[00:00:00] Speaker 02:
Case number 23-1177 Hedell, Center for Biological Diversity Petitioner versus Environmental Protection Agency Hedell.

[00:00:16] Speaker 02:
Morning.

[00:00:19] Speaker 02:
Good morning.

[00:00:23] Speaker 02:
May it please the court, Elizabeth Dawson presenting today on behalf of obligated party petitioners regarding the majority of the issues briefed, after which my co-counsel Jonathan Hardin will address the small refinery specific issues, including the Regulatory Flexibility Act.

[00:00:38] Speaker 02:
I'd like to reserve three minutes of time for rebuttal.

[00:00:41] Speaker 02:
The 2023 to 2025 renewable fuel standard is unlawful.

[00:00:45] Speaker 02:
This court's prompt remand is critical because as of today, November 1st, 2024, EPA is once again violating its statutory duty to promulgate renewable fuel volumes, this time for 2026, which the Clean Air Act requires no later than 14 months before the first year for which such applicable volumes will apply.

[00:01:04] Speaker 02:
EPA hasn't even proposed applicable volumes for 2026.

[00:01:09] Speaker 02:
The only silver lining in this situation is that this court could still issue an opinion that influences how EPA approaches RFS rulemakings for 2026 and beyond.

[00:01:19] Speaker 02:
This court should seize this opportunity for three overarching reasons.

[00:01:23] Speaker 02:
First, timing.

[00:01:25] Speaker 02:
It's past time for EPA to be held accountable for its inability to get back on track with RFS rulemakings.

[00:01:32] Speaker 02:
EPA has abused this court's leniency and has replaced the plain language of the lead time requirement with a reasonable mitigation requirement.

[00:01:40] Speaker 02:
And for 2023 and 2024, EPA complied with neither.

[00:01:45] Speaker 02:
Second, policy.

[00:01:47] Speaker 02:
The set provision espouses no policy in favor of annually increasing volumes, but EPA unlawfully superimposed such a policy onto the set factors analysis, biasing the results in favor of higher volumes for 2023, 2024,

[00:02:01] Speaker 02:
and 2025.

[00:02:03] Speaker 02:
Third, implementation.

[00:02:04] Speaker 02:
Instead of looking to Congress's non-aspirational factors evaluating the impact of renewable fuel use and a clear-eyed review of the program's performance, EPA forged ahead as though the congressional defaults still applied, resulting in arbitrary, unprecedented levels of required renewable fuel and an unlawfully predetermined supplemental standard.

[00:02:25] Speaker 02:
For all of these reasons, the court should remand the set rule.

[00:02:29] Speaker 09:
So is your challenge to the to the implied conventional fuel volume and the advanced bio non-cellulosic biofuel volume that EPA didn't analyze the factors, the statutory factors, or that it's going to increase compliance costs or

[00:02:47] Speaker 02:
Both, Your Honor, and they're intertwined because cost is a factor with regard to the set factors.

[00:02:54] Speaker 02:
So in the set rule, EPA intentionally implied this unreachably high conventional biofuel requirement on purpose

[00:03:02] Speaker 02:
with the thought that it could somehow compel the production or increase production of E15 and E85.

[00:03:07] Speaker 02:
Even though several places in the record, EPA concedes that it isn't clear whether that has actually worked in practice.

[00:03:15] Speaker 02:
At JA1806, 07, and JA1810, EPA says it's unclear to what extent these volumes will materialize.

[00:03:23] Speaker 09:
And then their response to that is, well, the advanced biofuel will backfill.

[00:03:27] Speaker 09:
And then you make an argument that

[00:03:29] Speaker 09:
forcing advanced biofuel to backfill the conventional renewable fuel mandate will cause RIN prices to quote converge with ethanol RINs rising to meet the price of advanced biofuel RINs.

[00:03:42] Speaker 09:
And I wasn't sure that I, that it was clear to me why you thought that would happen as opposed to converging down and whether you can point to any evidence or anything in the record to support that phenomenon.

[00:03:59] Speaker 02:
Yes, Your Honor, EPA actually acknowledges in the response to comments that the price will increase for conventional biofuel.

[00:04:07] Speaker 02:
Because what happens is when advanced biofuel is necessary to fill the conventional biofuel requirement, it causes both prices to go up because there is more demand overall for conventional.

[00:04:18] Speaker 02:
So it can charge more for its RINS.

[00:04:22] Speaker 09:
And EPA does- If there's more demand for conventional, even without the separate backfill, the price is going to rise.

[00:04:29] Speaker 09:
But I thought you were talking about some relationship between the D6 price and the D4 price.

[00:04:34] Speaker 09:
And it just wasn't clear to me why, even if you didn't have the advanced biofuel backfill, the point of the program is that the price will rise and that's part of incentivizing the production.

[00:04:46] Speaker 02:
Correct, Your Honor, but if the conventional biofuel total, the total renewable fuel volume, had been lower, then there would have been less demand for that fuel, whereas by increasing it artificially, it increases the cost overall.

[00:05:00] Speaker 09:
On its own, but the point I'm not following is the convergence point, and maybe it's not as major as I'm reading it to be in your brief.

[00:05:08] Speaker 02:
No, Your Honor, I think, I mean, that is correct, but I think both,

[00:05:12] Speaker 02:
EPA acknowledges that and doesn't contest that there is this convergence in the record.

[00:05:17] Speaker 02:
And so one of the other points with this is that it doesn't increase the renewable fuel volumes overall, which is EPA's stated purpose, even though we disagree that at this set posture, that is a lawful way for EPA to approach the program.

[00:05:31] Speaker 02:
Even if that were lawful, doing this doesn't achieve EPA's stated result.

[00:05:37] Speaker 02:
I'd like also to talk really quickly, oh, I'm sorry, you're on, okay, about.

[00:05:40] Speaker 08:
Well, I was gonna move to the Sinclair case because you had that happen in May of this year and we already have a majority upholding the 2020 to 2022 renewable fuel and you have the same analysis having been done in the Sinclair case as you do in CBD.

[00:05:59] Speaker 08:
In fact, the record for the Sinclair JA site is JA 151

[00:06:04] Speaker 08:
And then here for CBD is J8-1308 and the tables for ES1 look almost identical in terms of, you know, the analysis that was done.

[00:06:16] Speaker 08:
You have the set factors.

[00:06:19] Speaker 08:
In those factors, it says and.

[00:06:21] Speaker 08:
It does not suggest that you have to give greater weight to one factor or the other.

[00:06:25] Speaker 08:
And so you keep referring to higher costs.

[00:06:29] Speaker 08:
And we understand that, you know, costs are higher.

[00:06:33] Speaker 08:
But it didn't state that you have to focus more heavily on the cost in that regard.

[00:06:39] Speaker 08:
So why isn't Sinclair the precedent that we should go by in terms of this qualitative analysis?

[00:06:45] Speaker 02:
Well, your honor, we acknowledge that earlier this year, this court did uphold EPA's decision for 2020 to 2022 on the reset analysis.

[00:06:53] Speaker 02:
But we submit that this is an entirely different era of the program.

[00:06:57] Speaker 02:
We are now in a set posture where, as in Sinclair, EPA was resetting the volumes that Congress had already set based on those set factors.

[00:07:06] Speaker 02:
Here, EPA has to look at what should be the volumes going forward, separate and apart from anything Congress already did, because there are no tables.

[00:07:15] Speaker 02:
While the factors remain the same, EPA had to look at the entire body of the program prior to this time, look at how it was implemented, look at those factors and the additional provisions that are specific to cellulosic and advanced and biomass-based diesel, and come to a reasonable conclusion, divorced from the prior policy that Congress had to increase volumes.

[00:07:40] Speaker 01:
I mean, that's true.

[00:07:42] Speaker 01:
the reset authority at issue in St.

[00:07:46] Speaker 01:
Clair pointed at the same six factors.

[00:07:52] Speaker 02:
Yes, Your Honor, but we do believe that it's different in the sense that EPA was looking at the program at the time that Congress had set default volumes, whereas there are no default volumes here.

[00:08:03] Speaker 02:
This is a new phase where EPA is supposed to be

[00:08:06] Speaker 02:
going forward, looking more at a retrospective review and at what is reasonable in reality, not aspirational factors that Congress clearly embodied in those statutory tables.

[00:08:19] Speaker 09:
On the RIN cost pass-through theory, I'm not entirely following your argument that it harms the non-small refiners that you represent, because if EPA abandoned the RIN cost pass-through theory, wouldn't that lead to an increase in the percentage standard?

[00:08:38] Speaker 09:
It would lead to more small refiner exemptions and an increase in the percentage standard imposed

[00:08:43] Speaker 09:
on your non-small clients because more exemptions would be granted to the small refiners and so more of the total volume would have to be met by non-small?

[00:08:54] Speaker 02:
Well, Your Honor, my colleague Mr. Harden is going to be handling pass-through in more detail, but as to the non-small refiners, the point is not the percentage standards necessarily themselves.

[00:09:03] Speaker 02:
We acknowledge that

[00:09:04] Speaker 02:
If EPA applies the reallocation framework that it had said earlier it would, notably it hasn't because it projected no small refinery exemptions.

[00:09:13] Speaker 02:
But if that happened, the percentage standard would increase.

[00:09:15] Speaker 02:
But that doesn't mean that the total volume set would necessarily increase.

[00:09:19] Speaker 02:
And the argument is that, in fact, it should be lower if you consider the implications of the pass-through theory on the, or the failure of the pass-through theory on the program.

[00:09:29] Speaker 09:
Up front.

[00:09:30] Speaker 02:
Correct.

[00:09:32] Speaker 02:
I know I'm out of time.

[00:09:33] Speaker 02:
I would just like to briefly touch on timing, if I could.

[00:09:35] Speaker 02:
It is past time for EPA to be held accountable for its failure, really, to promulgate volumes on time.

[00:09:44] Speaker 02:
Here we are in now a posture where the deadline is actually supposed to be even earlier, 14 months before the first year to which it should apply.

[00:09:52] Speaker 02:
And EPA's continued reliance on extended compliance deadlines as a mitigation must be rejected.

