Appeals court strikes down part of EPA rule on climate-warming refrigerants

WASHINGTON (CN) — A federal appeals court struck down part of the Environmental Protection Agency’s plan to regulate hydrofluorocarbons in cooling systems on Tuesday, but largely left the regulation in place.

Choice Refrigerants, Worthington Industries Inc. and several trade associations sued the EPA over its plan to phase out the use of the chemicals, commonly referred to as HFCs. The regulation is intended to gradually curb production and import of the chemicals by 85% over the next 15 years.

The challenge had three core arguments: that the EPA cannot regulate HFC blends, which include other chemicals; Congress improperly delegated legislative power to the agency; and regulators cannot mandate companies use refillable containers and implement a nationwide tracking system.

In a ruling from the D.C. Circuit released Tuesday, U.S. Circuit Judges Karen Henderson, Cornelia Pillard and Justin Walker unanimously rejected the first two arguments. Henderson and Walker agreed with the third point, striking down that portion of the rule, while Pillard dissented.

The regulations actually trace back to the 1990s, when Congress sought to limit the use of ozone-depleting chlorofluorocarbons as coolants in refrigerators, freezers and air conditioners. Companies switched to hydrofluorocarbons, but the chemicals emerged as some of the most potent greenhouse gases, hundreds to thousands of times more potent than carbon dioxide.

“Congress’s change swapped one environmental hazard for another,” Walker, a Donald Trump appointee, wrote in the majority opinion.

Congress passed a law in 2021 directing the EPA to craft regulations to phase out the use of HFCs. The rules, adopted late last year, include a slew of guidelines and create a cap-and-trade system. 

The system is a market-based effort to curb emissions. The EPA sets a nationwide cap on the amount of HFCs and companies are given credits, which can be bought and sold amongst themselves. Over time, the EPA reduces the cap, making the credits more expensive and encouraging companies to reduce pollution.

The appeals court agreed that the EPA went beyond the broad measures of the legislation directing regulations by requiring refillable cylinders and a QR-code based tracking system, which it said would cost the industry between $441 million and $2 billion. 

“It is unlikely that Congress would have granted the agency authority to pass a rule of that magnitude in a provision of the statute that says nothing about complementary measures, refillable cylinders, or QR codes,” wrote Walker.

Pillard’s dissent argues that striking down this portion of the law hamstrings the effort to limit HFC production and use. Pillard, appointed by Barack Obama, argued that the EPA was within its statutory authority because it deemed the requirement necessary to achieve Congress’ goal. 

“Without such tools, it is hard to see how EPA can ensure the phasedown,” she wrote. “It will hamstring EPA’s efforts to combat illicit trade in HFCs, making it less likely that the United States accomplishes the HFC reductions Congress mandated.”

The court dismissed claims that Congress improperly delegated legislative power to the EPA on a technical point, saying the plaintiffs didn’t properly raise the argument during a public comment period and therefore didn’t meet the legal threshold to make that case now.

The panel also rejected the claim that the regulations should have included a carve-out for HFC blends, which are the flagship product of Choice Refrigerants. 

“In other words, an HFC in a blend of other chemicals is like a blue M&M in a bag of red M&Ms. The blue one does not stop being blue just because it is tossed in with a bunch of red ones,” Walker wrote. “In the same way, an HFC mixed with other chemicals does not stop being a regulated substance under the Act.”

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