[00:00:00] Speaker 02:
Page number, twenty eleven, seven.

[00:00:03] Speaker 02:
Clean fuels, alliance, America, versus environmental protection.

[00:00:08] Speaker 02:
It's the land for the, it's simple.

[00:00:11] Speaker 02:
It's Dawson.

[00:00:15] Speaker 04:
Good morning.

[00:00:16] Speaker 04:
David lane for petitions.

[00:00:18] Speaker 04:
I'm sorry.

[00:00:19] Speaker 08:
I didn't hear you right.

[00:00:21] Speaker 08:
Len lane.

[00:00:22] Speaker 04:
It's Lane, but I'll respond to either one.

[00:00:24] Speaker 08:
Oh, no, no.

[00:00:26] Speaker 08:
I want to honor you by giving rights to Lane.

[00:00:28] Speaker 08:
OK, thank you.

[00:00:29] Speaker 04:
I'd like to reserve three minutes, please.

[00:00:31] Speaker 04:
May I please the court?

[00:00:32] Speaker 04:
In the 2020 RFS rulemaking, EPA considered the issue of what to do about retroactive exemptions when establishing annual RFS standards.

[00:00:42] Speaker 04:
EPA determined that henceforth, when setting standards for a particular year, it would adjust the standards to account for the exemptions granted retroactively for that year, but not adjust the standards to account for exemptions granted retroactively for prior years.

[00:00:59] Speaker 04:
EPA codified this policy in the regulation that defines the formula computing standards.

[00:01:05] Speaker 04:
The logic of this court's precedence and EPA's own statements imply that this policy is unlawful because it compels EPA to violate its core mandate of setting standards that are reasonably designed to ensure that the national volume requirements are eventually met and because it compels EPA to engage in arbitrary decision making by setting standards that it knows ex ante will be ineffectual

[00:01:32] Speaker 04:
This court has said in the reset case Sinclair and others that if EPA does not adjust renewable fuel obligations to account for exemptions, it creates a renewable fuel shortfall and impedes attainment of overall applicable volumes.

[00:01:48] Speaker 04:
Our claim is that EPA is legally required to make those adjustments, including for past retroactive exemptions.

[00:01:57] Speaker 04:
I'd like to just be clear about how our claim works.

[00:02:01] Speaker 04:
There are really two different scenarios in which adjustment to the standards is needed for past retroactive exemptions.

[00:02:07] Speaker 05:
Before we get into the merits, what is the final agency action that you are asking us to review?

[00:02:16] Speaker 04:
The 2022

[00:02:18] Speaker 04:
I think that might have been a. I hope it was not definitely the 2020 rule that is the in that rule EP.

[00:02:33] Speaker 04:
reaffirmed and re-adopted its policy of not making up past retroactive exemptions after revisiting the issue.

[00:02:42] Speaker 04:
And that is, that is itself a rule within a rule.

[00:02:47] Speaker 04:
It's a statement of generally applicable policy that governs.

[00:02:51] Speaker 05:
What aspect of the 2020 rule has a legal effect on you today as we sit here?

[00:03:02] Speaker 05:
that imposes a right or an obligation.

[00:03:06] Speaker 04:
So every time EPA sets RFS standards, it is operating according to the policy that we're challenging, which precludes it from accounting for

[00:03:20] Speaker 04:
past retroactive exemptions.

[00:03:23] Speaker 05:
And by doing that, it... But the policy didn't come from the 2020 rule.

[00:03:29] Speaker 05:
The policy that impacts you today is a policy that was adopted in whatever rule is operative today, which is not the 2020 rule.

[00:03:41] Speaker 04:
I don't think that's correct.

[00:03:43] Speaker 04:
The policy stands independent of the standards that were adopted in 2020.

[00:03:49] Speaker 04:
So EPA took a policy position.

[00:03:52] Speaker 04:
That's a statement of generally applicable policy that will govern in the future.

[00:03:55] Speaker 04:
And then in that same rulemaking, it applied that to set percentage standards for that year, 2020.

[00:04:01] Speaker 04:
Policy isn't a final agency action.

[00:04:05] Speaker 04:
It is because it's a rule.

[00:04:06] Speaker 04:
Under the APA, I mean, this is standard administrative law.

[00:04:09] Speaker 04:
A statement of generally applicable policy is a rule.

[00:04:12] Speaker 04:
And that is an agency action.

[00:04:14] Speaker 04:
And it governs.

[00:04:17] Speaker 04:
And we litigated this in the 2019 rulemaking context in the Grove Energy case.

[00:04:21] Speaker 04:
And the court considered what it called the direct challenge to the policy of not making adjustments for retroactive exemptions.

[00:04:29] Speaker 04:
And the court said at that point, it was time barred because EPA had not reopened the issue.

[00:04:34] Speaker 04:
But in the 2020 rulemaking, EPA reopened the issue, revisited it in response to an administrative petition that we filed for reconsideration of the policy, and EPA determined to maintain its policy with respect to past retroactive exemptions, but it changed its position.

[00:04:51] Speaker 08:
It's the best language in the 2020 rule where they made

[00:04:57] Speaker 08:
A full blown adoption of policy as opposed to a declination to do what a petition for reconsideration as.

[00:05:07] Speaker 04:
I'm sorry, I don't think I quite follow the question.

[00:05:09] Speaker 08:
What is the best language?

[00:05:10] Speaker 08:
Like, normally when they adopt a policy, they say things like, and you want this to be this forward-going policy, although it started in 2019 and you didn't call, I mean, if it started in 2019 and you were time-marred on challenging it, then I don't know why you get to do it now.

[00:05:25] Speaker 08:
So, but your view is that they made some comprehensive announced

[00:05:30] Speaker 08:
Policy that would govern not just 2020, but all years going forward.

[00:05:35] Speaker 08:
And so I'm just hoping you can point me to the language where they did that.

[00:05:42] Speaker 04:
Yeah, so I was started 36.

[00:05:44] Speaker 04:
And a 36, this is in the 2020 rule.

[00:05:52] Speaker 04:
The history is that.

[00:05:54] Speaker 04:
In the context of the 2019 rulemaking, this is the Growth Energy case, we challenged this policy.

[00:06:00] Speaker 04:
The court rejected it on the grounds that EPA had not reopened the policy during that rulemaking and had actually established it back in 2012.

[00:06:09] Speaker 04:
But in the 2020 rulemaking, EPA revisited the whole policy.

[00:06:13] Speaker 04:
They did it in response to our petition for reconsideration of the policy.

[00:06:18] Speaker 04:
So at J836,

[00:06:20] Speaker 04:
EPA describes our petition.

[00:06:22] Speaker 04:
Which column are you in on, Jay?

[00:06:23] Speaker 04:
The middle column.

[00:06:25] Speaker 04:
And footnote 154 cites our petition for reconsideration.

[00:06:29] Speaker 04:
And in that petition for reconsideration, we argued that EPA had to... But where's the text, language in the text?

[00:06:35] Speaker 08:
Is it the carryover paragraph at the top, the full middle paragraph, the carryover?

[00:06:40] Speaker 08:
What language do you want me to point me to for them adopting a cross-cutting policy that's still continuing to govern today?

[00:06:47] Speaker 04:
Yeah.

[00:06:50] Speaker 04:
So first of all, look at footnote 154 at the bottom of the column.

[00:06:56] Speaker 08:
Oh, I see a citation is there too, a reconsideration petition.

[00:06:59] Speaker 08:
That's our reconsideration petition.

[00:07:00] Speaker 08:
I understand that.

[00:07:00] Speaker 08:
Where's the announcement of the policy?

[00:07:02] Speaker 04:
OK, so then if you go up, the language it is.

[00:07:07] Speaker 04:
So in the middle, the first full paragraph right in the middle of the page says,

[00:07:14] Speaker 04:
We are finalizing these changes and in turn also completing the process of revisiting this issue that we undertook as described above in response to the above noted administrative petition.

[00:07:26] Speaker 08:
Sorry, I'm very confused.

[00:07:27] Speaker 04:
It's right in the middle of the middle paragraph.

[00:07:34] Speaker 05:
The paragraph that begins in the F-28 proposal.

[00:07:37] Speaker 05:
Yes.

[00:07:41] Speaker 00:
Okay.

[00:07:41] Speaker 04:
And that is talking about our petition, which asks EPA to revisit this policy of not accounting for retroactive exemptions.

[00:07:52] Speaker 04:
And EPA says it's completing the process of revisiting the issue.

[00:07:55] Speaker 04:
To complete that process, it has to account for what we asked for in that petition.

[00:08:00] Speaker 08:
So the above-noted administrative petition?

[00:08:03] Speaker 04:
Yes, that's the one that's cited in 154.

[00:08:05] Speaker 08:
Was that the only administrative petition before them in 2020?

[00:08:11] Speaker 08:
I mean, it's referring to the... Because usually they call a petition for reconsideration is different than maybe an initial petition for action.

[00:08:18] Speaker 04:
Well, that is what it's referring to.

[00:08:20] Speaker 04:
And that was our petition for reconsideration of this policy.

[00:08:24] Speaker 04:
Then EPA.

[00:08:27] Speaker 08:
Oh, anyhow.

[00:08:28] Speaker 08:
So EPA then says.

[00:08:30] Speaker 08:
It's not your issue.

[00:08:30] Speaker 04:
It is our issue.

[00:08:33] Speaker 04:
The issue we presented in that petition for reconsideration was whether to account for retroactive exemptions, both past and projected.

[00:08:40] Speaker 04:
And in this.

[00:08:41] Speaker 08:
They are definitely addressing your project.

[00:08:44] Speaker 08:
ones.

[00:08:45] Speaker 08:
Yes, but they talk lots about that.

[00:08:47] Speaker 08:
They give reasons for it.

[00:08:50] Speaker 04:
Yes, but they can't complete the process of revisiting the issue raised in our petition without addressing the issue of past retroactive exemptions because that's what our petition was about.

[00:09:00] Speaker 03:
And then they say, what do we do with this?

[00:09:03] Speaker 03:
I'm sorry, please finish.

[00:09:04] Speaker 03:
And then they say, I point you to

[00:09:09] Speaker 04:
Well, if you bear with me for one second, I have more quotations on this.

[00:09:14] Speaker 08:
It seems like they're talking there about the thing that you wanted about the changing the denominator, getting the prospective exemptions factored in.

[00:09:26] Speaker 08:
That's 99.9% of what's going on here.

[00:09:29] Speaker 04:
Well, that's what they decided to do.

[00:09:32] Speaker 04:
And they're rejecting the rest of what we wanted.

[00:09:34] Speaker 04:
And so they are reaffirming their policy of not making the additional adjustments for the past retroactive exceptions.

[00:09:43] Speaker 04:
I would also point you to JA 117 in the response to comments.

[00:09:48] Speaker 04:
Oh, sorry.

[00:09:49] Speaker 04:
That's the 2022 rule.

[00:09:51] Speaker 08:
That's the problem that I've got, because in the 2022 rule, they say,

[00:10:01] Speaker 08:
We are reaffirming the modification of the percentage standards formulas for the 2020 final rule to account for the projection thing.

[00:10:07] Speaker 04:
Yeah.

[00:10:08] Speaker 08:
And then they say, we have chosen not, this is, they actually say it in words here.

[00:10:12] Speaker 08:
Yes.

[00:10:13] Speaker 08:
As opposed to just silence.

[00:10:15] Speaker 08:
Yes.

[00:10:15] Speaker 08:
In 2020.

[00:10:15] Speaker 08:
They actually say it in words and they have three and a half pages of analysis in 2022.

[00:10:21] Speaker 08:
We have chosen not to reallocate exempt volume from SREs for past years.

[00:10:25] Speaker 08:
That's your second position, the one you're challenging now.

[00:10:28] Speaker 08:
Yes.

[00:10:28] Speaker 08:
Number two.

[00:10:29] Speaker 08:
Correct.

[00:10:30] Speaker 08:
In 2020.

[00:10:31] Speaker 08:
whether through revisions to the percentage standard formulas or otherwise.

[00:10:35] Speaker 08:
This action constitutes our final and complete response to that petition.

[00:10:41] Speaker 04:
Yes.

[00:10:42] Speaker 04:
So you omitted the first sentence of that, which is we are reaffirming our response to that petition.

[00:10:49] Speaker 08:
Yes, I understand.

[00:10:51] Speaker 08:
You can add that.

[00:10:52] Speaker 08:
That's fine.

[00:10:53] Speaker 08:
This action constitutes our final and complete response to that petition.

[00:10:58] Speaker 08:
This is where

[00:10:59] Speaker 08:
they answered your arguments for three and a half pay if anything is an adoption of a policy i mean just ants just declining to do something is not a policy that's cross cutting forward-looking policy to the extent they did anything they just decided in 2020 we're not going to do the retro the the

[00:11:22] Speaker 08:
Sorry, there's some activity right from the big retroactivity that you want.

[00:11:25] Speaker 08:
So in 2022, because there's just no analysis.

[00:11:28] Speaker 08:
And I ask you to look at if I'm finished my point, you can do this.

[00:11:32] Speaker 08:
And then in 2022, we get three and a half pages of analysis, textual, programmatic, I mean, all the things that we expect to see when they are making a concrete determination that may will carry forward until otherwise changed.

[00:11:47] Speaker 08:
And they announced that that is the final and complete response to the petition you're referencing.

[00:11:54] Speaker 08:
And so I'm really having trouble understanding how the 2020 decision

[00:12:01] Speaker 08:
with a policy for anything other than the 2020 rulemaking, given what they did in 2022.

