understand yes that's right and you've got five minutes but you've reserved a minute for rebuttal so at the three minute mark ms rodriguez will give you a warning that you've got a minute left such that will be your yellow light ok that because it is for a specific monetary amount mainly it is that at a specific dollar figure of five dollars and fifty cents per increment of noncompliance and that figure also represents the maximum amount of the penalty for each such increment this use of a specific dollar figure makes the cap a penalty exactly with what congress intended to address in the improvement act and its predecessors which was to identify federal civil penalties that would be your bloated by inflation because they use automaker missed cafe standards in the year but had enough credits to offset the amount that was calculated than the penalty would be zero right that's correct your honor but that doesn't change the applicability of the statute here because under this scheme the credits are a way of complying with the underlying statute and this is because the credits factor into the determination of whether a manufacturer has complied with the statute the fi fifty is still being applied to whatever increment of noncompliance remains after factoring in the credits and again thirty  explicitly and i quote compliance is determined after considering credit a manufacturer that has enough credit at our current from over compliance with the cafe standards to cover any shortfall from its fleet in a particular model year is can i follow up more specifically with you on that we're dealing with the question of statutory construction here right that's correct and it seems that for purposes of thirty two  we're looking at the subsection b which defines the civil penalty right that's right and so i'm struggling here with how section b defines the civil penalty and it seems as i read it that you have been to alternative reading this one it says a civil penalty of five dollars and then there's language that follows after that multiplied multiplied by the th of a mile calculated under the section multiplied by the number of automobiles and reduced by the credit so i could see two arguments here either saying a civil penalty of five dollars and then all the rest is not a definition of the penalty or you have to take all the rest all the multipliers and the reduction of the credit as all part of the definition of the penalty would you agree with that that it's either one or the other or do you think that there's something half way interpretation that we could choose between where you're only taking the five dollars and one dollar of the multipliers because that's kind of what it sounded like you're talking about with the credits that you could get trying the penalty at the five dollars with the mileage multiplier with the number of automobile multiplier but not taking subsection three are you making that argument or or no argument that you're about to make about what doesn't matter it does matter to know what you believe the civil penalty is right so are you arguing it's five dollars or five hundred and fifty dollars is the penalty and now you're going to play and why the rest doesn't matter just start with your definition of the penalty sure so the direct answer is that it but what's the way that the statute defines the penalty is by an incremental measure that it's five dollars per incre stay compliance is determined after considering correct any of resulting sort of violations by the by the manufacturer whether because their own fleet fall below the standards or because they don't have credit to make up for the shortfall then gets multiplied by district or  formula by the dollar figure that is eroded by inflation and i guess what i'm wondering has been how do you how do you how do you say that the penalty formula only includes part of a paragraph the i don't understand linguistically tex why is be the one and b to all factor into the formula your view constitutes the penalty linguistically for a civil penalty of you keep reading through paragraphs one into but you don't understanding of how to read it the system which is again as a method of compliance with the statute and mathematically it works out the same either way you're reducing the amount of the violation either out of the amount of penalty afterwards it amounts medically to the same thing at the end of the day and i want to go back to the way it's not just a way of saying congress could have written as any number of ways and reach the same economic result but our problem is that we're dealing with the construction of a tax and we're supposed to look at the improvements act look at the definition of a specific monetary penalty and we need to plug something into that what is the specific monetary penalty and i  understand the economics but my question isn't are you or seem to be arguing that it's either or both the five dollars alone and then the five dollars of the one dollar and two dollars but not the three well under the monetary amount that have to be adjusted is the five dollars back that i think that boarding under that statute and the reason i was saying before that it is in a sense immaterial how you decide what the bill penalty covers under is that across the federal government used several pa penalties and exactly this weighted dollar figure multiplied by some measure of noncompliance and for three decades the way that the federal agencies have applied the improvement back and its predecessor to the penalties it increased the underlying dollar figure and the reason that makes sense under the improvement act and why progress to find the monetary penalty in