On August 8, 2017, the D.C. Circuit held in Mexichem Fluor, Inc. v. EPA, No. 15-1328 (D.C. Cir. Aug. 8, 2017), that EPA overstepped its authority under the CAA when it banned the use of hydrofluorocarbons (HFCs) in products. HFCs were adopted as alternatives to ozone-depleting substances (ODSs) in the 1990s under the Montreal Protocol. Their adoption was encouraged through application of EPA's Significant New Alternatives Policy (SNAP) Program, which was created to help implement U.S. obligations under the Montreal Protocol. In creating the SNAP Program under the CAA, Congress gave EPA explicit authority to regulate substances that "replace" ODSs.
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In 2015, EPA issued a rule that restricted the manufacture of products containing HFCs, such as refrigerators. EPA based this decision on its authority to regulate "ozone-depleting substances." Manufacturers challenged the rule claiming that EPA did not have authority to make them replace HFCs that are non-ozone-depleting. The court agreed with the manufacturers, holding that the CAA does not permit EPA to order the replacement of substances that are not ozone-depleting but that contribute to climate change. The case was remanded for further proceedings.
In arriving at its decision, the court looked closely at §612 of the CAA, which requires EPA to issue lists of both authorized and prohibited substitute substances based on the safety and availability of the substances. This section gives EPA the authority to require manufacturers to "replace" ozone-depleting substances with non-ozone-depleting substances. In the 2015 rule, EPA interpreted "replace" to grant them continuous authority to regulate, after a manufacturer makes the initial switch from a banned substance. According to the Agency, each time a business changes its manufacturing process, the manufacturer is essentially “replacing” the ODS with a non-ODS. The court took an opposing stance, adopting the common meaning of replace as “a new thing taking the place of the old,” commenting that EPA’s interpretation bordered on the “absurd.”
What is the future of the SNAP Program and for EPA’s ability to regulate greenhouse gases and other heat-trapping chemicals? This ruling implies that businesses will not be required to obtain SNAP approval when replacing a non-ODS chemical with another non-ODS chemical.
Are there statutory avenues available for EPA to regulate heat-trapping gases through other statutes? The court seems to think so. The court stated that its decision did not prohibit EPA from regulating HFCs under TSCA. Whether this is a viable option or not, time will tell.