[00:00:00] Speaker 01:
Case number 24-1009, State of West Virginia adult petitioner versus Environmental Protection Agency and Michael S. Reagan, Administrator, United States Environmental Protection Agency.

[00:00:13] Speaker 01:
Mr. Mansinghani for the petitioners, Mr. Hoshijima for the respondents, Mr. Griego for the interveners.

[00:00:20] Speaker 07:
Good morning, Mr. Mansinghani.

[00:00:21] Speaker 07:
You may begin when you're ready.

[00:00:23] Speaker 04:
Thank you, Your Honor.

[00:00:24] Speaker 04:
Nathan Mansinghani on behalf of West Virginia, Oklahoma and a total of 26 states as petitioners.

[00:00:30] Speaker 04:
I'd like to reserve three minutes for rebuttal.

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Under Section 111D, states set the standard of performance for existing sources that reflect EPA's best system of emissions reduction.

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EPA promulgates regulations governing the procedure for how states submit plans, but that procedure shall permit states to take into account remaining useful life and other source-specific factors in setting a standard of performance for a particular source.

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The statute thus clearly grants states discretion in setting standards of performance.

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The question here is whether, when a state reasonably exercises that discretion, EPA can nonetheless reject those reasonable judgments as EPA purports to do in the challenged rule.

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The answer is no.

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Nothing in the statute grants EPA that power.

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EPA interprets the language shall permit not as a command to honor state discretion, but as a power to restrict it.

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But nowhere in law do legislative commands that the executive shall permit something without more mean that the executive is free to restrict it in any way it wants.

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And so, too, with EPA's creation of a power to error-correct approved 111D plans or call for plan revisions, which Congress gave in Section 110K of the Clean Air Act for 110 plans, but did not give in Section 111D for 111 plans.

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The rule is also arbitrary and capricious because it set a deadline for the submission of state plans that was not justified by the evidence before it.

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EPA rejected a nine-month deadline because the data showed that most states took longer than nine months to submit their plans.

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But the exact same is true of the 18-month deadline that EPA chose.

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EPA wholly failed to explain why 18 months is adequate based on the record evidence before it.

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And for all these reasons, we asked the court to vacate the rule.

[00:02:23] Speaker 07:
I'm happy to answer questions on either of those topics.

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wasn't also too short.

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I mean, it didn't consider only the historical data about how long states took to comply.

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So it did explain.

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It explained by looking at statutes that it thought were roughly similar in terms of the activity they required of a state and described how long, and identified that the

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EPA had given 18 months for analogous inquiries.

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It looked at the need for prompt

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control of emissions.

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I mean, there's a whole series of things that it looked at.

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It looked at information provided by states on the sort of different procedural components.

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It looked in shifting from 15 months to 18 months at the additional work of, I think it's public engagement, states engaging with the public.

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And it also it looked at a comment that said, yeah, there is historical data, but some of the states have taken longer than necessary.

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And it also looked, for example, at this is only a default.

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And it means that in two ways.

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One, when a particular emissions guideline is published, EPA can, and indeed it has, extended more time for states to submit their plans.

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And even when it turns out for a particular state that is too short, there is no sanction.

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or going longer.

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So when you say they didn't at all explain why they didn't just adopt the lowest common denominator of the amount of time that states have historically have taken, what's wrong with the understanding that they did explain?

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This is a timeline, right?

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It's longer, shorter.

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And so all the different factors go to the same question.

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And so they did explain.

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So there's a lot there, and I'm going to do my best to try to tackle all of it.

[00:04:46] Speaker 07:
You know it already.

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But feel free to interrupt me if I'm going too long.

[00:04:50] Speaker 04:
So ultimately, I think with respect to the record evidence, and there's two big pieces of record evidence here, which is the data of how long it took states to submit 111 plans and what states told EPA of how long state procedures take to actually adopt these plans.

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EPA did not explain at all how their 18-month deadline was consistent with that data.

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Instead, as you pointed out, Judge Pillard, moved straight to, we're just going to compare to other statutes, and I can get to those other statutes later.

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But at most, EPA offered at most Ipsa Dixit by saying, well, we considered these things.

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It didn't actually explain how the data that it collected or the state comments on state procedures was consistent with an 18-month deadline.

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Now, in terms of, well, EPA can always extend the deadline, of course, the fact that they've done so a couple of times already might only indicate that the deadline, the default deadline is too short.

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And of course, in American Lung Association, they could have shortened the deadline for a specific admissions guideline, and yet the court did not hesitate in striking down the 36-month deadline as inadequately explained.

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And then the last thing I'll say on that is that

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The extension is with respect to a particular emissions guideline.

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But once that emissions guideline is there, EPA very clearly said at Joint Appendix 47 that it won't offer particular states any extensions to the extent that they need them.

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Mr. Manson, I guess I'm not sure what more EPA is supposed to say.

[00:06:24] Speaker 06:
So, I mean, the statute, I mean, it might be that the best reading of the statutory scheme is that it should be a 36-month deadline because that's what's in Section 110.

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But this Court has said,

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that's not a sufficient basis.

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And so EPA has to explain why, how it balances different interests.

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But I mean, what if they had picked 24 months or 38 months?

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Once you're talking about a deadline where you're looking at wanting states to comply in a timely manner, but also give them enough time,

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I don't know.

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This is the sort of thing.

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I mean, how much is an agency really supposed to say?

[00:07:02] Speaker 04:
Well, certainly the failure to explain is the core holding of American Lung Association.

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And so if they're making the mirror image error here, it should equally deserve vacature.

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And as far as what they should do, so for example, they said, look, we saw that states said that their procedures take somewhere between 15 to 36 months.

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We can't accommodate every state, so the end, right?

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That doesn't explain how what the state's comments were on state procedures is consistent with their 18-month deadline.

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What they could have done is what they did with their federal deadline.

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They said, look, here's every step of the process of doing a federal implementation plan.

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Here's how long that we think it'll take.

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And we're setting our federal deadline as long as that at that level.

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They could have done the same with respect to what they think state procedures could be.

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They don't have to accommodate the least common denominator.

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But what they can't do is just ignore as a whole how long states take to submit the plan.

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Same with respect to the data.

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I think they're saying that states took longer than they needed as a post-hoc rationalization.

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I don't see it anywhere in the rule.

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But they at least could have explained why they think states took longer than they needed rather than collecting the data and then doing nothing with it with respect to sending the 18-month deadline.

[00:08:23] Speaker 07:
Well, you say, how is it consistent with the data?

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I don't think that's the obligation.

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They don't have to make their timeline consistent.

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And you said that this is the mirror image of what happened and what we found inadequate in an American lung.

[00:08:38] Speaker 07:
But that's not right, because an American lung literally did not mention

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the need for speed, the need to, you know, the costs of a longer deadline.

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And it seems like, in a way, your argument is doing that, too.

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It doesn't need to be consistent with the data because, as Judge Rao's question mentioned, the task before EPA is necessarily dealing with conflicting exigencies, right?

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It needs to control

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have a process to control these harmful emissions and do it in a way that is orderly.

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And it mentioned and collected this data.

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It's a pretty limited data set.

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And it does mention it.

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And it does consider it.

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It does actually take action in terms of lengthening the default deadline based on it.

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It's a little bit hard to say what more, without micromanaging the agency, what more we could demand.

[00:09:40] Speaker 04:
Well, so the reason it rejected the nine-month deadline is because most states didn't meet the nine-month deadline, but the exact same is true of the 18-month deadline.

[00:09:48] Speaker 04:
So that's inconsistent reasoning.

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How many states did they meet?

[00:09:51] Speaker 00:
About a quarter.

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But with respect to American Lung Association, I don't think the only aspect of that decision

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is this failure to consider the environmental protection needs.

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The court basically, I read it, is offering three reasons.

[00:10:07] Speaker 04:
That it had the burden of justification for time frames.

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So it rejected mirroring 110 without reason support.

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and that it failed to document any problems with existing deadlines.

[00:10:19] Speaker 04:
So EPA then responded to that by collecting a bunch of data, rejected a nine-month timeline, but never explained how they were using that data to come up with the 18-month timeline, along, of course, with the state procedures problem.

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And so the question isn't necessarily that they had to pick the exact average.

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It's that they had to come to a recent conclusion based on the record evidence before it.

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So they had the record evidence before it.

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And I think in this case and in any other case, if that record evidence is not somehow dealt with in a reasoned explanation, that's arbitrary and capricious.

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What is your best argument that that failure of reasoning that you've alleged is not just harmless error?

[00:11:04] Speaker 06:
Well, I mean, unless you sort of have to tie it to the median amount of time or the average amount of time or something like that.

