Industry waits for EPA’s next move following court ruling on HFCs

Industry waits for EPA’s next move following court ruling on HFCs

It’s too soon to know the ultimate effect of the decision on U.S. EPA’s ability to regulate HFCs, but some say the momentum for natural refrigerants remains undiminished.

Industry reaction to a federal court ruling on the U.S. Environmental Protection Agency’s authority to regulate HFCs has so far been reserved as the EPA and intervening defendants contemplate their next step.

The U.S. Court of Appeals for the District of Columbia Circuit ruled August 8 in Mexichem Fluor, Inc. v. EPA that the EPA cannot require companies to replace HFCs designated for HVAC&R equipment or other applications with low-GWP substances under the SNAP (Significant New Alternatives Policy) program.

The decision specifically vacated an EPA rule released in 2015 “to the extent that [the rule] requires manufacturers to replace HFCs with a substitute substance.” Some observers took this to be a challenge to the EPA’s use of the Clean Air Act to address climate change.

While the ruling would appear to be a setback for low-GWP HFC replacements like natural refrigerants, several industry players said it was too soon to know its ultimate effect given the different directions the case or the EPA can still take. Some observers doubt the case can slow the momentum toward natural refrigerant technology.

“This decision is a temporary speed bump on the path to phasing down HFCs,” said Avipsa Mahapatra, climate campaign lead at the Environmental Investigation Agency (EIA). “it is not going to stop the increasing global demand for future-proof solutions.”

The two plaintiffs in the case were non-U.S. manufacturers of HFCs: Mexican company Mexichem Fluor and French company Arkema SA. In February, the Trump administration, along with intervenors (the National Resources Defense Council, Chemours and Honeywell), defended the EPA in oral arguments. Chemours and the NRDC are exploring an appeal.

The EPA’s SNAP program, which operates under Section 612 of the Clean Air Act, was found by the court to have exceeded its authority.

The Obama administration in 2015 extended the original SNAP program – which only dealt with ozone-depleting substances (ODS) – to HFCs, which are non-ODS but have a high global warming impact.

But Judge Brett Kavanaugh, writing for a 2-1 majority, ruled that the law does not extend to non-ODS and does not allow the EPA to require companies to replace HFCs with low-GWP refrigerants. However, the court rejected the plaintiffs’ argument that the EPA’s decision to remove HFCs from the list of safe substances was “arbitrary and capricious.”

The ruling requires the EPA to take action consistent with the court’s decision. The agency has other options by which it can regulate HFCs, such as the Toxic Substances Control Act, the court said.

Wait and see

Industry reaction to the decision has been cautious. “It’s too early yet – we need to wait to see what happens,” said Scott Martin, director of business development and industry relations for Hillphoenix, a major U.S. manufacturer of CO2 refrigeration systems.

A representative of a U.S. grocer with natural refrigerant installations said the ruling would have “no impact” on his company.

“There are multiple parts to the court’s decision and, in order to determine the long-term consequences, we first need to hear from the EPA on their next steps,” said Danielle Wright executive director, North American Sustainable Refrigeration Council, Mill Valley, Calif., which supports the use of natural refrigerants in supermarkets.

In any event, “it would be an unsound decision to invest in HFCs for new equipment or retrofits when there are so many low-GWP or zero-GWP options available,” she added. “We continue to believe that now, as always, the strongest case for natural refrigerants is the business case.”

Noted Mahapatra, “There is no excuse for companies to continue producing and using these chemicals when climate-friendlier alternatives are readily available and in use around the world.”

The Kigali Amendment to the Montreal Protocol, calling for a global phase-down of HFCs, is another factor. The U.S. was a party to the amendment, but to go into effect in this country the Senate would need to ratify it. If the Senate does, “HFCs will certainly need to be regulated in some way or the other for the U.S. to meet its commitments,” said Mahapatra.

In the court’s decision, Kavanaugh took particular issue with the EPA’s interpretation of the word “replace” in the SNAP section of the Clean Air Act, and said that by using it to list more alternatives, the federal agency had gone “beyond its ordinary meaning” in a manner that “borders on the absurd”.

“Under EPA’s current interpretation of the word ‘replace’, manufacturers would continue to ‘replace’ an ozone-depleting substance with a substitute even 100 years or more from now,” Kavanaugh wrote. “EPA would thereby have indefinite authority to regulate a manufacturer’s use of that substitute.”

Judge Robert Wilkins, an Obama appointee who dissented in part, wrote that he believes that the word “replace” under the SNAP program does not just relate to ODS. Wilkins argued that the court should have deferred to the EPA in this case, because the position of Congress on the SNAP program is unclear and the EPA has made “reasonable” rules in this matter.

EIA’s Mahapatra noted that while the divided decision was “essentially based on differing legal interpretations of the word ‘replace,’ what is unquestionable is that those HFCs are absolutely not ‘acceptable’ substitutes for CFCs [and HCFCs], given their impact on climate, and thereby human health and safety”.

Now what?

The ruling has now gone back to the EPA, which is required to take action consistent with the court’s decision, but had not responded to the suit as of press time. The EPA could use other statutory authorities to phase down HFCs, such as the Toxic Substances Control Act.

The agency could also force manufacturers using ODS to leapfrog over HFCs to low-GWP refrigerants and blowing agents. It could also explore implementing a “retroactive disapproval” of HFCs under the Clean Air Act, which the court ruled would only be permissible if the EPA were to explain why it is pursuing this under the current legislation. And Congress could act to adjust the Clean Air Act to cover HFCs.