[00:12:06] Speaker 04:
I'd like to make a few points.

[00:12:08] Speaker 04:
The first is that JA80, this is in the response to comments from the 2020 rulemaking.

[00:12:12] Speaker 04:
They say, we are not modifying the percentage standards to account for past retroactive exemptions.

[00:12:22] Speaker 04:
They're talking about the issue that we're presenting here.

[00:12:27] Speaker 04:
So J 80 response to comments.

[00:12:30] Speaker 08:
The second thing is that, okay, they just say we're not doing something.

[00:12:34] Speaker 08:
Is that every time an agency says we're not doing something in this rulemaking, that's a policy that's governing for the next six, seven.

[00:12:41] Speaker 04:
No, not necessarily, but it's against in the context of what's going on.

[00:12:46] Speaker 04:
There is a policy of not making adjustments for

[00:12:49] Speaker 04:
any retroactive exemptions before 2020.

[00:12:52] Speaker 04:
That's the pre-existing policy.

[00:12:54] Speaker 04:
No accounting for any retroactive exemptions.

[00:12:58] Speaker 04:
It is a rule that governs all rule-making.

[00:13:00] Speaker 04:
It's not that EPA adopts it every time it conducts annual standards.

[00:13:05] Speaker 04:
If it did, we would not have lost in the growth energy case.

[00:13:09] Speaker 04:
There would have been no re-opener issue.

[00:13:11] Speaker 04:
because EPA would have just automatically had to redo the policy every time.

[00:13:16] Speaker 04:
But what the court recognized was that this is a freestanding policy that governs year over year.

[00:13:21] Speaker 04:
It applies generally in perpetuity.

[00:13:24] Speaker 04:
We lost that case because EPA had not reopened.

[00:13:27] Speaker 04:
In 2020, in response to our petition to reconsider that policy,

[00:13:33] Speaker 04:
EPA revisited the issues presented in the policy.

[00:13:37] Speaker 04:
That's what it's explaining in the middle column at JA36.

[00:13:41] Speaker 04:
And it says, although in the 2020 rulemaking, the passage you quoted where the EPA says, this represents our complete and final.

[00:13:48] Speaker 08:
That's a 2022.

[00:13:50] Speaker 04:
OK, 2022, disposition of the petition.

[00:13:53] Speaker 04:
It said the same thing early.

[00:13:55] Speaker 04:
It's not because it revisited the issue all over again.

[00:13:57] Speaker 04:
But in the 2020 rule, it said, we are completing the process of revisiting this issue that we undertook in response to the administrative petition.

[00:14:06] Speaker 08:
But this issue is doing a lot of work there.

[00:14:10] Speaker 08:
Didn't say these issues, plural.

[00:14:12] Speaker 08:
Your petition had multiple things it wanted.

[00:14:15] Speaker 08:
Most importantly, account for projected

[00:14:21] Speaker 08:
projected exemptions.

[00:14:25] Speaker 08:
That was, I think, your big thing.

[00:14:29] Speaker 08:
Maybe the other was different, but anyhow, that was... I don't know which was bigger.

[00:14:32] Speaker 08:
They were both central.

[00:14:34] Speaker 08:
They said this issue and this issue, all they're talking about on that page is the forward projection.

[00:14:40] Speaker 08:
I didn't say these issues.

[00:14:44] Speaker 08:
this issue, and this issue is what everything they talk about on that page, which is forward projections.

[00:14:49] Speaker 08:
I mean, I get that they didn't do the second thing you asked for.

[00:14:54] Speaker 08:
I get that.

[00:14:56] Speaker 08:
And so that's an implicit denial.

[00:14:59] Speaker 04:
They didn't do it, but they didn't do it in the context of revisiting.

[00:15:01] Speaker 04:
This completes their process of revisiting the petition.

[00:15:05] Speaker 04:
The petition was about this issue.

[00:15:06] Speaker 04:
They can't complete a process of revisiting the issue presented by the petition without revisiting the part that we're challenging here and rejecting it.

[00:15:15] Speaker 04:
And that rejection comes more explicitly at JA80.

[00:15:18] Speaker 08:
There's no doubt that you could argue, you could challenge that denial.

[00:15:23] Speaker 08:
There's no doubt that you could at the time.

[00:15:26] Speaker 08:
But then we have in 2022,

[00:15:30] Speaker 08:
And what I think is arguably, I wouldn't have to decide it definitively, but be serious reopening and reconsideration of this issue where I think for the first time, tell me if I'm wrong, they devote multiple pages in their response to comments to the very precise issue you're raising here about the

[00:15:51] Speaker 08:
prior year adjustments.

[00:15:55] Speaker 04:
They do discuss it more extensively in the 2022 rule.

[00:15:58] Speaker 08:
More extensively, by hundreds of percentages.

[00:16:03] Speaker 08:
And they say, this is our final resolution

[00:16:10] Speaker 08:
of that reconsideration petition.

[00:16:13] Speaker 08:
That would be a great argument that 2022 sounds like a conclusive judgment based on a record with explanations of agency, balancing policies and considerations, looking at the statutory text.

[00:16:31] Speaker 08:
That would be a good argument for we are locked and loaded for the going forward until less than until we completely revisit this and explain the change in position.

[00:16:40] Speaker 08:
But in 2020, because there's nothing other than implicit denial.

[00:16:48] Speaker 08:
we're not going to do that.

[00:16:49] Speaker 08:
Here's how we're adjusting it.

[00:16:50] Speaker 08:
This is one of the things they wanted.

[00:16:52] Speaker 08:
This is the issue we're dealing with.

[00:16:54] Speaker 08:
So implicit denial of that.

[00:16:56] Speaker 08:
That seems like a very good argument that they denied it in 2020, but that was for the 2020 rule.

[00:17:02] Speaker 04:
It certainly was not for the 2020 rule.

[00:17:04] Speaker 08:
What's your definition of a policy?

[00:17:07] Speaker 08:
What's the legal test for knowing when something is

[00:17:10] Speaker 08:
a policy that's going to govern over many, many rules unless and until the agency formally changes its position from a decision not to act on a particular reconsideration petition.

[00:17:24] Speaker 04:
If this were.

[00:17:25] Speaker 04:
One issue and a reconsideration.

[00:17:26] Speaker 04:
So, first of all, this, I mean, the twenty twenty rule is the denial of our reconsideration petition as well.

[00:17:33] Speaker 04:
So, I mean, there's no other document that says we deny your petition or we have acted on your petition.

[00:17:37] Speaker 04:
The twenty twenty rule.

[00:17:38] Speaker 04:
It is the twenty twenty rule.

[00:17:39] Speaker 04:
No.

[00:17:39] Speaker 04:
There's another document.

[00:17:40] Speaker 04:
That's exactly what they say.

[00:17:41] Speaker 04:
But the twenty twenty rule says we are completing the process of revisiting the issue in the administrative petition.

[00:17:45] Speaker 04:
This is the end of the process.

[00:17:47] Speaker 04:
The EPA decided to do it again in twenty twenty two.

[00:17:50] Speaker 04:
That was their prerogative.

[00:17:51] Speaker 08:
And so is my point about the issue or this issue.

[00:17:54] Speaker 04:
I just think that it's not artfully worded.

[00:17:56] Speaker 04:
They're talking about our whole reconsideration petition, and they're resolving the reconsideration petition.

[00:18:02] Speaker 04:
And it is a policy because this is the position that governs all standards.

[00:18:09] Speaker 04:
In the growth energy case, we would not have lost on the re-opener doctrine and the time bar if it were just a one-off year-by-year decision.

[00:18:18] Speaker 04:
Otherwise, it would have been timely because we filed within 60 days of the 2019 rule.

[00:18:22] Speaker 04:
But the court said, no, this was a policy adopted in 2012 at the latest.

[00:18:27] Speaker 04:
And it continues.

[00:18:28] Speaker 04:
It operates every year that EPA sets standards.

[00:18:31] Speaker 04:
And so you had to challenge it in 60 days.

[00:18:33] Speaker 08:
It was adopted and locked in in 2012.

[00:18:36] Speaker 08:
for 2019.

[00:18:37] Speaker 08:
And if you're on timely in 2019, how can you possibly be timely in 2020?

[00:18:42] Speaker 08:
Unless you're saying every individual rule is another adoption of the policy.

[00:18:46] Speaker 04:
No, because they revisited, they explicitly say they're revisiting the issue in the context of the 2020 rule in response to a petition for reconsideration.

[00:18:55] Speaker 04:
So they have reopened it.

[00:18:56] Speaker 04:
They have reopened the policy for reconsideration.

[00:18:59] Speaker 08:
What factors do we normally look at to find that something's been reopened?

[00:19:02] Speaker 04:
You look at the entire rulemaking context.

[00:19:06] Speaker 04:
2013 is a case called Center for Biological Diversity that explains how you do this.

[00:19:12] Speaker 04:
You look at MPRM, response to comments, everything the agency says.

[00:19:17] Speaker 04:
Final rule.

[00:19:18] Speaker 04:
And here we have a discussion of there was a policy in place.

[00:19:22] Speaker 04:
We are revisiting the policy in response to your petition.

[00:19:25] Speaker 04:
Your petition asks for two things.

[00:19:27] Speaker 04:
We're giving you the projection but not the makeup of past or not dealing with past retroactive exemptions.

[00:19:33] Speaker 04:
We elaborate on it at JA80 where we say that explicitly that we

[00:19:37] Speaker 04:
we're not adjusting the percentage standards to account.

[00:19:39] Speaker 04:
The formula, it's talking about the formula for computing percentage standards.

[00:19:43] Speaker 04:
And this is all embodied in the regulation at 40 CFR 80.1405C.

[00:19:49] Speaker 04:
That regulation specifies the formula for computing percentage standards.

[00:19:53] Speaker 04:
In 2020, not in 2022, in 2020, EPA modified that formula to include an adjustment for projected exemptions.

[00:20:02] Speaker 04:
And it did not modify the formula for,

[00:20:06] Speaker 04:
If you're not going to account for it, the only way to modify it would be to insert a variable times zero, which would not have made any mathematical sense.

[00:20:12] Speaker 04:
So by preserving that part of the formula, that reflects their decision to maintain this as the policy after revisiting it in response to the petition.

[00:20:22] Speaker 04:
So they reopened it, and they reaffirmed the policy.

[00:20:24] Speaker 04:
And then they did it again in 2022.

[00:20:27] Speaker 04:
But it doesn't matter they did it in 2022, because the Union for Concerned Scientists case and the American Maritime case established that if you have a challenge to a first rule and a later rule reaffirms the position, even if your challenge applies equally to both, the later rule doesn't moot the challenge to the first rule.

[00:20:44] Speaker 04:
And that's the posture we're in.

[00:20:45] Speaker 05:
The interveners site,

[00:20:51] Speaker 05:
Alaska V, I guess it's Alaska V EPA, no, Alaska V U.S.

[00:21:03] Speaker 05:
Department of Agriculture for the proposition that once a rule has been superseded, a challenge to it has become moot because you

[00:21:19] Speaker 05:
You challenged the new rule that superseded it, and Alaska relies on lots of cases, including a case called Akiachak.

[00:21:32] Speaker 05:
But I didn't see any response to Alaska or that entire line of cases in your reply brief.

[00:21:42] Speaker 04:
We respond to it, I don't think we cited the Alaska case, but our response in that brief and my response here today is that the 2022 rule did not, the case law says that when an agency withdraws or rescinds or modifies the earlier rule, the challenge to that becomes moot.

[00:21:59] Speaker 04:
That didn't happen here.

[00:22:00] Speaker 04:
The position that was adopted in the 2020 rule is exactly the same as the position adopted in the 2022 rule and is the same as the position that EPA has today.

[00:22:09] Speaker 04:
It has not changed.

[00:22:11] Speaker 04:
It has never been withdrawn.

[00:22:12] Speaker 04:
The 2022 rule never purported to withdraw or supersede the 2020 rule.

[00:22:16] Speaker 04:
All it purported to do was use a different power, the reset power, to modify a different aspect of the 2020 rule, namely the percentage standards that had been set for 2020.

[00:22:27] Speaker 04:
That's the only thing it changed.

[00:22:30] Speaker 04:
Otherwise, it left it completely intact, and it used the word reaffirm over and over again.

[00:22:35] Speaker 04:
And the Union of Concerned Scientists case and the American Maritime case are more specific about this situation than the Alaska case.

[00:22:45] Speaker 04:
The fact that you have a later rule that reaffirms an earlier rule and you have a challenge that applies equally to both does not move the original challenge, unlike where the later rule withdraws or modifies the earlier rule.

[00:22:57] Speaker 04:
That does mood it, but that's not the context that we're in.

[00:23:03] Speaker 06:
Maybe a simplified version of this to make sure I'm understanding.

[00:23:08] Speaker 06:
If your argument was, in 2020, it was an arbitrary and capricious argument that they didn't sufficiently explain themselves, and then they gave a new explanation in 2022 for the same result, but it's an entirely different, more expanded explanation, you would agree your arbitrary and capricious claim would be moot, right?

[00:23:27] Speaker 06:
It would make no sense.

[00:23:28] Speaker 04:
That would make sense to me.

[00:23:29] Speaker 06:
OK.

[00:23:30] Speaker 06:
But your claim in this case is,

[00:23:32] Speaker 06:
The statute requires them to account for past exemptions.

[00:23:34] Speaker 06:
In 2020, they said no.