[00:11:14] Speaker 04:
One is with respect to the how long state procedures take, I think that it's certainly not harmless error because if you took into account state procedures, you'd have to get something higher than 18 months.

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And even if you're not getting to the average of 45 months, I think what the data does show is that the 110 deadline that Congress set as a reference point,

[00:11:34] Speaker 04:
acknowledge not a strict reference point, but the data does show that that 110 deadline is actually somewhat consistent with the data that EPA ended up collecting, unlike was the case in American Lung Association, where there was no data.

[00:11:49] Speaker 07:
EPA does discuss that.

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Many more different sources, emissions,

[00:11:58] Speaker 04:
Well, I think that 110 plans can be complex in that way, though not always.

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The methane rule has a ton of sources.

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It's a 111 rule.

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And 111 plans can be more complex in the sense that they take into consideration remaining useful life and other factors to tailor things, unlike

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110 plans where they're just trying to hit that one target of the national ambient air quality standards.

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So with respect to the statutory comparators, we've of course made our arguments as to why they should have at least looked at 110.

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But the other ones that they chose are sort of picking and choosing.

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I don't see why they chose those two.

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So 129, they admit, is just not comparable because of this lack of source-specific tailoring.

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And 189, well, that's about

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non-attainment plans for the NACs, and they for some reason chose to only compare it to the shortest of those deadlines.

[00:12:57] Speaker 04:
This course Wild Earth Guardians 2016 case talks about particulate matter as being the strictest of the deadlines, but most of the 110 deadlines and the NACs deadlines are 36 months.

[00:13:10] Speaker 04:
So it just seems like an awful lot of cherry picking there.

[00:13:15] Speaker 04:
I do want to talk about remaining useful life before my time expires, although I know that's not necessarily the strictest of the best, but yes.

[00:13:23] Speaker 06:
So West Virginia argues that EPA review here should be only for reasonableness.

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But the statutory standard is that EPA can determine whether the SIBs are satisfactory.

[00:13:36] Speaker 06:
And I'm wondering, I mean, satisfactory, why doesn't that encompass more than reasonableness?

[00:13:44] Speaker 06:
A plan might be unsatisfactory if it doesn't comply with the underlying statute or violates a different regulation or standard or something like that.

[00:13:53] Speaker 06:
So, but your position seems to be that the review is exclusively for reasonableness.

[00:14:00] Speaker 04:
Not quite, Your Honor.

[00:14:00] Speaker 04:
I do believe it is for review of both reasonableness and compliance with the statute.

[00:14:05] Speaker 04:
EPA agrees it's for compliance with the statute at Joint Appendix 68, as well as page 64 of their response brief.

[00:14:13] Speaker 04:
That's similar to the review that happens in section 110.

[00:14:17] Speaker 04:
But the way I would frame it is this way with respect to

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Let's say it does comply with the statute.

[00:14:22] Speaker 06:
So there's no legal.

[00:14:24] Speaker 04:
Right.

[00:14:25] Speaker 04:
The question.

[00:14:26] Speaker 04:
What the way I'd frame it is nothing in the statute allows EPA default state plans is unsatisfactory.

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if a state reasonably takes into consideration factors that Congress expressly permitted them to take into account.

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So if states shall be permitted to take into account remaining useful life and other factors, and states reasonably do so, I don't think EPA has the statutory authority to declare that unsatisfactory.

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And with respect to their new restrictions on remaining useful life, understand that these are restrictions on top of the existing reasonableness requirements already in the regulations.

[00:15:09] Speaker 04:
So the regulations currently say

[00:15:12] Speaker 04:
if states can deviate if there's unreasonable costs.

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And now these regulations on top of that say, it has to be also based on information fundamentally different from what EPA considered.

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And we think that layering on top of the reasonableness standards is what's facially unlawful.

[00:15:32] Speaker 07:
But I take them to be making sort of the inverse argument, which is that Ruloff shouldn't be a second double counting the same thing that the EPA already took into account.

[00:15:50] Speaker 07:
They, for example, look at all the sources.

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They said something that they think is achievable

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the category and if every

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source that sort of was in that group that was below average and therefore was part of the data that made EPA pick the limitation that it did as realistic and all the ones that are below average say well we have other conditions than then and you're you're sort of exempting them from a standard that's been set already taking those conditions into account but that seems like double counting to me.

[00:16:28] Speaker 04:
I don't think it's double counting.

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I think EPA acknowledges that if there is something as an extreme outlier, even if it was accounted for inside their overall industry wide data, that it would be something that might justify a variance here.

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And I think the question is who gets to make that sort of line drawing, right?

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If a state is

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relying on something that's insubstantial or de minimis I think the EPA can say no that's not a reasonable deviation but you know in the greenhouse gas rule EPA says well it might be something that only was in the 95th percentile of costs you know if a state said no actually this is in the 80th percentile of cost and we think that that's an unreasonable cost and so we're going to do something slightly different I don't think that that's something the EPA has the authority to reject but the other thing I'd say is that

[00:17:22] Speaker 04:
The way EPA frames fundamentally different says that if the EPA did not consider any information

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pertaining to a certain circumstance and making its determination, facility-specific information relevant to that circumstance may be fundamentally different.

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And that's at Joint Appendix 74.

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But if, for example, EPA, as it should, consider costs in setting the best system of emissions reduction, what that implies is that states can't consider costs in terms of remaining useful life and other factors and setting state-specific standards of performance.

[00:17:58] Speaker 04:
And I think the third thing they say, and this is at their brief on page 32, is if a source could meet those guidelines, it must comply.

[00:18:06] Speaker 04:
And that's just like an impossibility standard and I think is very far from what the statute allows EPA to do.

[00:18:17] Speaker 04:
With remaining useful life, I think the important thing, of course, is that states set standards of performance.

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EPA does procedural rules, and those procedures shall permit state discretion.

[00:18:29] Speaker 07:
I mean, states set standards of performance, but they have to reflect

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the what is the emission standards that are the degree of emission limitation that EPA has calculated in light of the best system of emission reduction.

[00:18:46] Speaker 07:
So that is not just procedural.

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The EPA determines

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a level of emission limitation that is adequately demonstrated.

[00:18:57] Speaker 04:
I wholly agree with that.

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The standard performance have to reflect what EPA's determination is in the terms of best system of emissions reduction.

[00:19:06] Speaker 04:
But in terms of when you can vary for that, that is what's given to states to exercise reasonable discretion in doing so.

[00:19:14] Speaker 04:
And I think that this is bolstered by the precedent all over the Clean Air Act of cooperative federalism.

[00:19:22] Speaker 04:
where the EPA set some general standards, states submit plans to reflect that standard, but tailored to local conditions, and EPA reviews on a limited basis and can promulgate a federal plan if disapproved.

[00:19:35] Speaker 04:
This is true in the 110 context and case after case, like train and union electric,

[00:19:40] Speaker 04:
the court has emphasized that states have wide discretion and considerable latitude in making legislative choices and EPAs.

[00:19:48] Speaker 07:
Choices in sort of what is particularly to require, how to allocate that, but a choice to say, great, you've demonstrated an emission limitation, an amount of pollution reduction that must be achieved, we're going to take that as just, you know,

[00:20:06] Speaker 07:
a rough recommendation, we're going to do something completely different.

[00:20:09] Speaker 07:
I know no case that takes that approach.

[00:20:12] Speaker 04:
And of course, we're not saying we can.

[00:20:15] Speaker 07:
As long as we reasonably, we the state reasonably explain, well, we, you know, all our sources are all a little older than average.

[00:20:23] Speaker 07:
And, you know, this would be expensive.

[00:20:26] Speaker 07:
I mean, there's I take your position to be saying that EPA can't look at those things.

[00:20:34] Speaker 07:
and second guess them because it's the prerogative of the state to take them into account.

[00:20:40] Speaker 04:
I don't think they can second guess reasonable state judgments.

[00:20:43] Speaker 04:
And I think a state judgment that overrides EPA's industry wide best system of emissions reduction determination.

[00:20:50] Speaker 04:
With regard to that state, if, for example, a state said, well, all of our facilities are pretty average, and we think that EPA considered costs incorrectly in their best system emissions reduction, I don't think that would be permissible.

[00:21:08] Speaker 04:
But if a state says for this particular source, EPA's representative data is not actually representative of this facility, and there are good reasons to

[00:21:16] Speaker 04:
choose a different system of emissions reduction or extend the compliance timeline, that should be within the state's reasonable discretion.

[00:21:26] Speaker 04:
And I think this is reinforced by the fact that in other provisions of the Clean Air Act,

[00:21:32] Speaker 04:
Congress was specific when it said that EPA's guidelines are mandatory and binding on the states.

