:
That was a judgment rather than a presidential opinion?

[03:33:09] Speaker 10:
I've just not seen this case.

[03:33:10] Speaker 10:
I'm trying to get a sense from you where to find it.

[03:33:13] Speaker 10:
Do you have a citation or anything?

[03:33:14] Speaker 01:
I do believe I have a citation.

[03:33:17] Speaker 01:
One moment, please.

[03:33:20] Speaker 10:
Here we go.

[03:33:21] Speaker 10:
My clerks have found it.

[03:33:25] Speaker 01:
Yeah, it's a Lexus citation.

[03:33:28] Speaker 10:
Other judges might want it.

[03:33:30] Speaker 10:
Go ahead.

[03:33:31] Speaker 01:
Yeah, 2020 US App Lexus, 2587 DC Circuit, August 14, 2020.

[03:33:39] Speaker 01:
And I apologize for not following the rule of the supplemental authority, but it is a case that was decided by this court.

[03:33:48] Speaker 18:
Do you think, if I can ask one question, do you think that the arguments that you are making about the validity of what the EPA did are arguments that were forfeited by all of the other parties and therefore

[03:34:08] Speaker 18:
are considerations that we are not allowed to consider if we decide you don't have standing.

[03:34:18] Speaker 01:
Okay, I apologize.

[03:34:20] Speaker 01:
I'm going to repeat the question just to make sure I understand it.

[03:34:23] Speaker 18:
So maybe this is a simpler way.

[03:34:25] Speaker 18:
I'm sorry.

[03:34:25] Speaker 18:
I'll make it even simpler.

[03:34:29] Speaker 18:
Could you have accomplished everything you want to accomplish by just filing an amicus brief?

[03:34:35] Speaker 01:
We decided in this case that the answer to that is no.

[03:34:41] Speaker 01:
We wanted actually a seat at the table, which we have today.

[03:34:45] Speaker 01:
We did file an amicus brief arguing the same issues in connection with the Clean Power Plan.

[03:34:52] Speaker 01:
But that amicus brief I think received zero attention, which led us to file this case so that we would get more than zero attention.

[03:35:04] Speaker 01:
If there are further questions on standing, I actually would be very happy to discuss those.

[03:35:10] Speaker 01:
We do think we have standing.

[03:35:11] Speaker 01:
We know that our resources and expenditures and costs increase dramatically for our existing clients, and not because of something new that came down the pike that we weren't involved in.

[03:35:27] Speaker 18:
And I think that the case- I'm good on standing.

[03:35:30] Speaker 18:
If you have answers for Judge Pillard or Judge Millett, I'm getting out of the way on this one.

[03:35:39] Speaker 08:
There's probably, do you have any more questions?

[03:35:41] Speaker 08:
No, thanks.

[03:35:43] Speaker 08:
Then I think we're going to, it's time for the EPA.

[03:35:48] Speaker 08:
That's Megan Greenfield, I believe.

[03:35:50] Speaker 08:
Good afternoon.

[03:35:50] Speaker 08:
Patient and waiting a long time.

[03:35:52] Speaker 08:
There's more to come.

[03:35:56] Speaker 15:
Sorry.

[03:35:57] Speaker 15:
No, go ahead.

[03:35:58] Speaker 15:
May it please the court.

[03:35:59] Speaker 15:
My name is Megan Greenfield, and I'm here on behalf of EPA.

[03:36:03] Speaker 15:
I'd like to begin with Petitioner's argument that EPA Section 111B

[03:36:08] Speaker 15:
significant contribution endangerment finding can be challenged in this case.

[03:36:14] Speaker 15:
It cannot.

[03:36:16] Speaker 15:
Section 111 is clear that EPA is obligated to make a significant contribution endangerment finding only when issuing new rules of new sources under Section 111B.

[03:36:29] Speaker 15:
There is no parallel requirement under Section 111D.

[03:36:34] Speaker 15:
Petitioners nevertheless argue that the endangerment issue is properly raised here.

[03:36:40] Speaker 15:
That's wrong for two reasons.

[03:36:42] Speaker 15:
First, the petitioners concede in their reply that their own trade groups challenged the 2015-111b rule.

[03:36:51] Speaker 15:
In that case, those petitioners made the same argument that the petitioners made here, namely that a significant contribution endangerment finding that was pollutant specific

[03:37:01] Speaker 15:
was required before regulating under Section 111B.

[03:37:04] Speaker 15:
Petitioners can't claim that they had no opportunity to challenge that earlier rule when they actually did so.

[03:37:13] Speaker 08:
Moreover, I just, this is a confusing area of law for me, and that is if a trade association sues, and some trade associations, like the Chamber of Commerce, have lots and lots and lots of members.

[03:37:32] Speaker 08:
Does that mean that every single member is necessarily on notice and participating in that challenge?

[03:37:40] Speaker 08:
Because they're saying that the new source rule didn't affect them, because they're never going to be a new source.

[03:37:45] Speaker 15:
Right.

[03:37:45] Speaker 15:
Not necessarily.

[03:37:46] Speaker 15:
I think it's true that sometimes a trade association could represent both individual organizations withstanding and organizations without.

[03:37:54] Speaker 15:
But here it's clear that these coal companies did have standing.

[03:37:57] Speaker 15:
And that's clear from the petitioner's brief and the 111b rule itself.

[03:38:01] Speaker 15:
There, those petitioners claimed that they had standing to challenge the 111B rule because it was the legal predicate for regulation under 111D.

[03:38:11] Speaker 15:
And they said, if the B rule falls, then the D rule will go with it.

[03:38:15] Speaker 15:
So we'd have standing to challenge that because of our interest in existing sources.

[03:38:20] Speaker 15:
EPA did not contest that standing there.

[03:38:24] Speaker 10:
So the question is whether it's too late for them to challenge now.

[03:38:30] Speaker 10:
There's a challenge in the context of the new source rule, but that's been held in abeyance.

[03:38:35] Speaker 10:
So these petitioners have challenged at the time of the new source rule, and also challenged when it became clear under a very different rule, the ACE rule, that affected them in an entirely different way.

[03:38:54] Speaker 10:
They might have been unharmed by the 2015 rule, and now they're challenging

[03:38:58] Speaker 10:
because the ACE rule uses that finding in a very different way.

[03:39:01] Speaker 10:
So I guess the question is why, what's untimely about that challenge given those distinctive circumstances?

[03:39:11] Speaker 15:
I have two answers because I think that there are two questions there.

[03:39:13] Speaker 15:
So the first about the abeyance.

[03:39:16] Speaker 15:
It's true that the 2015 rule challenges in abeyance, but the petitioners in that case supported the abeyance and have never sought to lift it.

[03:39:24] Speaker 15:
So the fact that it's remained in abeyance, I don't think, really works one way or another.

[03:39:29] Speaker 15:
And second, the petitioners are claiming that this rule affects them in a different way, but that's simply untrue because the B rule is the legal predicate for a D rule, and that's always been clear.

[03:39:41] Speaker 15:
And it's particularly clear here because the 2015 new source rule under 111B was released the very same day as the existing source rule, 111D, that's the Clean Power Plan.

[03:39:54] Speaker 15:
And so the linkage between the two, that the B was a legal predicate for the D, was obvious at that time.

[03:40:00] Speaker 15:
And so petitioners can't come in now and say there's some sort of new legal consequence that they were unaware of.

[03:40:05] Speaker 10:
I'm not sure that either the objection then or the objection now before the agency was quite as eloquent as Mr. Jellicoe has been in his briefing to us about

[03:40:19] Speaker 10:
What they're objecting to this and I don't know if you have taken a position on it.

[03:40:24] Speaker 10:
It seems like they are saying, you know, it really matters.

[03:40:27] Speaker 10:
Not just are we a big player in in carbon dioxide emissions, but how are you measuring it and I don't remember seeing those kinds of details in

[03:40:39] Speaker 10:
their objection before the agency, and maybe this is more a question for him.

[03:40:42] Speaker 10:
But is that part of your claim that it hasn't been timely raised, that you were not put on notice of a potential inadequacy that might even affect the adequacy of the new source rules, significant contribution finding as such?

[03:41:00] Speaker 15:
We aren't claiming that they've somehow waived their objection.

[03:41:04] Speaker 15:
So the answer to that question is no.

[03:41:07] Speaker 15:
But we do think that,

[03:41:10] Speaker 15:
even assuming that petitioners are right, that the significant contribution finding, the API has to apply criteria to the specific pollutant issue, that that happened here in 2015?

[03:41:23] Speaker 10:
I don't know so.

[03:41:24] Speaker 10:
I mean, they're saying, we don't know.

[03:41:25] Speaker 10:
Is it global?

[03:41:26] Speaker 10:
Is it domestic?

[03:41:28] Speaker 10:
Do we look at the past and future as well as the current situation?

[03:41:31] Speaker 10:
Are you looking at, I guess there's different ways to measure volume and rate and whatever.

[03:41:39] Speaker 10:
has EPA made those things clear?

[03:41:43] Speaker 15:
EPA hasn't made the specifics of those things clear, but it need not do so in this context.

[03:41:53] Speaker 15:
And in the 2015 rule, what EPA said about the contribution here was that the contribution of greenhouse gases from

[03:42:02] Speaker 15:
from fossil fuel-fired power plants was one third of domestic greenhouse gas emissions, that the source category emitted three times the next 10 highest-emitting source categories combined, and that under any reasonable threshold or definition, that this is a significant contribution.

[03:42:19] Speaker 15:
And I note that petitioners also argue in their reply that they're not saying that EPA has to consider a certain set of criteria or another.

[03:42:28] Speaker 15:
They're not saying that the statute requires standard X

[03:42:31] Speaker 15:
But they're saying that EPA didn't grapple with the significance question at all, and that's simply incorrect, based on the record for the 2015.

[03:42:40] Speaker 10:
You're saying this is not the case in which to worry about that, because as you just said, under any reasonable definition or threshold, this is clearly a significant contribution.

[03:42:50] Speaker 08:
Yes, that's correct.

[03:42:52] Speaker 08:
And you mean by the flip side of that, that there's no reasonable record on which

[03:42:58] Speaker 08:
Given what's in the record, there's no reasonable basis on which EPA could have concluded otherwise as a matter of law?

[03:43:07] Speaker 15:
So the issue was not reopened in this case.

[03:43:09] Speaker 15:
And so the record on that particular issue is not here.

[03:43:12] Speaker 15:
It's in the B-roll.

[03:43:13] Speaker 15:
And so that's why we think that the challenge... I'm talking about from the new source rule itself.

[03:43:20] Speaker 10:
Assuming that that challenge carries over or that the fact that they challenged it there is enough for them to raise it now.

[03:43:28] Speaker 10:
I'm looking at that record as a relevant record, which I think exactly.

[03:43:32] Speaker 10:
That's great.

[03:43:33] Speaker 10:
That record is a relevant record.

[03:43:34] Speaker 10:
I think the question was, uh, are you saying that record?

[03:43:40] Speaker 10:
Yeah.

[03:43:40] Speaker 10:
Really couldn't have held that it wasn't a significant factor.

[03:43:46] Speaker 15:
That's correct.

[03:43:48] Speaker 15:
It would be, it will, there is no evidence on that record.

[03:43:51] Speaker 15:
Otherwise,

[03:43:53] Speaker 08:
It's not.

[03:43:54] Speaker 08:
I'm sorry.

[03:43:54] Speaker 08:
So I just want to make crystal clear.

[03:43:55] Speaker 08:
As a matter of law, it would have been unreasonable for the agency on that record to conclude that they are not significant.

[03:44:01] Speaker 08:
That's your point.

[03:44:02] Speaker 15:
Right.

[03:44:03] Speaker 15:
And that's what the agency said on that record under any reasonable threshold of significance, however we describe it.

[03:44:08] Speaker 08:
That's not quite.

[03:44:08] Speaker 08:
I'm asking the flip side for a reason.

[03:44:10] Speaker 08:
They're not quite the same as saying we would, as a matter of law, would have had no discretion to conclude otherwise.

[03:44:18] Speaker 08:
It would have been irrational on that record.

[03:44:20] Speaker 08:
OK.

[03:44:21] Speaker 08:
Yes.

[03:44:21] Speaker 08:
Thank you.

[03:44:25] Speaker 15:
So next, I'd like to address the other point that petitioners are making, and that's that EPA has reopened the challenge to the 2015 finding in this proceeding, and that's not true.

[03:44:38] Speaker 15:
The reopening doctrine is exceedingly narrow, and it applies only where the agency has explicitly or implicitly reopened the issue by reexamining the choice made.

[03:44:49] Speaker 15:
And here in the ACE rule, the agency made clear that it was not reopening this issue.

[03:44:54] Speaker 15:
and that it did not reexamine the underlying facts of that endangerment finding.

[03:45:00] Speaker 15:
And one additional point on this petitioner's claim is that petitioners argue that EPA's position is unreasonable because they could have never known or it puts them in the untenable position of forecasting how EPA will act in the future.

[03:45:14] Speaker 15:
But on the facts here, that's just abundantly untrue because as I said earlier, the B rule and the D rule were released on the same day.

[03:45:22] Speaker 15:
And so the linkage between the two

[03:45:24] Speaker 15:
was obvious.

[03:45:26] Speaker 18:
Can I ask you about whether the EPA can regulate sources through 111D that are already regulated by 112?

[03:45:41] Speaker 15:
Absolutely.

[03:45:41] Speaker 18:
We can turn to that issue.

[03:45:47] Speaker 18:
Judge Maledden and Judge Piller, did you have follow-ups on the previous topic?

[03:45:51] Speaker 18:
I don't want to jump the gun.

[03:45:54] Speaker 00:
Whatever you're interested in.

[03:45:57] Speaker 18:
I guess my first question is, is the EPA saying that it's ambiguous whether the agency can regulate sources through 111D that are already regulated under 112?

[03:46:17] Speaker 18:
Or is the EPA saying that it's unambiguous that the EPA can do that?

[03:46:22] Speaker 15:
We're saying that this aspect of Section 111D is ambiguous and that it requires interpretation.

[03:46:30] Speaker 15:
And that EPA's construction of the ambiguity in the codified version of 111D is reasonable.

[03:46:38] Speaker 10:
And that's a consistent position of the agency ever since 1990.

[03:46:42] Speaker 15:
It's been a consistent position of the agency, yes.

[03:46:47] Speaker 18:
And petitioners are... Can I ask you...

[03:46:53] Speaker 18:
The petitioner and the panel have talked about my prime number, odd number analogy, maybe beyond the point that we should.

[03:47:08] Speaker 18:
But I wonder if you can tell me why you think the analogy is off.

[03:47:12] Speaker 15:
I assume you do.

[03:47:17] Speaker 15:
And I can remind you of it.

[03:47:20] Speaker 15:
Would you mind going through it again?

[03:47:21] Speaker 15:
Because I had a little bit of trouble.

[03:47:25] Speaker 18:
No, no, no, no problem.

[03:47:28] Speaker 18:
At the risk of subjecting everyone to it again.

[03:47:30] Speaker 18:
Imagine a bill that says you can pick any lottery number you want.

[03:47:36] Speaker 18:
There are a hundred lottery numbers in the ball, but the bill has two amendments.

[03:47:41] Speaker 18:
One amendment says you can't pick an odd number.

[03:47:43] Speaker 18:
One amendment says you can't pick a prime number.

[03:47:46] Speaker 18:
Uh, I think I would read that to mean that, um, you can't pick an odd number and by, and all prime numbers are odd numbers.

[03:47:57] Speaker 18:
Uh, so it's just, you can't pick a, you can't pick an odd number.

[03:48:01] Speaker 18:
And likewise, I read the house and the Senate amendments to be, you can regulate under one 11 D. Uh, but there's, there are two exceptions.

[03:48:11] Speaker 18:
You can't regulate, um, air pollutants that are covered in one 12.

[03:48:16] Speaker 18:
and you can't regulate sources that are regulated under 112.

[03:48:23] Speaker 18:
So regardless of whether or not the air pollutants are a subset of the sources or whether there's some kind of a Venn diagram thing going on, at the very least, you know, you can't regulate the sources that are already regulated under 112.

[03:48:42] Speaker 18:
So in my analogy, the sources are like the odd numbers

[03:48:45] Speaker 18:
That pollutants are like the prime numbers.

[03:48:48] Speaker 15:
Right.

[03:48:48] Speaker 15:
So I think that, you know, I have two answers to that.

[03:48:52] Speaker 15:
The first is in your hypothetical, the first instruction is clear on its face.

[03:49:00] Speaker 15:
Right.

[03:49:00] Speaker 15:
It's you can't.

[03:49:01] Speaker 15:
I think it's you can't regulate odd numbers is the first one.

[03:49:04] Speaker 15:
You can't regulate prime numbers.

[03:49:05] Speaker 15:
So it's clear what you can't regulate odd numbers means.

[03:49:09] Speaker 15:
And here, my point is that if we look at the statutory language, and I can walk through it, it doesn't have one plain or literal meaning that makes any sense at all.

[03:49:18] Speaker 15:
And so that's my response to that.

[03:49:21] Speaker 15:
And petitioner's reading, which I'd like to address, is completely unreasonable.

[03:49:28] Speaker 15:
Because as they conceded at the CPP oral argument,

[03:49:32] Speaker 15:
If you really read the text as they want you to read it, what it prohibits is EPA regulating under 111D any pollutants that are emitted from any 112 regulated source, even as to other source categories entirely.

[03:49:47] Speaker 15:
And because 112 regulates some 140 different sources that emit every stripe of air pollutant, 111D would have no continuing relevance at all.

[03:49:59] Speaker 15:
because EPA would be prohibited from regulating any of those pollutants that come out of a 112 source, even as to other categories.

[03:50:07] Speaker 18:
There's a theory that it would have allowed EPA to regulate in the two, three-year window after the 1990 amendment before they had finished applying the 112 regulations to

[03:50:28] Speaker 18:
to power plants, stationary sources.

[03:50:32] Speaker 18:
And even beyond that, there was some doubt at the time of 1990 whether or not stationary power plants would be regulated under 112.

[03:50:45] Speaker 18:
And as I think we were discussing a few minutes ago, I think the question of whether or not EPA can or should

[03:50:55] Speaker 18:
include stationary power plants under 112, um, has been litigated quite a bit and it's, it's still somewhat up in the air.

[03:51:04] Speaker 18:
My impression is that this EPA has said such a regulation is not necessary or appropriate, but they have also said we're going to continue regulation.

[03:51:17] Speaker 18:
I don't quite understand that either.

[03:51:19] Speaker 18:
Um, but, um, I'll, I'll, I'll stop.

[03:51:23] Speaker 18:
I'll, I'll stop now.

[03:51:24] Speaker 15:
Yeah, so those are two issues.

[03:51:26] Speaker 15:
One is that there would be a gap where EPA or where 111D would have some continuing relevance for a short period of time.

[03:51:34] Speaker 15:
But the problems with that are that if the real purpose of this prohibition was to prevent EPA from double regulating sources, that doesn't accomplish it because it still allows for double regulation.

[03:51:47] Speaker 15:
And there's also no legislative history indicating that that was the purpose.

[03:51:52] Speaker 15:
So that's on the first point.

[03:51:53] Speaker 15:
On the second point, this is the issue of whether or not PowerPoint plants would be listed at all under 112.

[03:52:00] Speaker 15:
And petitioner says, well, EPA could still regulate power plants under 111D as long as they delisted them under 112.

[03:52:09] Speaker 15:
But if petitioners are right that what 111D prohibits EPA from regulating anything under that provision, any pollutant that's emitted from a 112 regulated source

[03:52:22] Speaker 15:
that extends to paraparents regardless of whether or not they're regulated under 112 at all.

[03:52:29] Speaker 15:
Because in their view, at least as they conceded at the CPP oral argument, the prohibition extends to all pollutants from all 112 regulated sources as to any other category of sources.

[03:52:42] Speaker 18:
And so- It says, just to see, it says, omitted from a source category

[03:52:50] Speaker 18:
which is regulated under section 112.

[03:52:53] Speaker 18:
So it seems like the 111D exception doesn't cover source categories that emit pollutants that are regulated under 112.

[03:53:09] Speaker 18:
It only has an exception from regulation for a source category, which is regulated under

[03:53:18] Speaker 18:
112.

[03:53:18] Speaker 18:
Is that a distinction without a difference?

[03:53:20] Speaker 15:
Well, I think that that's leading off the first part, or what's really the middle of the provision.

[03:53:26] Speaker 15:
So looking at 7411D, which I have reprinted on 175 of the red brief.

[03:53:37] Speaker 05:
I figured that.

[03:53:41] Speaker 18:
I've got a whole computer screen of more statutes than I can keep track of.

[03:53:46] Speaker 15:
Right.

[03:53:47] Speaker 15:
So the way this reads, it says states have to establish standards for any air pollutant, and then it has the list of prohibitions.

[03:53:54] Speaker 15:
And in their view, to get to their quote literal reading, you have to pick up the which is not from the middle of the paragraph.

[03:54:01] Speaker 15:
And then you skip to the end and say, emitted from a source category, which is regulated under Section 112.

[03:54:07] Speaker 15:
And so that would prohibit EPA from regulating any air pollutant, which is emitted from a source category,

[03:54:15] Speaker 15:
which is regulated under 112.

[03:54:18] Speaker 15:
And that means, in another way, it prohibits EPA from regulating all air pollutants that are emitted from 112 regulated sources.

[03:54:27] Speaker 15:
And that's the rating at the CPP oral argument petitioners conceded was correct.

[03:54:33] Speaker 15:
And so that basically renders 7411D entirely devoid of meaning.

[03:54:38] Speaker 15:
And if Congress really wanted that, they probably would have just deleted the provision of the statute entirely.

[03:54:44] Speaker 15:
We wouldn't have this issue of the competing amendments, and it would just be gone if it was supposed to have no continuing effect.

[03:54:51] Speaker 15:
And that's what petitioners suggest is really they wanted EPA to handle all of this under 112.

[03:54:57] Speaker 15:
But that can't be right for two reasons.

[03:54:59] Speaker 15:
First, EPA had a choice whether or not to invoke 112 for power plants.

[03:55:03] Speaker 15:
And second, if they really wanted to write it out of the statute, this is the same point again.

[03:55:09] Speaker 15:
They would have just deleted it, and they didn't do that.

[03:55:12] Speaker 15:
And there's no legislative history on this point at all, as I'm sure you've all.

[03:55:18] Speaker 18:
I mean, there is and there isn't.

[03:55:20] Speaker 18:
It's somewhat instructive.

[03:55:23] Speaker 18:
To the extent we're going to look at legislative history, which maybe Scrivener's error is an exception to the general rule against finding legislative history dispositive.

[03:55:33] Speaker 18:
The health amendment language about the sources

[03:55:40] Speaker 18:
was in the president's original proposal.

[03:55:44] Speaker 18:
And so it suggests something other than an accident.

[03:55:49] Speaker 15:
You're correct that there is some ability to track how these provisions moved through the legislative process.

[03:55:55] Speaker 15:
My point was more that there was nothing in the legislative history exhibiting a congressional intent to effectively delete 111D from the statute, which is what petitioners reading would do.

[03:56:06] Speaker 08:
Can I ask in that regard?

[03:56:08] Speaker 08:
I'm sorry.

[03:56:09] Speaker 08:
Go ahead.

[03:56:10] Speaker 18:
No, I agree.

[03:56:11] Speaker 18:
I was just saying, I agree.

[03:56:12] Speaker 08:
Right.

[03:56:12] Speaker 08:
This is all in a very unwieldily written little Roman at I is that Roman at I meant to modify air pollution.

[03:56:22] Speaker 08:
Yes.

[03:56:23] Speaker 18:
The same thing.

[03:56:24] Speaker 08:
Right.

[03:56:25] Speaker 08:
And so, I mean, that's the thing that I'm wondering.

[03:56:27] Speaker 08:
It's not the normal use of which, but there's three witches there.

