Natural Res. Def. Council v. U.S. Dep't of Energy

• Decision Date: 22 February 2019
• Docket Number: 17 Civ. 6989
• Citation: 362 F.Supp.3d 126
• Parties: NATURAL RESOURCES DEFENSE COUNCIL, Plaintiff, v. U.S. DEPARTMENT OF ENERGY, Defendant.
• Court: U.S. District Court — Southern District of New York

362 F.Supp.3d 126

NATURAL RESOURCES DEFENSE COUNCIL, Plaintiff,

v.U.S. DEPARTMENT OF ENERGY, Defendant.

17 Civ. 6989

United States District Court, S.D. New York.

Signed February 22, 2019

Attorneys for Plaintiff, DEMOCRACY FORWARD FOUNDATION, 1333 H Street, NW - 11^th Floor, Washington, DC 20005, By: Javier M. Guzman, Esq., Jeffrey B. Dubner, Esq.

Attorneys for Defendant, U.S. ATTORNEY'S OFFICE, S.D.N.Y., 86 Chambers Street, 3^rd Floor, New York, NY 10007, By: Talia Kraemer, Esq.

OPINION

Sweet, D.J.

There are four motions pending in this action involving significant issues of administrative law and judicial review. The defendant, the Department of Energy ("DOE" or the "Defendant") has moved pursuant to Rules 12(b)(1) and 56 of the Federal Rules of Civil Procedure to dismiss the amended complaint ("AC") of plaintiff Natural Resources Defense Council ("NRDC" or the "Plaintiff") for lack of jurisdiction, or alternatively, for summary judgment. ECF No. 29. DOE has also moved to dismiss the AC as moot pursuant to Rule 12(h)(3) of the Federal Rules of Civil Procedure. ECF No. 56. NRDC has cross-moved for summary judgment and to supplement the Administrative Record ("AR") pursuant to the Administrative Procedures Act ("APA"). ECF Nos. 38, 40. Based on the facts and conclusions set forth below, the motion of DOE for dismissal for lack of jurisdiction and for summary judgment are denied, as is its motion to dismiss on mootness grounds; the motion of NRDC to supplement the AR and its cross-motion for summary judgment are granted.

I. Prior Proceedings

This action was commenced on September 14, 2017 by NRDC to challenge DOE's issuance of a stay under Section 705 of the APA of its Test Procedure Rule. ECF No. 1. NRDC's AC was filed on March 15, 2018. ECF No. 25.

By this Court's Opinion dated March 6, 2018, the motion of the DOE to transfer the action was denied. ECF No. 23.

The motion of DOE for dismissal or summary judgment, NRDC's cross-motion for summary judgment, and NRDC's motion to supplement the AR were heard and marked fully submitted on September 12, 2018, as was DOE's motion to dismiss this action as moot.

II. Background and Facts

The parties have not submitted statements of fact pursuant to Local Civil Rule 56.1 because the facts are set forth and cabined by the AR. See Just Bagels Mfg., Inc. v. Mayorkas , 900 F.Supp.2d 363, 372 n.7 (S.D.N.Y. 2012) (opining that cases based on the review of an administrative record "present[ ] only a question of law" and directing parties not to submit Local Rule 56.1 statements); Karpova v. Snow , 402 F.Supp.2d 459, 465 (S.D.N.Y. 2005) (summary judgment appropriate without submission of statements of undisputed material facts in APA cases because the administrative record provides the court with "all of the information necessary to determine whether material disputes of fact exist").

The Energy Policy and Conservation Act ("EPCA"), 42 U.S.C. §§ 6201 et seq. , authorizes DOE to adopt energy conservation standards for consumer products and set test procedures by which manufacturers certify their products' compliance with applicable standards. EPCA requires DOE to periodically review and strengthen its energy conservation standards, id. § 6295, and to review and amend its test procedures to "more accurately" measure a covered product's energy efficiency, id. § 6293(b) (1) (A).

Carrying out that obligation, DOE conducted several years of rulemaking proceedings in 2008 to update and strengthen the energy efficiency standards and test procedures for central air conditioners and heat pumps. This extensive process resulted in final rules in 2011 (the "2011 Rule") and 2016 (the "2016 Rule") to refine the regulations related to central air conditioners and heat pumps.

A significant part of these proceedings—including "proposals and comments from three separate rulemakings, two guidance documents, and two working groups," 81 Fed. Reg. at 36,994 —dealt with "split systems," air-conditioning systems that consist of an outdoor unit and an indoor unit. See generally id. at 36,996 (defining "split systems"). When an outdoor unit breaks down, it is often possible to replace that unit with an "unmatched" outdoor unit, without replacing the existing indoor components. Until 2016, however, DOE did not have a clear process for testing and certifying unmatched outdoor units. See U.S. DEP'T OF ENERGY, ENFORCEMENT POLICY STATEMENT: SPLIT-SYSTEM CENTRAL AIR CONDITIONERS WITHOUT HSVC (Dec. 16, 2015), https://www.energy.gov/sites/prod/files/2015/12/f27/Enforcement% 20Policy-CAC% 202015_0.pdf (acknowledging that many split systems "cannot be tested in accordance with the DOE test procedure"). This led to widespread noncompliance, particularly for "dry-shipped" units—that is, unmatched outdoor units that are shipped separately from the refrigerant needed to operate them. Id. The 2016 Rule redesigned the test procedures to require dry-shipped outdoor units to be paired for certification purposes with an indoor unit representative of the older, less-efficient indoor units they are typically paired with in practice. See 81 Fed. Reg. at 37,008 -09.