[00:21:38] Speaker 04:
We pointed out the regional haze example, as explained by the Wyoming case and the 10th Circuit, and the prevention of significant deterioration program where EPA's guidelines at times are explicitly mandatory.

[00:21:50] Speaker 04:
But I think when you're in this situation,

[00:21:53] Speaker 04:
which is much more similar to the BACT best available control technology situation in Alaska Department of Environmental Conservation or the state plan context in 110 of Union Electric and Train, state discretion is well established.

[00:22:09] Speaker 07:
So what comfort can you give us if we're inclined to agree with you that

[00:22:17] Speaker 07:
This is a quote from our warehouser versus Kossel that the pinhole safety valve envisioned by Congress doesn't become a yawning loophole.

[00:22:30] Speaker 04:
I would be hesitant to describe state discretion as pinhole.

[00:22:34] Speaker 04:
And I think Weyerhaeuser involved a different situation, which there were the statute did not explicitly allow variances, right?

[00:22:39] Speaker 04:
This is explicitly allowed in the statute.

[00:22:42] Speaker 04:
Nobody disagrees with that.

[00:22:44] Speaker 07:
Usually the statute provides a yawning loophole, and that's just the way it is, and it's always been.

[00:22:49] Speaker 04:
No, and I describe it a lot, yawning loophole.

[00:22:51] Speaker 04:
And I think there's a big gap between pinhole and yawning loophole.

[00:22:54] Speaker 04:
But I think states reason- I'm asking for some comfort.

[00:22:57] Speaker 04:
And I'm happy to give that comfort.

[00:23:01] Speaker 04:
First of all, these regulations have been, the old regulations were in place for a long time and it wasn't necessarily yawning loopholes created.

[00:23:09] Speaker 04:
But second, just like the EPA is subject to arbitrary and capricious review by this court,

[00:23:16] Speaker 04:
States are subject to a certain level of arbitrary and capricious review by EPA.

[00:23:20] Speaker 04:
And we don't think that agencies, federal agencies, have yawning loopholes merely because they're subject to a reasonableness review by the court.

[00:23:28] Speaker 04:
I think the same is true of states.

[00:23:30] Speaker 04:
And as I mentioned at the beginning, the EPA does get to determine the best system of emissions reductions, and state variances can't question those industry-wide determinations.

[00:23:42] Speaker 06:
There's only a yawning loophole if EPA can set presumptive standards here.

[00:23:51] Speaker 06:
Nobody challenges whether EPA can set presumptive standards, and I'm wondering why that is.

[00:23:58] Speaker 04:
In the American Lung Association case, we defended EPA's discretion not to set presumptive standards.

[00:24:06] Speaker 04:
I think to the extent that those presumptive standards are not binding on states, I'm not sure that there's any violation of the statute of their guidelines.

[00:24:15] Speaker 04:
And of course, to a certain extent, they set the, they determine the emissions reduction available through the best system of emissions reduction.

[00:24:24] Speaker 06:
Is that authority to set a presumptive standard?

[00:24:26] Speaker 04:
I don't think it's necessarily, I don't think it's an authority to set a binding presumptive standard, but a presumptive standard where EPA says like, look, we already looked at things, and if you happen to meet the presumptive standard, we're going to approve your plan, but not necessarily hold you to it beyond, you know, again, the reasonableness review and the statutory compliance review we talk about.

[00:24:45] Speaker 04:
I'm not sure we have a problem with that.

[00:24:50] Speaker 04:
You know, at the end of the day,

[00:24:53] Speaker 04:
While it's not a yawning loophole, I also don't think that EPA can take this discretionary provision that states have been granted by Congress and make it so tiny that it's practically nothing.

[00:25:07] Speaker 07:
So how do we know whether EPA's, what's EPA's latitude in evaluating whether a state's state plans standard of performance reflects the degree of emission limitation and best system emission reduction that the EPA administrator has

[00:25:32] Speaker 07:
determined as demonstrated.

[00:25:33] Speaker 07:
If reflect doesn't mean match, presumptively, in a binding way, unless you can show

[00:25:45] Speaker 07:
whether you can show something that's fundamentally different that allows you to depart from that.

[00:25:54] Speaker 07:
And what is Reflecting?

[00:25:56] Speaker 07:
What work is that doing?

[00:25:57] Speaker 04:
I mean, I think Reflect works hand in hand with the remaining useful life and other factors provision in the sense that if the states have no

[00:26:09] Speaker 04:
reason to impose something different on a particular facility beyond just disagreeing with EPA's, let's just say, affirmed best system of emissions reduction determination.

[00:26:22] Speaker 04:
I think that that could be rejected as not reflecting EPA's determination.

[00:26:27] Speaker 04:
But if there are source specific reasons to reasonably deviate from that, they don't have to match precisely one to one EPA's lesser determination.

[00:26:42] Speaker 07:
Do you have any response to EPA saying, you say there should be reasonableness review, of course there's reasonableness review, but that's a far cry from fundamental differences.

[00:26:51] Speaker 07:
And I think they, their fallback argument is actually in the context of this process where we have considered a lot of this stuff,

[00:27:01] Speaker 07:
It's unreasonable to vary from it unless you've shown what they call a fundamental difference, something that is sort of new, wasn't taken into account.

[00:27:10] Speaker 07:
But that would be the categorical description of the kinds of things that it would be reasonable for a state to rely on in departing from a full reflection of the degree of emission limitation that EPA has demonstrated.

[00:27:25] Speaker 04:
I guess my response to that is that if they're not saying anything more than just reasonableness review, then you could excise that portion of the Code of Federal Regulations and their standard would be the same.

[00:27:36] Speaker 04:
And that's what we're asking you to do, to vacate the rule and take that out of the Code of Federal Regulations.

[00:27:43] Speaker 07:
I think they're giving you context.

[00:27:45] Speaker 07:
They're saying, we're not going to see it as reasonable.

[00:27:48] Speaker 07:
So if you just said reasonable review,

[00:27:50] Speaker 07:
then it would be different from saying, let us give you some explanation of what we think is reasonable, given the work that we've done, our role, and your role.

[00:27:59] Speaker 07:
And they'd say, what would be reasonable would be if you point to something that's a fundamental difference from what we already considered.

[00:28:06] Speaker 07:
And so it just gives you more information.

[00:28:08] Speaker 07:
And it does narrow where reasonableness applies.

[00:28:11] Speaker 07:
But then once you're there, they're kind of saying it amounts to reasonableness.

[00:28:16] Speaker 04:
I don't think that's how EPA itself characterizes this regulation, and we're going off of how they've explained it in this rule and in other rules like the greenhouse gas rule and the methane rule.

[00:28:26] Speaker 04:
I gave one example as the 95th percentile example where that, I guess, to them is fundamental.

[00:28:33] Speaker 04:
Or if you take them at their word as saying, well, it has to be information that's fundamentally different.

[00:28:38] Speaker 04:
But if they considered cost, if they considered reliability, then that implies states can't consider those things in determining remaining useful life and other source.

[00:28:46] Speaker 04:
So I'm taking them at their word and then maybe the sort of word that causes me the most heartburn is fundamental, right?

[00:28:55] Speaker 04:
That has to be fundamentally different, not just that there's a reasonable deviation available, but fundamentally different, something completely outside the scope of what EPA was considering.

[00:29:12] Speaker 05:
Thank you.

[00:29:12] Speaker 00:
Thank you, Your Honor.

[00:29:22] Speaker 07:
Good morning, Mr. Hoshijima.

[00:29:24] Speaker 05:
Good morning and may it please the court.

[00:29:26] Speaker 05:
Suki Hoshijima for Respondent's EPA.

[00:29:29] Speaker 05:
With me at Council's table is Nora Greenglass from the EPA Office of General Counsel.

[00:29:35] Speaker 05:
The Supreme Court recognized just recently in the West Virginia case that EPA has the primary regulatory role under Section 7411D.

[00:29:44] Speaker 05:
Now, states do also have a critical role to play in the process.

[00:29:50] Speaker 05:
this rule appropriately balances the roles and responsibilities of states and the EPA.

[00:29:58] Speaker 06:
Now, unless the court- Can I ask you about this line that EPA relies very heavily on this passing reference to the fact that EPA retains the primary regulatory role?

[00:30:11] Speaker 06:
I'm wondering, I mean, the Supreme Court has also in many contexts recognized a system of cooperative federalism under the Clean Air Act.

[00:30:19] Speaker 06:
And I wonder if EPA's reading of the Supreme Court's language here as the primary regulatory role, it doesn't just mean first here in this process of setting SIPs.