[03:56:30] Speaker 08:
And the other two witches all modify air pollutant and just describe which air pollutants.

[03:56:36] Speaker 08:
Right.

[03:56:37] Speaker 08:
And if you were to read, my English teacher wouldn't like it, but she would yell at me for not using commas with my witches anyhow.

[03:56:46] Speaker 08:
If you read the witch's regulator in section 412,

[03:56:50] Speaker 08:
as actually a really ham-handed way of describing yet another list of pollutants that aren't to be regulated under 7411D, which is how what had been happening before, that's the correction.

[03:57:03] Speaker 08:
That's what the Senate amendment would accomplish.

[03:57:07] Speaker 08:
And it's not completely, well, you can tell me, maybe it's completely unreasonable, but it's not a completely untenable reading of what that provision means

[03:57:18] Speaker 08:
So at which point you wouldn't even have to really have a conflict, other than grammarians would be very angry, but you would have to learn those conflict myths, because a whole I is meant to modify types of pollutants.

[03:57:32] Speaker 05:
Exactly, exactly.

[03:57:34] Speaker 08:
So it's not the normal use of which.

[03:57:36] Speaker 05:
No.

[03:57:38] Speaker 08:
But if you do that, then it's really accomplishing the same thing, the Senate Amendment, which is conforming and trying to just clean it up and maintain the status quo.

[03:57:45] Speaker 08:
Otherwise, as you said, this little thing,

[03:57:49] Speaker 08:
It's doing an awful lot, substantively.

[03:57:51] Speaker 08:
Right, that's exactly my point.

[03:57:53] Speaker 08:
So can we read them?

[03:57:54] Speaker 08:
All three is just modifying which air pollutants, pollution?

[03:57:58] Speaker 15:
Yes, yes, I think we can.

[03:57:59] Speaker 15:
I think that that is EPA's construction here, and that's a reasonable reading of the statute.

[03:58:05] Speaker 15:
Is it the only reading?

[03:58:06] Speaker 15:
No, this provision is obviously ambiguous.

[03:58:09] Speaker 15:
This aspect of this provision is ambiguous and not very well written.

[03:58:13] Speaker 15:
But then if we read it that way, which is reasonable because it ascribes some meaning to this prohibition, it has continued meaning.

[03:58:21] Speaker 15:
It has a parallel significance as the prohibition that applies to NAICS.

[03:58:25] Speaker 15:
And it's also consistent with the Senate amendment.

[03:58:27] Speaker 15:
And so then we don't have to go through the muddy waters of what we do if there are conflicting amendments that are in the Senate, like statutes at large, but only one codified version.

[03:58:36] Speaker 15:
None of those tricky questions are presented.

[03:58:38] Speaker 15:
If we just read this as ambiguous, EPA has interpreted that ambiguity

[03:58:42] Speaker 15:
And it receives chevron deference because that interpretation is reasonable.

[03:58:47] Speaker 18:
Ms.

[03:58:47] Speaker 18:
Greenfield, assume that there will be some EPA regulation that's imaginable that depends on the interpretation that you're asserting.

[03:59:01] Speaker 18:
And that regulation will be very minor.

[03:59:04] Speaker 18:
Everyone will agree.

[03:59:05] Speaker 18:
It's just not particularly major regulation.

[03:59:09] Speaker 18:
And then let's assume

[03:59:11] Speaker 18:
that in this instance, whether it's ace, assume that it's major.

[03:59:19] Speaker 18:
You may not think that it is, but assume that it is.

[03:59:23] Speaker 18:
Does that mean under the major questions doctrine that we would afford EPA deference under Chevron when they're interpreting this ambiguous language in the case where we consider the

[03:59:39] Speaker 18:
relatively unimportant rule, but we would not afford the agency deference with regard to the same statutory language when it is involved in a major rule.

[03:59:54] Speaker 15:
I don't think that the deference EPA would receive as to this aspect of 7411 would change depending on the type of regulation that's issued.

[04:00:05] Speaker 15:
Because the question here is,

[04:00:07] Speaker 15:
not the scope of the regulation that EPA is allowed to promulgate, but whether or not EPA has any authority under this aspect of the statute at all, endpoint as to everything.

[04:00:18] Speaker 15:
And so I don't think that the major questions doctrine does any work in this aspect of 7411D.

[04:00:26] Speaker 18:
Okay, so even if your interpretation opens the door to a major rule, we still should not apply the major rule

[04:00:37] Speaker 18:
doctoring, major questions, doctoring to the question of how to interpret this language.

[04:00:46] Speaker 15:
No, that's correct.

[04:00:47] Speaker 18:
That's where you are.

[04:00:47] Speaker 18:
That's the answer to my question.

[04:00:50] Speaker 15:
I would also note that EPA's reading here is consistent with the Supreme Court's decision in AEP.

[04:00:56] Speaker 15:
And as we all know, in that case, the Supreme Court held that 7411D

[04:01:02] Speaker 15:
speaks directly to the issue of regulating carbon dioxide from power plants.

[04:01:08] Speaker 15:
And it's hard to say that a provision speaks directly to regulating the issue of carbon dioxide if it has no role whatsoever.

[04:01:17] Speaker 10:
Well, they're waiting for the 112 regulation of carbon dioxide to happen, right?

[04:01:22] Speaker 10:
Because there's that footnote seven that says 111D doesn't apply

[04:01:28] Speaker 10:
quote, if existing stationary sources of the pollutant in question are regulated under the National Ambient Air Quality Standard Program or the Hazardous Air Pollutants Program.

[04:01:39] Speaker 15:
So two notes on that.

[04:01:41] Speaker 15:
One, at the time AEP, lots of acronyms here, was published, the mass regulation of power plants under 112 was in the works.

[04:01:53] Speaker 15:
Power plants had been

[04:01:54] Speaker 15:
then EPA had made the necessary and appropriate finding more than a decade before, and the proposed rule had already been published.

[04:02:01] Speaker 15:
So it's not as though it was unknowable whether or not EPA would invoke 112 for power plants at that time.

[04:02:09] Speaker 15:
I'd also note, and this came up again at the CPP oral argument, that footnote is dicta, and it's at least half wrong.

[04:02:16] Speaker 15:
Because at the time of eight, that footnote indicates that EPA has no authority to regulate CO2 from power plants

[04:02:24] Speaker 15:
if power plants are either regulated under the NAICS program or under 112.

[04:02:29] Speaker 15:
And we all know at the time of AEP, and for a long time before, power plants were regulated under the NAICS program.

[04:02:35] Speaker 15:
So that's why we don't rely on DICTA.

[04:02:37] Speaker 15:
That's the lesson from that footnote.

[04:02:39] Speaker 10:
Well, and I mean, for all we know, some Supreme Court clerk was looking at the US Code, which rarely has the kind of complication behind it.

[04:02:47] Speaker 10:
Right.

[04:02:47] Speaker 10:
That's when your peers just thought, well, there it is.

[04:02:49] Speaker 10:
And nobody's, because it wasn't essential to the holding,

[04:02:54] Speaker 10:
It wasn't really delved into, possibly, but it's a little troubling.

[04:02:59] Speaker 15:
I agree, but I agree that it requires some thought.

[04:03:04] Speaker 15:
But because it's at least half wrong, because power plants were definitely regulated under the NAICS program at the time of AEP, if we're to take that footnote seriously, it would mean that EPA had no authority to regulate under 111D at all.

[04:03:19] Speaker 15:
And that would be in conflict with the Supreme Court's holding there that it did have authority.

[04:03:24] Speaker 18:
Do you think it's a Scrivener's heir?

[04:03:27] Speaker 18:
Yes.

[04:03:28] Speaker 10:
I'm just kidding.

[04:03:30] Speaker 18:
I can say with some confidence that I believe that that is a Scrivener's heir.

[04:03:37] Speaker 18:
Let me ask a question on the possibility that it helps us with this case.

[04:03:43] Speaker 18:
I'm not convinced that it does, but how is it possible for EPA to delist power plants

[04:03:54] Speaker 18:
under 112, sorry, how is it possible for them to find the power plants under 112, their regulation is not necessary and appropriate, but to not delist them as regulated?

[04:04:07] Speaker 18:
How does that work?

[04:04:09] Speaker 15:
So I think you're referring to a recent EPA decision where EPA found that it's not necessary and appropriate to regulate power plants, but nevertheless held the mass regulation in place, it kept it in place.

[04:04:23] Speaker 15:
for petitions for review files of that.

[04:04:25] Speaker 15:
I'm actually counsel of record in that case as well.

[04:04:29] Speaker 18:
You're the right person to ask.

[04:04:30] Speaker 15:
I'm the right person to ask.

[04:04:32] Speaker 15:
I haven't totally delved into the merits of that case yet.

[04:04:37] Speaker 15:
This one has kept me a little bit busy.

[04:04:39] Speaker 15:
But the EPA's interpretation there turns on this New Jersey, the EPA case.

[04:04:46] Speaker 15:
And I'm happy to provide further information in a 28 jelly letter or something like that if you'd like.

[04:04:53] Speaker 15:
address it, but I'm not really prepared to discuss the ins and outs of that decision right now.

[04:04:58] Speaker 18:
At a later time.

[04:04:59] Speaker 18:
That's fine.

[04:04:59] Speaker 18:
I appreciate it.

[04:05:00] Speaker 18:
I appreciate it.

[04:05:01] Speaker 15:
I'm happy to answer any questions on the Robin Enterprises petition for review, but I see that I'm about 20 minutes over my time, so I'm also.

[04:05:11] Speaker 15:
That's par for the course today.

[04:05:14] Speaker 08:
My apologies.

[04:05:14] Speaker 08:
These are complicated and a lot of

[04:05:17] Speaker 08:
It took a full on bank court nine hours just to do one of the issues in this case.

[04:05:22] Speaker 08:
We're doing great at this point.

[04:05:24] Speaker 08:
Yeah.

[04:05:24] Speaker 08:
So do my colleagues have any further questions?

[04:05:28] Speaker 08:
Or Ms.

[04:05:28] Speaker 08:
Greenfield, did you feel like you got to say the merit sentences that you need to?

[04:05:33] Speaker 08:
I feel like these issues are well presented in our briefs.

[04:05:36] Speaker 08:
So I'm happy to rest on the briefs.

[04:05:38] Speaker 08:
Bless you.

[04:05:38] Speaker 08:
OK.

[04:05:39] Speaker 08:
All righty.

[04:05:40] Speaker 08:
We will go on.

[04:05:42] Speaker 08:
I guess we have Mr. Duffy now.

[04:05:46] Speaker 14:
And then good afternoon, may it please the court.

[04:05:50] Speaker 14:
James Duffy on behalf of 13 public health environmental respondent interviewers.

[04:05:55] Speaker 14:
the peril of getting back into the, sorry about my voice, getting back into the lottery issue.

[04:06:02] Speaker 14:
I think our position- Lottery?

[04:06:05] Speaker 08:
Oh, we're not doing prime and odd.

[04:06:06] Speaker 08:
Can we try something else?

[04:06:14] Speaker 08:
I'm older and have less brain cells than him, so.

[04:06:17] Speaker 14:
I'll be very brief on this one.

[04:06:19] Speaker 14:
We think that the mandate is what EPA shall regulate there, not exclude.

[04:06:25] Speaker 14:
So a cumulative reading would allow EPA to regulate pursuant to either grant of authority and a petitioner's approach would render the Senate a nullity.

[04:06:35] Speaker 14:
So I think the prior clause that Judge Walker

[04:06:42] Speaker 14:
stated doesn't match what we have here, which is a requirement to regulate.

[04:06:51] Speaker 18:
So I think that's how we- This question has nothing to do with math.

[04:06:55] Speaker 18:
Can you give me a case, and I suspect there's one out there that says what you just said, that says you read an exception to a regulatory authority as narrowly as possible rather than as broadly as possible.

[04:07:12] Speaker 14:
I don't think there's a case.

[04:07:13] Speaker 14:
I just think the language of the text of the statute, which is a mandate to regulate using the word shall, it should be the focus here.

[04:07:22] Speaker 14:
And the exclusions, if they are to be read cumulatively, would grant either authority.

[04:07:31] Speaker 10:
Shall, prescribe, regulations, da-da-da-da, which do this or this or this.

[04:07:38] Speaker 10:
So if it's under any of them, then

[04:07:42] Speaker 10:
the prescription is required.

[04:07:43] Speaker 14:
Correct.

[04:07:44] Speaker 14:
That's our reading.

[04:07:46] Speaker 14:
I'll move on from 111-112.

[04:07:48] Speaker 14:
I think the way that Judge Mollett laid it out is very similar to how respondent interveners placed it in their briefs.

[04:07:58] Speaker 14:
We're looking at air pollutants, and we're looking at which is being regulated.

[04:08:03] Speaker 14:
That clause, we are thinking about the regulation as far as what is being regulated there.

[04:08:10] Speaker 14:
And what's being regulated there

[04:08:12] Speaker 14:
sources and air pollutants under the 112 program.

[04:08:18] Speaker 14:
So I think that the focus on air pollutants is the correct means of looking at this.

[04:08:23] Speaker 14:
I'll spend the remainder of my few moments on the significance threshold.

[04:08:30] Speaker 14:
We don't think a significant threshold needs to be identified.

[04:08:33] Speaker 14:
We agree deeply that the 2015 significant contribution finding is not before this court.

[04:08:39] Speaker 14:
But if the court determines that it is, that finding is sufficient.

[04:08:43] Speaker 14:
And in fact, any other finding would have been arbitrary and capricious.

[04:08:46] Speaker 14:
There's a robust record here before the court.

[04:08:50] Speaker 14:
But petitioners find that the facts in that record are insufficient because EPA didn't pick a precise threshold.

[04:08:57] Speaker 14:
We think that in Coalition for Responsible Regulation, the court found that endangerment finding doesn't require the agency to set a precise numerical value.

[04:09:05] Speaker 14:
And that center for auto safety is that identifying a significant risk.

[04:09:09] Speaker 14:
It's not a mathematical straight jacket.

[04:09:11] Speaker 14:
We need to look at the facts in this case.

[04:09:16] Speaker 14:
And in this case, you have the largest stationary source category.

[04:09:20] Speaker 14:
And without mitigating pollution from power plants, no plausible pathway would exist to avoid the worst consequences.

[04:09:26] Speaker 14:
So under any scenario, power plant emissions significantly contribute.

[04:09:31] Speaker 08:
Do you know, just in practice generally, in deciding significance, do we look at significance within the United States, or do we actually look at, do you have to be significant globally?

[04:09:45] Speaker 08:
Normally, I would assume a statute would be focused on domestic operations, but maybe I'm wrong on this one.

[04:09:50] Speaker 08:
I know greenhouse gases are international, but this significance finding covers lots of different types of pollutants.

[04:09:57] Speaker 08:
So is it just significance?

[04:10:00] Speaker 14:
I think it depends on the particular cases.

[04:10:03] Speaker 14:
And here are the particular cases.

[04:10:05] Speaker 14:
It depends on what?

[04:10:06] Speaker 14:
The particular case, the facts on the ground.

[04:10:09] Speaker 14:
I think it's a case by case analysis.

[04:10:12] Speaker 14:
And in the context of climate change and power plants, I think that we have

[04:10:18] Speaker 14:
We are an outsized contributor to a global problem.

[04:10:22] Speaker 14:
And so the largest stationary source within our country is certainly significant.

[04:10:28] Speaker 14:
As I said, if we don't reduce pollution from power plants domestically, there's no pathway to combating climate change.

[04:10:37] Speaker 14:
So I think this is a state farm national basis and test.

[04:10:43] Speaker 14:
And I think that EPA's record is sufficient to support a finding that-

[04:10:48] Speaker 18:
I would have thought you want, I would have thought you, you wanted the opposite that, uh, since, uh, American power plants, um, produce, uh, let's call it, let's just say 33% of carbon that comes from the United States.

[04:11:06] Speaker 18:
That sounds pretty significant.

[04:11:07] Speaker 18:
Let's say they produce 2% of the carbon in the world that starts to sound less significant.

[04:11:15] Speaker 18:
And you're, I think I'm the,

[04:11:17] Speaker 18:
the side of the, I think you represent the public health environmental respondent intervener.

[04:11:21] Speaker 18:
So why wouldn't you say that we should base our inquiry into what's significant with regard to a, base it on a national inquiry rather than an international one?

[04:11:38] Speaker 14:
I think you can look at both and have it be significant, you know, in the context of climate change.

[04:11:44] Speaker 08:
Can I ask what we think Congress was

[04:11:46] Speaker 08:
regulating here.

[04:11:48] Speaker 08:
Maybe you're thinking of something I'm not.

[04:11:49] Speaker 08:
Is there something that's a significant global source but not a significant domestic source?

[04:11:56] Speaker 08:
They've got a big fan blowing everything into Canada or something?

[04:12:01] Speaker 08:
I can't imagine.

[04:12:02] Speaker 08:
Is there someone that you're trying to save some regulation here that's somewhat significant globally?

[04:12:08] Speaker 08:
Because the background presumption is Congress intends domestic operation of the statute.

[04:12:13] Speaker 08:
And this is not a greenhouse gas statute.

[04:12:16] Speaker 08:
It includes greenhouse gas as a pollutant to be regulated, but it covers all kinds.

[04:12:21] Speaker 08:
And I would think Congress would have been looking, its reference point would have been domestic significance.

[04:12:25] Speaker 08:
Isn't that what it's going to care most about?

[04:12:27] Speaker 14:
Certainly, certainly.

[04:12:28] Speaker 14:
I mean, that might be what it cares most about.

[04:12:30] Speaker 14:
I don't think it's irrelevant to think about a global problem in a global way, but I think that the domestic significance is certainly relevant.

[04:12:42] Speaker 08:
I don't think you can just throw... The difficulty is if you start going, you can think about global significance and they're going to go

[04:12:50] Speaker 08:
We're two percent, like Judge Walker said, we're two percent globally.

[04:12:53] Speaker 08:
We're nothing.

[04:12:54] Speaker 08:
We are nothing.

[04:12:55] Speaker 08:
That's not significant.

[04:12:58] Speaker 10:
It seems like either or both.

[04:12:59] Speaker 10:
I mean, because we may be a big emitter of other things as well.

[04:13:05] Speaker 10:
And if we are, you know, if this is only one of among many big emitters within the US, but

[04:13:12] Speaker 10:
the US is overwhelming the rest of the world.

[04:13:15] Speaker 10:
Those are two different, but also very important facts for something that is a global.

[04:13:20] Speaker 14:
Right, right.

[04:13:21] Speaker 14:
Yeah, that's exactly what I'm trying to say.

[04:13:24] Speaker 08:
Yes, I still can't imagine the scenario in which they're significant domestically, and you need somehow to say, and this also has some global role under the statute.

[04:13:33] Speaker 14:
Sure.

[04:13:33] Speaker 14:
I mean, I think just with a global problem, it's worth considering significance.

[04:13:41] Speaker 14:
on a global scale, I think that power plants meet the criteria on both accounts.

[04:13:47] Speaker 14:
In the context of climate change, you know, a source category or a country's contribution to the problem might seem small or its ability to solve it might seem small in comparison to total emissions with a solution, but they can still be a very important contributor.

[04:14:01] Speaker 14:
And that's kind of the logic that EPA set out in the endangerment finding.

[04:14:05] Speaker 14:
which it built upon when it made its significant contribution finding in the alternative in 2015.

[04:14:12] Speaker 14:
So we think, you know, no matter where you look at it, the United States is an enormous and outsized contributor.

[04:14:20] Speaker 14:
This source category is an outsized contributor, both in the domestic and in the United States, as well as globally.

[04:14:28] Speaker 14:
And so EPA's facts and the record support a rational basis and should be upheld.

[04:14:37] Speaker 08:
OK.

[04:14:38] Speaker 08:
Any more questions from my colleagues?

[04:14:40] Speaker 08:
OK.

[04:14:41] Speaker 08:
Fantastic.

[04:14:41] Speaker 08:
Thank you all so much.

[04:14:42] Speaker 08:
Thank you, Mr. Duffy.

[04:14:44] Speaker 08:
And then we have rebuttal.

[04:14:45] Speaker 08:
I take it you both want to do some rebuttals.

[04:14:49] Speaker 08:
So I'm going to give you each.

[04:14:50] Speaker 08:
We're just getting really late here.

[04:14:51] Speaker 08:
I'm going to give you each one minute.

[04:14:53] Speaker 08:
OK, Mr. DeLaQuil?

[04:14:56] Speaker 11:
Three quick points, Your Honor.

[04:14:57] Speaker 11:
First, on the issue of endangerment,

[04:15:01] Speaker 11:
We aren't arguing that there has to be a numeric threshold, but I direct you to page 74 of the methane rule that we submitted as supplemental authority, which says that it's arbitrary and capricious where EPA doesn't provide a way to distinguish the contribution from significant contribution.

[04:15:18] Speaker 11:
That's equally the case here.

[04:15:20] Speaker 11:
Second, Judge Millett, you posed an alternative interpretation of the US code that I think even you suggested was agramatical.

[04:15:31] Speaker 08:
where it read haps, it put the- There is nothing grammatical about 7.4.11d, period.

[04:15:40] Speaker 08:
Can we just take judicial notice of that?

[04:15:42] Speaker 08:
The whole darn thing's not grammatical.

[04:15:45] Speaker 11:
Well, the best reading of it is Congress's decision not to use LIST, which it used in conjunction with the 108 pollutants in conjunction with the 112 pollutants,

[04:15:58] Speaker 11:
gives an exclusio, inclusio canon interpretation that Congress wasn't just referring to listed haps when it said any air pollutants.

[04:16:10] Speaker 11:
And finally, there was a suggestion of a concession made in this case that our interpretation was broader than I suggested, but we didn't make that concession.

[04:16:21] Speaker 11:
The industry petitioners in the CPP argument very clearly did not make that concession either.

[04:16:28] Speaker 11:
And I'm not convinced that the state petitioners made it.

[04:16:31] Speaker 11:
I find the record in response to Judge Srinivasan's question that argument to be unclear.

[04:16:36] Speaker ?:
Thank you.

[04:16:37] Speaker 08:
Thank you very much.

[04:16:40] Speaker 08:
OK.

[04:16:40] Speaker 08:
We have Mr. Hadziancic.

[04:16:43] Speaker 08:
You need to unmute.

[04:16:51] Speaker 08:
In the courtroom, Deputy, unmute Mr. Antich.

[04:16:57] Speaker 08:
How's the Antich, excuse me.

[04:17:01] Speaker 00:
Sir, I've just sent your request.

[04:17:02] Speaker 00:
Please click on OK.

[04:17:04] Speaker 01:
Can you hear me?

[04:17:05] Speaker 08:
Yeah, we can.

[04:17:06] Speaker 08:
Thank you.

[04:17:06] Speaker 01:
OK, thank you.

[04:17:08] Speaker 01:
Just very quickly, two points.

[04:17:11] Speaker 01:
First, American electric power doesn't change the result advocated by Robinson Petitioners.

[04:17:21] Speaker 01:
The issue of whether EPA could circumvent NACs after formally finding twice

[04:17:27] Speaker 01:
the carbon dioxide in the ambient air in dangerous health and is emitted from numerous and diverse sources.

[04:17:34] Speaker 01:
That issue was not raised by the parties, not addressed by the court, and hence the issue was never analyzed by the Supreme Court in American electric power.

[04:17:44] Speaker 01:
But that's the issue that we Robinson petitioners are raising as an issue of first impression

[04:17:51] Speaker 01:
in this court, and that is the issue to be addressed by this court.

[04:17:57] Speaker 01:
The only other point is EPA admits that it failed to use NACS because of the perceived difficulty

[04:18:08] Speaker 01:
in regulating carbon dioxide emissions under an X. EPA says in the briefing that the main problem with carbon dioxide is, quote, its uniform atmospheric concentration.

[04:18:21] Speaker 01:
That's an EPA brief 195, note 55.

