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Case number 24-1193-EDAL.

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Chamber of Commerce of the United States of America EDAL petitioners versus Environmental Protection Agency and Liam Zeldin in his official capacity as administrator, United States Environmental Protection Agency.

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Mr. Lin for the petitioners, Mr. Walters for the respondents, Mr. Cummings-Katz for the respondents.

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Good morning.

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Good morning, it may please the court.

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Belber Lynn on behalf of Petitioners.

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There are several independent errors that require vacature, with EPA's rule designating PFOA and PFOS as hazardous substances under circle.

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But I'd like to start with notice and comment, as we believe that is the most glaring error, and would, standing alone, require vacature.

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Under this court's longstanding critical information precedent, it is a violation of the APA's notice and comment requirement

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When an agency introduces in the final rule new methodologies, conclusions, or data that does more than simply support prior disclosed data.

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EPA ran afoul of those precedents here when it introduced with its final rule a brand new totality of the circumstances analysis supported by a new 300-page regulatory impact analysis that at J387 to 389 weighed 29 different impact categories in comparing the advantages and disadvantages of the rule.

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What's the study that you think EPA should have disclosed in the notice?

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It's not a study, per se.

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I mean, you're saying they didn't disclose the RIA.

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Yeah, sure.

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The RIA is the product of the rulemaking.

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Of course.

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The rulemaking will never come to an end if the end product has to be disclosed at the outset.

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There are six different methodologies, assumptions, and quantitative analyses that they undertook.

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So I don't think it has to be a study per se.

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I think if you look at the owner operator case from this court, it talks about a methodology that was used.

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It's not a specific study.

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So I could go through all six of them, and I'll just start with just a couple.

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I mean, the first is,

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The EPA concluded that they would not, that it would entirely ignore costs at federal superfund sites.

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And this, it said, it said that the thing- But they told you on the front end of the rulemaking, there is a unitary question, designate or no designate.

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It's an on-off switch.

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They proposed to do it.

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And they invited comments about whether costs should be considered, what costs should be considered.

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All of those questions, they teed up and you all, and they didn't, this is not a case where they have studies in their files that they're hiding.

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They quite reasonably expressed uncertainty.

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How in the world can you precisely quantify all this stuff?

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And they solicited input.

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And you all had every opportunity in the world to comment.

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And I think that's the difference between the logical outgrowth doctrine and the critical information doctrine.

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I think the Chamber of Commerce versus SEC case 2006 of this court makes that clear, where it says that there was what this court called a bear request for comment on a potential change to the cost benefit analysis.

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And the court said that that wasn't enough, because the agency that might be enough for logical outgrowth

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Windows covering manufacturers case from 2023 distinguishes between the two.

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It says there was no logical outgrowth problem there, but there was a critical information problem.

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And here, yes, they asked for, you know, comment on do we have to consider costs and tell us what costs you think we need to consider.

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But it then introduced

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whole assumptions and about things that it was going to consider costs, conceptualizations of what is a cost and what is a benefit that were never disclosed.

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I think the federal, again, I have six different ones, but I'll start with the federal one.

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In the notice of proposed rulemaking and the economic assessment, where they talk about how there's a lot of uncertainty and they say, tell us something about costs, they highlighted the Department of Defense's estimates for federal costs and cleanups and said, hey, look at this.

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Here's something that might be relevant in the cost analysis, although they said we're precluded from considering costs.

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And then they turned around in the final rule and said, we're not going to consider federal costs at all.

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We're going to completely ignore what happens at federal sites, and we're only going to look at things that happen at non-federal sites.

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That is a, call it a methodology, or call it an assumption, or call it a conceptualization, but it is an underlying principle

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I get that and you have some precedent on your side.

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No question about it.

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Owners and operators is a good case for you.

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It's just struggling.

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I mean, if we apply this doctrine as broadly as you're asking us to, I mean, we'll really get

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big Vermont Yankee problem.

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And there's a big problem that we're effectively requiring formal rulemaking as opposed to informal rulemaking.

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If you have to put everything into the record, that's formal rule, into a record, that's formal rulemaking.

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A couple of answers to that, Your Honor.

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I mean, I think there's a question that you raised as to how the doctrine intersects with Vermont Yankee.

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And I think

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But Calvin, of course, when he was on school, he and Judge Kavanaugh thought he can't be reconciled had a problem with that.

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But you have to try to reconcile.

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But that counsels in favor of.

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not being too extravagant in how we apply it.

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I think it may counsel in favor of not expanding it.

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But I don't think we're asking for an expansion here.

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And I think if you, again, if you look at, and as you point out, I think there is a fair amount of precedent that really we fall within the heartland of it.

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Windows covering, American public gas, owner operator, chamber of commerce.

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All of these cases we're talking about cost benefit analyses.

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And there were some notice and comment requests.

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But what was missing was either studies or methodologies.

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In one case, it says they didn't disclose the way in which they were going to apply this analysis.

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And here, and I mentioned the federal ones, but there's another one is this concept.

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Yes, Your Honor.

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I'm sorry.

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I just have a quick question.

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In those cases, they involved

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lack of notice on information that ended up changing in part or in whole the outcome of the rule.

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They had outcome impacts, the information that was left out.

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Do you have one where what was not disclosed in the NPRM did not affect the outcome in part

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or in whole?

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My answer to you would be to go with the premise, because I think that these cases, there is a distinction between supplemental information and critical information.

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But I think a case like owner operator, I don't think it changed what was

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In the final rule, it did not change the ultimate bottom line that had been proposed.

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A significant relevant portion of it.

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I mean, what was added in had discernible impact.

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Something shifted from the NPRM to the final rule in something regulatory, something of regulatory consequence.

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I guess that's not how I read those cases.

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I think, for example, the Chamber of Commerce case, this court had reversed the previous rule for a mistake, what it found to be an error in the cost-benefit analysis.

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And that was correct.

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And immaterial?

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Correct.

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Well, it was a material error, and then it was corrected.

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So I guess, Your Honor, if you're

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I think it supported the cost benefit analysis, the ultimate conclusion in that case.

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This court said that there was a mistake there.

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What you have here is them in the NPRM and their economic assessment, first of all, dealing directly with direct effects.

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And they did that again, the final rule, and you're not challenging it, the notice requirements, okay?

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And then all that's going on here is about indirect effects.

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And in the indirect effects, they did their own sort of qualitative, but not quantitative assessment, evaluation, analysis, and the economic assessment, and talked about the uncertainties, acknowledged the uncertainties, grappled with them and said, here's where it comes out for us.

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Then you come to the final rule here.

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They do the same qualitative analysis.

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And when they get the quantitative done, nothing of what I see you guys being concerned about changed anything.

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These are all indirect effects and change it.

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And in particular, there's just continued acknowledgement and not dispute by you of the massive amounts of uncertainty.

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that you're even trying to predict here.

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And so that's, I think that's why those other cases.

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I think I understand the question.

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If I could answer, I think there's three different potential answers to that.

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The first is even at a very, very high level of 30,000 foot level, I think there was a fundamental change to the cost of an analysis because

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In the notice and the economic assessment, there wasn't a conclusion about whether costs outweighed benefits or benefits outweighed costs.

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They said in the note... It was a qualitative one, but not a quantitative.

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Not even on the qualitative.

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I don't think they reached a conclusion as to what one outweighed the other.

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He said advantages outweighed disadvantages.

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And then the second point is that on the qualitative stuff, Your Honor, there are different qualitative points that were raised here.

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If you compare, even in the economic assessment, they do talk about a few qualitative things, but they're limited.

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And I actually went through and tried to kind of sort out what they were.

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And I think you can.

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what the number of safe driving hours was.

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And I'll get into that here.

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I'll get into the quantitative in a minute.

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But on the qualitative point, this is at J 144 to 146.

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There's three pages of the economic assessment.

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And they mentioned four things.

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more efficient cleanup, earlier response activity, potentially increased research and development and health benefits.

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Those are the four qualitative advantages and disadvantages they say they can't quantify at the economic assessment stage.

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That's it.

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They also talk about a fifth thing, which is the transfer of cleanup costs from, quote, public to polluters.

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I will give them those five things.

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More efficient cleanup, earlier response activity, increased R&D, health benefits, and the transfer from public to polluters.

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But what they introduced in the final rule is other qualitative conclusions.

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One of them, whether you want to call this qualitative or quantitative, is the exclusion of federal sites.

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But another qualitative conclusion is that they are going to treat all costs, new costs, at non-superfund sites as benefits.

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Is that is that quantitative?

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I mean, Mr. when I guess my question is to your notice and comment violation claims depend on the threshold question of whether costs have to be considered under one or two because EPA is putting forth both qualitative and qualitative.

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Justifications so if.

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for instance, their qualitative assessment was sufficient to support the designation, then would there be a notice and comment violation?

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I mean, your notice and comment violation critical materials arguments are all based on the fact that they have to consider economic costs and that they didn't provide the RIA and the relevant information for parties to comment on.

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So if the qualitative is sufficient,

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then is there no notice and comment violation?

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I mean, don't you have to win on the threshold question too that costs have to be considered?

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So I think you're asking two different questions, but yes, costs have to be considered.

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I think it's a separate question, whether what do you do with the qualitative versus quantitative?

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But yes, costs have to be considered.

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Is it separate?

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Because if costs don't have to be considered, then you have to make an additional argument about why the qualitative

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qualitative considerations that NPA put forth.

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I don't hear you making that argument.

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I think that is premised on the idea that costs are only quantitative.

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I mean, when I say cost benefit, I'm happy to adopt their terminology of advantages versus disadvantages.

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I don't think that cost benefit is necessarily a quantitative analysis.

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I think it can

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I mean, I think what Michigan requires is that you look at advantages and disadvantages, and costs are included in that.

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And that's part of the overall weighing.

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So that's why I think there are two different questions.

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I think the one question is, does the statute require them to do this sort of advantage versus disadvantage, weighing what goes into that?

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And then the second question is, did they provide sufficient notice of what they ultimately relied on?

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But your notice arguments are largely based on

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failure to provide economic analysis, you know, like actual costs, not just advantages and disadvantages, right?

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That they didn't provide the RIA, that they didn't give any of this economic information.

[00:15:48] Speaker 06:
And I think the answer to that, Your Honor, is that, I mean, I think what you do with the critical materials doctrine is you have to ask what EPA itself considered to be critical, which I think gets kind of all back to the third answer to Judge Millett's question about qualitative versus quantitative and did it make a difference.

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The government has argued in their brief that all of this quantitative stuff was just

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it was just extra, it was illustrative, they didn't rely on it.

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But with respect to my friend, I think that's, if you look at the preamble, I think that's a post-hoc litigation position of counsel.

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If you read, just starting at JA26,

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When EPA talks about the totality of the circumstances test that they have newly created in the final rule, they say, EPA weighed the quantitative and qualitative costs and benefits valued in the RIA.

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EPA considered the estimated direct and indirect monetized costs.

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EPA also considered qualitative costs.

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And over and over, it talks about how it took into account the quantitative estimates of costs.

