How will West Virginia v. EPA impact our case and the HFC phasedown?

In one of the last decisions released by the U.S. Supreme Court before the end of the 2021 session, the court released its opinion in the case West Virginia v. EPA. This case asked the courts to determine if a regulatory agency has the power to develop regulations beyond the original intent of Congress when it wrote the authorizing statute. The Supreme Court ruled that the “major questions doctrine” should be applied to determine if a regulator created a rule to decide a major issue of “economic and political significance” not explicitly authorized by statute. The court ruled that the EPA could not create a rule that required power generators to shift their production from one fuel source to another in order to reduce emissions because while the goal of the Clean Air Act is to reduce harmful emissions, section 111(d) requires EPA to develop regulations for existing generation equipment to improve the efficiency of the existing equipment, not replace the equipment with more efficient systems.

Impact on the HFC Phase-down

West Virginia v. EPA will have no impact on the overall phase-down of HFCs. The American Innovation and Manufacturing (AIM) Act explicitly gives EPA authority to develop an “allowance allocation and trading program” using production and consumption baselines of regulated substances of HFCs including HFCs contained in blends based on the exchange values (GWP) of the HFC products.

The major question of if and how HFCs should be regulated is answered by the AIM Act. Congress gave EPA precise instructions on how to regulate a specific list of chemicals, methods for determining if additional chemicals should be added to the list, how to determine the production and consumption baselines, how quickly the phase-down should occur, the allowance system by which companies would be allowed to produce and consume HFCs, a list of essential uses of HFCs that are protected from EPA regulations for a set number of years, and authority to do rulemakings to establish the “allowance allocation and trading program”, “management of regulated substances”, and “monitoring and reporting requirements”. If EPA regulates the phase-down of HFCs in the manner prescribed by Congress within the authorities granted by the AIM Act, the EPA will be able to oversee the reduction in HFC production and consumption between now and 2036 when the phase-down of HFCs ends at 15% of the baseline.

Impact on HARDI v. EPA and the non-refillable cylinder ban and cylinder tracking requirements

Congress, through the AIM Act, gave EPA regulatory power to implement an HFC phase-down in a very specific way. Even the “Management of Regulated Substances” in which the AIM Act delegated broad authority, Congress was specific that that ability to regulate was limited to “any practice, process, or activity regarding the servicing, repair, disposal, or installation of equipment”. What the AIM Act did not do was provide open-ended authority to the agency to pursue additional “complementary measures” to assist in the enforcement of the phase-down.

The non-refillable cylinder ban and cylinder tracking system (QR code tracking), are complementary measures created by the EPA that go far beyond the monitoring and reporting requirements authorized by the act and enforcement mechanisms taken from existing law. EPA tries to claim the authority to regulate non-refillable cylinders through the definition of the phrase “shall ensure” contained in subsection (e)(2)(B), much in the same way EPA tried to force the changing of power generation equipment with the definition of the word “system” in the Clean Power Plan. The Supreme Court was decidedly against EPA’s methodology saying “The word ‘system’ shorn of all context, however, is an empty vessel. Such a vague statutory grant is not close to the sort of clear authorization required.” Using this precedent, the District Court should view EPA’s claim of authority from subsection (e)(2)(B) through a similar lens:

If that word were enough, then every statute that directs an agency to “ensure” one thing or another would authorize agencies’ demands for all manner of “whatever-it-takes” extra-statutory “complementary measures” Congress neither envisioned nor intended. […]

[…] No other agency or court, to our knowledge, has ever read the word “ensure” as expansively as EPA does here, and EPA certainly identifies none.

West Virginia v. EPA reinforces HARDI’s case that EPA exceeded the authority granted by the AIM Act in creating the non-refillable cylinder ban and cylinder tracking system and the petition argues for these complementary measures to be severed from the final rule to allow the Congressionally prescribed “allowance allocation and trading program” to phase-down the production and consumption of HFCs.

Next steps for HARDI v. EPA

With the submission of our reply brief, both the petitioners and respondents will submit final briefs to the court later this month and prepare for oral arguments in front of a three-judge panel sometime in the fall after the court returns from its summer recess. After oral arguments, the court will deliberate on the case and provide a ruling likely in late 2022 or early 2023.

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Submit your questions in advance here.

If you have any questions about the lawsuit or the impact of West Virginia v EPA, feel free to reach out to Alex Ayers.  

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