[00:09:59] Speaker 02:
Compliance deadlines are paper exercises.

[00:10:01] Speaker 02:
It's the compliance year that is important.

[00:10:03] Speaker 02:
Because obligated parties can't demonstrate compliance, no matter what deadline it is in the future, when EPA promulgates rules that are too late for the market to catch up.

[00:10:13] Speaker 02:
And so without further questions, I would reserve the remainder of my time for rebuttal.

[00:10:17] Speaker 09:
Thank you, Ms.

[00:10:17] Speaker 09:
Stone.

[00:10:17] Speaker 09:
Thank you.

[00:10:20] Speaker 09:
Now we'll hear from Mr. Harden.

[00:10:49] Speaker 04:
Thank you, Your Honor.

[00:10:50] Speaker 04:
May it please the Court, Jonathan Harden representing the small refinery petitioners, I'd like to reserve one minute for rebuttal.

[00:10:57] Speaker 04:
I'll briefly address two ways that EPA's reliance on an economic theory called rent pass-through renders the rule arbitrary, capricious, and contrary to law.

[00:11:08] Speaker 04:
First, EPA relied on its rent pass-through theory to ignore the cost of RFS compliance to obligated parties in violation of the Clean Air Act and the APA.

[00:11:18] Speaker 04:
Second, EPA relied exclusively on its pass-through theory to refuse even to perform the flexibility analysis required under the Regulatory Flexibility Act.

[00:11:29] Speaker 09:
On that ladder, just before you get into the merits, I didn't see cited in any of the comments the Regulatory Flexibility Act.

[00:11:38] Speaker 09:
And so there is a question raised as to whether that challenge is preserved at all.

[00:11:43] Speaker 04:
Yes.

[00:11:44] Speaker 04:
Thank you, Judge Pillard.

[00:11:45] Speaker 04:
EPA was unquestionably on notice.

[00:11:48] Speaker 04:
that from commenters that its RIN pass-through theory was hopelessly flawed and EPA stubbornly relied on that theory at its own peril to promulgate the rule and that was the exclusive reason that it refused at the screening phase to refuse to perform the flexibility analysis.

[00:12:06] Speaker 04:
So the idea that EPA was not on notice that its RIN pass-through theory was being challenged and its reliance on that for the regulatory flexibility act is not

[00:12:15] Speaker 04:
a waiver and that would respectfully that engage in the kind of hair splitting analysis that the Supreme Court just rejected earlier this year.

[00:12:24] Speaker 01:
You think it's hair splitting.

[00:12:26] Speaker 01:
When they don't.

[00:12:31] Speaker 01:
They said.

[00:12:33] Speaker 01:
This theory is problematic and therefore you should do two things.

[00:12:37] Speaker 01:
You should lower the volume requirements under the Clean Air Act and you should grant more small refinery exemptions under the Clean Air Act.

[00:12:48] Speaker 01:
You think it's hair splitting to say that those arguments don't encompass a different statute that was never mentioned?

[00:12:57] Speaker 04:
I do think it's hair splitting for EPA to say that we couldn't have known that our reliance on RENPASS through to refuse to perform the regulatory flexibility analysis had not been challenged by the commenters.

[00:13:13] Speaker 09:
Well, the regulatory flexibility analysis

[00:13:15] Speaker 09:
for example, and the small refinery exemption.

[00:13:18] Speaker 09:
Those are two different standards.

[00:13:20] Speaker 09:
And I mean, I just don't see.

[00:13:23] Speaker 09:
You're right that the RIN pass-through theory was raised.

[00:13:25] Speaker 09:
But for example, in Sinclair, Wyoming, and in Calumet, the courts that were considering RIN pass-through, both those courts accepted that pass-through occurs on average and in general.

[00:13:37] Speaker 09:
They were just looking at specific

[00:13:40] Speaker 09:
individual small refiners and particular periods.

[00:13:46] Speaker 09:
I'm not sure how that bears.

[00:13:47] Speaker 04:
I would dispute Judge Pillard that those courts accepted that rent pass-through occurred on average across markets as a whole.

[00:13:56] Speaker 04:
I think it's more accurate to say that that type of macro analysis in those cases, which were specific applications to small refineries, was not necessary for the court to pass on the validity or invalidity of rent pass-through theory at a macro level in order to decide those cases.

[00:14:12] Speaker 04:
But to be clear, EPA's rent pass-through theory is wrong, not just as applied to small refineries, but its pass-through theory is that all obligated parties, regardless of size, regardless of the markets that they participate in or their share of that markets, or any other characteristic, that all obligated parties have no cost of RFS compliance whatsoever, zero.

[00:14:37] Speaker 04:
When you say it out loud,

[00:14:38] Speaker 04:
it already sounds too good to be true, and that's because it's not true.

[00:14:43] Speaker 04:
And here in the record, you have the GAO analysis which found that EPA's assumptions that all parties pay the same cost for RINs at all times is incorrect.

[00:14:53] Speaker 09:
So we have to decide this in this case, this sort of, in average on general, RIN pass-through, the validity of the RIN pass-through theory?

[00:15:02] Speaker 04:
Yes, because EPA relied on it in several ways.

[00:15:06] Speaker 04:
It relied on it

[00:15:07] Speaker 04:
in its analysis of the statutory factors on cost, that's at JA38.

[00:15:11] Speaker 04:
It relied on it in its regulatory impact analysis in Chapter 1, where it claimed to be performing the review of the implementation of the program that it's supposed to base the volumes on.

[00:15:22] Speaker 04:
And nowhere in that regulatory impact analysis about the review of the implementation of the program does EPA take into consideration the real world cost to obligated parties.

[00:15:32] Speaker 01:
But in order to...

[00:15:35] Speaker 01:
use the RIN pass-through problem as a basis for lowering, for setting aside the volume requirements, we would have to conclude that the theory is rotten at its core, not just inapplicable to a couple of small refiners here and there, right?

[00:15:56] Speaker 04:
Yeah, so I think there is the basis in this record to show that at least a remand to the agency

[00:16:03] Speaker 04:
to consider the volumes and its regulatory flexibility act analysis without relying on the pass-through theory as warranted.

[00:16:11] Speaker 01:
I mean, it seemed like the GAO study, the other Sinclair opinion from our court, the Fifth Circuit opinion, all questioned the theory as applied to small refiners.

[00:16:26] Speaker 01:
They didn't say as a general matter it was wrong.

[00:16:30] Speaker 04:
Yes, so I would say, well, first of all, for the Regulatory Flexibility Act analysis, we're only talking about small entities.

[00:16:37] Speaker 04:
Fair enough.

[00:16:38] Speaker 04:
So that, I think, even if you were to credit Judge Pillard's question, which I disagree with earlier, it's about small.

[00:16:46] Speaker 01:
Or if you're stronger on the merits, you have a preservation issue, but on the volumes themselves.

[00:16:51] Speaker 04:
Yeah, but on the volumes themselves, with respect to all obligated parties, the GAO found that the assumption that all parties, not just small refineries, but that all parties pay the same cost for rents all the time, in all markets, on all days, and that they've all obligated parties fully pass through their costs all the time, it's a net zero program, it's a utopian view of the world, GAO found that that assumption was flawed,

[00:17:21] Speaker 04:
and incorrect, and it found that it was an incomplete assessment because it only relied upon a few large markets.

[00:17:26] Speaker 09:
That's a systemic problem.

[00:17:27] Speaker 09:
The GAO study has been systemically criticized by EPA and has chosen not to rely on it because of really major errors such as valuing very small transactions, the price paid, you know, the same as very large transactions.

[00:17:46] Speaker 09:
you end up with just enormous distortions in the GAO study, and I don't see anything in the record that repairs that.

[00:17:55] Speaker 09:
And EPA has a tremendous amount of data that it has analyzed, and it has come up with, you said we can't say that on each day for each party the price is always fully passed through, but I don't take that to be the contention that EPA

[00:18:16] Speaker 09:
is making when it's setting annual volumes.

[00:18:18] Speaker 09:
It's saying on average and in general, so some days you're gonna get a cheaper rent than, and other days you're gonna get more expensive, but it's on average and in general, the cost is gonna be passed through.

[00:18:31] Speaker 09:
So what do you point to in the record that we really need to grapple with other than the GAO study that undermines that conclusion?

[00:18:39] Speaker 04:
So first of all, I would point to how EPA uses its pass-through analysis because it exclusively relies on what it calls the most recent analysis that it did, which was the denial actions.

[00:18:53] Speaker 04:
And every time it relies on its pass-through theory, it cites the denial actions.

[00:18:57] Speaker 04:
And it's an assumption not that there is

[00:19:01] Speaker 04:
some evening out over the macro analysis, their assumption on which they base the volumes and on which they refuse to perform the regulatory flexibility analysis is that there is zero pass-through that every obligated party pays the same price.

[00:19:21] Speaker 04:
100% pass-through.

[00:19:21] Speaker 04:
100% pass-through.

[00:19:22] Speaker 04:
Right, and so I think that EPA uses it heavily

[00:19:27] Speaker 04:
as a magic wand waving it around to pretend that there are no cost obligated parties and that that warrants remand for EPA to consider the real world costs to obligated parties of RFS compliance.

[00:19:41] Speaker 04:
Thank you.

[00:19:50] Speaker 09:
And I have next that we'll hear from Ms.

[00:19:53] Speaker 09:
Epfel.

[00:20:22] Speaker 07:
Good morning.

[00:20:23] Speaker 07:
Good morning.

[00:20:23] Speaker 07:
May it please the court?

[00:20:24] Speaker 07:
Carrie Abfel for Petitioner National Wildlife Federation.

[00:20:28] Speaker 07:
I'd like to reserve one minute for rebuttal.

[00:20:31] Speaker 07:
We are here today presenting a classic case of arbitrary capricious and unreasoned decision making.

[00:20:37] Speaker 07:
In this instance, it relates to a market driving program that is propping up the continued production of corn and soy for biofuel use beyond what the market would otherwise dictate.

[00:20:48] Speaker 07:
absent the program's mandates.

