09/27/2017 - Regulatory Tracker

Hydrofluorocarbons and Kigali Amendment to Montreal Protocol

by EELP Staff

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Why it Matters

The Montreal Protocol, finalized in 1987, is a global agreement to phase out the production and consumption of ozone-depleting substances. At the time of its adoption, hydrofluorocarbons (HFCs) were thought to be acceptable substitutes for ozone layer-depleting chlorofluorocarbons (CFCs). In 1994, the Environmental Protection Agency (EPA) began approving HFCs for use in refrigeration, air conditioning, building insulation, and aerosols to substitute CFCs. It is now understood that, although HFCs pose a much lower risk for ozone depletion, they have a high global warming potential and their continued use contributes to climate change. In fact, HFCs can cause thousands of times more warming in the atmosphere than CO2 in the short term.

In 2016, the international community, led by the US, adopted the Kigali Amendment to the 1987 Montreal Protocol, to phase out the use of HFCs. The Kigali Amendment 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 2011-2013 levels by 2036. The US has yet to ratify the Kigali Amendment, which would help protect the ozone layer and could avoid up to 0.5 degree Celsius of global temperature rise by 2100. Even without ratification of the Kigali Amendment, domestic regulations could phase out HFCs in the United States.

Pending ratification of the Kigali Amendment, EPA has used its Clean Air Act authority to set certain rules for the use of HFCs. In 2015, EPA issued a rule to phase out the use of HFCs as approved substitutes for ozone-depleting substances. In 2016, EPA issued a rule expanding existing leak repair requirements under the refrigerant management program to cover appliances releasing HFCs. The Trump administration is now working to reverse those actions. This page tracks EPA’s regulation of HFCs and the status of the Kigali Amendment.

Current Status

Though the Kigali Amendment took effect on Jan. 1, 2019 after being ratified by 65 countries, the US has yet to ratify the amendment. However, under the Trump administration, EPA published a final rule weakening requirements restricting the release of HFCs, leading to an estimated increase of 2.9 million metric tons of carbon dioxide equivalent (MMTCO2) emissions annually. EPA also finalized a rule allowing the use of HFCs as an acceptable substitute for refrigeration, air conditioning, and fire suppression. Despite these changes, on Dec. 22, 2020, in a year-end omnibus bill, Congress agreed to phase down production and consumption of HFCs 85% by 2036. President Biden took this commitment one step further and issued an Executive Order on Jan. 27, 2021 requiring the Secretary of State to seek the Senate’s advice and consent to ratify the Kigali Amendment within 60 days (by March 28, 2021). The Secretary reportedly sent the package to the White House on March 26, 2021. EPA also issued a proposed rule on May 3, 2021 to phase down the production and use of HFCs by 85% over the next 15 years.

History

Under Section 608 of the Clean Air Act, EPA regulates the management of appliances that use ozone-depleting refrigerants. Section 608 prohibits knowingly releasing ozone-depleting refrigerants into the air during the maintenance, repair, or disposal of appliances or industrial process refrigeration. Under the related regulations, HFCs are considered “substitute refrigerants,” because they were originally developed as a safer substitute to CFCs and other ozone-depleting refrigerants.

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 finalizes a rule that extends the Section 608 leak repair requirements beyond ozone-depleting refrigerants to HFCs and other commonly used substitute refrigerants. The duty to repair leaking appliances will now apply to most refrigerants. The rule also strengthens other provisions of the program, including: lowering the threshold at which leaks must be repaired, requiring regular leak inspections or continuous monitoring, and updating the disposal requirements for appliances containing refrigerants. EPA estimates that the final rule will reduce annual greenhouse gas emissions equivalent to taking 1.5 million cars off the road. While the regulation took effect on Jan. 1, 2017, some provisions had compliance dates of Jan. 1, 2018, and Jan. 1, 2019.

Trump Era

Jan. 24, 2017 Mexichem Fluor files an additional petition in the D.C. Circuit challenging the 2016 refrigerant management 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.

Aug. 10, 2017 In response to requests by industry, EPA announces that it will revisit the 2016 extension of refrigerant management requirements to HFCs.

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 Natural 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. Natural 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 Substitutes. The 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. EPA is now taking the position that it does not have the legal authority to extend these provisions to substitute refrigerants. This proposal will not affect the requirements for ozone-depleting refrigerants. The proposed rule also requests public comment on rescinding other provisions that were extended to substitute refrigerants.

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. Natural 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 II 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.

Feb. 26, 2020 EPA Administrator Andrew R. Wheeler signs the final ruleProtection of Stratospheric Ozone: Revisions to the Refrigerant Management Program’s Extension to Substitutes. The final rule rescinds requirements for leak repair and maintenance of appliances using 50 or more pounds of substitute refrigerants, such as HFCs. These appliances, which include medium- and large-scale refrigeration and air-conditioning equipment, are no longer subject to rules requiring: repair for leaks above a certain level; periodical inspection for leaks; reporting of chronic leaks to the EPA; retrofitting or retiring appliances with chronic leaks; or maintaining records. EPA estimates the rule will generate an increase of 2.9 million metric tons of carbon dioxide equivalent (MMTCO2) emissions annually. The rule went into effect on April 10, 2020.

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. The D.C. Circuit now decides that EPA’s response to that 2017 decision went too far by entirely removing HFCs from the list of unsafe substitutes, thereby allowing current users of ozone-depleting substances to now switch to HFCs. The D.C. Circuit vacated EPA’s guidance because it was made without notice to the public or an opportunity for comment. The court remanded to EPA for further proceedings. Nat. Res. Def. Council v. Wheeler, No. 18-1172 (D.C. Cir.).

May 11, 2020 coalition of states and the Natural Resources Defense Council file two separate petitions in the D.C. Circuit for review of EPA’s 2020 refrigerant management rule. Nat. Res. Def. Council v. Wheeler, Docket No. 20-01150 (D.C. Cir.).

Dec. 10, 2020 California sets new limits on HFCs in refrigeration, air-conditioning, chillers, ice rinks, cold storage, aerosols-propellants, and foam end-uses.

Dec. 11, 2020 EPA finalizes a rule expanding the list of acceptable substitutes in the Significant New Alternatives Policy (SNAP) Program and includes an HFC substance as an acceptable substitute. 

Dec. 22, 2020 In a year-end omnibus bill, Congress agrees to phase down production and consumption of HFCs 85% by 2036. 

Early Biden Actions

Jan. 27, 2021 President Biden issues an Executive Order requiring the Secretary of State to seek the Senate’s advice and consent to ratify the Kigali Amendment within 60 days (by March 28, 2021).

March 26, 2021 The State Department sends a transmittal package for the Kigali Amendment to the White House. Under President Biden’s Executive Order on the Climate Crisis, the Secretary of State had to prepare the package by March 28, 2021.

April 13, 2021 Environmental and industry groups submit five petitions to EPA to reinstate parts of its 2015 and 2016 HFC regulations under the American Innovation and Manufacturing (AIM) Act.

May 3, 2021 EPA issues a proposed rule to phase down the production and use of HFCs by 85% over the next 15 years. The rule seeks to implement provisions of the American Innovation and Manufacturing Act. EPA publishes the proposed rule in the Federal Register on May 19, 2021.