D.C. Circuit Vacates Part Of The EPA's HFCs Phasedown Rule

• Published date: 14 August 2023
• Subject Matter: Environment, Environmental Law, Climate Change, Clean Air / Pollution
• Law Firm: Jones Day
• Author: Ms Jane Story and Daniella Einik

Overview of the EPA's Previous HFCs Rules Under the SNAP Program

In 1994, the EPA believed that HFCs were an appropriate substitute for ozone-depleting substances used in refrigeration, air-conditioning, and aerosol products. In 2015, the EPA shifted course, determining based on climate change concerns that HFCs'which are greenhouse gases'should no longer be considered a safe substitute. EPA therefore issued a rule under the Significant New Alternatives Policy ("SNAP") Program to prohibit the use of certain HFCs, claiming authority under Section 612 of the Clean Air Act (the "2015 Rule").

In 2017, the D.C. Circuit determined that the EPA exceeded its statutory authority in the 2015 Rule by regulating entities that were currently using HFCs and vacated the 2015 Rule to the extent it required manufacturers to replace HFCs with a substitute substance. Mexichem Fluor, Inc. v. U.S. Envtl. Prot. Agency, 866 F.3d 451 (D.C. Cir. 2017).

In response, in 2018, the EPA promulgated a rule to allow interim use of HFCs by manufacturers (the "2018 Rule"). In 2020, the D.C. Circuit vacated the 2018 Rule for failing to follow the proper notice-and-comment process. Natural Res. Def. Council v. Wheeler, 955 F.3d 68 (D.C. Cir. 2020).

In 2021, the EPA promulgated a rule that lists new alternative substances under the SNAP Program for the refrigeration and air-conditioning sector (the "2021 Rule"). This rule refers to listings from the 2015 Rule, but the EPA notes that "[t]his final rule is not [the] EPA's response to the court's decision" following the 2015 Rule.

Phasedown of HFCs Under the American Innovation and Manufacturing Act and Phasedown Rule

In 2020, the United States Congress passed the American Innovation and Manufacturing Act (the "AIM Act") to address the environmental impact from HFCs. The AIM Act directs the EPA to phasedown the use of HFCs by 85% by 2036.

The AIM Act required the EPA to issue a final rule to phasedown the production and consumption of HFCs in the United States through an allowance allocation and trading program. Specifically, Congress instructed the EPA to:

• Determine the production and consumption baseline levels of HFCs in the United States;
• Cap the production and consumption of HFCs to the corresponding percentage of the baseline for the given year; and
• Determine the quantity of allowances for production and consumption of HFCs for the following year.

The EPA issued a phasedown rule under the AIM Act in October 2021 (the "Phasedown Rule")...