this way if they were trying to target dollar because that would be able to get by play should the fact that there is a multiplier required to do and had no discretion or delegated interpretive authority to deviate from what to take that dollar figure and update it or cost of living adjustments under a formula the congress imposed and again hundreds of statute have been modified in precisely the way amount and two fixed multipliers but then you have this rd variable but the credit do you can you point to another statue where the calculation of the penalty itself one because that's a helpful comparison i think or maybe it is or maybe it isn't i looked at that and they're very clearly talk about the credit as you say to be used in determining whether there's a violation and then if you look at the penalties it simply an on off switch or a if you have a violation then you are liable for d i can't remember back five thousand dollars for each violations there is no penalty had a statute that only factored credit into the violation timing but here you could have a violation unmodulated units between the statutory section dealing with the penalty so if you have a statute we're credits  factored into the penalty so i do not but i have two responses to that one is that although this is the way it is to help you laid it under the under africa i mean again the credits are a for of compliance even if you do think the credit here are sometimes offsetting the penalty the five dollars amount that are set out in the statute the sort of nominal dollar figure at minimum tax the amount of liability for the penalty for a manufacturer so the maximum amount under the statu agency unreasonably refused to consider the many positive economic impacts of an updated penalty but i do st want to just point out one other thing in the colloquy we're having with mr wu which is that i think it's important to take a step back and look at the definition of civil monetary penalty under the inflation adjustment act it does not define a civil monetary penalty as one that is a specific monetary amount but rather one that is for a specific monetary amount or has a maximum amount and the cafe penalty satisfies both of those prongs if you even if you include the credit provision of three dollars to ninety one dollars to be three within the concept of what the sat cafe penalty is the penalty is still for a specific amount of five dollars per th of a mile per gallon per increment of my of of noncompliance and all the credits do there just like those other credit provisions that are referenced in policy integrities briefs and that they just reduce the overall amount of compliance so it's operates in the exact same way turning back to the arbitrary capricious argument it violates ordinary language as well as basically principles of reasoned decision making to conclude that something has a negative economic impact without at least considering the countervailing positive and here the economic benefits of an updated penalty were enormous the agency does not dispute that the updated penalty could have saved consumers more than fifty billion gallons of fuel over the next fifteen years even at today's historically low gas prices that means that the updated penalty could have resulted in more than one hundred billion dollars in fuel savings or more than six billion dollars per year which far exceeds any economic cost cited by the agency in its rule one would not ordinarily say that something which saves you six times as much as it costs has a negative economic impact but it's adopted that unreasonable interpretation and express ignored the enormous positive impact here to instead reinstate an outdated penalty that effectively gives automakers a free pass to violate the law that one sided analysis was arbitrary and capricious and contravenes congress's express purposes in the inflation adjustment act and should be set aside by this court as unlawful the agency tries to justify its ignoring of positive economic impacts by pointing to the other exception for social social impacts but it mysen it misunderstands the distinction between the two exceptions they differ in terms of the types of impacts on which they focus st on economic impacts and this nd on a broader category of social ones but both exceptions call for the same type of comparative analysis congress expressly referred to the weighing of costs and benefits in the social cost exception because social cost benefits are not autumn are not are intangible and not easily quantified so this sort of weighing doesn't come automatically in congress want to make clear that that's what it was but economic impact by contrast are inherently quite of quantified and it's almost impossible to think about them coherently without some sort of comparison that is reflected in the phrase negative economic impact niches interpretation that the agency could completely blind itself to the positive economic impacts is also unreasonable because it violates the background principle that agencies engage in r decision making should consider both the costs and benefits of their decisions and it also ignores the context of this provision which is that it is an exception to the otherwise mandatory adjustment and this court has has as explained in citizens against casino gambling that exceptions are to be construed narrowly in light of the statutory purposes but here reading the exception to allow the agency to blind itself to one side of the ledger which would would make this an exception every adjustment under the statute would allow the exception to swallow the rule and that is an entirely unreasonable honor i mean on that point to me it's