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And as a point of comparison,

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So they cite some stuff about, well, they say, well, we specifically said in the rule that we would reach the same conclusion without the quantification.

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The only place that that appears is with respect to the consideration of quantified benefits.

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And that's at JA 32.

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EPA believes that the advantages of this action

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It never says that about quantified costs.

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We've done this analysis.

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We've tried to quantify the benefits and the costs.

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We think the benefits are really hard to pin down.

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So even without it, we think the advantages outweigh the disadvantages.

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They never say that for the quantification of costs.

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Instead, what they say is that they say things like, future response costs are difficult to quantify.

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Unlike with benefits though, EPA concluded that it has sufficient information to reasonably estimate anticipated future costs for NPL and non-NPL sites.

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So I think what this all kind of comes back to is, while the government has suggested that the quantitative costs here are just icing on the cake,

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Well, it really is, when you read the preamble, it was butter, it was sugar, it was a critical ingredient to the totality of the circumstances.

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Can I follow up on Judge Ralph's question?

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So suppose I agree with you that Michigan versus EPA does require consideration of cost, but I don't think

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Either the statute or Michigan versus EPA requires a quantification cost.

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You with me on that?

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I'm with you.

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OK, so as a conceptual matter, we'll get back to how EPA treated the two documents.

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But they could have done a qualitative assessment in the preamble for purposes of judicial review under the APA.

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And they could have done hundreds of pages of quantification in the RIA for purposes of an executive order that's not judicially enforceable.

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And our review would be just on the qualitative in that scenario, right?

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With a caveat, but yes, I take it you're going further.

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So quantification as a substantive matter is icing on the cake.

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They don't need to do any of it.

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in order to have a non-arbitrary explanation consistent with Michigan versus EPA?

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So I think the issue here, I'm trying to sort this out, because I think the way to answer that question is this.

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Michigan leaves it to the agencies to, I think it says, to how best to account for costs.

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I think we think as a

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I would quarrel with the premise of your question, which is I think in order to do a reasonable advantages versus disadvantages assessment here, you have to take into account some of the quantification because these cleanup costs are massive.

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But accepting your hypothetical.

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I don't think it matters for purposes of the notice and comment question here, because what the critical materials doctrine, the critical information doctrine is asking is, did EPA give notice of what was critical to its analysis and its conclusion, which is why

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with your indulgence, I was reading to you those parts of the preamble.

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I think what's really important here is when EPA concluded in the totality of the circumstances test in the final rule that the advantages outweigh the disadvantages.

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What motivated and underlay that ultimate decision?

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Because if the quantification there was important, and we think it's clear from the final rule that it was.

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You do have these

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Cross references in preamble to the RIA, which tends to support the argument you're making, which is we have to judge their explanation on its own terms, but.

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Boy, if we conclude that the qualitative analysis in the preamble would suffice for APA purposes, and it's really not that complicated.

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This is really dangerous stuff.

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The statute is focused on, the designation part of the statute is focused on whether the chemical is hazardous to human health.

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And all of the downstream stuff about who pays what like circle has guardrails.

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So we'll worry about that later.

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Like, that's their basic rationale.

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And I mean, by standards, it hangs together pretty well.

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So, you know, we're going to do a.

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We're going to set this thing aside because of some fantastical possibility that buried deep in the RIA are some numbers that might change when they redo the calculations that they never had to do in the first place.

[00:22:40] Speaker 06:
Well, Your Honor, again, I would fundamentally disagree with your reading of the preamble.

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I think if it were indeed, if all of these numbers were fantastical icing on the cake, we will be dealing with a very, very different case.

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But they talk at length in the preamble about the shift in costs.

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the $50 million per year, the $18 million per year of costs at these sites that are going to be a meaningful advantage and a benefit of the rule.

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I mean, if I could, at JA 41, this is one that really, this is in the preamble.

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JA 41.

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This is in the context of discussing enforcement at non-superfund sites.

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So this is all cleanup that nobody believes would exist but for designation, because this kind of enforcement against private parties can only happen if you have a designated hazardous substance.

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Quote, EPA acknowledges that costs

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parties expend to clean up PFOA and PFOS is a burden on them.

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But notwithstanding this, EPA views the cleanup monies, sorry, I have typos, it's movies.

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The EPA views it's the cleanup monies spent by PRPs as an advantage of the rule.

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And if you look at that right there, they're talking about $18 million a year of cleanup costs that would not exist,

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So there's a bunch of costs that they say would exist, even in the non-designation baseline.

[00:24:29] Speaker 06:
But these $18 million a year are costs that everybody agrees would not exist without designation.

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And they are treating these as benefits.

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And they say that these are an advantage of the rule.

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And these are the costs that they say they had sufficient information to reasonably estimate that they took into account.

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as compared to the quantification of benefits, which they specifically say, we'd reach the same conclusion even without them, as compared to litigation costs, where they say, there's just not enough information for us to quantify that, so we're not going to.

[00:25:03] Speaker 06:
OK, I'll accept that for purposes of this argument, Your Honor.

[00:25:07] Speaker 06:
They made a decision that they didn't want to quantify that.

[00:25:11] Speaker 06:
I don't think there is any fair way to read this preamble in the way that the government has attempted to characterize it in their briefs, which is that- What is private enforcements that you're concerned about?

[00:25:22] Speaker 04:
They do have to be conducted consistent with the National Contingency Plan, is that right?

[00:25:31] Speaker 02:
Yes, Your Honor.

[00:25:32] Speaker 04:
And the National Contingency Plan requires, at least when implemented by EPA,

[00:25:39] Speaker 04:
specific, site-specific balancing of costs, cost effectiveness, consideration, then you don't have all of these remote contingencies, then it's not much more concrete, and you have to do a cost balancing and a cost effectiveness analysis, right?

[00:25:57] Speaker 06:
At that point, yes, Your Honor.

[00:26:00] Speaker 04:
And so to be consistent with that,

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do private entities have to undertake that same, again, now it's more focused, costs effectiveness and costs, pro-com, advantages, disadvantages, I forget what we're calling it now, balancing, before it can happen.

[00:26:16] Speaker 04:
I do think, yeah, yes, I think.

[00:26:19] Speaker 04:
So it's, I understand how EPA upfront is saying, it's, we can't predict with much certainty at all of this, other than maybe reference to historical practice, but,

[00:26:33] Speaker 04:
Who which states which private entities are going to take up these cleanups on their own and then try to obtain compensation.

[00:26:44] Speaker 04:
Where when who how much and.

[00:26:51] Speaker 04:
even if they want to do that, they're going to have to show that in undertaking that cleanup and incurring these costs, it was consistent.

[00:26:59] Speaker 04:
They did this inappropriate or at least consistent with it.

[00:27:03] Speaker 04:
I'm not sure how consistent it has to be, but I don't know what that word consistent means, but it's going to have to consider costs and cost effectiveness at that point.

[00:27:15] Speaker 04:
And so why was it wrong for EPA to say,

[00:27:21] Speaker 04:
We think we want numbers.

[00:27:24] Speaker 04:
All right, we think it's past practice.

[00:27:26] Speaker 04:
Maybe this is what's going to result.

[00:27:29] Speaker 04:
But who and when and where and whether any of it will actually shake out because.

[00:27:35] Speaker 04:
A lot of this stuff is already getting cleaned up anyhow as part of other cleanups.

[00:27:42] Speaker 04:
It seems to me you're wanting a lot more, in picking out those numbers, you're not sort of grappling with all the layers of uncertainty and all the layers of protection that actually even still exists for these private and state actions that are going to let you have that very careful analysis that you say,

[00:28:01] Speaker 04:
You need to have has to happen.

[00:28:03] Speaker 04:
You don't say this can't happen and this can't be listed.

[00:28:06] Speaker 04:
You simply say we need to get this beforehand and you're going to get it beforehand or you'll have an argument.

[00:28:12] Speaker 04:
Someone doesn't give it to you.

[00:28:13] Speaker 04:
Then you'll have a good way to challenge it.

[00:28:16] Speaker 06:
I think there's a couple different arguments in there.

[00:28:19] Speaker 06:
I think we do take issue with the claims of uncertainty and that there are some things that they say can't be quantified and they don't quantify.

[00:28:29] Speaker 06:
But I don't think you have to reach that to address the notice and comment issue, which goes to the quantifications

[00:28:37] Speaker 06:
in part that they actually did, right?

[00:28:40] Speaker 06:
So, Your Honor, some of these questions that you're raising about, you know, they say that they can't calculate.

[00:28:46] Speaker 04:
It's not prejudicial if in fact they're wrong that the totality of the circumstances analysis, or I'm sorry, that their decision that we don't need to do this and or our qualitative analysis was sufficient.

[00:29:00] Speaker 06:
On notice and comment, the question of prejudice this court has said is not a high bar.

[00:29:06] Speaker 06:
The question is, did we have anything useful to say?

[00:29:09] Speaker 04:
You have to win on the argument that they had to do a quantified, a dollars cost benefit analysis.

[00:29:17] Speaker 04:
Because if the statutory answer is they give us sort of three options on the table, we don't have to do it at all at this hazard designation stage.

[00:29:27] Speaker 04:
cost-benefit analysis is going to come later, much more site-specific and focused.

[00:29:31] Speaker 04:
That's one.

[00:29:31] Speaker 04:
Two, to the extent we have to do a qualitative beyond the direct effects.

[00:29:39] Speaker 04:
So for the indirect effects, qualitative is permitted and we've done that.

[00:29:44] Speaker 04:
Or three, it has to be number crunching.

[00:29:47] Speaker 04:
And you have to prevail on it has to be three.

[00:29:52] Speaker 04:
It has to be number crunching for us to say, well, when they

[00:29:57] Speaker 04:
predicted a range of expenses for private and state actions, they had to get that better?

[00:30:08] Speaker 06:
I don't think so.

[00:30:09] Speaker 06:
I think the way I would suggest you think about the analysis is this.

[00:30:14] Speaker 06:
One, do they have to

[00:30:16] Speaker 06:
do an advantages and disadvantages weighing at all?

[00:30:21] Speaker 06:
I think the next question is, what did they do?

[00:30:23] Speaker 06:
But the first question is, did they have to do an advantages and disadvantages weighing at all?

[00:30:27] Speaker 06:
And I think the answer to that is yes for a number of different reasons.

[00:30:32] Speaker 04:
I understand your argument.

[00:30:33] Speaker 04:
I'm just saying you have to win on that before you've been prejudiced by any of this.

[00:30:36] Speaker 06:
Yeah, and so then we'll move on to that.

[00:30:39] Speaker 06:
So the first is that.

[00:30:41] Speaker 06:
And I think the answer to that is yes for a number of reasons, one of which is the government has

[00:30:47] Speaker 06:
conceded for purposes of this case that they had to consider costs.

[00:30:51] Speaker 06:
In the preamble, they said kind of both things, but they've come into court, page 39 of their brief, and said- Qualitative or quantitative?

[00:30:58] Speaker 06:
They have to do some sort of weighing.

[00:31:00] Speaker 06:
Appropriate means you've got to look at the relevant factors and weigh advantages versus disadvantages.

