Ruling that blocks EPA from regulating HFCs.

Court of Appeals turns down petition by NRDC, Chemours and Honeywell to rehear ruling that blocks EPA from regulating HFCs.

The U.S. Court of Appeals for the District of Columbia Circuit last Friday denied petitions for a rehearing of a controversial ruling the court delivered in August 2017 that barred the U.S. Environmental Protection Agency (EPA) from prohibiting HFCs as replacements for ozone-depleting refrigerants by incumbent users.

In the original case, Mexichem Fluor, Inc. v. EPA (Arkema was another plaintiff), a three-judge panel ruled 2-1 that the EPA cannot require companies to replace HFCs in current or future HVAC&R equipment or other applications with low-GWP substances under the SNAP (Significant New Alternatives Policy) program; these substances include natural refrigerants, HFOs and HFO blends. The case specifically targeted a 2015 rule implemented by the EPA under the direction of the Obama administration.

In the absence of a response from the EPA.  the Natural Resources Defense Council (NRDC) and the chemical companies Chemours and Honeywell – who were intervenors in the case – last September asked the full federal appeals court in Washington, D.C., to rehear and reverse the three-judge panel’s ruling.

But on January 26, a majority of the nine judges on the court eligible to vote did not vote in favor of the petitions, which were thus denied. In addition, two of the original three judges who heard the case (the third retired) split their vote, denying the request for the panel to rehear the case.

The court’s refusal to rehear the case leaves the U.S. HVAC&R industry, at least for the short term, in a state of uncertainty with respect to the usage of high-GWP HFCs. On the one hand, the court is preventing the EPA from delisting them. On the other hand, the EPA or the U.S. Congress could still take steps that would restore the EPA’s ability to regulate HFCs, in line with the growing number of governments throughout the world that have ratified the HFC-reduction scheme under the Kigali Amendment to the Montreal Protocol.

In a series of tweets last Friday, David Doniger, senior strategic director of the NRDC’s Climate and Clean Energy Program, offered the NRDC’s reaction to the court’s decision not to rehear the case. “Disappointing decision today from divided D.C. Circuit not to rehear case on the super climate damaging HFCs,” he wrote, adding that the EPA’s HFC-delisting rules were defended by the Trump adminstration EPA and “supported by nearly entire industry and environmentalists.”

But, he added, “This isn’t over. There’s the option to appeal to [the Supreme Court]. And there are other ways to skin this cat. “

One way would be for the U.S. Senate to ratify the Kigali Amendment. Last November, an official of the U.S. State Department said the U.S. had initiated the process to consider U.S. ratification of the Kigali Amendment. Following ratification, the Congress would be obliged to support an HFC-reduction scheme that the EPA would implement.

“Rest of world going ahead,” Doniger tweeted. “American industry doesn’t want to fall behind.”

In addition, the California Air Resources Board (CARB) last October began the process of adopting the EPA’s SNAP rules on HFCs should the EPA not be able to implement those rules. 

At a conference hosted February 5 by the Hudson Institute in Washington, D.C., Doniger said the NRDC is seriously considering whether to ask the Supreme Court for review of that decision. We’ll decide in the next few weeks.”

He noted that it can be more difficult to get the DC Court of Appeals to rehear one of its own opinions than it is to get the Supreme Court to take the case on appeal. “Not to say the Supreme Court will take the case but it may be of interest because there are some important legal interpretation principles at stake.”

If NRDC is not successful in getting the Supreme Court to hear the case – or in parallel with trying to get it before the Supreme Court – NRDC will work with states like California that are moving forward with their own HFC-reduction schemes. “Eleven states supported our position in the case,” he said.

In addition to California, “you could expect a number of other big states which have an important share of the air conditioning and refrigeration market to be interested in doing what California does,” said Doniger. In that case, he added, there may end up being a “patchwork” of state regulations and additional “uncertainty.”

The original court decision also left some other avenues open to the EPA. For example, the agency could use other statutory authorities to phase down HFCs, such as the Toxic Substances Control Act. Alternatively, the EPA could explore implementing a “retroactive disapproval” of HFCs under the Clean Air Act, which the court ruled may be permissible if the EPA could explain why it is pursuing this under the current legislation.

Doniger wrote in a blog on the NRDC website last year that the original ruling bypassed a 1994 regulation that requires product manufacturers to switch to safer alternatives when EPA adds an existing substitute to the its prohibited list of refrigerants. EPA added a number of HFCs to that list in 2015 – a move that the court’s panel upheld, he pointed out, adding, “That should have ended the case.”

By ruling as it did, the panel “eviscerates EPA’s Safe Alternatives program,” Doniger added. “It will even block EPA from stepping in when substitutes found to be acutely toxic – as EPA did some years ago when it stopped use of a refrigerant that caused kidney damage to exposed workers.”

HFCs, he wrote, “are the fastest-growing climate pollutants here in the U.S., and especially in the developing world, as more and more people can afford air conditioners.  Left unchecked, HFCs released from equipment like air conditioners and supermarket refrigerators will cause a major rise in global temperature.”

 

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