his reading of the two exceptions would render the social cost exception entirely superfluous they cannot identify any instance where the social cost would outweigh the social benefits in which there wouldn't be statutory scheme protected penalties did not meet the definition of a civil monetary penalty and nd even if it did that a negative economic impact one billion dollars tom told against the st inflation adjustment  penalty or the penalty is a five dollars figure and the other is that it is the entire phrase the st is simply not the correct reading of the statute and we know that for a couple of reasons one it's sort of odd to think of trun amount to be used in calculating a civil penalty in the really odd for congress to say that five hundred and fifty dollars is both the penalty and the amount used in the penalty congress just doesn't speak they're both sides of the mouth in that way and it's and twelve arguably congress was talking on both sides of that smell and perhaps because echo was written before the emplacement place an improvement zakk so it had no reason to think about how it would have the five dollars amount it then places restrictions on the secretary making a decision only when the secretary decides that it is likely that the increase in the penalty and will have a certain consequences and it's clear right that the parts of section that the secretary meaning greece it is only the five dollars multiplier rank they can't i'm correct that they cannot increase the factors listed in the twelve dollars or three rank so two answers to that there are parts of the penalty that the secretary can independently increase formula in fact the secretary is done so recently but all of that is part of how the cafe penalty ultimately does increase the nd is that i don't think the phrase increase in the penalties necessarily means increase in the five dollars figure and i say that for the main reason that of course when you increase the size dollar figure let's say you increase it to ten dollars the natural mathematical outcome is static but we all know knows that the manufacturing industry has been increasing and is continuing to increase fuel efficiency they know that even increasing the five gallon multiplier may yield a decrease penalty i mean it's an increase in the penalty and it isn't that only really read it says before the secretary may make a decision to paragraph eight  no there are but you know part of the increase in the side dollar figure is looking at the entirety of their other formulations that they use for economic impact like a substantial or deleterious impact on the economy but there are other reasons why there might not be an increase in the ultimate penalty i mean you might have an instance where the secretary believes that automakers are going to make fewer cars you might have an instance where you know it hasn't happened before but where the balance those against the increase in the dollar amounts and say well there would be no increase in the penalty ultimately but i do want to kind of think about this through a broader perspective and i want to address a few of the points too about the credits that i think it's not correct that the credits are just about compliance if you have credits that make up the entirety of the shortfall now let's assume that manufacturer has a one million dollars worth of credit that manufacture can either choose to apply all those credits in which case it comes into full compliance under thirty dollars to nine hundred and eleven dollars it could choose to use none of those credits in which case it pays a one million dollars or it can choose to use half of those credits and it will pay something in the middle although there are reasons why the actual penalty amount is not for a specific monetary  and manufacturers make those choices within the scheme based on their economic realities some years they might be losing a lot of money and so they might want to use their credit for what other years could i ask you what do you position is your argument that we just ignore that because this is a better taishan i mean it's fundamentally a good thing when agencies realize that they've gotten something wrong even if it's something that they've gotten wrong for a long period of time an  a careful hard look at the penalties within their statutes and so i wanted agencies to look at that question afresh because it realized that it was a really significant important question to get right in the st instance and you have to combine and in that adjustment this is said that it was limited to adoption of the statutory language without a true interpretation there's no sense that tongass wanted it to be automatic and and i don't think that you know regulation right agencies that is that it's doing no interpretation has that much weight in the sort of long history that we're talking about the i think all those are reasons why the history doesn't really matter as much here and especially because the at this moment to look at the current inflation adjustment from the capital t on the books and so that was the narrow question that it was focused on at this time that handedness is kind of gone through this process it's noted that agree with i don't have a quite right with your argument is the improvement that no doubt is very strong role to play in all this and this is determination was based on it interpretation of the cafe the penalty statute and the improvements act tells individual agencies that it's their role to apply their expertise to look at their statutory schemes and bring together the statutory schemes with the improvement act where we're not looking at an instance where looking