Divided DC Circuit Panel Sets Back HFC Transition

A divided panel of the U.S. Court of Appeals for the District of Columbia Circuit dealt a setback yesterday to the EPA’s efforts to cut emissions of the powerful heat-trapping gases called hydrofluorocarbons (HFCs). The court’s ruling scrambles a wide variety of industries’ plans to transition to climate-friendlier alternatives, in compliance with approaching deadlines.

A divided panel of the U.S. Court of Appeals for the District of Columbia Circuit dealt a setback yesterday to the Environmental Protection Agency’s efforts to cut emissions of the powerful heat-trapping gases called hydrofluorocarbons (HFCs). The case is called Mexichem Fluor, Inc. v. EPA.

The court’s ruling scrambles a wide variety of industries’ plans to transition to climate-friendlier alternatives to HFCs, in compliance with approaching deadlines. 

But it may not be the last word, as we explain below.

EPA’s SNAP rules (standing for “Significant New Alternatives Policy”) called for ending uses of the most harmful HFCs in supermarket refrigeration, foams, aerosols, and several other applications. EPA set those deadlines recognizing that innovative companies have developed better alternatives, and taking into account users’ transition lead time needs. Companies have already complied with the earliest new requirements, and other companies were well along in transition plans  

The Trump administration defended the Obama-era HFC replacement rules in the oral argument before the court in February, and the new administration has left these rules conspicuously off its list of climate regulations targeted for rollback. 

That may be because the transition away from HFCs enjoys broad support from the American producers of climate-friendlier alternative chemicals (notably Honeywell and Chemours) and from a broad alliance of companies that use HFCs in refrigeration, air conditioning, foams, aerosols, and other applications, but are now ready to transition to the better alternatives. The new administration knows these companies are investing hundreds of millions of dollars in plants and factories located in the United States, supporting and creating lots of American jobs.

The court’s divided decision may not end the matter. Much will turn on whether EPA continues to defend its authority.

Here’s the background.

Because HFCs are powerful drivers of climate change, NRDC and others petitioned EPA to use its authority under Section 612 of the Clean Air Act—which creates the “Significant New Alternatives Policy” (SNAP) program—to set deadlines for replacing HFCs where better alternatives have become available.

EPA agreed, and during the last administration, after full rulemakings, issued two SNAP rules setting deadlines for transitioning from HFCs to climate-friendlier alternatives in an array of specific uses.

Today’s decision stems from a legal challenge to the first of these rules, brought by Mexichem and Arkema, chemical producers based respectively in Mexico and France who lag behind their American counterparts in offering climate-friendly alternatives to HFCs. The American firms Honeywell and Chemours, as well as NRDC, intervened on EPA’s side.

Two judges today sided with the foreign firms, ruling that EPA lacks authority under the Section 612 SNAP program to set deadlines for companies to switch from HFCs to climate friendlier alternatives. The dissenting judge disagreed, reasoning that the Clean Air Act gives EPA this very authority.

The judges differed sharply on the meaning of the statutory term “replace” in Section 612. 

The majority (Judges Brett Kavanaugh and Janice Rogers Brown) ruled that Section 612 (and its key term “replace”) has only one possible meaning: EPA could designate approved and prohibited substitutes back in the 1990s when it was phasing out the ozone-destroying CFCs, and EPA put HFCs on the approved list as the best alternative at the time. But according to these judges, companies that adopted HFCs over the last 25 years are forever protected against being required to adopt better alternatives as they are subsequently developed.  In their view, that is the “unambiguous” statutory meaning, and the only one EPA may adopt under the hallowed Chevron doctrine.

Judge Robert Wilkins, in a strong dissenting opinion, found nothing in the term “replace” or the rest of Section 612 that limits EPA to one shot at determining the acceptability of HFCs, forever barring the agency from requiring a transition to safer alternatives. This reading, Judge Wilkins, found “makes a mockery of the statutory purpose.” He found the language of Section 612, and the key term “replace,” to have more than one reasonable meaning—to be “ambiguous” in Chevron terms—and he found that EPA had reasonably interpreted the statutory language.  

NRDC agrees. The “one-bite-at-the-apple” reading of Section 612 provisions runs counter to the SNAP program’s provisions and purposes.

Section 612 of the Clean Air Act requires EPA to establish two lists, of approved and prohibited substitutes, based on their effects on human health and the environment, including climate change. The statute prohibits anyone from replacing an ozone-destroying substance with a prohibited substitute. The Act also allows anyone at any time to petition EPA to add or remove chemicals from the approved and prohibited lists. 

There is no time limit on making such petitions, and EPA is required to respond to them in a specified period. It is perfectly reasonable for a petitioner to ask EPA to remove a substance from the approved list, and add it to the prohibited list, when new and safer alternatives are developed. This is exactly what NRDC and other petitioners asked for HFCs.  And this is exactly what the EPA rules did.

Judge Kavanaugh’s majority opinion does offer EPA a pathway to accomplish its goals, by retroactively determining that some HFCs should not have originally been approved and are thus no longer legal for use going forward. In that case, EPA’s limits on the use of HFCs may be permissible if the agency takes a different route to get there. But this will require a new rulemaking.

Notably, nothing in Judge Kavanaugh’s opinion takes away from EPA’s authority and responsibility to regulate climate-damaging pollutants that endanger public health and welfare (a term that includes every aspect of the environment). Kavanaugh even suggested that EPA could regulate HFCs under other parts of the Clean Air Act or the Toxic Substances Control Act. 

But these would be round-about and unsure pathways to do something the SNAP program is there to do directly. 

Notably also, the court’s decision addresses only domestic law. The court’s decision does not speak to the Kigali Amendment to phase down HFCs under the Montreal Protocol, adopted by nearly 200 countries with U.S. industry’s support last October. The industry continues to support the Kigali Amendment, and the new administration has not changed the U.S. position.

NRDC agrees with Judge Wilkins’s dissent and will continue to pursue common-sense limits on the use of HFCs through the Section 612 SNAP program. We believe the Clean Air Act gives EPA authority to limit the use of highly potent, climate-damaging HFCs in favor of safer, climate-friendlier alternatives that are readily available today. We will work with our industry co-intervenors to assess options for moving forward with HFC limits under the SNAP program, including the potential for asking the whole court to rehear the case, and for a new EPA rulemaking.

Tuesday’s ruling won’t stop progress away from harmful HFCs. We are hopeful that it won’t be the last word on HFCs under the SNAP program, either.

This post co-written with Lissa Lynch and Alex Hillbrand

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