[00:00:00] Speaker 00: Case number 15-1465 et al, Sierra Club et al petitioners. [00:00:05] Speaker 06: Good morning. [00:00:06] Speaker 00: Environmental Protection Agency and Andrew Wheeler, Administrator, U.S. [00:00:10] Speaker 00: Environmental Protection Agency. [00:00:12] Speaker 00: Mr. Johnson for the petitioners, Mr. Rosen for the respondents. [00:00:23] Speaker 02: Good morning. [00:00:25] Speaker 02: Good morning, Seth Johnson. [00:00:26] Speaker 02: For petitioners, I reserve three minutes for rebuttal. [00:00:29] Speaker 02: Congress amended the Clean Air Act in 1990 to create a comprehensive program for driving attainment of ozone standards. [00:00:34] Speaker 02: That program relies on curbing EPA's discretion and holding regulators and polluters accountable to ensure communities get real, effective pollution reductions. [00:00:42] Speaker 02: As it has many times before, in the rules at issue here, EPA has once again sought to inject discretion in the form of what it calls flexibilities. [00:00:51] Speaker 02: I plan to focus on three issues. [00:00:53] Speaker 02: First, how EPA's inter precursor trading program illegally allows increased emissions of one ozone-forming pollutant to be offset by lesser reductions in emissions of a different ozone-forming pollutant. [00:01:04] Speaker 02: Second, how EPA unlawfully allows contingency measures to be already implemented measures that fail to prevent the contingency from happening. [00:01:11] Speaker 02: And third, how EPA's implementation-based approach to milestone compliance demonstrations unlawfully and arbitrarily removes the requirement that states verify that mandated emission reductions occurred. [00:01:24] Speaker 02: I'll begin with inter precursor trading. [00:01:26] Speaker 02: In nonattainment areas, new source review program requires that new emissions of an ozone forming pollutant from facilities like refineries must be offset by greater reductions of emissions of such ozone forming pollutant. [00:01:39] Speaker 02: But under EPA's inter precursor trading scheme, the reduced emissions can be of a different ozone forming pollutant and can be less than the increased emissions. [00:01:47] Speaker 02: EPA's scheme violates the act. [00:01:48] Speaker 02: 7511AA4 and its siblings expressly established the ratio of total emission reductions of volatile organic compounds to total increased emissions of such air pollutant. [00:02:00] Speaker 02: Such air pollutant has to refer back to the only air pollutant that's mentioned, volatile organic compounds. [00:02:07] Speaker 02: But EPA would allow it to mean oxides of nitrogen. [00:02:10] Speaker 02: EPA is thus unlawfully writing such out of the act. [00:02:13] Speaker 02: Oxides of nitrogen are a distinct chemical that Congress separately extended 7511 AA4 to cover. [00:02:19] Speaker 02: Inter precursor trading abrogates other plain text too. [00:02:23] Speaker 02: 7503C1 is explicit that increased emissions of a pollutant must be offset by an equal or greater reduction in the actual emissions of such air pollutant. [00:02:33] Speaker 02: But under inter precursor trading, [00:02:36] Speaker 02: Increased emissions can undisputedly be offset by a lesser reduction in emissions. [00:02:41] Speaker 02: That's at J531. [00:02:42] Speaker 02: And that outcome plainly contravenes the act. [00:02:45] Speaker 02: EPA statutory interpretation does further damage to the act. [00:02:49] Speaker 02: 7511AA4 and 7503C1 speak exclusively about emissions and require offsetting emission reductions. [00:02:57] Speaker 02: They don't refer anywhere to ambient pollution levels. [00:03:00] Speaker 02: But EPA's attempt to rationalize inter precursor trading [00:03:04] Speaker 02: relies on redefining the offsetting that must occur as offsetting ambient pollution increases. [00:03:10] Speaker 02: EPA is deleting the word emission or emissions from the Act's offsets provision, and that's evident throughout EPA's brief. [00:03:17] Speaker 02: But Congress knew the difference between ambient levels of air pollutants and emissions of air pollutants. [00:03:22] Speaker 02: In 7511 AC2C and 7511 AC1, Congress expressly referred to emissions and to ambient concentrations. [00:03:32] Speaker 02: but it referred only to emissions in 7511AA4 and 7503C1. [00:03:38] Speaker 02: And that distinction must be given effect. [00:03:41] Speaker 02: I'll move now to contingency measures. [00:03:45] Speaker 04: Mr. Johnson, if we were to agree with you about the statutory issue, am I right that we don't have to reach your arguments about banked emissions and backsliding provisions? [00:03:55] Speaker 02: Yes, Your Honor, that's correct. [00:03:59] Speaker 01: So on contingency measures, I understand your textual argument, but help me understand what sense it would make in the context of a pollution reducing statute. [00:04:19] Speaker 01: or a Congress to create an affirmative incentive for companies or states not to use available measures because they need to hold them in reserve to count as the contingency measure? [00:04:37] Speaker 02: Sure. [00:04:37] Speaker 02: There's two answers to this. [00:04:39] Speaker 02: One is a legal answer, and the other is there's an issue with the premise of the question, which is that they are holding measures back. [00:04:47] Speaker 02: But on the legal point, [00:04:49] Speaker 02: Congress in 1990 had amended the Clean Air Act because it recognized that sort of full board discretion to the states and to regulators didn't work. [00:05:00] Speaker 02: And there needed to be accountability measures. [00:05:02] Speaker 02: So Congress gave two commands in the act. [00:05:05] Speaker 02: One command is for areas to come into attainment and to implement reasonably available control measures as expeditiously as practicable. [00:05:14] Speaker 02: And recognizing that this might not always work, that, you know, [00:05:18] Speaker 02: plans might not work as well as expected, other things might change. [00:05:22] Speaker 02: It also recognized there need to be backup measures. [00:05:24] Speaker 02: And so it also commanded that there be contingency measures. [00:05:27] Speaker 02: And that's what contingency measures are for. [00:05:29] Speaker 02: They're for when the existing measures that areas have been rushing to put into effect. [00:05:35] Speaker 02: They're for when those