Heating, Air-Conditioning, & Refrigeration Distributors International v. EPA

On August 18, 2023, the D.C. Circuit Court of Appeals denied a refrigerant manufacturer’s request for panel rehearing or rehearing en banc of the court’s decision rejecting the manufacturer’s nondelegation challenge to a U.S. Environmental Protection Agency (EPA) rule implementing the phasedown of hydrofluorocarbons (HFCs) pursuant to the American Innovation and Manufacturing (AIM) Act. The manufacturer had asked for reconsideration of the panel’s ruling that the Clean Air Act’s exhaustion requirement required the manufacturer to first raise before EPA its claim that the AIM Act impermissibly delegated legislative power to EPA.

The D.C. Circuit Court of Appeals vacated two parts of EPA’s regulations implementing the phasedown of hydrofluorocarbons (HFCs) mandated by the American Innovation and Manufacturing Act but rejected other challenges to the regulations. The court concluded that the statute did not authorize EPA either to mandate that refillable cylinders be used to transport HFCs or to establish a certification and tracking system for HFC distribution that required that a QR code be affixed to each container to document a valid certification identification. (Judge Pillard dissented from this portion of the decision, finding that the measures fell within EPA’s congressionally delegated authority to “ensure” compliance with the phasedown schedule.) The court upheld other challenged aspects of the rule, holding that the statute gave EPA authority to regulate HFCs within blends and finding that it could not consider an argument that the statute violated the nondelegation doctrine because the petitioner did not raise this argument before EPA.

The court assigned the challenge to the notice of 2022 allowance allocations to a new docket (No. 22-1025, RMS of Georgia, LLC v. EPA).

Three trade associations; a manufacturer of pressure cylinders for refrigerant, propane, and industrial gases; and a producer of hydrofluorocarbon blends filed petitions for review in the D.C. Circuit Court of Appeals challenging EPA’s final rule on “Phasedown of Hydrofluorocarbons: Establishing the Allowance Allocation and Trading Program under the American Innovation and Manufacturing Act.” The trade associations asserted that the final rule exceeded EPA’s statutory authority, was contrary to the American Innovation and Manufacturing Act of 2020, and was arbitrary and capricious and otherwise contrary to law. In particular, the trade associations asked the court to set aside certain provisions of the final rule prohibiting the sale of regulated substances contained in disposable cylinders and mandating the tracking of the movement of cylinders containing regulated substances, including through the use of QR codes.