[00:30:31] Speaker 06:
I mean, EPA seems to read primaries meaning foremost or paramount or something like that.

[00:30:37] Speaker 06:
But maybe in context, it just means first.

[00:30:41] Speaker 06:
First, the agency decides the amount of

[00:30:44] Speaker 06:
pollution, using the best system of emissions reductions, and then states then submit plans.

[00:30:50] Speaker 06:
So EPA is first, and then the states are second.

[00:30:53] Speaker 06:
It doesn't mean EPA has the most significant role in the system under Section 111.

[00:31:02] Speaker 05:
We don't think that primary regulatory role refers solely to order here.

[00:31:08] Speaker 05:
One reason that's so is because EPA's role doesn't stop when it

[00:31:13] Speaker 05:
issues emission guidelines at the front end.

[00:31:16] Speaker 05:
EPA does make these nationwide regulatory determinations in which it determines how much pollution reduction is generally reasonable to require of the industry, but that's not the end of EPA's role.

[00:31:29] Speaker 05:
States then implement those determinations, but EPA, under subsection D2 of the statute, has the authority to determine if a state plan is satisfactory.

[00:31:42] Speaker 05:
Petitioners concede, even, that satisfactoriness review is a substantive review, at least for reasonableness.

[00:31:50] Speaker 05:
So EPA has the responsibility to make sure that state plans aren't undermining the emission guidelines and the initial regulatory determination that Congress assigned to EPA.

[00:32:06] Speaker 05:
Now, what EPA generally does in emission guidelines is

[00:32:11] Speaker 05:
It's looking at average and representative units in the source category to determine what is reasonable to require generally of sources.

[00:32:21] Speaker 05:
And in the second step, when states are turning that determination into standards that apply to specific sources, there's a translation step at which states get flexibility and are able to exercise discretion.

[00:32:35] Speaker 05:
States also are able to decide

[00:32:38] Speaker 05:
when instead of just translating EPA's determinations, there's reason to deviate from EPA's emission guidelines.

[00:32:47] Speaker 05:
And this rule does give states a real and meaningful opportunity to deviate from EPA's determinations based on source-specific factors.

[00:32:57] Speaker 05:
EPA acknowledges that it's making broader nationwide regulatory determinations considering the industry as a whole.

[00:33:06] Speaker 07:
explain a little bit, always helps me to have sort of more concrete sense of what's going on.

[00:33:11] Speaker 07:
When EPA is promulgating emissions guidelines for categories of existing sources, it sets them on a nationwide basis?

[00:33:20] Speaker 05:
Generally, yes.

[00:33:21] Speaker 05:
With the further caveat that EPA, when it finds some characteristics that are common to a subgroup of sources within a category,

[00:33:33] Speaker 05:
may subcategorize within emission guidelines.

[00:33:35] Speaker 07:
But once it's decided, here's the set, then it doesn't have a separate guideline for every state.

[00:33:44] Speaker 07:
It does it for that set.

[00:33:46] Speaker 05:
That's right.

[00:33:46] Speaker 05:
The emission guidelines are nationwide rules that EPA promulgates by looking broadly at what system of emission reduction is available and best for sources within that category.

[00:34:00] Speaker 07:
And is it

[00:34:03] Speaker 07:
level and typically set based on average facility in the category or I mean I know in some other EPA they do you know the the top get rid of the best performing and then go for some subgroup below that but here

[00:34:26] Speaker 07:
Average, median?

[00:34:28] Speaker 05:
Well, it's not what sources are already achieving on average.

[00:34:33] Speaker 05:
The relevant language is in subsection A1, where the standard is best system of emission reduction.

[00:34:41] Speaker 05:
And EPA looks at what systems are adequately demonstrated and what is achievable.

[00:34:47] Speaker 05:
So that may be a system that

[00:34:53] Speaker 05:
that the industry is not already using on a widespread basis or that the average unit's not already using, but it may be a system that is nonetheless adequately demonstrated that results in a standard that is achievable and reasonably achievable.

[00:35:09] Speaker 07:
And taking into account costs.

[00:35:11] Speaker 05:
Yes, cost is a factor that the statute requires EPA to determine, to consider as part of that process.

[00:35:18] Speaker 07:
So it could be that there's some relatively inexpensive, easy piece of equipment that all sources could use.

[00:35:28] Speaker 07:
None of them are using it, but it's been demonstrated that it could, and it's cheap.

[00:35:33] Speaker 07:
And so you could set a much more demanding, I mean,

[00:35:36] Speaker 07:
would that there were opportunities like this, but in theory, EPA could set a much more demanding standard than what's being achieved because it could say this is demonstrated and achievable.

[00:35:50] Speaker 05:
Yes, because absent a regulatory impetus,

[00:35:54] Speaker 05:
An industry isn't going to necessarily going to adopt the best system voluntarily, even one that is adequately demonstrated and even one that results in achievable emission reductions.

[00:36:06] Speaker 05:
That's the basic idea of Section 7411 is for EPA to determine what is reasonably, what is reasonable to require of the industry generally.

[00:36:17] Speaker 07:
So what does it mean to EPA for a state plan to be satisfactory?

[00:36:22] Speaker 07:
I thought the definition in the brief, at least as I was reading it, was a little circular.

[00:36:27] Speaker 07:
It says that standards in state plans must be consistent with the statute.

[00:36:32] Speaker 07:
But I'm not sure that that helps us answer the question of whether the fundamental differences rule is consistent with the statute or not.

[00:36:42] Speaker 07:
as one of the ways of implementing the EPA's satisfactoriness review.

[00:36:49] Speaker 05:
EPA, yes, has understood satisfactory to mean consistent with the statute.

[00:36:54] Speaker 05:
In context, what that means, and we have to zoom out a little bit to explain what consistent with the statute means here.

[00:37:01] Speaker 05:
This is a statute where the Congress has assigned EPA to make these broader regulatory determinations.

[00:37:09] Speaker 05:
States have the opportunity then

[00:37:11] Speaker 05:
to deviate when there's something about a specific source that would make it unreasonable to apply those determinations to that source.

[00:37:21] Speaker 05:
So what this rule is saying, which is consistent with EPA's understanding of the statute for decades, is that it's not consistent with the statute for a state to deviate from EPA's emission guidelines and the determinations in them unless there's some

[00:37:41] Speaker 05:
difference pertaining to that specific source that makes it reasonable or makes it unreasonable to apply EPA's determinations.

[00:37:49] Speaker 06:
I'm skeptical that this fundamentally different standard is continuous with EPA's long-standing interpretation.

[00:37:59] Speaker 06:
I mean, can you say a little bit more about that?

[00:38:00] Speaker 06:
I mean, one, those words seem to me, those phrases are very different, right?

[00:38:06] Speaker 06:
Significantly more reasonable versus

[00:38:09] Speaker 06:
a state has to demonstrate that there are fundamental differences.

[00:38:12] Speaker 06:
So the terms seem very different to me, maybe fundamentally different, we could say, but also the fundamental difference standard.

[00:38:22] Speaker 06:
So let me go back to the original rule, significantly more reasonable, that phrase only applied to other factors specific to the facility.

[00:38:32] Speaker 06:
And now in the revision to the rule, fundamental differences applies to

[00:38:36] Speaker 06:
all of the factors, including costs, physical impossibility, and the rest.

[00:38:40] Speaker 06:
So not only is the term broader, but its application seems to be substantially broader.

[00:38:45] Speaker 06:
So how is that continuous with what EPA has done in the past?

[00:38:51] Speaker 05:
So let me start by discussing the relationship between this rule and the prior regulations and then get to the application of fundamental differences to each prong.

[00:39:02] Speaker 05:
EPA explained that all it's doing here is clarifying what significantly more reasonable means.

[00:39:08] Speaker 05:
Now, I would focus the court's attention on the new version of the regulations, and this is in subsection E1 of the amended regulation, where even in this version, the touchstone is reasonableness.

[00:39:25] Speaker 05:
It says that a state can apply a less stringent standard

[00:39:29] Speaker 05:
if a facility cannot reasonably achieve the degree of emission limitation in the guidelines because of some of these factors.

[00:39:38] Speaker 05:
Reasonableness is also built into subsection E2 of the regulations where, and that's where the fundamental difference language is, it says there has to be a fundamental difference such that achieving

[00:39:52] Speaker 05:
EPA's determination in the emission guideline is unreasonable for that facility.

[00:39:57] Speaker 05:
So we do think that reasonableness is actually still the core tenet of these regulations.

[00:40:02] Speaker 06:
But basically, E2 suggests to me, at least reading this together, that a state shows what it has acted reasonably by state must demonstrate that there are fundamental differences between the information that EPA considered and facilities and information that the state considered.