measures fail. [00:05:37] Speaker 02: But EPA is allowing contingency measures to do nothing at all, nothing new. [00:05:42] Speaker 02: They add nothing. [00:05:44] Speaker 02: And so it's writing the contingency measures entirely out of the act. [00:05:48] Speaker 02: And that's not a permissible statutory interpretation. [00:05:52] Speaker 02: And then as for the premise of the question, a lot of times the emission reductions that states rely on for contingency measures are nothing more than surplus reductions that have already occurred. [00:06:07] Speaker 02: So for example, we pointed to this at JA 605 to 606, Connecticut for its reasonable further progress contingency measures [00:06:17] Speaker 02: It said, well, we're gonna be getting a lot of emission reductions from turnover of non-road engines, like new engines are cleaner than old engines as they replace them, emissions go down. [00:06:37] Speaker 02: And over the six years of the progress requirement, we're gonna be getting more emissions than we need. [00:06:42] Speaker 02: So the surplus emissions from that period, that's our contingency measure. [00:06:47] Speaker 02: And there's nothing that's being de-incentivized there. [00:06:50] Speaker 02: That's something that's already happening. [00:06:52] Speaker 02: We think it's good that it's happening. [00:06:53] Speaker 02: But it's just shifting numbers on a page. [00:06:58] Speaker 02: And that's not consistent with Congress's intent in 1990. [00:07:01] Speaker 02: And I'd also note that if states want to implement contingency measures before they're triggered, they can, so long as they come up with new measures that are actually contingency measures. [00:07:13] Speaker 02: And it may be hard to come up with these measures, and these measures may be tough, but that's what the act requires. [00:07:19] Speaker 02: The threat of tough measures creates a powerful incentive to reduce pollution now, as this court held in South Coast 1 and reiterated in South Coast 2 when it referred to contingency measures as penalties. [00:07:32] Speaker 02: Contingency measures that are already implemented provide no incentive to make additional reductions now, and that violates the act. [00:07:40] Speaker 02: If there are no further questions on contingency measures, I've moved to the milestone compliance demonstration. [00:07:46] Speaker 05: Let me ask you a question and I'll make sure you understand your argument on the baseline emissions question. [00:07:54] Speaker 05: Sure. [00:07:54] Speaker 05: If I'm recalling correctly, are you suggesting that when EPA allows one of two possibilities [00:08:04] Speaker 05: This ensures that one of the possibilities will be a significantly less favorable result in terms statutory goals. [00:08:13] Speaker 05: And so you're allowing for gamesmanship. [00:08:16] Speaker 05: That is because one is going to be where I, if I remember correctly, something in your brief, you compared to 17 2017 2018. [00:08:29] Speaker 05: Am I recalling correctly? [00:08:31] Speaker 05: The numbers would be significantly different depending upon which alternative you selected and in adopting that approach, this would ensure that the regulated party [00:08:47] Speaker 05: could go for a less favorable position. [00:08:49] Speaker 05: Is that right? [00:08:50] Speaker 02: The problem is it opens the door to regulated parties going for a less favorable position. [00:08:56] Speaker 02: It opens the door to regulated parties saying, hmm, this is the one that we'd rather do. [00:09:02] Speaker 02: We don't have to do as much. [00:09:04] Speaker 02: And so we're going to choose that. [00:09:07] Speaker 02: That's sort of the real world [00:09:09] Speaker 02: concern. [00:09:10] Speaker 02: The legal problem is just that that sort of flexibility isn't allowed, and EPA hasn't given any statutory justification for allowing it under the Act. [00:09:19] Speaker 05: Well, they're offering a statutory rationale by using 1990, and they're saying 1990 included the two possibilities. [00:09:28] Speaker 05: I asked them about that coincidentally, maybe, but nonetheless they're referencing the statute. [00:09:32] Speaker 05: And I'm trying to understand, is the thrust of your argument [00:09:35] Speaker 05: that nonetheless the position they've taken is arbitrary and capricious, because it doesn't make sense to allow parties to pick one of two when you know one is always going to be inconsistent with the statute's goals. [00:09:49] Speaker 02: Our argument is primarily a statutory argument. [00:09:52] Speaker 05: Yeah, and I'm not understanding that. [00:09:54] Speaker 05: Where is, I understand your other statutory arguments, [00:09:59] Speaker 05: Where is the statutory argument that requires, and which way are you going? [00:10:04] Speaker 05: Because your position has not been always consistent. [00:10:07] Speaker 05: Which way are you going in terms of the two alternatives that EPA recites? [00:10:12] Speaker 05: Are you picking one of them? [00:10:14] Speaker 05: Are you saying there simply has to be one only? [00:10:16] Speaker 05: What do you say? [00:10:18] Speaker 02: OK. [00:10:18] Speaker 02: The only challenge we raise here is to EPA's decision to allow areas to choose between baseline year between the two options. [00:10:25] Speaker 02: We're not challenging the specifics of either option. [00:10:27] Speaker 02: We're challenging that there is an option. [00:10:29] Speaker 02: And it seems to me that's an arbitrary and capricious argument. [00:10:32] Speaker 02: Well, the court has held that the statute is ambiguous about what the baseline year is. [00:10:39] Speaker 02: That's a different question from who gets to choose the baseline year. [00:10:44] Speaker 02: That's a different question from whether states get to select their own baseline year. [00:10:48] Speaker 02: And as the court's aware, under Chevron, you have to look at the precise [00:10:54] Speaker 02: question, and EPA is looking at the wrong question. [00:10:57] Speaker 02: And I point to, for example, in NRDC 749 F3 1055 1063, this court rejected an EPA regulation that the agency claimed was just fleshing out the term appropriate, which is a quintessentially discretion granting ambiguous provision. [00:11:23] Speaker 02: But it rejected EPA's regulation because the act authorized courts, not EPA, to make that