09/27/2017 - Regulatory Rollback

Hydrofluorocarbons and Kigali Amendment to Montreal Protocol

by EELP Staff

The Environmental & Energy Law Program is tracking the environmental regulatory rollbacks of the Trump administration. Click here for the list of rules we are following. If you’re a reporter and would like to speak with an expert on this rule, please email us.

Why it Matters

Hydrofluorocarbons (HFCs) were thought to be an acceptable substitute for ozone layer-depleting chlorofluorocarbons (CFCs), which the Montreal Protocol sought to phase out. It is now understood that HFCs, despite not being listed as ozone-depleting substances by the Environmental Protection Agency (EPA), have a high global warming potential and their continued use contributes to climate change. The Kigali Amendment to the Montreal Protocol seeks to phase out HFCs by cutting emissions by 10 percent in 2019 and 40 percent in 2024, finally phasing them down to 15 percent of 2011-13 levels by 2036. Ratification of the Kigali Amendment by the would protect the ozone layer and could avoid up to 0.5 degree Celsius of global temperature rise by 2100. Even absent ratification of the Kigali Amendment, domestic regulations could also phase out HFCs in the United States.

Current Status

Jan. 1, 2019 The Kigali Amendment enters into force after it is ratified by 65 countries. The United States has yet to ratify the amendment.

April 7, 2020 The D.C. Circuit rules that EPA did not properly implement its 2017 decision in Mexichem Fluor, Inc. v. EPA, 866 F.3d 451 (D.C. Cir.). In that case, the court determined that EPA could forbid companies using ozone-depleting substances from switching to HFCs as a substitute. The court also determined that EPA did not have the authority to make companies switch a second time if they had already switched to using HFCs as a replacement before the agency realized the harmful effects of HFCs. Today, the court found that EPA’s response to the decision went too far by removing HFCs from the list of unsafe substitutes all together, which allows current users of ozone-depleting substances to now shift to HFCs. This change was made without notice to the public and an opportunity to comment and the court has found that to be improper. Nat. Res. Def. Council v. Wheeler, D.C. Cir., No. 18-1172.

History

July 20, 2015 EPA finalizes a rule to phase out certain uses of HFCs. In the rule, EPA reconsiders a list of acceptable substitutes for ozone-depleting chemicals, saying “Global warming potential (GWP) is one of several criteria EPA considers in the overall evaluation of the alternatives under the SNAP [Significant New Alternatives Policy] program.” Instead of only having an “acceptable” list, EPA will now designate substances as unacceptable; acceptable subject to use; or acceptable subject to narrow use, “based on information showing that other substitutes are available for the same uses that pose lower risk overall to human health and the environment.” The agency changes the status of many uses of HFCs from “acceptable” to “unacceptable.” Pursuant to a previous rule passed by EPA, the continued use of chemical substitutes on the unacceptable list is prohibited.

Sep. 17, 2015 Mexichem Fluor and Arkema, two private companies, sue EPA over the rule, saying the Clean Air Act program authorizing action is about ozone depletion, not climate change, and that EPA has therefore overstepped its authority. Mexichem Fluor v. EPA, No. 15-1328 (“Mexichem I”).

Oct. 15, 2016 The international community reaches agreement on the Kigali Amendment to the Montreal Protocol, to phase out HFCs because of their global warming potential.

Nov. 18, 2016 EPA adopts a new final rule, Protection of Stratospheric Ozone: Update to the Refrigerant Management Requirements Under the Clean Air Act. This rule took effect Jan. 1, 2017, but some provisions had compliance dates of Jan. 1, 2018 and 2019. The rule extended refrigerant management requirements to common substitutes like HFCs, lowered the leak rate thresholds that trigger the duty to repair refrigeration and air-conditioning equipment, required regular leak inspections or continuous monitoring for equipment that exceeded the threshold leak rate, and required owners/operators to submit reports to EPA if they had significant leakage.

Trump Era

Jan. 24, 2017 Mexichem Fluor files an additional petition in the D.C. Circuit challenging the 2016 rule. Mexichem Fluor v. EPA, No. 17-1024 (“Mexichem II”). Arkema also files an additional petition on the 2016 rule on Jan. 27, 2017. The two petitions are consolidated into one case and court puts it on hold on March 13, 2017 pending the decision in Mexichem I.

April 3, 2017 Mali becomes the first country to ratify the Kigali Amendment. Over 50 countries have now ratified the amendment, which means it can enter into force on Jan. 1, 2019. The United States has yet to ratify the amendment.

Aug. 8, 2017 The D.C. Circuit vacates (cancels) part of EPA’s HFC rule in Mexichem I on the grounds that Title VI of the Clean Air Act does not require or allow EPA to require replacement of non-ozone depleting substances such as HFCs. The court finds that once a manufacturer replaces a ozone-depleting substance with a substitute deemed to be safe by EPA (like HFCs which were once considered safe by EPA) the agency cannot later require the industry to replace that substitute if it has been removed from the safe list on the basis of its global warming potential and not on the basis of its ability to deplete the ozone layer.