[00:40:20] Speaker 06:
So the revisions to the rule defines reasonableness as putting a burden on the state to show that there are fundamental differences.

[00:40:31] Speaker 06:
What this regulation is doing is, I think, giving a little more clarity about when... You said that, but why is reasonableness now not defined as fundamental differences?

[00:40:42] Speaker 05:
Well, the question is, when is it significantly more reasonable?

[00:40:46] Speaker 05:
That's the language under the prior regulations.

[00:40:49] Speaker 05:
When is it significantly more reasonable for a state to impose a less stringent standard?

[00:40:55] Speaker 05:
Well, it's significantly more reasonable when there's a fundamental difference between what is specific to that source and what EPA already considered in its nationwide determination, such that there's a reason to treat that source differently from everybody else in the category.

[00:41:12] Speaker 06:
So and then what about the application?

[00:41:14] Speaker 06:
So now a state has to demonstrate fundamental differences, not just with respect to other circumstances, but with respect to costs of control and physical impossibility.

[00:41:24] Speaker 06:
I mean, that is a substantial expansion, arguably.

[00:41:30] Speaker 05:
And you're referring, Your Honor, to referring that language to all three prongs, right?

[00:41:36] Speaker 05:
So we don't think that's a substantive difference from what was there before.

[00:41:42] Speaker 05:
It's true that in the prior version of the regulations,

[00:41:46] Speaker 05:
The significantly more reasonable language was associated with other factors.

[00:41:51] Speaker 05:
We think other is the key there, where the first two prongs, unreasonable cost and physical impossibility, are instances of factors that would make it significantly more reasonable for a state to apply a less stringent standard.

[00:42:06] Speaker 05:
Which is to say that the significantly more reasonable standard was always underlying all three prongs.

[00:42:13] Speaker 05:
It's just that textually it was associated only with this other factors residual clause.

[00:42:20] Speaker 05:
EPA thought in the process of revising this regulation that it would be clear to

[00:42:26] Speaker 05:
state more expressly what was already implicit there in that listing of the three prongs, and to say that fundamental differences is the basic idea that underlines each of those circumstances.

[00:42:39] Speaker 07:
Historically, can you tell us a sort of general frequency, just give us a feel how often states invoke the remaining useful life of a facility to justify a less stringent standard of performance for existing sources?

[00:42:58] Speaker 05:
In the preamble to this rule, EPA identified four historical instances in which states had sought to grant a source-specific variance.

[00:43:09] Speaker 05:
Now, that's not a large number, but we would posit that shows that states granting a variance is supposed to be the exception rather than the rule.

[00:43:21] Speaker 05:
States aren't supposed to come in and take EPA's determinations as just advisory, but then decide from the ground up what's reasonable to apply to sources generally.

[00:43:33] Speaker 07:
So in the other situations, they basically adopt EPA's guidelines?

[00:43:38] Speaker 07:
Are there other things that they do that change?

[00:43:43] Speaker 05:
In the circumstances when a state doesn't grant a variance?

[00:43:49] Speaker 07:
Or isn't taking remaining useful life of the facility into account?

[00:43:54] Speaker 05:
In those situations, a state has

[00:44:00] Speaker 05:
impose standards that reflect EPA's emission guidelines.

[00:44:06] Speaker 05:
That doesn't necessarily mean mirror precisely.

[00:44:10] Speaker 05:
States are able to impose a standard that achieves an equivalent level of stringency.

[00:44:16] Speaker 05:
So if a state already has a program that regulates sources in a way that is equivalent to EPA's determinations, then a state can make an equivalent she's showing.

[00:44:27] Speaker 07:
I don't know if you can, and I know this is asking a lot of the lawyer rather than the agency staff, but can you give an example of, you know, state already has stuff, EPA says here's the best system of emission reduction, here's the resulting emission guidelines, state says we can, what we can meet the overall amount that would be the same amount as if we applied your guideline, but we're doing what difference?

[00:44:53] Speaker 07:
I'm just trying to get a sense of even in the real world, what parameters are we even talking about?

[00:45:00] Speaker 05:
I'm not sure I have a specific historical example for you, but there is a little bit more extended discussion of this in the methane emission guideline, where EPA in that preamble to that rule

[00:45:14] Speaker 05:
explained a little bit more about how it would conduct an equivalency determination.

[00:45:19] Speaker 05:
EPA set out physically a multi-step equivalency determination.

[00:45:24] Speaker 05:
Now, another way in which a state standard might reflect, not perfectly, but reflect an emission guideline in their standards without deviating from it would be, for example, an averaging or trading program where

[00:45:42] Speaker 05:
a state can allow a group of sources to in the aggregate achieve the amount of emission reduction that EPA's emission guidelines would require.

[00:45:54] Speaker 05:
Of course, the extent to which

[00:45:56] Speaker 05:
a state is able to do that will depend on the nature of each emission guideline and characteristics that may be unique to each industry.

[00:46:05] Speaker 05:
So EPA in an emission guideline might provide further explanation of what kind of flexibility is available to states to implement emission guidelines without departing from them.

[00:46:20] Speaker 06:
Can I ask you to maybe walk through EPA's arguments about why

[00:46:26] Speaker 06:
It claims it has statutory authority to recall and revise state plans.

[00:46:32] Speaker 06:
Because 111D1 gives EPA the authority to establish procedures under which states shall submit plans.

[00:46:41] Speaker 06:
So it's about regulations, procedures, about submissions.

[00:46:47] Speaker 06:
And so once a plan has been submitted and approved, what authority does EPA have under 111

[00:46:56] Speaker 06:
to take post-approval actions, like recalling a SIP or revising it.

[00:47:03] Speaker 05:
In promulgating those two procedural mechanisms, EPA relied on both subsection D1 and subsection D2.

[00:47:11] Speaker 05:
Starting with subsection D1, Congress authorized EPA to prescribe regulations that govern how the existing source regulation process works.

[00:47:22] Speaker 06:
Congress specify my question.

[00:47:23] Speaker 06:
So it says submission, submit plans.

[00:47:26] Speaker 06:
How is a post approval mechanism within that language?

[00:47:33] Speaker 05:
Because the language about establishing procedures for submission is Congress specifying something that should be in those regulations.

[00:47:41] Speaker 05:
But there's not tech saying that's the outside limit of the regulations.

[00:47:46] Speaker 06:
But I mean, other provisions have those specific authorities, you know, to revise or recall.

[00:47:52] Speaker 06:
plans, and that authority was not given in 111.

[00:47:57] Speaker 05:
Right.

[00:47:58] Speaker 05:
Congress expressly conferred that authority to EPA in Section 7410.

[00:48:03] Speaker 05:
In Section 7411, Congress essentially used concise shorthand to say, EPA, given your experience administering these programs, we're going to give you the discretion to figure out which of those mechanisms from Section 7410 make sense

[00:48:22] Speaker 05:
to port over or to bring over as an analog in the context of sections.

[00:48:27] Speaker 06:
What in the statute says that that part of section 110 can be imported into 111?

[00:48:35] Speaker 05:
Well, first there's the language, just prescribed regulations to govern this existing source process.

[00:48:42] Speaker 06:
And also under subsection D. It's not the existing source process.

[00:48:46] Speaker 06:
It's for submission of plans, to submit plans.

[00:48:53] Speaker 05:
But it can't be that EPA's ability to promulgate regulations stops at the submission of the states, because that would mean that the existing regulations about how EPA considers, reviews a state plan, how EPA will promulgate a federal plan.

[00:49:09] Speaker 06:
Because that's how they're reviewing the plan.

[00:49:10] Speaker 06:
They're reviewing the submission.

[00:49:12] Speaker 06:
And then after the approval of a SIP, there's no submission to be regulated.

[00:49:20] Speaker 05:
But subsection D2,

[00:49:22] Speaker 05:
authorizes EPA to ensure that state plans are satisfactory.

[00:49:26] Speaker 06:
That's part of the approval process of a state plan.

[00:49:31] Speaker 06:
And so after EPA has determined a state plan is satisfactory, what regulatory authority does it have after that to later, maybe years down the line, revise or recall a state plan?

[00:49:43] Speaker 05:
State plans are implemented over many years after the approval step.

[00:49:47] Speaker 05:
And we're talking about a situation where a state plan has become substantially inadequate.

[00:49:53] Speaker 05:
In that situation, it's no longer satisfactory.

[00:49:57] Speaker 05:
It's no longer achieving the pollution reduction objectives of the statute, because at that point, the state plan is no longer consistent with the statute.