determination. [00:11:33] Speaker 02: So the statutory argument here is EPA is looking at the wrong question. [00:11:38] Speaker 02: It's looking at whether the act is ambiguous about what the baseline year is. [00:11:43] Speaker 02: But that's a distinct question from whether states can select their own baseline year. [00:11:48] Speaker 02: And it still hasn't analyzed that question anywhere. [00:11:53] Speaker 04: I thought your argument was, number one, that in the statute, Congress picked one baseline here in 1990, and that the reasons EPA is given for having two, namely flexibility, is not grounded in the statute. [00:12:21] Speaker 04: Isn't that your argument? [00:12:23] Speaker 04: Yes, well. [00:12:24] Speaker 04: And in fact, it's inconsistent with the statute, right? [00:12:27] Speaker 04: Because the statute was designed to eliminate this kind of flexibility. [00:12:32] Speaker 02: Right. [00:12:33] Speaker 02: I think, you know, our argument is EPA hasn't provided a statutory basis for allowing the flexibility for the reasons and that it's inconsistent. [00:12:44] Speaker 02: And there's no basis in the statute at all for allowing this flexibility because Congress [00:12:50] Speaker 01: there's there's there's no basis in the statute for any of anything. [00:12:54] Speaker 05: I mean, that's the problem. [00:12:55] Speaker 05: And this with this issue, that's the problem. [00:12:58] Speaker 01: The statute says 1990. [00:13:01] Speaker 01: So the reality is we're just we're making this stuff up. [00:13:05] Speaker 01: And if it is a reasonable extrapolation to say, you can use attainment date [00:13:14] Speaker 01: And it's a reasonable extrapolation to say you can use the triennial emission date. [00:13:22] Speaker 01: Why isn't it a reasonable extrapolation to say that people can pick either of those two reasonable baselines? [00:13:33] Speaker 02: There are three reasons. [00:13:34] Speaker 02: And I think Judge Tatel has identified at least two of them. [00:13:39] Speaker 02: The three reasons are, one, Congress didn't pick multiple dates. [00:13:43] Speaker 02: Congress specified in other circumstances when a ground rule of implementation like this could vary. [00:13:50] Speaker 02: It specified that in 7511Ai and 7511Dv2, and it didn't specify that for here. [00:13:59] Speaker 02: And the third reason is, overall, when Congress amended the Clean Air Act in 1990, it did so in order to curb flexibility. [00:14:07] Speaker 02: And so as this court held in South Coast One, it's irrational [00:14:13] Speaker 02: to resolve an ambiguity in the act in a way to maximize flexibility. [00:14:19] Speaker 02: That's just contrary to Congress's clear intent, even under Chevron step two. [00:14:23] Speaker 02: So I disagree that there are no guideposts. [00:14:26] Speaker 01: To give states an option where just assume that either option would be reasonable if imposed by itself. [00:14:41] Speaker 02: I'm sorry, I missed the, I was still talking when you started your question. [00:14:45] Speaker 01: Sorry. [00:14:45] Speaker 01: I get the point about this is a discretion reducing statute, but that seems to me not to have a lot of resonance where all we're talking about is a choice between reasonable options. [00:15:09] Speaker 01: either the attainment date or the triennial emission date. [00:15:17] Speaker 01: We've said either one of those is reasonable. [00:15:21] Speaker 02: Right, either one of those is reasonable. [00:15:23] Speaker 02: What's not reasonable is allowing states to choose because that's maximizing the flexibility and under South Coast one, that's not a rational way for EPA to resolve an ambiguity under this step. [00:15:36] Speaker 01: To permit. [00:15:38] Speaker 01: Sorry, go ahead. [00:15:39] Speaker 04: No, you go ahead. [00:15:40] Speaker 04: Finish. [00:15:41] Speaker 01: Just to permit flexibility within a range of reasonable options is foreclosed by the statute. [00:15:49] Speaker 02: It can't be MPA's fundamental basis for it for allowing it. [00:15:54] Speaker 01: I'm sorry. [00:15:55] Speaker 04: Yeah, just to go back to the first question that Judge Edwards asked you. [00:16:03] Speaker 04: I take it your point is that by allowing a choice, the states could pick [00:16:08] Speaker 04: the least rigorous choice, correct? [00:16:11] Speaker 04: Is that right? [00:16:12] Speaker 04: That's correct. [00:16:13] Speaker 04: Yes, Your Honor. [00:16:15] Speaker 04: Now go back to his question. [00:16:16] Speaker 04: Is there evidence in the record that, say you have two choices, choice A and choice B, is there evidence in the record that for a certain number of states, choice A would be more rigorous and for another set of states, choice B would be more rigorous? [00:16:32] Speaker 02: I'm not aware of that evidence in the record, Your Honor. [00:16:37] Speaker 05: Yeah, I mean, that's the other problem that's perplexing. [00:16:40] Speaker 05: When I think about it, it's hard to know what the choices produce, and does that depend upon the state? [00:16:50] Speaker 05: So it's true, a state can pick the less rigorous choice, but what does that really tell us about the entire universe? [00:16:58] Speaker 05: I mean, the difficulty with your argument is if you concede that both choices are reasonable, [00:17:05] Speaker 05: That's a bad starting point for your argument because both are reasonable and we have said that there is Chevron to type ambiguity in this provision. [00:17:14] Speaker 05: And both of these choices are reasonable. [00:17:17] Speaker 05: It's hard to say that the agency says, well, you can pick either of these reasonable choices hard to say that that breaches Chevron to [00:17:25] Speaker 05: And if they're both reasonable, and I'm not, I did look at your argument that you have flexibility to pick the less favorable, but I don't know what that means nationally. [00:17:34] Speaker 05: I don't understand that. [00:17:36] Speaker 05: So I'm back to your concession that either choice is reasonable. [00:17:40] Speaker 05: We agree with that. [00:17:41] Speaker 05: Well, if either choice is reasonable, what's the Chevron 2 violation? [00:17:47] Speaker 05: And we've already said it's a Chevron 2 case. [00:17:50] Speaker 05: We've said that in the prior case. [00:17:52] Speaker 05: There's an ambiguity to be filled here. [00:17:54] Speaker 05: And I don't know