[00:23:36] Speaker 06:
So I think we all agree you could file a petition right then saying not accounting for past exemptions is contrary to the statute.

[00:23:44] Speaker 06:
And in your view, all that happened in 2022 is, sure, they gave more explanation, but they still said, we're not doing what you want.

[00:23:51] Speaker 06:
And you're still saying that's contrary to the statute.

[00:23:54] Speaker 06:
That's correct.

[00:23:54] Speaker 06:
And that's what motor and equipment says.

[00:23:56] Speaker 06:
You can amend, you can do whatever else, but if that regulation that you initially challenged is still the same.

[00:24:03] Speaker 04:
That's exactly correct.

[00:24:05] Speaker 04:
Otherwise, it would turn into a kind of whack-a-mole game.

[00:24:08] Speaker 04:
EPA issues these rules every year.

[00:24:09] Speaker 04:
Every year, while one challenge is pending, they could say, oh, we're going to reaffirm that policy in this later one and kill our lawsuit.

[00:24:16] Speaker 04:
And then we have to go chase them in the next lawsuit.

[00:24:18] Speaker 04:
And then they can do it again in the next rule.

[00:24:20] Speaker 06:
What is a little bit confusing here is the relief.

[00:24:25] Speaker 06:
So what do you actually envision happening?

[00:24:28] Speaker 06:
Is it that the next time we're not going to go back and recalculate the 2020 obligation?

[00:24:33] Speaker 06:
Correct.

[00:24:33] Speaker 06:
Is it that you want them to amend the formula and the regulation and you think, I guess the next year is going to be 2027, that when they do that, they have to account for every past exemption in setting the new standards?

[00:24:47] Speaker 04:
That is basically right.

[00:24:49] Speaker 04:
The way I would frame it is I would say that you could partially vacate the 2020 rule, vacate it to the extent that it re-adopts the policy of not accounting for past retroactive exemptions, send it back to EPA.

[00:25:03] Speaker 04:
EPA has to reformulate its policy, probably involves amending the standard equation and the regulation, and then that would govern future rule-makings.

[00:25:12] Speaker 04:
No one is saying EPA

[00:25:14] Speaker 04:
no one wants EPA or is asking EPA to go back and change the 2020 standards or the 2022 standards or any past standards.

[00:25:22] Speaker 04:
This is about changing how EPA operates in the future.

[00:25:25] Speaker 04:
So we'd have to apply this new policy, this amended policy, starting with 2026, what's going on now, or if it didn't complete this remand process in time, it might be the 2028 year that it begins to implement this correction, but it would be going forward.

[00:25:44] Speaker 08:
Brief doesn't ask for vacatur.

[00:25:47] Speaker 08:
Your opening brief, reply brief, just ask for remand.

[00:25:52] Speaker 04:
Well, that might've just been... Reply brief, same thing.

[00:25:58] Speaker 04:
It didn't say vacatur in any of your briefs.

[00:26:00] Speaker 08:
Okay, well, I mean, I think you could do... A footnote going, yeah, maybe, maybe, maybe not.

[00:26:04] Speaker 08:
A footnote in the middle of the brief, but in both cases, you did not ask for vacatur, so you want them as to remand the 2020

[00:26:12] Speaker 08:
rule.

[00:26:13] Speaker 04:
I think you could, you could remand without a vacator, given the fact that, you know, we don't need to knock out a lot of parts of the rule.

[00:26:19] Speaker 04:
You don't, we're not asking you to invalidate it entirely.

[00:26:22] Speaker 04:
So you could remand without a vacator or you could just vacate in part.

[00:26:25] Speaker 08:
To gut the formula that they adopted.

[00:26:28] Speaker 08:
It's a huge part of the 2020 rule.

[00:26:31] Speaker 08:
You got the denominator wrong because you didn't account for the prior years as well as prospective.

[00:26:38] Speaker 08:
That's not ordinarily a remand.

[00:26:44] Speaker 04:
I mean, not ordinarily a remand without a vacator.

[00:26:48] Speaker 08:
Yeah.

[00:26:50] Speaker 08:
Yes.

[00:26:51] Speaker 08:
You want what they did, their formula thrown out as legally wrong, as contrary to statute.

[00:26:59] Speaker 03:
Yes.

[00:27:00] Speaker 03:
That's right.

[00:27:00] Speaker 08:
When have we ever done that and just remanded?

[00:27:06] Speaker 04:
I mean, I don't know the answer to that.

[00:27:09] Speaker 04:
But I think we were trying to give the court flexibility in how it dealt with this, because it is an odd.

[00:27:14] Speaker 08:
You can give us flexibility by saying, you could do this.

[00:27:17] Speaker 08:
We ask that you first vacate in the alternative remand without vacating your race points.

[00:27:23] Speaker 08:
But you didn't do that.

[00:27:24] Speaker 08:
You only asked for them to go back and think about it a little bit more.

[00:27:28] Speaker 04:
OK, well, I think our intention was if vacator makes more sense to do the vacate.

[00:27:35] Speaker 04:
If I can ask for it right now, then that's what I'll do.

[00:27:38] Speaker 04:
I mean, I think that a partial vacator, we're not saying you have to vacate the entire rule.

[00:27:43] Speaker 04:
And I think that's maybe where some of the unclarity came from in the briefing.

[00:27:46] Speaker 04:
Because we're not trying to suggest.

[00:27:48] Speaker 04:
Potentially.

[00:27:51] Speaker 04:
I mean, EPA might solve the problem in a different way from changing the formula.

[00:27:56] Speaker 08:
Was that your argument to them in 2020?

[00:28:00] Speaker 08:
Or was it that, no, your formula needs to account for both projected and backwards?

[00:28:06] Speaker 08:
Did you give them an alternative?

[00:28:07] Speaker 04:
I mean, in our reconsideration petition, I think we gave them alternatives.

[00:28:11] Speaker 04:
And in our comment, I think we also give them alternatives.

[00:28:13] Speaker 08:
What were the alternatives?

[00:28:15] Speaker 04:
Well, EPA could fix it in the, it could basically add the amount to the numerator.

[00:28:23] Speaker 08:
That's changing the formula.

[00:28:26] Speaker 04:
I mean, certainly this is embodied in the formula, but again, EPA could just say, from now on we're going to... Maybe this is semantics, but EPA could have a policy that says, we're going to account for this in the future by when we compute the numerator, we're just going to add this amount to that numerator.

[00:28:45] Speaker 04:
We're not going to change the regulation, but this is how we're going to implement it.

[00:28:48] Speaker 08:
2020 formula was wrong.

[00:28:50] Speaker 04:
Effectively, yes.

[00:28:51] Speaker 08:
Yes.

[00:28:51] Speaker 08:
Effectively or yes?

[00:28:53] Speaker 04:
Yes, because it embodies the policy that we're challenging.

[00:28:57] Speaker 08:
So in answering the question of whether the statutory text compels this prior year accounting for which you're advocating and have advocated, if we decide that as part of the 2020 challenge you have here, we can't go beyond the 2020 record, right?

[00:29:25] Speaker 08:
That's how we look at the statute.

[00:29:28] Speaker 08:
Did they say anything of relevance?

[00:29:32] Speaker 08:
as we've discussed already, not that I see.

[00:29:33] Speaker 04:
I think that's correct, but I also don't think it matters because our argument is about the interpretation of the statute and the application of this court's precedent, and that's all you need.

[00:29:42] Speaker 08:
Well, I think so.

[00:29:43] Speaker 08:
The 2020 rule has some very considered agency analysis, both of the text and how it operates and programmatic implications of this.

[00:29:54] Speaker 08:
And Loper-Brite's quite clear.

[00:29:59] Speaker 08:
that Skidmore deference remains, and that we can consider if it would be helpful and persuasive in a particularly complicated statute like this that involves a very intricate formula.

[00:30:13] Speaker 08:
We can consider the agency's expert views, its consideration, and its perspective.

[00:30:22] Speaker 08:
We ultimately decide what the statute means, but we can consider it.

[00:30:28] Speaker 08:
Why would it make any sense to decide that question on the 2020 rule record, as you just said, that lacks all that considered explanation and analysis?

[00:30:39] Speaker 08:
If we would come to a different answer, if we ask that same question in 2022 or whatever year from the 2022 rule, will we have that?

[00:30:48] Speaker 08:
And if that skid, we could accord skid more deference.

[00:30:52] Speaker 08:
to the agency's views.

[00:30:53] Speaker 08:
There's two different statutory interpretation questions before us, 2020 and 2022.

[00:30:59] Speaker 08:
If we answer for 2020 and exclude everything they said in 2022, I think that only answers the question for 2020.

[00:31:08] Speaker 08:
If it would be a different answer, let's just assume, and I know you would argue that it's not.

[00:31:12] Speaker 04:
I don't think it can be.

[00:31:14] Speaker 08:
Let's assume that in reviewing the statutory language as to whether they are compelled

[00:31:22] Speaker 08:
in their formula, their fractional formula to include prior years, if it would make a difference to the statutory interpretation question.

[00:31:36] Speaker 08:
I'm not saying it would, but if it would,

[00:31:41] Speaker 08:
And we have to decide that based on the 2020 record or 2022 record where we have that input from the agency.

[00:31:48] Speaker 04:
So even I think the answer is no.

[00:31:50] Speaker 04:
And even in the old Chevron deference world, the answer was no.

[00:31:55] Speaker 04:
Because this is a pure question of legal interpretation and application of precedent.

[00:32:01] Speaker 04:
And we cited the Sierra Club case in our brief.

[00:32:05] Speaker 08:
Pure interpretation and application of precedent are not

[00:32:09] Speaker 08:
I'm sure what you're saying here, because a precedent on this issue predated Loper-Brite, other than you just had the Sinclair decisions, one of which is post-Loper-Brite.

[00:32:21] Speaker 04:
It did predate Loper-Brite, but it did not.

[00:32:23] Speaker 04:
The relevant parts of that precedent didn't rest on Chevron deference.

[00:32:26] Speaker 04:
It rested on the court's interpretation of the statute.

[00:32:30] Speaker 04:
So it's still valid.

[00:32:33] Speaker 08:
My question is, and I'm not saying this is how it would come out,

[00:32:36] Speaker 08:
If we would have a different answer on the 2022 record because of Skidmore, Blubber Brides by Skidmore, than we would in 2020, what are we supposed to do?

[00:32:48] Speaker 08:
Well, I think that because this is really a legal question, whatever... If we would have a different answer to that legal question, if we decided, reviewed it on the 2022 record,

[00:33:04] Speaker 08:
with agency input subject to Skidmore consideration than we would in 2020 in the absence of that explanation.

[00:33:12] Speaker 04:
What do we say?

[00:33:13] Speaker 04:
Then you should consider the arguments that EPA presented in 2022, which I think it repeated.

[00:33:19] Speaker 08:
You just said you had to decide this based on the 2020 record.

[00:33:21] Speaker 04:
It repeated those arguments in its briefing here.

[00:33:24] Speaker 04:
And we have no objection to those arguments being in the briefing.

[00:33:27] Speaker 04:
We're not saying.

[00:33:27] Speaker 08:
You told me that we have to consider it on the 2020 record.

[00:33:30] Speaker 08:
We're going to consider it.

[00:33:32] Speaker 08:
If we're going to consider on the 2022 record, it seems very odd.

[00:33:38] Speaker 08:
Then if it makes a difference, we would say it was plain statutory construction permitted by law in 2022, but not 2020.

[00:33:49] Speaker 04:
These are legal arguments, and all the arguments that EPA makes are in its brief in this case.

[00:33:55] Speaker 04:
And you can consider all the legal arguments.

[00:33:56] Speaker 04:
You're not bound by legal arguments made outside the record.

[00:33:59] Speaker 08:
You can consider all legal arguments.

[00:34:02] Speaker 08:
Just give more differences to the agency's expertise, not their attorney's.

[00:34:07] Speaker 04:
Which they've expressed time and again in prior rule makings, which are all before the court, which they've expressed in their brief, which are before the court.

[00:34:15] Speaker 04:
everything EPA wants to say on the subject, it has said to the core outside of the 2022 rulemaking.

[00:34:20] Speaker 04:
In any event, because it's a purely legal question, I don't see why you couldn't look at the 20, strictly speaking, you look at the 2020 rulemaking, correct, but because it's legal, I don't see why you can't look at any arguments EPA is making about this.

[00:34:33] Speaker 08:
It's not, we're not making it- It's all rulemakings going forward and backwards for their input on this.

[00:34:39] Speaker 04:
I don't see a problem with that because this is a legal question that we're presenting.

[00:34:43] Speaker 04:
And so the court needs to come up with the best answer and it can look at whatever it wants to look at for the best answer.

[00:34:50] Speaker 04:
In this rulemaking, if EPA hadn't articulated something and it puts it in its brief, that's still for the court to consider because it has to get the best reading of the statute.

[00:35:00] Speaker 04:
Not the best reading with one eye closed and ignoring a bunch of other stuff, but the best reading.

[00:35:08] Speaker 04:
And there's plenty of evidence to use for Skidmore weight, although, again, I think this supports precedent and the logic of what EPA has already said determine the outcome of the merits of this case without any kind of deference to what EPA's position.

[00:35:26] Speaker 08:
Do you have any other questions?

[00:35:31] Speaker 06:
I guess one question about the merits.

[00:35:33] Speaker 06:
Yeah, I'd be happy to talk about the merits.

[00:35:38] Speaker 06:
you rely on the word insurer, the immediate question is, insure what?

[00:35:42] Speaker 06:
And it seems to me that one basic way of thinking about the question is, is it year by year or is it cumulative, in other words?

