waxman thank you your honor and may have please the court the guidance in question imposes requirements that are nowhere found in and our deeds indeed are inconsistent with the e methods for measuring the amount of cellulosic ethanol that is produced simultaneously with conventional ethanol in recognition of the complexity of that subject and the absence of any standard means  reference the regulation delegates to the judgment of outside experts validation of proposed method but the guidance up ends that delegation replacing deference to the expert judgment of peer reviewers and voluntary consensus standard boards with the mandatory application of a mathematical test a test moreover that is a literally impossible to perform let me explain under the guidance a method of calculating the tell you last a converted fraction will no longer be accepted even when peer review certify that it would produce reasonably accurate results or when it accords with the v c s p standard now except instance conditioned on proof that the method both measures cell directly and has in fact produced results that are within twenty percent of the known cellulose the content of a yet nonexistent representative reference material that is a stark departure the reason that the two thousand and fourteen regulation delegate to experts the scientific judgment that a method would produce reasonably accurate results is precisely because it is not possible to test a method against a known reference material because none exist if such a representative reference material did exist which is what the guidance then peer review would be completely irrelevant at a minimum the imposition of these new mandatory requirements and indeed one that is a renter irrelevant peer the reference material and demonstration requirements are currently impossible to satisfy and the mass closure prohibition disregards the evidence before the agent and would foreclose methods that e p a s other new standards would permit the guidance is plainly final agency action the new reference material and demonstration requirements speak in mandatory terms and even the other two new requirements which e t a says are merely recommendations set forth e p a s definitive views the message to the industry is clear producers who failed to fact a legislative rule so this court we pray should grant the petition and vacate the guidance all right thank you judge gunn do you have any questions regulation i'm interested in the nd part of it or using a method that would produce reasonably accurate results as demonstrated through peer reviewed references provided party engineer you say that means that the rd party engineer gets the final say yes the rd under the under the regulations and in particular what we've been discussing is section eighty point  and fifty parental to which appears on the page immediately following what you just quoted me says an independent rd party engineering review and written report and verification of the information provided pursuant to what you just read may shall be provided pursuant to the section and then it goes on at great lengths to say what the engineer has to do in order to certify the application including and i'm quoting on page a defendant page twenty seven state whether the independent rd party agrees with the information provided and identify any exceptions between the independent rd parties findings and the information provided so in other words the responsibility of the the applique can is to produce to the rd party engineer the proposed methodology either a methodology that has been approved by a voluntary consensus standards board in a format i understand i want to focus on the rd party engineer part so when i'm only for will itself it says that would produce reasonably accurate results as demonstrated through peer reviewed references provided to the rd party engineer it doesn't say as decided by the rd party engineer it says provided to the question is who has to be demonstrated to and what you just read me also says that the rd party engineer has to certif apologize if i'm not directly responding to your honor's question but there is a difference here between as to exactly what the delegation here there's not a delegation either to the rd party review or  the peer review or or the rd party engineer of the final decision making authority that is the decision whether to grant or deny registration the delegation to the peer review or here is the delegation of the scientific judgment that the proposed method quote would produce reasonably accurate results that that's exactly the question so if you look at the rule it reading of that is that the company provides the references to the rd party engineer but the question who then does whatever review the engineer does whether it's reasonably accurate there's nothing in the rule that suggests that it is an e p a that makes that decision oh i think it is i think it's under the regulation the detail under the language that you quoted me a message is reasonably accurate if a peer review or you know a bona fide peer review or based on his or her independent judgment or expertise is satisfied that a man is it is a scientifically defensible i want i want you to read me the actual text that says what you just as well it says that it's reasonably accurate would produce reasonably accurate results as demonstrated through peer review references provided to the rd party engineer it defines reasonably accurate through a procedure and the point i'm trying to make here is that in the stand your point  what i'm trying to say the text supports the point that is if it's said as demonstrated through peer reviewed references as decided by the rd party engineer you would be home but all this says as provided to the rd party engineer i think i think it's perhaps useful judge garland to say to compare the nd prong which i think you're doing with the prong which is you get all contrary to the guidance if you use an analytic method certified by a v c s p that's it ok so now you're drawing the distinction between that and the requirement that using a method that a peer review reference demonstrates would be reasonably accurate and the reason for the distinction between those two is that when a voluntary consensus standards body certifies a method it is certifying that that method would produce reasonably accurate results