what your option is. [00:17:55] Speaker 05: Which way do you land? [00:17:57] Speaker 05: Are you saying they can only allow one? [00:18:00] Speaker 05: We don't care which they pick. [00:18:03] Speaker 05: Or are you saying there's a certain one that they must compel as the date? [00:18:10] Speaker 02: We're saying that EPA can pick either one, but EPA has to pick. [00:18:16] Speaker 02: It can't leave it up to states to pick. [00:18:18] Speaker 02: Those are distinct questions under Chevron. [00:18:21] Speaker 02: Distinct questions are what year it is and who picks it. [00:18:24] Speaker 05: Okay. [00:18:25] Speaker 05: Go ahead, David. [00:18:29] Speaker 04: That only works if there are environmental consequences to the choice. [00:18:35] Speaker 04: That's exactly why I asked my question. [00:18:39] Speaker 04: And in response to Judge Edwards' first question, I thought you said, yes, you were arguing that there were environmental consequences to the choice and that states could pick the one that was easiest for them. [00:18:52] Speaker 04: But when I asked you the question, I thought you said there isn't any evidence in the record that this could vary from state to state. [00:19:00] Speaker 04: Because if it can't vary from state to state, then I guess, I don't, or does that make a difference? [00:19:09] Speaker 04: I mean, is it that EPA gives them options A and B and A is the easiest to meet and they all pick A? [00:19:24] Speaker 04: Is that your point? [00:19:25] Speaker 02: I think, I apologize if it seemed like I gave different answers. [00:19:30] Speaker 02: I've interpreted your question as, was there evidence in the record spelling out whether one year versus another year is generally going to be better or worse? [00:19:40] Speaker 02: And I'm not aware of that evidence. [00:19:43] Speaker 02: But the point still stands that there's going to be a difference between those years and states can now choose between the years in order to game their progress requirements. [00:19:55] Speaker 04: But how do we know? [00:19:56] Speaker 04: See, you use the word game. [00:19:57] Speaker 04: And I understand that. [00:19:59] Speaker 04: I understand that argument theoretically. [00:20:01] Speaker 04: But is there evidence in the record that gamesmanship would work here? [00:20:08] Speaker 05: Yeah, I mean, that's what you're not advancing. [00:20:09] Speaker 05: And it really, I'm not going to pressure you anymore on this one. [00:20:13] Speaker 05: I just want you to understand at least what my concern is. [00:20:16] Speaker 05: It's a very hard argument to me to digest. [00:20:22] Speaker 05: to have councils say options A and B are perfectly reasonable, but it is unreasonable for the agency to say a regulated board can pick A or B. And I get there on whichever one, that doesn't make sense to me. [00:20:41] Speaker 05: That makes no sense whatsoever. [00:20:43] Speaker 05: So I just want you to understand what I struggled with as I looked at it. [00:20:47] Speaker 05: And I was wondering whether you were trying to suggest it could be gaming, and I couldn't figure out how that might happen. [00:20:54] Speaker 05: So I mean, I think you've answered or not answered my concerns. [00:20:57] Speaker 05: But I want you to understand what my concern is, because I don't know how you can start with your premise, because it doesn't work. [00:21:04] Speaker 02: OK, well, I appreciate that. [00:21:05] Speaker 02: And I see I'm over time if there are no questions. [00:21:09] Speaker 04: I think we'll move on and hear from [00:21:11] Speaker 04: the agency and I'll give you a couple of minutes for rebuttal. [00:21:15] Speaker 02: Okay. [00:21:16] Speaker 04: Thank you. [00:21:17] Speaker 03: So, yeah. [00:21:21] Speaker 03: Thank you, Your Honor. [00:21:22] Speaker 03: Perry Rosen for EPA. [00:21:24] Speaker 03: I'd like to start out with inter precursor training since we haven't spoken about that yet. [00:21:29] Speaker 03: Inter precursor training reduces the level of the pollutant, the air zone, the ozone. [00:21:34] Speaker 03: It's been allowed for years with regard to other pollutants that are based on precursors like particulate matter, [00:21:41] Speaker 03: And it's been allowed for decades with regard to ozone. [00:21:45] Speaker 03: And that's because it's allowed because the science clearly supports it. [00:21:51] Speaker 03: There is no linear approach to reducing ozone through the reduction of precursors. [00:21:59] Speaker 03: The amicus for the petitioners, for instance, the Pasadena group, I doubt if in their area, they could say, quote, most people live in areas where ozone levels increase [00:22:10] Speaker 03: when NOx, when nitrogen oxides decrease. [00:22:14] Speaker 03: In contrast, MECUS on our behalf, the South Coast Group in Southern California say that reduction of NOx is much more effective than VOC reduction in ozone. [00:22:27] Speaker 03: So we're given a non-attainment area to balance the reductions to actually accomplish what the statute wants them to accomplish. [00:22:36] Speaker 03: Offset of ozone. [00:22:39] Speaker 04: Petitioners arguing that the statute doesn't permit that. [00:22:43] Speaker 04: It says one of these provisions says the ratio of total emission reductions of VOCs to total increased emissions of such air pollutants. [00:22:58] Speaker 03: And that refers, and that is the ratio provision, which applies for each level of non-attainment. [00:23:04] Speaker 03: And that sets the ratio. [00:23:07] Speaker 03: But it does not itself call for a reduction. [00:23:13] Speaker 03: It says, when an offset is required somewhere in the park, petitioners concede that the offset provision is 7503. [00:23:22] Speaker 03: And that provision only calls for the reduction of the air pollutant. [00:23:27] Speaker 03: There are other provisions, as EPA set out in its regulation, that just apply to VOCs and don't refer to the air [00:23:35] Speaker 03: And in those cases, EPA has expressly said the inter precursor training is not permitted. [00:23:42] Speaker 01: So your position is that the phrase such air pollutant in AA4 refers not to the VOCs one phrase before, [00:23:59] Speaker 01: but to ozone that appears 10 sections earlier in a very complex statute where 10 sections is probably 20 pages of text. [00:24:13] Speaker 03: That is our position, but recall that this