[04:18:25] Speaker 01:
If EPA chooses to regulate carbon dioxide, then it can't reject the sole solution provided by Congress to that main problem, namely a rule limiting uniform atmospheric concentration, which is only provided under the NAICS program.

[04:18:42] Speaker 01:
Thank you.

[04:18:43] Speaker 08:
Thank you.

[04:18:44] Speaker 08:
Any questions for my colleagues?

[04:18:47] Speaker 08:
OK.

[04:18:47] Speaker 08:
I'm just going to ask my colleagues, do you want to do a break now, or do you want to go flower head on?

[04:18:54] Speaker 08:
My colleagues have a preference.

[04:18:55] Speaker 18:
I'd vote for a three minute break, if that's okay with the two of you.

[04:19:00] Speaker 08:
Let's try five minutes, okay?

[04:19:02] Speaker 08:
Courtroom deputy?

[04:19:03] Speaker 08:
Okay, thank you.

[04:19:03] Speaker 08:
And then hopefully we can get through the next two without another break.

[04:19:06] Speaker 08:
And we appreciate counsel's patience very much.

[04:19:09] Speaker 00:
This honorable court will now take a brief recess.

[04:19:15] Speaker 00:
This honorable court is now again in session.

[04:19:19] Speaker 08:
I just want to make a quick inquiry.

[04:19:21] Speaker 08:
If the attorneys are all OK, I hope you're able to grab something to eat very fast.

[04:19:26] Speaker 08:
If anyone's feeling like you're having blood sugar problems, then feel free to throw some trail mix in your mouth or something while we're here, because I don't want anybody fainting on me.

[04:19:39] Speaker 08:
All right, we're ready for Mr. Donahue.

[04:19:41] Speaker 08:
Now we're on the legality of the other statute, the central attack.

[04:19:46] Speaker 08:
The last ones were as well.

[04:19:50] Speaker 12:
Thank you, Your Honor.

[04:19:52] Speaker 12:
May it please the Court, Sean Donahue, for the Health and Environmental Petitioners.

[04:19:56] Speaker 12:
I'd like to reserve three minutes for rebuttal, please.

[04:20:00] Speaker 12:
The ACE rules combination of extreme inefficacy at reducing pollution and rigid restrictions on implementation are further evidence that EPA's underlying interpretation of the statute is wrong and certainly not compulsory.

[04:20:17] Speaker 12:
But the errors I'm going to discuss would require vacature of ACE even if the repeal of the Clean Power Plan were lawful.

[04:20:24] Speaker 12:
I'd like to highlight four central flaws.

[04:20:27] Speaker 12:
First, EPA ignored the act's pollution reduction objective and the benefits of pollution control.

[04:20:35] Speaker 12:
Second, ACE violates the statute and EPA's own regulations by failing to establish any emissions limit that state standards of performance must satisfy.

[04:20:45] Speaker 12:
Third,

[04:20:47] Speaker 12:
EPA arbitrarily rejected systems of emission reduction far more effective than minor improvements in coal plant efficiency.

[04:20:57] Speaker 12:
And finally, ACE unlawfully deregulates natural gas and oil-fired plants entirely.

[04:21:04] Speaker 12:
Mr. Myers will then address the practical implications for states of the rule's lack of emissions limits and its prohibition on emissions trading.

[04:21:14] Speaker 12:
In 2015, EPA identified urgent and severe threats to public health and welfare and found that minor heat rate improvements alone would not satisfy the statutory requirements, particularly with regard to emission reduction.

[04:21:31] Speaker 12:
Since then, the National Climate Assessment and multiple other reports, many of which EPA has contributed to, have

[04:21:41] Speaker 12:
reaffirmed that the dangers are even more urgent, and in particular the need for achieving large emissions reductions in the very near term is ever more vital.

[04:21:52] Speaker 12:
In ACE, EPA didn't disavow any of this, any of these findings, but EPA nonetheless adopted an extremely weak rule that by its own accounting will achieve less than 1% reductions in emissions,

[04:22:08] Speaker 12:
that is likely to increase emissions in many states due to the emissions rebound effect that leaves the entire natural gas category unregulated.

[04:22:19] Speaker 12:
It's like choosing a squirt gun to put out a five alarm fire.

[04:22:24] Speaker 12:
EPA provides no reasoned explanation of how such a paltry remedy is appropriate given a record showing such an urgent problem.

[04:22:34] Speaker 12:
Now, to be sure, EPA has to stay within the bounds of the statute

[04:22:38] Speaker 12:
But the statute talks about emissions control and risks to public health and welfare.

[04:22:43] Speaker 08:
Can you ask in that regard?

[04:22:45] Speaker 08:
Because one of the things the EPA points out is that the market on its own is already accomplishing a lot and, in fact, has gone faster than even the Clean Power Plan anticipated.

[04:23:01] Speaker 08:
Is that a legitimate thing for them to factor in when addressing the concern that you're raising or not?

[04:23:09] Speaker 12:
So first of all, of course, that was no part of the repeal of the Clean Power Plan.

[04:23:13] Speaker 12:
And even the ACE rule, the ACE rule remarkably is actually designed sort of in contradiction to the powerful market trends toward cleaner generation, toward more extensive use of

[04:23:30] Speaker 12:
shifting of dirty sources to clean sources.

[04:23:33] Speaker 12:
It actually seeks to, you know, require investment in the dirtiest sources.

[04:23:39] Speaker 12:
That's where we get the rebound effect.

[04:23:42] Speaker 12:
We, you know, it remains the fact that even though there have been.

[04:23:46] Speaker 08:
I think I wasn't, my question wasn't very clear.

[04:23:48] Speaker 08:
What I'm asking is, though, to the extent you're saying, look, this is, as you said, a five alarm fire and they brought a squirt gun.

[04:23:55] Speaker 08:
Is it permissible?

[04:23:59] Speaker 08:
Is it rational or reasonable for the agency to say, it turns out we only need a squirt gun because the market has already brought in, you know, six fire engines with the big hoses?

[04:24:11] Speaker 12:
Right.

[04:24:11] Speaker 12:
So I think there's a chennery problem when they actually come to identifying the best system of emission reduction.

[04:24:18] Speaker 12:
That's not the basis they use when they reject the more effective systems.

[04:24:22] Speaker 12:
But it's also, I think it would be arbitrary even if they had because it remains the case that on EPA's own projections, this will remain a huge, the largest stationary source contributors for years to come, including during this short period of time

[04:24:38] Speaker 12:
that we have to get our arms around this problem.

[04:24:41] Speaker 12:
So I don't think that that, in fact, is the rationale of ACE.

[04:24:46] Speaker 12:
It's window dressing.

[04:24:49] Speaker 12:
But it wouldn't be a reason basis for just saying, let's just leave it entirely to the market.

[04:24:56] Speaker 12:
Congress required EPA to regulate when there's a danger like this, as there will continue to be.

[04:25:04] Speaker 12:
And that's not we think that the trends that have driven those reductions show that there are readily available cheap and easy means of achieving much deeper reductions.

[04:25:15] Speaker 08:
And that's where EPA should be going instead of imagine instead of because you have concerns about this will actually

[04:25:23] Speaker 08:
being, you know, actually increasing with, you said, the rebound effect.

[04:25:28] Speaker 08:
Could EPA say we've looked at this problem and the markets are doing fantastically and we're afraid that if we interfere, you know, the government comes in and it'll lock things up.

[04:25:39] Speaker 08:
And so we are declining to regulate greenhouse gases under 7411D at this time.

[04:25:49] Speaker 08:
Would that be allowed under, say, Chevron Step 2, not a Chevron Step 1?

[04:25:53] Speaker 12:
Right.

[04:25:54] Speaker 12:
I don't think on the record that we have, which is that there are readily available, adequately demonstrated means of reducing pollution that all agree.

[04:26:04] Speaker 12:
EPA has not said that the risk is somehow being adequately addressed by other.

[04:26:11] Speaker 12:
We're at a point where we really need an EPA.

[04:26:14] Speaker 12:
It hasn't made any attempt to kind of contradict the studies I point the court

[04:26:19] Speaker 12:
to the climate change mitigation experts brief that just emphasizes that it's widely understood we have to achieve emissions reduction.

[04:26:31] Speaker 12:
So it's an interesting hypothetical whether if there were a pollution problem that is rapidly being really taken care of by markets,

[04:26:39] Speaker 12:
Operation which case that's not what we have here.

[04:26:44] Speaker 12:
I just like to point out that when EPA evaluates other systems of emission reduction in this rule, for example, co firing or partial carbon capture and sequestration and deems them too expensive.

[04:26:59] Speaker 12:
It has nothing to compare that to.

[04:27:01] Speaker 12:
You can't decide whether something's too costly without some sense of its value.

[04:27:06] Speaker 12:
And EPA assigned no value to reducing greenhouse gas emissions.

[04:27:13] Speaker 12:
In the regulatory impact analysis, it used a social cost of carbon, a sort of revised interim social cost of carbon that we think is clearly sort of indefensible.

[04:27:26] Speaker 12:
And there's an amicus brief on this.

[04:27:27] Speaker 12:
But it's clear in their brief and the rule, they say we actually didn't rely on this and setting standards and we think there's a total void.

[04:27:35] Speaker 12:
They didn't rely on any kind of reasoned assessment of the value of pollution reduction or reasoned analysis of the amount of pollution reduction as this court emphasized in the Sierra Club case and is playing on the face of the statute that emissions reduction is at least a central factor.

[04:27:52] Speaker 12:
in applying the statute.

[04:27:53] Speaker 10:
It's sort of like a Michigan versus EPA problem.

[04:27:56] Speaker 12:
It is Michigan versus EPA problem, where in that case, Justice Scalia was insisting that it's almost always the case that you have to think about costs as well as benefits in making a reasoned regulation.

[04:28:14] Speaker 12:
Here, we have the same problem.

[04:28:16] Speaker 12:
It's just the other side of that comparison that's been ignored.

[04:28:20] Speaker 08:
Can I ask another question?

[04:28:22] Speaker 08:
I'm sorry.

[04:28:23] Speaker 08:
I, um, I've been waiting all morning to ask you the question that Mr. Pullen cars punted to you.

[04:28:29] Speaker 08:
And that is, I'm a little on this co-fire and I need, I just need a little more information because, um, you know, there was a lot of talk, uh, four years ago about the large percentage of EGUs that, um, have either,

[04:28:46] Speaker 08:
own or even have on-site or else own or co-own by folks that are in natural gas just to simplify what we're burning here.

[04:28:56] Speaker 08:
I didn't hear that in the briefs this time.

[04:29:00] Speaker 08:
I'm wondering what the percentages are because their argument was it's only 35 percent they can do this and they're just using it to you know to warm the coffee pot in the morning and start the fire but

[04:29:11] Speaker 08:
Different to me.

[04:29:14] Speaker 12:
Right.

[04:29:15] Speaker 08:
What's wrong.

[04:29:16] Speaker 08:
What am I misunderstanding.

[04:29:17] Speaker 12:
So I think we may be talking about different things.

[04:29:19] Speaker 12:
There's I think what in the clean power plant argument, we're talking about companies that own both coal generation and gas or renewables.

[04:29:27] Speaker 12:
And I think that's that was a 77% number and that's at page 64 796 of the Clean Power Plans at 40 Federal Register.

[04:29:36] Speaker 12:
I have endeavored while being glued to the screen all morning to try to get some information on that.

[04:29:44] Speaker 12:
Of course, you know, this rule wasn't really based on on this, you know, The rule is not very it doesn't sort of

[04:29:54] Speaker 12:
flow out of the facts.

[04:29:56] Speaker 12:
And so EPA didn't emphasize this very much, but the regulatory impact assessment for the ACE rule at JA 1658 and 59 talks about the continuing and indeed accelerating shifts in the power sector toward

[04:30:13] Speaker 12:
natural gas and renewable generation.

[04:30:15] Speaker 12:
I'm going to cite a few other things which are not, I don't know.

[04:30:19] Speaker 08:
Is that that's so is that I would have thought some part of that 70s and then maybe this is the 35% but I would have thought some part of 77% would have been sort of maybe physically within a plant or something.

[04:30:31] Speaker 08:
But maybe that's wrong.

[04:30:32] Speaker 12:
So I think 35% is coal plants that use some natural gas.

[04:30:40] Speaker 12:
Right.

[04:30:40] Speaker 12:
I have been, I thought that we were talking about companies that own both so that I guess I'm not clear my question.

[04:30:48] Speaker 08:
I was trying to understand.

[04:30:49] Speaker 08:
I was trying to put the two numbers together.

[04:30:51] Speaker 08:
So we have the 35% that are using natural gas, but we're told

[04:30:55] Speaker 08:
Some percentage of that, I'm not sure if I recall exactly what it is, are really only using the natural gas for a tiny amount.

[04:31:04] Speaker 08:
But what I was wondering is from that 77%, is it really, is it that everybody, these things are far enough apart, or are there any that are sort of within the same plant facility that would make, even if you have to build a little bit of pipeline, it wouldn't be that much.

[04:31:17] Speaker 08:
It would make co-firing more

[04:31:19] Speaker 08:
feasible and that this wasn't addressed, but maybe it is apples and oranges.

[04:31:24] Speaker 12:
So I think they're slightly different, although the fact that a company owns both, it's likely to have a little more facility working with both kinds of fuel if it owns both.

[04:31:34] Speaker 07:
No, I'm talking about the infrastructure for then co-firing, which is not... Right, so on that, I would

[04:31:41] Speaker 12:
point the court to the studies that the environmental groups put in the record about the capacity of plants that already co-fire with natural gas to increase the amount of gas and then the ability of plants that do not now but readily could.

[04:32:02] Speaker 12:
And we think EPA, you know, did not, you know, adequately address that as a far more effective

[04:32:10] Speaker 12:
system of emission reduction, although only one of several.

[04:32:14] Speaker 08:
So you had two categories there.

[04:32:16] Speaker 08:
So let's talk about this 35%, I think, that already are using natural gas to some extent, even if it's just to start things up in the morning.

[04:32:28] Speaker 08:
What I don't understand is why

[04:32:31] Speaker 08:
If you have the natural gas in, how much infrastructure or construction or expenditure would it take?

[04:32:50] Speaker 07:
more.

[04:32:51] Speaker 12:
So I think we think they could, and we think that our record submissions demonstrate that there is a lot of room for improvement, and the emissions reductions that come with that are substantial.

[04:33:04] Speaker 12:
We also think that the entire way that EPA looked at this, which was to kind of say, well, there are places where this is really infeasible or very costly, and therefore it's not sort of widely available across the entire source category, therefore it's not the BSER conflicts, and it kind of

[04:33:20] Speaker 12:
obvious way with how they treated heat rate which is they listed seven different things that a plant could do to increase a coal plant's efficiency and then they said well some of them aren't available at all and some plants maybe can't do any of them so we're going to turn it over to the states to look plant by plant if that approach is I'm sorry I interrupt you that's very striking and I I mean I was thinking that and I guess you wrote it in your brief which is why I had that idea but it

[04:33:50] Speaker 10:
doesn't make sense if they're taking heat rate improvements that are not universally applicable and saying, well, find where they are.

[04:33:56] Speaker 10:
Why don't they do the same thing with co-firing?

[04:33:59] Speaker 12:
Right.

[04:33:59] Speaker 12:
Right.

[04:33:59] Speaker 12:
And we think that applies to carbon capture as well, the same problem.

[04:34:03] Speaker 12:
I think another thing EPA said was, while the most efficient use of natural gas is to use it in a natural gas

[04:34:12] Speaker 12:
plant that was designed for that purpose, rather than, you know, co-firing in a boiler that was designed to burn coal.

[04:34:20] Speaker 12:
But they didn't show that there is an adequate supply.

[04:34:24] Speaker 08:
And again, in making all these judgments... Let me ask you back... Sorry, I'm just more about... Because at this point, we're assuming

[04:34:33] Speaker 08:
Clean power plan interpretation of the statute is out and things have to happen on the ground at the plants and facilities.

[04:34:42] Speaker 08:
And they said, Oh, it's a million dollars for a mile of pipeline or something like that.

[04:34:48] Speaker 08:
But what I was trying to figure out are they're not beyond the 35% that are we using it some

[04:34:55] Speaker 08:
Is there information you all put in the record or someone put in the record that says, that responds to that point by going, I mean, one response is, well, that's worth it for the human health effects.

[04:35:08] Speaker 08:
But I'm actually asking more of a operational question.

[04:35:13] Speaker 08:
Is it, you know, if you only have to do one mile of pipeline, then it might pay for itself within a year or two.

[04:35:18] Speaker 08:
Or, as I was trying to start it out, but I guess I'm wrong, if you have, if you're,

[04:35:25] Speaker 08:
sister plant facility is only half a mile down the road and it's a gas one, then you can get pipeline in easily.

[04:35:31] Speaker 08:
I'm trying to understand if there is an operational response to that argument.

[04:35:39] Speaker 12:
Right.

[04:35:40] Speaker 12:
I mean, I think we put in studies, including both NRDC and Environmental Defense Fund.

[04:35:48] Speaker 12:
I point the court, although this is by no means all that's in the record, joint appendix 10, 15, and 16, and 11, 26, and 27.

[04:35:58] Speaker 12:
We think there's extensive evidence that shows that co-firing could be, you know, is widely available.

[04:36:06] Speaker 12:
And EPA would have to make a judgment about, you know, whether there are subcategories that could be used or whether it can be the basis or a component of the BSCR.

[04:36:22] Speaker 12:
But for some plants at least, particularly those that already burn natural gas, it seems clear that it's every bit as valid and far more effective as the measures that EPA actually

[04:36:35] Speaker 12:
um like it is in 35 i'm just trying to deal with the 65 do we have any sense of how many what that percentage would be that might be doable right i mean i'm gonna have to really really incredibly expensive i'm gonna have to point the court to the um to the studies we we did we submitted an analysis by mj bradley and company um and that that we basically cited in our brief um the record submissions but we think they're pretty

[04:37:03] Speaker 12:
expensive and we think EPA didn't um you know give them reasoned consideration um which i'm sorry which one are you talking about um this is natural gas co-firing um yeah and i think they're pretty expensive i'm sorry natural gas co-firing

[04:37:25] Speaker 10:
Day is the natural gas component?

[04:37:27] Speaker 12:
Yeah.

[04:37:28] Speaker 12:
I mean, there is a capital expenditure.

[04:37:30] Speaker 12:
And there may be instances where it's expensive.

[04:37:35] Speaker 12:
But it's also a lot more effective and as an ingredient in a best system that is based at the source.

[04:37:42] Speaker 12:
Of course, the cheapest, most effective, and most realistic, completely at the source measure

[04:37:50] Speaker 12:
is emission reducing utilization, which totally fits within EPA's construct of to or at the source.

[04:37:57] Speaker 12:
It is what EPA itself said sources would do if EPA allowed them to comply even with the ACE rule.

[04:38:04] Speaker 12:
That's just turning down the amount of utilization and allowing that same amount of electricity to be produced by an already online cleaner source.

[04:38:14] Speaker 10:
What about the continuous objection?

[04:38:17] Speaker 12:
Yeah, we happily address that.

[04:38:21] Speaker 12:
There are two provisions, 7602, these are Cleaner Act definitions, K and L and 7602 that require slightly different wording, continuous emission reductions.

[04:38:35] Speaker 12:
Neither of them prohibits a standard such as an annual standard where emissions are tracked over some period of time, but emissions can fluctuate during that time.

[04:38:47] Speaker 12:
Indeed, the ACE rule itself,

[04:38:49] Speaker 12:
At page 32552 says it'll be okay for states to use annual or even multi annual test to comply with ACE.

[04:38:58] Speaker 12:
And that's because a standard like that is continuous.

[04:39:01] Speaker 12:
In fact, the Clean Air Act uses the term emission limitation.

[04:39:05] Speaker 12:
To describe the the title for cap and trade acid rain program.

[04:39:13] Speaker 08:
You said you said it's well established or something like that, that when it says continuous submission.

[04:39:20] Speaker 08:
That means that can still be measured sort of over time, rather than meaning continuous and Any, any emission standard, whether it's an hourly

[04:39:30] Speaker 12:
monthly or yearly is going to have a period of time and then typically the test is whether the amount of emissions during that period of time exceeds the number that the regulator has prescribed.

[04:39:40] Speaker 10:
What is continuous about?

[04:39:42] Speaker 10:
Is this about pollutants that are where the location of them matters and you don't want big bursts of them?

[04:39:52] Speaker 12:
I think it was partly designed to respond to things like

[04:39:56] Speaker 12:
standards that would allow polluters to rely on the wind to blow away instead of actually controlling your pollution, just dispersing your pollution and not being subject to any limit at all.

[04:40:11] Speaker 12:
But if there is a standard that imposes a limit on pollution, the continuous requirement in the statute does not prescribe the agency from using

[04:40:24] Speaker 12:
an annual test or a monthly test.

[04:40:26] Speaker 12:
And I note that the ACE rule itself... Okay, apart from the ACE rule, what can you point me to?

[04:40:31] Speaker 08:
Case law recognized?

[04:40:32] Speaker 08:
Is there case law discussing this?

[04:40:34] Speaker 12:
I point that the statute uses the term emission limitation in Title IV, which is the acid rain program, which is annual emission allowances, which of course famously allow

[04:40:48] Speaker 12:
for fluctuations at individual plants.

[04:40:52] Speaker 12:
So we don't think the continuous argument is there.

[04:40:55] Speaker 08:
I guess what I'm trying to figure out is if someone just said, OK, coal plant, you will run on Monday, Wednesday, Friday, but not Tuesday, Thursday.

[04:41:03] Speaker 08:
So that's one option.

[04:41:04] Speaker 08:
The other is coal plant can go 100% Monday, Wednesday, Friday, and 50% Tuesday, Thursday, Saturday.

[04:41:12] Speaker 08:
That's continuous.

[04:41:13] Speaker 08:
It's just the lower level.

[04:41:15] Speaker 08:
Are you saying continuous also includes don't run at all on Tuesday, Thursday?

[04:41:18] Speaker 12:
If a standard could impose a limit, 10 tons of pollution a week, the source could decide whether to emit in an amount that if it operated 100% of the time and every hour of the week would not exceed 10, or it could operate at full throttle three days and then shut off.

[04:41:41] Speaker 12:
And that's common.

[04:41:42] Speaker 08:
There's nothing in the- I'm trying to figure out how this continues.

[04:41:46] Speaker 12:
The standard is continuous.

[04:41:48] Speaker 12:
It doesn't stop working.

[04:41:49] Speaker 12:
This court in the Sierra Club, a case under 112 dealt with the situation.

[04:41:53] Speaker 08:
The standard has to be continuous, not the generation.

[04:41:56] Speaker 08:
It has to be continuous.

[04:41:58] Speaker 12:
Yes.

[04:42:00] Speaker 08:
And I would say that a- The standard's continuous if somebody waits until the day that the wind is all blowing east to operate.

[04:42:09] Speaker 12:
Right.

[04:42:09] Speaker 12:
I think that that would be a standard that would be

[04:42:13] Speaker 12:
very dubious if it didn't actually limit pollution.

[04:42:16] Speaker 12:
I mean, the thing.

[04:42:17] Speaker 08:
No, no, no.

[04:42:17] Speaker 08:
I'm saying someone sets a legitimate standard.

[04:42:20] Speaker 08:
You said that this continuous emission was meant to prevent someone from saying, I'm operating when there's a strong wind east, because I'm on the border of whatever state you want to pick.

[04:42:30] Speaker 08:
I'm on the Michigan border.

[04:42:31] Speaker 08:
And so then all the emissions is going to go into Michigan.

[04:42:36] Speaker 08:
and count for their pollutants, not ours.

[04:42:39] Speaker 08:
Or it'll be dispersed so much, it won't be measured as that much.

[04:42:43] Speaker 08:
But the standard, a perfectly legitimate standard, I don't see how the standard, if the standard has to be continuous, I don't see how it stops that problem.