[00:50:07] Speaker 05:
All EPA is saying here is that it's authority to prescribe regulations for this process and to ensure the satisfactoriness of state plans allows EPA to establish what are just procedural mechanisms.

[00:50:21] Speaker 06:
So it can just decide whether something is satisfactory onto infinity into the future for all time?

[00:50:31] Speaker 05:
Well, these are not new substantive authorities.

[00:50:34] Speaker 05:
These are procedural mechanisms

[00:50:36] Speaker 05:
for then EPA to determine whether a state plan is satisfactory.

[00:50:41] Speaker 06:
So it just has like ongoing oversight authority to determine whether SIPs are satisfactory.

[00:50:47] Speaker 06:
It does.

[00:50:48] Speaker 06:
That's what EPA is essentially claiming.

[00:50:51] Speaker 05:
Yes, because otherwise you would have state plans that are substantially inadequate and there would be no, there would be

[00:50:59] Speaker 05:
recourse that EPA would be able to take, for example.

[00:51:02] Speaker 06:
So what has EPA done in the past?

[00:51:04] Speaker 06:
Because this is a new authority that EPA is claiming.

[00:51:08] Speaker 06:
What did it do before this rule?

[00:51:10] Speaker 06:
When it thought a SIP was no longer satisfactory?

[00:51:13] Speaker 05:
What EPA might do in the alternative will depend on the exact nature of the problem.

[00:51:21] Speaker 05:
Some options that EPA described in the preamble is

[00:51:25] Speaker 05:
that it may be able to use its enforcement authority under Section 7413 to enforce a state plan that a state is not adequately enforcing.

[00:51:35] Speaker 05:
EPA may also promulgate a new emission guideline that would require resubmission, but that's an incredibly cumbersome step that leads to the same place eventually.

[00:51:46] Speaker 05:
Let this procedural mechanism

[00:51:49] Speaker 05:
does is to allow EPA to get to that place without having to essentially nationwide repromogate an emission guideline and require all of the states to resubmit state plans.

[00:52:02] Speaker 07:
So one of the reasons EPA says it needs this authority is if a state fails to implement the plan.

[00:52:11] Speaker 07:
Is that right?

[00:52:13] Speaker 05:
Yes.

[00:52:13] Speaker 07:
I thought that's specifically covered by 111 D2B where there's explicit authority of the administrator to enforce provisions of a plan if the state fails to do it.

[00:52:26] Speaker 07:
Is that different?

[00:52:28] Speaker 05:
Subsection D2B authorizes EPA to take enforcement action.

[00:52:34] Speaker 05:
such as under section 7413 to enforce a state plan.

[00:52:39] Speaker 07:
But you're saying this is if the state isn't enforcing it that you could recall the plan and.

[00:52:47] Speaker 05:
and direct the state to submit a plan that includes adequate state enforcement mechanisms, or else EPA would have to promulgate a federal plan that includes implementation of the emission guidelines and enforcement thereof.

[00:53:05] Speaker 05:
Because EPA coming in to federally enforce a state plan that a state is no longer adequately enforcing is a stopgap mechanism, but it doesn't actually solve the issue.

[00:53:17] Speaker 07:
And it's a different kind of state federal friction.

[00:53:19] Speaker 07:
So hopefully the states are going to be in cooperative federalism doing their work.

[00:53:24] Speaker 07:
And so this is a way of prompting the states to do the work rather than marching in there to do it, the feds themselves.

[00:53:34] Speaker 05:
And that's why EPA identified that as one of two types of circumstances in which it might

[00:53:40] Speaker 05:
use the state plan call authority.

[00:53:43] Speaker 05:
The other type of circumstance that EPA identified in this rule is when there's something that changes after an admission guideline and after approval of a state.

[00:53:52] Speaker 07:
Can you remind me what an example would be of the change?

[00:53:55] Speaker 07:
I don't know if this is technical or?

[00:53:57] Speaker 05:
It can be something technical.

[00:53:59] Speaker 05:
It can be a legal development.

[00:54:02] Speaker 05:
EPA explained in the preamble that there may be a variety of circumstances that make a state plan substantially inadequate.

[00:54:10] Speaker 05:
I do think it's important to point out that this isn't giving EPA a wide range in use substantive authority.

[00:54:17] Speaker 05:
It's a new procedural mechanism where states and regulated parties would also have recourse in terms of commenting on EPA's proposed state plan call, seeking judicial review of a state plan call or an error correction.

[00:54:36] Speaker 05:
error correction mechanism.

[00:54:38] Speaker 05:
We explained in our briefs that those are actions that EPA has taken in the Section 7410 context using those rulemaking procedures.

[00:54:49] Speaker 06:
7410 Congress explicitly gave EPA those authorities.

[00:54:53] Speaker 05:
Yes.

[00:54:54] Speaker 06:
But they didn't in 111.

[00:54:58] Speaker 05:
No, Congress did not expressly

[00:55:02] Speaker 05:
include those mechanisms in the Section 7411D process.

[00:55:07] Speaker 05:
Instead, it left EPA the room to decide whether those made sense to port over to this program.

[00:55:14] Speaker 06:
In the rule... I'm sorry, did you want to follow up?

[00:55:18] Speaker 06:
No, I just, I mean, that's just not how we read statutes.

[00:55:21] Speaker 06:
I mean, if Congress gives a specific authority in one section, you know, for one type of program and then withholds it,

[00:55:29] Speaker 06:
or doesn't explicitly provide it in the other section, the natural inference is that it doesn't exist in 111.

[00:55:36] Speaker 06:
Otherwise, you know, I mean, that's normally how we read statutes.

[00:55:39] Speaker 06:
I'm not sure that you've explained how we would overcome that presumption.

[00:55:43] Speaker 05:
Because Congress expressly linked section 7411D to 7410.

[00:55:47] Speaker 05:
Not those parts of it.

[00:55:51] Speaker 05:
Congress was writing Section 7411D in largely a bit of shorthand that refers back to 7410, authorizes EPA to establish procedures that are similar to Section 7410 when EPA decides it makes sense to do so.

[00:56:09] Speaker 05:
Again, any of these

[00:56:11] Speaker 05:
Invocations of this authority are going to be judicially reviewable.

[00:56:15] Speaker 06:
At the end of the day, if EPA... That doesn't fix the problem that EPA may not have had the authority to do those, exercise those procedures in the first place.

[00:56:25] Speaker 05:
Can we submit that Section 7411D gives EPA that authority?

[00:56:29] Speaker 05:
Or Congress entrusted to EPA the decision?

[00:56:32] Speaker 05:
Which of those elements made sense in this context?

[00:56:37] Speaker 07:
You said it's not, it doesn't give them any substantive authority, it's just procedural.

[00:56:44] Speaker 07:
In the rule, 6427A1, Romanet 1, the recall is appropriate when the applicable plan is substantially inadequate to meet the requirements of the applicable emission guideline.

[00:57:00] Speaker 07:
Isn't substantially inadequate a substantive standard?

[00:57:05] Speaker 05:
It's a standard for directing states to submit a new plan, but then EPA's

[00:57:13] Speaker 05:
review of that resubmitted plan is going to be under the same authority that EPA has to initially review a state plan.

[00:57:21] Speaker 07:
And I guess to the extent that substantively and substantially inadequate does anything, it actually protects the state because it said can't be some nitpicky technical minor inadequacy.

[00:57:34] Speaker 07:
It has to be substantially, it has to be like worth going back and reopening things.

[00:57:40] Speaker 07:
Yes.

[00:57:42] Speaker 07:
to meet that standard.

[00:57:43] Speaker 07:
So it's not like imposing a new standard on the state.

[00:57:45] Speaker 07:
It's actually saying, EPA, you didn't do this earlier.

[00:57:49] Speaker 07:
You can't be doing this with every little change in the world.

[00:57:54] Speaker 07:
But if it really becomes significant that it's legally or technically no longer meeting the requirements of the applicable mission guideline, then yes.

[00:58:07] Speaker 05:
That's right.

[00:58:08] Speaker 05:
And a state plan call action and the substantial inadequacy finding in it would be judicially reviewable.

[00:58:16] Speaker 05:
Now, if I may briefly address the timeline issue.

[00:58:20] Speaker 05:
As Judge Pillard recognized, in establishing the 18-month default state plan submission deadline, EPA was balancing competing considerations and paying heed to this court's American Lung Association case.

[00:58:37] Speaker 05:
where the court recognized that the central objective of the statute is to deal with the dangerous air pollution.

[00:58:45] Speaker 05:
Now, petitioners mostly focus on the historical data.

[00:58:51] Speaker 05:
And to make a couple of quick points about that data, we do think that data actually supports EPA's inclusion here.