statute was written in two parts. [00:24:18] Speaker 03: Subpart one was written at one time and subpart two was written in a second. [00:24:25] Speaker 03: In so far to Congress made more specific requirements, it gave specific numbers, it gave specific levels, it gave specific ratios. [00:24:35] Speaker 03: But in this case, it referred back to the offset requirement, which is 7503, which is titled offsets. [00:24:43] Speaker 03: That's the requirement that says when a new facility comes in, it needs to offset its emissions of the air pollutant. [00:24:52] Speaker 03: And that's what inter precursor training [00:24:54] Speaker 03: does, and it must do it by definition because the regulation says it is only permitted if it offsets at least the same or greater amount as a linear reduction would do. [00:25:09] Speaker 03: There are provisions. [00:25:12] Speaker 03: The definition of air pollutant allows EPA to define precursors, like VOCs or NOx, as itself an air pollutant. [00:25:21] Speaker 03: That's in the definition of air pollutant. [00:25:23] Speaker 03: It includes, quote, [00:25:24] Speaker 03: any precursors to the formation of any air pollutant to the extent the administrator has identified such precursor or precursors for the particular purpose for which the term air pollutant is used. [00:25:37] Speaker 03: But that didn't happen here. [00:25:40] Speaker 03: EPA did quite the opposite. [00:25:41] Speaker 03: EPA explained that in fact in this case, in the case of Ausense, the precursors VOCs and NOCs are not to be deemed air pollutants. [00:25:53] Speaker 03: The provision that the petitioners rely on sets the ratio. [00:25:58] Speaker 03: The ratio is still complied with. [00:26:01] Speaker 03: It's just complied with in a manner that achieves the purpose. [00:26:07] Speaker 04: It's only complied with by disregarding the plain language of the such provision. [00:26:20] Speaker 04: You have to ignore that word to be able to get where you want to get, or referring back to ozone earlier in the statute. [00:26:29] Speaker 04: It's the only way you can get there. [00:26:30] Speaker 03: Because even that provision uses the term air pollutant, and that is how EPA interprets it. [00:26:36] Speaker 03: And interprets it since that provision. [00:26:40] Speaker 04: But it says such air pollutant, and such refers back to NOx. [00:26:49] Speaker 04: That's why there's a sentence. [00:26:52] Speaker 04: Did you diagram sentence in school? [00:26:55] Speaker 04: If you diagram this, that's what that refers to. [00:27:02] Speaker 03: Well, again, we believe it. [00:27:06] Speaker 03: So Congress wrote the subpart two in a convenient way, wrote its provisions just with VOCs. [00:27:13] Speaker 03: And then it included one provision that just said, [00:27:17] Speaker 03: Everything we just said basically also applies to NOx, the nitrogen NOx. [00:27:24] Speaker 01: That structure cuts against you. [00:27:26] Speaker 01: That shows Congress for these purposes separately focused on oxides of nitrogen and VOCs. [00:27:40] Speaker 03: But petitioners' argument is they all apply to NOx as well. [00:27:47] Speaker 03: If you look at the specific provisions, for instance, the very provision they rely upon, which calls for the application of the exact same ratio, let's say that for marginal, a 1.1 to one also applies to NOx. [00:28:02] Speaker 03: But that very provision says that the administrator doesn't have to apply it. [00:28:07] Speaker 03: The administrator can determine that in fact, air quality will not be increased by applying that ratio. [00:28:15] Speaker 03: It allows the administrator to say, in fact, [00:28:17] Speaker 03: in a certain situation, we're not going to apply the ratios at all because of the fact that it results in better air quality. [00:28:28] Speaker 03: And Congress further recognized that inter precursor training can be beneficial and should be used. [00:28:35] Speaker 03: It did it in the section on reasonable further progress. [00:28:39] Speaker 03: It expressly said [00:28:40] Speaker 03: call for inter-precursive training. [00:28:42] Speaker 04: Well, doesn't that demonstrate that if Congress knows how to do it in one provision, the fact that they didn't do it here suggests that the petitioners are correct? [00:28:53] Speaker 03: No. [00:28:54] Speaker 03: I know that it is sort of a basic rule, but it's a basic rule that this court has said in many situations doesn't apply. [00:29:01] Speaker 03: Well, why doesn't it apply here? [00:29:04] Speaker 04: Just explain to me why it doesn't apply. [00:29:06] Speaker 03: It doesn't apply here, because in this case, [00:29:10] Speaker 03: Sorry. [00:29:13] Speaker 03: In this case, in the reasonable further progress, I'm sorry, Judge, you're breaking up there. [00:29:21] Speaker 03: No, I didn't. [00:29:22] Speaker 03: Go ahead with you. [00:29:24] Speaker 03: OK. [00:29:25] Speaker 03: In this case, in the reasonable further progress provisions, it talks only about VOCs, VOC reduction. [00:29:33] Speaker 03: It doesn't talk about air pollutant. [00:29:35] Speaker 03: And as EPA explained, in that situation where you're not dealing with the air pollutant that's at issue, [00:29:40] Speaker 03: goes on, and Congress spoke only and exclusively to VOCs, then it needs an extra provision. [00:29:48] Speaker 03: Congress needed to include an extra provision to allow it, which it did with regard to reasonable further progress. [00:29:54] Speaker 03: But with regard to offsets, the offsets of the pollutant that was in it. [00:29:59] Speaker 04: Let me add to this, Mr. Rosen, because I'm sure you want to spend some time on the other provisions. [00:30:04] Speaker 04: If we were to agree with the petitioners on this, [00:30:10] Speaker 04: Do we vacate the entire inter precursor training program, or is this provision severable? [00:30:17] Speaker 04: How would that work? [00:30:22] Speaker 03: I would say that it's severable, inter precursor training, as I said. [00:30:29] Speaker 03: The petitioners say it's severable. [00:30:32] Speaker 04: Do you agree? [00:30:35] Speaker 03: Yes, I would say it is severable. [00:30:40] Speaker 03: Yes. [00:30:41] Speaker 03: As to turning to the next provisions on the milestones, we talked about the baseline and I don't think unless there's any questions need to go there. [00:30:57] Speaker 03: The second part of their argument is that somehow it has to be measured when you measure the demonstration of reaching reasonable further progress has to be measured with actual emissions. [00:31:09] Speaker 03: And the statute says expressly the opposite. [00:31:13] Speaker 03: Well, the statute says that the baseline needs to be defined by actual emissions. [00:31:19] Speaker 03: When measuring the compliance, when looking at the demonstration of whether the area has reached reasonable further progress against that milestone, 42 USC 7511 AG2 says that the demonstration of compliance with reasonable further progress milestones [00:31:38] Speaker 03: shall be submitted in such form and manner and shall contain such information analysis as the administrator shall be required. [00:31:46] Speaker 01: Can I take you back to the baseline emissions section? [00:31:53] Speaker 01: Yes. [00:31:54] Speaker 01: So a lot of the briefs talk about B1B, which is the provision that says baseline emissions mean the total amount of actual emissions. [00:32:09] Speaker 01: but immediately after that provision is a different one, which is mentioned only in the reply brief and only very quickly, but seems like it could be a pretty important provision here. [00:32:26] Speaker 01: And it says, this is B1C, says that emissions are creditable to the reductions [00:32:36] Speaker 01: only to the extent they, and this is the precise framing, have actually occurred. [00:32:46] Speaker 01: So doesn't that pretty- Which section are you pointing to, Greg? [00:32:51] Speaker 01: 7511A, E1C. [00:32:53] Speaker 01: A, E1C? [00:32:57] Speaker 01: B, B as in boy. [00:33:02] Speaker 01: Okay. [00:33:06] Speaker 01: It's titled General Rule for Creditability of Reductions. [00:33:14] Speaker 03: Yes. [00:33:15] Speaker 03: Your honor, that was only raised in the reply brief. [00:33:18] Speaker 03: You were right about that. [00:33:21] Speaker 04: Although we get the statute interpreted properly, Mr. Rosen. [00:33:25] Speaker 03: Yes, we agree with that. [00:33:28] Speaker 03: In EPA's view, the word actually there refers to the time period. [00:33:35] Speaker 03: that the emissions need to have, the reductions need to have occurred within that six year time period. [00:33:44] Speaker 03: And that's what he actually is referring to, not to actual triennial emissions inventories. [00:33:51] Speaker 03: That has to be looked at in the way Congress specifically defined how the measurement against the milestones should be addressed. [00:34:03] Speaker 03: And it's specifically a left hand to the broad discretion of BPA administrator. [00:34:09] Speaker 03: And there's good reason. [00:34:10] Speaker 01: I'm sorry, I just, I missed your, I missed what you said there. [00:34:17] Speaker 01: Well, why doesn't actually occurred compel a backward looking measurement at the end of the period, rather than simply a, [00:34:32] Speaker 01: forward-looking projection from the beginning of the period? [00:34:37] Speaker 03: Well, for the same reasons, it doesn't look at a forward-looking projection. [00:34:43] Speaker 03: It looks at measuring whether, when you hit that milestone, the emissions reductions have occurred. [00:34:49] Speaker 03: And just as in other cases, outside this particular six-year provision, for instance, the annual inventories that have to be complied with. [00:35:01] Speaker 03: EPA determined that that is very difficult to do. [00:35:05] Speaker 03: The data is most often not available or not necessarily reliable because it depends on triennial emissions inventories that may be stale by the time you make that determination. [00:35:19] Speaker 03: They may be, since it's a three-year inventory, averaged over three years, it may be two years old. [00:35:25] Speaker 03: It may not show, it may not reflect advances you've made in the last two years. [00:35:31] Speaker 03: So again, our view is that the word actual there refers to them being heard within the six years, but that does not change the other provision, which gives full discretion to EPA to make the determination of how you make the measurement. [00:35:50] Speaker 04: Okay, but the petitioners rely on, they acknowledge the general authority of the administrator, but they argue that there's two provisions [00:36:01] Speaker 04: that limit that general authority, that discretion. [00:36:06] Speaker 04: One is the one Judge Katz has just mentioned. [00:36:08] Speaker 04: The other is, I mean, the statute itself defines the baseline missions from which milestone compliance is to be measured in terms of actual missions. [00:36:23] Speaker 04: And the point petitioners make is that how can a state show there's been a reduction in actual emissions without presenting any actual emission data? [00:36:33] Speaker 04: That's their point. [00:36:36] Speaker 04: And when you combine that with the provision Judge Hatch has just pointed out, you've got two specific provisions of the statute. [00:36:43] Speaker 04: This is their argument, two specific provisions that limit the administrator's discretion. [00:36:51] Speaker 03: So what's your response to that? [00:36:53] Speaker 03: And because if you're looking at the baseline provision, for instance, and I understand it's also in this second provision, but basing it on actual emissions makes sense with regard to a baseline, because those are historic. [00:37:10] Speaker 03: And those can be looked at, and you have the time to do that. [00:37:13] Speaker 03: Under the statute, not EPA's regulations, but under the statute, a milestone determination must be made within 90 days of the milestone. [00:37:22] Speaker 03: And those actual emissions data are just either not available at all or oftentimes not reliable because of the timing. [00:37:33] Speaker 04: Well, maybe the administrator should be going back to Congress and saying, you know, you've imposed a standard on us. [00:37:40] Speaker 04: We can't meet. [00:37:41] Speaker 04: But from where we're looking at this, the court, this is what the statute says. [00:37:47] Speaker 03: And I mean, so. [00:37:51] Speaker 03: And, but again, the statute, for instance, the statute would only, in that case, the statute. [00:38:01] Speaker 03: Sorry, that provision would only apply to the initial six-year determination, which many jurisdictions don't have to make. [00:38:09] Speaker 03: It