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Judges Probe Limits of EPA Authority in Hydrofluorocarbon Rule

Nov. 18, 2022, 6:38 PM

A D.C. Circuit panel on Friday probed technical language in a popular law to regulate hydrofluorocarbons, examining claims that the EPA exceeded its authority in implementing portions of the law.

Heating and cooling wholesalers and manufactures met the Environmental Protection Agency at the U.S. Court of Appeals for the District of Columbia Circuit for oral arguments in a lawsuit over portions of the agency’s hydrofluorocarbon phasedown plan.

The petitioners’ interpretation of the American Innovation and Manufacturing Act (Public Law 116-260) “would seriously undermine EPA’s authority to carry out its statutory responsibilities,” according to Department of Justice trial attorney Andrew Coghlan.

The hydroflorcarbon (HFC) phasedown rule was the first major greenhouse gas-reducing standard to come from the Biden administration. It was met with broad support from industry and advocates, and works to stem the use and illegal trade of the climate “superpollutants.”

But while Congress granted the EPA authority under the AIM Act in 2020 to phasedown the climate superpollutants through an allocation program, that authority did not extend to a ban on single-use cylinders or cylinder tracking measures, according to HVAC association attorney Stephen K. Wirth of Arnold & Porter Kaye Scholer LLP.

The associations leading the lawsuit largely supported the Biden administration’s rule when it was released in September 2021, but took issue with specific anti-smuggling portions of the final mandate that curtailed the use of certain cylinders and mandated extra tracking.

‘Fundamentally Different Footing’

Industry attorneys argue that the ban will increase costs on wholesalers that will eventually trickle down to consumers.

“If Congress intended to give EPA broad authority to regulate cylinders to address smuggling, we would expect Congress to confer that power in the section of the [AIM] Act that expressly grants EPA authority to enforce the phasedown,” Wirth told the panel.

There are also other ways the agency can crack down on smuggling, Wirth noted, responding to an inquiry about alternatives from Judge Karen Henderson.

The panel did push Wirth on whether statutory language urging EPA to act on smuggling simultaneously limits what it can do to address it. Wirth countered that the agency must follow the express language of the law, and not conjure compliance efforts “out of thin air.”

Coghlan said that, in order for EPA to comply fully with congressional mandate, it “adopted measures to identify and to prevent illegal HFCs, thereby ensuring that HFC production and consumption takes place within the framework of allowances that Congress provided,” which includes container tracking systems.

These provisions don’t constitute a case where the agency was “discovering some sweeping authority in some dormant statutory provision,” Coghlan noted. “This is the first rulemaking that EPA has ever done under the AIM Act, I think that places this under pretty fundamentally different footing.”

Attorneys for two related cases also gave arguments before the panel on certain aspects of the HFC rule, including whether the AIM statute greenlights regulations on chemical blends and disposable cylinders.

Judges Justin R. Walker and Cornelia Pillard joined Henderson on the panel.

The cases are RMS of Georgia, LLC v. EPA, D.C. Cir., No. 21-01253, Oral argument 11/18/22, Worthington Industries Inc. v. EPA, D.C. Cir., No. 21-01252, Oral argument 11/18/22, and Heating, Air-conditioning & Refrigeration Distributors International v. EPA, D.C. Cir., No. 21-1251, Oral Argument 11/18/22

To contact the reporter on this story: Jennifer Hijazi in Washington at jhijazi@bloombergindustry.com

To contact the editor responsible for this story: Zachary Sherwood at zsherwood@bloombergindustry.com