IIAR

On October 9th, the Supreme Court of the United States declined to consider the case of whether the Environmental Protection Agency (EPA) has the authority to regulate hydrofluorocarbons (HFCs) under the Significant New Alternatives Policy (SNAP) program. The case originated from a lawsuit brought by two HFC international manufacturers (Mexichem and Arkema) that sued EPA challenging the validity of an EPA rule requiring manufacturers to replace HFCs with refrigerants that have a lower global warming potential. The District Court found that the SNAP program only authorizes the regulation of ozone depleting substances and not substances with high global warming potential. The D.C. Circuit Court of Appeals upheld that ruling in an opinion written by Brett Kavanaugh, who has since been confirmed as a Justice on the Supreme Court.

In response to the lower court actions, chemical companies Honeywell and Chemours, manufacturers of refrigerant alternatives to HFCs, along with the Natural Resources Defense Council (NRDC) petitioned the Supreme Court to reverse the lower court’s ruling and enable the SNAP program to restrict HFC use. Sixteen states and the District of Columbia have filed an amicus brief in support of the petitions filed by Honeywell, Chemours and NRDC. The Supreme Court denied a writ of certiorari to consider the case. Kavanaugh did not participate in the decision.

With the question of SNAP authority to regulate HFCs having been decided by the courts, EPA is reconsidering its overall approach to HFCs. On September 18th, EPA issued a proposed rule entitled: “Protection of Stratospheric Ozone: Revisions to the Refrigerant Management Program’s Extension to Substitutes.” The proposed rule reflects EPA’s reinterpretation of how systems containing substitute refrigerants such as hydrofluorocarbons (HFCs) can be regulated.

In November 2016, nearing the end of the Obama Administration, EPA finalized a rule that extended the requirements of the Refrigerant Management Program to cover substitute refrigerants, such as HFCs. The 2016 policy contained requirements including: (1). Lowering the leak rate thresholds that trigger the duty to repair refrigeration and air-conditioning equipment containing 50 or more pounds of refrigerant (2). Requiring quarterly/annual leak inspections or continuous monitoring devices for refrigeration and air-conditioning equipment that have exceeded the threshold leak rate and (3). Reporting to EPA when systems leak 125 percent or more of their full charge in a calendar year.

The 2018 proposed rule presents a change in the agency’s thinking about its authority to regulate HFCs. The current Administration, in the wake of the court case ruling that EPA cannot regulate HFCs through the SNAP program, is interpreting that it also lacks the authority to regulate HFCs under the Refrigerant Management Program. As a result, EPA is proposing to rescind the leak repair and maintenance requirements for HFCs, while leaving the provisions in place for ozone depleting refrigerants. If finalized as proposed, systems with 50 or more pounds of substitute refrigerants would not be subject to the following requirements:

• Conduct leak rate calculations when refrigerant is added to an appliance.
• Repair an appliance that leaks above a threshold leak rate.
• Conduct verification tests on repairs.
• Conduct periodic leak inspections on appliances that exceed the threshold leak rate.
• Report to EPA on chronically leaking appliances.
• Retrofit or retire appliances that are not repaired.
• Maintain related records.

In addition, EPA is also considering the rescission of other provisions that were extended to HFCs including:

• Anyone purchasing refrigerant for use in an appliance or handling refrigerants (e.g., air-conditioning and refrigeration service contractors and technicians) must be a Section 608-certified technician.
• Anyone removing refrigerant from a refrigeration or air-conditioning appliance must evacuate refrigerant to certain level using certified refrigerant recovery equipment before servicing or disposing of the appliance.
• The final disposer (e.g., scrap recycler, landfill) of small appliances, like refrigerators and window air conditioners, must ensure and document that refrigerant is recovered before final disposal
• All used refrigerant must be reclaimed to industry purity standards before it can be sold to another appliance owner.

EPA held a public meeting on October 16th to hear from interested parties on the proposed rule. The public comment period ended on November 15th and EPA is now evaluating the comments received. A final rule is expected in 2019.

While the U.S. federal policy, via court cases and EPA proposed rules, is currently moving away from HFC regulation, the overall trend towards phasing down HFCs continues. The Kigali Agreement, which incorporates HFC phase downs into the Montreal Protocol is poised to go into effect on January 1, 2019. The ratification of Kigali by 20 countries is needed for the agreement to enter into force. At the end of October 2018, 58 countries had successfully ratified the agreement setting the stage for implementation at the beginning of 2019.