[00:31:06] Speaker 06:
I think the answer to that is yes, whether it's on a party presentation ground or if you look at Michigan directly, I think Michigan, the way the statute is set up applies to that.

[00:31:16] Speaker 06:
We can talk about that, but that's question one.

[00:31:19] Speaker 06:
I think as to two and three, Judge Millett, and this gets back to dialogue with Judge Katzis,

[00:31:26] Speaker 06:
I think they sort of collapse into, and what did EPA think was critical to its analysis?

[00:31:36] Speaker 06:
Because if EPA says, we had to do an advantage as a disadvantage, the next question for purposes of notice and comment is, what did they do, and what was critical to their conclusion?

[00:31:47] Speaker 06:
And that is the colloquy that we had, which is, I think,

[00:31:52] Speaker 06:
the preamble makes very clear that the numbers that they did crunch, at least with respect to costs, they absolutely relied on them because some of those costs, 18 million and 51 million, they considered benefits.

[00:32:08] Speaker 06:
And I think that is the question.

[00:32:10] Speaker 06:
I don't think we have to win on do they have to consider quantitative because they

[00:32:15] Speaker 04:
I don't think they said we consider this particular dollar amount the benefit.

[00:32:20] Speaker 04:
I think they said we, as a statute, as a design, consider the transfer of these costs, which is going to happen at some point.

[00:32:31] Speaker 04:
It's to some degree to be a benefit because the statute considers that a benefit.

[00:32:37] Speaker 04:
Well, right.

[00:32:39] Speaker 04:
I don't read their decision that if it's not $18 million, then we would decide this.

[00:32:45] Speaker 04:
Then we're going home.

[00:32:46] Speaker 04:
We're not regulating this.

[00:32:47] Speaker 06:
So one, I think they do.

[00:32:49] Speaker 04:
But two- You think they say that if the benefits are not this dollar amount, the dollar amounts we've identified or that range, then we would not regulate this by size.

[00:32:58] Speaker 06:
I spoke too quickly.

[00:32:59] Speaker 06:
I'm sorry.

[00:33:00] Speaker 06:
There is no sentence that says that specific thing.

[00:33:03] Speaker 06:
I think it's part of it because they call it a totality of the circumstances test.

[00:33:08] Speaker 06:
They don't identify which 10 things are on this side of the ledger and how you weigh them against the other 10 things.

[00:33:15] Speaker 06:
What they do have at, and again, I'm sorry, I've lost it now.

[00:33:19] Speaker 06:
I think it was 387.

[00:33:20] Speaker 06:
They have a table.

[00:33:23] Speaker 06:
in the RIA that they refer to the cross-reference from the final rule that has the 29 different impact categories that are the costs and benefits that were taken into account in the totality of the circumstances.

[00:33:36] Speaker 06:
And they don't tell us exactly how you weigh one thing or the other.

[00:33:39] Speaker 06:
They do at one point say the quantification of the benefits that we can sort of take our leave.

[00:33:44] Speaker 03:
So Mr. I'm going to ask another question.

[00:33:46] Speaker 03:
Is your notice and comment argument contingent on the fact that the reasoning

[00:33:52] Speaker 03:
is arbitrary and capricious?

[00:33:55] Speaker 06:
I think it's contingent.

[00:33:56] Speaker 03:
Because many of these arguments that you're making now are not about critical materials and notice, per se, but just that internally, the rule is unreasonable or poorly reasoned.

[00:34:08] Speaker 03:
You can't sort of trace the reasoning.

[00:34:10] Speaker 06:
No, I think it's both.

[00:34:12] Speaker 03:
And are they separate or are they connected?

[00:34:17] Speaker 06:
They are connected in part.

[00:34:19] Speaker 06:
So the notice and comment analysis, I think we have to identify some things of which we were not given notice that were critical.

[00:34:27] Speaker 06:
And then we have to establish prejudice.

[00:34:29] Speaker 06:
The prejudice argument knocks up against the argument that the reasoning is arbitrary and capricious.

[00:34:39] Speaker 06:
But under this court's cases, we don't have to actually win the arbitrary and capricious argument on those things of which we weren't given notice.

[00:34:47] Speaker 06:
We just have to show that we had something useful to say that would create some uncertainty as to the outcome.

[00:34:52] Speaker 06:
But the court has said, we don't have to show that it would have convinced the agency to go the other way on those pieces of it.

[00:35:00] Speaker 06:
But one other thing I did want to stress is.

[00:35:03] Speaker 04:
Sorry, at some level, it cannot be

[00:35:10] Speaker 04:
that when you point out how long and comprehensive and multi-factor this weighing of advantages and disadvantages was, both qualitative and quantitative, all you've got to do is find one number and say, oh, we would have told you a different number.

[00:35:31] Speaker 04:
And then we always send it back.

[00:35:33] Speaker 04:
It's a never-ending cycle.

[00:35:34] Speaker 06:
Not always.

[00:35:35] Speaker 06:
But the problem here is with the way EPA did its analysis.

[00:35:40] Speaker 06:
Just as a hypothetical, if they had actually done

[00:35:44] Speaker 06:
And I'm saying that they had to do this, right?

[00:35:46] Speaker 06:
But if we have a different case where they said, there are $100,000 worth of benefits over here, and there are $50,000 worth of costs over here, and then there's some other qualitative benefits that go above and beyond that.

[00:36:04] Speaker 06:
And if we found a problem with the

[00:36:07] Speaker 06:
You would know better which pieces of those, how they fit together in the analysis.

[00:36:13] Speaker 06:
But EPA here has chosen to do what they call the totality of the circumstances test.

[00:36:19] Speaker 06:
So they haven't built the Jenga tower for us to understand what each individual piece does.

[00:36:27] Speaker 06:
And I think what we've identified are- It's your burden to show prejudice.

[00:36:31] Speaker 04:
Yes.

[00:36:33] Speaker 04:
And agencies do totality of circumstances analyses, not uncommonly, and they're allowed to do that.

[00:36:38] Speaker 04:
Michigan versus EPA calls for that.

[00:36:40] Speaker 04:
And so I don't understand what that means if you say they have to give you sort of some sort of analytical framework, sort of a whole program here that says, and by the way, if this one changes, whoa, that's bad.

[00:36:56] Speaker 04:
If this one changes, doesn't matter so much.

[00:36:58] Speaker 04:
I mean, really, I think

[00:37:00] Speaker 04:
I think the burden's on you, and I'm having trouble understanding, especially when you're mixing qualitative and quantitative in the balancing, how simply your objections, which seem to be really very data-specific, this number versus that number, well, we would have told you this number versus that number, not the mode of analysis, not what they've done, that you didn't consider this, or you failed to add that one in.

[00:37:27] Speaker 04:
You have to show that it was gonna make a difference.

[00:37:29] Speaker 04:
Don't you?

[00:37:30] Speaker 04:
You're big enough to make a difference.

[00:37:32] Speaker 06:
No, I don't.

[00:37:36] Speaker 06:
Not in this, as a general matter, the prejudice standard does not require us to show that we would have convinced the agency to come out in a different way.

[00:37:45] Speaker 06:
All it requires is for us to show that we had something useful to say.

[00:37:48] Speaker 04:
I mean, we're going in circles here.

[00:37:52] Speaker 04:
It has to be, it can't, because I thought you agreed it cannot be, wait, we had 50 cents more to add, right?

[00:38:01] Speaker 04:
You could have added that.

[00:38:03] Speaker 04:
I think it would say that's not useful and that it's not going to be material to an analysis.

[00:38:07] Speaker 04:
And so don't you have to show it's not just that we have a different number.

[00:38:14] Speaker 04:
Reports are rarely ever going to say which of the two numbers for an agency and technical area like this is right.

[00:38:19] Speaker 04:
So it has to be more than just we had a number.

[00:38:23] Speaker 04:
We had a number.

[00:38:25] Speaker 04:
that could, you don't have to show would for a notice, but that could have changed this.

[00:38:31] Speaker 06:
And I think we have done that for two reasons.

[00:38:34] Speaker 06:
One is that these aren't just numeric complaints.

[00:38:38] Speaker 06:
And Your Honor, I think I was unable to circle back around to your question before about the 18 million, if the 18 million were different, would they have taken the ball and gone home, right?

[00:38:49] Speaker 06:
The complaint about the $18 million, and this gets to Judge Rao's question before about is it quantitative or qualitative.

[00:38:55] Speaker 06:
I think there is a qualitative element to our complaint about that.

[00:38:59] Speaker 06:
And then there's another thing, which I haven't mentioned yet.

[00:39:01] Speaker 06:
But on the $18 million, it's how they're treating that $18 million.

[00:39:05] Speaker 06:
Whatever magnitude that number ends up being, the point is that they have decided, the EPA has decided that $18 million of new costs will be treated solely as benefits.

[00:39:16] Speaker 06:
That is a big conceptual swing, no matter what that number is.

[00:39:22] Speaker 06:
Things that should be in the cost column.

[00:39:25] Speaker 05:
Why?

[00:39:25] Speaker 05:
Why can't they just make a first cut global assessment that these chemicals are dangerous enough that they should be cleaned up?

[00:39:41] Speaker 05:
And then all of the particulars about what if it's just one part per trillion and it's not worth doing, it just gets handled post-designation.

[00:39:53] Speaker 06:
So Your Honor, I think you're, just to make sure I understand, you're asking sort of the threshold question about- They can just make a general assessment

[00:40:05] Speaker 05:
The only question before us is, could they permissibly designate these chemicals as hazardous?

[00:40:14] Speaker 05:
And they look at the science, and you haven't contested any of this, they conclude that these chemicals are really dangerous because of earth defects and cancer and everything else.

[00:40:28] Speaker 05:
And the conclusion is, as a general matter, arbitrary and capricious, we're not fly-specking too much.

[00:40:38] Speaker 05:
They say there should be cleanup.

[00:40:46] Speaker 05:
And that's true regardless of whether the site is on the national priorities list or who's going to do the initial cleanup.

[00:40:58] Speaker 05:
who's going to get hit as a potentially responsible party.

[00:41:02] Speaker 05:
It just seems like that's a categorically rational decision on the threshold question, whether to designate or not.

[00:41:14] Speaker 05:
And then you have all these details on the back end about which sites do you do first and how much do you have to clean up and do you not bother if the concentration is really, really small?

[00:41:27] Speaker 06:
a couple of answers to that.

[00:41:29] Speaker 06:
I mean, again, I think the first answer that your honor is that's not what they did.

[00:41:32] Speaker 06:
They have said they did.

[00:41:36] Speaker 05:
But that's I'm suggesting that might be what they're doing when they say this is really a benefit.

[00:41:43] Speaker 05:
This is a net benefit.

[00:41:45] Speaker 05:
Cleaning the stuff up in non NPL sites is a benefit.

[00:41:50] Speaker 06:
And it's part of the way that they weighed advantages and disadvantages.

[00:41:58] Speaker 06:
And it's a totally new method or assumption about how you think about whether those costs are advantages or disadvantages that they didn't give us notice of.

