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Environment & Energy Report

Obama Policy on Climate-Warming Chemicals Partially Revived (3)

April 7, 2020, 2:33 PMUpdated: April 7, 2020, 10:31 PM

The EPA overcorrected when it scrapped an entire Obama-era climate regulation in response to a court order focused on just part of the rule, the D.C. Circuit said.

The Tuesday ruling is a win for the Natural Resources Defense Council and a coalition of states that challenged the Environmental Protection Agency’s decision to eliminate Obama-era restrictions on hydrofluorocarbons. One state called it “an important victory in the fight against climate change.”

The U.S. Court of Appeals for the District of Columbia Circuit agreed with the challengers that the EPA shouldn’t have fully tossed the 2015 restrictions on HFCs, powerful greenhouse gases that are used in air conditioning, refrigeration, and other products.

The agency made the move in 2018, without involving the public, after the D.C. Circuit struck down a portion of the restrictions.

“EPA wholly failed to provide petitioners (or any other interested parties) the opportunity to comment on the best way to implement the distinctions drawn by our court” in the previous ruling, Chief Judge Sri Srinivasan wrote, joined by Judge David S. Tatel.

HFCs, commonly used in supermarket refrigeration, have a global warming potential hundreds to thousands of times greater than carbon dioxide. A 2016 international agreement calls for a global phaseout of the chemicals, and U.S. lawmakers have spent years debating whether to ratify the deal.

A 2017 ruling from the D.C. Circuit struck down part of the Obama administration’s HFC restrictions, but the court’s Tuesday decision requires the agency to implement the remaining portions.

‘Significantly Lower Emissions’

“This will result in significantly lower emissions from HFCs from companies that would be switching to those products unnecessarily,” NRDC attorney Pete DeMarco, who argued the case last year, told Bloomberg Law.

New York Attorney General Letitia James (D) called the ruling a critical check on the Trump administration’s agenda.

“Today, we won an important victory in the fight against climate change,” she said in a statement. “The Trump administration’s attempt to lift all restrictions on HFCs shows a reckless disregard of science and the law, and the court agreed.”

The EPA said it’s reviewing the opinion. HFC maker Arkema Inc., which intervened in the case on the Trump administration’s side, said the agency must now address how it will implement the court’s orders.

“We will continue to work with EPA as it develops its new rulemaking consistent with the opinions from the court,” a company spokeswoman said.

Judge Neomi Rao dissented from the D.C. Circuit’s decision Tuesday, saying it “unravels” the court’s original decision on the Obama-era HFC restrictions.

“Here, the lawful and unlawful ‘parts’ of the 2015 Rule were not just ‘intertwined,’” she wrote. “They stemmed from the exact same listing—indeed, the exact same words.”

The court heard oral argument in the case in May 2019, on Rao’s first day on the bench. President Donald Trump nominated her to the court after she oversaw his deregulatory agenda as head of the White House Office of Information and Regulatory Affairs.

Caitlin McCoy, an attorney for Harvard Law School’s Environmental & Energy Law Program, said the ruling will block the EPA from trying to use court decisions as cover for broader policy moves in other contexts.

“The D.C. Circuit has made it clear that EPA cannot say it is merely implementing a court decision and use that as a backdoor to finalize additional changes without providing public notice and an opportunity to comment,” she said.

“This is an important decision at an important time as the agency faces a lot of litigation that it may implement through rules as decisions come down in the near future,” McCoy added.

Kavanaugh’s Role

The legal dispute centers on the fallout from the D.C. Circuit’s split ruling in 2017 that said the Obama-era regulation exceeded the EPA’s authority under the Clean Air Act.

The Clean Air Act gives the EPA power to regulate ozone-depleting substances and their substitutes. HFCs are a popular replacement for ozone-depleting substances. But while they’re safe for the ozone layer, they’re harmful to the climate.

The 2017 opinion written by then-Judge Brett Kavanaugh, now a Supreme Court justice, said the Obama administration overstepped by using its authority over ozone-depleting substances to require companies to phase out ozone-friendly HFCs.

The Trump administration responded to the 2017 ruling by issuing a guidance document that scrapped the HFC program entirely.

Many states and environmental groups argued that the agency should have retained applications of the rule Kavanaugh’s opinion didn’t address. The EPA should continue enforcing restrictions on new adoptions of HFCs as replacements for ozone-depleting substances, an area still within the agency’s authority, they said.

Agency lawyers had argued that it wasn’t possible to detangle the parts of the law that were problematic under Kavanaugh’s opinion and those that weren’t. They also contended that the guidance document wasn’t a final agency action subject to court review.

All three judges on the panel agreed that the EPA’s action was subject to judicial review. The majority concluded that it required public comment, while the dissent said the agency wasn’t required to consult the public.

The case is Nat. Res. Def. Council v. Wheeler, D.C. Cir., No. 18-1172, 4/7/20.

(Adds comment from New York attorney general.)

To contact the reporter on this story: Ellen M. Gilmer in Washington at egilmer@bloombergenvironment.com

To contact the editor responsible for this story: Gregory Henderson at ghenderson@bloombergenvironment.com

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