would not apply to the annual. [00:38:12] Speaker 04: You're pretty much, Mr. Rosen, is there any other provision you want to mention quickly? [00:38:17] Speaker 03: Yeah, just on the. [00:38:19] Speaker 03: On the contingency issue, that's pretty much set out in the two court decisions, the two sides. [00:38:27] Speaker 03: The only question is whether that's ambiguous. [00:38:30] Speaker 03: But the interpretation put forth by the petitioners just would make no sense under petitioner's view and under the majority in bar. [00:38:42] Speaker 03: If you had two jurisdictions and one jurisdiction wanted to put- Wait a minute, hold on. [00:38:47] Speaker 04: Yeah, just, you're not really serious, are you, that we should sort of count judges and see if... No, no, no. [00:38:55] Speaker 03: We were just... No. [00:38:57] Speaker 04: Or it makes it... Well, that's what you argue in your brief. [00:38:59] Speaker 04: Well, we should say that you're saying that, look, some other judges split on whether it's ambiguous, and therefore it's ambiguous. [00:39:07] Speaker 03: I think all we were trying to show is that [00:39:11] Speaker 03: Reasonable minds can differ. [00:39:14] Speaker 03: This is up to you. [00:39:16] Speaker 03: This is your court. [00:39:17] Speaker 04: Yeah, but the fact that it does disagree about it is not evidence of that. [00:39:20] Speaker 04: I think there's many cases where, you know, we have ruled the statute is clear when another circuit has unanimously said that it's ambiguous. [00:39:28] Speaker 04: In fact, petitioners cite one in their reply brief. [00:39:31] Speaker 04: But here's the point they make. [00:39:33] Speaker 04: They say, to make this very simple, they say measures that are already implemented [00:39:40] Speaker 04: are not measures, quote, to be undertaken. [00:39:46] Speaker 04: Can't be. [00:39:47] Speaker 04: If they're not measures to be undertaken, if it fails to meet the milestones, they're just measures that fail to make real progress. [00:39:57] Speaker 04: That's their argument. [00:39:58] Speaker 04: It's a statutory argument. [00:40:00] Speaker 03: But they can be. [00:40:03] Speaker 03: For instance, let me give you an example or two. [00:40:06] Speaker 03: Yeah, go ahead. [00:40:07] Speaker 03: An area or a state may have [00:40:09] Speaker 03: a vehicle inspection program that they've just started that is a contingency measure, but they've decided to go ahead and start it. [00:40:18] Speaker 03: And they're on a pilot program and it's reducing emissions. [00:40:22] Speaker 03: And it shows that in fact, this is a good thing. [00:40:24] Speaker 03: And it's going to continue to reduce emissions at even higher and higher levels as they go on. [00:40:32] Speaker 03: That jurisdiction should not be punished for starting that contingency measure before they reach [00:40:39] Speaker 04: time when the contingency measures kicked in. [00:40:43] Speaker 04: Mr. Rosen, what's your answer to their question? [00:40:46] Speaker 04: They're arguing about the language of the statute. [00:40:49] Speaker 04: I understand your policy argument here, but they're saying the statute's clear. [00:40:54] Speaker 04: What's your answer to that? [00:40:57] Speaker 04: Well, again, we... Already implemented measures can't be, quote, measures to be undertaken, to be undertaken. [00:41:06] Speaker 04: They're already implemented and they failed. [00:41:10] Speaker 03: Only if you, again, see them in isolation. [00:41:14] Speaker 03: As another example, if an area wants to transform all of its cars, its vehicles, its government vehicles to electric vehicles, it can start that process. [00:41:27] Speaker 03: And as it goes on, the emissions continue to be reduced. [00:41:32] Speaker 03: The application of that measure to a greater number of vehicles is taking effect as you go forward. [00:41:40] Speaker 03: How are they being punished? [00:41:42] Speaker 05: You said they would be punished if we went to petitioner's view. [00:41:47] Speaker 05: How so? [00:41:48] Speaker 05: They would still take these actions, right? [00:41:52] Speaker 05: And that has nothing to do with whether they otherwise are required to have contingency measures. [00:41:58] Speaker 03: I think according to petitioners, they'd have to come up with a new contingency measure because that contingency measure [00:42:07] Speaker 03: has already been put in place. [00:42:09] Speaker 05: That's the argument. [00:42:11] Speaker 05: Well, no, no. [00:42:11] Speaker 05: That's when, conceptually, I'm trying to understand that measure of the examples. [00:42:15] Speaker 05: I hear the examples, and they're important. [00:42:19] Speaker 05: The measures that they've put in place are measures that count for them now, right? [00:42:27] Speaker 03: They don't count towards any standard. [00:42:30] Speaker 03: In order to use them, [00:42:32] Speaker 03: now and still preserve them as a contingency measure. [00:42:35] Speaker 05: Well, forget the contingency measure. [00:42:36] Speaker 05: Just help me. [00:42:37] Speaker 05: They count now, right? [00:42:39] Speaker 05: Forget any requirement of contingency. [00:42:41] Speaker 05: They count, right? [00:42:44] Speaker 03: If you mean whatever emissions reductions are occurring, they count. [00:42:48] Speaker 05: Yes. [00:42:48] Speaker 05: They count. [00:42:49] Speaker 05: So they're not being punished. [00:42:50] Speaker 05: They get the credits that they're due for those measures, right? [00:42:56] Speaker 03: Yes. [00:42:56] Speaker 05: Okay. [00:42:56] Speaker 05: So now the question is, why should they be able to claim [00:43:02] Speaker 05: that measures that they would properly put in place and that are working and that they're getting credit for should also count for contingencies that have to be undertaken in the event that these measures and others aren't working as they should. [00:43:21] Speaker 05: That's the part that's perplexing. [00:43:23] Speaker 05: They're not being punished. [00:43:24] Speaker 05: That's what caught my attention. [00:43:25] Speaker 05: You're saying they're being punished. [00:43:26] Speaker 05: They're not being punished. [00:43:28] Speaker 05: Because they're getting full credit for these measures that are in place. [00:43:32] Speaker 05: So the only question is, has Congress said, yeah, that's fine. [00:43:36] Speaker 05: You