[00:35:52] Speaker 06:
And then when you look at the table, which is what just ensure the requirements of the table are met, it seems to me that your position would make sense if just starting at the top, it said,

[00:36:06] Speaker 06:
By 2007, 8.7 billion.

[00:36:10] Speaker 06:
Instead, it says four in 2006, 4.7 in 2007.

[00:36:15] Speaker 06:
Just seems quite clearly to envision a year-by-year target, not every year you have to look back and make up for prior under-compliance.

[00:36:24] Speaker 06:
So just wanted to hear your brief articulation of where that requirement comes from.

[00:36:30] Speaker 04:
I'll try to be brief, but I want to make a threshold point about this, which is that there's really two scenarios in which past retroactive exemptions create a problem.

[00:36:40] Speaker 04:
And I think what you're talking about is kind of true scenario where, you know, there's shortfalls in the past, but which is

[00:36:50] Speaker 04:
Yeah so that I think that as a second scenario the first scenario to me is there are the exemptions inflate the RIN bank and that inflation persists and will persist into the future rule that's for a year that's being set.

[00:37:04] Speaker 04:
There wasn't a past shortfall yet there's just these extra RINs because of the exemptions and so in that scenario you're not trying to true up across past shortfalls what you're doing is you're saying

[00:37:16] Speaker 04:
The standards we're setting for the future will not actually require the amount that we're specifying because those RINs are going to be available and they will suppress the binding force of the requirements.

[00:37:28] Speaker 04:
This is actually the logic that justified the projection makeup that this court approved in the reset case.

[00:37:33] Speaker 04:
It's also the logic that's in EPA's recent supplemental NPRM for the set two rulemaking.

[00:37:40] Speaker 04:
So that's one scenario and it doesn't even generate the problem that you're pointing to.

[00:37:45] Speaker 04:
The other scenario which does generate this problem is if those exemptions created an actual shortfall in the past year because either the fuel was never used or it was used and then that inflation of the bank was already drawn down to avoid compliance in an intervening year, then you'd have a shortfall in the past.

[00:38:05] Speaker 04:
And so where do we get this idea that you get to kind of sum up those shortfalls and add them to the future?

[00:38:10] Speaker 04:
Well, I understand your point about the tax, but this court in the reset case most recently said that the insured duty includes increasing future year standards to ensure that volumes that should have been used in the past will eventually be used.

[00:38:28] Speaker 04:
It said that in the context of discussing the makeup of the 2016 waiver, which was added on to the 22 and 23 requirements.

[00:38:39] Speaker 04:
But there is this idea that there's sort of an obligation over the arc of the program to bring it into line with that gradually increasing set of requirements.

[00:38:49] Speaker 06:
I think what we saw is that EPA has authority to do that.

[00:38:52] Speaker 04:
You did say that.

[00:38:53] Speaker 04:
So the question that was presented was about authority because it was challenging what EPA did.

[00:38:59] Speaker 04:
But of course what the court has said over and over, including in the recent case, in the Winningwood case, in the American fuel case and others, is that the insure duty is EPA's core mandate.

[00:39:10] Speaker 04:
It is a requirement.

[00:39:13] Speaker 04:
What Reset does is it distinguishes between that mandate and some discretion in the implementation.

[00:39:20] Speaker 04:
So the Reset case says, the statute doesn't confine EPA to a particular method of accounting for exemptions.

[00:39:28] Speaker 04:
In other words, you have to make it up somehow, but how you do it

[00:39:32] Speaker 04:
you've got some discretion.

[00:39:33] Speaker 04:
Maybe you spread it over years.

[00:39:35] Speaker 04:
Maybe you put it in the numerator.

[00:39:36] Speaker 04:
Maybe you put in the denominator.

[00:39:37] Speaker 04:
Maybe you use projection.

[00:39:38] Speaker 04:
Maybe you only do retrospective makeup.

[00:39:40] Speaker 04:
The projection is just one part of this, and it's optional.

[00:39:44] Speaker 04:
You could have done it in other ways.

[00:39:45] Speaker 04:
So I think the authorization part is a combination of the question that was being framed, or the way the case is being framed, and the fact that

[00:39:53] Speaker 04:
It was really a challenge to the particular method that EPA was using to account for these exemptions.

[00:39:59] Speaker 04:
And broadly, there's a lot of time shifting in the program, carryover rents, carry forward deficits.

[00:40:04] Speaker 04:
They're all poke holes in the idea that these are hermetically sealed years and reinforce that this is really a program that stretches over the entire span of the program.

[00:40:16] Speaker 04:
And that's what EPA needs to ensure.

[00:40:18] Speaker 05:
Following up on Judge Garcia's question,

[00:40:24] Speaker 05:
That same provision, I guess, go to a Romanetta 1.

[00:40:35] Speaker 05:
The phrase about promulgating regulations to ensure in both the first sentence of that paragraph talks about no later than one year after

[00:40:53] Speaker 05:
August 8, 2005.

[00:40:57] Speaker 05:
It says you are to ensure that gasoline sold, that EPA, the administrator is to ensure that gasoline sold or introduced into commerce in the United States.

[00:41:12] Speaker 05:
I'm going to skip language there on an annual average basis.

[00:41:18] Speaker 05:
What work is average doing there?

[00:41:22] Speaker 04:
I don't know if EPA has ever spoken precisely to that issue.

[00:41:27] Speaker 04:
I think it can be understood to mean exactly what we're saying that maybe it's not a mathematical average, but actually that across the years,

[00:41:39] Speaker 04:
If you're supposed to have 20 in one year and 25 in the next, and you do 22 in one and 23 in the next, and you combine them, then you are hitting the requirements on an average annual basis.

[00:41:53] Speaker 04:
They're all sort of netting out to equal the total amount that's supposed to be used.

[00:41:59] Speaker 05:
It uses the same phrase on an annual average basis.

[00:42:04] Speaker 05:
in the second sentence, which is for regulations after December of 2007.

[00:42:16] Speaker 05:
But they don't have the annual average basis language

[00:42:32] Speaker 05:
later on about subsequent.

[00:42:39] Speaker 05:
But correct me if I'm wrong.

[00:42:40] Speaker 04:
No, I think that's the only in the other provisions that have the insure language.

[00:42:46] Speaker 04:
I think those are the only two that use the phrase on an annual average basis.

[00:42:55] Speaker 04:
I don't think that that language is, I think it supports our position for the reasons I just said, but I don't think it's essential to our position.

[00:43:02] Speaker 04:
Again, the courts recognize this sort of

[00:43:06] Speaker 04:
broad sweep of the program insured duty on multiple occasions.

[00:43:11] Speaker 04:
The National Petrochemical case for EPA took the 2009 requirements and added it to the 2010.

[00:43:15] Speaker 04:
And the court said, yes, the insured duty means that you have to eventually make sure that the volumes are met across the years.

[00:43:26] Speaker 04:
Just because you were late doesn't mean you abandon that year.

[00:43:29] Speaker 04:
The reset case, set it again.

[00:43:31] Speaker 08:
We said you have to do it across the years.

[00:43:35] Speaker 08:
In which case?

[00:43:36] Speaker 04:
In the reset case, the same query reset case, the language.

[00:43:43] Speaker 04:
I think it's a 891 or 893.

[00:43:45] Speaker 04:
And it said.

[00:43:48] Speaker 03:
I'll read you the.

[00:44:05] Speaker 04:
893, the court deemed unpersuasive, that's a quotation, that the statute does not provide a true-up mechanism on the back end.

[00:44:14] Speaker 08:
I'm sorry, which column are you in and which paragraph?

[00:44:18] Speaker 08:
On 893.

[00:44:20] Speaker 03:
Give me a moment to get the case.

[00:44:32] Speaker 04:
Are you looking at a Westlaw version of this?

[00:44:34] Speaker 05:
Are you in the paragraph that begins with, to start we conclude?

[00:44:44] Speaker 04:
The part I just quoted is in that paragraph and then I'm going to go further down.

[00:44:53] Speaker 04:
So in that paragraph they say,

[00:44:57] Speaker 04:
The refinery petitioners argue the statute does not provide a true mechanism on the back end of things don't go as planned.

[00:45:04] Speaker 04:
That argument is unpersuasive.

[00:45:07] Speaker 04:
the next paragraph, we had made clear that EPA must ensure the applicable volumes are met regardless of delay.

[00:45:11] Speaker 04:
And then therefore, EPA may increase later year volumes to make sure that volumes that should have been met in earlier years are eventually sold or introduced into commerce.

[00:45:25] Speaker 04:
That is the lesson of national petrochemical.

[00:45:28] Speaker 04:
May.

[00:45:29] Speaker 04:
May.

[00:45:30] Speaker 04:
Well, that goes to what I was saying.

[00:45:32] Speaker 08:
I thought you, and maybe I misheard you, I thought you said they were required by the statute too.

[00:45:36] Speaker 04:
Well, that goes to my point earlier with Judge Garcia that the insure duty is a mandate.

[00:45:42] Speaker 04:
It is obligatory.

[00:45:43] Speaker 04:
The case was framed in terms of authorization because that's all that the petition needed to show.

[00:45:49] Speaker 04:
And what the court said was,

[00:45:52] Speaker 04:
The insured duty is mandatory, but that doesn't confine EPA to a particular method for accounting for exemptions.

[00:46:00] Speaker 04:
So really the question was, could EPA use this projection method to account for exemption?

[00:46:06] Speaker 04:
And the court said, yes.

[00:46:08] Speaker 04:
EPA could also account for exemptions in other ways.

[00:46:11] Speaker 04:
But it has to eventually make sure that these obligations are

[00:46:16] Speaker 04:
made up.

[00:46:17] Speaker 04:
Now, in this context, it's talking specifically about making up the 2016 waiver.

[00:46:21] Speaker 04:
I just want to be clear, this passage is not about the exemption part.

[00:46:25] Speaker 04:
But I am reading, I mean, it's the insurer duty that is controlling in both parts of the decision.

[00:46:32] Speaker 04:
And I'm putting together the things the court is saying in those two sections of the opinion.

[00:46:37] Speaker 08:
I noticed in response to Judge Wilkins' question about annual average basis that you answered it by saying,

[00:46:46] Speaker 08:
average annual basis.

[00:46:49] Speaker 08:
I think the first time, yeah, average annual basis would have been very helpful language for you because that average annual basis would suggest you're averaging a basis over the years.

[00:47:03] Speaker 08:
But this does not say average annual, it says annual average.

[00:47:07] Speaker 08:
And if you think about an annual average of something, that sounds like an average within that year.

[00:47:13] Speaker 04:
Yeah, I'm not sure that really makes sense though in the context of the program.

[00:47:16] Speaker 04:
I mean, what's required is an amount.

[00:47:19] Speaker 04:
not an average, right?

[00:47:21] Speaker 04:
The standards are, you have to, there's a volume metric requirement, which is the number of gallons of renewable fuel, and there's four of them.

[00:47:28] Speaker 04:
And then there are four percentage standards that everybody has to meet to generate one volume.

[00:47:35] Speaker 08:
And compliance is not determined by- Well, this is about how much is sold into commerce.

[00:47:39] Speaker 08:
And I think would annual average basis just be a way of saying, we're not gonna require that be a pro rata, January, February, March, April, May,

[00:47:47] Speaker 08:
Instead, as long as the average number over the year that year that 12 month period satisfies the required amount percent calculated as a percentile or not introduced into commerce.

[00:48:04] Speaker 08:
if that's what they mean.

[00:48:05] Speaker 08:
It's hard to know.

[00:48:06] Speaker 08:
This is difficult, but it does seem striking that they don't say average annual.

[00:48:11] Speaker 08:
Annual average would sound very different meaning.

[00:48:14] Speaker 04:
It may just be more of a drafting error than anything else because what you just proposed for a plain text argument.

[00:48:22] Speaker 04:
Our argument doesn't rest on that language.

[00:48:24] Speaker 08:
They got it twice in here.

[00:48:25] Speaker 04:
Our argument doesn't rest on that phrase.

[00:48:27] Speaker 08:
Our analysis of all the relevant language suggests

[00:48:31] Speaker 08:
that there would have been a very easy way to say your point, average annual, and they didn't.

[00:48:36] Speaker 08:
I don't think it's a drafting area, it's here twice.

[00:48:38] Speaker 04:
Well, I don't think it can mean what you just proposed because the compliance is not determined by averaging the months.

[00:48:44] Speaker 04:
It doesn't matter what anyone does in one month or another month.

[00:48:46] Speaker 04:
What matters is what they do over the course of the year.

[00:48:48] Speaker 08:
That's exactly what annual average means.

[00:48:50] Speaker 04:
Well, you would just say the total.

[00:48:52] Speaker 04:
Why would you go to the total and then back into an average from that?

[00:48:57] Speaker 08:
If I could ask Congress every time why they said it the way they said it, I would be a nonstop job just doing that.

[00:49:03] Speaker 04:
I just think that it doesn't make any practical sense to use that language to mean what you're proposing.

[00:49:09] Speaker 04:
The much simpler solution is just the amount that's used in the air.

[00:49:13] Speaker 08:
But your response to him that it supported your view doesn't work because it doesn't say what you need it to say.

[00:49:19] Speaker 04:
Well, I think that what I'm saying is a more sensible instruction of that language, because the alternatives don't make any sense to me.

[00:49:25] Speaker 04:
But I also think that the argument works regardless of that language.

[00:49:28] Speaker 04:
I don't think that language has driven any of the court's decisions on the insured duty.

