Does EPA Have Statutory Authority from Congress to Issue a 2015 Rule Regulating HFCs?
In August, the D.C. Circuit ruled on a separation of powers issue concerning whether the Environmental Protection Agency (“EPA”) had statutory authority from Congress to issue a 2015 Rule regulating the use of hydrofluorocarbons (“HFCs”). This 2015 Rule followed and expanded upon the emission regulations established in the 1990 amendment to the Clean Air Act.
Specifically, in 1990 the Clean Air Act was amended to construct a system for phasing-out substances that contribute to the degradation of the ozone layer. Under the amendment, industrial sectors dealing in refrigeration, air conditioning, and the manufacturing of aerosol coolants were required to substitute ozone depleting substances such as chlorofluorocarbons (“CFCs”) and hydrochlorofluorocarbons (“HCFCs”) with substances the EPA listed as safe alternatives to these Class I and II chemicals. The 1990 Clean Air Act amendment, however, concluded that HFCs do not contribute to the active depletion of the ozone layer and therefore were considered safe alternatives to CFCs and HCFCS. As a result, many businesses in the 1990s and 2000s replaced their ozone-depleting substances with HFCs as “safe alternatives.”
In 2013 President Obama released his Climate Action Plan, in which he called for a reduction in the emission of HFCs due to their potency as greenhouse gases. In accordance with the administration’s climate objectives, EPA promulgated the 2015 Rule that restricted manufacturers from making certain products, such as spray cans, automobile air conditioners, and refrigerators that contain HFCs. The EPA based its statutory authority on the Significant New Alternatives Policy (“SNAP”), a program established under Section 612 of the Clean Air Act and designed to identify ozone-depleting substances and replace them with acceptable alternatives. As a result of this rule, some manufacturers that previously used HFCs as safe alternatives to Class I and II chemicals were no longer permitted to do so and were required to use other EPA-approved substances in their products.
Following the passing of this rule, Mexichem Fluor and Arkema, chemical companies that manufacture HFC-134a, petitioned for review. The parties argued that the 2015 rule exceeds the EPA’s statutory authority and that Section 612 of the Clean Air Act only gives the EPA authority to require the replacement of ozone-depleting substances, which, as both parties and the court agreed, HFCs are not. Because HFCs are greenhouse gases but not ozone-depleting substances, Section 612 did not grant EPA authority to require replacement of HFCs. The parties also argued that the EPA’s decision to remove HFCs from the list of acceptable alternatives was arbitrary and capricious.
The court ruled in favor of Mexichem Fluor and Arkema, finding that Section 612 does not require or give the EPA authority to mandate that manufacturers replace non-ozone-depleting substances such as HFCs even if those substances contribute to climate change. While the court recognized the EPA’s “overarching effort to fill that legislative void and regulate HFCs,” it found the EPA had overstepped its authority. As a result, the court vacated the 2015 Rule to the extent it required manufacturers to replace HFCs.
The California Environmental Lawyers at Bick Law LLP will continue to monitor the development of new emission regulations and their commercial impacts.