[00:42:09] Speaker 06:
And we could have had this very debate

[00:42:13] Speaker 06:
with the agency if they had actually provided notice and comment.

[00:42:17] Speaker 06:
I think that's really, I mean, that's ultimately the notice and comment complaint is that there are whole pieces of how they thought about the advantages and disadvantages.

[00:42:26] Speaker 06:
Some of them are numbers, others of them are not.

[00:42:30] Speaker 03:
Another example- Mr. Lin, would you have the same argument if the preamble said perhaps more clearly something like what Judge Katz has said, that we are making a

[00:42:40] Speaker 03:
qualitative judgment that these are hazardous substances that need to be regulated.

[00:42:46] Speaker 03:
And we have an economic justification separately.

[00:42:50] Speaker 03:
Would you have the same argument about that?

[00:42:51] Speaker 03:
I think it would be a different case.

[00:42:53] Speaker 03:
It would be a different case.

[00:42:54] Speaker 06:
It would be a different case on the notice and comment, although we would think on the qualitative judgment, we'd have to see what went into their qualitative judgment.

[00:43:04] Speaker 06:
If it was Judge Katz's is like kind of a one liner,

[00:43:07] Speaker 06:
about, well, we've sort of generally weighed the qualitative.

[00:43:11] Speaker 03:
Well, that was partly why I asked the question towards the beginning of this argument, which is, do you have to prevail on the threshold question about whether costs are part of 102?

[00:43:21] Speaker 03:
Because if it's sufficient to simply do a kind of qualitative assessment about what's a hazardous substance, then can you still prevail on your arguments?

[00:43:37] Speaker 06:
I think we can, because on the notice and comment- Because of what they did, but not necessarily because of the law.

[00:43:47] Speaker 06:
Well, but those two things go together, right?

[00:43:50] Speaker 06:
Because- Sorry, finish.

[00:43:53] Speaker 06:
I'm sorry.

[00:43:53] Speaker 06:
No, go ahead.

[00:43:56] Speaker 06:
No, go ahead.

[00:44:00] Speaker 06:
If the law requires that they do an advantages and disadvantages assessment, which, again, was to step onto the analysis, and they do it, and they reach that conclusion based on a number of whether it's data or methodologies or assessments that they don't give us any notice of and any opportunity to comment on, and that that is the basis for their advantage and disadvantage assessment, then there is a notice and comment violation.

[00:44:29] Speaker 06:
And the question is whether that was prejudicial.

[00:44:32] Speaker 06:
That's the next question.

[00:44:33] Speaker 03:
Section 102 is just a purely precautionary provision.

[00:44:37] Speaker 03:
An EPA can decide that something is a hazardous substance because it affects the environment or human health.

[00:44:46] Speaker 03:
Then do you have a winning argument?

[00:44:50] Speaker 06:
If they don't have to do the advantages and disadvantages.

[00:44:54] Speaker 03:
Well, advantages and disadvantages are so broad.

[00:44:57] Speaker 06:
If they don't have to do anything other than consider whether the substance is hazardous, then the notice and comment argument does fall away because that is premised on the idea that the word appropriate in the statute requires them to do an assessment.

[00:45:15] Speaker 06:
Some kind of assessment.

[00:45:18] Speaker 06:
Again, as we've talked about, I think the government has conceded for purposes of this case that that is what they had, that Michigan does require them to do that way.

[00:45:26] Speaker 04:
They just assumed without deciding that they win anyhow.

[00:45:28] Speaker 04:
That's different than a concession.

[00:45:31] Speaker 06:
I think what they have, maybe the way that I would put the concession is they have said to this court that it should be assumed in this case.

[00:45:41] Speaker 04:
Yes, EPA assumed without conceding at the final rule stage of the section 9602.

[00:45:46] Speaker 06:
And therefore, the only live issue in this case is whether the costs.

[00:45:50] Speaker 04:
I'm just clarifying.

[00:45:51] Speaker 04:
Yes.

[00:45:52] Speaker 04:
That's important.

[00:45:53] Speaker 06:
I think if you read on in that paragraph, it says that therefore the only live issue here is whether the cost benefit analysis or the advantages and disadvantages weighing was done correctly.

[00:46:04] Speaker 06:
And so I think they're asking this court to assume that they were required to do that.

[00:46:10] Speaker 06:
And the question is whether they did it correctly.

[00:46:13] Speaker 06:
And whether they did it correctly, one question is whether it's arbitrary and capricious, but a threshold question is whether they provided sufficient notice and comment.

[00:46:21] Speaker 06:
Some of them are numbers, and some of them

[00:46:23] Speaker 04:
provided this $18 million number from the NPRM thinking you said this is what we think this advantage is.

[00:46:32] Speaker 04:
Where have you shown what you would have done differently other than substantive debate whether it's the statute allows them to consider that an advantage?

[00:46:42] Speaker 06:
What we've said about

[00:46:45] Speaker 06:
Oh, I'm sorry.

[00:46:46] Speaker 04:
I missed the last part of your question.

[00:46:47] Speaker 04:
So we didn't have the note.

[00:46:50] Speaker 04:
One of the ways we think about prejudice is, well, usually people say, well, had they told me this, then we would have done, had they told me X, we would have done Y. There are two objections that we have to the $18 million number.

[00:47:05] Speaker 04:
Commission from the NPRM.

[00:47:07] Speaker 06:
One of them is that they considered that $18 million, again, could have been bigger, could have been smaller, that they considered it

[00:47:15] Speaker 06:
as a benefit and not as a cost.

[00:47:16] Speaker 04:
That's more of a legal argument than a notice argument, isn't it?

[00:47:20] Speaker 06:
I think it's still a notice argument because it deals with how they ended up.

[00:47:26] Speaker 06:
This gets to the quantitative versus qualitative.

[00:47:28] Speaker 06:
I think it's qualitative in the sense that they decided they're going to consider that whole category as stuff.

[00:47:33] Speaker 04:
You've made all these arguments.

[00:47:36] Speaker 06:
We did not make that argument in the comments because they didn't preview that they were going to take these new costs and treat them conceptually as benefits.

[00:47:45] Speaker 06:
And the other thing, so that's one objection, and that's a qualitative objection, as to the actual $18 million number, that only counts

[00:47:55] Speaker 06:
federal enforcement and they say that they're not going to calculate in that 18 million what happens with private and state enforcement at those non-superfund sites and one of the things we point out in our brief is that historical data shows that only a third of enforcement at those sites is by the federal government and so again if we had had an opportunity to comment on it we would have

[00:48:20] Speaker 06:
we would have explained that that is a woeful undercounting of the costs that will occur at these new sites, because two-thirds of enforcement occur by somebody other than the federal government.

[00:48:31] Speaker 06:
So I think we did have

[00:48:33] Speaker 06:
not to overuse the phrase, but useful comments about.

[00:48:37] Speaker 04:
They would just up the benefit value.

[00:48:40] Speaker 06:
Maybe.

[00:48:40] Speaker 06:
Who knows?

[00:48:41] Speaker 06:
And who knows how they would have done it?

[00:48:42] Speaker 06:
But that's the whole point of the notice and comment process.

[00:48:45] Speaker 06:
And the other qualitative problem that we have, which I haven't gotten to, is they count

[00:48:53] Speaker 06:
these operational changes to sort of cut down on the potential releases of this chemical as a benefit.

[00:49:00] Speaker 06:
It's included in the chart at 387 to 389 as a benefit.

[00:49:05] Speaker 06:
But then in the totality of the circumstances analysis, they tell us that they're not going to consider the costs of those actual changes.

[00:49:14] Speaker 06:
Again, I don't know if you want to call that quantitative or qualitative.

[00:49:18] Speaker 06:
There are no numbers attached to that, so let's call it qualitative.

[00:49:21] Speaker 06:
It's a qualitative conclusion to count only the benefit of operational changes to cut down on releases of PFOA and PFOS.

[00:49:31] Speaker 06:
But then they refuse to count what the changes would actually cost.

[00:49:35] Speaker 04:
I thought what they said is it's complicated because it's no longer being manufactured in this country.

[00:49:42] Speaker 04:
Graphics, these 2 substances are no longer being manufactured.

[00:49:47] Speaker 04:
So you don't have those types of costs.

[00:49:50] Speaker 04:
And so then you simply have questions of.

[00:49:54] Speaker 04:
It'll be coming in, I guess, through imported products.

[00:49:58] Speaker 04:
So you have that complexity of them trying to predict.

[00:50:02] Speaker 04:
So it's not going to be the sort of linear analysis of you counted here, you didn't count there at all.

[00:50:07] Speaker 04:
I think they explained why they were doing what they were doing.

[00:50:10] Speaker 04:
And it also gets more complicated in this case because there are other statutes that keep kicking in, in covering a lot of this stuff, whether it's hazardous waste,

[00:50:21] Speaker 04:
or other, there's a whole network of statutes that are covering, and some of these costs are already getting covered under these other programs anyhow.

[00:50:32] Speaker 04:
And then the PFOA and PFOS are often only getting cleaned up when, and this could be, I don't know why this would be any different for private and state enforcement rather than federal.

[00:50:44] Speaker 04:
It's at sites, if it's at the already cleaning up of sites, this is getting cleaned up as a part of that.

[00:50:50] Speaker 04:
So far, as they said, they don't think that there's huge amounts or they're unclear how much of it's going to be a pure PFOA or PFOS cleanup.

[00:51:01] Speaker 04:
So it's on top of things that are already getting cleaned up.

[00:51:03] Speaker 04:
So you have to figure out how to back all of that out.

[00:51:06] Speaker 04:
And so I think they've dealt with the uncertainties and the complexities and not only is it not linear, this thing is an absolute jigsaw puzzle in trying to even trace things.

[00:51:19] Speaker 04:
They weren't playing the game that I think your analysis was suggesting.

[00:51:24] Speaker 04:
We're going to only count the good and not the bad.

[00:51:27] Speaker 04:
But they explained it.

[00:51:28] Speaker 04:
And I don't know what more we ask of them in this context.

[00:51:34] Speaker 06:
Your Honor, what they say is that

[00:51:38] Speaker 06:
And then they say in their brief that the costs of those practices are not fairly attributable to the

[00:52:00] Speaker 06:
But why would you count those changes as a benefit when you don't count the costs of making those changes?

[00:52:08] Speaker 04:
That is what Business Roundtable... They said there's any costs.

[00:52:11] Speaker 04:
It's a benefit, but a lot of it's already getting captured.

[00:52:13] Speaker 04:
I mean, you're the ones who have to show there's something material.

[00:52:16] Speaker 06:
Your Honor, with respect, I don't think that's what the agency said.

[00:52:19] Speaker 04:
I mean, that could have, if not would have.

[00:52:22] Speaker 06:
I think that they say that they count these as deferred benefits, which is why this table is so helpful.

[00:52:29] Speaker 06:
And then they say that the cost side of that in their brief at 62 to 64 is not fairly attributable to the rule.

[00:52:36] Speaker 06:
That is an internal inconsistency in how you treat costs and benefits under business roundtable.