[00:59:00] Speaker 05:
The data we're talking about is in a spreadsheet that's in the record.

[00:59:05] Speaker 05:
And that spreadsheet shows historically how long states have taken to submit state plans.

[00:59:13] Speaker 05:
EPA didn't look at that data and say, oh, there was one outlier state that managed to submit in 18 months.

[00:59:20] Speaker 05:
There's actually well into the double digits instances, historical data points of when states were able to submit in less than 18 months.

[00:59:30] Speaker 05:
Petitioners are faulting EPA for not taking the average, but the average just isn't the right metric.

[00:59:36] Speaker 05:
Because of this need for speed that the court identified in American Lung Association, EPA decided that it makes more sense to look at the minimum time reasonably necessary.

[00:59:49] Speaker 05:
And so if you're looking at the minimum time reasonably necessary, that's not the historical average.

[00:59:59] Speaker 05:
The court has no further questions.

[01:00:02] Speaker 05:
We ask that the petitions be denied.

[01:00:03] Speaker 07:
Thank you.

[01:00:04] Speaker 07:
I think we have one more, uh, interveners.

[01:00:14] Speaker 07:
Five minutes.

[01:00:21] Speaker 02:
May it please the court.

[01:00:21] Speaker 02:
My name is Matthew Greco.

[01:00:22] Speaker 02:
I'm here from New York on behalf of the intervener respondents.

[01:00:26] Speaker 02:
The petition for review should be denied.

[01:00:29] Speaker 02:
because EPA's rule is consistent with both cooperative federalism and, under the best reading of Section 111D, with the assigned roles of states in EPA.

[01:00:38] Speaker 02:
I want to start by explaining why the maximalist view of state discretion that runs throughout Petitioner's Brief is plainly incorrect, and then move to why EPA's specific regulation is valid.

[01:00:49] Speaker 02:
The text of the statute alone refutes petitioner's argument.

[01:00:54] Speaker 02:
And their first error comes in treating 111D1 as though it is primarily structured as a delegation of authority to states.

[01:01:01] Speaker 02:
The relevant statutory text here that they rely on regarding source specific factors occurs in the midst of a sentence directing EPA to write regulations.

[01:01:10] Speaker 02:
And above and beyond that,

[01:01:12] Speaker 02:
By using the term standard of performance, it incorporates the definition of that term in section 111A1 to mean a standard performance that reflects the degree of emissions limitation achievable using the best system of emission reduction that the administrator determines.

[01:01:32] Speaker 02:
has been adequately demonstrated.

[01:01:33] Speaker 02:
So it is fundamentally a rule-making delegation to EPA, with a proviso included in the midst of it that EPA exercise that delegation in a way that provides some mechanism for remaining useful life and other factors to be taken into consideration.

[01:01:49] Speaker 02:
And when Section 111D1 is properly understood in all of that context, it's clear why petitioners' reading of the statute has to be wrong.

[01:01:57] Speaker 02:
The statute not only permits but requires EPA, because it is a statute telling EPA to write regulations, to craft a regulation setting forth how remaining useful life and other factors may be considered.

[01:02:10] Speaker 02:
The petitioners want this court to read a sentence that expressly delegates rulemaking authority to EPA in such a way that EPA has no authority to set contours for how remaining useful life is taken into consideration.

[01:02:24] Speaker 02:
And for example, at page 15 of Petitioner's Brief, they argued that the statute places no limits on statute of state authority other than the reasonableness that applies to all rulemaking.

[01:02:34] Speaker 02:
But that essentially reads the rulemaking role for EPA out of the statute.

[01:02:39] Speaker 02:
And there are several other features of the text that further confirm EPA's reading is correct.

[01:02:44] Speaker 02:
The best reading of the phrases shall permit and take into consideration is that the thing to be considered must be

[01:02:53] Speaker 02:
must receive a meaningful evaluation as a part of the process, not that it will be dispositive in every case.

[01:02:59] Speaker 02:
And in addition to that, we have the word satisfactory in the statutes making clear that EPA's role is to review whether the state plan is consistent with EPA's guidelines.

[01:03:13] Speaker 02:
And RULOFF is meant to be an adjustment to that.

[01:03:16] Speaker 02:
And in addition to the statutory text,

[01:03:23] Speaker 02:
the Supreme Court's holding in West Virginia versus EPA could not have been more clear in stating that the agency, not the states, decides the amount of pollution reduction that must ultimately be achieved.

[01:03:36] Speaker 02:
That is in addition to the language that received some attention earlier about EPA having the primary regulatory role.

[01:03:42] Speaker 02:
I do want to say that on the question of what the Supreme Court meant by primary regulatory role,

[01:03:51] Speaker 02:
I don't think it can mean simply that EPA starts the process at first and then it is handed over entirely to the states.

[01:03:57] Speaker 02:
A better way to understand it is that the states operate in the middle of the process.

[01:04:01] Speaker 02:
That EPA adopts its guidelines, states proposed plans, which may in some cases involve a rule of determination, and then it proceeds to EPA satisfactory review.

[01:04:15] Speaker 07:
Back up for a moment, you went rather quickly through shall permit, taking consideration, meaning it gets a meaningful consideration and satisfactory.

[01:04:25] Speaker 07:
Focusing on shall permit, I mean, your sister states have said that shall permit means must permit.

[01:04:36] Speaker 07:
And your response to that is?

[01:04:39] Speaker 02:
The response to that is that it means that it shall permit them to take it into consideration and the error lies in believing that taken to consideration means that in every case a a source specific factor is going to have a out is going to be outcome determinative taken to consideration means that the process provides a meaningful way to ensure.

[01:04:58] Speaker 02:
that source-specific factors are not overlooked during the course of the regulatory process.

[01:05:02] Speaker 07:
And in their view that they can affect the bottom line.

[01:05:06] Speaker 07:
I mean, take into consideration is window dressing if it can affect the bottom line.

[01:05:12] Speaker 02:
It and in some cases it can and it needs to be a meaningful review process, but the petitioners brief suggests that once a state has made a determination that remaining useful life or other factors ought to apply the EPA has to in all circumstances treat that as outcome determinative and that's not what the statute says.

[01:05:32] Speaker 02:
And the statute, to the contrary, says that EPA is to set a set of procedures for determining how states shall be permitted to take this into consideration.

[01:05:41] Speaker 02:
So if a state has the opportunity to present its arguments for a variance based on remaining useful life or other factors, EPA is still within its delegated authority under the statute to set the regulation that it has set here, explaining what needs to be made in order for that to be attained.

[01:06:02] Speaker 07:
And so what is your understanding when you say a set of procedures that seems like, arguably, maybe what Virginia would say, hiding something that's anything but procedural.

[01:06:13] Speaker 07:
You're saying not just when you take it into consideration that you have a moment to do that, but limitations on how you take it into consideration.

[01:06:27] Speaker 07:
And I think EPA is kind of saying, no.

[01:06:31] Speaker 07:
Take it in consideration and we're really subject to reasonableness review But I guess you could say it's procedural in the sense that it only trains on things that haven't already been counted for I don't know help me out with why your characterization of EPA's role as setting procedures for how that's taken into consideration why isn't that just

[01:06:56] Speaker 07:
three card Monte putting a EPA substantive restriction into procedural guard?

[01:07:03] Speaker 02:
Well, a couple of things.

[01:07:04] Speaker 02:
I mean, I first of all would point to the fact that the the regulations have historically ever since the original implementing regulations in the 1970s included substantive requirements for what needs to be shown in order to make a remaining useful life and other factors determination.

[01:07:21] Speaker 02:
And in fact,

[01:07:22] Speaker 02:
The 2019 regulation retained those original implementing regulations with only minor wording changes.

[01:07:32] Speaker 02:
And many of the states who are petitioners here today defended that 2019 regulation by arguing that it simply repeats the statutory language.

[01:07:41] Speaker 02:
The contribution that EPA has made here pursuant to its statutory delegation is that it provides additional clarity.

[01:07:50] Speaker 02:
As my friend from EPA was explaining, it provides needed context for what a state needs to show in order to make a rule of determination.

[01:08:02] Speaker 02:
And as states, we support a clearer rule because clarity in what showing is required for a variance supports transparent application of EPA standings.

[01:08:12] Speaker 07:
And you're understanding if we were to invalidate this is that it would roll back to the 2019 or the 2019 bias terms doesn't apply.

[01:08:19] Speaker 07:
2019 standard that you just alluded to.

[01:08:24] Speaker 02:
I think it would roll back to the original regulations.

[01:08:27] Speaker 07:
74.