[00:20:50] Speaker 07:
And this is causing significant harm to the climate, the environment, and to environmental justice.

[00:20:56] Speaker 07:
While the briefs may raise some confusion, what EPA did in this case is actually quite clear.

[00:21:02] Speaker 07:
Simply put, it unreasonably assessed the climate and environmental harms of the renewable fuel volumes and thus failed to demonstrate a reasonable connection between the facts on the record and the resulting policy change.

[00:21:15] Speaker 07:
which is the standard this court set out recently in Sinclair, Wyoming.

[00:21:20] Speaker 07:
EPA failed to meet its baseline APA obligations by unlawfully setting volumes for which it showed no record support, failing to consider an important aspect of the problem, and failing to provide a reasoned explanation.

[00:21:35] Speaker 07:
As we all recall from grade school math, if you don't show your work or explain your answer, you don't get credit, and that's what happened here.

[00:21:45] Speaker 07:
As we set forth in our briefs, EPA's analysis fails for three primary reasons.

[00:21:50] Speaker 07:
First, EPA improperly assesses the effect of the set rule on climate.

[00:21:56] Speaker 07:
It inadequately explained its unquestioning reliance on uncertain and unaligned estimates in the literature review.

[00:22:04] Speaker 07:
At the same time, it inexplicably ignored a significant climate impact, which is the opportunity cost of keeping land in agricultural production for corn and soy for biofuel and preventing that or other land from being used for other purposes.

[00:22:20] Speaker 07:
And it also disregarded its own model comparison exercise.

[00:22:26] Speaker 07:
EPA improperly analyzed the grave environmental injustice impacts of the rule, including, for example, an increase in over 100,000 tons of air pollution attributable to the production of corn ethanol.

[00:22:40] Speaker 07:
Characterizing these harms is minimal without sufficiently explaining why this is so.

[00:22:46] Speaker 07:
And third, given the fundamental flaws with EPA's analysis of the individual factors, EPA does not and cannot

[00:22:55] Speaker 07:
provide a reasoned explanation for the volumes.

[00:22:58] Speaker 07:
In fact, had EPA shown its work, there's no reason to think that the evidence in the record would support these same volumes.

[00:23:07] Speaker 07:
Notably, because we're challenging EPA's analysis of the individual factors rather than EPA's balancing of those factors, this court's recent holding in Sinclair, Wyoming does not control here.

[00:23:20] Speaker 07:
So with this backdrop, I'd like to focus my limited time on EPA's problematic climate analysis.

[00:23:26] Speaker 01:
Sorry, can you just drill down a little bit on why you think Sinclair is not controlling?

[00:23:32] Speaker 07:
Sure, Your Honor.

[00:23:33] Speaker 07:
In Sinclair, the court was looking at... On the Clean Air Act issues?

[00:23:37] Speaker 07:
Well, Your Honor, in Sinclair, what the court was looking at, from my understanding, was the inclusion of a qualitative analysis.

[00:23:46] Speaker 07:
So EPA analyzed a variety of factors, but it only quantified a few select factors.

[00:23:51] Speaker 07:
Other factors, it gave a qualitative assessment of those factors, and then it balanced the qualitative and the quantitative collectively.

[00:23:59] Speaker 07:
Here, we're not saying that it can't include qualitative analyses.

[00:24:03] Speaker 07:
Here, we're saying its qualitative analysis, specifically on climate, was improper and inadequate, and therefore, it can't balance factors when those factors were inappropriately assessed.

[00:24:15] Speaker 09:
And your basis for that is that EPA's decision not to include a carbon opportunity cost analysis into its climate analysis as unreasonable.

[00:24:26] Speaker 09:
But there has to be an assumption when one is doing a climate opportunity cost analysis, right?

[00:24:32] Speaker 09:
And your assumption seems to be, you can correct me if I'm wrong, that in the absence that farmers could convert

[00:24:40] Speaker 09:
existing cropland to forest, and they could do that.

[00:24:45] Speaker 09:
But we're in a situation where EPA doesn't actually have any control over what happens to land use.

[00:24:51] Speaker 09:
So wouldn't EPA instead need to consider what the likely real world alternative uses would be of land in the absence of the RFS standard, not ideal ones that would really be more pro-climate?

[00:25:09] Speaker 07:
Right, I understand the question, Your Honor, and I have a few answers.

[00:25:12] Speaker 07:
So the first part, there are a few reasons that we think the climate analysis was flawed.

[00:25:18] Speaker 07:
One of them is the carbon opportunity cost, which I'll get to.

[00:25:21] Speaker 07:
But there's also two other reasons, which is the literature review itself is fundamentally flawed for reasons which I can describe in a moment.

[00:25:29] Speaker 07:
And then also it's disregard of the model comparison exercise.

[00:25:32] Speaker 07:
The third reason is it's failure to consider the significant climate impact from this carbon opportunity cost.

[00:25:38] Speaker 07:
And I think that thinking that farmers have to revert that land back to forest land or native grassland is a misconception of what this opportunity cost is.

[00:25:48] Speaker 07:
This cost recognizes that land is a finite resource.

[00:25:52] Speaker 07:
So if you're keeping land in production for corn and soy for biofuels, that particular land can't be used for other resources, such as growing food for human consumption.

[00:26:04] Speaker 07:
or animal feed or sequestering and storing carbon.

[00:26:07] Speaker 09:
If it were used to grow food for human consumption, the climate analysis might be the same.

[00:26:13] Speaker 07:
Well, Your Honor, what happens because that land is not being used, there's land clearing elsewhere in the United States and globally, and those are factored in.

[00:26:21] Speaker 07:
In fact, EPA itself recognizes the global impact of the program.

[00:26:25] Speaker 07:
So what we're looking at is not just the specific parcel of land and how that's being used, but its effect on how other land is being used, and so there's a displacement.

[00:26:34] Speaker 07:
So rather than using that land to produce food for human consumption, other land has to be found to be used for that, and that has a climate impact.

[00:26:42] Speaker 07:
And EPA completely ignored that climate impact because it says that it's not a life cycle analysis.

[00:26:48] Speaker 09:
In terms of the literature review and the model exercise, on the model exercise, I just read it differently what EPA was doing there from how you read it.

[00:26:58] Speaker 09:
I don't think they were running the model exercise to come out with data for this rule.

[00:27:02] Speaker 09:
They basically, I mean, it's almost like, you know, and here's something else that might be interesting that we're thinking about to develop

[00:27:11] Speaker 09:
and select models for future and they want to comment on it.

[00:27:15] Speaker 09:
It's like crowd sourcing an idea, but I don't think they purport to rely on any of that for this rule.

[00:27:21] Speaker 09:
And then, but they do rely on the literature review where they're basically saying what's the best science available on

[00:27:30] Speaker 09:
the climate effects, we're going to look at what's published and what they find out there and use the data and then scale it to the project before EPA, what they find out is that there's a very wide range.

[00:27:43] Speaker 09:
And I mean, that alone seems problematic, but I don't take that to be what you're challenging.

[00:27:49] Speaker 07:
Your Honor, we're challenging both these things.

[00:27:51] Speaker 07:
We are challenging that aspect of the literature review and the fact that in its entire 465 page regulatory impact analysis,

[00:27:59] Speaker 07:
EPA itself never comes up with an independent conclusion about the climate effects of the rule.

[00:28:05] Speaker 07:
Instead it looks at these studies, it says here's the range of results from these studies, and the closest it comes is to say that they tend to be lower than the emissions from petroleum.

[00:28:16] Speaker 07:
But it never analyzes the underlying data in the studies, their methodology, their relevance, their validity, the data itself.

[00:28:24] Speaker 07:
It would be like this court's looking at a range of GPAs for law clerk applicants without looking at the underlying data like where they went to school and what their grades were and what classes they took.

[00:28:34] Speaker 07:
You need to look at the underlying data to get a sense of the validity of the studies that they looked at in the literature review.

[00:28:40] Speaker 08:
But what value would we give the concurrences then?

[00:28:43] Speaker 08:
I'm sorry, Your Honor.

[00:28:44] Speaker 08:
What value would we give the concurrences with respect to how the 250 page biological evaluation that occurred here too though?

[00:28:52] Speaker 07:
Well, within the biological evaluation, they also recognize that there's these climate impacts.

[00:28:56] Speaker 07:
They talk about land conversion.

[00:28:58] Speaker 07:
They talk about a lot of the environmental harms that come from conversion of land.

[00:29:03] Speaker 07:
Those have a climate impact as well.

[00:29:06] Speaker 07:
And they also ignore several studies that talk about the carbon opportunity cost.

[00:29:11] Speaker 07:
And they say that these are outlier studies.

[00:29:13] Speaker 07:
They say that in the brief.

[00:29:14] Speaker 07:
Sorry, council says that.

[00:29:16] Speaker 07:
EPA itself doesn't say that.

[00:29:17] Speaker 07:
But there's record evidence that talks about these studies

[00:29:20] Speaker 07:
at JA 531 to 533 that talk about the climate opportunity cost.

[00:29:26] Speaker 07:
And EPA itself recognizes this global impact in the record itself.

[00:29:30] Speaker 07:
But again, it excludes these studies because it says that they're not life cycle analyses.

[00:29:36] Speaker 07:
But this statute requires EPA to consider all climate impacts, not just those climate impacts that stem from life cycle analyses.

[00:29:44] Speaker 09:
Although, wouldn't that be very distorted?

[00:29:46] Speaker 09:
I mean, they need to come up with, that's the case I gather for these biofuels, is some kind of life cycle analysis.

[00:29:52] Speaker 09:
And if they, you know, they have to have some theory about what the relevant unit of measure is, and they've chosen a life cycle.

[00:30:01] Speaker 07:
Well, Your Honor, the statute requires them to consider life cycle analyses when looking at whether a particular fuel has a 20% reduction.

[00:30:08] Speaker 07:
And so to set which fuels qualify as renewable fuels, that requires a life cycle analysis.

[00:30:14] Speaker 07:
But the statute here says that they have to consider climate impacts.