[00:49:32] Speaker 04:
The court has still articulated this duty to make up over years.

[00:49:37] Speaker 04:
The court has still articulated this duty in the reset case, speaking about the projections that

[00:49:43] Speaker 04:
It helps ensure that the future standards will actually require the volumes that are being specified and required and will not create under-compliance.

[00:49:51] Speaker 04:
That all comes from the insurer duty.

[00:49:52] Speaker 04:
That's what we're resting on.

[00:49:53] Speaker 04:
And none of that turned on the language of annual average basis.

[00:49:57] Speaker 06:
Any questions?

[00:49:58] Speaker 06:
Just one last question about the breadth of the argument.

[00:50:02] Speaker 06:
So it seems like the logic is once EPA knows there was an exemption in the past year that results in a shortfall, it has to make up for it.

[00:50:13] Speaker 06:
It seems like everyone tries to disclaim that they would have to do the same thing if shortfalls happen for other reasons, like overall fuel production just ends up being lower than expected.

[00:50:23] Speaker 06:
The logic of your argument, I think, would suggest that they do have to make up for that kind of shortfall too.

[00:50:29] Speaker 06:
And is that right?

[00:50:31] Speaker 06:
And if not, why not?

[00:50:32] Speaker 06:
How do you limit your position to just these exemptions?

[00:50:35] Speaker 04:
So a couple of things.

[00:50:37] Speaker 04:
In the Sinclair case, in the reset case, the court drew that distinction and said, we're going to require a make-up.

[00:50:43] Speaker 04:
But we're only talking about this true-up scenario where the exemption's already created a shortfall, not the prospective shortfall that doesn't generate this problem.

[00:50:53] Speaker 04:
But where there's already been a shortfall and you're going to have a true-up, the court said, in the context of the 2016 waiver analysis,

[00:51:01] Speaker 04:
It distinguished between making up for the waiver and making up for a technical error inherent in the projection of what independent third parties are going to do in terms of how much gasoline or diesel they're going to use.

[00:51:14] Speaker 04:
Of course, you don't have to make up for those errors.

[00:51:17] Speaker 04:
You do have to make up for the 2016 waiver.

[00:51:22] Speaker 04:
We would say that the exemption is like the waiver because these are programmatic actions by EPA.

[00:51:27] Speaker 04:
They're not independent actions by third parties.

[00:51:31] Speaker 04:
And there's two other ways of thinking about this.

[00:51:34] Speaker 04:
Second is that the gasoline shortfall doesn't really create a shortfall.

[00:51:37] Speaker 04:
It creates a shortfall with respect to the volume metric.

[00:51:40] Speaker 04:
requirement but that volumetric requirement under the program gets operationalized as a percentage and the gasoline shortfall does not create a shortfall relative to the percentage it just the percentage still operates whereas the exemptions create a shortfall not only with respect to the volumetric requirement but also with respect to the percentage requirement.

[00:51:59] Speaker 04:
The percentage ends up being lower than was specified because of the exemptions and

[00:52:06] Speaker 05:
The problem I have with that is that the reason that the percentage is off is that something was included in the denominator that shouldn't have been included in the denominator, which is the amount of fuel

[00:52:30] Speaker 05:
used, were introduced into commerce by the small refineries that ended up being exempted, but their production was counted towards the amount in the denominator, correct?

[00:52:48] Speaker 04:
That is correct, but it's one way of understanding what went wrong.

[00:52:54] Speaker 05:
Well, Sinclair Reset said that if there's an error in the projection of the denominator, that's kind of how things go and these projections can be off.

[00:53:14] Speaker 05:
The legal error that has to be corrected is an error in the numerator.

[00:53:20] Speaker 05:
That's what Sinclair Reset said.

[00:53:23] Speaker 05:
So, if we look at it as an adjustment to the denominator, doesn't Sinclair reset?

[00:53:35] Speaker 05:
I mean, maybe it doesn't doom your arbitrary precincts argument, but wouldn't it doom your statutory construction argument?

[00:53:47] Speaker 04:
First of all, I don't think I agree with your reading of the reset case because the accounting for exemptions that EPA, for projected exemptions that EPA adopted and was proved in that case was an adjustment to the denominator

[00:54:07] Speaker 04:
and the gasoline is also in the denominator.

[00:54:09] Speaker 04:
So the court said the insurer duty allows EPA to adjust the denominator for exemptions and it does not require EPA to adjust the denominator for gasoline.

[00:54:20] Speaker 04:
So I don't think this is about denominator.

[00:54:22] Speaker 05:
I'm looking at the Sinclair case 101F4 at 895.

[00:54:29] Speaker 05:
Okay.

[00:54:32] Speaker 05:
And the paragraph that begins the two situations are materially different.

[00:54:38] Speaker 04:
Yes.

[00:54:40] Speaker 04:
I think what the court is talking about there is specifically about the 2016 waiver, which was a numerator problem, because it caused the PHUs to specify a lower total renewable fuel volume than it should have.

[00:54:54] Speaker 04:
That's the numerator.

[00:54:55] Speaker 05:
And it says that when there's a numerator has been set too low, that is a legal mistake

[00:55:02] Speaker 05:
and the resulting percentage standard is subject to vacature.

[00:55:09] Speaker 05:
But then they say that if the denominator is set too high, i.e.

[00:55:15] Speaker 05:
incorrectly forecasting total fuel usage, they say that that is a technical error inherent in the nature of projecting events that have yet to occur.

[00:55:31] Speaker 05:
Yes.

[00:55:33] Speaker 05:
So that's not, according to this case, a legal error in the sense of you have, at least the way I read that, that setting the denominator too high is not a legal error in the sense of violating the statutory mandate.

[00:56:02] Speaker 04:
So a couple of things.

[00:56:03] Speaker 04:
One is I don't think that should be read to mean to draw a categorical line between numerators and denominators, because the projection of exemptions is done in the denominator.

[00:56:14] Speaker 04:
And the court said EPA can make that adjustment to the denominator.

[00:56:21] Speaker 04:
That's one thing.

[00:56:22] Speaker 04:
The second thing is that EPA could implement what we're asking for through a numerator adjustment.

[00:56:30] Speaker 04:
It could increase the volume.

[00:56:32] Speaker 05:
But just my point is the fact that they can adjust the denominator doesn't answer the question of whether they must.

[00:56:43] Speaker 05:
In this case, says the way I read it, that

[00:56:49] Speaker 05:
It's not a requirement.

[00:56:50] Speaker 05:
It's not a mandate.

[00:56:51] Speaker 05:
It's not something that they must do.

[00:56:53] Speaker 04:
Well, they certainly are not required to adjust the denominator.

[00:56:56] Speaker 04:
That goes to the particular methods.

[00:56:59] Speaker 04:
Court says the statute does not confine APA to particular methods for accounting for the exemptions.

[00:57:04] Speaker 04:
Maybe it does it in the denominator.

[00:57:06] Speaker 04:
Maybe it does it in the numerator.

[00:57:08] Speaker 04:
But its core mandate, and that is a mandate, is to ensure that the volumes are met.

[00:57:13] Speaker 04:
And that includes increasing future years to make up for volumes that should have been used in past years.

[00:57:19] Speaker 04:
And that includes increasing future years where there are available RINs that result from exemptions that would cause those future requirements to not actually require the specified amount of renewable fuel.

[00:57:31] Speaker 04:
That could be done through a correction through the numerator.

[00:57:35] Speaker 04:
That's where EPA has planned the joints.

[00:57:38] Speaker 04:
And it can be done spread over multiple years.

[00:57:40] Speaker 04:
EPA has planned the joints.

[00:57:42] Speaker 04:
But there is this fundamental mandate, which all this sits on top of.

[00:57:46] Speaker 04:
And EPA right now is simply ignoring part of that mandate.

[00:57:50] Speaker 05:
All right.

[00:57:51] Speaker 05:
I think we're talking.

[00:57:51] Speaker 05:
That's the core of our plan.

[00:57:54] Speaker 04:
I apologize, Your Honor.

[00:57:55] Speaker 04:
I was trying to answer.

[00:57:58] Speaker 08:
Thank you.

[00:57:58] Speaker 08:
We appreciate that.

[00:57:59] Speaker 08:
We'll give you a minute's on rebuttal.

[00:58:01] Speaker 08:
Thank you.

[00:58:07] Speaker 07:
May it please the court.

[00:58:12] Speaker 07:
I'm Kimberly Kimball here today on behalf of EPA.

[00:58:15] Speaker 07:
The portion of the 2020 rule petitioners challenge here has been superseded.

[00:58:20] Speaker 07:
The sole component of the 2020 rule that petitioners attempt to tether their claim to is EPA's change to two factors in the denominator of the percentage standard formula.

[00:58:32] Speaker 07:
The EPA fully reconsidered those two factors as well as the percentage standard formula as a whole in the 2022 rule.

[00:58:40] Speaker 07:
Accordingly,

[00:58:41] Speaker 07:
The 2022 rule has superseded the 2020 rule, and this case should be denied as moot.

[00:58:47] Speaker 07:
This case should be dismissed as moot or under the doctrines of waiver, forfeiture, or latches.

[00:58:54] Speaker 08:
What's your best case for a theory that, let's assume that I know the 2020 policy was adopted to not go back to prior years and adjust for those.

[00:59:11] Speaker 08:
And in 2022, you look again and say, yep, we were right in 2020, not going backwards.

[00:59:18] Speaker 08:
What is your best case that what occurred in 2022 supersedes the policy adopted in 2020 so that it can no longer be challenged?

[00:59:32] Speaker 07:
So two things.

[00:59:33] Speaker 07:
First, to your honor's point before, I don't think it's fair to say that EPA really adopted a policy in the 2020 rule of not going back to correct past year's exemptions.

[00:59:43] Speaker 07:
As your honor noted, there's nothing in the 2020 rule that discusses that whatsoever.

[00:59:49] Speaker 07:
But the best case in the fact that the formula has been superseded, I think, is the Alaska v. Department of Agriculture case that Judge Wilkins noted before.

[00:59:59] Speaker 06:
What do you mean the formula has been superseded?

[01:00:01] Speaker 06:
The formula is the same.

[01:00:02] Speaker 07:
But the EPA completely reopened the formula to comment on it.

[01:00:07] Speaker 07:
It fully considered it.

[01:00:08] Speaker 07:
It fully considered petitioners' arguments that past year's exemption should be considered for the first time.

[01:00:14] Speaker 06:
But this is my hang up, right?

[01:00:15] Speaker 06:
If all we had was the 2020 rule, not the 2022 rule.

[01:00:19] Speaker 06:
You still would have had a final rule that rejects their legal argument.

[01:00:23] Speaker 06:
You might have done it without any explanation, but you rejected it and they could challenge it.

[01:00:27] Speaker 06:
And we would have before us today a pending challenge to the 2020 rule as contrary to law because it didn't account for past exemptions.

[01:00:36] Speaker 06:
And we would adjudicate that today, right?

[01:00:38] Speaker 06:
If there wasn't a 2022 rule, that would be live.

[01:00:44] Speaker 06:
And then for everything I just said, the 2022 rule

[01:00:48] Speaker 06:
doesn't seem to change anything about the legal question.

[01:00:50] Speaker 06:
We would still ask, is it contrary to the statute to not account for past exemptions?

[01:00:58] Speaker 06:
And that seems like the motor and equipment case.

[01:01:00] Speaker 06:
They superseded the rule in all sorts of ways, but they kept the regulation, one of the regulations that the petitioners initially challenged in place, and we said it wasn't moot.

[01:01:10] Speaker 07:
So I think a couple of things.

[01:01:11] Speaker 07:
First, the 2022 rule fully considered additional things that were not considered in the first rule.

[01:01:20] Speaker 07:
And had this court considered the 2020 rule and found the EPA insufficiently explained what it did, insufficiently explained?

[01:01:27] Speaker 06:
1,000% agree that any arbitrary and capricious claim would be moot.

[01:01:33] Speaker 06:
But a contrary to law claim, setting aside Judge Malik's very good point about Skidmore,

[01:01:39] Speaker 06:
has nothing to do with what you said in the record.

[01:01:42] Speaker 06:
It's a question about the statute and whether your regulation complies with it.

[01:01:45] Speaker 06:
And that, it doesn't matter what else you said in the second rulemaking.

[01:01:51] Speaker 07:
That's a fair point, although I would also note that the 2020 rule was not considering whether or not to address the past year's exemptions.

[01:02:02] Speaker 07:
The 2020 rule was specifically considering only whether to address the projections.

[01:02:08] Speaker 06:
But you agreed with me that after the 2020 rule, when they file their petition for review, there is a live challenge to the legal question.

[01:02:18] Speaker 06:
Is it contrary to law not to account for past exemptions?

[01:02:22] Speaker 06:
So there was a live dispute.

[01:02:25] Speaker 06:
And then you need an argument that something about the 2022 rule moots that live dispute.

[01:02:31] Speaker 06:
And I also think you just agreed that nothing about the 2022 rule alters the legal question that was live.

[01:02:38] Speaker 06:
Is it contrary to the statute to not account for past exemptions?

[01:02:44] Speaker 07:
That's fair.

[01:02:45] Speaker 07:
What changed was the record on which EPA considered the rule.

[01:02:50] Speaker 07:
So EPA reconsidered the formula and considered various aspects of the formula.

[01:02:56] Speaker 06:
But the thing that changed was the record on which EPA considered it with respect to... Well, I won't belabor it, but doesn't that mean that if there were an arbitrary and capricious challenge to the extent of the reasoning, that is moot, but the contrary-to-law challenge is not moot because nothing has changed?