[00:52:42] Speaker 06:
I did have the statutory argument if this court is interested in discussing that.

[00:52:46] Speaker 03:
I just have a quick question about your non-delegation.

[00:52:52] Speaker 03:
My reading of your brief is that you were not challenging Section 102 as being an unconstitutional delegate.

[00:52:59] Speaker 03:
Correct, Your Honor.

[00:53:00] Speaker 03:
Okay, but then I'm not sure what your argument is.

[00:53:06] Speaker 03:
I'm not sure exactly what you're asking this court to do then, because I mean, Justice Scalia is very clear in Whitman that agencies can't cure an unconstitutional delegation with a different interpretation.

[00:53:18] Speaker 03:
And you seem to be suggesting that the interpretation EPA has adopted raises constitutional concerns.

[00:53:26] Speaker 03:
which suggests that they could adopt a different interpretation that would address those concerns.

[00:53:31] Speaker 03:
I'm not exactly sure what even ideally you would like from this court with your non-delegation argument.

[00:53:40] Speaker 06:
I think you're pretty close to it.

[00:53:42] Speaker 06:
So I think our argument is the statute is being read in a way that is

[00:53:49] Speaker 06:
allows them standardless and limitless discretion to designate substances.

[00:53:55] Speaker 06:
And that runs up against the non-delegation doctrine.

[00:53:59] Speaker 03:
But the question is, does the statute lead to standardless, no intelligible principle decision making?

[00:54:08] Speaker 03:
And you're not arguing that the statute lacks an intelligible principle or violates the non-delegation principle.

[00:54:17] Speaker 06:
So the next step to the answer is, so our argument is that their interpretation of the statute is incorrect.

[00:54:25] Speaker 06:
And what we are asking this court to say is that their interpretation of the statute as allowing for a possibility but not a certainty of substantial danger is so broad that it runs afoul of the non-delegation doctrine that it's inconsistent with the statutory hierarchy, and that you should

[00:54:43] Speaker 06:
they get the rule and give them another chance if they would like, as they have indicated that they would in this press release that is cited in the briefs, to interpret the statute correctly and in a way.

[00:54:56] Speaker 03:
You would just say this interpretation is bad.

[00:54:58] Speaker 06:
Is incorrect.

[00:54:59] Speaker 03:
Is incorrect, but what would we say the correct interpretation is?

[00:55:05] Speaker 03:
I don't see that in your brief.

[00:55:08] Speaker 06:
I don't think this court has to interpret.

[00:55:11] Speaker 03:
I mean, if we under Loper-Bright have to say what the law is, we just say, well, it's not what the EPA says.

[00:55:17] Speaker 03:
But that's it.

[00:55:18] Speaker 06:
I think that that's right, Your Honor.

[00:55:20] Speaker 06:
With respect, I don't think Loper-Bright tells you that you have to, in every case, that raises a statutory question and interpret the statute.

[00:55:27] Speaker 06:
I think what it says is the court exercises independent judgment.

[00:55:31] Speaker 06:
And it doesn't defer to the parties or the agency.

[00:55:35] Speaker 06:
And so the question is, did they get it right?

[00:55:38] Speaker 03:
But usually when you say that the agency has gotten it wrong, courts have some account of what the right interpretation is.

[00:55:46] Speaker 03:
I don't see what that would be from the petitioners.

[00:55:50] Speaker 06:
We have suggested in our reply brief that may should not be read as possible, but something more like able to.

[00:56:00] Speaker 06:
When we talk about when you have may in the contingent clause with when released into the environments,

[00:56:07] Speaker 06:
blah, blah, blah.

[00:56:08] Speaker 06:
So there are other interpretations of the statute.

[00:56:12] Speaker 06:
We haven't asked this court to adopt that interpretation.

[00:56:15] Speaker 04:
Do you have an interpretation that wouldn't cover these chemical substances?

[00:56:21] Speaker 06:
It's hard to say whether the science would actually satisfy the interpretation that we've set forth.

[00:56:26] Speaker 04:
Do you have an interpretation that you believe it would be unlawful for them to say this meets?

[00:56:34] Speaker 04:
Do you think you're able to, wouldn't be met, isn't met even on this record?

[00:56:43] Speaker 06:
I think a few answers.

[00:56:45] Speaker 06:
One, I think.

[00:56:46] Speaker 06:
This court can't actually uphold the rule on that ground because it would be a different statutory interpretation.

[00:56:52] Speaker 06:
But to answer your question directly, I can't say based on the science whether EPA would ultimately be able to reach that conclusion.

[00:57:04] Speaker 04:
Their findings don't show that this is able.

[00:57:06] Speaker 06:
What the findings show, and Judge, I was going to point this out earlier, you had suggested that they said that it causes all of these things.

[00:57:16] Speaker 06:
I think if you look at what the findings say, it says that they're associated with certain health effects, right.

[00:57:25] Speaker 06:
Look, we acknowledge that under a correct reading of the statute, which I think would be more restrained than possible, there is still some discretion for the agency in figuring out whether the science meets that standard.

[00:57:38] Speaker 06:
And we just can't know how that's going to play out in practice until the agency operationalizes a correct new reading of the statute.

[00:57:50] Speaker 04:
Thank you very much, counsel.

[00:57:51] Speaker 04:
We'll give you some time for rebuttal.

[00:57:53] Speaker 02:
Thank you.

[00:57:59] Speaker 02:
Okay.

[00:58:07] Speaker 07:
Good morning, your honors.

[00:58:08] Speaker 07:
Riley Walters for EPA and Administrator Zeldin.

[00:58:11] Speaker 07:
I'll start here on the talk with the notice and comment argument.

[00:58:14] Speaker 07:
Interested parties were on notice that EPA may consider costs in the final roll.

[00:58:19] Speaker 07:
EPA solicited a comment on the cost question.

[00:58:21] Speaker 07:
This was not just a bear request for comment, as my friend suggested.

[00:58:24] Speaker 07:
EPA solicited a comment on every aspect of the question.

[00:58:28] Speaker 07:
This is at JA 78.

[00:58:29] Speaker 03:
What does it mean to solicit comments on costs where the agency has top-line position is costs don't matter?

[00:58:37] Speaker 03:
Please go ahead and give us some comments on costs.

[00:58:42] Speaker 03:
How can those comments possibly address what the agency is considering when they've said that costs don't matter?

[00:58:49] Speaker 07:
Because that's what it said in the proposal.

[00:58:52] Speaker 07:
So EPA did provide an economic assessment that provided the basic framework for how it was thinking about the cost issue.

[00:58:58] Speaker 07:
And in the actual solicitation for common itself, EPA said, do we have the statutory authority to consider costs or are we required to consider costs in the statute?

[00:59:06] Speaker 07:
If so, what costs and what benefits should we consider?

[00:59:09] Speaker 07:
How should we weigh those costs and benefits and how do those costs and benefits factor into the ultimate designation decision?

[00:59:15] Speaker 07:
And then EPA provides the economic assessment that lays out the general framework.

[00:59:19] Speaker 03:
Well, that's more like a request for information than comments on what the agency is in fact doing or the justifications that they have for their proposed rule.

[00:59:28] Speaker 03:
The justification is we don't really need to think about costs.

[00:59:31] Speaker 03:
Here are some top line considerations of advantages and disadvantages.

[00:59:36] Speaker 03:
Please give us information about costs and benefits.

[00:59:39] Speaker 03:
I know those things just don't match up.

[00:59:42] Speaker 07:
I think the agency did a little bit more than that in the economic assessment.

[00:59:44] Speaker 07:
So for example, in the economic assessment, EPA went through the general categories, direct costs.

[00:59:50] Speaker 07:
Those were the reporting costs.

[00:59:51] Speaker 07:
EPA provided a quantified figure there.

[00:59:53] Speaker 07:
EPA looked at direct benefits, such as better information on scope of contamination and faster cleanups.

[01:00:00] Speaker 07:
That was noted as a benefit.

[01:00:02] Speaker 07:
It also looked at costs.

[01:00:03] Speaker 03:
How does all that match up with the 300-page RIA?

[01:00:08] Speaker 07:
Your Honor, I think the 300-page RIA is the logical outgrowth of that because, again, EPA was relying on the same general categories and simply expanded on that framework.

[01:00:16] Speaker 07:
And I think the best evidence that petitioners had a meaningful opportunity to comment on the cost question is the fact that they did comment on it.

[01:00:23] Speaker 07:
The Chamber submitted a 20-page cost report with quantified numbers and EPA considered that information along with information supplied by other

[01:00:31] Speaker 07:
interested parties and it explained why it disagreed.

[01:00:34] Speaker 07:
And so the notion that petitioners were surprised by the cost analysis and the RIA I think is hard to square with the record and given their own comments.

[01:00:42] Speaker 03:
Well, so they commented, but they didn't have notice really of what EPA was going to, of at least any kind of detailed information.

[01:00:51] Speaker 03:
I mean, the fact that the chamber could pull together comments about costs that they thought the agency might consider to be relevant.

[01:00:58] Speaker 03:
I mean, it shouldn't be on regulated entities to guess what kinds of costs and benefits an agency is going to take into account.

[01:01:06] Speaker 07:
Your Honor, I don't think, and there's record supports that they were guessing again.

[01:01:10] Speaker 07:
In the economic assessment, EPA provided extensive information of the types of costs and benefits it was considering.

[01:01:16] Speaker 07:
And most of these were qualitative.

[01:01:17] Speaker 07:
Almost all of them were qualitative.

[01:01:19] Speaker 07:
And these are the same qualitative costs and benefits that were considered in the RIA.

[01:01:23] Speaker 07:
And this went out for comment.

[01:01:24] Speaker 07:
Petitioners have an opportunity to address, for example, if EPA was thinking about this wrong, if EPA needed to provide a more robust quantitative analysis, if a qualitative analysis would have been insufficient,

[01:01:34] Speaker 07:
they had the opportunity to do that.

[01:01:36] Speaker 07:
And I think under this court's logical outgrowth cases, that's more than sufficient.

[01:01:40] Speaker 05:
How do you reconcile your position with cases we have like owner operator, which seems to treat methodology as its own category and something that

[01:02:01] Speaker 05:
must be disclosed to some degree must be disclosed at the outset.

[01:02:08] Speaker 05:
And does it on an incredibly hard look basis, like one aspect of the cost benefit calculation, one aspect of that methodology didn't get disclosed and we reversed on that basis.

[01:02:27] Speaker 07:
Yes, your honor.

[01:02:27] Speaker 07:
I think owner operator is a critical materials doctrine case.

[01:02:30] Speaker 07:
What the court said there was that the particular methodology that did not go out for comment.

[01:02:35] Speaker 05:
Critical materials, which sort of suggests like the, you know, hiding a secret study point, but in fact was about an undisclosed methodology.

[01:02:46] Speaker 07:
It was about methodology.

[01:02:48] Speaker 07:
We agree, Your Honor.

[01:02:49] Speaker 07:
And what the court said in our operator was that methodology was an integral part of the model that itself was the central justification for the role.