that's what end of the c s p certification does but because at the time of the two one thousand dollars regulation there was no method that had been certified by a v c s be the regulation goes on and says well we're all going to will also going to allow verification of reasonable accuracy through the provision of peer review that is a bona fide a peer review by a propre atlee qualified expert and what that person is going to do in his or her own capacity determination for purposes of allocating the appropriate rins is how much of the ethanol that is produced is produced from fibrous material and how much is produced from starch the corner girl now if there a material that everybody agreed as to what the true value of that material what the true value of the fiber content of the material was you could take a method you know we're going to use these enzymes and we're going to go through all these steps and we can show you that this is a reasonably accurate way of allocating rin the random  applying this method to a material that everybody agrees will reflect the actual true value of the fiber content and as e p a points out in its brief it gives as an example a reference material that is used in order to test test methods of certain fuel additives in that instance there is a representative reference material that everybody agrees has a very specific compile each component of the fuel additive is known precisely and so if you're going to use a vested ology to test whether a new product is a fuel additive or not you simply apply it to that reference material and you do a mathematical calculation the problem here is that in two thousand and fourteen and indeed now there is no representative reference material that e p a that anybody has ever identified that gives the precise true value of the fiber content and  i'm sorry for interrupting but i don't know if you have the example of orange juice in gator aid and it seems like if the if the thing in the field that you're trying to cast for you know whatever it's it's sugar content or i don't see content is orange juice how could i like gator aid which as you point out is easier to precisely know it's contents how could that be a reference material for orange juice so ok i now understand that i had to work through this myself to what i was st writing the brief in this case so if you have something that is if you will the gold standard reference material we know precisely what the sugar content is of gator aid somebody produces something called orange juice well there is orange juice that's naturally occurring and you have to come up with some method tell me the methodology mr chemist for determining the sugar content of this orange juice and show me why your methodology will accurately calculate how much sugar is in this batch of orange juice or that batch of born shoes because you have a known reference material that everybody agrees gives you the true con sugar content you can say well e p a or f d a the way i'm going to test and certify the sugar content of my orange juice and grapefruit juice and prune juice is using the following methodology the waxman methodology and the westman methodology is accurate because if you use if you use the maximum methodology to test gator aid it comes up with the actual true value mystery isn't that the e p a need taken speak for itself but more or less part of their object so this is this is their objection to to the use of a  reference material that is synthetic that is that does not naturally occur in nature that is really a sideshow here because the principle point is that e p a is now saying that we are not whatever methodology used and carbohydrate chemical analysis they do to certify that the method would produce reasonably accurate results now we will require that that the methodology be demonstrated to have come plus or minus twenty five percent of the known value of a representative reference material which is to peer review and in any event everyone agrees naturally occurring or synthetic there is no reference material and it is if so facto arbitrary and capricious and on reasonable to impose a requirement that is impossible to satisfy are there how many producers since that the two thousand and fourteen memorandum have been able to register and the denial last year of our the application for our hudson facility it had approved several facilities that use in situ co process thing even though it acknowledges that there is no accepted representative reference material and therefore and there and there also has been no approved v c s even method and so they all were approved exactly what poet has done those are the various ways in which you can apply principles of carbohydrate chemistry in order to evaluate the amount of e ol that has been produced from fiber and you know our facilities you know use some of those methodologies as well they're all ways of indirectly measuring using forms of mass closure the amount of ethanol that is produced from the fibrous content of the corn kernel so that the current amount we can ask them about their current view on math closure analytical method design to focus on starch or some other non cellulose that component to yield reasonably accurate results that is exactly the opposite of what the docket memo says  yeah thank you your honor so national mining and this court's decisions in california communities and the decision last month in sierra club all involve the  finality of statements made by e p a in the context of the title five the clean air act title five permit process in which which is an exercise of cooperative federalism where the the actual regulating parties are the state permitting authorities and international mining as in california communities and sierra club this and again i'm quoting here from national mining the state  horities are quote free to ignore close quote e p a statements the court international mining judge then judge kavanaugh also pointed out that the guidance in that case quite contrary to what we have here was devoid of mandatory language and that it had never been applied in any particular context as binding which of course is the opposite of what we have here because on the very day that guidance was issued here e p a also denied our application for hudson facilities using precisely the same reasoning and indeed very much of the same language