[01:03:13] Speaker 07:
Well, I think that, well, to judge, let's point the fact that there is this record could provide skin more deference.

[01:03:22] Speaker 07:
But I take your point that the formula did not change between the two rules.

[01:03:29] Speaker 07:
But it is also true that the 2022 rule adopted the formula anew.

[01:03:37] Speaker 07:
So if this court were to vacate the 2020 rule, there is no practical effect because the formula is still there because of the 2022 rule.

[01:03:48] Speaker 07:
All this court could do is issue an advisory opinion that EPA should also reconsider the 2022 rule.

[01:03:55] Speaker 06:
We can't hold that the regulation violates the statute in a way that requires you to amend your regulation going forward.

[01:04:07] Speaker 07:
You could hold the EPA's adoption of the regulation in 2020 violated the statute and the EPA should, I guess, consider that in deciding whether or not to reconsider the 2020-22 rule.

[01:04:25] Speaker 06:
It seems to me that if that is true, then all of our cases saying if there is an ongoing policy that's repeated and new regulations, but not meaningfully changed, that they don't really mean anything because we must be able to grant relief.

[01:04:39] Speaker 06:
The relief, even without the 2022 rule, in this kind of a case would be totally prospective.

[01:04:44] Speaker 06:
It would be

[01:04:45] Speaker 06:
Next time you do, 2020 rules set aside.

[01:04:48] Speaker 06:
We obviously can't go back to 2020 and make you do it right.

[01:04:52] Speaker 06:
But now going forward, you must comply with our interpretation of the statute.

[01:04:57] Speaker 06:
And it just seems like that could be a remedy in this case, too.

[01:05:01] Speaker 06:
When you come up for 2027, you have to follow the statute.

[01:05:06] Speaker 07:
Well, but in order to do that, well, I guess it's true that the legal question is a question that remains in every year.

[01:05:17] Speaker 07:
But EPA's full consideration of that question, I think, is something that this court should take into consideration in deciding whether or not to decide the issue.

[01:05:26] Speaker 07:
And I take that that is less of an Article III witness issue and more of just an equitable doctrines issue and more of a consideration of EPA had a better record in which it fully considered these issues in a later rulemaking.

[01:05:41] Speaker 07:
And therefore,

[01:05:43] Speaker 07:
this court should consider this question or should have considered this question in the later rulemaking.

[01:05:48] Speaker 07:
And petitioners had the opportunity to present this issue in the 2022 litigation.

[01:05:53] Speaker 07:
But instead of actually arguing this issue, they intervened on our behalf and defended the rule.

[01:06:00] Speaker 06:
And I will yield to my colleagues, but one small question.

[01:06:04] Speaker 06:
What does annual average basis mean?

[01:06:06] Speaker 07:
So I agree that I don't think EPA has spoken to this issue.

[01:06:10] Speaker 07:
I do think that it's fair.

[01:06:12] Speaker 07:
So two things.

[01:06:13] Speaker 07:
First, the actual statutory basis that petitioners use is not O2A1.

[01:06:20] Speaker 07:
It's O31.

[01:06:21] Speaker 07:
And O31 doesn't speak to an annual average basis.

[01:06:24] Speaker 07:
It instead speaks to the forthcoming calendar year, which is very clearly an individual year.

[01:06:31] Speaker 07:
I think that O2A1, and this is my interpretation, but O2A1 and O3-1 can be read together.

[01:06:39] Speaker 07:
And the average annual basis is actually referring to the fact that EPA has to do the percentage standard formula in O3.

[01:06:47] Speaker 05:
The annual renewable fuel percentage standard is

[01:07:00] Speaker 05:
Signified in an equation that's at 40 CFR, 80.1505C, right?

[01:07:12] Speaker 07:
That sounds correct.

[01:07:13] Speaker 07:
I don't know the number off the top of my head, but it sounds correct.

[01:07:17] Speaker 05:
And so in the 2020 rulemaking,

[01:07:22] Speaker 05:
They said, okay, this is what we think that the annual renewable fuel percentage standard should be.

[01:07:30] Speaker 05:
And they set out that formula.

[01:07:33] Speaker 05:
And it's got all the symbols and all of that.

[01:07:36] Speaker 05:
And the symbols mean different things.

[01:07:39] Speaker 05:
And so the rulemaking, I guess what I'm getting at is that

[01:07:51] Speaker 05:
What the petitioners, they say that they want to set aside this policy that was articulated and announced in the 2020 rulemaking, but really the manifestation of the policy is the formula.

[01:08:12] Speaker 05:
And the formula is in regulation.

[01:08:20] Speaker 05:
They haven't asked us to set aside the regulation, but isn't that really what they're asking us to do?

[01:08:30] Speaker 05:
Or isn't that really the upshot if we grant them the relief that they're asking for is that we would set aside 40 CFR 80.1405C?

[01:08:44] Speaker 07:
So I think the relief that they're requesting has been very vague and has really shifted throughout the course of this litigation.

[01:08:52] Speaker 07:
So I don't want to speak for what relief they're actually seeking, but it does seem like the only place that they've actually tethered any of their arguments to the 2020 rule is through the percentage standard formula.

[01:09:09] Speaker 05:
Maybe rather than ask you what relief they are seeking, because that is a question better put to them, let me ask it this way.

[01:09:23] Speaker 05:
If they come back on rebuttal and say, you're right, that is what we're seeking, what's your response to that?

[01:09:33] Speaker 07:
My response is the same, that the 2022 rule superseded the 2020 rule and re-adopted that same formula.

[01:09:42] Speaker 07:
Therefore, that is the rule that would need to be challenged in order to challenge that formula.

[01:09:49] Speaker 07:
Vacating the 2020 rule with respect to the percentage standard formula does nothing to effectuate a change in the regulation.

[01:10:00] Speaker 06:
Would that be true every time?

[01:10:02] Speaker 06:
So presumably when you did the 2025 standards, you also stood by the formula and the regulation.

[01:10:10] Speaker 06:
Does that mean that a challenge to the 2022 rule would be moot now?

[01:10:17] Speaker 06:
Well, I mean, I think every time you continue to use this policy and if using it again, moots a prior challenge,

[01:10:26] Speaker 07:
So two things.

[01:10:27] Speaker 07:
First, the key issue here is that EPA fully reopened this question to comment on it and fully reconsidered it.

[01:10:36] Speaker 07:
Therefore, EPA in 2022 specifically was considering this formula and readopted it.

[01:10:45] Speaker 07:
But it is also true that by the very nature of the Clean Air Act's jurisdictional and venue provisions,

[01:10:52] Speaker 07:
that it is the case that any 2022 rule would be moved by 2025 because Clean Air Act very carefully channels all litigation into a single challenge to a rule, which is the problem here because petitioners are essentially arguing that they get to challenge the same thing twice and they don't get to do that.

[01:11:13] Speaker 07:
EPA superseded the regulation or superseded the rule with the 2022 rule and that was their only opportunity to challenge this formula.

[01:11:24] Speaker 08:
We may be confusing terms because it's one thing to challenge a rulemaking and it's another thing to challenge an agency policy.

[01:11:37] Speaker 08:
It can cross cut and be applied again and again in different rulemakings.

[01:11:42] Speaker 08:
And so, assume there was a policy adopted sub-silencio in 2020 not to count for prior years.

[01:11:56] Speaker 08:
And then that, do you consider what happened in 2022 to be sort of the formal adoption of a final position on this prior years?

[01:12:11] Speaker 08:
incorporation, redress issue that would continue unless and until changed by the agency.

[01:12:17] Speaker 07:
Yes, I think to the extent that EPA has adopted any policy on the prior year's issue, it could only be in the 2022 rule.

[01:12:27] Speaker 08:
And so had they, let's say they'd filed, let's say they challenged it in 2022.

[01:12:32] Speaker 08:
And then, you know, litigation takes what time it takes.

[01:12:37] Speaker 08:
And as a new 25, 26 rulemaking comes out,

[01:12:41] Speaker 08:
as in 2020 doesn't say boo about this issue.

[01:12:44] Speaker 08:
Were they not still a challenge in 25, 26?

[01:12:48] Speaker 08:
The policy adopted in 2022 about prior year.

[01:12:54] Speaker 07:
Not if it was not reopened.

[01:12:58] Speaker 07:
So if EPA reopened the issue in the 2025 rulemaking.

[01:13:02] Speaker 08:
Why would they have to reopen it?

[01:13:03] Speaker 08:
That policy would still, assuming the formula reflected, no change.

[01:13:08] Speaker 08:
You just said that would be the adoption of a policy, a formal agency position on that question.

[01:13:14] Speaker 08:
That's really what you guys called it in 2022.

[01:13:15] Speaker 08:
And so as long as that's still the live policy, that's going to get repeated in every rule, rulemaking.

[01:13:25] Speaker 08:
You don't revisit every policy in every rulemaking, do you?

[01:13:29] Speaker 08:
No, you don't.

[01:13:30] Speaker 08:
You don't revisit the, we're going to account for estimates of exemptions we expect will be granted.

[01:13:36] Speaker 08:
You don't revisit that or reopen that in every rule, but it continues to be a practice.

[01:13:41] Speaker 08:
It does.

[01:13:42] Speaker 08:
Isn't that the same thing for what happened when you decided in 2022, unless and until the agency decides to revisit that question, if it ever does?

[01:13:50] Speaker 08:
That is the answer.

[01:13:53] Speaker 07:
So that is the answer.

[01:13:55] Speaker 07:
So petitioner had to challenge it in 2022.

[01:13:56] Speaker 07:
To the extent the question is, could they challenge it?

[01:14:00] Speaker 08:
And then when that litigation drag on too long, they'd have to challenge it in 2025, 26.

[01:14:04] Speaker 08:
And then when that drag on too long, they'd have to challenge it in 26, 27.

[01:14:07] Speaker 07:
No, I'm sorry.

[01:14:09] Speaker 07:
I'm saying the opposite.

[01:14:10] Speaker 07:
You can only challenge it in the rule that actually addressed the issue.

[01:14:14] Speaker 07:
The fact that there is a continuing policy doesn't give you a new opportunity to challenge that issue.

[01:14:19] Speaker 07:
That's something that is

[01:14:20] Speaker 07:
to the Clean Air Act because the Clean Air Act really channels all litigation into

[01:14:26] Speaker 07:
I challenge within 60 days of the rule actually expressing that policy.

[01:14:32] Speaker 07:
And it requires people to have submitted a comment on that issue.

[01:14:37] Speaker 07:
And for all of the channeling that the Clean Air Act does, it's very specific too.

[01:14:43] Speaker 07:
You will challenge this rule once.

[01:14:45] Speaker 07:
You will challenge it in the DC Circuit if it's a nationally applicable rule.

[01:14:50] Speaker 07:
And all of that channeling is through 42 USC 7607.

[01:14:56] Speaker 08:
OK.

[01:14:56] Speaker 08:
And then I'm struggling with what to do here.

[01:14:59] Speaker 08:
So they say, let's assume policy adopted in 2020 that they want to challenge because they got no explanation from the agency as to why they were not prior year adjustment.

[01:15:14] Speaker 08:
They want to say important question, error of law, both of those approaches.

[01:15:20] Speaker 08:
And then 2022, the agency says, OK, we hear you.

[01:15:26] Speaker 08:
We are looking at this again.

[01:15:27] Speaker 08:
Here is our comprehensive review and our comprehensive answer.

[01:15:33] Speaker 08:
And then you say in terms, and that is our final answer to your petition for reconsideration.

[01:15:40] Speaker 08:
Just what you say in 2022.

[01:15:41] Speaker 08:
And they go, we're all in.

[01:15:45] Speaker 08:
We're defending this rule 100% and make no objections whatsoever.

[01:15:55] Speaker 08:
But they can still go back.

[01:15:57] Speaker 08:
It just seems odd to me that are you arguing there are stops that they're, there's something they made their decision in 2022 to endorse the rule fully, having no doubt been fully aware of your direct response to their petition for reconsideration and declaration that that's the final answer to it.

[01:16:22] Speaker 08:
And so they forfeited any challenge to that reconsideration petition?

[01:16:27] Speaker 07:
Yes.

[01:16:27] Speaker 07:
They waived or forfeited the challenge by not raising it in the Sinclair litigation.

[01:16:32] Speaker 07:
Alternatively, they're barred by latches because they waited until the Sinclair decision was held.

[01:16:38] Speaker 08:
All those documents are a little confusing here because they kept their 2020 petition alive for all these years.

[01:16:45] Speaker 08:
So it doesn't look like a normal latches case.

[01:16:51] Speaker 08:
I think to an outsider at least, it would look like you had your objection.

[01:16:55] Speaker 08:
Then they answered it and you said, we're all in.

[01:16:59] Speaker 07:
Yes.

[01:17:00] Speaker 07:
Well, so I still think that the waiver and forfeiture fully apply.

[01:17:04] Speaker 07:
We also argued prudential mootness, that there's no real relief left for the court to offer.

[01:17:10] Speaker 07:
And it's an entirely different record.

[01:17:12] Speaker 07:
And the first record is stale.

[01:17:14] Speaker 07:
All of those doctrines, I think, go towards how improper this is for judicial review, even if it is

[01:17:24] Speaker 07:
even if it is judicially available, that the court should instead stay its hand because petitioners should not be able to do this sort of piecemeal, duplicative litigation where they challenge the same thing multiple times in multiple cases.