[00:30:19] Speaker 07:
And yes, they can look at life cycle analyses, but it's unreasonable to ignore an important aspect of the problem, which is the tremendous climate impact that comes from keeping land in use for this type of production.

[00:30:31] Speaker 08:
But in looking at an important aspect of the problem, they can give it little weight or great weight.

[00:30:35] Speaker 08:
And so do you have a consideration as to what emphasis they should place on either little or great?

[00:30:42] Speaker 07:
Well, Your Honor, regardless of whether it should be literal weight, little or great, they gave it no weight at all.

[00:30:48] Speaker 07:
They failed to consider it at all.

[00:30:50] Speaker 07:
And here with the literature that they did review, they also didn't explain what they gave any weight to.

[00:30:56] Speaker 07:
Again, they didn't reach any independent conclusion.

[00:30:59] Speaker 07:
They just said, here's the results from these studies.

[00:31:02] Speaker 07:
We're not looking at what their relevance is.

[00:31:04] Speaker 07:
And in fact, EPA itself says that the studies do not align

[00:31:09] Speaker 07:
in terms of their scope, system boundaries, time horizon, year of analysis, or other factors.

[00:31:16] Speaker 07:
And that's at JA 1435.

[00:31:18] Speaker 07:
And EPA also said that it did not, quote, adjudicate

[00:31:23] Speaker 07:
which particular studies, estimates, or assumptions are most appropriate, and that's at JA33 in the preamble.

[00:31:31] Speaker 07:
So EPA itself is not telling us what weight it gave to any studies or how it's looking at any of these studies as opposed to just blindly accepting the range of estimates that they provided.

[00:31:44] Speaker 07:
So, Your Honors, I see I'm out of time.

[00:31:46] Speaker 07:
We just respectfully request that this court finds that the role is arbitrary and capricious and a violation of the Clean Air Act and the APA.

[00:31:54] Speaker 07:
Thank you.

[00:31:55] Speaker 09:
And I gather we'll hear next from Margaret Coulter.

[00:32:21] Speaker 06:
Good morning, may it please the court?

[00:32:23] Speaker 06:
Margaret Coulter for Petitioner Center for Biological Diversity.

[00:32:26] Speaker 06:
I'd like to reserve one minute for rebuttal.

[00:32:29] Speaker 06:
The Endangered Species Act requires formal consultation for all agency actions that may affect endangered or threatened species or their formerly designated critical habitats.

[00:32:40] Speaker 06:
Given the enormous scope and scale of this program,

[00:32:43] Speaker 06:
and EPA's acknowledgments throughout the record that adverse impacts could occur, it is implausible and arbitrary that the EPA and the wildlife agencies found that the set rule was not likely to adversely affect any of hundreds of listed species or their critical habitat.

[00:32:59] Speaker 06:
This is arbitrary capricious and violates the ESA.

[00:33:03] Speaker 06:
And this failure matters because formal consultation is the only mechanism for requiring conservation measures to mitigate the potential harms that EPA acknowledged throughout the record.

[00:33:15] Speaker 06:
I'll start first with the Fish and Wildlife Service whose conclusion is the most egregiously unlawful.

[00:33:22] Speaker 06:
Despite EPA's acknowledgments in the record that the set rule may affect listed species in critical habitat, including a table of the top 10 species most impacted, all of which are within Fish and Wildlife Service's jurisdiction, Fish and Wildlife Service categorically found no effect for all species.

[00:33:40] Speaker 06:
But BPA acknowledges, for example, up to approximately 5% of the Salt Creek tiger beetles' critical habitat could be converted to cropland.

[00:33:49] Speaker 06:
And critical habitat is defined as habitat that the agency has found essential to the conservation of the species.

[00:33:58] Speaker 06:
But Fish and Wildlife did not undertake any scientific analysis of these potential impacts, and yet made a blanket determination that the set rule would have no effect at all on these and other protected species and critical habitat.

[00:34:10] Speaker 09:
But how can we hold that blanket determination unlawful when it was based on the two-part causation test outlined in the regulatory definition of, quote, effects of the action in 50 CFR 402.02?

[00:34:26] Speaker 06:
Your honor, I think you're referring to the reasonable certainty standard that Fish and Wildlife Service uses in their concurrence letter.

[00:34:35] Speaker 06:
So the statute and regulations don't require that this uncertainty be resolved as a threshold for moving into formal consultation.

[00:34:42] Speaker 06:
And formal consultation is where the agency should be utilizing the best available science to grapple with this uncertainty.

[00:34:50] Speaker 06:
So the plain language of the ESA and implementing regulations require formal consultation where action is likely to adversely affect species.

[00:34:58] Speaker 09:
Am I right in putting weight on the assignment of the likeliness, the threshold likely to affect determination on the EPA as opposed to on the services?

[00:35:10] Speaker 06:
So the EPA provides information to the services and it's on the services

[00:35:14] Speaker 06:
to determine whether or not to concur.

[00:35:17] Speaker 06:
And so when Fish and Wildlife is looking, EPA makes this acknowledgement of many potential impacts that could occur.

[00:35:24] Speaker 06:
And Fish and Wildlife Service doesn't even grapple with any scientific analysis of its own with what EPA prepared.

[00:35:31] Speaker 06:
And this lies in contrast to what NIMHS actually did here, which we think was inadequate.

[00:35:38] Speaker 06:
NIBs at least completed an initial analysis of the impacts to species and habitat.

[00:35:43] Speaker 06:
And in fact, NIBs scientifically evaluated impacts to a species gulf sturgeon, a nearly identical species to that located in very close proximity to a fish and wildlife service species, the pallid sturgeon.

[00:35:55] Speaker 06:
So when you compare the two approaches there, fish and wildlife service failed to consider these impacts and grapple with the science.

[00:36:03] Speaker 06:
And that is arbitrary and capricious here.

[00:36:07] Speaker 01:
There's an odd feature of the two regulations at issue, odd textual feature to me anyway, which is the substantive rule of formal consultation is key to actions that either may or are not likely to have an affect with an A. And there's a defined

[00:36:37] Speaker 01:
term of effect with an E, which Judge Pillard had just mentioned.

[00:36:44] Speaker 01:
Do you accept the proposition that the affect in the operative rule is just something that has an effect, which is a defined term?

[00:36:57] Speaker 06:
I think that's how the services have interpreted.

[00:37:00] Speaker 01:
That is how they have.

[00:37:01] Speaker 01:
Yes, and I think that that- Do you dispute that?

[00:37:04] Speaker 06:
I don't think we do dispute that.

[00:37:06] Speaker 01:
Because then, I mean, it just gets very odd if you look at the operative rule.

[00:37:14] Speaker 01:
It seems to be somewhat favorable to you.

[00:37:19] Speaker 01:
May affect is a species-friendly standard.

[00:37:23] Speaker 01:
Not likely to adversely affect is

[00:37:28] Speaker 01:
You know, maybe it's 51% if you drill down into what they say about discountable.

[00:37:35] Speaker 01:
It seems like it's a species-friendly standard.

[00:37:40] Speaker 01:
But you go back to the definition of effect and it's just not an effect at all unless there is something, unless the harm is reasonably certain to occur.

[00:37:50] Speaker 01:
And that's a very, you know, pro-action agency standards.

[00:37:56] Speaker 01:
I don't know how to reconcile those.

[00:37:58] Speaker 06:
So if you look at the services handbook for CSA Section 7 consultation.

[00:38:04] Speaker 01:
I've done that.

[00:38:05] Speaker 06:
Go ahead.

[00:38:06] Speaker 06:
There's a section on concurrence for the wildlife agencies with not likely to adversely affect determinations, which quote says, if the nature of the effects cannot be determined, the benefit of the doubt is given to the species.

[00:38:21] Speaker 06:
do not concur in this instance.

[00:38:24] Speaker 06:
And that's in the joint appendix at 2134, handbook page 3-12.

[00:38:29] Speaker 06:
And so here where we're going from informal consultation to formal consultation, the nature of the effects, if they are unable to be determined, if there's uncertainty, that should be resolved in a formal consultation.

[00:38:40] Speaker 01:
That makes perfect sense, but they have to be effects.

[00:38:44] Speaker 01:
effects in the first place.

[00:38:47] Speaker 06:
The May effects standard is a very, many courts have found, is a very low bar for entering into formal consultation.

[00:38:53] Speaker 06:
And here we would argue that Fish and Wildlife Service and EPA's acknowledgments throughout the record should push it into the formal consultation process.

[00:39:03] Speaker 09:
So is it correct to think about the way that EPA and the National Marine Fisheries Service looked at the issue was, as with these two regulations that Judge Katz points out, feel like they point different ways, is that EPA, National Marine Fisheries looked, started with

[00:39:32] Speaker 09:
may affect and move from there into the question of whether it's likely to adversely affect and then looking at insignificance and discountability, whereas Fish and Wildlife Service kind of started at the end.

[00:39:56] Speaker 09:
and asked kind of implicitly after we think about discountability and insignificance, is there an effect of the action that is reasonably certain to occur and said no?

[00:40:14] Speaker 09:
And if so, what's wrong with those two different services coming to concurrences from two different avenues?

[00:40:21] Speaker 06:
I think as you're thinking through the consultation process, what EPA did here was started with an informal consultation.

[00:40:28] Speaker 06:
And if you're looking at informal consultation, the standard is may affect, and that's a very low bar.

[00:40:34] Speaker 06:
And so the way that EPA and NIMS looked at the effects, whether they crossed that low bar to get into the next step of not likely to adversely affect potential determinations, that is the typical process that's outlined in the section seven handbook.

[00:40:51] Speaker 06:
What Fish and Wildlife did here, like you said, is kind of going from the back end, saying if we're going to be trying to determine the ESA's substantive standard

[00:41:03] Speaker 06:
that is insuring against jeopardy, we need to look at, are there any certain, reasonably certain effects?

[00:41:08] Speaker 06:
And that's coming at it from the back end.

[00:41:10] Speaker 06:
And the order of those operations is reversed here.

