Court upholds Biden-era EPA rule phasing out climate-damaging refrigerant

Reuters

4 days ago

Aug 1 (Reuters) - A federal appeals court on Friday rejected challenges by refrigerant manufacturers to a rule adopted during Democratic President Joe Biden's administration to curtail the use of a potent climate-warming gas used in refrigerators and air conditioners.
A three-judge panel of the U.S. Court of Appeals for the District of Columbia Circuit rejected, opens new tab arguments that the U.S. Environmental Protection Agency's rule governing hydrofluorocarbons (HFCs) was invalid and that the agency unconstitutionally exercised legislative power by adopting it.
Zhonette Brown, a lawyer for Georgia-based Choice Refrigerants at the conservative New Civil Liberties Alliance, said her client was evaluating next steps, saying the court's ruling was not consistent with the text and history of the statute at issue.
A lawyer for the other company that challenged the rule, Florida-based IGas, which is partly owned by China-based Zhejiang Juhua (600160.SS), opens new tab, did not respond to a request for comment.
The EPA said it is reviewing the ruling. The agency in February sought unsuccessfully to have the case put on hold, citing the need for new agency leadership under Republican President Donald Trump to review the regulation.
The rule was finalized in July 2023 in order to implement a provision of the American Innovation and Manufacturing Act, a 2020 law that calls for reducing the production and consumption of climate-damaging HFCs by 85% by 2036.
To implement the law, the EPA began setting annual 'allocations' for each HFC producer and importer based on estimates of their historical market share that gradually would decline over time.
Lawyers for Choice Refrigerants argued that Congress had unconstitutionally delegated legislative power to the EPA to set the allowances.
But U.S. Circuit Judge Florence Pan, a Biden appointee, wrote that the AIM Act does not unconstitutionally delegate legislative power to the EPA because it sufficiently constrained the agency's discretion to allocate HFC allowances.
"Congress provided ample direction to guide the EPA's exercise of discretion: The Act's text, structure, and history demonstrate that Congress intended for the EPA to model its cap-and-trade program on similar programs established under the Clean Air Act, and those programs allocated allowances to market participants according to their market share," Pan wrote.
The 2023 rule built on an earlier one finalized in 2021 that implemented a 10% phase-down for 2022 and 2023 and called for a further 40% reduction in the use of HFCs from 2024 to 2028.
For both rules, the EPA calculated market share based on an average of a company's three highest years of HFC import data from 2011 and 2019.
It opted in 2023 against including 2020 and 2021 data, saying that data might have been overly impacted by the COVID-19 pandemic, supply chain disruptions, and stockpiling of HFCs by companies anticipating the regulatory phasedown.
Lawyers for IGas had argued that excluding the 2020 data was arbitrary and capricious, requiring the rule to be deemed unlawful under the Administrative Procedure Act.
But the three-judge panel said the EPA reasonably concluded that the 2020 data was unrepresentative of market share and that its inclusion would disrupt the market.
The case is IGas Holdings, Inc., et al v. EPA, U.S. Court of Appeals for the District of Columbia Circuit, No. 23-1261.
For IGas: JoAnn Sandifer of Husch Blackwell
For Choice Refrigerants: Zhonette Brown of New Civil Liberties Alliance
For the EPA: Sarah Buckley of the U.S. Department of Justice
For Air-Conditioning, Heating, and Refrigeration Institute: Elizabeth Dawson of Crowell & Moring
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Court skeptical of challenge to EPA phase out of climate-damaging refrigerant