[01:02:57] Speaker 07:
And so the court said that the public lacked the opportunity to comment on the most critical factual material in the case.

[01:03:04] Speaker 07:
We don't have anything like that here.

[01:03:07] Speaker 07:
The general framework for how EPA was thinking about the costs did go out in the economic assessment.

[01:03:13] Speaker 07:
But my friend on the other side seems to focus most on here are the quantified illustrative estimates.

[01:03:19] Speaker 07:
And those were not a critical part of the cost analysis.

[01:03:22] Speaker 07:
And the cost analysis was not the central justification for the rule.

[01:03:26] Speaker 07:
So I don't think owner operator is anywhere close to this case.

[01:03:30] Speaker 05:
I would agree with you if you had written

[01:03:37] Speaker 05:
the preamble a little bit differently and said, this is the qualitative analysis that we want to stand on for APA purposes.

[01:03:48] Speaker 05:
We've done this whole other number crunching thing for the EO.

[01:03:53] Speaker 05:
But there are these seeming cross references in the preamble where you did seem to take on the whole burden of that multiple hundred page thing.

[01:04:06] Speaker 05:
I don't know why you would do it, but you seem to do it.

[01:04:09] Speaker 07:
So your honor, I think the question of whether EPA considered those numbers is different from whether they were critical material in the case.

[01:04:15] Speaker 07:
So it's true, your honor.

[01:04:16] Speaker 07:
In the preamble, EPA didn't know that it considered the quantified figures.

[01:04:20] Speaker 07:
But it noted throughout the preamble and in the RIA itself that these were merely illustrative.

[01:04:24] Speaker 07:
It notes time and again, for example, at JA26, that the RIA doesn't fully capture the costs and benefits because there's just too much uncertainty.

[01:04:33] Speaker 07:
JA36 and 36.

[01:04:35] Speaker 05:
Give me your best shot, best one or two sites in the preamble for the proposition that the agency would have done the same thing without the RIA.

[01:04:49] Speaker 07:
So I direct you to J-26, Your Honor.

[01:04:51] Speaker 07:
And again, they don't, EPA did not use that exact language.

[01:04:56] Speaker 07:
But again, it goes to,

[01:04:59] Speaker 07:
EPA was expressing the fact that there is so much uncertainty associated with these quantified costs and benefits.

[01:05:06] Speaker 05:
We're on 26.

[01:05:07] Speaker 05:
I have kind of the money quote is maybe a third of the way down on the left hand column.

[01:05:17] Speaker 05:
Which says the analysis included consideration of the RIA.

[01:05:23] Speaker 07:
So the far right column, your owner on J 26 last paragraph, where it says first sentence, the RIA does not fully capture the quantitative cost or benefits of the role due to data limitations.

[01:05:34] Speaker 03:
I mean, EPA also says that it is assuming that costs and benefits have to be considered, but then it says it's only using the costs and benefits as illustrative.

[01:05:48] Speaker 03:
So how do you have it?

[01:05:50] Speaker 03:
Either it seems that EPA should rest on the fact that

[01:05:53] Speaker 03:
Section 102 allows it to make a purely qualitative or hazard-based determination.

[01:05:58] Speaker 03:
That's one justification.

[01:06:01] Speaker 03:
But on EPA's own reasoning, it says it's assuming that it needs to do this type of balancing, and then it points to the RIA and other economic justifications.

[01:06:14] Speaker 03:
So then doesn't that have to be reasonable on EPA's own terms?

[01:06:18] Speaker 07:
Yes, your honor, it does seem to be reasonable, but EPA, again, assumed that it had to consider costs and benefits.

[01:06:24] Speaker 07:
It did not assume that it needed to perform a quantitative analysis of costs and benefits.

[01:06:28] Speaker 07:
And the only figures that are described as illustrative are those quantified figures.

[01:06:33] Speaker 07:
We agree for purposes of this analysis, EPA did need to consider qualitative costs.

[01:06:37] Speaker 07:
and benefits.

[01:06:38] Speaker 07:
But under Michigan, the court went out of its way to say it was not requiring agencies to assign a monetary value to each cost and benefit, recognize that a qualitative analysis may be appropriate in certain contexts.

[01:06:50] Speaker 07:
And we think this is a context where a qualitative analysis provides more information.

[01:06:55] Speaker 03:
So then does EPA have to prevail on the threshold statutory question that section 102 does not require consideration of costs?

[01:07:05] Speaker 07:
To note, Your Honor, we assume for purposes of this analysis that we did have to consider costs.

[01:07:11] Speaker 07:
Not quantitative costs.

[01:07:14] Speaker 07:
Again, because we're at the designation stage.

[01:07:16] Speaker 07:
This is a preliminary stage in the circular cleanup process where there's just not enough information to provide robust quantitative analysis.

[01:07:24] Speaker 07:
And so we don't think the court needs to decide whether EPA is required to consider costs.

[01:07:28] Speaker 07:
However, if the court

[01:07:29] Speaker 07:
thought that EPA aired in its cost analysis, and that was the issue in the case, then I think the court would have to decide the question of what the statute requires.

[01:07:39] Speaker 07:
But we don't think the court has to reach that in this case.

[01:07:42] Speaker 03:
Because the qualitative assessment is sufficient.

[01:07:44] Speaker 07:
Yes, Your Honor.

[01:07:45] Speaker 03:
And the 300-page RIA is just illustrative, so it's not critical material.

[01:07:50] Speaker 07:
No, we're not.

[01:07:51] Speaker 07:
We're not.

[01:07:51] Speaker 07:
I'll make it very clear.

[01:07:52] Speaker 07:
We are not arguing the 300-page RIA is just illustrative.

[01:07:56] Speaker 07:
We're talking about the quantified figures,

[01:07:58] Speaker 07:
I think it's four, quantified estimates that EPA acknowledged were being made based on imperfect assumptions and a lot of uncertainty.

[01:08:06] Speaker 07:
EPA labeled those estimates as illustrative.

[01:08:09] Speaker 07:
The qualitative analysis was not illustrative.

[01:08:12] Speaker 07:
That was part of EPA's wing of the advantages and disadvantages in the case.

[01:08:18] Speaker 07:
And your honor, Judge Katz is going back to your question for one more side.

[01:08:23] Speaker 07:
I think that may be helpful here is in the R. I. A. itself.

[01:08:26] Speaker 07:
It's J. A. five ninety two in here in the R. I. A. It's in the R. I. A. Yes, your honor.

[01:08:33] Speaker 07:
Their EPA said that significant uncertainties

[01:08:38] Speaker 07:
prevent a robust quantitative analysis here.

[01:08:41] Speaker 07:
And so if the agency was treating these quantified figures as critical to the role, I don't think the agency would admit that these are not robust figures.

[01:08:52] Speaker 07:
That would be an admission to arbitrary and capricious decision making.

[01:08:55] Speaker 07:
One more point on whether these illustrative figures were critical to the rule.

[01:09:02] Speaker 07:
Michigan, the EPA said that where appropriate requires consideration of all relevant factors and cost is one of those factors.

[01:09:09] Speaker 07:
So agencies can't ignore costs and when Michigan applies.

[01:09:13] Speaker 07:
But again, they're just one factor, they're one quiver in the appropriate, or they're one arrow in the appropriate quiver.

[01:09:19] Speaker 07:
And the EPA considered them as such.

[01:09:22] Speaker 07:
The EPA also considered CIRCLA's purpose and why their designation would further CIRCLA's purpose.

[01:09:27] Speaker 07:
Also considered whether there were other authorities that the agency could use to address PFOA and PFOS.

[01:09:32] Speaker 07:
And it concluded that CIRCLA was the best authority that was available.

[01:09:36] Speaker 07:
And so these illustrative

[01:09:38] Speaker 07:
estimates were just one minor aspect of the cost analysis, which itself was just one minor aspect of the totality of circumstances analysis under Michigan.

[01:09:48] Speaker 07:
And then all of that was just one aspect of the designation decision, which turned primarily on the scientific finding a substantial danger.

[01:09:55] Speaker 07:
And so I just don't think the record supports

[01:09:58] Speaker 07:
The claim that these illustrative figures were critical to the rule.

[01:10:02] Speaker 07:
It would have been better if we had said that it's more explicitly on or I'll concede that, but we, I think there's enough in the record to to to agree with with our position on that question.

[01:10:13] Speaker 05:
So, I think that I'm inclined to.

[01:10:20] Speaker 05:
agree with you to the extent we think of this, the first two of their four or five arbitrary and capricious challenges, which seem to me the strongest, are one is the quantification of a range of

[01:10:40] Speaker 05:
10.3 million to 57.1, and the second is the range of 327,000 at 18.1 million.

[01:10:51] Speaker 05:
And if we just put blinders on, look at that chart and say, is there a significant enough likelihood that the bottom line would change if those numbers were adjusted?

[01:11:07] Speaker 05:
That seems unlikely.

[01:11:10] Speaker 05:
But what if we take a step back on the notice and comment and just look at look at the whole scheme and nothing was disclosed about the methodology for calculating any of these costs and benefits.

[01:11:31] Speaker 05:
I mean, to borrow a phrase, these two problems from their perspective are just illustrative of this global problem that they had no idea how you're going to go about.

[01:11:46] Speaker 05:
thinking about this problem and or making these calculations.

[01:11:50] Speaker 07:
Sir, I'm sorry, just so I understand the question is the question, would there be a notice and comment?

[01:11:55] Speaker 05:
Yeah, there's the notice and comment problem is broader than just the specific

[01:12:02] Speaker 07:
arbitrary and precious objections.

[01:12:05] Speaker 07:
Understood, Your Honor.

[01:12:05] Speaker 07:
So I think to the extent petitioners are arguing, they don't have a chance to comment on the quantified figures, which I know you were addressing here, or the assumptions behind those figures.

[01:12:14] Speaker 07:
For example, the assumption that EPA would bring enforcement actions at 67 non-MPL sites.

[01:12:20] Speaker 07:
We think those assumptions are part of the quantified estimates, and so that's all the same bucket.

[01:12:25] Speaker 07:
My understanding from petitioners' arguments, it really is only

[01:12:29] Speaker 07:
two other buckets of issues that they say do not have a chance to comment on.

[01:12:34] Speaker 07:
One was this allegation that EPA characterized certain costs as benefits, Your Honor, and I just don't think the record supports that.

[01:12:42] Speaker 07:
In fact, the page that my friend cited,

[01:12:45] Speaker 07:
41, he even quoted language where EPA recognized that these new cleanups that are taking place because of enforcement actions are costs for PRPs.

[01:12:56] Speaker 07:
And EPA even said that these cleanup costs were a quote, burden for PRPs.

[01:13:01] Speaker 07:
But EPA reached the conclusion that the benefits justify those burdens.

[01:13:05] Speaker 07:
And EPA did say that it considers this an advantage of designation.

[01:13:09] Speaker 07:
That's because it furthers the purpose of CERCLA for polluters to pay for the contamination they cause.

[01:13:14] Speaker 07:
criminal statutes, for example, when they're enforced, they impose costs on criminals.