that the guidance imposes so here we he we really have a situation in which the e p a directly determines whether we can or can't get this permit the guidance is in mandatory terms and it has already in fact been applied to deny an application so the relevant the most relevant precedents i think that are garland from this court are the g e case the appalachian power case and the national environmental development association case where and again i'm just i'm just quoting the g e decision quote a document will have practical binding effect if the affected parties are reasonably led to believe that failure to conform will bring adverse consequences such as denial of an application that is not only what we have precisely here but we also know that the guide the principles announced in the gu statement yes ma'am thank you and may have please the court there are the guidance is not final it does not bind d p a it does not present itself as binding and it does not determine any rights  obligations it is therefore not actionable under section three hundred and seven in addition even if the go and guidance were final which is not the case it is simply an interpretive rule and as such is not subject to notic comment finally if the guidance were final which again is not the case it is not arbitrary capricious or contrary to law and therefore should be upheld to elaborate congress charge ensure that each category of renewable fuel is precisely what it says it is and the rule requires producers such as petitioner to demonstrate to e p a that their methods would produce reasonably accurate results and in this regard i believe my my friend misapprehensions the links in the chain there are in fact four links in the administrative chain the st link of course is the producer the nd link is the peer reviewers the rd link is the engineer and the th link is e p a a natural construction of the rule which i will shorthand as thirteen b three is that the demonstration is to e t a it is through peer reviewers who provide their documentation to the engineer and if you look at the preamble that supports the pathways to rule i'm not sure you honour's if you have the preamble in front of you but if you look at the preamble at seventy nine federal register for two thousand one hundred and thirty three you'll see that the independent professional engineer actually has a very limited role his or her role is to verify that the equipment to perform each of the relevant unit processes is in place so it's a highly limited it is the last step in the chain before we but it's highly limited the natural grammar of the rule is that e p arbiter of whether there has been sufficient demonstration not only is that the natural grammatical interpretation of the rule it also is the only interpretation of the rules that's consistent with the trajectory of the statute at the end of the day the emperor has to have close the each category viewable fuel has to be what it says it is otherwise congress's purpose is in enacting the statute on being served and that the the demonstration needs to be made t p a the problem arose because e p a became aware of high variability in the data i turn the court if it will to page forty eight of our brief where we discuss that and this is a part of the brief various stakeholders on that precise issue which led to a request by various stakeholders including petitioner that e p a provide clarification of its views which in turn led to the guidance but the guidance is nothing but a s understanding of what the rule requires that a specific point in time it does not bind e p a it does not speak in terms of binding anyone else and it does not determine any three or four actually first of all mr waxman suggests that we have in fact denied the hudson permit and that is not true if you look at the so called hudson letter which is in the record it neither grants nor denies the application for the permit and in fact there is a separate application i'm told pending as of april th for the hudson facilities that's not quite accurate secondly e p a never said that mass closure is not possible and so many few words we said that we believe it is not possible and finally i'd like to respond to the implication that a representative reference material isn't possible to make scientists in fact make representative reference materials all the time including in the context this kind of context we refer to this process on page forty of our brief where we were cite to an article by judge by john taylor doctor dr john taylor of the national institute of standards and technology this is called the round robin process scientists gather in several separate laboratories and they don't own each other's works and they protest by consensus material that they need e p a will concede that if you go to this article and try to read the relevant paragraphs they are scientific and complex and even dr taylor concedes that that the the process is tricky and involves trial and error but it is a normal process and i return to the point that i started with early in my in my presentation and that is that the emperor at the end of the day has to have close in other words under the statute and charged under the rule with ascertaining or being demonstrated to that in fact cellulose is being turned into ethanol and at this point there is no evidence there is no conclusive evidence strategies in the guidance that it sees as components of the best path forward they are control groups trial runs and analytical methods that do not magnify margins of error when i say control group that's a nickname for a representative reference material it's a standard aspect of the scientific method it's not it shouldn't be a surprise to anyone that in the in the in a context where we're seeing highly variable important part of the path forward and mass closure because of the substantial margin of error in the measurement of starch at this point does not look like a promising analytical method the problem there is because given the extent to which starts dominates the mass of corn any margin of error in the measurement of starch if transferred to the measurement of the imputed measurement of cellulose would be greatly magnified if it started seventy percent of corn and we have two percent a two percent margin of error that means that the actual percentage could be anywhere from