[00:41:13] Speaker 06:
And here we're in this situation where we're in informal consultation and we're needing to step to formal consultation because of the numerous potential effects that EPA outlines in the biological opinion.

[00:41:26] Speaker 09:
Maybe it'll help if you talk about how National Marine Fisheries Service erred, because if National Marine Fisheries Service did not err in its concurrence, it is hard to see how this starting at the back end by fish and wildlife was problematic.

[00:41:44] Speaker 09:
But if National Marine Fisheries Service did err, I see your point that it seems like the

[00:41:52] Speaker 09:
maybe Fish and Wildlife Service jumped over an important analytics step and that's the results of that would have pointed toward formal consultation.

[00:42:01] Speaker 09:
Sure.

[00:42:02] Speaker 09:
So I guess it's, can you further explain why you think EPA failed to analyze harms from water pollution?

[00:42:11] Speaker 09:
It seems like EPA did evaluate the potential for water pollution and determined that any such effects were insignificant or discountable.

[00:42:22] Speaker 09:
And then I took you in your reply brief to say, well, NMFS's conclusion as to discountable effects was reasonable, but its conclusion as to insignificant effects was arbitrary.

[00:42:34] Speaker 09:
Am I right about that?

[00:42:36] Speaker 06:
Your Honor, yes.

[00:42:37] Speaker 06:
I think that we would say that there's a spectrum of effects to species here.

[00:42:41] Speaker 06:
And it may be the case that some of these effects could potentially be discountable.

[00:42:46] Speaker 06:
So here we have the example of how NIMHs looked at water pollution.

[00:42:51] Speaker 06:
It found it not likely to adversely affect, as you said, citing insignificant and discountable, finding that some of these effects are insignificant and discountable.

[00:43:00] Speaker 06:
So for example, it justified its determination by setting an arbitrary 1% threshold for changes in pollutant concentrations from crop conversion, calling anything less than 1% insignificant indiscriminately for all salmon and sturgeon species.

[00:43:16] Speaker 06:
These are the species most affected by water pollution.

[00:43:19] Speaker 06:
But there's nothing in the ESA that excuses harms merely because they're small or because they're below some 1% threshold.

[00:43:27] Speaker 06:
And NIMS provides no discussion of why a 1% threshold could be appropriate for any specific species or any specific designated habitat.

[00:43:36] Speaker 06:
So this is unlawfully arbitrary.

[00:43:42] Speaker 06:
So when we're looking at discountable, we agree it's likely that there may be some effects to species that are discountable, such as for whales and manta rays.

[00:43:51] Speaker 06:
But this is not the same as effects that may be incrementally small.

[00:43:56] Speaker 06:
such as less than 1% changes to pollution concentrations, which NIB's claims are insignificant.

[00:44:02] Speaker 09:
So as I read it, EPA didn't just say 1% per se is insignificant.

[00:44:11] Speaker 09:
It said that it would not be measurable.

[00:44:14] Speaker 09:
It would not be measurable, which seems to me to track the applicable standard

[00:44:20] Speaker 09:
pretty accurately.

[00:44:21] Speaker 09:
The inherent variability of exposure can vary over 10% due to differences in factors such as precipitation and soil type.

[00:44:28] Speaker 09:
And when it says it's not measurable, it's hard for me to see how that isn't a legally valid determination of insignificance.

[00:44:40] Speaker 06:
The service's handbook has this longstanding definition of insignificant.

[00:44:44] Speaker 06:
And I'll quote from the handbook.

[00:44:46] Speaker 06:
It's at Joint Appendix 2126.

[00:44:50] Speaker 06:
Insignificant is not, sorry, here's the quote.

[00:44:52] Speaker 06:
Should never reach the scale where take occurs and take even if unintentional or not lethal is expected to occur to even just one individual of any species or any adversely modify any critical habitat, concurrence is not appropriate.

[00:45:07] Speaker 09:
Maine Lobsterman roundly rejects that.

[00:45:10] Speaker 06:
Maine Lobsterman dealt with a factually different situation where we were in the formal consultation process and we were dealing with the jeopardy question.

[00:45:18] Speaker 06:
Here we're getting from

[00:45:20] Speaker 06:
We are looking at the very low, likely to adversely affect standard, and here we're seeing the agencies using uncertainty to avoid consultation.

[00:45:30] Speaker 06:
And so there the court found that in the case of uncertainty, an agency can't just throw up its hands and rely only on a presumption there of the worst case scenario.

[00:45:41] Speaker 06:
to avoid using the best available science.

[00:45:44] Speaker 06:
And so NIMS fails to engage with this extensive existing scientific data surrounding hypoxic dead zones in the Chesapeake Bay and Gulf of Mexico.

[00:45:52] Speaker 06:
And as we heard in Nene Lobstrom in this court, found the core of the services remit is to form a scientific judgment.

[00:46:00] Speaker 06:
And so we've seen that Fish and Wildlife Service didn't grapple with this science at all.

[00:46:04] Speaker 06:
And EPA acknowledges, oh yes, there is a hypoxic dead zone.

[00:46:07] Speaker 06:
Oh yes, it is,

[00:46:10] Speaker 06:
continually adversely affected by additional pollution from sediment runoff, from fertilizer, from pesticides, from the kinds of activities that this rule is action forcing.

[00:46:23] Speaker 09:
So even the handbook itself, which you refer to and you distinguish Maine Lobster Man by saying,

[00:46:32] Speaker 09:
that that was in a formal consultation, which I appreciate.

[00:46:35] Speaker 09:
But EPA itself references the consultation handbook definition of insignificant effects as those that a person would not, quote, be able to meaningfully measure, detect, or evaluate.

[00:46:46] Speaker 09:
And I think it's speaking to that by saying these water quality effects are not detectable.

[00:46:55] Speaker 09:
And your response to that, I know you've just given me, but succinctly your response to that is,

[00:47:02] Speaker 06:
When you look at a watershed, all pollution flows downstream and aggregates.

[00:47:06] Speaker 06:
And we know where critical habitat is.

[00:47:08] Speaker 06:
And for species that live in water, we know what those watersheds are.

[00:47:13] Speaker 06:
And so as you think about effects, measurable effects to species, the aggregation of ordinary water pollution affects these species.

[00:47:23] Speaker 06:
And so I think that if you think about what is insignificant as measurably detectable,

[00:47:31] Speaker 06:
you look at the effect to these species.

[00:47:33] Speaker 06:
And for example, in EPA's top 10 table, we've got at least two fish species, two crayfish species, and water pollution is cited as one of the reasons why those species were listed in the first place.

[00:47:47] Speaker 06:
So that adverse modification of their designated critical habitat meets that very low, likely to adversely affect bar, pushing us into formal consultation.

[00:47:56] Speaker 09:
So are you saying that the very figures on the table kind of belie their nonmeasurable conclusion?

[00:48:02] Speaker 06:
I think that's right.

[00:48:04] Speaker 06:
Thank you.

[00:48:05] Speaker 06:
I see I'm out of time.

[00:48:06] Speaker 06:
If you'd like me to briefly conclude, or if I can reserve my one minute for rebuttal?

[00:48:12] Speaker 09:
You can briefly conclude in 20 seconds and reserve your one minute.

[00:48:15] Speaker 06:
You've got it.

[00:48:15] Speaker 06:
Thank you.

[00:48:16] Speaker 06:
So at its core, it's implausible that this enormous program is not likely to adversely affect even a single individual of any of hundreds of endangered and threatened species, nor adversely modify any critical habitat.

[00:48:29] Speaker 06:
So we respectfully request the court find the agencies violated the ESA and vacate and remand the corn and soy volumes in the role.

[00:48:36] Speaker 09:
All right, thank you.

[00:48:37] Speaker 06:
Thank you.

[00:48:39] Speaker 09:
We hear next from EPA Alexander Porpoiro.

[00:48:46] Speaker 05:
Good morning, Your Honors.

[00:48:53] Speaker 05:
May it please the court?

[00:48:55] Speaker 05:
My name is Alex Perpura, appearing on behalf of the respondents, along with John Martin from the Department of Justice.

[00:49:01] Speaker 05:
I'll be arguing for 22 and a half minutes in response to the Clean Air Act and Regulatory Flexibility Act claims raised by environmental petitioners and obligated party petitioners.

[00:49:10] Speaker 05:
My co-counsel, Mr. Martin, will argue for seven and a half minutes in response to the Endangered Species Act claims raised by environmental petitioners.

[00:49:19] Speaker 05:
The court should deny the petition's review.

[00:49:21] Speaker 05:
UPA acted within its statutory authority to assess the statutory set factors as well as the implementation of the program to set achievable renewable fuel volumes that appropriately account for the balance of the factors.

[00:49:34] Speaker 05:
UPA properly considered the timing of its rulemaking in setting those factors and

[00:49:40] Speaker 05:
properly set the supplemental standard in response to this court's remand maize.

[00:49:46] Speaker 05:
Further, the regulatory flexibility act argument asserted by petitioners has been waived, but even so, it's not a basis for overturning the pool.

[00:49:54] Speaker 05:
And finally, the agencies have properly complied with their obligations under the Endangered Species Act.

[00:50:00] Speaker 05:
EPA has applied the statutory criteria under section 7545-02-B2 to set renewable fuel volumes that advance Congress's policy of increasing renewable fuel.

[00:50:11] Speaker 05:
This court has repeatedly held that the purpose of the renewable fuel standard is to increase consumption of renewable fuels.

[00:50:17] Speaker 05:
There's nothing improper about EPA's analysis where it has applied the statutory factors and considered the implementation of the program to set renewable fuel volumes progressing into future years.

[00:50:28] Speaker 05:
EPA recently considered each of the factors.

[00:50:31] Speaker 09:
Mr. Propero, can you help us to understand EPA's decision to set the advanced biofuel volume around a billion gallons below the candidate volumes that the record suggested would be reasonable and appropriate to require based on the analysis of all the statutory factors?

[00:50:57] Speaker 05:
Sure, Your Honor.

[00:50:57] Speaker 05:
So when EPA assessed the candidate volumes, it was assessing the types of fuel within each of those categories.