[01:13:18] Speaker 07:
When someone is put behind bars, that's a real cost.

[01:13:21] Speaker 07:
But we wouldn't say that there's no advantage to enforcing criminal law.

[01:13:24] Speaker 07:
It also serves other purposes.

[01:13:26] Speaker 03:
There's a sort of Orwellian quality about the way that you talk about costs and benefits.

[01:13:30] Speaker 03:
So you're at some point talking about real costs and burdens, but then when you want to flip the switch, you start talking about advantages and disadvantages.

[01:13:39] Speaker 03:
I mean,

[01:13:41] Speaker 03:
Your Honor, I think- It's sort of through the looking glass quality about the way these costs and benefits are being talked about.

[01:13:48] Speaker 03:
Yes, it's a burden on private parties to do cleanup, but we're going to take that as a benefit of the rule.

[01:13:55] Speaker 03:
I mean, I don't know how that's being mischaracterized by the petitioners here.

[01:13:58] Speaker 07:
Your Honor, we didn't say that that cost was a benefit of the rule.

[01:14:02] Speaker 03:
We said it's an advantage of the rule.

[01:14:04] Speaker 03:
The advantage is- Or something like that.

[01:14:07] Speaker 03:
Is that different from being a benefit?

[01:14:09] Speaker 07:
So, Your Honor, I think EPA's use of the words advantage, disadvantage, in many places are just interchangeable with cost and benefits, but it also is broader because, again, under Michigan, the appropriate, as may be appropriate, language requires us to consider all relevant factors.

[01:14:24] Speaker 07:
One of those things EPA considered here was circles purpose, making polluters pay.

[01:14:28] Speaker 07:
So when it's using advantage there, it's talking about there is an advantage here in furthering the purpose of

[01:14:34] Speaker 03:
On that reasoning, any time a regulation furthers the purpose of a statute, and let's hope that the government is only regulating when the regulation would further the purpose of the statute, that regulation will always be advantageous.

[01:14:51] Speaker 03:
I mean, that's the reasoning of the EPA.

[01:14:53] Speaker 03:
So any time regulation is doing something that's within the statute and within the purpose of the statute,

[01:14:59] Speaker 03:
It's all beneficial.

[01:15:00] Speaker 03:
It's all good for society because it's furthering the purposes of the statute.

[01:15:05] Speaker 03:
I mean, that has no connection to how we have thought about costs and benefits or advantages and disadvantages.

[01:15:12] Speaker 03:
If every regulation that furthers a statutory purpose is advantageous, then there are no limits whatsoever on the EPA's regulatory power.

[01:15:23] Speaker 07:
Your honor, I agree with you.

[01:15:24] Speaker 07:
If we had ignored the costs that these enforcement actions impose on PRPs and just said it's a benefit because it further circuits purpose, that would have been error.

[01:15:33] Speaker 07:
But we did not do that here.

[01:15:34] Speaker 07:
In fact, the chart, the helpful chart in the RIA, JA 387, this is page seven of the RIA.

[01:15:41] Speaker 07:
It lists all the costs and benefits.

[01:15:43] Speaker 07:
Labeled under indirect costs are costs related to enforcement actions, the $327,000 to $18.1 million.

[01:15:51] Speaker 07:
So EPA treated these as a cost in its cost analysis.

[01:15:56] Speaker 03:
So again, Your Honor, I just... You treat it as a cost, but then you wave away the cost by saying it's an advantage.

[01:16:03] Speaker 03:
So, I mean, isn't that the same thing as just treating it as a benefit?

[01:16:07] Speaker 07:
no, because I respectfully I disagree that EPA just waived the way the cost and the language that my friend cited.

[01:16:13] Speaker 07:
EPA acknowledged that it was a cost and acknowledged that it was a burden.

[01:16:16] Speaker 07:
And then it said the benefits justify that burden.

[01:16:20] Speaker 07:
And then it also said it was an advantage to further Circus purpose.

[01:16:22] Speaker 07:
So I don't think the advantage language was canceling out or erasing

[01:16:27] Speaker 07:
the prior language where EPA is acknowledging that it's a cost.

[01:16:30] Speaker 07:
It's a complex analysis for sure.

[01:16:32] Speaker 07:
But again, I would go back to the criminal statute.

[01:16:34] Speaker 07:
You can both acknowledge that enforcing criminal law imposes costs on certain people and then also knows that there are advantages to enforcing criminal law.

[01:16:42] Speaker 07:
They serve the purposes of deterrence.

[01:16:44] Speaker 07:
They serve the purposes of incapacitation.

[01:16:47] Speaker 07:
And I think EPA was doing something similar here.

[01:16:49] Speaker 03:
So is there any situation though where the advantages of furthering a statutory purpose would not be greater than the costs of something?

[01:17:03] Speaker 03:
I mean, there's this sort of generalized reasoning that CIRCLE has these purposes, which of course it does.

[01:17:08] Speaker 03:
And, you know, for sure, these are these substances, no one is questioning that they are harmful.

[01:17:13] Speaker 03:
Okay.

[01:17:15] Speaker 03:
But there's still a question of how we weigh the harms of that against the costs that it imposes on private parties.

[01:17:23] Speaker 07:
Your Honor, I totally agree.

[01:17:25] Speaker 07:
And the question in these cases is whether the agency engaged in reasoned decision making.

[01:17:29] Speaker 07:
And I think there's a lot of deference that's owed to the agency in weighing costs and benefits in a complex scenario like this.

[01:17:36] Speaker 07:
And so I think the question here is, did EPA acknowledge costs?

[01:17:39] Speaker 07:
Did it acknowledge benefits?

[01:17:41] Speaker 07:
And how did it weigh them?

[01:17:41] Speaker 07:
And I think EPA did that reasonably here, especially given the stage of the process we're at.

[01:17:49] Speaker 07:
And again, just to make it abundantly clear here, so there's no doubt, we agree that EPA could not just relabel cost as benefits and ignore important costs that are imposed on society.

[01:18:01] Speaker 03:
Can they rename costs as advantages, statutory advantages to the public?

[01:18:05] Speaker 07:
It cannot ignore the cost.

[01:18:07] Speaker 07:
If EPA was ignoring costs and just saying, oh, well, it's a good thing.

[01:18:10] Speaker 07:
And so we're just going to label it an advantage and not even recognize that it's a cost.

[01:18:14] Speaker 07:
I think that would be a problem.

[01:18:15] Speaker 03:
So it's sufficient to recognize there are costs.

[01:18:18] Speaker 03:
But then whatever the costs are, a statutory advantage can overcome that.

[01:18:22] Speaker 07:
Your Honor, EPA reached the bottom line conclusion that the advantages of designation outweigh the cost.

[01:18:27] Speaker 04:
Well, that decision has to be reasonable.

[01:18:28] Speaker 07:
It has to be reasonable.

[01:18:29] Speaker 04:
So did the agency- Justified and explained.

[01:18:31] Speaker 07:
Exactly, Your Honor.

[01:18:32] Speaker 04:
So if you decided it would promote

[01:18:35] Speaker 04:
Circular to have every single microscopic piece of these substances removed from the United States, and it's going to cost billions of dollars to do that, but.

[01:18:47] Speaker 04:
That would be consistent with circles purpose.

[01:18:53] Speaker 07:
But then that would be a situation where designation very well may not be appropriate.

[01:18:58] Speaker 07:
And I can think of other examples for if if the only available clean up technology for removing the substance would cause even more danger to public health or the environment.

[01:19:08] Speaker 07:
That may also be a reason not to move forward.

[01:19:10] Speaker 07:
Or if the only available clean up technology imposed extraordinary costs on society, it cost a trillion dollars to clean up the substance.

[01:19:18] Speaker 07:
That might be a reason.

[01:19:19] Speaker 07:
not to move forward.

[01:19:20] Speaker 07:
So there are plenty of examples where I think costs could make a difference here.

[01:19:24] Speaker 07:
Here, EPA acknowledged costs, it acknowledged benefits, it engaged in recent decision making, and I think that supports the decision.

[01:19:32] Speaker 04:
Thank you very much, Council.

[01:19:38] Speaker 04:
We'll give you some more time.

[01:19:39] Speaker 04:
We will give you more time, but we'll have a lunch.

[01:19:41] Speaker 04:
Thank you very much, Council.

[01:19:43] Speaker 04:
I'll give them the intervener.

[01:19:48] Speaker 01:
May please the court.

[01:20:06] Speaker 00:
I'm John Helmes Katz for the Environmental and Community Interveners.

[01:20:10] Speaker 00:
No party disputes the most critical fact in this case.

[01:20:13] Speaker 00:
PFOA and PFOS may present substantial danger when they are released to the environment.

[01:20:18] Speaker 00:
That is the standard for designating hazardous substances under CERCLA, and petitioners have not provided any basis for overturning the designation of these highly toxic, persistent, and pervasive carcinogens.

[01:20:30] Speaker 00:
Today I'd like to begin with the notice arguments the court has been discussing, and then I'd like to briefly address petitioners claim that EPA's interpretation of substantial danger lacks limits.

[01:20:41] Speaker 00:
So Judd's catch us, you had asked for record support for EPA's position that the cost estimates were not critical to its ultimate decision in addition to JA26, which we agree supports that.

[01:20:53] Speaker 00:
The first page of the rule, this is JA002, refers to the RIA as an additional discretionary analysis.

[01:21:00] Speaker 00:
And I think that is how it was treated here.

[01:21:02] Speaker 00:
All parties agree that notice is only required for materials or peer assumptions that are critical to the agency's ultimate determination.

[01:21:11] Speaker 00:
The RIA and its quantitative cost calculations were not critical for three reasons.

[01:21:17] Speaker 00:
First, and I would actually like to put a pin in this one because I don't think the court needs to reach it, there is a justification provided in this rule that does not consider costs at all.

[01:21:26] Speaker 00:
And CERCLA does not require EPA to consider costs here.

[01:21:29] Speaker 00:
So that is a basis for rejecting the notice argument.

[01:21:34] Speaker 00:
However, even if the court were to find that Michigan applied and that some consideration of costs was warranted, the RIA and its quantitative calculations would still not be critical.

[01:21:44] Speaker 00:
Michigan is very clear that agencies have broad discretion in how they assess for costs, and here EPA did provide the economic assessment with its proposed rule, which quantified direct costs and qualitatively addressed indirect costs.

[01:21:58] Speaker 00:
That satisfied any requirements that may have been imposed by Michigan or by CERCLA,

[01:22:03] Speaker 00:
And I think it is particularly important here given the preliminary stage that this case is reaching this court.

[01:22:09] Speaker 00:
This is a decision about whether to add two substances to a list of some 800 hazardous substances.

[01:22:15] Speaker 00:
Any decisions about how to remediate the substances, where to remediate the substances, the decisions that really drive the analysis of costs are going to occur much later on a site-specific basis.

[01:22:27] Speaker 00:
And that is where Congress required EPA to consider costs.

[01:22:30] Speaker 00:
So to the extent that any cost consideration was required, it was satisfied by the economic assessment that was provided.

