US Court Rejects Chemours/Honeywell Appeal on HFC Refrigerants

On January 26th, 2018 the United States Court of Appeals for the District of Columbia Circuit ruled against the appeal on HFC refrigerants. The appeal comes from an earlier court ruling back in August of 2017. In August a US Court ruled against the Environmental Protection Agency’s 2015 SNAP Rule  20. This rule, which was announced in 2015, was aimed at phasing out HFC refrigerants by using the EPA’s power under the Clean Air Act. Specifically, they referenced section 612 of the Clean Air Act. The problem here is that this section of the Clean Air Act was designed specifically for CFC and HCFC refrigerants. It has nothing to do with HFC refrigerants. It’s design was to stop the damage to the Ozone layer by offering alternative refrigerants. Since HFC’s do not contain Chlorine and do not damage the Ozone they should not fall in the same category.

Mexichem and Arkema, two of the world’s largest refrigerant manufacturers, saw this opportunity and ran with it. They filed a petition with the court against the Environmental Protection Agency. (The court documents can be found by clicking here.) This petition stated that the EPA had overstepped it’s bounds by using the Clean Air Act and their SNAP program to push down and require changes on HFC refrigerants. The EPA defended itself in court and even had Chemours and Honeywell come in as intervenors in the matter but ultimately in August of 2017 the court ruled in favor of Mexichem and Arkema.

The Appeal

This ruling put everything in a tail spin. For years companies, contractors, educators, and everyone thought that HFC refrigerants such as R-410A, R-134a, and R-404A were on their way out and would be phased down and removed very soon. Companies had already begun to build contingencies. Honeywell and Chemours had invested hundreds of millions of dollars in their new HFO refrigerant line. What was going to happen if this ruling became the law of the land?

It was only a month after the initial ruling that Chemours, Honeywell, and Natural Resources Defense Council (NRDC) all filed an appeal against the court’s ruling from August. (I wrote an article about this appeal which can be found by clicking here.) They had two arguments for their appeal:

  1. First, they argue that the SNAP Rule 20 was well-founded and that the federal court’s ruling exceeded it’s jurisdiction as well as ignoring the original intent of the SNAP Program. (To replace Ozone depleting refrigerants with the safest alternatives.) This argument drives me crazy folks. They know they didn’t go through Congress and they know that they didn’t do it the right way. But none of that matters. No. Their intent was good. I guess as long as my intent is good I can do anything I want.
  2. The second argument and just as ludicrous in my book is that these two companies invested two much money to have this ruling being turned on it’s head. Chemours noted that they had invested more then one billion dollars to research, develop, and commercialize their new HFO refrigerants. All of this development was done under the guise of HFC refrigerants being phased out. What they don’t tell you here is that Chemours and Honeywell, have been investing money into HFOs long before the EPA made it’s decision to phase out HFC refrigerants in 2015. This argument seems like a moot point. In business there is a thing called risk as all of you know.

A few days later after the appeal was filed the court ruled that the EPA’s SNAP Rule 20 would stay into affect until another decision was made on the appeal. This basically put a stay on the August ruling and set things back to ‘normal.’ For the short term everyone began to calm down as most everyone expected the court to rule in favor of Honeywell and Chemours. (I wrote an article on this matter as well which can be found by clicking here.)

January’s Decision

As I said in the beginning of our article a few days ago the US Court ruled against Honeywell, Chemours, and NRDC’s appeal. The court stated that the EPA’s authority only extended to those refrigerants or foam blowing agents that contained Chlorine and that actively damaged the Ozone layer. Since HFC refrigerants do not contain Chlorine and do not damage the Ozone layer the EPA does not have authority nor permission to force changes across the country. This ruling has once again caused turmoil in the industry. What happens now? How will prices react? How will manufacturers react? Will HFCs be around for decades now or will HFOs and Natural refrigerants still have an opportunity to dominate the market?

David Doniger, a senior member of the NRDC group, was quoted as saying on Twitter that, “This isn’t over. There’s the option to appeal to [the Supreme Court]. And there are other ways to skin this cat.” In other words folks they are not giving up on this fight. One possible avenue to appeal HFCs in the United States is the most recent amendment made to the Montreal Protocol known as the Kigali Amendment.

Kigali To The Rescue?

For those of you who are in favor of phasing out HFC refrigerants across the United States there is some hope out there. In a meeting in October of 2016 that took place in Kigali, Rwanda negotiators from more than one-hundred and seventy countries met together  for many days and nights until they all finally came to an agreement on HFC refrigerants. There was an agreement that was reached known as the Kigali Amendment. Like the Montreal Protocol, this new amendment is aimed at having a global phase down of HFC refrigerants instead of a country by country approach. More details on this amendment can be found by clicking here.

Although it has been nearly a year and a half since the world came to agreement the United States has yet to ratify the amendment. In fact there is some doubt if the Trump Administration will ratify this amendment at all. The Trump Administration did comment on the matter in late 2017 which can be read below:

“Judith Garber, the principal deputy assistant secretary, at the Bureau of Oceans and International Environmental and Scientific Affairs, confirmed that the US supported the Kigali Amendment and had started the procedures necessary to ratify.” – Source.

Judith continued to say that there is not an established timeline on when the United States would adopt the amendment. Keep in mind folks that she is not a higher ranking Trump Administration personnel. I honestly don’t know if we can take her word for this or not. Nothing against her, I’m just pointing out that this kind of thing has happened before. In the past year the Trump Administration has contradicted itself and with the withdrawal from the Paris Agreement it is tough to say if we will ratify or not. Looking at the pattern of Trump logically I would say that we would NOT ratify the amendment.

Arkema and Mexichem are both pushing for adoption and ratification of the Kigali Amendment. In fact that was the reason of their lawsuit against the EPA. They are in favor of having one unified agreement on HFC refrigerants across the world instead of having a patch work of regulations and requirements by country or even by state. I mention state as California’s version of the EPA known as CARB has already announced that they will be using the EPA’s SNAP Rule 20 regulations for their state regardless of what the federal ruling is. There are other states here in the United States that are expected to follow suit.

Conclusion

Regardless of what your politics are or how you feel about HFCs and the environment I feel that I can safely say that these rulings and the rejection of an appeal was a direct correlation of the Trump being in the White House. In fact when the ruling was overturned the EPA was silent. They didn’t appeal. They didn’t do anything. It took outside companies like Honeywell and Chemours to file an appeal. I believe that the EPA was silent due to the new people and new management.

Again, regardless of politics, this phase out of HFCs by the EPA did overstep their power. If the goverment thought it was absolutely necessary to phase out these refrigerants then why not go through Congress and enact an actual act of legislation instead of having these agencies install new regulations? By going through Congress we wouldn’t be in this mess and this turmoil where no one knows for what is going to happen.

Thanks for reading and I hope this article was helpful!

Alec Johnson

RefrigerantHQ

Sources

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