get all the credit in the world for that. [00:43:38] Speaker 05: And we're not doubting it. [00:43:39] Speaker 05: And we're glad you're doing it. [00:43:40] Speaker 05: But in the event there's a problem, you have to have something else that you will undertake to cure the problems. [00:43:47] Speaker 03: Now, why is that wrong? [00:43:49] Speaker 03: Well, maybe I can explain it. [00:43:52] Speaker 05: Your examples aren't responding to the concern is what I'm trying to say. [00:43:55] Speaker 05: Okay. [00:43:56] Speaker 03: Let me try again. [00:44:01] Speaker 03: Let's take this same example of exhaust, looking at the exhaust, measuring the exhaust from vehicles or going to electric vehicles. [00:44:11] Speaker 03: If a jurisdiction is faced with the fact that, and it's not required for any of the requirements, that's a prerequisite. [00:44:18] Speaker 03: If they are faced with the issue of should we do that now and help add to the reduction of emissions or should we hold it and not reduce ozone commissions more than we are obligated to do just in case we need to, then that's what they'll do and the air will be worse for it. [00:44:40] Speaker 05: Why wouldn't they do it now to get both to reduce pollution and they'll get credit for it now? [00:44:47] Speaker 03: not if it not if this is not considered a contingency. [00:44:51] Speaker 05: No, no, no, don't they get credit for just in reducing emissions? [00:44:55] Speaker 03: No, they, as I understand petitioners argument, they would have to put in a new contingency measure. [00:45:02] Speaker 05: Yeah, we were talking past each other. [00:45:04] Speaker 05: I just asked you if if a jurisdiction implements a new program, [00:45:10] Speaker 05: that has the effect of reducing emissions. [00:45:12] Speaker 05: They're getting credit for that the moment they do it, right? [00:45:15] Speaker 05: Forget the contingency. [00:45:17] Speaker 05: They're getting credit for it. [00:45:18] Speaker 05: It works to their advantage to reduce admissions. [00:45:21] Speaker 05: There are ongoing credits that are being developed, right? [00:45:24] Speaker 05: Yes, that's right. [00:45:25] Speaker 05: So that's why I'm not understanding your punishment argument. [00:45:28] Speaker 05: And why wouldn't they go ahead and do it if they're going to be credited for it? [00:45:34] Speaker 05: You're saying, well, they won't do it if you're not going to let them count as a contingency. [00:45:39] Speaker 05: that isn't ringing true why wouldn't they go ahead and do it both because it helps the environment and two because they're going to get credit for it yeah they will get credit for it in the measurements but they will not get credit for it in the exercise of the required contingency of course yeah that makes perfectly good sense i would have been concerned if you had told me no they're not going to get any credit for this [00:46:04] Speaker 05: and so they won't do it you conclude they won't do it if we won't allow it as a contingency that makes no sense to me of course they'll do it if they'll get credit for it and it helps the environment why wouldn't i do it that's the part i'm not i'm just not getting that argument all right i don't have any more judge tatel okay thank you thank you counselor great [00:46:28] Speaker 04: I'm fine. [00:46:29] Speaker 04: Judge Katz, do you have any questions? [00:46:31] Speaker 04: I'm fine. [00:46:32] Speaker 04: OK. [00:46:32] Speaker 04: Mr. Rosen, you're well on time. [00:46:33] Speaker 04: Thank you. [00:46:34] Speaker 03: Thank you. [00:46:36] Speaker 04: Let's see. [00:46:36] Speaker 04: Mr. Johnson, I think you were over time too, but we'll give you two minutes. [00:46:40] Speaker 02: Thank you, Your Honor. [00:46:41] Speaker 02: EPA's argument confirms that it's making policy arguments. [00:46:45] Speaker 02: Our arguments are statutory. [00:46:47] Speaker 02: The CIA has no authority to depart from what Congress specified only in the Clean Air Act. [00:46:55] Speaker 02: Just to touch on its inter-precursor trading argument, [00:46:59] Speaker 02: You know, EPA's argument overrides plain text of the statute. [00:47:05] Speaker 02: Its excuse for overriding the plain text of 7511AA4 is that putatively, 7503C1 was written earlier. [00:47:14] Speaker 02: That makes no sense, both as a textual matter and as a factual matter, it's wrong. [00:47:20] Speaker 02: 7503C1 was added to the statute at the same time as 7511A. [00:47:29] Speaker 02: EPA's lawyers repeat their post-hoc claim that EPA didn't identify volatile organic compounds and oxides of nitrogen as precursors. [00:47:43] Speaker 02: That's false. [00:47:46] Speaker 02: Congress identified them as pollutants in the statute, and EPA, in fact, made the identification that 7602G actually calls for, both in this record at JA 183 and in its regulations in 40 CFR [00:47:58] Speaker 02: 51.165. [00:48:00] Speaker 02: On the milestone compliance demonstrations, the point of the milestone compliance demonstrations is to look back and check whether the reductions that were hoped for have actually happened. [00:48:15] Speaker 02: Judge Katz, as you pointed to the provision we raised on, reply. [00:48:18] Speaker 02: Judge Tatel, as you point out, there's loads of case law that says this court shouldn't ignore the statute as it's actually written. [00:48:27] Speaker 02: EPA would be ignoring the statute as it's all, as it's actually written and overriding the demand for verification. [00:48:34] Speaker 02: On contingency measures, there's no ambiguity here. [00:48:36] Speaker 02: There's no punishment in having to follow the statute. [00:48:39] Speaker 02: EPA is trying to make this all an accounting game. [00:48:41] Speaker 02: And can I just very quickly say one more thing about the baseline year? [00:48:45] Speaker 02: You asked me about the record. [00:48:47] Speaker 02: I interpreted that as the administrative record. [00:48:50] Speaker 02: We discussed in our declarations how the, this is a declaration, page nine, [00:48:57] Speaker 02: We discussed how the baseline year option opens the door to the sort of gaming that we're concerned about. [00:49:06] Speaker 02: If there are no questions. [00:49:08] Speaker 04: Thank you. [00:49:09] Speaker 04: Thank you, gentlemen. [00:49:10] Speaker 04: We will take the case under submission. [00:49:13] Speaker 04: Thank you.