[01:22:38] Speaker 00:
Moreover, if you look at the agency's totality of the circumstances analysis, and this is at pages JA 26 to 41 of the Joint Appendix, I think it becomes readily apparent that the specific cost estimates the petitioners are discussing and even these

[01:22:55] Speaker 00:
conceptual kind of approaches that they claim were first announced in the RIA and we would take issue with some of that, but they were not critical for the agency's decision.

[01:23:05] Speaker 00:
That is a 16-page analysis which on its whole is overwhelmingly qualitative.

[01:23:12] Speaker 00:
In fact, I think

[01:23:13] Speaker 00:
The only page that references the specific cost estimates that petitioners are talking about is the one that they mentioned at argument.

[01:23:21] Speaker 00:
There is one reference to qualitative cost estimates.

[01:23:24] Speaker 00:
If you look at that in the context of the totality of the circumstances analysis that the agency conducted, which looks at the harms associated with these chemicals, which looks at the statutory purpose,

[01:23:35] Speaker 00:
There's really no reasonable reading of that analysis where the court would conclude that these specific figures were the fulcrum, that these were the critical aspect of the agency's decision.

[01:23:54] Speaker 05:
We made the statutory assessment of substantial danger.

[01:24:00] Speaker 05:
Yes.

[01:24:02] Speaker 05:
And then it said we did other things that were discretionary.

[01:24:10] Speaker 05:
Correct.

[01:24:11] Speaker 05:
But it folds into those other things, not just the RIA,

[01:24:18] Speaker 05:
But more broadly, the assessment of advantages and disadvantages.

[01:24:26] Speaker 05:
That seems to tee up the Michigan versus EPA question.

[01:24:33] Speaker 05:
I mean, I'll put my cards on the table.

[01:24:38] Speaker 05:
I don't think they're required to quantify.

[01:24:43] Speaker 05:
But I do think they're required under Michigan

[01:24:48] Speaker 05:
to consider costs and benefits.

[01:24:53] Speaker 05:
And this passage that you pointed me towards seems to treat all of that as discretionary.

[01:25:01] Speaker 00:
To the extent that is your honor's position, then we would say they have assessed that with the proposed rule and with the economic assessment.

[01:25:09] Speaker 00:
So they- In the RIA or without getting into the RIA?

[01:25:13] Speaker 00:
Without getting into the RIA.

[01:25:15] Speaker 00:
I think the economic assessment was rational.

[01:25:17] Speaker 00:
When you look at, and if you may, I'm going to discuss the remediation process because I think it becomes very clear when you look at this why the sort of precision they were looking for can't be provided at this stage.

[01:25:29] Speaker 00:
The remediation process begins with a comprehensive analysis of the contaminants at site.

[01:25:33] Speaker 00:
What is driving the remedy?

[01:25:35] Speaker 00:
Then EPA at a given site considers the feasibility analysis, which are what are the different options for remediating the contamination and how much do they cost?

[01:25:44] Speaker 00:
That can range from monitor natural recovery, which costs very little, to digging everything up and disposing of it in hazardous waste landfill.

[01:25:51] Speaker 00:
And then EPA applies eight different factors from the NCP.

[01:25:55] Speaker 04:
I think we're familiar with the process here.

[01:25:58] Speaker 00:
My point is that when EPA lists a superfund site, it has no idea how much the remediation of that site is going to cost.

[01:26:05] Speaker 00:
Here we are stages before that and making the decision on a nationwide level.

[01:26:10] Speaker 00:
So it was perfectly reasonable for EPA to quantify direct costs and to qualitatively assess indirect costs in this case, Your Honor.

[01:26:18] Speaker 04:
Any questions?

[01:26:19] Speaker 04:
Thank you very much, Council.

[01:26:22] Speaker 04:
We'll give you three minutes.

[01:26:26] Speaker 06:
Thank you, Your Honor.

[01:26:38] Speaker 06:
I think what I'd like to sort of hit is I think there may be tough

[01:26:44] Speaker 06:
critical materials cases.

[01:26:47] Speaker 06:
But this really shouldn't be one of them.

[01:26:49] Speaker 06:
We're talking about something that started as a 20-page economic assessment that EPA said it was not only not looking at, but couldn't look at, and has turned into a 300-page RIA.

[01:27:04] Speaker 06:
And the agency's position here is that they can throw a 300-page document at the wall and say that there's some uncertainty

[01:27:14] Speaker 04:
Our agency is allowed in an NPRM to say, this is what we think the statute requires, but we're interested in your views and then change their mind.

[01:27:22] Speaker 06:
Yes, Your Honor.

[01:27:25] Speaker 06:
They are.

[01:27:26] Speaker 04:
And that gets to the- Is that a notice problem if they didn't?

[01:27:29] Speaker 06:
not under the logical outgrowth doctrine, but what we're talking about here is the critical materials analysis.

[01:27:36] Speaker 06:
And the agency's position here is that because they did a totality of this- They have to do a whole nother notice and comment and say, oh, that was persuasive.

[01:27:44] Speaker 04:
Okay, so now notice and comment on this.

[01:27:47] Speaker 04:
That's what you want.

[01:27:48] Speaker 04:
There should have been another round of notice and comment.

[01:27:51] Speaker 06:
on the methodologies behind the quantitative assessments and on some of these qualitative conclusions about treating costs.

[01:27:59] Speaker 03:
I assume that EPA was just running into the CRA deadline at the end of the administration.

[01:28:06] Speaker 03:
That's perhaps why they did not do another.

[01:28:09] Speaker 06:
I would not be in a position to speculate on that, Your Honor.

[01:28:12] Speaker 04:
Can you say a lot of free round notice and comments or two double notice and comments like that?

[01:28:17] Speaker 06:
There are supplemental notice and comments that are done.

[01:28:19] Speaker 04:
Complimental like this.

[01:28:20] Speaker 04:
I'm talking about this would have been a very comprehensive one like that, where they go, we think this is our view of the statute, but let us know your views otherwise.

[01:28:30] Speaker 04:
So on a legal question, you come back with an answer to that legal question and information.

[01:28:35] Speaker 04:
And then they go, OK, we now agree with your position on that legal question.

[01:28:40] Speaker 04:
And now here's a new notice and comment.

[01:28:42] Speaker 06:
I have not seen a case like this one where they said they were not going to do it.

[01:28:47] Speaker 06:
They were precluded from doing a cost benefit analysis and then did a 300 page from doing it that the statute didn't require it because a different thing.

[01:28:55] Speaker 06:
They said it was they were precluded from doing it.

[01:28:57] Speaker 04:
That was the statute doesn't require it here, but doesn't mean.

[01:29:02] Speaker 04:
No, no, they said the staff will have they said, but that's not going to influence artists.

[01:29:05] Speaker 04:
I mean, what the statute would preclude them from doing is, I think in their view is if we thought it was going to be very expensive, but this thing was as hazardous, I'll get out.

[01:29:19] Speaker 04:
We can just declare it not hazardous.

[01:29:20] Speaker 06:
It would preclude them from taking it into.

[01:29:23] Speaker 04:
So this is a supplement.

[01:29:25] Speaker 06:
But I think the main issue here is their contention is that this material is not critical because they said, even though the preamble says that they considered the quantitative analysis, that they said that there was still some uncertainty that the RIA didn't take into account.

[01:29:44] Speaker 06:
all of these things.

[01:29:45] Speaker 06:
And I think just the most important point on this is there are places in the RIA and in the totality of the circumstances where they specifically talk about quantitative benefits that they could take or leave in their analysis.

[01:30:00] Speaker 06:
And they did not do that with respect to all of the things that we are complaining about.

[01:30:05] Speaker 05:
And this only matters.

[01:30:08] Speaker 05:
The procedural point only matters to the extent

[01:30:14] Speaker 05:
You would have had something useful to say.

[01:30:19] Speaker 05:
Yes, Your Honor.

[01:30:20] Speaker 05:
So would you have had anything useful to say other than with regard to the specific substantive arguments you've made on arbitrariness?

[01:30:37] Speaker 06:
in terms of the cost benefit analysis.

[01:30:41] Speaker 05:
Whatever criticism, critiques of the methodology, you've made four or five on the back end now that you've seen the methodology, points where you say the agency acted arbitrarily, right?

[01:30:58] Speaker 05:
Yes.

[01:30:59] Speaker 05:
I'll spot you, for purposes of this question, I'll spot you that

[01:31:05] Speaker 05:
You don't need to win those arguments to establish prejudice on your procedural point.

[01:31:15] Speaker 05:
So, Your Honor, if your question is... Is there anything else?

[01:31:19] Speaker 06:
Are there other prejudicial arguments that we didn't make that we left on the category floor?

[01:31:24] Speaker 06:
I think there are others.

[01:31:26] Speaker 06:
I think within the limits of the words, we set forth what we thought were the best ones.

[01:31:32] Speaker 06:
I think the cost, treating costs as benefits discussion that was had with Judge Rao is, I think, as

[01:31:39] Speaker 06:
you can get in terms of the need for notice and comment, you heard government council here today walk away from what we read the rule to do which is to treat these enforcement costs as benefits and he says,

[01:31:55] Speaker 06:
we categorically, I'm putting words in his mouth, he said categorically, but he says, we don't think that that is an appropriate thing to do.

[01:32:02] Speaker 06:
Well, that would have been a nice conversation to have in the notice and comment process.

[01:32:07] Speaker 06:
And maybe we can disagree about what the preamble says, although I think it's pretty clear in my own mind.

[01:32:12] Speaker 06:
It says we view the cleanup monies, again, I print movies, but the cleanup monies as an advantage of the rule.

[01:32:21] Speaker 06:
I don't know how you can read it another way, but the point is,

[01:32:25] Speaker 06:
We shouldn't be having this debate here a year later in court.

[01:32:30] Speaker 06:
And then the one final point I wanted to make was he did acknowledge that if it cost, Your Honor, maybe your hypothetical is it cost $2 trillion or something, or maybe he said $2 trillion.

[01:32:39] Speaker 06:
The other thing, there's been a lot of talk about the numbers.

[01:32:41] Speaker 06:
I think that's only part of it.

[01:32:42] Speaker 06:
But one thing I do want to clarify, the $18 million and the $51 million, the upper end of the ranges that we're talking about, those are annualized over 77 years.

[01:32:50] Speaker 06:
When you look at them in terms of present day cost, and it's in here, JA535, the present value cost of the $18 million is $721 million.

[01:33:02] Speaker 06:
And the present day cost of the $51 million is $2 billion.

[01:33:06] Speaker 06:
$2 billion with that cost stream discounted.

[01:33:12] Speaker 06:
$2 billion with a B to borrow from a former colleague of yours who was invoked at Judge Kavanaugh.

[01:33:19] Speaker 06:
So I think it's important.

[01:33:20] Speaker 06:
We're not talking about chump change here, but of course the quantitative complaints are only part of our issue.

[01:33:28] Speaker 06:
Thank you very much.

[01:33:29] Speaker 04:
Thank you very much to all counsel.

[01:33:31] Speaker 04:
The case is submitted.