[01:17:40] Speaker 07:
Also, for what it's worth, it's not unusual for this court to put a case into abeyance while the agency reconsiders a rule.

[01:17:49] Speaker 07:
And for that reconsideration to affect nothing in terms of

[01:17:53] Speaker 07:
ending the first litigation, even if they fully reconsider the issue, would have profound implications, I think, for just how this court operates.

[01:18:08] Speaker 08:
Do you have a view?

[01:18:11] Speaker 08:
Your friend on the other side said, if we get to deciding the legal question that they've presented with your question of law,

[01:18:24] Speaker 08:
And we consider it on the basis of the 20, as adopted in the 2020 rule.

[01:18:29] Speaker 08:
That's what they've asked us to do.

[01:18:30] Speaker 08:
We can still consider everything you said in the 2020 to reopening, I guess you called it reopening, right?

[01:18:43] Speaker 08:
Right.

[01:18:43] Speaker 08:
Reopening.

[01:18:46] Speaker 08:
If we get, if we were to invoke Skidmore, we could still consider that even though that post-dates by two years.

[01:18:54] Speaker 08:
the 2020 rule that would be under review.

[01:18:57] Speaker 08:
Is that right?

[01:18:59] Speaker 07:
Do I agree that you can consider EPA's analysis in the 2022 rule?

[01:19:05] Speaker 08:
In deciding a, the legal, not the arbitrary, but just the legal challenge.

[01:19:11] Speaker 08:
If we're only deciding that, I mean, if we decided in this appeal, we're deciding to base just on 2020, what was adopted by the agency in the 2020 rule.

[01:19:19] Speaker 07:
I mean, I do think that it would be improper because another court has already considered the formula under the 2022 rule and on the record of the 2022 rule.

[01:19:29] Speaker 07:
So I think doing this sort of backwards, sort of clawing back the 2022 rule via the 2020 rule, despite the fact that it superseded the 2020 rule, I think is odd and sort of procedurally difficult.

[01:19:50] Speaker 07:
That said, if the court is still going to consider the legal issue, then I think that the agency's statements about its reasoning are very valid to the court's consideration.

[01:20:07] Speaker 08:
Any more questions?

[01:20:12] Speaker 08:
All right.

[01:20:15] Speaker 08:
Thank you very much.

[01:20:17] Speaker 08:
We'll hear from the intervener now.

[01:20:21] Speaker ?:
Thanks.

[01:20:31] Speaker 01:
Thank you, Your Honors.

[01:20:31] Speaker 01:
Good morning, and may it please the court.

[01:20:33] Speaker 01:
Elizabeth Dawson on behalf of the interveners, obligated parties, American fuel and petrochemical manufacturers, and the small refineries.

[01:20:40] Speaker 01:
First, I'd like to start with just addressing the mootness question, and in particular, how important it is to remember that the 2022 rule, what we're calling the 2022 rule, not only superseded 2020, but also fully replaced it.

[01:20:54] Speaker 01:
Because that rule covered the compliance years 2020, 2021, and 2022.

[01:20:59] Speaker 01:
So it is not just that EPA reopened and reaffirmed its legal reasoning with regard to the formula.

[01:21:05] Speaker 01:
That 2020 rule is completely replaced.

[01:21:10] Speaker 01:
As such, there is no effective relief that this court could grant that would redress any injury that occurred because of the 2020 rule.

[01:21:19] Speaker 05:
When you say replaced, are you saying that there is a specific part of the 2020 rule

[01:21:30] Speaker 05:
that in the 2022 rule said that part is no longer effective.

[01:21:43] Speaker 01:
Your Honor, by the time EPA promulgated the new 2020, the replacement 2020 rule, it changed the percentage standards to effectively reset them to the amount that had been produced in 2020.

[01:21:57] Speaker 01:
Because if you will recall, this was kind of a sui generis situation where we had COVID.

[01:22:01] Speaker 01:
And so EPA was reconsidering the 2020 rule in that context.

[01:22:07] Speaker 01:
So again, focusing on this part about relief and the fact that the petitioners are effectively seeking advisory opinion, I would go back to that Alaska versus USDA case.

[01:22:19] Speaker 01:
Because in that case, the court noted that it would be entirely inappropriate for the court to do as the state would want, and issue an advisory opinion to guide the agricultural department's rulemaking.

[01:22:30] Speaker 01:
And that's exactly what they're seeking here.

[01:22:32] Speaker 01:
They are seeking to have

[01:22:33] Speaker 01:
And as we know, EPA is now already in the midst of proposing the second version of the set rule.

[01:22:48] Speaker 01:
for 2026 and 2027.

[01:22:50] Speaker 01:
So they are hoping to influence that future rulemaking instead of dealing with whatever EPA ends up with on a full and complete record in that rulemaking in which they will have a full and fair chance to argue what they would like with regard to the meaning of the statute.

[01:23:06] Speaker 01:
But that is not appropriate for this court to consider at this time because there is no effective relief that can be had for 2020.

[01:23:14] Speaker 01:
And unless the court has any questions more about mootness, I would just turn to the merits for a moment, if I can have one minute.

[01:23:23] Speaker 01:
I just think should the court reach the merits, it should deny the petitions because there is no statutory authority.

[01:23:27] Speaker 01:
There is no reason to reconsider whether small refineries should have to reapply for exemptions that they were already granted in a previous year and because it was an arbitrary or capricious for EPA to decide not to reallocate in the 2020 rule.

[01:23:43] Speaker 05:
Why is it saying that small refineries are essentially losing an exemption that they got in the prior year?

[01:23:55] Speaker 05:
If we were looking at this, it's just like a true up where the denominator, the EPA got the denominator wrong in the prior year.

[01:24:06] Speaker 01:
So petitioners are asking EPA to increase future year standards based on what they deem to be under compliance or missed volumes in previous years.

[01:24:14] Speaker 01:
That would be taking those volumes, which were lawfully exempted amounts that small refineries under the statute shall not have to comply with.

[01:24:22] Speaker 01:
reporting them over into a new year.

[01:24:24] Speaker 01:
And that would effectively, even though it would be spread out, would require smaller refineries to justify once again why they shouldn't have had to comply with that percentage of their obligation for the prior year.

[01:24:36] Speaker 01:
And I think this also goes to the point that the court was making about

[01:24:40] Speaker 01:
whether this is really the only true-up mechanism that petitioners are seeking with regard to smaller finery exemptions versus other reasons that the volumes may not have been made.

[01:24:49] Speaker 01:
And there, for example, in Sinclair, where this court was deciding on EPA's decision to add a supplemental volume because of a legal error in 2016, that is very different from lawfully granted exemptions.

[01:25:02] Speaker 01:
that EPA is by statute required to provide to small refineries that demonstrate that they qualify.

[01:25:08] Speaker 01:
That is not really a missed volume.

[01:25:11] Speaker 01:
That is a legal entitlement to a small refinery when it demonstrates that it is deserving of the exemption.

[01:25:16] Speaker 01:
So it is not the case that it would be that EPA is not ensuring that these volumes are met by not accounting for a lawful exemption granted in a prior year.

[01:25:27] Speaker 08:
Any other questions?

[01:25:29] Speaker 01:
All right.

[01:25:29] Speaker 08:
Thank you, Your Honor.

[01:25:30] Speaker 08:
Okay, Mr. Lay, we will give you two minutes for rebuttal.

[01:25:38] Speaker 04:
Thank you, Your Honor.

[01:25:40] Speaker 04:
A few brief points.

[01:25:42] Speaker 04:
When we filed this case, we had a valid challenge to the policy.

[01:25:45] Speaker 04:
The other side doesn't actually dispute that.

[01:25:48] Speaker 04:
They concede it.

[01:25:50] Speaker 04:
Their argument is that it became moot.

[01:25:52] Speaker 04:
But all that happened in the 2020 rule was an elaboration of the explanation for the position.

[01:25:58] Speaker 04:
And that alone cannot render our original claim moot.

[01:26:02] Speaker 04:
They don't cite any case that says that.

[01:26:04] Speaker 08:
They replaced the 2020 rule.

[01:26:06] Speaker 04:
Like, that's clearly not true.

[01:26:08] Speaker 04:
The 2020 rule itself says that all it's doing is modifying the 2020 percentage standards.

[01:26:13] Speaker 04:
That's it.

[01:26:14] Speaker 04:
Otherwise, it explicitly says it's reaffirming everything that's- The percentage standards- Are the applicat- They're by the formula, the formula.

[01:26:27] Speaker 04:
Yes, they're determined by applying the formula to- They challenge the computational formula.

[01:26:31] Speaker 04:
That's correct.

[01:26:33] Speaker 04:
But our challenge here is not about the application of the formula to particular numbers or percentages.

[01:26:40] Speaker 04:
It is the formula that stands independent of how it is applied in a specific year.

[01:26:50] Speaker 04:
That's the same policy that we challenged in the growth energy case.

[01:26:53] Speaker 04:
And the court said, you have a direct challenge to the formula or the policy, and you have a challenge to the particular percentage standards that were set.

[01:27:01] Speaker 04:
The court separated the two and said the challenge of the policy was time barred because EPA didn't reopen it.

[01:27:07] Speaker 04:
Here, EPA reopened.

[01:27:09] Speaker 04:
They revisited the issue.

[01:27:10] Speaker 04:
That's uncontested.

[01:27:12] Speaker 04:
The other side never argued re-opener in their briefs.

[01:27:15] Speaker 04:
So we have a live challenge to the policy.

[01:27:19] Speaker 04:
And all they're saying is it's moot because there was an elaboration of the explanation.

[01:27:23] Speaker 04:
But Skidmore can't render a case as moot just because the agency goes out and says more about the reason in a later action.

[01:27:30] Speaker 06:
Mootness is one thing.

[01:27:31] Speaker 06:
What about waiver and forfeiture?

[01:27:35] Speaker 06:
Why didn't you raise this argument in the Sinclair Reset case?

[01:27:38] Speaker 04:
Well, the Union of Concerned Scientists, American Maritime and Motor and Equipment give us the assurance that we were under no obligation to raise it in the later case.

[01:27:46] Speaker 04:
In those cases, the court said, we're not going to require a party to have to go out and litigate in a second case.

[01:27:51] Speaker 03:
This is the later case.

[01:27:52] Speaker 04:
No, this is the earlier case.

[01:27:54] Speaker 03:
This is the 2020 case.

[01:27:57] Speaker 04:
Only because we agreed to an abeyance.

[01:28:00] Speaker 04:
While this case was pending, the 2022 rule came out.

[01:28:04] Speaker 04:
We never agree that our challenge here became moot because of the issuance of the 2022 case.

[01:28:11] Speaker 04:
We sit on the sidelines because we thought that

[01:28:15] Speaker 04:
The 2022 case could foreclose our claim here.

[01:28:19] Speaker 04:
If the refineries challenge to the projection had succeeded, then we believe that that would also mean we would never win our plan.

[01:28:27] Speaker 04:
In addition, at that time, EPA had announced a new exemption policy that would have wiped out all exemptions from 2018 onward.

[01:28:36] Speaker 04:
And we looked at that and thought, if this holds up,

[01:28:39] Speaker 04:
We really don't have to worry about these exemptions anymore.

[01:28:42] Speaker 04:
So there's no reason to force the cost and the time for us, for the court, to litigate this issue.

[01:28:53] Speaker 04:
So we'll wait and see what happens.

[01:28:55] Speaker 04:
And then the exemption policy was reversed.

[01:28:58] Speaker 08:
The 22 rule said it was looking at your reconsideration petition.

[01:29:05] Speaker 08:
and gave pages of answer and said, this, the 2022 rule is our final answer to your reconsideration petition.

[01:29:16] Speaker 08:
And we see you coming in saying the 2022 rule, we are all in.

[01:29:24] Speaker 08:
You didn't say in the sidelines, you were there.

[01:29:27] Speaker 08:
Because I recall intervening in support of the rule.

[01:29:29] Speaker 04:
That's not correct.

[01:29:30] Speaker 04:
We intervened in support of the rule with respect to the projection.

[01:29:38] Speaker 04:
We weren't saying the whole thing was good.

[01:29:42] Speaker 08:
They gave you an answer.

[01:29:44] Speaker 08:
It's the strangest thing I've ever seen is we say we are really upset in 2020 about this decision.

[01:29:52] Speaker 08:
on our reconsideration petition.

[01:29:54] Speaker 08:
And in 2022, they say, okay, we will think about it again.

[01:29:58] Speaker 08:
And here is our answer, lots of explanation.

[01:30:01] Speaker 08:
And this, this 2022 rule is our answer to your reconsideration petition on this precise issue of what to do about prior years.

[01:30:10] Speaker 08:
And then you show up in the litigation and you don't say boo about it.

[01:30:15] Speaker 08:
You don't say we support, as parties do all the time, we support this part, but we don't support this part.

[01:30:21] Speaker 08:
It was right in this regard, but also this should have happened.

[01:30:24] Speaker 08:
You came in and you didn't say boo.

[01:30:26] Speaker 08:
It sounded, anyone looking at your brief there would have said, well, I guess they're satisfied with the answer they got to their reconsideration petition in the 2022 rule.

[01:30:36] Speaker 08:
And then lo and behold, we're like, oh no, we're still unhappy with our answer from 2020.

[01:30:44] Speaker 04:
Well, the only issue that was presented was the projection issue.

[01:30:48] Speaker 04:
And we confined our, we couldn't, we weren't a petitioner.

[01:30:52] Speaker 04:
We were interveners.