at the improvements acts in a vacuum or working at the improvements act as it applies to other federal agencies and we're not deference or just on be looking at the improvement act in a vacuum i mean what we're looking at here is a agency's determination that time aggressive specifically told the agency to go out to do by too much is that this force is sort of out of the bar in the way that in the statute says that you have to do all this by july of two thousand and sixteen so that it takes effect by august of two thousand and sixteen and that's in fact what that the supreme court has a number of deadline cases where a sort of a deadline doesn't deprive the agency of its fundamental what they already and there's there's no sense that congress would have wanted to rush this at why something is the nd the nd main point i have is were the results look at the statute says that you shall do this by certain date and the agency complied with those six more or less so why isn't that the end of it so let me kind of talk more specifically about what the agency had to do and sort of what its the agency had to issue an interim final rule the statute doesn't forth if there is a rule making that follows in which comments are petitions for reconsideration if there is an end date and then period for the final let alone whether there is one and i'm happy to address that sort of negative economic impact let alone if there is one for the negative economic impact the the statute also says that that interim final rule has to take immediate effect now you know based on this court's prior decision that reconsider this court said that that final rule had to be effective in the interim but there's nothing in the statutory language that the prize an agency of the fundamental obligation to get its interpretations of the statute correct and that would be a really odd scenario where an agency was forever lost in because it got something wrong in the st and i thought if you want to get right in the negative and economic impact exception how long is that available in your sure there isn't really that date and again there were still on the st adjustment so as long as is doing this with respect to the st adjustment which it is the negative economic impact exception applies that negative economic impact exception doesn't apply to future adjustments so if there were a nd or rd or subsequent adjustment or future years in which there might be an adjustment the negative economic impact exception doesn't apply to those adjustments but all of this just kind of underscores that congress wanted t get these issues right in the st instance and that congress didn't anticipate that agencies were just going to rush this through and in fact the timeframe of how collapsed the timeframe for doing these inflation adjustments was sure well over time i felt like i heard somebody interrupt me but i you know i do want to just say one last thing about the negative economic impact exemption and why the agency's determination was reasonable here you know all of these things heard and they said that they weren't unaware of any type of penalty that had the same type of the same amount of effect or the same magnitude and that's this inflation adjustment far exceeds the revenue of all  penalties that makes it significantly different you know very sort of penalty schemes where we can be debating about whether there is really a negative economic impact here and if you look at page twenty seven  special appendix you can just see there's two tables where there's either hundreds of millions of dollars billions of dollars over the years that is computer and calculating out and that's really the basis of really for any agency to reconsider negative economic impact and far from conferring that authority on agents the congress had the opposite judgment that this court recognized and wanted a much belated inflation adjustment to occur on a quick time line twenty sure that civil allowed to reconsider this catch of adjustment or is that true also if assuming we were to accept their argument that the imprudence act has not applied to act would you similarly when it has applied previous inflation adjustments to the cafe penalty it is applied to the five dollars symbol and that's consistent with congress's purpose here and this is the point that maybe i will end with regardless of whether the penalty is determined by that amount or by the if we were to find that the statute is ambiguous i'm trying to figure out what each party thinks is sort of the tiebreaker in their favor in terms of our canons of statutory construction and it's  was covered is a meaningful indication of congress and tech and particularly so when throughout this entire period capek penalty had been if not the most significant then at least one of the largest civil penalties collected by the federal government emphasize this is not congressional inaction we're talking about over there's consistent interpretation but rather as mr was pointing out congress amended the act twice after being specifically informed on multiple occasions that the act applied to this penalty and afternoon to itself apply emphasize that the agency finalized its catch up adjustment in december two thousand and sixteen under the statute anything beyond that point would have been by necessity a subsequent adjustment but the act provides agencies no discretion under those subsequent adjustments the mandatory and are to be you know adjusted for inflation if there are no further questions your honor we respectfully request court grant our petitions for review and vacate this on the full current thank you all well argued  interesting case we will reserve