[00:51:04] Speaker 05:
And when it set the final volumes, it decided to maintain the statutory implied volume from the prior rulemaking, which includes the 15 billion gallons or 15.25 with the supplemental standard.

[00:51:17] Speaker 05:
And in doing so,

[00:51:19] Speaker 05:
EPA recognized that the total renewable fuel volume, so the amount outside the advanced standard, can be accounted for with both conventional fuel and advanced biofuel.

[00:51:29] Speaker 05:
So it still accounts for that portion of the advanced biofuel category, and that can be used to satisfy that gap in the implied volume.

[00:51:37] Speaker 09:
I guess my question more pointedly is how would the 15 billion gallon implied conventional fuel volume incentivize the production of E15 and E85?

[00:51:50] Speaker 09:
I take it EPA here is looking to incentivize a volume that will push past the blend wall

[00:51:57] Speaker 09:
I take it the blend wall in the real world terms is reflected by the inadequacy of infrastructure of vehicles that can accommodate more than E10 and that if there's a greater supply of ethanol and it's cheap enough that that will trigger the development of infrastructure of the vehicles that will that will hurdle the blend wall and

[00:52:25] Speaker 09:
So that that's sort of the policy idea behind, in part, the statute and behind EPA's position.

[00:52:32] Speaker 09:
Is that right?

[00:52:34] Speaker 05:
Yes, Your Honor, that's correct.

[00:52:36] Speaker 09:
And so then my question is, well, if the projection that EPA is making is that the extra billion or so of the implied conventional fuel volume is likely to be met by biomass-based diesel, is that also right?

[00:52:57] Speaker 09:
It's likely to be met by biomass-based diesel?

[00:53:01] Speaker 05:
Yes.

[00:53:03] Speaker 09:
That's how I read the record.

[00:53:04] Speaker 09:
But then that is biomass-based diesel, unless I'm really missing something, can't be used in E15 or E85 and is going to have no effect on the blend wall.

[00:53:19] Speaker 09:
And so it seems like kind of an apples and oranges bit of reasoning.

[00:53:25] Speaker 05:
So while biomass-based diesel can be used in total renewable fuel volume,

[00:53:32] Speaker 05:
It is not correct that maintaining that space above the blend wall does not incentivize the increase in E15E85.

[00:53:43] Speaker 05:
So EPA acknowledges that biomass-based diesel can be used to satisfy some excess volumes, but there are increased numbers of fuel used from the 15E85

[00:53:56] Speaker 05:
NEPIA has found that over the years, while we certainly recognize that the amounts of E15, E85 aren't going to close the gap, they are steadily increasing over the years.

[00:54:11] Speaker 05:
So the record at Joint Appendix 16, 1600, 1601,

[00:54:16] Speaker 05:
reflects data for increasing distribution stations for E15E85, which EPA found was a primary limiter in the ability of those fuels to sort of close the gap in that implied volume.

[00:54:28] Speaker 05:
And those have been increasing over the years program.

[00:54:31] Speaker 05:
EPA assessed that were it to scale down that implied volume,

[00:54:36] Speaker 05:
at the blend wall would essentially eliminate any incentives for those fuels and eliminate their use in the market.

[00:54:42] Speaker 05:
So EPA does find that there is value in maintaining that gap, but also allowing parties to use other fuels to fulfill that gap because it creates space for those fuels to grow, even though we acknowledge that the full amount isn't going to be used with those fuels.

[00:54:58] Speaker 05:
But it does

[00:55:00] Speaker 05:
the EPA explains in the record that it does support the growth of those plans.

[00:55:06] Speaker 09:
So they're basically saying, we're going to try to use this additional

[00:55:18] Speaker 09:
biomass-based diesel or non-cellulosic advanced biofuel standard to both push the non-cellulosic advanced biofuels and implicitly push conventional biofuels.

[00:55:37] Speaker 09:
And they're sort of thinking those two things are both happening in the way they've set that non-cellulosic advanced biofuel volume.

[00:55:46] Speaker 05:
I believe that's correct.

[00:55:48] Speaker 05:
So effectively the tailoring of the lines here both ensures that as the volumes show and as in case projections show, the non-cellulosic advanced biofuels are expected to increase in production.

[00:56:02] Speaker 05:
The program does provide incentive for the increase of those fuels, but also that not quite tailoring the line to

[00:56:10] Speaker 05:
up to the blend wall allows for space for the amount to grow above the 10% blend wall area.

[00:56:18] Speaker 09:
And what's your response to your colleagues representing the refiners that talk about this price convergence at the price for conventional

[00:56:33] Speaker 09:
renewables is going to rise because of the way you've treated these two different categories.

[00:56:39] Speaker 09:
Is that wrong?

[00:56:40] Speaker 09:
They say you acknowledge that it's right?

[00:56:43] Speaker 05:
We do acknowledge that the price in that category has increased as a result of that gap in the volume.

[00:56:51] Speaker 05:
But we also explain that that increased price does provide increased incentives for use of renewable fuel, especially the E-15 85 blends.

[00:57:00] Speaker 05:
and that part of that incentive is to provide the increase for those fuels.

[00:57:06] Speaker 05:
So when we recognize that there is an increase in the price of rims, that's an expected effect of the program where the program is designed to increase the consumption of renewable fuel.

[00:57:17] Speaker 05:
The rim prices are expected to rise in time.

[00:57:20] Speaker 09:
So is it that the conventional fuel price is affected by the price of the non-cellulosic advanced biofuel, or it's just that given the relative need for pressure to raise the volume of conventional biofuels, the price is going to go up, whatever happens, separately?

[00:57:40] Speaker 09:
to some other price of some other category.

[00:57:44] Speaker 09:
The converge is what, and maybe I'm overthinking it, but the term converge is what's, that's just a practical analysis.

[00:57:52] Speaker 09:
It's not like there's some effect of the one on the other, or is there?

[00:57:56] Speaker 05:
I believe there is an effect.

[00:57:59] Speaker 05:
So the availability of, let's say, D6 rims in the pool for the total renewable fuel volume

[00:58:10] Speaker 05:
it reaches up to a certain number.

[00:58:12] Speaker 05:
And the fact that you need additional wins at a higher price to fulfill that gap causes the prices to meet at a certain point.

[00:58:23] Speaker 05:
And so to that extent, I believe that addresses the converged question, Your Honor.

[00:58:33] Speaker 09:
Shifting a little bit, can you explain the illustrative analysis that EPA undertook to compute the climate change benefits?

[00:58:41] Speaker 09:
I have to say, in a program that is specifically aimed at energy security and at climate benefits, the range of values for climate that the literature reflects, and as your environmental friends were saying, EPA's restraint from

[00:59:04] Speaker 09:
choosing which of the figures in the literature it thinks is most rigorous and most that it's willing to favor.

[00:59:17] Speaker 09:
How can it be non-arbitrary to just have this range that the poles of which have very different implications for whether this is a climate saving or a climate harming program?

[00:59:33] Speaker 05:
EPA conducted, as the record reflects, a literature assessment of the available science on climate change, which expresses a range regarding all these differential pathways.

[00:59:46] Speaker 05:
EPA created criteria for what types of studies it would include, one of them being that it has to be a life cycle analysis and it has to be a peer-reviewed study or come from a credible government or NGO entity.

[01:00:04] Speaker 05:
to determine what studies fall within.

[01:00:07] Speaker 05:
And EPA looked at these studies and determined that they each had their relative strengths and weaknesses, and it wasn't appropriate, at least with the current state of the science, to start ruling these out or cutting these out.

[01:00:20] Speaker 05:
And EPA created a range of these studies and notes in the record at Joint Appendix 1436 that

[01:00:28] Speaker 05:
The trend of these ranges is that the life cycle analysis estimates for renewable fuels tend to be lower than those for petroleum fuels.

[01:00:37] Speaker 05:
EPA looked at this range.

[01:00:38] Speaker 05:
EPA considered it as it's required to do in assessing the environmental factor and on the balance determined that the potential for benefits provided by the greenhouse gas reductions from renewable fuel

[01:00:53] Speaker 05:
justified or at least part of the factors justifies the increased volumes here.

[01:01:02] Speaker 01:
You did two calculations.

[01:01:07] Speaker 01:
I'm just trying to make sure I understand the mechanics of how you thought about this, right?

[01:01:13] Speaker 01:
So you look at the literature on emissions and you see this huge range and

[01:01:21] Speaker 01:
Then when you try to monetize, you do one set of calculations, which is low biofuel, high petroleum emissions, right, which would be most favorable for the program.

[01:01:40] Speaker 01:
And then you do another one, which is high biofuel,

[01:01:44] Speaker 01:
low petroleum, right, which is kind of going on the other end of the literature, right?

[01:01:51] Speaker 01:
And you do, you have another huge source of uncertainty on social cost of carbon and you have the kind of, your best guess reflected in the three columns and the 95th percentile is the outlier.

[01:02:13] Speaker 01:
And then you have three different discount rates and the 5 and 2.5 are the outer bound and the 3% is the mid-range, right?

[01:02:25] Speaker 01:
Do I understand it?

[01:02:28] Speaker 01:
Okay, so if you do the favorable to the program, biofuels have low emissions, petroleum has high emissions,

[01:02:42] Speaker 01:
and you take the intermediate discount rate and you've given us a table of numbers extending 30 years, which you say are the climate benefits on all of those assumptions discounted to present value.

[01:03:02] Speaker 01:
If you add up all those numbers, you get a climate benefit.

[01:03:06] Speaker 01:
If I did the math right, you get a climate benefit of about $7.5 billion.

[01:03:13] Speaker 01:
over 30 years.

[01:03:16] Speaker 01:
Is that right?

[01:03:18] Speaker 01:
Just summing the numbers in the column.

[01:03:21] Speaker 01:
I don't want to hold you to the number, but am I summing the right numbers?

[01:03:28] Speaker 01:
I'm on JA 1506.

[01:03:32] Speaker 01:
Just looking at

[01:03:35] Speaker 05:
I've seen, in adding the numbers, I've seen far higher estimates, but, you know, acknowledging that EPA's not holding these out as exact calculations or even relying on these numbers.