[01:30:53] Speaker 04:
So we were intervening to defend.

[01:30:55] Speaker 04:
We could have, but we didn't.

[01:30:56] Speaker 08:
You chose not to.

[01:30:57] Speaker 08:
You made a strategic decision.

[01:30:59] Speaker 04:
Well, we had a right not to because of cases like the Union of Concerned Scientists.

[01:31:03] Speaker 04:
We had a valid live case.

[01:31:04] Speaker 08:
Concerned scientists involved them between the interim rule and the final rule.

[01:31:09] Speaker 08:
objecting to something, the interim rule, and then coming in on the final rule and saying, we are on board and not saying a word about their objections that they still had.

[01:31:19] Speaker 08:
Did that happen in those cases?

[01:31:21] Speaker 04:
The case was decided before the second litigation occurred.

[01:31:24] Speaker 04:
So there was no occasion for it.

[01:31:26] Speaker 04:
This happened because we agreed to an advance.

[01:31:28] Speaker 04:
This is very different.

[01:31:30] Speaker 04:
It is different, but it's not different in the fundamental way.

[01:31:33] Speaker 08:
We made a decision about how to respond to the 2022 rule, which incontrovertibly

[01:31:39] Speaker 08:
was EPA's answer to your reconsideration petition.

[01:31:41] Speaker 08:
And now you're asking this court to review the 2020 answer to your reconsideration petition.

[01:31:48] Speaker 08:
You spent all that time pointing to that footnote where you said they're answering our reconsideration petition.

[01:31:52] Speaker 08:
So you want us only to look to their 2020 answer to your reconsideration petition, but not your 2022 reconsideration petition when you had every opportunity

[01:32:03] Speaker 08:
to challenge it then, and you didn't.

[01:32:06] Speaker 04:
It's the same policy.

[01:32:07] Speaker 04:
All they did in 2022 was reaffirm the policy that we had already challenged.

[01:32:11] Speaker 08:
You got zero explanation in 2020.

[01:32:13] Speaker 08:
I understand what your challenge would have been.

[01:32:15] Speaker 08:
And you got lots of explanation, and you didn't say boo about it.

[01:32:20] Speaker 04:
Yeah, we didn't need to.

[01:32:22] Speaker 04:
This case was preserved.

[01:32:27] Speaker 04:
It was on ice.

[01:32:27] Speaker 04:
We had a valid challenge.

[01:32:29] Speaker 04:
It was in advance.

[01:32:30] Speaker 08:
It's astonishing to me that it would have been very easy to file a second petition.

[01:32:36] Speaker 08:
Oh, they've now answered again our petition and there's still no improvement.

[01:32:42] Speaker 08:
You put an awful lot of hope in having this answered based on the 2020 record.

[01:32:48] Speaker 04:
This was the first time that EPA revisited the policy and decided it.

[01:32:53] Speaker 04:
In some sense, this made more sense.

[01:32:55] Speaker 04:
This was the one that all the second one did was reaffirm.

[01:32:58] Speaker 08:
They told us they didn't decide.

[01:32:59] Speaker 08:
They were dealing with one particular issue.

[01:33:02] Speaker 08:
And then you must have pointed out to them that, hey, we still haven't got an answer on this.

[01:33:07] Speaker 08:
And so in 2022, they gave it to you.

[01:33:10] Speaker 08:
2020, they were making the middle of COVID.

[01:33:12] Speaker 04:
Respectfully, Your Honor, I disagree with that characterization.

[01:33:14] Speaker 04:
Our petition for reconsideration that was before the agency covered the past retroactive exemptions.

[01:33:20] Speaker 04:
And in the final rule, EP said, this is our completion of the process.

[01:33:25] Speaker 04:
in responding to that petition.

[01:33:27] Speaker 04:
And we are sticking by not accounting for past retroactive assumptions.

[01:33:33] Speaker 04:
We meant it.

[01:33:34] Speaker 04:
We said final last time.

[01:33:35] Speaker 04:
We're saying final again.

[01:33:37] Speaker 05:
Hold on.

[01:33:38] Speaker 05:
You were saying that in 2020, EPA decided gave you your answer to your reconsideration petition.

[01:33:49] Speaker 05:
Yes.

[01:33:51] Speaker 05:
What

[01:33:55] Speaker 05:
What other evidence other than what's stated in this rule do you have for that?

[01:34:02] Speaker 05:
For instance, does an EPA have a docket?

[01:34:11] Speaker 05:
And don't they put an entry on the docket when they have closed or resolved a reconsideration petition?

[01:34:23] Speaker 04:
The petition is listed on a webpage.

[01:34:27] Speaker 04:
I don't believe there's anything about a decision listed on that page.

[01:34:36] Speaker 04:
That is, I don't think there's anything stated, I could be wrong, but I don't think there's anything stated there about a decision.

[01:34:41] Speaker 04:
But everyone, I mean, we understood and the agency understood that the 2020 rule was the decision on the petition.

[01:34:51] Speaker 04:
I do have one other piece of evidence.

[01:34:53] Speaker 05:
Then why did they spill three pages of ink on it in 2022?

[01:34:57] Speaker 04:
Well, they went back.

[01:35:01] Speaker 04:
They went back to it.

[01:35:02] Speaker 04:
I mean, we're an important stakeholder in this process.

[01:35:06] Speaker 04:
The refineries are, the agency listens to what we say.

[01:35:08] Speaker 04:
There are conversations in between.

[01:35:10] Speaker 04:
They go back to the issue.

[01:35:12] Speaker 04:
I'd like to read, this is more evidence.

[01:35:14] Speaker 04:
This is from the 2022 rulemaking.

[01:35:16] Speaker 04:
2022, JA 117.

[01:35:20] Speaker 04:
We are reaffirming our response to that petition

[01:35:25] Speaker 04:
That's saying we decided the petition in 2020, we resolved the issues, it was the completion of our process, and now we were visiting it once again, and we're standing by what we did in response to that petition in 2020.

[01:35:37] Speaker 08:
And this, I have the next sentence, this action constitutes our final and complete response to that petition.

[01:35:46] Speaker 08:
I'm assuming you guys saw that when the 2022 rule came out.

[01:35:52] Speaker 04:
Yes, but I don't.

[01:35:52] Speaker 08:
This is our final and complete response to your petition, and yet you chose not to seek review, not to petition for review.

[01:36:06] Speaker 08:
You chose to go in in support and not have any qualifications.

[01:36:09] Speaker 08:
If there's something in your brief from 2022 that drops a footnote saying, by the way, we're still unhappy about that, let me know.

[01:36:15] Speaker 08:
But as far as I can tell, you didn't say anything.

[01:36:19] Speaker 08:
You got this answer.

[01:36:21] Speaker 08:
We're looking, you're a stakeholder.

[01:36:24] Speaker 08:
We've had conversations.

[01:36:25] Speaker 08:
So we are looking at your petition again and we are giving you all the answer that we have given in here.

[01:36:34] Speaker 08:
And yes, we're reaffirming, we've looked at it all and we've come to the same conclusion.

[01:36:38] Speaker 08:
Agencies sometimes do that, sometimes they change.

[01:36:41] Speaker 08:
But they looked at it again and told you this is a final and complete response to that petition.

[01:36:46] Speaker 08:
And you didn't do anything about it.

[01:36:51] Speaker 08:
because we had this case because you want because you got you were happy with the 2020 response even though you just told us you had conversations intervening conversations.

[01:37:01] Speaker 08:
You're a stakeholder.

[01:37:02] Speaker 08:
They care about your views.

[01:37:04] Speaker 04:
We weren't happy with the response.

[01:37:05] Speaker 04:
We were litigated.

[01:37:06] Speaker 04:
We had filed a petition to review the response.

[01:37:08] Speaker 04:
We disagreed with it and we had that case preserved.

[01:37:11] Speaker 04:
We filed it timely.

[01:37:12] Speaker 04:
It was in advance and we knew we could go back or we believed consistent with the case.

[01:37:16] Speaker 04:
Although we could go back to that case.

[01:37:19] Speaker 05:
So

[01:37:20] Speaker 05:
Is it your position that the formula in the CFR, 40 CFR, section 80.1405C, that that formula is wrong?

[01:37:45] Speaker 04:
Yes, that formula embodies a policy that we say is invalid as a matter of law because it excludes any accounting for past retroactive exemptions.

[01:37:59] Speaker 05:
So why didn't you just ask us to set aside that regulation?

[01:38:03] Speaker 04:
I don't think there's a difference in asking you to set aside the rule or act on the rule that makes that regulation and set aside the regulation itself.

[01:38:15] Speaker 05:
Was that particular formula first adopted in the 2020 rule, or had that formula been adopted?

[01:38:24] Speaker 04:
So there was a formula that predated the 2020 rule.

[01:38:28] Speaker 04:
That prior version did not include any accounting for retroactive exemptions.

[01:38:35] Speaker 04:
The 2020 rule modified the formula to insert a variable for projected retroactive exemptions.

[01:38:47] Speaker 04:
but not a variable for past retroactive exceptions.

[01:38:52] Speaker 04:
And that is the formula as it exists today.

[01:38:54] Speaker 05:
So the formula at this particular subsection, 80.1405C, was modified in 2020.

[01:39:05] Speaker 05:
Yes, and not modified in 2022.

[01:39:10] Speaker 05:
And not modified in 2022.

[01:39:12] Speaker 04:
Correct.

[01:39:14] Speaker 04:
If we had brought this challenge in 2002.

[01:39:17] Speaker 08:
Its history at the end of the rule shows that it was modified in 2022.

[01:39:20] Speaker 04:
Not in the relevant respect.

[01:39:24] Speaker 04:
Maybe there was some other change, but not with respect to... It doesn't show anything in 2019.

[01:39:30] Speaker 04:
That's correct.

[01:39:31] Speaker 08:
I'm sorry, I thought I heard you say they had changed it in 2019.

[01:39:34] Speaker 04:
No, the 2020 rule modified it.

[01:39:37] Speaker 04:
I misheard you then.

[01:39:38] Speaker 04:
The 2020 rule modified it.

[01:39:39] Speaker 04:
The 2022 rule did not modify it, at least with respect to the exemptions.

[01:39:42] Speaker 08:
There was a modification in 2020 and then 2022.

[01:39:45] Speaker 04:
Yeah, but the 2020 rule did not modify it with respect to the exemption accounting.

[01:39:50] Speaker 04:
There may have been some other, the formula does a lot of things.

[01:39:54] Speaker 04:
There may have been some other change that I don't recall, but it wasn't about exemptions.

[01:39:59] Speaker 04:
The only modification for exemptions was in 2020.

[01:40:02] Speaker 08:
When did this formula's first not include a prior year account for prior years?

[01:40:14] Speaker 04:
For exemptions?

[01:40:19] Speaker 04:
Probably, I mean, I might go back to 2010, 2011, 2012, somewhere around there.

[01:40:24] Speaker 08:
That's the first time it didn't do what you think it should have.

[01:40:27] Speaker 04:
That's why we lost the growth energy case in the 2019 rulemaking case.

[01:40:30] Speaker 08:
So you run timely.

[01:40:32] Speaker 04:
We run timely.

[01:40:36] Speaker 04:
Just to speak to the vacator point, I wanted to just mention our footnote too in the reply.

[01:40:41] Speaker 04:
We do ask for a vacator there.

[01:40:45] Speaker 04:
I probably would formulate the language differently in retrospect.

[01:40:48] Speaker 04:
But we were asking for a vacator with respect to footnote two.

[01:40:52] Speaker 04:
It's on page, well, the relevant sentence is on page six.

[01:40:57] Speaker 04:
The footnote starts on page five.

[01:41:05] Speaker 08:
Contrary to individual's suggestion, the court could invalidate the challenge policy and remand the rule without vacature.

[01:41:12] Speaker 08:
Yes.

[01:41:12] Speaker 08:
Or it could vacate the rule.

[01:41:15] Speaker 08:
So you're like, well, you could do either one.

[01:41:17] Speaker 08:
So I look to what you're actually asking us to do, and it's remand.

[01:41:21] Speaker 04:
OK, well, vacate and remand.

[01:41:24] Speaker 04:
Partially vacate and remand.

[01:41:26] Speaker 04:
Please.

[01:41:28] Speaker 08:
Have you asked for a declaratory judgment?

[01:41:32] Speaker 08:
Can you get that under the EPA?

[01:41:35] Speaker 04:
I mean, the Clean Air Act allows you to declare the action unlawful.

[01:41:45] Speaker 04:
I believe, I believe this formulated similar as a form of relief.

[01:41:50] Speaker 04:
Honestly, I don't think I've ever seen a brief in an AP case that are releasing these cleaner act cases that does it as a distinct form of relief that's requested.

[01:41:59] Speaker 04:
If you did that, we would be happy with that outcome as well.

[01:42:05] Speaker 08:
I'm just asking the question.

[01:42:06] Speaker 08:
I'm not quite sure how they all intersect.

[01:42:08] Speaker 04:
Well, I'm quite a bit over.

[01:42:10] Speaker 04:
I had a couple more points, but I will recede if I exhausted my.

[01:42:17] Speaker 08:
Thank you, Raj.

[01:42:17] Speaker 08:
We have exhausted you, I'm afraid.

[01:42:19] Speaker 04:
Thank you very much, Your Honor.

[01:42:20] Speaker 08:
We're grateful for your assistance and assistance from the government and an intervener.

[01:42:25] Speaker 08:
The case is submitted.

[01:42:26] Speaker 08:
Thank you.