[04:42:51] Speaker 12:
Well, we have one data point, and that is this court's decision in the Sierra Club case, which was under 112, but it's also subject to this same provision.

[04:43:03] Speaker 12:
You're talking about the Sierra Club.

[04:43:06] Speaker 12:
versus Johnson on 551 after 1019.

[04:43:11] Speaker 12:
And that was a case where the court concluded that the regulation just stopped operating during, I think it was startup and shutdown.

[04:43:20] Speaker 12:
And EPA said, well, there's this other standard.

[04:43:23] Speaker 12:
And the court said, no, there has to be a section 112 compliant one.

[04:43:27] Speaker 12:
So that's an example.

[04:43:28] Speaker 12:
Whatever the outer limit of the continuous prohibition is,

[04:43:33] Speaker 12:
an annual standard that would allow for EPA to consider emission-reducing utilization as a component of the best system, which is incredibly common.

[04:43:44] Speaker 12:
It eliminates the trading component if that were to trouble the court.

[04:43:49] Speaker 12:
And it operates within the bounds of each source.

[04:43:53] Speaker 12:
It has to be considered.

[04:43:54] Speaker 12:
It's what sources.

[04:43:56] Speaker 12:
In fact, EPA used it

[04:43:58] Speaker 12:
as a basis for exempting sources.

[04:44:00] Speaker 12:
If they want to cut their utilization, they can be exempted from the ACE rules we pointed out in our brief.

[04:44:07] Speaker 10:
Back on the co-firing, if anywhere in the world where we're assuming that the statute forecloses the approach used in the Clean Power Plan and that the EPA's interpretation that the measures have to be used at the source, would that

[04:44:27] Speaker 10:
encompass building pipeline to get to a plant to allow natural gas co-firing if it isn't already so equipped?

[04:44:35] Speaker 12:
I don't understand EPA to say that their construct of BSCR would preclude co-firing as a sort of legal matter.

[04:44:45] Speaker 12:
I think they acknowledged that it could, but they rejected it on sort of more particular grounds that there's not enough gas or it's too expensive.

[04:44:56] Speaker 10:
So you also were gonna talk about, you had four different topics.

[04:45:04] Speaker 12:
I do and I'm aware that everybody's tired, but I'm also desperate to get to a couple of them at least.

[04:45:10] Speaker 07:
We'll be completely fair to you.

[04:45:14] Speaker 02:
Much appreciated.

[04:45:16] Speaker 02:
Let me ask about continuous just before you move totally off of it.

[04:45:21] Speaker 18:
If a factory is emitting

[04:45:25] Speaker 18:
100 units of a pollutant a day.

[04:45:30] Speaker 18:
And we know that when it does that, everyone within a 10-mile radius can't breathe when they jog.

[04:45:42] Speaker 18:
And we also know that if they could reduce that to 50 units a day, then people will be able to jog and still breathe.

[04:45:52] Speaker 18:
And so we say, you have to

[04:45:55] Speaker 18:
reduce by 50%.

[04:45:57] Speaker 18:
And the factory were to say, all right, fine.

[04:46:02] Speaker 18:
Every other day, we're going to emit 100.

[04:46:06] Speaker 18:
And every other day, we're going to emit zero.

[04:46:10] Speaker 18:
So problem solved.

[04:46:12] Speaker 18:
it definitely wouldn't solve the problem for the people who want to go for a jog when they want to go for a jog.

[04:46:17] Speaker 18:
How does your theory of continuous fit with that problem?

[04:46:20] Speaker 12:
Right.

[04:46:21] Speaker 12:
I think it would be an arbitrary and capricious regulation because it wouldn't, you'd be dealing with a locally harmful pollutant and not taking care of the problem at all.

[04:46:30] Speaker 12:
So that there would be other problems with it.

[04:46:32] Speaker 12:
But I think the continuous, it's hardly the only restriction in the statute.

[04:46:37] Speaker 12:
And so I think my answer would be provided that in your hypothetical

[04:46:42] Speaker 12:
the standard limited the company to 100 tons per week, that would not violate the continuousness requirement.

[04:46:53] Speaker 12:
It would just be a terribly designed regulation that ought to be struck down on.

[04:46:57] Speaker 02:
And I agree with the arbitrary and capricious.

[04:47:00] Speaker 18:
If arbitrary and capricious review would take care of the problem in that situation,

[04:47:09] Speaker 18:
help me understand why arbitrary and compression review wouldn't always take care of the problem.

[04:47:14] Speaker 18:
Why was the word continuous and necessary to be added to the statute?

[04:47:18] Speaker 12:
Right.

[04:47:18] Speaker 12:
Well, I think it was, and I should say in the real world, there would probably be some substantive provisions that would say, you know, you have to have a standard that protects health or whatever, in addition to sort of general reason decision-making requirements.

[04:47:32] Speaker 12:
I think the best I can say on continuousness, and there is some discussion of the legislative history in that Sierra Club case that I just discussed, that it was concerned about standards that just sort of stopped operating or only operated when weather conditions were one way or another.

[04:47:50] Speaker 12:
And Congress was interested in reducing aggregate overall pollution.

[04:47:55] Speaker 12:
I think that would be.

[04:47:57] Speaker 18:
I think that approach would probably also be arbitrary and precious, but I'd rather let it go for now.

[04:48:04] Speaker 18:
I know you have other points.

[04:48:05] Speaker 12:
Okay, thank you.

[04:48:08] Speaker 12:
So one of the most fundamental problems with this rule is it fails to execute EPA's central duty under Section 111D, which is to establish an emission limit that then governs and provides a basis for reviewing state plans.

[04:48:25] Speaker 12:
that substantive criterion for state plans.

[04:48:28] Speaker 12:
That's why there's federal regulation here at all.

[04:48:32] Speaker 12:
It is central to the regime.

[04:48:33] Speaker 12:
It has been since the first regulations were adopted in 1975 that EPA actually re-promulgated here, which made clear that EPA has to identify a degree of emission limitation based on the best system and that

[04:48:49] Speaker 12:
then state standards of performance must be no less stringent than that emission guideline.

[04:48:54] Speaker 12:
And that latter one is 60.24 AC.

[04:49:00] Speaker 12:
And the ACE rule just fails to do that.

[04:49:03] Speaker 12:
It just includes a menu of measures that states are told to consider, possible heat rate improvement measures,

[04:49:13] Speaker 12:
It's about heat rate.

[04:49:15] Speaker 12:
It's not about emissions.

[04:49:16] Speaker 12:
And those are actually often at odds because increasing efficiency can also increase pollution.

[04:49:23] Speaker 02:
And I asked about that, Mr. Donahue.

[04:49:25] Speaker 02:
I think that's the rebound effect, if I'm understanding.

[04:49:28] Speaker 18:
And so in trying to wrap my head around it, again, I'm going to go back to small round numbers.

[04:49:37] Speaker 18:
But there's a factory that's emitting

[04:49:43] Speaker 18:
100 tons of carbon per 100 units of electricity.

[04:49:49] Speaker 18:
And EPA comes along and says, well, we have a way for you to reduce that rate so that you'll emit 90 tons of carbon for every 100 units of electricity.

[04:50:03] Speaker 18:
The factory implements that, and it's going about its business.

[04:50:08] Speaker 18:
It's emitting 90 tons of carbon per 100 units of electricity.

[04:50:11] Speaker 18:
But then it doubles its production, and it's now producing 200 units of electricity with 180 tons of carbon.

[04:50:21] Speaker 18:
That seems to me like the EPA has done what it's supposed to do, what the Clean Air Act requires it to do.

[04:50:30] Speaker 18:
I don't think has been interpreted in the past as a requirement that the country produce less energy.

[04:50:39] Speaker 18:
And so I guess I just don't see in my hypothetical, yes, let's say that the increase in productivity was caused because of an efficiency improvement.

[04:50:50] Speaker 18:
And yes, as a result, there are now 180 tons of carbon being emitted where once there were only 100.

[04:50:59] Speaker 18:
But absent the regulation, if there were 200 units of electricity being created, there would have been 200 tons of carbon.

[04:51:06] Speaker 18:
And now because of the regulation, there are 180 tons of carbon.

[04:51:12] Speaker 18:
So you compare it, I guess, isn't that how the Clean Air Act is supposed to work?

[04:51:17] Speaker 12:
So first of all, in the context of the power sector, if you're increasing the amount of generation with relatively high emissions, that means you're going to be decreasing some other, like the whole, we're working in a world where we have the same amount of the product.

[04:51:33] Speaker 12:
And so you're talking about increasing harmful pollution,

[04:51:39] Speaker 12:
and a decreasing generation of pollution that's less harmful.

[04:51:45] Speaker 12:
And that's, I think, what's problematic about it.

[04:51:48] Speaker 12:
And just in general, adopting a regulation where the known effect is to cause more pollution and more harm, because we're also talking about other kinds of pollution that cause local.

[04:52:03] Speaker 18:
But that's question begging, Mr. Donahue, I think, because you're saying it causes more pollution

[04:52:09] Speaker 18:
but it causes less pollution relative to the amount of energy being produced.

[04:52:16] Speaker 18:
Am I understanding the rebound effect right?

[04:52:18] Speaker 18:
Or maybe I'm just, maybe I don't understand how to rebound effect.

[04:52:20] Speaker 12:
I mean, I'm noting that if the source that's regulated increases its generation in the context of the power sector, some other source, so you're going to have the same amount of product.

[04:52:30] Speaker 12:
So you're not limiting, you're not increasing the amount of widgets and improving human welfare by having more stuff to buy.

[04:52:37] Speaker 12:
So I think that's a big problem.

[04:52:39] Speaker 12:
The other thing is the Clean Air Act doesn't require EPA to use an hourly rate standard.

[04:52:46] Speaker 12:
And in fact, as EPA emphasized in the Clean Power Plan, it authorizes and requires the agency to think about the real world health effects and the characteristics of the pollutants.

[04:52:57] Speaker 12:
So that's why we think.

[04:52:58] Speaker 12:
And of course, EPA did use efficiency upgrades as part of the Clean Power Plan, but it combined that with other measures

[04:53:05] Speaker 12:
to limit the impact of the rebound effect.

[04:53:09] Speaker 10:
What is the measure?

[04:53:10] Speaker 10:
You just mentioned, you said the clean air doesn't require the EPA to use.

[04:53:18] Speaker 12:
an hourly rate.

[04:53:20] Speaker 10:
So what is the metric?

[04:53:23] Speaker 10:
What was the metric under the Clean Power Plan?

[04:53:25] Speaker 10:
What's the typical metric?

[04:53:26] Speaker 10:
What's the metric under ACE in terms of, as you say, setting a guideline that's communicated?

[04:53:31] Speaker 10:
I mean, I gather this is a really major shift, but it's a little bit opaque to those of us who are not steeped in the energy sector and emissions regulation.

[04:53:41] Speaker 12:
Right.

[04:53:41] Speaker 12:
So the Clean Power Plan used a rate-based

[04:53:46] Speaker 12:
standard, an hourly rate based standard, but it also gave states the option of using a so-called mass based standard that would have allowed, you know, different kinds of compliance approaches that section 111 doesn't require either of those, but it does require the agency to make a reasonable, that plus APA requires the agency to make sort of a reasonable choice.

[04:54:10] Speaker 12:
And so to say as EPA does here,

[04:54:12] Speaker 12:
Well, the emission rate of coal plants is going to go down.

[04:54:18] Speaker 12:
and therefore we've done our job under a statute that refers to danger to public health and welfare, we think is not, they haven't fully done their job.

[04:54:28] Speaker 10:
We don't think that- So where is the requirement in the statute of EPA or the authorization for EPA to, I don't think EPA can test this, that it has an obligation to give guidance, but it is, tell me where the best pedigree is for that obligation.

[04:54:47] Speaker 12:
the obligation to set a limit more than guidance in the sense of like help or advice.

[04:54:56] Speaker 12:
So we think the text of section 111A that requires the administrator to identify the best system because that is based on a degree of admission limitation achievable through the application of that system.

[04:55:12] Speaker 12:
And then EPA has consistently read the statute since 1975 and indeed re-promulgated regulatory language that makes it very clear that EPA's job is to specify the limit itself, not just kind of say, here's how you, the states might do it.

[04:55:26] Speaker 12:
And that's, of course, really familiar under cooperative federalism.

[04:55:29] Speaker 10:
I mean, re-promulgate just now in its new rules.

[04:55:32] Speaker 12:
Yes, in the framework rules that were promulgated together with ACE and that I cited those earlier.

[04:55:39] Speaker 12:
I cited one of them, but they require that EPA specify the degree of limitation in the guideline and then that EPA in reviewing plans ensure that the state standard of performance is no less stringent than the limit EPA has prescribed.

[04:56:00] Speaker 12:
And that's just what is just lacking in this rule.

[04:56:03] Speaker 12:
I want to point out two features of the rule that are two little provisions of their approach that kind of, I think, are one of many tells about this rule.

[04:56:12] Speaker 12:
That is, of the seven heat rate improvement measures on the menu, by far the two most, those that appear to be most effective, which are turbine path upgrades,

[04:56:28] Speaker 12:
and economizer replacements.

[04:56:30] Speaker 12:
They're kind of outsized in terms of their potential benefit in improving efficiency.

[04:56:35] Speaker 12:
But EPA concluded that they would increase emissions and thereby trigger other Clean Air Act requirements for sources under the new source review program.

[04:56:47] Speaker 12:
And states would then permissibly choose never to require them under ACE.

[04:56:53] Speaker 12:
And then EPA's modeling said they will never be adopted anywhere.

[04:56:58] Speaker 12:
And so I think that's kind of, you know.

[04:57:01] Speaker 10:
Why is it not permissible if they're supposed to take into account energy requirements or other health and environmental impacts if these are gonna increase emissions?

[04:57:16] Speaker 12:
So, I mean, I think I'm fine with these not being

[04:57:21] Speaker 12:
used.

[04:57:21] Speaker 12:
The problem is that they're trotted out as being the linchpins of a rule based on improved efficiency.

[04:57:30] Speaker 12:
And they're in service of my argument that there's no limit here.

[04:57:34] Speaker 12:
There's no serious effort to control pollution.

[04:57:37] Speaker 12:
These are two measures that, if there were significant deregulation under the new source review program, might be more attractive, even though they pollute more.

[04:57:47] Speaker 12:
But that hasn't been done, even though EPA proposed it.

[04:57:50] Speaker 12:
So, you know, I think that's the fact that those two sort of lead measures of the menu are projected never to be implemented is typical of how kind of non-serious this rule is.

[04:58:07] Speaker 10:
I mean, the reason they didn't come up, I gather, or if it's a reason or just a description of it, I'm not coming up with a

[04:58:16] Speaker 10:
a actual limit, like a verifiable numerical limit is they said, well, you know, we can't do anything categorical.

[04:58:24] Speaker 10:
It's all going to depend on what each individual source can accomplish.

[04:58:27] Speaker 10:
We don't know that until the states sort of go around and work with the individual sources.

[04:58:32] Speaker 10:
And so it's just a toss up.

[04:58:36] Speaker 10:
What's the response to that?

[04:58:38] Speaker 12:
So they're not fulfilling their obligation under the statute or their own regulations.

[04:58:43] Speaker 12:
And I also think, first of all, we think they should be looking at a bunch of other far more effective systems.

[04:58:49] Speaker 12:
But the factual premise that it's not possible to come up with the limit is not consistent with the record.

[04:58:55] Speaker 12:
And it also just fundamentally deprives the regime.

[04:59:00] Speaker 07:
Explain the former to me.

[04:59:01] Speaker 07:
How does the record show that it's not possible to come up with a limit?

[04:59:06] Speaker 12:
Well, so I mean,

[04:59:07] Speaker 12:
Just within the heat rate category or yes.

[04:59:11] Speaker 12:
So, I mean, I think EPA, for example, in the clean power plan EPA look broadly across the source category and said, here's what we think heat rate potential is there been historic Reviews.

[04:59:24] Speaker 12:
I mean, typically plants do differ, but we set standards based on what plants can achieve

[04:59:31] Speaker 12:
And then EPA relies on the remaining useful life language in section 111D, but that actually cuts against what they've done here.

[04:59:38] Speaker 12:
That language provides that when applying a standard of performance to a particular source, the state shall be allowed to take into account the remaining useful life, the age of the plant, and then other factors.

[04:59:51] Speaker 12:
But that presupposes that there be a standard in the first place.

[04:59:54] Speaker 12:
And EPA here has kind of turned that around and made it a basis for not

[04:59:58] Speaker 08:
Um, is a single number as opposed to, um, they did a range here and put aside your disagreement with the range they did here.

[05:00:10] Speaker 08:
Uh, is it really, what, what, what is your best citation for the fact that they have to come up with a number?

[05:00:19] Speaker 08:
Cause the statute says the degree of a mission and limitation achievable and, um,

[05:00:26] Speaker 07:
Why could that not be?

[05:00:27] Speaker 07:
How do we know that can't be arranged?

[05:00:29] Speaker 12:
So two things.

[05:00:30] Speaker 12:
One is, even if it were arranged, there's no binding limit here.

[05:00:34] Speaker 12:
If you could say, you can do two to four, but you've got to be in that range, that would at least have some binding.

[05:00:41] Speaker 12:
It would be a binding basis, especially if EPA said, we think that bigger plants can do four or something with some other.

[05:00:49] Speaker 12:
But there's nothing binding here.

[05:00:52] Speaker 12:
And so we think that's the central problem.

[05:00:56] Speaker 10:
To table one.

[05:00:57] Speaker 10:
And the problem is that they don't say that every plant in this size category or this size category.

[05:01:03] Speaker 10:
This size category has to meet this has to fall within the specified range.

[05:01:08] Speaker 10:
They say states will tell us Which he rate improvements, the plants are planning to use

[05:01:14] Speaker 10:
And so it's the sort of, it's the sort of, it rolls from the bottom up, right?

[05:01:19] Speaker 12:
And there's- It's like what Congress might've done before the Modern Clean Air Act was enacted by a nearly unanimous, a unanimous Senate and a one vote against in the House in 1970, and put the federal government in the business of providing these protections on a nationwide basis.

[05:01:40] Speaker 12:
Prior to that, there was often in many areas a sort of model of providing

[05:01:44] Speaker 12:
guidance and information for state governance.

[05:01:48] Speaker 12:
And that's just not what's going on here.

[05:01:50] Speaker 12:
This is a cooperative federalism regime where EPA sets the minimum, and then states have substantial room to, if they choose, implement that federal minimum.

[05:02:01] Speaker 12:
But the minimum is set to protect the country as a whole, and EPA has sort of failed to do that central thing here.

[05:02:09] Speaker 10:
I have a couple of questions, and these are really, I'm sure betray my ignorance, but what is the cost and energy requirements language?

[05:02:20] Speaker 10:
I mean, at some level, if something's so costly that it's gonna be untenable for a source as a business matter, but if the cost, I mean, if we're talking about a release of,

[05:02:40] Speaker 10:
you know, something that's going to kill everybody tomorrow, is cost relative to that?

[05:02:46] Speaker 10:
I mean, which is the metric?

[05:02:48] Speaker 10:
Because it feels like people are talking about very different things.

[05:02:50] Speaker 10:
And we, you know, we are worried about, we look at the language of the statute, and we look at EPA's authority, but cost is listed among its concerns.

[05:03:00] Speaker 10:
And I just wonder how that—

[05:03:03] Speaker 12:
So cost is explicitly required to be considered.

[05:03:06] Speaker 12:
We think that, as I mentioned earlier, one of the problems is there's no sort of comparison between what the cost and the benefit of regulation.

[05:03:14] Speaker 12:
So it's kind of in this.

[05:03:15] Speaker 10:
That's relevant.

[05:03:16] Speaker 10:
It's the cost nationwide and the benefit of regulation nationwide, as opposed to the, I mean, there's some implication that it's the cost to a particular

[05:03:24] Speaker 12:
So I think historically EPA has tended to look at the source category and has said, you know, is this unreasonable and excessive for the source category, given what we know about it, and has been willing to adopt standards that impose significant costs and don't always give a break to the sources that are the dirtiest or the most marginal, that has tried to sort of push things forward and

[05:03:53] Speaker 12:
And on the other hand, the statute allows for this consideration at the source specific level under the remaining useful life.

[05:04:01] Speaker 12:
So if there is a plan that the state concludes, you know, it's going to retire in a couple years anyway, or is physically configured in a way that makes it extremely difficult to meet the limit.

[05:04:14] Speaker 12:
the state has some discretion to build that in.

[05:04:17] Speaker 12:
I don't know if I answered your question.

[05:04:19] Speaker 10:
I think nobody wants to go there because there's a lot of jobs and a lot of, you know, productive capacity and a lot of expectation built into all kinds of energy production as it stands today.

[05:04:33] Speaker 10:
But just to understand the limits statutory as opposed to kind of political and policy and economic,

[05:04:40] Speaker 10:
that the statute puts on EPA.

[05:04:42] Speaker 10:
If EPA said, look, we recognize that these plants were built and invested in and people have put their careers into them and a lot of people, but now we know things about the externalities of these ways of generating energy, what in the statute constrains, controls, and guides how severely EPA can impose

[05:05:06] Speaker 10:
Assuming that the net overall national costs are worth it, is there anything that sort of speaks to this more like distributional question?

[05:05:16] Speaker 12:
Right.

[05:05:17] Speaker 12:
So I think, you know, the agency would have to act reasonably in applying the cost factor to a particular record.

[05:05:26] Speaker 12:
And, you know, I think there's some guidance in the Michigan decision.

[05:05:29] Speaker 12:
I think it would also be appropriate to take into account the fact that there's this second level

[05:05:36] Speaker 12:
of remaining useful life that can kind of dampen impacts on particular sources.

[05:05:42] Speaker 12:
But beyond that, the Clean Air Act is a serious statute.

[05:05:46] Speaker 12:
It was intended to secure major economic benefits to the country.

[05:05:50] Speaker 12:
I mean, you don't have to live in California or Oregon to realize how extreme this now annual experience of having schools shut down for smoke days is to understand that this is affecting the economy in a really significant way.

[05:06:05] Speaker 12:
So I think, and that's one of the problems with thinking about this as only on the side of, you know, cost to regulated industry.

[05:06:14] Speaker 12:
And of course, the Clean Power Plan was designed to minimize that.

[05:06:17] Speaker 12:
And there are lots of ways that you could design a rule to build on these very powerful trends that are already in play.

[05:06:24] Speaker 12:
But I think, you know, you kind of have to think about the other side of it too.

[05:06:28] Speaker 12:
And leaving this problem that the record shows, unrebutted record shows is a super serious problem.

[05:06:35] Speaker 12:
really imminent, leaving that kind of unaddressed also has very significant costs.

[05:06:42] Speaker 10:
I'm not sure that I'm, and maybe there isn't really an answer, but is there anything in the statute or the regs that addresses sort of bumpy imposition of costs?

[05:06:55] Speaker 10:
Assuming that the net costs are really worth it and the costs on the other side or the benefits,

[05:07:04] Speaker 10:
of the regulation are very exigent.

[05:07:09] Speaker 10:
You know, is there anything in the statute that says, you know, you can't go there to sort of to curtail production by these legacy technologies?

[05:07:20] Speaker 10:
Or is there nothing and then Congress has to turn around and figure out how to

[05:07:26] Speaker 10:
how to smooth those bumps and help those communities, sort of like when you have global trade and it messes, I mean, it seriously messes with people's lives, but there's a sense, oh, it's a net benefit.

[05:07:38] Speaker 12:
So, I mean, I think EPA has a lot of tools, like the ability to subcategorize a source category to take it on to.

[05:07:46] Speaker 09:
See, that's the thing I'm wondering about.

[05:07:47] Speaker 09:
So costs can mean that they can make those choices?

[05:07:51] Speaker 12:
In making a sub categorization decision.

[05:07:55] Speaker 12:
Yeah, I think so.

[05:07:56] Speaker 12:
You know, if some category of sources.