sixty eight five point six to seventy one four percent but if you take that same swing and transfer it to the much smaller scale a loss of cellulosic component you end up with a swing of seventy percent which gives rise to the concern about the mass closure method mass closures an indirect way of measuring cellulose not by measuring cellulose directly but my measuring starch and then assuming that the agricultural organic content other than starch must be cellulose e p a identified that is problematic because of those margins of error and that magnification advised components of the of the scientific method there's nothing in the guidance that is not embedded in the rule and as well as the statute from the beginning both the statute and the rule  i don't think that under the guidance would be the right way to put it i would say your honor that at this point in time given the state of the technology and what are you seeing if a if an application for registration were submitted t honestly don't know it's this is may th two thousand and twenty and the guidance was written on may th two thousand and nineteen in response to requests by stakeholders for clarification of b p s views i think it's highly likely that that would still be true a little over a year later it seems to me then for the period of time right after the guidance was issued is the guidance final as to that point not involve a representative reference material i cannot speak definitively to what was true a day later we're talking about if you will one line on a function and i can tell you what the  the slope of the line was at that one point in time and i can't tell you what the slope was the next day given the logic of the situation it is highly likely that the next day the same thing was true but that the guidance  not present itself as final or binding or conclusive or less let's try the twenty percent rule is that going to change over time i think the twenty percent rule probably is the most amenable rule to change my my my impression is that the twenty percent rule is was adopted or identified as a sort of relaxed standard to  give producers a fairly fairly wide target to hit and so i think that one of the four components of the guidance i think that's the one that's the most up in the air and i think the nd most up if you don't from within that amount well that's the exact language of the guidance it's in the same paragraph i believe we say that we evaluate every application on a case by case basis so the guide and that's actually that phrase actually appears more than once and i guidance as does the phrase that this is our current view or our current understanding so i don't know for sure i'm only saying that the twenty percent number strikes me just reading it reading our defense of it as the one that's that is not part of the guidance that the e p a will decide the reasonableness question your honor that was true in two thousand and fourteen when when he ph promulgated the pathways to rule itself i think that it was already obvious from the language in two thousand and nineteen e p a was simply repeating something that was already true in addition if the guidance that the way the  guidance presents itself in terms of the trial runs and control groups and so on if all of that is merely advisory then the underlying logic is also advisory is in my in a manner of i think i see your point and i think that that that particular legal conclusion is something that we we firmly represent and it's in our brief so we don't walk away from that my my answer to you your honor is that that's been the fourteen rule and memo the agency said that starts measurement could be used and the guidance now says calculations based on stark's reference values alone cannot i think it's in the i think it's in our brief and that may take me a minute to find i'm very sorry  nine so looking at page eight of our brief and i apologize your honor for fumbling on that in the pathways to rule e p a did not require or endorse any particular methodology roger rather the agency explained believed reasonable to require the use of existing methods under certain circumstances and those certain circumstances your honor is a reference to situations in which the reporting record keeping and so on requirements of the a little circular censuses trying to describe what would meet the requirements for registration well the requirements for well registration isn't is not as not as is not a one time thing  a complete sense one registers and then one has record keeping and reporting requirements and if in the context of keeping records and making reports it becomes apparent that one's cellulosic converted fraction has fallen off than e p a engages you on what seems to be going on and your a c c f is readjusted and so on so it's an ongoing interactive process between between incumbent regist the implication here is that yes we are identifying mass balance and so on as potentially feasible approaches but subject to their continued compliance with with what what the system what the what the  renewable fuel standard program requires so this is not a blanket perspective permission for people to do what it is to adopt whatever method they want no matter how  again you can turn to page forty eight of our brief you can also turn to page ten of our brief on page forty eight from lines four to eleven we identify give you some of that information it is under seal and it i did get e p a make available for public comment and i have the scientific that i gather not the monte carlo study or the other data observations that underpin this guidance the the guidance did not go out for notice and comment your honor we do not think that we don't think the guidance is final at all for the reasons that i've identified it doesn't it doesn't bind anyone it doesn't bind e p a and so on even if it were final which we don't think is the case it would simply be an interpretive rule so it wouldn't need to go for notice and comment the in a manner of speaking we showed our work on the monte carlo simulation if you look at the guidance and look at the appendix at the end of the guidance you can see all of the values and you can see all of the charts and you can even see the code i'm not enough of a mathematician actually to have run it all i am enough of a mathematician that i pressure tested it with my own fingertips