[01:08:31] Speaker 02:
Yeah, but even if the consequence were that it would restore the 2019 regulation, which required factors for a less stringent standard to be significantly more reasonable, a rule that not only went unchallenged by the petitioners, but which many of the petitioners intervened to defend, the delta between that rule and this one is comparatively small.

[01:08:54] Speaker 02:
I also want to point to this court's decision in the Weyerhaeuser case, which demonstrates the long-standing familiarity of this court with the term fundamental difference.

[01:09:05] Speaker 02:
And it refutes the idea that because EPA requires a showing of fundamental difference, that the fact that any information has been considered as to a particular topic rules out a variance under remaining useful life and other factors.

[01:09:19] Speaker 02:
The court clearly understood in that case that if a factor was considered but is present to a fundamentally different degree, that can support a variance.

[01:09:30] Speaker 02:
And EPA, in adopting the current regulation, did not choose the words fundamental difference coincidentally.

[01:09:37] Speaker 02:
And I also want to emphasize that we should want EPA to set a standard that provides a lot of clarity for when a remaining useful life and other factors determination is appropriate.

[01:09:48] Speaker 02:
Because Congress wanted EPA to be meticulous in its original approach in developing the guidelines.

[01:09:54] Speaker 02:
It is reasonable to require a showing that something fundamentally different was not considered in order to obtain that sort of variance.

[01:10:08] Speaker 02:
And Weyerhaeuser also makes clear that when Congress puts a safety valve into a statute, EPA is not required to interpret that safety valve as a yawning loophole.

[01:10:18] Speaker 02:
petitioners interpretation would prioritize the safety valve over the emission guidelines itself, which is not consistent with the text of the statute and is certainly not consistent with a understanding of how the regime works that was viewed by the Supreme Court as uncontroversial in issuing its decision in 2022.

[01:10:39] Speaker 02:
Just to briefly talk about the timeline issue, the starting point on the timeline issue has to be that EPA has to engage in some sort of balancing in order to arrive at a timeline.

[01:10:56] Speaker 02:
As Judge Pillard said during one of the earlier arguments, there are conflicting exigencies.

[01:11:01] Speaker 02:
And so once you accept that there has to be some degree of balancing, the question is whether EPA reasonably cited to a basis for the deadline that it chose.

[01:11:12] Speaker 02:
And as my friend from representing EPA said earlier, there are a significant number of states that have been able to meet the 18-month deadline in the past.

[01:11:24] Speaker 02:
And the spreadsheet that is linked at page 104 of the Joint Appendix reflects that.

[01:11:30] Speaker 02:
So that shows that it's attainable, and it's reasonable for EPA to set a deadline that is consistent.

[01:11:37] Speaker 02:
It can choose something that is at the shorter end of what states have been able to attain in the past, because the statute contemplates that EPA is intended to move the process along to some degree.

[01:11:50] Speaker 02:
Thank you.

[01:11:51] Speaker 07:
Thank you.

[01:11:53] Speaker 07:
Now, did Mr. Mansinghani reserve time for rebuttal?

[01:11:58] Speaker 07:
Three?

[01:12:03] Speaker 04:
Thank you, Your Honors.

[01:12:04] Speaker 04:
A couple of quick points.

[01:12:07] Speaker 04:
When I heard my counsel on the other side reference when variances are allowed, he says, well, if the information is different, that makes it more reasonable.

[01:12:18] Speaker 04:
And he omitted the word fundamentally, because I don't think you can utter the word fundamentally and say this is just the same thing that's been going on all along.

[01:12:27] Speaker 04:
Now,

[01:12:28] Speaker 04:
You know they point to this primary regulatory role language in West Virginia, but I think judge value have it right that in a certain sense that is that EPA acts first but also that they set.

[01:12:40] Speaker 04:
the default in terms of making the generic technical determinations about feasibility and reliability and cost.

[01:12:48] Speaker 04:
And that is one of the three things we think bounds spine state's discretion in that they get to make that initial determination.

[01:12:56] Speaker 04:
The rule of remaining useful life and other factors, determinations by states have to be consistent with the statute and reasonable.

[01:13:04] Speaker 04:
So I don't, I hardly think that this is unbounded

[01:13:09] Speaker 07:
Can I just interrupt you on the error correction and recall piece?

[01:13:16] Speaker 07:
Your argument, I gather, is that they're not listed in Section 110C, so not authorized.

[01:13:27] Speaker 07:
But there are the three other authorities, partial approval, conditional approval, and parallel processing, that also aren't listed.

[01:13:35] Speaker 07:
But those aren't challenged.

[01:13:36] Speaker 04:
So I think all of those relate to the state plan submission process within their 111 D1 authority.

[01:13:43] Speaker 04:
And, you know, so yeah, I guess that would be my answer to that.

[01:13:49] Speaker 07:
Yeah, so you're just saying it's temporary that even though in some sense, certainly the error correction can be said to relate to the state plan submission.

[01:13:57] Speaker 07:
EPA says we made a mistake in, you know, accepting your submission.

[01:14:01] Speaker 07:
We should have told you to do this or that, or we just added something up wrong or, you know, so.

[01:14:09] Speaker 04:
It is partially temporal.

[01:14:11] Speaker 04:
Yes, in the sense that this is relating to the state pan submission and approval process that comes in in D2, but it's not a post approval thing like error correction or calling for pran revisions.

[01:14:22] Speaker 04:
The post approval authority, as you pointed out, is explicit in the terms of failure to implement plans.

[01:14:28] Speaker 04:
and aligning it with sections 113 and 114 of the Act.

[01:14:32] Speaker 04:
And I think for all of the reasons that were given in the questions by Judge Rao, I think that issue is pretty clear.

[01:14:38] Speaker 04:
So the last thing I want to touch on where my time expires is on the timing issues.

[01:14:43] Speaker 04:
I think the real problem here

[01:14:45] Speaker 04:
is that they did a lot of work in collecting data and telling states, give us comments about how long state procedures will take.

[01:14:52] Speaker 04:
And then they did not at least in the face of the rulemaking consider that in terms of setting 18 months.

[01:15:00] Speaker 04:
The only justification for setting 18 months was this cherry pick statutory comparators.

[01:15:06] Speaker 04:
When it comes to the data, they didn't say anything about how that

[01:15:10] Speaker 04:
What they're saying now about, well, enough states submitted their plans within 18 months.

[01:15:13] Speaker 04:
It's not in the rule.

[01:15:14] Speaker 07:
Didn't they move from 15 to 19 based on that data?

[01:15:17] Speaker 04:
They moved from 15 to 18 based on that data, but they never provided any explanation for why 18 was enough as opposed to something higher.

[01:15:26] Speaker 04:
Or they moved, I would say, from 9 to 18.

[01:15:28] Speaker 04:
I think the 15 to 18 was based on the meaningful engagement requirement.

[01:15:31] Speaker 04:
And when it comes to- They moved from, they doubled it.

[01:15:34] Speaker 07:
Based on that data, and you're saying they didn't ever take, they didn't explain why they didn't just accepted wholesale?

[01:15:41] Speaker 04:
Well, I think they didn't explain why they chose 18 from that data.

[01:15:45] Speaker 04:
What they're saying now is enough states, you know, met 18 is nowhere in the rule.

[01:15:51] Speaker 04:
And so in a certain sense, going on with the

[01:15:56] Speaker 04:
failure to consider the state comments as to how long state procedures take.

[01:16:00] Speaker 04:
That's an arbitrary and capricious decision for failure to consider the record evidence, but it's also a failure to respond to comments because all they had was Ipsa Dixit that, well, we reviewed the steps states need to carry out.

[01:16:11] Speaker 04:
That's a joint appendix 45.

[01:16:12] Speaker 04:
You won't find any other explanation of how they accounted for that factor.

[01:16:15] Speaker 03:
Just on the issue of arbitrary and capricious, the whole argument about

[01:16:23] Speaker 03:
EPA's ability to, I guess, cabin the state's use of reasonably considered source-specific factors.

[01:16:38] Speaker 03:
What I see in your brief that's developed is an excess of statutory authority argument.

[01:16:43] Speaker 03:
I don't really see developed an arbitrary and capricious argument.

[01:16:48] Speaker 03:
Did I miss that?

[01:16:49] Speaker 04:
I think that's correct, Your Honor.

[01:16:51] Speaker 04:
It's primarily that this is outside of their statutory authority.

[01:16:54] Speaker 04:
I don't believe with respect to this issue, we made an arbitrary and capricious argument.

[01:16:59] Speaker 03:
Thank you.

[01:17:02] Speaker 04:
Thank you, Your Honors.

[01:17:03] Speaker 07:
Thank you.

[01:17:03] Speaker 07:
The case is submitted.