[05:07:58] Speaker 12:
It's a lot harder to get natural gas to them or other some other pollution control, you know, measure that would be a basis for EPA to make that And, you know, and I think the agency has to act reasonably and And then and explain itself.

[05:08:19] Speaker 12:
And that's a significant

[05:08:20] Speaker 12:
you know, restraint.

[05:08:22] Speaker 12:
And then also, you know, the agency has the ability to design rules that take account of reality, including in this case, you know, trends that are operating very powerfully in the sector that can be used to relatively cheaply achieve both major benefits for public health and welfare, and also much less bumpiness economically by allowing for flexibility

[05:08:51] Speaker 12:
And that's what's one of the things that's so remarkable about the ACE rule is EPA says, no, you can't use emission reduction utilization or trading or some of these things that virtually everyone would use if they could and that are cheaper.

[05:09:05] Speaker 12:
And it just seems really surprising to find anything in the statute that prevents that kind of common sense.

[05:09:14] Speaker 10:
For questions we were I know we were hijacking your time quite a bit.

[05:09:22] Speaker 18:
Um, and I have more hijacking to do.

[05:09:25] Speaker 02:
I don't want to interrupt.

[05:09:34] Speaker 10:
Did you get to cover your fourth?

[05:09:36] Speaker 12:
Oh, so number four was just the repeal of the gas standards, which we don't think EPA has given a reasoned response to the evidence that was put in on its proposal to repeal with no replacement any standards for natural gas and oil.

[05:09:55] Speaker 12:
But natural gas is a really big one.

[05:09:57] Speaker 12:
Our brief sites studies that show that there are

[05:10:02] Speaker 12:
even sort of to and at the source approaches that can work for natural gas.

[05:10:07] Speaker 12:
And like with, as has already been mentioned, there's this disconnect between their rationale for rejecting that and their heat rate approach to coal, which is, oh, you know, there's not enough specificity about unit level potential, et cetera, which EPA didn't find necessary for coal.

[05:10:28] Speaker 12:
So we think that that was unlawful as well.

[05:10:32] Speaker 12:
I'm happy to be, um, just one question, although I can't, we can't promise that the answer will be short.

[05:10:40] Speaker 18:
It'll be up to you, but, uh, and I know your topic is the ACE rule.

[05:10:45] Speaker 18:
Um, but I'm, I have a question about the, the CPP and I'm going to, I want to exploit your knowledge of environmental law and energy law if I can.

[05:10:53] Speaker 18:
Um, the, the way that generation shifting works that I have in my head,

[05:11:00] Speaker 18:
the CPP would have done is there's a power company called Acme Power, and they have nothing but a coal plant.

[05:11:13] Speaker 18:
And the CPP says, or their state says, for every 100 units of electricity, you used to produce 100 tons of carbon, but now for every 100 units of electricity produced, you can only produce 50 tons of carbon.

[05:11:29] Speaker 18:
And one thing that Acme Energy Company can do is it can buy a wind energy place that does no carbon.

[05:11:36] Speaker 18:
And it'll start doing 100 units of electricity from the coal and 100 from the wind.

[05:11:43] Speaker 18:
And now it's doing 200 total with 100 tons of carbon.

[05:11:48] Speaker 18:
And it's now made that two to one ratio requirement.

[05:11:53] Speaker 18:
Instead of buying a wind plant, it could buy credits from

[05:11:57] Speaker 18:
another company that does wind energy or solar energy.

[05:12:02] Speaker 18:
Am I understanding how generation shifting works?

[05:12:08] Speaker 18:
Because I would hate to get back to Chambers and try to, you know, write an opinion and not have my basic understanding of the Clean Power Plan correct?

[05:12:20] Speaker 12:
Right.

[05:12:20] Speaker 12:
And I think it may be a term that there's a little bit of slippage between different well-informed users.

[05:12:27] Speaker 12:
But I think basically one quibble I would have with I think the hypothetical is that the Clean Power Plan, which of course was a sort of framework, it was a guideline that then states had some significant discretion about how to implement it.

[05:12:43] Speaker 12:
But I think the hypothetical was or the sort of situation was that the coal plant has to reduce its emissions and that isn't how the Clean Power Plan would have worked.

[05:12:54] Speaker 12:
The plant would have had

[05:12:57] Speaker 12:
the ability to reduce its emissions.

[05:12:59] Speaker 12:
It could have done something like a partial carbon capture and reduce out of its smokestack to comply.

[05:13:05] Speaker 12:
But that, of course, wasn't the best system that EPA identified there.

[05:13:09] Speaker 12:
It could also purchase a credit from a renewables or a gas company that would then average in on one variant of the Clean Power Plan to reduce its rate.

[05:13:23] Speaker 12:
And that's how a lot of these programs work

[05:13:27] Speaker 12:
getting credits that then serve to reduce the rate that is attributed to a particular source.

[05:13:33] Speaker 12:
The source could also, you know, choose to, you know, whatever level of production that it wanted to and use credits to achieve the limit.

[05:13:43] Speaker 12:
I don't know if that answered your question.

[05:13:45] Speaker 18:
The only reason why I'm worried it didn't is because aside from the carbon capture option,

[05:13:50] Speaker 18:
I thought I had said what you just said.

[05:13:53] Speaker 18:
So do you see daylight between, did I say something wrong?

[05:13:56] Speaker 12:
I thought you said the CPP said the coal plant has to ratchet down its production and that's not right.

[05:14:05] Speaker 12:
Okay.

[05:14:06] Speaker 10:
As a result of the CPP, the state is coming to the coal plant and saying, we think, right, because it's all mediated through the state saying, how are we going to allocate

[05:14:16] Speaker 10:
the limitations that we have to, the belt tightening that we have to do.

[05:14:21] Speaker 05:
Right.

[05:14:22] Speaker 10:
Under it came to the plan and said, it looks like your share folks is going to be this then how you need it.

[05:14:29] Speaker 10:
Is that right?

[05:14:30] Speaker 12:
Um, I think, I think I understood that one point I would just like to make about this is that there's a lot of sort of policy variance here.

[05:14:39] Speaker 12:
But we have before us a rule that repeals the Clean Power Plan on a legal theory that's really sweeping that would rule the call out.

[05:14:47] Speaker 10:
So one of the points I know that the EPA has made here is, well, we threw out carbon capture and coal firing, but so did the Clean Power Plan.

[05:14:58] Speaker 10:
And maybe this is an argument that you all made, but it seems like that doesn't necessarily carry over because if you think the statute puts off the table, a lot of the things that the Clean Power Plan thought were cheaper and more efficient,

[05:15:14] Speaker 10:
methods of production, then the costs, the unchanged costs, in terms of environmental costs, might bring those back into focus as actually not only reasonable, but required?

[05:15:27] Speaker 10:
What's the position on that?

[05:15:30] Speaker 12:
We think that the word best and best system is necessarily a sort of comparative term.

[05:15:34] Speaker 12:
If you think that the CPP approach is off the table, you have to figure out something else that's best.

[05:15:39] Speaker 12:
EPA didn't say

[05:15:40] Speaker 12:
co-firing is infeasible or unreasonably expensive.

[05:15:44] Speaker 12:
It said the opposite.

[05:15:45] Speaker 12:
It said this is the approach we could use, and that was in line with other Clean Air Act rules, but that the Clean Power Plan's more flexible, cost-effective approach is better.

[05:15:57] Speaker 12:
And they also say, EPA says incorrectly in its brief that the Clean Power Plan rejected emissions-reducing utilization as it's not clear since the current

[05:16:09] Speaker 12:
EPA does not appear to have a lot of hold the Clean Power Plan in lots of esteem.

[05:16:15] Speaker 12:
So it's not clear what it would have meant if the Clean Power Plan had come out differently, but it's not true that I direct the court to or I suggest the court look at page 64782, note 602 of the Clean Power Plan where that

[05:16:31] Speaker 12:
The agency said emission reducing utilization meets the BSER statutory factors.

[05:16:41] Speaker 12:
What EPA is pointing to is a different thing, which is EPA's rejection in the final team power plan of reliance on energy efficiency, which would have reduced the overall amount of the electricity product.

[05:16:54] Speaker 12:
available to customers on EPA.

[05:16:57] Speaker 12:
So that's different from what we've done before.

[05:16:59] Speaker 12:
We're not doing that.

[05:17:00] Speaker 12:
But they certainly didn't categorically say emission-reducing utilization, where you're basing that on the availability of replacement generation and equal amount that's cleaner can't be part of the best system.

[05:17:14] Speaker 10:
You mean energy efficiency by people and their appliances?

[05:17:18] Speaker 12:
Right.

[05:17:18] Speaker 12:
So the proposed Clean Power Plan, since we've

[05:17:22] Speaker 12:
fully understood the final Clean Power Plan, now we're going to go into the proposal, had four building blocks, one of which was energy efficiency, which actually is a very effective, cost effective, as you know, from the EPSA decision, it's widely used.

[05:17:40] Speaker 12:
But EPA ultimately decided that it, as a matter of discretion, made a policy choice to leave that out, and it's in connection with that, that EPA's

[05:17:49] Speaker 08:
Got it.

[05:17:50] Speaker 08:
Yeah, I have one last question is the mission reduction utilization, a very fancy way of saying simple simply reducing your hours of production or does it include

[05:18:02] Speaker 08:
Or I'm sorry, yes, reducing your hours of production, or does it include stopping production?

[05:18:08] Speaker 12:
Both.

[05:18:09] Speaker 12:
It could be both.

[05:18:10] Speaker 12:
And I direct suggest the court look at the discussion in the Trade Association Petitioners' Brief, which talks about using it in connection with judgment.

[05:18:22] Speaker 10:
You mean Con Edison?

[05:18:23] Speaker 10:
Is that that great?

[05:18:24] Speaker 12:
No, that's the power companies.

[05:18:26] Speaker 12:
This would be the American Wind Energy Association at L.

[05:18:31] Speaker 08:
OK.

[05:18:33] Speaker 08:
Sorry.

[05:18:34] Speaker 08:
Go ahead.

[05:18:34] Speaker 08:
No, no.

[05:18:35] Speaker 08:
I was just going to say I was going to try and wind it up.

[05:18:36] Speaker 08:
But go ahead.

[05:18:37] Speaker 08:
If you have another question, we'll keep going.

[05:18:39] Speaker 10:
So just thinking about kind of the decision tree for the panel, if the panel were to decide that the, were to reject EPA's statutory argument for the invalidity of the Clean Power Plan, are any of the issues

[05:19:00] Speaker 10:
that we've been discussing in this third segment of the argument still alive.

[05:19:07] Speaker 12:
So I think that it would require vacating the ACE rule because it's predicated on that construct being legally mandated by the Clean Air Act.

[05:19:19] Speaker 12:
So EPA didn't consider all kinds of things.

[05:19:21] Speaker 12:
Their response to comments over and over says, even with respect to should we think about climate change, they say, oh, no, we're limited by the statute.

[05:19:29] Speaker 12:
So it would require vacating ACE.

[05:19:33] Speaker 12:
Whether the court, as we've suggested in our brief, we think the proper remedy would be vacate ACE and then remand the whole thing.

[05:19:41] Speaker 12:
We don't think putting the clean power plan in effect now with deadlines passed, power sector is a very different place, makes any sense.

[05:19:49] Speaker 12:
So that's the remedy we're seeking.

[05:19:51] Speaker 12:
Should the court reach other issues?

[05:19:54] Speaker 12:
The other issues in the ACE case certainly are important to how EPA would consider the range of options.

[05:20:02] Speaker 12:
On remand, they could do something totally different.

[05:20:08] Speaker 12:
But I don't think the court would have to reach any of those issues.

[05:20:12] Speaker 10:
Could we reach any of them?

[05:20:14] Speaker 10:
And one thing that I think that relates to your point about them not having considered the environmental risks

[05:20:24] Speaker 10:
that goes to the framework regulations changing of the timeframe.

[05:20:31] Speaker 10:
Like if that's something, if we were to invalidate the ACE rule, there's still the issue of the framework regulations, which seems closely together with the question of the ACE rule, but it isn't technically the ACE rule.

[05:20:45] Speaker 10:
So are there parts of that that fall, parts of that that stay?

[05:20:49] Speaker 10:
How does one think about that?

[05:20:50] Speaker 12:
So what we've challenged are those extensions of deadlines, which we think are just kind of not justified with recent decision making.

[05:21:00] Speaker 12:
And so you're right, Your Honor.

[05:21:02] Speaker 12:
That wasn't something we proposed to argue.

[05:21:05] Speaker 12:
But we do argue in our brief that those deadlines are, those changes are arbitrary and capricious.

[05:21:11] Speaker 12:
And we would ask the court to, at a minimum, send those back, even if it relied in general on the proposition that the ACE rule

[05:21:21] Speaker 12:
was predicated on the assumption that EPA's repeal was valid.

[05:21:26] Speaker 12:
And it seems to me courts often make kind of pragmatic judgments on these.

[05:21:31] Speaker 12:
If the court were to conclude that the repeal is unlawful, there may be issues that make sense to address and others not.

[05:21:40] Speaker 12:
And I'm not sure I have a really crisp answer, except I don't think the court would be sort of obligated

[05:21:46] Speaker 12:
To address the issues of design regulatory design and obviously the record issues in the case.

[05:21:52] Speaker 10:
It'd be interesting to hear from others about that too.

[05:21:55] Speaker 10:
So what's the what's the prudential and what are the hard stop, you know, questions about what we could or couldn't should or shouldn't I mean

[05:22:04] Speaker 12:
To me, it would be helpful.

[05:22:07] Speaker 12:
I mean, I think the failure to look at the pollution control, pollution reduction factor and the benefits and the record on risk and then the failure to set a binding limit are sort of issues that if it's okay to do what they did here, then that would very significantly change what they could do in a new rule if the court

[05:22:32] Speaker 12:
we're considering addressing some issues, those are sort of high level cross cutting ones that I think it would be helpful to address, but certainly not necessarily to address details of the record on how extensive the natural gas distribution system is or whatever.

[05:22:51] Speaker 08:
Any further questions from my colleagues?

[05:22:54] Speaker 08:
Okay.

[05:22:55] Speaker 08:
Well, you got a little extra time there, Mr. Donahue.

[05:22:58] Speaker 08:
Thank you, though, for very, very informative and being very responsive to the questions.

[05:23:02] Speaker 08:
Mr. Myers?

[05:23:05] Speaker 17:
Michael Myers for State and Municipal Petitioners.

[05:23:08] Speaker 17:
Mr. Donahue will be doing this part of the segment for both of us, so I won't be requesting separate rebuttal time.

[05:23:15] Speaker 17:
Your honors will be happy here.

[05:23:17] Speaker 17:
I'm going to discuss two areas, the implications for state plan.

[05:23:22] Speaker 10:
This is for us.

[05:23:23] Speaker 10:
This is how we have fun.

[05:23:26] Speaker 08:
It's a pandemic.

[05:23:28] Speaker 08:
We don't get to see anybody.

[05:23:33] Speaker 17:
I'm going to focus on two areas, Your Honor.

[05:23:36] Speaker 17:
The implications for state plans of the ACE rules lack of minimum degree of emission limitation and how ACE is prohibition on emissions trading and averaging is unlawful.

[05:23:47] Speaker 17:
Before I go to those two areas, I just wanted to quickly follow up on a question that Judge Pillard raised, and that is in terms of, you know, once EPA ruled best generation shifting type measures out of the equation, didn't it still have an obligation to look at the emission reductions that are available under the systems it does think are lawful?

[05:24:12] Speaker 17:
Mr. Donahue talked about how

[05:24:14] Speaker 17:
EPA failed to weigh emission reductions when it made its best system choice.

[05:24:19] Speaker 17:
I just want to make a quick follow up on that.

[05:24:21] Speaker 17:
And that is under FCC versus Fox, EPA found in the Clean Power Plan that heat rate improvements alone could not be the best system because they had, quote, a critical flaw.

[05:24:35] Speaker 17:
And that critical flaw, and I'm referring to 80 FETRAG at 64 or 727,

[05:24:42] Speaker 17:
was the quantity of emission reductions.

[05:24:45] Speaker 17:
So not only did EPA fail to weigh the different systems it did think were lawful, it did not explain how heat rate improvements now have fixed what it referred to previously as a critical flaw.

[05:24:59] Speaker 02:
That the rebound effect, the critical flaw was the rebound effect or are those different things?

[05:25:04] Speaker 17:
Well, that's related to it, Your Honor.

[05:25:07] Speaker 17:
It's both that heat rate improvements do not get

[05:25:10] Speaker 17:
substantial emission reductions and it's also whatever emission reductions they may get you can be offset by the rebound effect.

[05:25:18] Speaker 10:
Isn't their position, this is where they cite Mexicam, their position is, yeah, this could be a huge problem.

[05:25:24] Speaker 10:
And these may be really inadequate measures.

[05:25:28] Speaker 10:
And in fact, I don't think they deny that these are pretty small when measured against the magnitude of the CO2 greenhouse gas problem.

[05:25:40] Speaker 10:
But they're saying, this is all we can do under the statute.

[05:25:44] Speaker 10:
Get another statute.

[05:25:46] Speaker 17:
Well, that is what they say, your honor.

[05:25:48] Speaker 17:
But my more limited point is, when it comes to even the systems under their constrained reading that they said were allowed to consider, like co-firing, carbon capture, and sequestration, they did not weigh emission reduction and explain how they could choose heat rate improvements despite what they themselves found was a critical flaw just a few years earlier.

[05:26:13] Speaker 17:
Moving to the two main areas I wanted to quickly cover.

[05:26:17] Speaker 17:
First of all, EPA's failure in ACE to include a minimum degree of emission limitation for state plans.

[05:26:24] Speaker 08:
I apologize.

[05:26:25] Speaker 08:
Can I back you up to your last point?

[05:26:27] Speaker 08:
Could they have said that, or they did say

[05:26:31] Speaker 08:
The market states are already taking care of this.

[05:26:35] Speaker 08:
They're making great progress on climate protection.

[05:26:38] Speaker 08:
So we don't understand that as being their balanced consideration of climate impacts.

[05:26:49] Speaker 08:
If you understood what I'm saying, we can do less because the market's already doing more at this level.

[05:26:54] Speaker 08:
That wouldn't be sufficient.

[05:26:56] Speaker 17:
Well, your honor, there, we cover this in our applied brief.

[05:26:59] Speaker 17:
Actually, I think there are two problems with this.

[05:27:00] Speaker 17:
First, there's a chennery problem because they did not actually say in the rulemaking, here's what the, what the market is getting us.

[05:27:09] Speaker 17:
So therefore we only need to get X plus with the age rule.

[05:27:13] Speaker 17:
They did not do that.

[05:27:14] Speaker 17:
And in addition to that, it's their obligation to consider what level of reduction

[05:27:22] Speaker 17:
may be necessary with respect to the endangerment that they found.

[05:27:25] Speaker 17:
And they just did not do that analysis here.

[05:27:29] Speaker 17:
So in terms of the unworkable nature of ACE, by failing to provide a minimum level of reduction, EPA has discarded its longstanding criterion for determining whether state plans are satisfactory under the statute.

[05:27:48] Speaker 17:
And also whether under EPA's regulations that Mr. Donahue cited,

[05:27:53] Speaker 17:
The performance standards and state plans are no less stringent than EPA's emission guideline, unless the state can demonstrate to EPA that a specific source cannot meet that limit.

[05:28:06] Speaker 17:
But with no baseline at all, there's no basis to make that comparison.

[05:28:12] Speaker 17:
Second, and this is the second reason why ACE is unworkable, states have no minimum or default emission limit to work from when setting standards for specific sources.

[05:28:23] Speaker 17:
As the Association of State Air Pollution Control Agencies told EPA in its rulemaking comments, this is at Joint Appendix 1098, this creates problems for states lacking expertise and or resources to translate these vaguely defined heat rate improvements into emission standards.

[05:28:43] Speaker 17:
And on that point, I wanted to go back to something that Judge Pillard said about the table and the ranges

[05:28:50] Speaker 17:
The main case that EPA relies upon for support that it could adopt a range is the Sierra Club versus Costal case.

[05:29:00] Speaker 17:
But that case, as the NGOs explain in their brief at page 15, was a much different situation.

[05:29:07] Speaker 17:
Their EPA created the subcategories that, Judge Billard, you were talking about with Mr. Donahue, and set specific limits that applied to each of those categories.

[05:29:18] Speaker 17:
They did not just sort of

[05:29:20] Speaker 17:
you know, spout out this table and say to the state, hey, you know, essentially good luck in coming up with an emission standard.

[05:29:29] Speaker 10:
ACE is also inequitable in addition to being- So when you talk about this, having to have like a quantifiable or substantive degree of emissions limitation achievable,

[05:29:46] Speaker 10:
Again, it's somewhat striking that it doesn't seem to really be spelled out in the statute and the best authority you have.

[05:29:52] Speaker 10:
So here's another way of putting it more concretely.

[05:29:55] Speaker 10:
EPA says, cooperative federalism, we actually think the states really are more knowledgeable.

[05:30:01] Speaker 10:
And what we're going to do is we're going to throw these heat rate suggestions out.

[05:30:07] Speaker 10:
And the states are going to tell us, they're going to survey all their sources and they're going to tell us what they think is really the most ambitious they can do.

[05:30:16] Speaker 10:
We're going to have some dialogue with them.

[05:30:17] Speaker 10:
We're going to push back a little bit, maybe ask them to do a little bit more.

[05:30:22] Speaker 10:
But then they're going to come back to EPA with something specific.

[05:30:28] Speaker 10:
And that's going to be in their SIP.

[05:30:30] Speaker 10:
And we're going to say, OK, we're going to accept that.

[05:30:33] Speaker 10:
And then you go forth and meet that.

[05:30:36] Speaker 10:
So that, it's not something that ex ante based on the BSER in the way that the Clean Power Plan comes up with a limitation, but it is sort of saying like, we think BSER is this more episodic or more informational exercise, but we are gonna have something that's verifiable.

[05:30:58] Speaker 10:
It's just gonna be something that's served up from the states and that we're gonna bless.

[05:31:03] Speaker 10:
What about the law or the statute or anything

[05:31:07] Speaker 10:
forbids that?

[05:31:09] Speaker 17:
Well, Your Honor, I would point you to EPA's regulations 60.21AE, the definition of a mission guideline, which provides that an admission guideline shall reflect the degree of emission limitation achievable through the application of the best system.

[05:31:26] Speaker 10:
And why isn't this what I'm describing, which is the state coming up with something that reflects the degree of emissions limitation achievable?

[05:31:34] Speaker 10:
And feds say, okay, we're on board with them.

[05:31:39] Speaker 17:
Well, EPA is saying in that regulatory provision, we're going to define the emission limitation that is achievable through the best system.

[05:31:50] Speaker 17:
And states take that information and they figure out on a specific individual unit basis, if that works, if they have to vary from it, if they have to vary from it, then they have to demonstrate why.

[05:32:03] Speaker 10:
I understand that's how you like it to work, but I'm just wondering if there's something legal that prevents it from working effectively the way it does under the ACE rule.

[05:32:11] Speaker 10:
And I have a reason that's really ascribing something to Congress.

[05:32:17] Speaker 10:
I mean, Mr. Donahue mentioned the history, and he said that it used to be that that kind of was how EPA functioned before 1970.

[05:32:24] Speaker 10:
They'd go around and say, hey, you might consider this and that.

[05:32:27] Speaker 10:
I guess one problem is that if you're a national

[05:32:30] Speaker 10:
pollution regulator, if you do that, then the states have a really strong incentive, especially when the grid is integrated, to race to the bottom.

[05:32:41] Speaker 17:
Well, that actually was going to be my second point in terms of why ACE is inequitable, because without a minimum required level of reduction, EPA does open the door for states to set very lenient standards, contradicting the statutory design

[05:33:00] Speaker 17:
that all states must do their share at a limit pollution that's endangering public health and welfare.