March 23, 2018 The California Air Resources Board adopts regulations prohibiting the use of HFCs “to preserve and continue in California some of the EPA’s prior prohibitions on HFCs.” New York, Maryland, and Connecticut have since proposed similar state-level regulations to phase out HFCs.

April 27, 2018 EPA publishes a Notice of Guidance regarding the Significant New Alternatives Policy (SNAP) Program to “dispel confusion and provide regulatory certainty for stakeholders affected by EPA’s Significant New Alternatives Policy program final rule” from July 2015, and says that EPA “will not apply the HFC listings in the 2015 Rule, pending a rulemaking.”

June 4, 2018 Thirteen GOP senators send a letter to President Trump urging him to send the Kigali Amendment to the Senate for its advice and consent. The letter notes that the Montreal Protocol “has enjoyed bipartisan support since its inception” and highlights that 589,000 U.S. employees would benefit from the Kigali Amendment.

June 25, 2018 Two chemical manufacturers and National Resources Defense Council file a petition for writ of certiorari in the U.S. Supreme Court seeking review of the D.C. Circuit decision in Mexichem I. The brief filed by the Department of Justice reveals that EPA has changed its stance and now believes that it lacks the authority to require a phase-out of HFCs.

July 9, 2018 The D.C. Circuit removes the hold on Mexichem II and orders parties to prepare for briefing and oral argument regarding the 2016 HFC rule. EPA and industry are asking the court to void the 2016 rule and send it back to the agency for reevaluation. National Resources Defense Council and two chemical manufacturers have intervened in the case to defend the 2016 rule.

Sep. 18, 2018 EPA issues a proposed rule, Protection of Stratospheric Ozone: Revisions to the Refrigerant Management Program’s Extension to SubstitutesThe agency is proposing to rescind a 2016 modification of provisions that regulate repair, maintenance, and disposal of appliances containing ozone-depleting substances. The 2016 modification extended the regulations to cover appliances using substitute refrigerants such as HFCs. The EPA is now taking the position that it does not have the authority to extend these provisions to substitute refrigerants. The proposed rule also requests public comment on rescinding other provisions that were extended to substitute refrigerants. This proposal would not affect the requirements for ozone-depleting refrigerants. For more information on this proposed rule, visit our post on hydrofluorocarbons and the Refrigerant Management Program.

Oct. 9, 2018 The Supreme Court declines to hear the appeal of Mexichem I. This action makes final the D.C. Circuit’s decision in Mexichem I.

March 8, 2019 The D.C. Circuit hears oral argument in Mexichem II. EPA and Mexichem argue that the court has jurisdiction over the case and should void the 2016 rule based on the decision in Mexichem I. National Resources Defense Council and two chemical companies argue that the court does not have jurisdiction over the case, alleging that Mexichem is actually challenging a 1994 EPA rule that prohibits the use of alternative substances not listed as “acceptable,” rather than the 2016 rule transferring certain uses of HFCs off the acceptable list.

April 5, 2019 The D.C. Circuit Court of Appeals rules in Mexichem Fluor v. EPA, No. 17-1024 to “…vacate the 2016 rule only to the extent it requires manufacturers to replace HFCs that were previously and lawfully installed as substitutes for ozone-depleting substances.” The court decides it is required to vacate this rule without further review of the arguments due to the similarity between the Mexichem I and Mexichem II cases, according to a judicial doctrine called “issue preclusion.”

May 7, 2019 Washington State Governor Jay Inslee signs a package of four clean energy bills into law, including HB 1112, a bill that phases down HFC use for new equipment based on equipment category (e.g., commercial refrigeration) beginning in 2020. This makes Washington the second state to enact such legislation, after California.

Oct. 30, 2019 Senators John Kennedy (R-La.) and Tom Carper (D-De.) introduce the American Innovation and Manufacturing Act of 2019, which would require the United States to phase down HFCs by 2036 on a schedule consistent with the Kigali Amendment.

Feb. 24, 2020 The governors of Rhode Island, Massachusetts, and Maine say they are planning new regulations for HFCs.

March 17, 2020 EPA publishes a final rule in the Federal Register allocating production and consumption allowances for specific HFCs for 2020-2029. In the final rule, EPA also updates other requirements under the program for controlling production and consumption of ozone-depleting substances.

April 7, 2020 The D.C. Circuit rules that EPA did not properly implement its 2017 decision in Mexichem Fluor, Inc. v. EPA, 866 F.3d 451 (D.C. Cir.). In that case, the court determined that EPA could forbid companies using ozone-depleting substances from switching to HFCs as a substitute. The court also determined that EPA did not have the authority to make companies switch a second time if they had already switched to using HFCs as a replacement before the agency realized the harmful effects of HFCs. Today, the court found that EPA’s response to the decision went too far by removing HFCs from the list of unsafe substitutes all together, which allows current users of ozone-depleting substances to now shift to HFCs. This change was made without notice to the public and an opportunity to comment and the court has found that to be improper. Nat. Res. Def. Council v. Wheeler, D.C. Cir., No. 18-1172.