[01:03:48] Speaker 01:
No, but, all right, but that is a back of the envelope number that gives a benefit over 30 years.

[01:03:57] Speaker 01:
that is less than what you say are the increased fuel costs for one year, 8 billion a year, which is 24 billion over three years.

[01:04:11] Speaker 05:
In that particular column, perhaps, Your Honor, I believe some of the higher ranges provide much higher benefits.

[01:04:19] Speaker 01:
I mean, I'm taking, I'll check my math, but I'm taking the mid-rate on low biofuel, high petroleum.

[01:04:27] Speaker 01:
And if you take the mid-rate on high biofuel, low petroleum, you actually get a negative number.

[01:04:35] Speaker 01:
In other words, EPA's table says if you go on the other end of the literature, the net 30-year outcome of this just on greenhouse gas emissions is a cost, not a benefit.

[01:04:50] Speaker 05:
Right, that's on the low end.

[01:04:52] Speaker 01:
You know, you just look at a year one, you're in the whole 15,000 and you're making it up 300 or 400 a year.

[01:05:03] Speaker 01:
It never catches up.

[01:05:07] Speaker 05:
On the low end, that sounds correct.

[01:05:11] Speaker 01:
I mean, the statute requires consideration of cost

[01:05:18] Speaker 01:
How is this a reasonable assessment of cost where on the negative view of the literature, you're getting 30 years of benefit that don't equate to one year of increased fuel cost?

[01:05:37] Speaker 05:
So the statute requires a consideration of cost to consumers of fuels and impacts of environmental

[01:05:45] Speaker 05:
of climate change and other environmental impacts.

[01:05:48] Speaker 05:
And EPA here has assessed the qualitative benefits provided by climate change.

[01:05:53] Speaker 05:
Again, I don't have the numbers.

[01:05:56] Speaker 01:
And said it's a huge range and we have no idea, but here's a calculation that's favorable to the program and here's one that's unfavorable to the program.

[01:06:06] Speaker 05:
Right.

[01:06:06] Speaker 05:
And that's why EPA doesn't

[01:06:09] Speaker 05:
rely at least on that calculation, because again, you're looking at the extreme on one end and the extreme on the other, which is not where most of the studies in the literature land.

[01:06:19] Speaker 05:
But if you look at the range of the studies, many of them do reflect that there are greenhouse gas emission reductions that EPA qualitatively considered those studies and the range of benefits provided by greenhouse gas emissions and

[01:06:34] Speaker 05:
As this court found in the Sinclair decision earlier this year, that assessment is reasonable where Congress has asked EPA to look at climate benefits.

[01:06:44] Speaker 05:
It's one of the primary benefits the program is designed to incur.

[01:06:49] Speaker 05:
And the issue here is that the science where it currently is does not allow for an exact estimate.

[01:06:58] Speaker 09:
But even close, I mean, it seems like at some point

[01:07:04] Speaker 09:
EPA has to have better metrics because a lot of what it's doing these days, not just in this program, is, you know, for putative client benefits or over client-based objections and you can't make rational decisions and we can't review their rationality if the range is such that

[01:07:27] Speaker 09:
the, you know, there are material, major material differences in where within the range reality might be.

[01:07:36] Speaker 09:
I mean, I think I trust you appreciate the problem.

[01:07:42] Speaker 05:
We understand it's a difficult issue and EPA is grappling with it by attempting to consider and understand the

[01:07:50] Speaker 05:
the full range of scientific literary traumas issue.

[01:07:54] Speaker 05:
And certainly not.

[01:07:55] Speaker 09:
And coming up with a model that it would actually use?

[01:08:00] Speaker 05:
I mean, so in the record, although EPA didn't rely on it, part of the model comparison exercise was implemented to understand the differences between these studies.

[01:08:11] Speaker 05:
Now, for this rulemaking, EPA didn't determine that it wasn't at a point where they could use it.

[01:08:16] Speaker 05:
to assist the rulemaking, but EPA also explains in the record in response to comments that Joint Appendix 1878 comments requesting that EPA create criteria to further establish and I guess prune out some of these studies or at least narrow down the results and EPA explained it needs additional time to work with stakeholders and get feedback to reach that point.

[01:08:41] Speaker 05:
But the current state of

[01:08:44] Speaker 05:
the science is where EPA is assessing that.

[01:08:48] Speaker 09:
On this, just much more specifically on JA 1504, this table 4.2.4.2-3, why is it that the numbers in the 2025 line are all negative in terms of climate impact?

[01:09:10] Speaker 09:
Is this because this is when the

[01:09:15] Speaker 09:
land usage of acreage would occur, and then this is only looking at these same volumes over time, and so that's then the cash out from the acreage transformation, or what's with the negative at the outset?

[01:09:29] Speaker 05:
That's generally correct, Your Honor.

[01:09:32] Speaker 05:
In general, you note that the trend across the tables is that that first line item is usually negative, and that's to account for the impact of

[01:09:42] Speaker 05:
clearing the land and generating these fuels.

[01:09:44] Speaker 05:
And that's where the negative value comes from.

[01:09:47] Speaker 05:
And then that's why EPA looks at it over a 30-year trend is because you'll have that initial burst of emissions.

[01:09:57] Speaker 05:
And then over the years, you'll get the gains from then replacing petroleum fuels and reducing emissions over the years.

[01:10:05] Speaker 09:
And I think EPA has not done any opportunity cost analysis, not just hasn't done the ones that your environmental petitioners have requested.

[01:10:16] Speaker 09:
What would be the likely uses of these lands if not for this program?

[01:10:24] Speaker 09:
And it is arresting when they say you could use 1% of the acreage for a solar farm and use the rest of it for any number

[01:10:33] Speaker 05:
So I'd like to clarify a bit to what they're referring to.

[01:10:41] Speaker 05:
So environmental petitioners refer to a particular study that EPA acknowledged in its regulatory impact analysis.

[01:10:51] Speaker 05:
This is the searching study, which assesses this carbon opportunity cost.

[01:10:58] Speaker 05:
issue.

[01:10:59] Speaker 05:
And that study, I believe, used a counterfactual exercise.

[01:11:05] Speaker 05:
So do not rely on empirical data.

[01:11:06] Speaker 05:
And EPA acknowledged the study and explained why it wasn't included in the general range of life cycle analyses, because it's not a life cycle analysis.

[01:11:15] Speaker 05:
So to the extent they're saying EPA didn't just ignore carbon opportunity costs, that's not correct.

[01:11:22] Speaker 05:
EPA looked at the study and considered it and explained why

[01:11:27] Speaker 05:
why it was not factoring that into the life cycle analysis.

[01:11:31] Speaker 09:
And there's no other, I guess what I was asking is there's no other carbon opportunity cost methodology that EPA has relied on or developed, because that would seem to be an important just real world factor when one looks at a chart like this.

[01:11:47] Speaker 05:
So I think part of the issue though is that, so no, there's not a particular study in that range of studies that EPA

[01:11:56] Speaker 05:
relied on, but it explained in its response to comments that to the extent that the study could be, or that type of analysis could be estimated with empirical measurements, they're not just assumptions on what landowners might do with their land versus what's currently being used for.

[01:12:15] Speaker 05:
EPA explained the current life cycle analysis that it is relying on, or at least that the studies it's looking at rely on are the kind of business as usual.

[01:12:26] Speaker 05:
status of these lands that landowners would use if they were not growing crops for the RFS program or biofuels.

[01:12:35] Speaker 09:
Okay, well that is an opportunity cost analysis.

[01:12:39] Speaker 09:
Business as usual is what you're assuming would be happening.

[01:12:43] Speaker 09:
I think that's responsive to my question.

[01:12:46] Speaker 08:
On another note, the Sinclair decision mentions Chevron, and you did the two-step analysis with respect to doing an interpretation, but obviously Chevron has gotten overruled, so when you're looking at the cellulose volume requirement, how much are you relying on just kind of the plain text of that statute versus EPA using its own interpretation?

[01:13:13] Speaker 05:
For which?

[01:13:14] Speaker 08:
For just making its own interpretation with respect to the statute.

[01:13:17] Speaker 08:
I'm just trying to figure out how much you're relying on using Chevron since now it's been overruled with Loper.

[01:13:23] Speaker 08:
And then our court has taken up the Loper decision on Monday.

[01:13:29] Speaker 05:
EPA is not relying on its own interpretation.

[01:13:33] Speaker 05:
The arguments we've made in our brief are all based on the statutory text.

[01:13:37] Speaker 05:
So we don't rely on deference or reasonableness here.

[01:13:41] Speaker 08:
Okay.

[01:13:41] Speaker 08:
And then just to back up on the sustainability question, you obviously have this program for three years.

[01:13:51] Speaker 08:
I think I want to just ask the direct question, is it your position that the program is sustainable over this period of time for the set roof during this period of time?

[01:14:04] Speaker 05:
EPA explains that in the record, a joint appendix 45 to 52, that on the balance and consideration of all these factors, that the volumes are appropriate, that given the various benefits the program provides to economic development, to job creation, to the increased production of renewable fuels, and for the potential greenhouse gas benefits that the fuels provide, that the volumes are appropriate, achievable, and that the program is

[01:14:33] Speaker 05:
I'm not sure the sustainable language, but we believe the program is appropriate as EPA said.

[01:14:47] Speaker 01:
Another significant category of costs is food costs.

[01:14:55] Speaker 01:
I think the environmental petitioners say that your figures in the RIA

[01:15:03] Speaker 01:
say the volumes will increase food costs by $500 per year per consumer unit, which I guess means something like household, and that translates into a $6.6 billion per year cost, greater food costs for American families.

[01:15:28] Speaker 01:
Do you have any reaction to that?

[01:15:32] Speaker 05:
So EPA does estimate food prices as the set factors require and explains that its assessment of the food prices is that they would increase, but that EPA is not viewing that as a cost per se program because the statutory set factor set out how EPA is supposed to look at the different factors.

[01:15:55] Speaker 05:
So where it says food prices,

[01:15:58] Speaker 05:
In one spot, it says cost to consumer of renewable fuel in another spot.