[05:33:09] Speaker 10:
I mean, is there anything more general in the Clean Air Act or environmental law that tells us if you don't have a kind of, you know,

[05:33:19] Speaker 10:
uniform or somehow nationally disciplined standard.

[05:33:23] Speaker 10:
It's just, I mean, if I were a state regulator, and I'm thinking if my sources are cleaner, they're also going to be more expensive.

[05:33:32] Speaker 10:
And with the kind of generation shifting that happens as a matter of just the bare function of the transmission, what's it called?

[05:33:43] Speaker 10:
Least cost dispatch?

[05:33:47] Speaker 10:
that my sources are gonna be disadvantaged.

[05:33:51] Speaker 10:
I mean, even if you care a lot about the environment, what state would, so I just wonder if there's anything in the EPA that kind of, I mean, in the Clean Air Act that tells us, of course, that's not what is meant or permitted because the whole system would fall to the ground.

[05:34:09] Speaker 10:
I don't see it in the language of 111, frankly.

[05:34:13] Speaker 17:
Well, Your Honor, I guess I would just fall back on the response that this is the way that EPA has been, you know, administering this program since its outset, 1975.

[05:34:24] Speaker 17:
It comes up with an emission limit that serves as the substantive criterion by which it judges state plans to be satisfactory.

[05:34:32] Speaker 17:
And within that is, do the performance standards, are they no less stringent than what's in the emission guidelines?

[05:34:40] Speaker 17:
And if the answer is yes, then the state has to specifically demonstrate why a specific source requires different treatment.

[05:34:49] Speaker 10:
Am I right that here it seems like on the one hand, they sort of walked back on the framework regulations and they said, OK, we're going to keep that.

[05:34:57] Speaker 10:
But then as ACE instantiates them or applies them, they don't.

[05:35:03] Speaker 17:
That's absolutely right, Your Honor.

[05:35:05] Speaker 17:
That is a disconnect.

[05:35:07] Speaker 17:
Moving to the second area that I was going to cover,

[05:35:10] Speaker 17:
The ACE rules prohibition of emissions trading and averaging as compliance measures is unlawful.

[05:35:18] Speaker 17:
Trading emissions credits is part of a program to reduce overall pollution as long standing roots in the Clean Air Act, including under Section 111D.

[05:35:27] Speaker 17:
Here the record demonstrates an EPA does not dispute that emissions trading programs successfully reduce power plant CO2 emissions.

[05:35:35] Speaker 17:
Our brief cited, for example, to the success of the 10 state regional greenhouse gas initiative program or Reggie.

[05:35:42] Speaker 17:
Despite this proven track record, ACE precludes trading because sources would comply to increasing the use of lower or zero carbon generation, not upgrading coal plants.

[05:35:55] Speaker 17:
And according to EPA, that would undermine their best system.

[05:35:59] Speaker 17:
Now before returning to the legal problem.

[05:36:01] Speaker 18:
Does ACE prevent states from doing generation shifting or does it just prevent them from using generation shifting to satisfy the ACE standard?

[05:36:21] Speaker 17:
You mean as a matter of state law could plants in our states continue to use generation shifting for other reasons?

[05:36:28] Speaker 17:
Yes, they could, Your Honor.

[05:36:33] Speaker 18:
If you couldn't regulate under 7411, if you couldn't regulate under 111D, I should say, but you still wanted to regulate power plants and their carbon emissions, where in the Clean Air Act would you go to to do that?

[05:36:55] Speaker 18:
I know you think you can under 111D, but assume that you can't.

[05:36:59] Speaker 18:
Assume you're the EPA administrator.

[05:37:01] Speaker 18:
You can't do it under 111D.

[05:37:04] Speaker 18:
What are the other ways you can do it?

[05:37:07] Speaker 17:
Well, Your Honor, under the Prevention of Significant Serioration Program, that was the program that was issue in the UR case.

[05:37:20] Speaker 17:
Power plants and other major stationary sources are regulated under that provision.

[05:37:25] Speaker 17:
provided that they trigger the statute for reasons other than simply their quantity of emitting greenhouse gas emissions.

[05:37:34] Speaker 17:
So that's one of the programs.

[05:37:37] Speaker 17:
There are other potentials.

[05:37:38] Speaker 10:
Does they need to be backsliding to trigger that?

[05:37:43] Speaker 10:
Provided they meet the criteria, which would be significant deterioration?

[05:37:49] Speaker 17:
Well, Your Honor, the way it would work is either if building a new stationary source or modifying existing.

[05:37:56] Speaker 02:
Assume it's just existing.

[05:37:58] Speaker 02:
It's an existing stationary source.

[05:37:59] Speaker 02:
Because 111B covers new and modified.

[05:38:03] Speaker 18:
So I'm saying you want to regulate carbon emissions from existing sources.

[05:38:12] Speaker 18:
Assume you can't use 111D.

[05:38:15] Speaker 02:
What would you use?

[05:38:17] Speaker 02:
What are some of the possibilities that you would use?

[05:38:19] Speaker 17:
Well, I think they would be the possibilities that you were discussing in some of the earlier arguments, Your Honor.

[05:38:25] Speaker 17:
MACS program, Section 112, Section 115, those are all possibilities that EPA has.

[05:38:32] Speaker 18:
I just wanted to see if you had a fourth or a fifth to add to that list, but it's totally fine.

[05:38:39] Speaker ?:
I'm good.

[05:38:40] Speaker 17:
Thank you, Your Honor.

[05:38:41] Speaker 08:
I have a question.

[05:38:45] Speaker 08:
If someone objects to, under a scheme like this, where the states have so much discretion, if someone objects to the state plan, not the EPA guideline, sorry, I just don't know this, how are those challenged?

[05:39:03] Speaker 08:
Are those challenged inside the state, or are they also challenged under the?

[05:39:08] Speaker 17:
Those will be challenged.

[05:39:09] Speaker 17:
Each state plan could be challenged under state law, Your Honor.

[05:39:12] Speaker 08:
I guess you could always challenge, I guess, the Secretary's approval or the Administrator's approval of a particular state plan.

[05:39:20] Speaker 08:
But if the Administrator has approved the state plan, it can still be struck down under state law?

[05:39:30] Speaker 17:
Well, typically the way it works, Your Honor, is the state law and act as a matter of state law or state regulation, whatever provisions will go into

[05:39:41] Speaker 17:
a federal plan for submission.

[05:39:43] Speaker 17:
So challenges usually come first at the state level.

[05:39:47] Speaker 17:
And then, you know, a state will propose, here are the regulations that we have enacted that will fulfill our obligations under this EPA plan.

[05:39:57] Speaker 17:
We'll submit those to EPA.

[05:39:59] Speaker 17:
If EPA disapproves them, then, you know, that can be challenged.

[05:40:05] Speaker 17:
Or if EPA approves, that could also be challenged as well.

[05:40:09] Speaker 08:
So I'm sorry, the state law challenges come before it's approved by the administrator?

[05:40:14] Speaker 17:
Typically.

[05:40:15] Speaker 08:
Okay.

[05:40:16] Speaker 08:
All right.

[05:40:17] Speaker 08:
Thank you.

[05:40:17] Speaker 08:
Are there any more questions from Judge Piller or Judge Walker?

[05:40:21] Speaker 17:
If I might, sorry, Your Honor, if I might just finish up this point on trading.

[05:40:25] Speaker 08:
One minute, one minute.

[05:40:28] Speaker 17:
I know he, I heard you're trying to wrap this up.

[05:40:32] Speaker 17:
Two quick points on this.

[05:40:33] Speaker 17:
First, the ban on trading is inconsistent with the flexibility recognized in Section 111A1 and EPA's implementing regulations.

[05:40:42] Speaker 17:
Those provisions don't mandate using EPA's preferred systems.

[05:40:48] Speaker 17:
They say the standards and state plans are to reflect the degree of a mission limitation achievable through the application of the best system.

[05:40:57] Speaker 17:
And that is consistent with Congress's notion of cooperative federalism,

[05:41:02] Speaker 17:
that it's the results, the performance that matters here.

[05:41:06] Speaker 17:
It's not the specific methods that states choose.

[05:41:11] Speaker 17:
The second legal problem is many of our states intend to use emissions trading programs going forward, yet EPA's prohibition on using trading to comply with ACE means that we'll need to devise a different plan to get reductions of the same pollutant from the same sources.

[05:41:29] Speaker 17:
And for the reasons we cited in our brief, we think both Section 116 of the Act and the Supreme Court's decision in Union Electric go against that result.

[05:41:40] Speaker 17:
Sorry, I was just going to very quickly conclude, if I may.

[05:41:48] Speaker 08:
Go ahead.

[05:41:49] Speaker 17:
It's been 15 years since New York and other states sued EPA in this court for failing to use Section 111 to limit

[05:41:56] Speaker 17:
power plant CO2 emissions causing climate change harms.

[05:42:00] Speaker 17:
Today, our residents are struggling to breathe from wildfire smoke, and our communities are being inundated by severe storms and rising seas.

[05:42:09] Speaker 17:
EPA has the authority to meaningfully address those harms.

[05:42:12] Speaker 17:
We ask the court to grant our petition for review and order EPA to promptly fulfill its obligation under the statute to provide that relief.

[05:42:20] Speaker 17:
Thank you.

[05:42:21] Speaker 06:
Thank you, Mr. Myers.

[05:42:22] Speaker 06:
All right, Mr. Brightville, your turn again.

[05:42:26] Speaker 13:
Thank you very much, Your Honor.

[05:42:27] Speaker 13:
Jonathan Brightfield again for the Justice Department.

[05:42:30] Speaker 13:
So I'm going to try to move through it quickly.

[05:42:32] Speaker 13:
But I've accumulated a list of 15 points over the course of the hour and a half on the first part of this that I'm going to try to get through very quickly and not take as long.

[05:42:48] Speaker 13:
But before I do that, I want to start now by just clarifying and nailing down the standard of review now for the ACE rule, right?

[05:42:56] Speaker 13:
Now, for the CPP under the Merck cases where you had a fundamental change in the regulatory structure and the regulatory paradigm from a technology and technique bottoms up standard to a aggregate area planning and incentives based, you know, coming down, impacting states.

[05:43:19] Speaker 13:
That triggers the major question doctrine.

[05:43:22] Speaker 13:
We think you don't even get there, Chevron, step one.

[05:43:24] Speaker 13:
But what we have here now is unquestionably in the realm of agency discretion.

[05:43:32] Speaker 13:
And so statutory issues like degree, what does BSER mean, those types of things were clearly in the wheelhouse of Chevron step two and no one is disputing that.

[05:43:45] Speaker 13:
Now, with respect to the first of all, point one here was the suggestion that because there is a modest

[05:43:55] Speaker 13:
reduction in the ACE.

[05:43:56] Speaker 13:
There must be a problem.

[05:43:58] Speaker 13:
And actually, that logic is exactly to the contrary when you look at Section 111D, which is one of the, if not the most modest emission reduction provisions in all of the Clean Air Act you're on.

[05:44:14] Speaker 13:
And you're talking about adequately demonstrated, based on cost, based on energy requirements, and the like.

[05:44:21] Speaker 13:
And the fact that you had effectively

[05:44:24] Speaker 13:
Um, you contrast that to mapped maximum, um, achievable control technology and 112 layer lowest achievable emission rate for non-attainment areas for new source review.

[05:44:38] Speaker 13:
Your honor, you have one of the most modest provisions in the act.

[05:44:42] Speaker 13:
And the fact that you, of course, from this mouse hole used five times successfully prior to the clean power plan, you spring the clean

[05:44:51] Speaker 13:
That from that the elephant of the clean power plan with its dramatically different form of regulation.

[05:44:57] Speaker 13:
It's actually to the contrary, your honor, the, the results that you see or there were claimed under the clean power plan.

[05:45:03] Speaker 08:
I guess I understand.

[05:45:07] Speaker 08:
The point you're making, but we really need to focus on the ace rule.

[05:45:10] Speaker 08:
Now I understand your arguments on the clean power plan.

[05:45:13] Speaker 08:
So I guess you're, I think you're setting up the point that this is supposed to be modest regulation and that's where you want to lunch from.

[05:45:18] Speaker 13:
And that's, and that is the point, your honor.

[05:45:20] Speaker 13:
Thank you.

[05:45:21] Speaker 13:
That ultimately the fact that you see a modest result from the ace rule is not inconsistent with this statute or its history or its place.

[05:45:30] Speaker 10:
Although you were talking about maximum and here it says best.

[05:45:34] Speaker 10:
Does that not have a similar dynamic?

[05:45:39] Speaker 13:
It does not, Your Honor.

[05:45:40] Speaker 13:
This is not actually a technology forcing provision, because it requires that best system of emissions reduction to be adequately demonstrated.

[05:45:50] Speaker 13:
And this court's case law have talked a lot about what that means over the course of the year.

[05:45:55] Speaker 13:
And in particular, for example, in the Essex chemical case,

[05:45:59] Speaker 13:
talks about it being without becoming exorbitantly costly in an economic or environmental way.

[05:46:06] Speaker 13:
In Portland cement, it talks about it needing to be a national standard in national lime association, that this is a standard that you consider the representativeness for the industry of a whole.

[05:46:17] Speaker 13:
So these are all background principles that when you layered into

[05:46:21] Speaker 13:
adequately demonstrated, achievable, taking into account cost, energy factors, right?

[05:46:28] Speaker 13:
To the contrary, these are actually what EPA called the guiding principles of how it went about formulating the ACE role.

[05:46:35] Speaker 13:
And this is a very important critical argument that none of the petitioners have actually wrestled with.

[05:46:43] Speaker 13:
And we actually called them out specifically on this in our brief at page 211, which is that the first

[05:46:51] Speaker 13:
act of EPA in formulating the ACE rule was to look at what BSER means and to interpret that the statutory provision in a Chevron step two manner considering what all the other case laws are and to come up with an articulated legal standard for how it was going to go about conducting its review.

[05:47:16] Speaker 08:
The best system of omission regulation

[05:47:20] Speaker 08:
include, do you just look at cost and technology, or do you have to balance in deciding what is best, not just cost, but also whether it is, in fact, making a material change, materially addressing the environmental problem at hand, one which, as we discussed earlier, the EPA has, it's so dramatic that the EPA has made an endangerment finding for.

[05:47:45] Speaker 13:
It does not, Your Honor, require that.

[05:47:49] Speaker 08:
You don't have to consider whether it moves the needle at all on emission control in any material way.

[05:47:57] Speaker 13:
No, in effect, this court's prior precedent in the Essex chemical case represents that, for purposes of Section 111, EPA may not be able to set a BSER that moves the needle at all.

[05:48:12] Speaker 13:
Now, the petitioners give on reply.

[05:48:14] Speaker 08:
Because they're not allowed to factor in

[05:48:18] Speaker 08:
I'm saying it for a specific reason, because the EPA is forbidden to consider in deciding what is the best system, whether it in fact makes any material reduction in emissions.

[05:48:30] Speaker 08:
That's the EPA's position?

[05:48:33] Speaker 13:
EPA's position is that under the Essex chemical case, it may be the case that the best system of emissions reduction is one that once you consider all of the statutory factors

[05:48:48] Speaker 13:
that there actually is not a best system of emissions reduction, that for a particular category of sources may actually move the needle.

[05:48:56] Speaker 13:
And this court already has that.

[05:48:57] Speaker 02:
I'm sorry, Mr. Brightbill.

[05:48:58] Speaker 02:
I don't think you answered Judge Millett's question.

[05:49:01] Speaker 13:
Well, maybe I apologize, Your Honor, because then maybe I didn't understand what she's trying to get at.

[05:49:07] Speaker 08:
The question is whether best system of emission reduction forbids you from considering, amongst those statutory factors, whether the

[05:49:18] Speaker 08:
technique at hand or the system at hand will make any material difference in emission reduction?

[05:49:27] Speaker 13:
In that, to that narrow question, I would say it doesn't forbid it, but that consideration cannot overcome, ultimately, whether or not the specific factors.

[05:49:39] Speaker 02:
Does it require the EPA to consider it?

[05:49:44] Speaker 13:
I'm not saying I'm not saying.

[05:49:47] Speaker 13:
No, it does not.

[05:49:48] Speaker 13:
Your honor, the statute doesn't use that what the stats.

[05:49:50] Speaker 02:
I mean, I think that's so I think that's really hard to grapple.

[05:49:54] Speaker 18:
I mean, to wrap my head around.

[05:49:56] Speaker 18:
We're talking about a program to reduce air pollution, and it doesn't even require you to consider how much

[05:50:07] Speaker 18:
It's been a long day.

[05:50:09] Speaker 18:
Pollution you're reducing.

[05:50:11] Speaker 13:
That's what you're saying?

[05:50:13] Speaker 13:
OK, so let me clarify that.

[05:50:15] Speaker 13:
So of course, it requires you to consider the amount of pollution that the system is reducing when you're looking at it.

[05:50:22] Speaker 13:
But I understood Judge Millett's question to be broader, I guess, in some sense, in terms of reaching all the way to whether there are health and environmental benefits from the system of emissions reduction.

[05:50:37] Speaker 13:
And I would say, no, it does not require that.

[05:50:41] Speaker 13:
In 111D actually, 111D is actually triggered by 111B.

[05:50:47] Speaker 13:
And that kind of what I will call high level determination of whether regulation of the pollutant is beneficial from a Michigan VEPA perspective, from a cost benefit perspective.

[05:51:01] Speaker 13:
That occurs in 111B in the context of-

[05:51:07] Speaker 08:
I'm sorry.

[05:51:08] Speaker 08:
I'm hearing a ringing is one of you trying to ask a question.

[05:51:11] Speaker 08:
So, no.

[05:51:12] Speaker 08:
Okay.

[05:51:13] Speaker 08:
You have to balance both the costs and The benefits.

[05:51:17] Speaker 08:
Correct.

[05:51:18] Speaker 13:
In when in 111 D.

[05:51:20] Speaker 13:
when you are doing a determination of whether you are going to regulate a particular substance under the Section 111, then yes, you need to weigh the cost and the benefits under Michigan VEPA.

[05:51:35] Speaker 13:
Once you're through that gate and into 111B, the statutory inquiry is different.

[05:51:41] Speaker 13:
Now, when we're talking about existing sources and whether or not there is something

[05:51:48] Speaker 13:
More that the existing sources can do.

[05:51:51] Speaker 13:
We're now conducting a technological review of whether there is a Be as in boy or D as in dog.

[05:52:00] Speaker 08:
Maybe I'm not hearing you right because I'm getting a little confused about the argument.

[05:52:04] Speaker 13:
So in Boyd, in 111 Boyd is when you do kind of a broad Michigan VEPA style weight of cost benefits to determine whether- That B is new and modified sources.

[05:52:16] Speaker 08:
So let's just confine the argument, at least unless my colleagues prefer otherwise, to 111D existing sources.

[05:52:25] Speaker 08:
Correct.

[05:52:27] Speaker 08:
That cost benefit, I assume, is happening under 111A.

[05:52:32] Speaker 13:
And in it in knowing in what once you get to D, there's a statutory inquiry, the statutory inquiry that Congress sets forth is whether the there is a system that is adequately demonstrated.

[05:52:45] Speaker 13:
That's an egg.

[05:52:47] Speaker 13:
Well, a but a again, you have to read in the context of D, because you're because, again, like what one of the problems is that there's been kind of a There's no balancing under a just to be clear, that's your position.

[05:53:02] Speaker 13:
When EPA is doing the determination of what the BSER is in the context of D, because it is doing a BSER for the D rule, then the statutory inquiry is a balancing of the factors that are in that statute.

[05:53:22] Speaker 10:
And I thought I heard you say, Mr. Brightville, that it doesn't

[05:53:26] Speaker 10:
look at the extent to which the system reduces emissions.

[05:53:32] Speaker 10:
So best is not the system in your view that is best at reducing emissions.

[05:53:39] Speaker 10:
It's the system that is best at taking into account the cost and non-air quality health and environmental impact and energy requirements, but not the best at reducing emissions.

[05:53:54] Speaker 13:
No, no, no.

[05:53:55] Speaker 13:
I think you misunderstood.

[05:53:56] Speaker 10:
Best system for emission reduction.

[05:53:58] Speaker 13:
I think you misunderstood what I was talking about with respect to section B for boy versus D for dog.

[05:54:05] Speaker 13:
So for dog, for section D, you are trying to, back here, you're trying to determine what is the best system of emissions reduction.

[05:54:16] Speaker 13:
And then there's a statutory analysis, what is adequately demonstrated.

[05:54:21] Speaker 13:
Of course,

[05:54:23] Speaker 13:
In the context of that, you will be looking at whether there are emissions reductions.

[05:54:29] Speaker 13:
But in addition to whether there are emissions reductions, you also have to determine that it is adequately demonstrated.

[05:54:35] Speaker 13:
And this is the gating exercise that the petitioners skip.

[05:54:39] Speaker 13:
You have to determine if it's adequately demonstrated and broadly achievable for the source category across the country.

[05:54:48] Speaker 13:
That is how, as a Chevron Step 2 matter, to begin their analysis.

[05:54:53] Speaker 08:
The statute doesn't say broadly achievable.

[05:54:54] Speaker 08:
The statute just says achievable.

[05:54:56] Speaker 13:
But go ahead.

[05:54:58] Speaker 13:
That's right, Your Honor.

[05:54:59] Speaker 13:
And again, if you refer back to the preamble, the ACE rule, where they lay this out, Joint Appendix 0015, that's really where it starts.

[05:55:11] Speaker 13:
These are the guiding principles, and that additional

[05:55:16] Speaker 13:
that gloss that you just referred to there, broadly achievable across the country.

[05:55:21] Speaker 13:
That, again, comes from this circuit's case law interpreting 111A1.

[05:55:27] Speaker 13:
Now, that was in the context of new sources, but EPA interpreted this court's case law to require a similar analysis for BSER when it comes to existing sources.

[05:55:40] Speaker 13:
So the very, very first thing that EPA did then was, okay, what does it mean to have a BSER in the first instance when you, in light of the case law, and they established this standard.

[05:55:53] Speaker 13:
Now, the petitioners never attack that interpretation, never call it wrong.

[05:55:58] Speaker 13:
They were called out for it in our brief.

[05:56:01] Speaker 13:
And the only response was, well, there's case law that reflects that a BSER doesn't have to be in widespread use.

[05:56:09] Speaker 13:
sidesteps the question, Your Honor, because that's not what EPA is saying in it either.

[05:56:14] Speaker 13:
All of the analysis asks is, is this broadly achievable for the source category across the country?

[05:56:22] Speaker 13:
It's not dependent upon the sole response that they had on this issue.

[05:56:28] Speaker 13:
So now once you've established what is a BSER, EPA's practice at that point was to go through the candidate

[05:56:37] Speaker 13:
beat systems of emissions reduction against this standard.

[05:56:41] Speaker 13:
Again, the standards ultimately articulated in the Joint Appendix at 16, 84, FedRec, 32, 535, column two, and then consider each of them.

[05:56:53] Speaker 13:
And so when it did so, only heat rate improvement met the statutory standard to qualify, to kind of get through the door, to get through the gate in the first instance, to be a BSER, your honor.

[05:57:07] Speaker 13:
Now, that was actually points one, two, and three, your honor.

[05:57:12] Speaker 13:
So point four.

[05:57:14] Speaker 13:
Mr. Donahue then makes reference to the rebound effect.

[05:57:19] Speaker 13:
And with respect to the rebound effect, your honor, it's interesting that you ultimately, the petitioners are of two minds and kind of working at cross purposes.

[05:57:29] Speaker 13:
For one thing, I just want to point out that there seems to be a criticism of the ACE rule

[05:57:36] Speaker 13:
as compared to the Clean Power Plan and the benefits.

[05:57:41] Speaker 13:
But at the end of the day, the scientific study that the petitioners themselves, and Mr. Donahue, I think, was referring to this earlier, put into the record, submitted in comments to the Environmental Protection Agency.