the most operative moving part in the monte carlo simulation if you look if you look at it at the guidance the most operative part of the monte carlo simulation is the margin of error for the cellulosic excuse me for the carbon use me for the sorry for the starched i figure it's was a minus ten percent at the post end and that's what that's what causes all the problems why don't you take a couple of minutes in response i'm sorry judge henderson i think you were cut off all right by educate two minutes in rebuttal ok thank you just a couple of points number one the representative reference material requirement the judge garland was asking about at the outset is plainly now mandatory it's mandatory by its terms e p a s own brief doesn't deny that requirement and the demonstration requirement are mandatory and they were the basis for what was the denial of the hudson application a representative reference material whether it is naturally occurring or is no prediction when it will or if it ever will produce something and what e t a is now saying in its guidance is it is a it is a requirement and actually in their th circuit briefs they said that it amounts to a pause in the registration provision because a requirement that is the compare the actual demonstration of the method against a representative reference material which doesn't exist i cast that doesn't exist is by definition arbitrary and capricious but in any event e p a plainly has a new view about what it is going to require it is not going to be satisfied with the  certification of a peer review or and a rd party engineer and it has to engage in notice and comment rule making if it's going to change the the requirements for registration now you say it's by definition arbitrary and capricious to impose a test that can't be met but that that must be the case in all kinds of regulatory rena's i mean we want to cure for cancer but it can't be done yet and unless the person provides a cure for cancer that is an arbitrary and capricious and on reasonable requirement i think probably the best articulation of this relief the one that i remember as i'm standing here now is your decision in the i think it was the alliance for cannabis therapeutics case that was decided now seven or eight years ago that specifically said quote impossible requirements imposed by an agency are per force on reasonable now just one other point with respect to this and that is mr solomon cause reference to the i guess it's to point our request for guidance which is supposedly what produced this guidance this is the single most galling aspect of this case they have in their brief made this assertion and supported it by reference to a single document in the joint appendix i believe it's page  dollars but don't hold me to it you want to look at that document to test their assertion that industry is seeking guidance what that document is is a back and forth is a string of e mail communications between and the e p a in which poet is basically saying with respect to the hudson facility we have satisfied the regulation we have provided you not one not two but five peer reviewers we don't understand what it is more that it has to be done and that is the so called request for general guidance it's if they exchange between an applicant for registration and the and the authority saying we don't understand what part of this regulation we haven't met that judge pillared your question about the monte carlo simulation goes to mr solomon because point that there's just too much variability in these methods number one if that's true and that is certainly e p a s current view that is the reason for injective for having i noticed in comment rule making to have a new a new regime it is not you cannot say that something is not a peer review one less the peer review or does a specific a specific test indeed a test that doesn't exist and indeed in the record in this  case e p a the monte carlo simulation says if you take a bunch of hypothetical numbers and you run this sort of random sample it turns out that some results are nonsensical we provided data which in the hudson letter the agency acknowledges that our method has reduced the variability in various and in the results from the application of our method to well within the tolerances  and i understand your question the answer would be obviously not if that's right obviously not so the question is why is that what's going on here the text of the statute is that you're only going to get t about if the contrary to the two thousand and fourteen regulation which is predicated upon a finding by e p a that there are available message that will reason was reasonable accuracy produced the the cellulosic conferred converted fraction if b p s is now of the view that none of the current methods do that and that the only way it can be done assuming that i die understand it and i'm not taking it personally i'm trying to be very professional about best the point the point is that there is now a new and exclusive test for satisfying e p a there's no doubt that it is new and there is no doubt again that it is inconsistent with what peer review is but the fact that it is new in fact it is not impossible in fact it is quite possible and in fact we have demonstrated accuracy a significant level of accuracy in our h impossible i'm actually saying both i'm saying that if you yes maybe it's it's a little bit of both if you are in a world in which there are reasonable standards that could be implied that are possible of being met which is what we have here it is arbitrary and capricious and on reasonable to say nope we're not going to accept any of those methodology is no matter how strong a showing you that therefore that it's impossible to meet the requirements of proving it would be arbitrary you are not taking that position correct that's right our position with respect to vat hypothetical is and i think this is what e of more forthright version of what they're doing is just to say based on all of our recent experience we are no longer satisfied that there is any method that could ever be demonstrated as sufficiently accurate and we are cancelling pa to they can do that but they have to do it by notice and comment rule making ok thank you i have the argument presented thank you thank you thank you counsel and madam clerk would you please call the next case