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DC Circuit Appeals Court Sends July 2015 Stratospheric Ozone Protection Rule Back to EPA

Last week, the U.S. Court of Appeals, District of Columbia Circuit, issued a ruling that vacates part of U.S. EPA’s July 2015 Final Rule on changes to acceptable and unacceptable substitutes for ozone-depleting substances under EPA’s Significant New Alternatives Policy Program.

This Final Rule did not impose requirements directly on the recycling industry, and the ruling likewise does not directly affect the industry. At the same, the ruling may be indicative of how strictly this Court adheres to the plain meaning of Title VI of the Clean Air Act (CAA) for Stratospheric Ozone Protection. Adherence to its plain meaning could be helpful to the industry respecting the Title VI “Safe Disposal” requirement “that class I or class II [ozone depleting] substances contained in bulk in appliances, machines or other goods shall be removed from each such appliance, machine or other good prior to the disposal of such items or their delivery for recycling”. EPA has never promulgated refrigerant management regulations for appliance and vehicle recycling that follow the plain meaning of this “Safe Disposal” requirement. ISRI pointed out this problem in our May 2017 comments on Evaluation of Existing [EPA] Regulations.

At issue before the Court, EPA’s July 2015 Final Rule designated some hydrofluorocarbon (HFC) substances as unacceptable in some end uses and other HFCs and non-ozone depleting substances as acceptable in those end uses. HFCs (e.g., HFC-134a) are non-ozone-depleting substitutes for ozone-depleting substances (e.g., CFC-12). Title VI of the CAA authorizes EPA to require substitution of ozone-depleting (e.g., CFCs) with non-ozone-depleting substances (e.g., HFCs). Some producers of these newly unacceptable HFCs petitioned EPA on the Final Rule because they claimed (1) that EPA had no authority to require replacement of HFCs with other HFCs or non-ozone-depleting substances and (2) that EPA’s process of designating some HFCs as unacceptable was “arbitrary and capricious”. In a 2-1 split decision hinging on the meaning of “replace”, the Court majority held that “replace” in Title VI has its plain meaning and is thus a one-time occurrence; therefore, EPA has no authority to require replacement of one non-ozone-depleting substance with another—only authority to require replacement of an ozone-depleting substance with a non-ozone-depleting substance. The Court majority pointed out that “EPA’s authority to regulate ozone-depleting substances under Section 612 [in Title VI] and other statutes does not give EPA authority to order the replacement of substances that are not ozone depleting but that contribute to climate change. Congress has not yet enacted general climate change legislation.” For this reason, the Court sent the Final Rule back to EPA to redraft it within EPA’s legal authority. However, the Court majority offered that EPA could justify the Final Rule under an alternative “retroactive disapproval” theory, but would have a number of legal hurdles to support that theory. The minority judge held that EPA’s interpretation of “replace” to allow perpetual replacement of an ozone-depleting substance by a series of non-ozone-depleting substances (e.g., each subsequent HFC substitutes for the original CFC) is consistent with the language and intent of Title VI. Separately, the Court unanimously rejected the petitioners’ arguments that EPA’s designation of some HFCs as unacceptable was arbitrary and capricious. ISRI will be following this Final Rule to understand whether newer interpretation of CAA Title VI could be helpful to the industry.

For more information, please contact David Wagger, chief scientist and director of environmental management, at (202) 662-8533.

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