[05:57:57] Speaker 13:
And they included an excerpt, the Joint Appendix 1452 to 53, calls the difference between the eighth rule

[05:58:05] Speaker 13:
and the Clean Power Plan in terms of its net cumulative emissions, slight.

[05:58:11] Speaker 13:
And I'll read it to you.

[05:58:12] Speaker 13:
Cumulative O2 CO2 emissions from 2021 to 2050 are slightly lower under all three A scenarios compared to new policy and slightly higher

[05:58:25] Speaker 13:
compared to the CPP.

[05:58:27] Speaker 13:
Now the EPA's own data is to the contrary, and they disagree with that, but with respect to the assertions of a chennery problem or otherwise that they've established in this record, that there's a material difference or significant difference between the ACE rule and the Clean Power Plan, the record that they've established is to the contrary.

[05:58:46] Speaker 13:
But now this study also goes on and addresses this issue of the rebound effect, which again is slightly different amount of emissions and that's just measurably different.

[05:58:59] Speaker 08:
The amount of emissions reduction is just the numbers are not slightly different.

[05:59:05] Speaker 13:
Well, they have a table and the difference between the two.

[05:59:09] Speaker 08:
I'm just asking you to just look at me and just talk to me.

[05:59:13] Speaker 08:
Maybe you just say that maybe that expert's all wrong or confused or we're talking about something else, but I think we can all agree that the numbers and the amounts of reduction, unless you're talking about what the market would bring in on its own.

[05:59:26] Speaker 08:
But if we're just talking about what ACE alone would accomplish,

[05:59:29] Speaker 08:
what the Clean Power Plan would have accomplished in the percentile of emission reductions.

[05:59:34] Speaker 08:
There's not a slight difference between them.

[05:59:36] Speaker 13:
Well, the Clean Power Plan itself, in its preamble, was premised on the idea that the market was going to do many things on its own.

[05:59:45] Speaker 13:
Right.

[05:59:45] Speaker 13:
So you're relying on the market plan theory.

[05:59:47] Speaker 08:
So you're talking about A's plan plus the market keeps going and doing what it does.

[05:59:55] Speaker 13:
So the difference between the market

[05:59:59] Speaker 13:
and ACE at the end of the day is about a percent overall, your honor.

[06:00:03] Speaker 13:
But the difference between the ACE plan and the CPP as compared to their own data is depending on the scenario, 2.2 to 2.7% in cumulative emissions over the next 30 years, your honor.

[06:00:16] Speaker 08:
But more broadly in defending the clean power plan, Mr.- That including on the assumption that people are gonna use the, I'm not gonna have the language right here, but the blade changing and the,

[06:00:28] Speaker 08:
What is the other one called Where do I have it here the blade and then Sorry, I am NOT a technological the blade path upgrade and the economizer Are you are you including those or not including those I

[06:00:48] Speaker 08:
In your number.

[06:00:49] Speaker 13:
I am including those and I'm sorry, I just want to double check.

[06:00:51] Speaker 08:
But you said we don't think anyone's going to do it.

[06:00:53] Speaker 08:
So that seems to gild the lily a little bit.

[06:00:55] Speaker 13:
Well, let me clarify, Your Honor.

[06:00:57] Speaker 13:
No, it doesn't because that's why I gave you a range and I should have said 2.3% to 2.9% according to their tables, Your Honor.

[06:01:04] Speaker 13:
But that's why there is a range because they do do different scenarios.

[06:01:07] Speaker 13:
And one of the scenarios is the one you're referring to with the

[06:01:11] Speaker 08:
How can you count something that, I mean, it is on the table.

[06:01:15] Speaker 08:
It looks like the most productive one.

[06:01:18] Speaker 08:
But you all said we don't expect anyone to do it, and I think you didn't even model it.

[06:01:23] Speaker 08:
So you can't include any projections about those emission reductions.

[06:01:28] Speaker 08:
Can you reasonably do that?

[06:01:30] Speaker 13:
Your Honor, when assessing the overall rationality of the policy,

[06:01:35] Speaker 13:
It is reasonable to assess the various outcomes.

[06:01:38] Speaker 13:
And on the whole, Wait, wait, wait.

[06:01:40] Speaker 08:
How is it?

[06:01:42] Speaker 08:
That's a nice general rule.

[06:01:44] Speaker 08:
Is it rational to assess an outcome where, in fact, probably your most significant outcome is under including in that a scenario that you have said we don't think will happen?

[06:01:57] Speaker 08:
That is your position.

[06:01:57] Speaker 08:
That is a rational thing to do.

[06:02:00] Speaker 13:
It is rational to do that, Your Honor, because part of rational policymaking is to

[06:02:05] Speaker 13:
is to model various different scenarios.

[06:02:08] Speaker 13:
And that's what they did in their studies.

[06:02:10] Speaker 13:
That's what EPA did when it did its analysis of what the emissions output would be.

[06:02:15] Speaker 08:
But can you defend your scenario on the ground of options that you expect that do move the needle more than the other options on the list?

[06:02:28] Speaker 08:
When you have said made a finding or determination or prediction, an informed expert prediction from the agency,

[06:02:35] Speaker 08:
that it'll never happen.

[06:02:37] Speaker 08:
It feels like gilding the lily to me.

[06:02:39] Speaker 08:
You count it, but you don't expect it to happen.

[06:02:41] Speaker 13:
Well, Your Honor, again, that's only one of the modeling scenarios, of course.

[06:02:45] Speaker 08:
And the total record, the total... I'm just responding to you saying it's rational to do that.

[06:02:51] Speaker 13:
Well, it is rational to do it as a standalone.

[06:02:53] Speaker 13:
I'm not saying it could be the only scenario that you could do it.

[06:02:56] Speaker 13:
But your question was, is that rational?

[06:02:58] Speaker 13:
I interpreted that to mean, is that rational to do it all ever?

[06:03:01] Speaker 13:
And it is if you're doing a range of different assessments.

[06:03:04] Speaker 13:
And that is what they did, ultimately.

[06:03:06] Speaker 13:
It's a series of modeling.

[06:03:07] Speaker 13:
And ultimately, the expert agency to which Congress has delegated on this issue had substantial evidence, which

[06:03:16] Speaker 13:
this court owes an extreme degree of deference to, since this is a technical judgment, that the net benefits of the ACE rule would be positive overall.

[06:03:25] Speaker 13:
Now, with respect to the rebound effect then, Your Honor, here again, the petitioners want their cake and to have it too, because when they are defending the Clean Power Plan, one of the things that Mr. Wu said in his discussion was that it doesn't matter

[06:03:44] Speaker 13:
Actually, I believe it was in response to your question, Judge Millett, when you said, is it possible that you could have a state that could do nothing and they could run full power gangbusters and then all the credits could come from another place?

[06:03:58] Speaker 13:
And his answer to that was, that's okay, Your Honor, because of the unique nature of this pollutant and the total amount of greenhouse gas emissions is going to come down

[06:04:12] Speaker 13:
then the Clean Power Plan is rational and that type of hypothetical scenario is true.

[06:04:17] Speaker 13:
That same logic is why the rebound effect is not a criticism, a legitimate criticism of the ACE rule, Your Honor.

[06:04:27] Speaker 13:
Yes, it may be the case that in some places, some states, there will be more emissions, but on the net across the entirety of the United States for this

[06:04:38] Speaker 13:
unique form of pollutant, which all emissions across the country ultimately mix evenly in the atmosphere, as Mr. Wu noted, the rebound effect is not a legitimate criticism since the regional isolation that they are engaging in doesn't answer what this particular pollutant is.

[06:05:01] Speaker 13:
With respect to the rebound effect and the other issues that they raised against it, of course, the statute 302K does permit EPA to establish or to base things on a rate and to have standards based on a rate.

[06:05:19] Speaker 13:
The net emissions are going down.

[06:05:21] Speaker 13:
And one additional justification for why EPA's response was rational and why the rebound effect, its response to that was not arbitrary,

[06:05:31] Speaker 13:
At Joint Appendix, page 24, EPA noted that states would be able to take account of the putative prospect of rebound when they're formulating their own state plans.

[06:05:44] Speaker 13:
Of course, we're dealing with a period of emissions over the next 30 years.

[06:05:49] Speaker 13:
And to the extent that rebound effect actually develops, that that is something that EPA can watch.

[06:05:56] Speaker 08:
Does EPA expect?

[06:05:57] Speaker 08:
I don't know why we're getting feedback.

[06:05:58] Speaker 08:
I apologize.

[06:05:59] Speaker 08:
Does EPA expect rebound effect?

[06:06:02] Speaker 13:
EPA expects in when it does its cumulative analysis across the country, EPA does expect that in some places, some states, there could be higher emissions, but that the total overall CO2 emissions.

[06:06:18] Speaker 08:
I just want to ask, I'm going to try this one more time.

[06:06:19] Speaker 08:
Does EPA expect rebound effect?

[06:06:23] Speaker 13:
not net rebound effect in any except the worst case scenario modeling that it conducted in conjunction with its RIA.

[06:06:30] Speaker 13:
But in total, its conclusion is no, there will not be a rebound effect.

[06:06:35] Speaker 08:
What do you mean by net rebound effect?

[06:06:36] Speaker 08:
Do you mean just within coal power emissions, or are you throwing in all the market reductions in the process?

[06:06:44] Speaker 13:
In total, for the country.

[06:06:47] Speaker 08:
That includes market less use of coal,

[06:06:52] Speaker 08:
trading systems, whatever it is, all that.

[06:06:54] Speaker 08:
I'm just trying to, if the only thing we're going to look at is what happens with coal.

[06:06:58] Speaker 08:
All we're going to look at is what happens with coal.

[06:07:00] Speaker 08:
We're not going to look at trading.

[06:07:01] Speaker 08:
We're not going to look at generation shifting.

[06:07:03] Speaker 08:
You don't want us to look at that stuff anyhow.

[06:07:06] Speaker 08:
Would this lead to a rebound effect?

[06:07:11] Speaker 13:
What the record reflects and what EPA's finding is, is that there will not be a rebound effect that will outweigh

[06:07:20] Speaker 13:
the benefits of heat rate improvements at the coal fire power plants, your honor.

[06:07:25] Speaker 13:
That was their finding.

[06:07:27] Speaker 13:
Now, with respect to point six that Mr. Donohue made about the lack of an emissions limit, as your honor already noted, that that argument was premised on the avoiding the word degree

[06:07:47] Speaker 13:
in the analysis for what is a BSCR.

[06:07:52] Speaker 13:
The statute does not require EPA to set a specific limit.

[06:07:58] Speaker 13:
Instead, it is to provide guidelines that reflect the degree of emissions reduction, which can occur by virtue of the application of the best system of emissions reduction.

[06:08:11] Speaker 08:
Is there anything I ever said a range like this before?

[06:08:14] Speaker 08:
And it sounds like it's more a suggested range.

[06:08:16] Speaker 08:
It's not even a mandatory range.

[06:08:19] Speaker 13:
No, it's an actual range, Your Honor, in the following sense.

[06:08:25] Speaker 13:
The way that EPA's regulations work is that the states will now take the emissions guidelines, they will now take the table, and the regulations and the process requires each state to go through each of the seven heat rate improvement technologies at each of the coal fire power plants that they have within their jurisdiction.

[06:08:50] Speaker 13:
And using that HRI information,

[06:08:53] Speaker 13:
determine whether that HRI can be deployed at that facility.

[06:08:58] Speaker 13:
And again, one of the reasons why EPA took this approach and nothing in the statute.

[06:09:03] Speaker 08:
I want to hear that.

[06:09:04] Speaker 08:
I want to hear you finish and tell me how this is an actual, these up and down, the top or bottoms here are actual hard limits for them.

[06:09:13] Speaker 13:
Yes.

[06:09:14] Speaker 13:
So the, the,

[06:09:18] Speaker 13:
The EPA needs to take the, or they take the information, excuse me, your honor, the states take the information, they have to go through each of the heat rate improvement candidates.

[06:09:27] Speaker 13:
And then they need to do an analysis of whether or not the heat rate improvement technologies will have the effects to the extent that a state determines that, hey, for our particular facility, because they've already done equipment upgrades of this kind, or this plant is,

[06:09:46] Speaker 13:
unique in its nature and therefore this HRI is not going to have the expected results.

[06:09:52] Speaker 13:
There could be geographically driven results because of ambient temperatures and other things depending on where in the country a particular power plant is.

[06:10:02] Speaker 13:
There's also many other idiosyncratic factors that relate to remaining useful life that the state will have to take those factors into account and justify and explain variation

[06:10:14] Speaker 13:
from the emission guidelines that EPA has provided through the Table 1, through the expected heat rate improvements.

[06:10:22] Speaker 10:
So, Mr. Breitfeld, I just have a question about what you've said so far.

[06:10:24] Speaker 10:
You were saying that

[06:10:27] Speaker 10:
that states are the backstop on the rebound effect.

[06:10:30] Speaker 10:
But does that mean that states can use averaging or trading to account for rebound effects?

[06:10:36] Speaker 10:
I mean, how are they backstop on that?

[06:10:39] Speaker 13:
Well, they set the standards of emission reduction, Your Honor, and they are empowered as states to make judgments as they

[06:10:48] Speaker 13:
are reviewing these technologies and applying these technologies, Your Honor.

[06:10:52] Speaker 10:
So what is the federal guidelines?

[06:10:56] Speaker 10:
Is it correct, as Mr. Donahue was suggesting, this is sort of going back to the pre-1970 EPA, where EPA is coming up with some information that might be useful to the states, but really the only actual verifiable numerical metrics are, as an initial matter, at least served up by the states in their SIPs?

[06:11:18] Speaker 13:
I'm sorry, Your Honor, I don't quite understand your question.

[06:11:21] Speaker 10:
So when EPA, under its new framework regulations, reaffirmed the requirement that EPA have a guideline that it communicates as part of its BSER, but I gather from the ACE, and you can correct me if I'm wrong, that they don't actually

[06:11:43] Speaker 10:
specify for states or for categories of sources, degrees, numerical degrees of emission limitation.

[06:11:53] Speaker 13:
So what they don't do is they do not provide a standard which would be relevant for a coal power plant of pounds of million tons of CO2 per megawatt.

[06:12:06] Speaker 10:
Or even a rate.

[06:12:09] Speaker 13:
Right, they do not provide- No numbers.

[06:12:12] Speaker 10:
Okay, so how is it verified whether they're complying or not?

[06:12:16] Speaker 13:
What they provide is information about the expected heat rate improvement.

[06:12:23] Speaker 13:
Right, the table one, you're talking about table one.

[06:12:25] Speaker 13:
Table one, your honor, yes.

[06:12:27] Speaker 10:
And then if a state says, you know, we are gonna meet table one, we're gonna be at the low end of everything, or we just can't meet table one, but here's what we can do.

[06:12:39] Speaker 10:
And they come back, then what happens?

[06:12:42] Speaker 13:
So if they say they cannot meet table one, they will need to justify that and explain what the factors are that at the power plants and the places where they imposed a standard of performance that was late, that was less than and derived less heat rate improvement and then ultimately a lesser standard.

[06:13:01] Speaker 13:
than table one, they'll have to explain and justify that.

[06:13:04] Speaker 10:
If they do not, and that will be such a- And they justify that according to what standard?

[06:13:10] Speaker 13:
They will justify that according to the standards in the regulations and the new implementation regulations, Your Honor.

[06:13:18] Speaker 10:
Which section numbers are you thinking about?

[06:13:23] Speaker 13:
So in the new implementing regulations, 60.24A in joint appendix

[06:13:31] Speaker 13:
57, and this in general applies the standards of performance and compliance schedules.

[06:13:40] Speaker 13:
And you can see there are a number of various criteria that are being imposed on the states, in particular in doing the heat rate improvement analysis.

[06:13:50] Speaker 13:
The regulations provide, except as provided in paragraph E of this section, standards of performance shall be no less stringent than the corresponding emission guidelines

[06:14:02] Speaker 13:
Specified in subpart C of this part and final compliance shall be required as expected.

[06:14:07] Speaker 10:
Are there emissions guidelines in subpart C of this part?

[06:14:10] Speaker 13:
I didn't see those.

[06:14:12] Speaker 13:
The emissions guidelines then is the table one, your honor.

[06:14:17] Speaker 13:
That was the emissions guidelines for this class of sources, your honor.

[06:14:23] Speaker 13:
And then they use those.

[06:14:24] Speaker 08:
Suppose the company comes in or state comes in and says, we went and talked to coal plant A.

[06:14:33] Speaker 08:
And we said, let's see if we can, let's see if it makes any sense to have you do the blade path.

[06:14:42] Speaker 08:
Like, ah, no, nobody's gonna do that.

[06:14:44] Speaker 08:
Nobody's gonna do that just as the EPA predicted.

[06:14:47] Speaker 08:
All right, how about the economizer?

[06:14:49] Speaker 08:
No, we can't do that just as the EPA said we can't.

[06:14:52] Speaker 08:
And then they go through the other things.

[06:14:54] Speaker 08:
They go, look, we are really old.

[06:14:59] Speaker 08:
And

[06:15:00] Speaker 08:
The economies of coal production are so bad.

[06:15:05] Speaker 08:
We can't make any of the changes on this table because we are hanging on by a shoestring.

[06:15:12] Speaker 08:
And any extra expense, it's already hard for us to compete on the grid.

[06:15:17] Speaker 08:
Our bids are always coming in on the bottom of the pile.

[06:15:21] Speaker 08:
And if you put more expense on us, we're just going to go even deeper.

[06:15:27] Speaker 08:
So we just can't do any of this.

[06:15:30] Speaker 08:
And the state says, well, it makes sense to me.

[06:15:33] Speaker 08:
If you spend, you're hanging on by a shoestring, you're on that verge of bankruptcy, and you could do anything more, you're going to put them even less competitive on the grid.

[06:15:44] Speaker 08:
The state comes back and says that to EPA, what happens?

[06:15:48] Speaker 13:
So if the state says that, they'll have to write up the technical and other cost justifications for that.

[06:15:55] Speaker 13:
And ultimately, that'll be subject to review by EPA, who will determine if the reasons that have been provided.

[06:16:02] Speaker 08:
Well, let's assume it's truthful.

[06:16:04] Speaker 08:
It's truthful.

[06:16:06] Speaker 08:
Clean power plants are old.

[06:16:09] Speaker 08:
They're already having a tough time competing on the grid.

[06:16:15] Speaker 08:
They're already financially struggling.

[06:16:18] Speaker 08:
Then what happens?

[06:16:20] Speaker 13:
Well, Your Honor, they would need to articulate

[06:16:23] Speaker 13:
how the remaining useful life and other factors that are set forth in that way that they would provide that argument to EPA.

[06:16:32] Speaker 13:
EPA would determine if that argument is satisfactory.

[06:16:35] Speaker 08:
Yeah, I'm gonna give you 10 pages of this and it's all gonna be truthful and I'm gonna give you the economic information you need, the financials that you need, the studies that you need and it's gonna show you exactly what I just told you.

[06:16:47] Speaker 08:
So I'm gonna back it up with some data and facts

[06:16:52] Speaker 08:
And so EPA goes, OK.

[06:16:56] Speaker 08:
So then they just don't have to meet?

[06:16:57] Speaker 08:
Do they just not have to meet an emission limit then?

[06:17:00] Speaker 13:
Yeah, let me answer your penultimate question, Your Honor, because I'm not EPA, so I can't make the technical judgments in the weighing of all the economic factors in your hypo.

[06:17:09] Speaker 13:
But to answer your penultimate question.

[06:17:12] Speaker 08:
I'm sorry, aren't you representing the EPA?

[06:17:16] Speaker 13:
I am, I am, but I'm not a technical expert as to how all those factors will ultimately come together in any particular scenario to I told you how this is going to work.

[06:17:25] Speaker 13:
If, if, if, if the plan is going to be deemed satisfactory or not.

[06:17:29] Speaker 08:
What choice would they have There's no real standard here to violate and they would have explained their way why they couldn't do any of those things.

[06:17:37] Speaker 13:
What happened again, they would need to explain.

[06:17:39] Speaker 13:
And if they explain

[06:17:40] Speaker 13:
and provide sufficient technical justification.

[06:17:43] Speaker 13:
That's my hypothetical to you.

[06:17:44] Speaker 13:
Yes, that's your penultimate.

[06:17:46] Speaker 13:
It's true.

[06:17:46] Speaker 13:
You look at it as a- Then that's right.

[06:17:48] Speaker 13:
Then there may not be an improvement that can be applied to that particular plant, a standard of performance that requires anything more from that plant that's consistent with the- Is it hard to imagine that every coal plant will be, or almost that a large percentage of the coal plants will be able to make that same showing?

[06:18:08] Speaker 08:
They're old.

[06:18:09] Speaker 08:
There aren't new ones.

[06:18:11] Speaker 13:
EPA doesn't do stuff.

[06:18:12] Speaker 08:
They're all competing.

[06:18:13] Speaker 08:
And as we all said earlier, they tend to come out low on the grid competition.

[06:18:20] Speaker 08:
Just more expensive.

[06:18:21] Speaker 08:
Getting coals more expensive than getting a beam of sun.

[06:18:23] Speaker 08:
or natural gas, which is an abundance, right?

[06:18:26] Speaker 08:
They're just always coming out on the bottom of that.

[06:18:29] Speaker 08:
And anything you install, money is money.

[06:18:31] Speaker 08:
It's going to cost more.

[06:18:33] Speaker 08:
It's going to make our bids are going to have to go up.

[06:18:36] Speaker 08:
If a penny, two pennies in a system like this, that might make all the difference.

[06:18:40] Speaker 13:
Your Honor, EPA's technical assessment ultimately after going through the heat rate technologies and the data that was collected in comments was that ultimately there will be heat rate improvements that will be able to be made that

[06:18:53] Speaker 13:
across the entirety of the fleet will achieve emissions reduction.

[06:18:58] Speaker 13:
It is the case that with respect to particular facilities that states review in light of remaining useful life, which Congress directed them to be able to account for when setting that standard of performance and other factors.

[06:19:12] Speaker 10:
No, they directed the states to account for that in determining how the standard applies, not EPA in setting the standard.

[06:19:19] Speaker 10:
That's pretty clear.

[06:19:20] Speaker 13:
Yes, that's exactly right, Your Honor.

[06:19:23] Speaker 10:
But under the ACE rule, I realize you're a Department of Justice IPA, but under the rule that you're defending, the reference in 60.24A

[06:19:39] Speaker 10:
sub C to federal guidance that requires standards of performance on the part of facilities to be no less stringent than the corresponding emissions guidelines specified in table one.

[06:19:55] Speaker 10:
So that's the floor, right?

[06:20:00] Speaker 10:
That's the stringency requirement is that it has to be at least as stringent as table one.

[06:20:05] Speaker 13:
They have to use that as their emission guidelines.

[06:20:09] Speaker 13:
They cannot use anything less than table one to start their analysis.

[06:20:14] Speaker 10:
But, and this is just summing up, I think, what your interaction with Judge Millett has sort of walked through.

[06:20:21] Speaker 10:
It's up to the plant and the state to decide which of the heat rate improvements in the suite of BSER the facility is gonna take on.

[06:20:36] Speaker 10:
And so the state and the facility are going to make that determination.

[06:20:39] Speaker 10:
And if they decide none of them, then there's no stringency requirement.

[06:20:44] Speaker 13:
No, if they decide that there's none of them, it may be that Congress's purpose in 111D is fulfilled.

[06:20:51] Speaker 10:
Exactly.

[06:20:52] Speaker 10:
That's your position.

[06:20:53] Speaker 10:
That's right.

[06:20:54] Speaker 10:
Congress's purpose is fulfilled because they've looked at the remaining useful life, and they've thought about the possible emissions control, and they've said it's

[06:21:05] Speaker 10:
with nothing to gain here?

[06:21:08] Speaker 13:
They'll say nothing to gain here.

[06:21:10] Speaker 13:
Now, that'll be subject to judicial review when EPA determines that a state plan is satisfactory or not satisfactory.