[01:16:03] Speaker 05:
So in assessing food prices, EPA did determine what the increase would be, but explained that when looking at cost to society as a whole, it's not necessarily a cost because it's a transfer payment between participants in society.

[01:16:18] Speaker 05:
So where consumers spend more on food, farmers, growers, rural communities receive more in food prices.

[01:16:28] Speaker 05:
To the extent that it's entirely characterized as a cost, it's a bit misleading around that.

[01:16:35] Speaker 08:
And in Growth Energy v EPA, we made a determination, well, based on you all agreeing that this may have negative effects on endangered species.

[01:16:45] Speaker 08:
So why should we come to a different determination here from that 2019 rule?

[01:16:55] Speaker 05:
So my colleague, Mr. Martin, will address the endangered species issue, but to briefly answer, the agency is conducting an assessment in response to that determination and fully assess that question.

[01:17:15] Speaker 09:
Great.

[01:17:15] Speaker 09:
Thank you.

[01:17:17] Speaker 05:
Thank you, Annis.

[01:17:22] Speaker 09:
Mr. Martin.

[01:17:26] Speaker 00:
Good morning, your honors.

[01:17:32] Speaker 00:
John Martin here to represent the three different federal agency respondents.

[01:17:38] Speaker 00:
These three agencies consulted on the effects of this three year volume rulemaking for over two years over successive versions of EPA's biological evaluation to refine the data used and the analyses that were employed.

[01:17:53] Speaker 00:
And the record is extensive.

[01:17:56] Speaker 00:
and supports their final empirical judgments that the rule was not likely to adversely affect any of over 800 different listed entities or their critical habitats.

[01:18:04] Speaker 00:
The center doesn't particularly challenge any aspect of EPA's technical analysis.

[01:18:12] Speaker 00:
And so the court should uphold

[01:18:14] Speaker 00:
the ESA consultation in whole as reasonable.

[01:18:17] Speaker 00:
The key analysis in this case is the limited connection between the three year volume requirements here and the possible land use changes by independent farmers nationwide who may grow corner soy that could affect any ESA listed species.

[01:18:33] Speaker 00:
EPA and the services, the three expert agencies here, all found this causal chain too uncertain to demonstrate that EPA's volume requirements will cause demonstrable land use changes or worsened water quality in specific locations that matter for any specific ESA species.

[01:18:51] Speaker 09:
I found that analysis

[01:18:55] Speaker 09:
quite implausible to the extent that the brief argues that, well, there could be no effect because the additional volumes could be obtained from increased yield on existing arable land or imported.

[01:19:12] Speaker 09:
That could happen.

[01:19:14] Speaker 09:
But in light of the past history and the data that EPA has about how increased volumes have led to increased conversion of cropland,

[01:19:25] Speaker 09:
I just found that to be, to say that that's uncertainty that there would be any effect seems, I know that's not the sum total of EPA's analysis, but that step of it seemed a bit blinder to me.

[01:19:41] Speaker 00:
Well, your honor, I would point out, I would make several points in response.

[01:19:45] Speaker 00:
For example, soybean was EPA found that that could the possible expansion to grow soybeans could constitute three quarters of the acreage.

[01:19:57] Speaker 00:
that might increase as a result of this set rule.

[01:20:01] Speaker 00:
But EPA specifically addressed that productivity increases by soybean farmers could account for that entire amount, as well as decreased exports because our nation exports significant amounts of soybean.

[01:20:15] Speaker 00:
So I think these are dynamic markets.

[01:20:16] Speaker 00:
I also think, Your Honor, that

[01:20:19] Speaker 00:
As EPA explained, the impact of this program varies over time because it's a very dynamic market in biofuels and in these commodity markets.

[01:20:29] Speaker 00:
And I guess the third point I'd make is that the record for this rule is very different than the record in prior cases, particularly the growth energy case.

[01:20:39] Speaker 00:
Because in this case, the literature in agricultural economics

[01:20:43] Speaker 00:
has advanced, where EPA was able to do an attribution analysis that it had never done before.

[01:20:48] Speaker 00:
And it found that the requirements for this year had a very marginal effect on the nation's overall production of biofuel and consumption of biofuel, as well as production of corn and soy.

[01:21:01] Speaker 00:
For example, only 5%

[01:21:03] Speaker 00:
approximately 5% of the production of corn and soy biofuels are attributable to this set rule requirement.

[01:21:11] Speaker 00:
And then I think you have to pair that with the fact that ESA consultation is species specific.

[01:21:18] Speaker 00:
And so what EPA analyzed here was whether there would be a bullseye over a bullseye in effect.

[01:21:22] Speaker 00:
Whether within a species range, which species don't occupy at all times, or critical habitats, that's one bullseye.

[01:21:28] Speaker 00:
The other bullseye is whether or not any farmers would

[01:21:33] Speaker 00:
take action to affect species habitats or within their range.

[01:21:38] Speaker 00:
So it's really a bullseye over a bullseye and it's very extended chain.

[01:21:43] Speaker 00:
And so I point, for example, to my environmental colleagues point that they would hold EPA responsible for

[01:21:51] Speaker 00:
harming any species as a result of farmer decisions.

[01:21:54] Speaker 00:
And I think just pointing that out loud illustrates the very, very uncertain causal chain here that EPA's renewable fuels program under the Clean Air Act would be responsible for sort of aggregate non-point source water pollution by farmers in corn and soil already.

[01:22:11] Speaker 09:
I think what they're arguing is that it would be responsible for an incremental rise

[01:22:17] Speaker 09:
in aggregate non-source water pollution.

[01:22:20] Speaker 09:
And the notion that an incremental rise of 1% in watershed runoff that then accumulates into a river, that seems non-trivial in light of the figures that EPA itself has included in the record.

[01:22:38] Speaker 09:
So it's a little hard to tell

[01:22:46] Speaker 09:
take that careful analysis that EPA did of potential marginal species effects and understand how they become insignificant.

[01:22:59] Speaker 00:
Well, Your Honor, I point out EPA also used worst case scenarios in the maximum impact.

[01:23:05] Speaker 00:
And I'll talk about the water quality.

[01:23:08] Speaker 00:
For example, EPA looked at the Chen study, the SWAT model, and found that the increases would be on the order of 1% at the mouth of the Mississippi River, which was one of the more significant water basins.

[01:23:21] Speaker 00:
The National Marine Fisheries Service looked at that and found that there's already a significant amount of existing water pollution.

[01:23:29] Speaker 00:
an increase of 1% in the magnitude of say nutrients or sediment loading or pesticides would be within the natural variability of exposure.

[01:23:38] Speaker 00:
Because again, I'd like to make the point that there's two, there's two critical elements to the analysis here.

[01:23:42] Speaker 00:
One is whether species will even be exposed to environmental changes.

[01:23:45] Speaker 00:
And the second would be their responses.

[01:23:46] Speaker 00:
And the National Fisheries Service also went on and looked at the responses and found that, had several pieces of evidence to support this conclusion that increases of 1% in exposure

[01:23:59] Speaker 00:
would essentially not lead to any detectable responses in the species.

[01:24:06] Speaker 09:
So help me out with that.

[01:24:08] Speaker 09:
So EPA and National Marine Fisheries Service made this insignificant conclusion regarding the effects of incremental additional water pollution.

[01:24:19] Speaker 09:
But why wouldn't EPA be able to measure, and part of it is this variability point, you know, that there's

[01:24:25] Speaker 09:
other sources of pollution that the concentrations really ebb and flow, they really change over time, and only, as you point out, only if a high concentration were to hit these species that was present would you have a problem.

[01:24:41] Speaker 09:
That just seems like that's a data issue and it's unclear to me why EPA wouldn't be able to measure a sustained increase in pollutant concentrations even if there's lots of inherent variability in particular pollutant concentration levels and species response in any one place.

[01:24:59] Speaker 09:
That just seems like that is a classic data analysis challenge and the notion that raising an input

[01:25:09] Speaker 09:
because of such variability becomes indetectable in terms of any effect it might have.

[01:25:17] Speaker 09:
I'm having a hard time

[01:25:19] Speaker 09:
seeing that as not just a sweeping under the rug?

[01:25:22] Speaker 00:
Well, Your Honor, I think the easy answer is the dose makes the poison.

[01:25:28] Speaker 00:
The National Marine Fisheries Service did discuss that when you're looking at sort of the downstream effects, as in contrast to the other scenario about proximal effects in smaller tributaries, the downstream effects, the effects of pesticides and

[01:25:44] Speaker 00:
nitrogen and phosphorus, nutrient loading, would be diluted throughout the much larger water bodies it would get to.

[01:25:52] Speaker 00:
And so I think the National Marine Fisheries Service and EPA wrestled with that question.

[01:25:57] Speaker 00:
They also made specific determinations that there were no more analyses that could be done under existing models or existing data to be done.

[01:26:05] Speaker 00:
And I think that's a critical point in ESA case law that

[01:26:10] Speaker 00:
If the technical expert agencies have determined that this is the best available information, it's a high bar for challengers to say, well, you should do more.

[01:26:19] Speaker 00:
I think that EPA will continue.

[01:26:20] Speaker 09:
Well, you should study more is really what they're saying.

[01:26:23] Speaker 09:
just that you should study more.

[01:26:24] Speaker 00:
Well, but the ESA statute requires the use of the best available commercial and scientific information.

[01:26:30] Speaker 00:
There may be, and there certainly will be, more and newer information in future consultations, because EPA will be consulting on future volume rules going ahead.

[01:26:40] Speaker 00:
I think this will develop, I think as this Court has seen in the prior cases and in EPA's analysis, this is a very vibrant market and more information will be forthcoming.

[01:26:50] Speaker 00:
I mean, for example, the attribution analysis here is new.

[01:26:53] Speaker 09:
Right.

[01:26:54] Speaker 09:
But the land conversion would happen pretty promptly under the tables that we were just looking at when Mr. Perpura was standing at the podium.

[01:27:05] Speaker 09:
On the discountability question, so I appreciate that EPA