[06:21:19] Speaker 13:
When it approves or disapproves the plan, that'll be subject to judicial review in the regional circuit in which the administrator takes that action to either approve or disapprove the plan.

[06:21:30] Speaker 13:
So if that action has been arbitrary and capricious, the state

[06:21:35] Speaker 13:
has basically just kind of waved their hands and winked and nodded.

[06:21:39] Speaker 08:
No, that's not the hypotheticals we're giving you.

[06:21:41] Speaker 08:
The hypotheticals are not.

[06:21:43] Speaker 08:
It's true that they send in this documentation about age and financial condition and competitiveness.

[06:21:50] Speaker 08:
So don't say wave your hand.

[06:21:51] Speaker 08:
That's not the hypothetical here.

[06:21:53] Speaker 08:
That's too easy.

[06:21:54] Speaker 08:
I'm trying to figure out now how it's going to be arbitrary and capricious.

[06:21:58] Speaker 08:
I think it's under this table on judicial review.

[06:22:03] Speaker 13:
So it will not be arbitrary and capricious if they ultimately conclude because of the remaining useful life and other factors after reviewing the heat rate improvements that there are no HRI technologies that for a particular source can be applied appropriately.

[06:22:26] Speaker 13:
They will have to justify that.

[06:22:28] Speaker 13:
If they have justified it, then the result may be that for that particular source,

[06:22:32] Speaker 13:
There is not, there aren't additional technologies that can be.

[06:22:38] Speaker 10:
And Mr. Brightville, under Judge Mollett's hypothetical, she was saying that the justification is we are, this is an old plant, it's a coal plant.

[06:22:49] Speaker 10:
The competition out here is fierce.

[06:22:52] Speaker 10:
We are gonna be,

[06:22:55] Speaker 10:
not able to provide any power in a system that runs on lease cost dispatch if we take on even one of these methods.

[06:23:06] Speaker 10:
So we're not going to do it.

[06:23:07] Speaker 10:
And you're the state regulator in West Virginia.

[06:23:11] Speaker 10:
And you're going to say, you know what, you're right.

[06:23:17] Speaker 10:
And then that plan comes to EPA and or the court.

[06:23:23] Speaker 10:
What is the standard that we use to evaluate whether that is arbitrary and capricious or whether that meets the minimum level of stringency of the corresponding emission guideline?

[06:23:37] Speaker 13:
It would be an arbitrary and capricious standard of review at that point.

[06:23:41] Speaker 10:
How do we tell?

[06:23:42] Speaker 10:
What are we comparing it to?

[06:23:44] Speaker 13:
You're comparing, first of all, table one,

[06:23:47] Speaker 13:
the expected heat rate improvements to the explanation and the justification for whether or not there is a reason to depart downward from those heat rate improvements at that particular plant, Your Honor, it's very similar.

[06:24:03] Speaker 10:
What does remaining useful life mean?

[06:24:06] Speaker 10:
Like the concept that that's trying to capture, is that like, we're not gonna upgrade because we're gonna retire this thing in two years anyway, or?

[06:24:16] Speaker 10:
Is that what it means?

[06:24:17] Speaker 13:
It means a variety of what I will call related factors, Your Honor, but certainly cost is a major part of that when you look at what the Congress itself said, which is considering other factors, including remaining useful life.

[06:24:32] Speaker 13:
And so it would be, you know, any of a whole breadth of unbounded, right?

[06:24:39] Speaker 13:
I mean, that's a, other factors is a highly discretionary

[06:24:43] Speaker 13:
Grant of authority to states, your honor.

[06:24:46] Speaker 13:
So other factors not completely unbounded other factors because it's it's being used in the context of remaining useful life.

[06:24:54] Speaker 13:
But clearly that is a very broad discretionary grant of authority to states, your honor.

[06:24:59] Speaker 13:
I would agree with that.

[06:25:00] Speaker 13:
And that was Congress's policy choice.

[06:25:03] Speaker 08:
Now, What's the average age, what would you say the average age of coal plants is in this country.

[06:25:09] Speaker 13:
I do not know the answer to that factual question, Your Honor.

[06:25:14] Speaker 08:
Wouldn't that have been important to know in setting up a scheme like this?

[06:25:18] Speaker 13:
I'm sure that EPA does know that off the top of my head.

[06:25:21] Speaker 13:
I apologize, Your Honor.

[06:25:22] Speaker 13:
I don't know the answer to that particular factual question.

[06:25:26] Speaker 10:
So with respect- Let me just ask you, Mr. Brayfield, if a plant had been sort of, you know, scheduled to last or amortized to last for 40 years, and if it's still going along and they're expensive and so you want to get everything you can out of it, and it's in the 50th year, then how does one project remaining useful life in that situation?

[06:25:51] Speaker 13:
To make sure I understand your hypothetical, Your Honor, you're suggesting that

[06:25:55] Speaker 13:
The plant is about to shut down.

[06:25:56] Speaker 10:
It's 50 years in or it's 50 years in, but it's actually running fine, but sort of as a, as a, as a matter of amortization.

[06:26:04] Speaker 10:
It was only intended to last 40 years.

[06:26:06] Speaker 10:
So it's, you know, it's gravy now.

[06:26:08] Speaker 13:
Right.

[06:26:09] Speaker 13:
I think it would be an engineering technical judgment ultimately by by by those who are reviewing that plan by the states acting pursuant to the broad discretion that the Congress has granted them.

[06:26:20] Speaker 13:
So I think it's, as you say, if it's all running along fine, it probably has a more extended remaining useful life ultimately, Your Honor.

[06:26:29] Speaker 08:
So- I would like, you said EPA knows what the average age of coal plants is in this country.

[06:26:35] Speaker 08:
If you could send in a letter after argument, that would be helpful.

[06:26:38] Speaker 13:
I'd be happy to do that, Your Honor.

[06:26:39] Speaker 13:
Yes, I'd be happy to do that.

[06:26:41] Speaker 08:
All right.

[06:26:41] Speaker 08:
And we are really getting up on our time limit here.

[06:26:44] Speaker 08:
Again, I can't remember if you had a list of

[06:26:49] Speaker 08:
I fear you said 15 points.

[06:26:51] Speaker 13:
Yeah.

[06:26:52] Speaker 13:
So let me.

[06:26:54] Speaker 08:
What number are you on?

[06:26:55] Speaker 13:
I was up to six at that point, Your Honor.

[06:26:58] Speaker 13:
And in particular, because Judge.

[06:27:01] Speaker 08:
You're going to have to do some triage here.

[06:27:03] Speaker 13:
I think that I will.

[06:27:04] Speaker 13:
I can take the hint, Your Honor.

[06:27:06] Speaker 13:
But one of the things that there was a reference to was by Mr. Donahue was the statutory authorization for generation shift.

[06:27:14] Speaker 13:
And one of the things I wanted to be clear about is that where Congress has

[06:27:18] Speaker 13:
Grant has authorized generation shifting, including in the SIP provisions, the Section 110 provision.

[06:27:24] Speaker 13:
There is specific language in the statute that has authorized that.

[06:27:28] Speaker 13:
So 42 USC 7410A 2 little a talks of techniques, including marketable permits and auctions of emissions rights.

[06:27:41] Speaker 13:
in the acid rain cap and trade program, section 7651, Congress specifically provided for alternate methods of compliance provided by an emission allocation and transfer system, Your Honor.

[06:27:54] Speaker 08:
Is trading a technique for obtaining, I don't want to give the clean power plant argument about where you have to do it, but is it a mechanism for obtaining emission reduction?

[06:28:07] Speaker 13:
No, Your Honor, not under 111D1.

[06:28:10] Speaker 08:
I'm just asking you, is it a mechanism for reducing emissions?

[06:28:14] Speaker 13:
It has been utilized as a compliance mechanism, Your Honor, yes.

[06:28:22] Speaker 08:
Well, it can't be utilized as a compliance one if it doesn't actually accomplish emission reductions.

[06:28:27] Speaker 13:
And EPA claimed in the Clean Power Plan that it was, it could be used.

[06:28:32] Speaker 08:
I'm not asking for claims.

[06:28:33] Speaker 08:
I'm asking what your position.

[06:28:34] Speaker 08:
I'm just asking you, isn't this, is trading part of the market system that has accomplished the reduction in emissions in this country?

[06:28:50] Speaker 13:
My position on that and EPA's position on that, Your Honor, is show us the statute, right?

[06:28:56] Speaker 13:
if the statute has authorized- I'm not asking statutory authority.

[06:29:00] Speaker 08:
I'm asking an empirical question here.

[06:29:02] Speaker 08:
All right?

[06:29:03] Speaker 08:
And you all say, and this is how you all, you say your system plus these market forces make the delta between you and the Clean Power Plan not all that big.

[06:29:14] Speaker 08:
Is part of that market force system that you're referring to, does that include trading or credit systems?

[06:29:22] Speaker 08:
If Congress has provided for Congress, I'm asking empirically in the world, the market systems, not the congressional system, what they're doing out there on their own, because there hasn't been a system in place.

[06:29:32] Speaker 08:
Is that part of the market forces that have gotten levels down faster than clean power plan.

[06:29:38] Speaker 13:
If you use as your baseline, the grid and you and use and generation shifting

[06:29:44] Speaker 13:
is a system that can achieve market or emissions reductions for the grid in a kind of empirical generalized sense, Your Honor, yes.

[06:29:55] Speaker 08:
It is not a continuous system of- When you say generation shifting, are you including with that trading systems?

[06:30:02] Speaker 13:
Yes, I was, Your Honor.

[06:30:04] Speaker 13:
Yes, as an empirical top level, but it is not actually a system that is applied

[06:30:09] Speaker 13:
At a source, your honor.

[06:30:11] Speaker 08:
I mean, That argument.

[06:30:12] Speaker 08:
I don't want to go back to clean power plant argument.

[06:30:13] Speaker 08:
I understand your argument on in that regard, but I'm just you're talking about statutory authorization and so It certainly could be part of a system.

[06:30:22] Speaker 08:
You just say it's not a system.

[06:30:23] Speaker 08:
You don't dispute that it can be part of a system for emission reduction.

[06:30:26] Speaker 08:
It's just not a in a

[06:30:28] Speaker 08:
not looking at the statutory language.

[06:30:29] Speaker 08:
So it is descriptively part of a system for emission reduction.

[06:30:33] Speaker 08:
It's just not, I think, under your argument, a system for emission reduction that's applied at a particular facility.

[06:30:39] Speaker 08:
Is that where we are?

[06:30:40] Speaker 13:
That's right.

[06:30:41] Speaker 13:
It's not applied at a particular authority.

[06:30:43] Speaker 08:
But you don't dispute that it could be part of a system for emission reduction.

[06:30:46] Speaker 08:
It just, in your mind, that's not the language problem.

[06:30:50] Speaker 08:
The language problem is it has to be putting 111 and one

[06:30:55] Speaker 08:
111 D 111 a 111 D together, it has to be at a facility.

[06:31:00] Speaker 13:
Right.

[06:31:01] Speaker 13:
Yes.

[06:31:01] Speaker 13:
EPA identifies a BSE are for a source.

[06:31:05] Speaker 13:
It does not identify BSE owner ours for owners of sources, your honor.

[06:31:10] Speaker 13:
And there was a there's a completion of two steps there, your honor.

[06:31:13] Speaker 07:
No, no, no, I want to got it.

[06:31:14] Speaker 13:
We got that

[06:31:15] Speaker 07:
Yeah, we got anything.

[06:31:17] Speaker 02:
All right.

[06:31:17] Speaker 02:
Let me ask a follow up to Judge Millett's question.

[06:31:21] Speaker 02:
There are 10 states, I think, that have done some version of cap and trade generation shifting.

[06:31:27] Speaker 18:
There's the Northeastern ones and there's California.

[06:31:34] Speaker 18:
Is it true that there is less carbon being released into the air

[06:31:45] Speaker 18:
from existing power plants because those 10 states are doing cap and trade or some version of cap and trade?

[06:31:57] Speaker 13:
I don't know the specific answer to that question, Judge Walker.

[06:32:02] Speaker 13:
I believe that in the Clean Power Plan Preamble, that is addressed at some point.

[06:32:07] Speaker 13:
And I believe that the answer to that is yes.

[06:32:10] Speaker 13:
But that's a factual detail relating back to the findings that, again,

[06:32:14] Speaker 13:
we could follow up and provide the answer to that question.

[06:32:17] Speaker 08:
So just to be clear, it was yes, they have resulted in emission reductions.

[06:32:21] Speaker 13:
I believe that the answer to that is yes, Your Honor.

[06:32:24] Speaker 13:
But relative to a baseline of if there was not a regional group in New England, I believe the answer to that would be yes.

[06:32:33] Speaker 13:
That was one of the things that EPA concluded in the Clean Power Plan.

[06:32:37] Speaker 13:
But off the top of my head, I don't know the answer to that.

[06:32:42] Speaker 18:
Under your approach,

[06:32:44] Speaker 02:
Everything that you said, you were talking with Judge Millett about the coal company says this, the state says this, the state says, okay, you have to do this, you don't have to do that.

[06:32:56] Speaker 18:
It goes to the EPA, the EPA has to approve that or not approve that state plan.

[06:33:02] Speaker 18:
And it would be arbitrary and capricious for the state to make the wrong call on that based on, I think, and here's my question for you,

[06:33:14] Speaker 18:
All of these factors I'm about to list, and you tell me if I'm missing any.

[06:33:18] Speaker 18:
EPA would have to consider the benefits of reduced air pollution, the benefits of improved health, the benefits of improved non-air environmental impact, the costs of possibly reduced energy, and the costs of possibly more expensive energy.

[06:33:41] Speaker 18:
Now, is that list over-inclusive, under-inclusive when it comes to figuring out whether the EPA's approval or disapproval of the state plan is arbitrary and compressive?

[06:33:52] Speaker 13:
So I have to go through each of the factors step-by-step, Your Honor, but I believe that ultimately your list would be over-inclusive in all likelihood in what would be required of states, but that your list includes factors, I believe,

[06:34:11] Speaker 13:
You'd have to go through them again with me one by one, but are certainly factors that states could account for within the broad breadth of their discretion.

[06:34:19] Speaker 18:
There's five, and I know we're late, but I think this is important.

[06:34:23] Speaker 18:
The state comes to EPA with a plan, and EPA chooses not to consider the increased cost of energy.

[06:34:34] Speaker 18:
that would result from that plan.

[06:34:37] Speaker 18:
EPA chooses not to consider that factor.

[06:34:39] Speaker 02:
Arbitrary and capricious or not arbitrary and capricious?

[06:34:42] Speaker 13:
In the context of the state plan, your honor, so the increased cost of energy is definitely a factor in the BSER consideration, your honor.

[06:34:53] Speaker 13:
OK, what about?

[06:34:54] Speaker 13:
For the regulations here, your honor.

[06:34:57] Speaker 02:
I mean, it's not like highly technical factors I'm giving, I don't think.

[06:35:04] Speaker 02:
I think I understood you just say EPA would have to consider the increased cost of energy from the plan EPA would have to consider the possibility that the plan will reduce the amount of energy available.

[06:35:18] Speaker 18:
Do you agree with that.

[06:35:21] Speaker 13:
Would have would have to

[06:35:23] Speaker 13:
increase the amount.

[06:35:25] Speaker 18:
The state says part of this plan means doing something expensive and so as a result some companies are going to not be able to do it and so they're going to shut down now there's less energy produced.

[06:35:36] Speaker 02:
That'll be a factor the EPA would consider right in approving or disapproving the plan.

[06:35:40] Speaker 02:
It's in the statute.

[06:35:41] Speaker 02:
I don't I don't think so your honor because in terms of the best the best system the best system takes into account quote the cost of achieving such reduction in any non-air quality

[06:35:52] Speaker 18:
health and environmental impact and energy requirements.

[06:35:56] Speaker 13:
I see, I see your honor.

[06:35:57] Speaker 13:
So what you're, you're, you're, uh, you're looking at the factors that EPA itself considered when establishing the identifying the best system of emissions reduction in the first instance, that is distinct then from the factors that the state.

[06:36:16] Speaker 13:
Okay.

[06:36:17] Speaker 18:
So that's helpful.

[06:36:17] Speaker 18:
I get it.

[06:36:18] Speaker 18:
I get it.

[06:36:18] Speaker 18:
And that is, that is very helpful to know that I was confused.

[06:36:22] Speaker 18:
used on that.

[06:36:24] Speaker 18:
I think I'm now I'm even more worried, though, and I'm going to leave it at this.

[06:36:28] Speaker 18:
Because I first I thought we were going to do arbitrary and capricious review based on five factors, which seems to me mushy.

[06:36:38] Speaker 18:
And now you're telling me, if we don't even know exactly what the factors are, I don't even I don't even know that those are the five the five factors.

[06:36:49] Speaker 18:
And so

[06:36:50] Speaker 18:
I guess what's going to happen is the EPA is going to approve or disapprove a state plan.

[06:36:55] Speaker 18:
And it's going to be, the EPA is going to have enormous discretion to do that, which is a lot of power to vest in the EPA to just say thumbs up or thumbs down kind of because we woke up on one side of the bed that day.

[06:37:08] Speaker 18:
And then it's going to get sued.

[06:37:09] Speaker 18:
It's going to get taken to court as it always does.

[06:37:12] Speaker 18:
And then the court is going to be highly deferential to the EPA.

[06:37:16] Speaker 18:
And so, and we're not even gonna exactly know as a court what standard we're supposed to apply in terms of figuring out what's arbitrary and what's not.

[06:37:24] Speaker 18:
So we're not gonna be able to say it was arbitrary.

[06:37:26] Speaker 18:
This is, I mean, I think this is a, maybe this approach is defensible, but I haven't heard the defense.

[06:37:36] Speaker 13:
So your honor, I'm just looking here because the EPA did address this in the pre-gamble to the ACE rule.

[06:37:46] Speaker 13:
And I am going to get you the citation so that you can look at this.

[06:37:55] Speaker 13:
It's joint appendix 39 here, according to my notes, provides the, sorry, we've got a lot of paper moving around on all of this, your honor.

[06:38:07] Speaker 13:
But in joint appendix 39, the,

[06:38:13] Speaker 13:
I have every other appendix here except for that first one that's got the... Oh, here it is, okay.

[06:38:24] Speaker 13:
So if you look on joint appendix 39, EPA describes column three, how they're going to analyze these plans.

[06:38:33] Speaker 13:
To the extent that state plans consider an existing sources remain useful life.

[06:38:38] Speaker 08:
Are you quoting now?

[06:38:39] Speaker 08:
I'm sorry, if you could tell me.

[06:38:41] Speaker 08:
If you're quoting now, if you could give me

[06:38:43] Speaker 08:
There's a sure I can't my eyes can't go down column three that fast.

[06:38:46] Speaker 08:
Are you in the second paragraph, the third paragraph, the beginning column three, your honor.

[06:38:54] Speaker 08:
Which paragraph in column three.

[06:38:56] Speaker 13:
It's about it starts about halfway down the page to the extent so joint appendix 39 Got it.

[06:39:03] Speaker 08:
Okay.

[06:39:04] Speaker 08:
In the second paragraph starting second.

[06:39:05] Speaker 08:
Okay.

[06:39:06] Speaker 13:
Yes, to the extent that state plans considering existing sources remaining useful life.

[06:39:12] Speaker 13:
in establishing a standard of performance for that source.

[06:39:15] Speaker 13:
The state plan must specify the exact date by which the source's remaining useful life will be zero.

[06:39:21] Speaker 13:
In other words, the state must establish a standard of performance that specifies the designated facility will retire by a future date certain, i.e., the date by which the EGU will no longer supply electricity to the grid.

[06:39:34] Speaker 13:
It is important to note that as with all aspects of the state plan, the standard of performance and associated retirement date

[06:39:40] Speaker 13:
will be federally enforceable upon approval by the EPA in the event.

[06:39:47] Speaker 08:
That's interesting, but it doesn't deal with my hypothetical, which is not just useful life.

[06:39:53] Speaker 08:
It's like really old, really living on the financial edge, very hard to compete.

[06:40:01] Speaker 08:
And because we're really old, any upgrade is going to be expensive.

[06:40:05] Speaker 13:
Well, your honor, I think it does in the fall.

[06:40:08] Speaker 08:
Very precise thing about one factor and that is useful life and I am giving you a combination of concerns that a state could rightfully note about its coal plants.

[06:40:23] Speaker 08:
And so

[06:40:24] Speaker 08:
Yeah, okay, so you've got like a deadline.

[06:40:27] Speaker 08:
If all they're relying on is useful life, you're putting a deadline in.

[06:40:31] Speaker 08:
But that's, I don't think that's.

[06:40:33] Speaker 08:
I looked over this stuff and it made me even more nervous that there's no there there on how someone's supposed to review if a state were to come, if the EPA approved a state plan that said what my hypothetical did.

[06:40:50] Speaker 13:
Well, Your Honor, I guess what I would ask you to do is take a look at starting that whole section under submission of state plans.

[06:40:57] Speaker 08:
No, I'm telling you.

[06:40:58] Speaker 08:
That's what I'm just telling you.

[06:40:59] Speaker 08:
It didn't help.

[06:41:00] Speaker 08:
That's what I'm just telling you.

[06:41:01] Speaker 08:
I'm looking at more than just those lines that you're telling me about a narrow topic.

[06:41:06] Speaker 08:
I'm telling you, it didn't give me.

[06:41:09] Speaker 08:
And if I didn't understand some of the language or missed it, and it could be I missed it.

[06:41:14] Speaker 08:
We've done a lot of reading in the last few weeks.

[06:41:16] Speaker 08:
I just don't see where the standard is for fine reviewing the API.

[06:41:21] Speaker 08:
Excuse me.

[06:41:23] Speaker 08:
We do that statute a lot to the EPA.

[06:41:27] Speaker 08:
Approval of a state plan that says this power plant can't do anything on the grounds that I have recited to you.

[06:41:38] Speaker 13:
So I guess what I would say to you, your honor, is this whole section three submission of state plans and starting

[06:41:45] Speaker 13:
There's a set up paragraph in column two.

[06:41:49] Speaker 13:
And then continuing from there, generally the plans by states must be adequately documented.

[06:41:55] Speaker 13:
And just continuing down through this entire section, your honor, provides EPA's analysis of how it's going to go about reviewing state plans that are submitted.

[06:42:07] Speaker 08:
And it's all about providing documentation, which my hypothetical did.

[06:42:10] Speaker 08:
I mean, it may be just be, as I think you said at one point, maybe in response to Judge Walker,

[06:42:15] Speaker 08:
If a state comes in and says what I proposed as to its coal plant, and it gives you the documentation, then EPA is going to sign off.

[06:42:26] Speaker 08:
And there's not anything arbitrary and capricious about that.

[06:42:30] Speaker 13:
I don't think I've said that you're hypothetical.

[06:42:33] Speaker 13:
In fact, I think my answer to your question was, Your Honor, that as to your specific hypothetical, that I wouldn't be able to answer how EPA would

[06:42:44] Speaker 13:
would weigh those factors and all those things together.

[06:42:47] Speaker 08:
My question is, does this rule provide, I mean, if you're telling me you can't answer it because the rule doesn't address it, and so nobody knows, and there is no standard in this rule, then that's your answer.

[06:43:00] Speaker 13:
No, what my answer is, is to the extent that the economics are playing in and weighing

[06:43:06] Speaker 13:
They'll be analyzed consistent with what's described at length here across the various columns of Joint Appendix 39 and 40, Your Honor.

[06:43:18] Speaker 13:
And as to the remaining useful life element that you noted is if there is an adjustment that's made, a variance that's authorized or consideration, I shouldn't say variance, it's not a variance, it's a setting of the standard, but if the standard is set,

[06:43:35] Speaker 13:
at a point in consideration of remaining useful life, it'll become a binding determination under federal law that they will be committed to ultimately if they want to use remaining useful life to secure