After DOE issued the 2016 Rule, Johnson Controls Inc. ("JCI") began marketing a new type of unmatched outdoor unit that shipped with one refrigerant, R-407C, but was compatible with a different refrigerant, R-22—a hydrofluorocarbon ("HCFC") with one of the "highest ozone depletion potentials of all HCFCs," which the Environmental Protection Agency ("EPA") has been phasing out. EPA, PHASEOUT OF CLASS II OZONE-DEPLETING SUBSTANCES , https://www.epa.gov/ods-phaseout/phaseout-class-ii-ozone-depleting-substances; see also AR 102. EPA had banned the sale and distribution of new systems designed to use R-22, but JCI's new outdoor units could operate as replacement R-22 units without complying with either the ban on R-22-equipped units or DOE's test procedures for unmatched units shipped without their intended refrigerant. See 81 Fed. Reg. at 81,170.

On August 24, 2016, DOE published a Supplemental Notice of Proposed Rulemaking to close this loophole. See Energy Conservation Program: Test Procedures for Central Air Conditioners and Heat Pumps, 81 Fed. Reg. 58,164 (Aug. 24, 2016) ("2016 SNOPR"). The 2016 SNOPR proposed to require all unmatched outdoor units that are compatible with R-22 to be certified through the same test procedures as units shipped with R-22, even if they shipped with a different refrigerant. See id. at 58,171. After considering comments from JCI and other industry participants, as well as NRDC and other efficiency, environmental, and consumer groups, DOE published the Test Procedures Rule on January 5, 2017. AR 350-515. As proposed in the 2016 SNOPR, the Test Procedures Rule required that units compatible with R-22--in practice, only JCI's R-407C units--be tested the same way as unmatched outdoor R-22 units themselves. AR 358. The effective date for the Test Procedures Rule was February 6, 2017, with a compliance deadline of July 5, 2017. AR 350.

A. DOE Delays the Test Procedures Rule Twice, Opposed by All But One Manufacturer

On January 20, 2017, the White House Chief of Staff directed agencies to "temporarily postpone" the effective date of all regulations that had not yet become effective, "as permitted by applicable law." Memo. from Reince Priebus to Heads of Exec. Dep'ts & Agencies (Jan. 20, 2017) (the "Preibus Memo"), https://www.whitehouse.gov/presidential-actions/memorandum-heads-executivedepartments-agencies/. On February 2, 2017, without notice or opportunity to comment, DOE published a final rule purporting to postpone the Test Procedures Rule's effective date by 60 days. AR 349 (the "February Final Rule"). The sole basis for this delay was "to give DOE officials the opportunity for further review and consideration of new regulations" in light of the Preibus memo. Id.

The February 2, 2017 delay--and the prospect DOE might delay the Test Procedures Rule again--came to the attention of industry participants who opposed any delay. One manufacturer of central air conditioners, Lennox International ("Lennox"), sent a letter to DOE on March 17, 2017, explaining that the Test Procedures Rule "was crafted during a negotiated rulemaking ... with broad stakeholder involvement" and "has broad industry support, because it makes many improvements to the test procedure." AR 320. Lennox cautioned that "[i]f this negotiated outcome is delayed or overturned, industry will either be subject to the existing inferior test procedure or will be at the mercy of yet another federal rulemaking." AR 321.

On March 21, 2017, without any advance notice or opportunity to comment, DOE published another final rule purporting to further postpone the Test Procedures Rule's effective date, this time to July 5, 2017, the rule's original compliance date. AR 348 (the "March Final Rule"). The sole basis for this delay was to provide the Secretary of DOE more time "for further review and consideration of new regulations." AR 348.

Two days later, the Air-Conditioning, Heating, and Refrigeration Institute ("AHRI"), an industry trade association representing more than 300 manufacturers of air conditioners and related equipment, supported the Test Procedures Rule. AR 322. AHRI explicitly stated that it "is not seeking to delay or rescind the [Test Procedures Rule]." Id.

On April 12, 2017, Lennox expanded on the reasons the Test Procedures Rule should be "implemented without further delay" in a detailed twelve-page letter. AR 324-25. Lennox noted that "JCI is in the unique position in the industry of [seeking to certify] products with R-407C refrigerants in residential applications." AR 324. It then provided several arguments against further delay in subjecting those products to the updated test procedures, explaining both the Test Procedures Rule's lawfulness and the negative impacts of a delay on consumers, industry, and energy efficiency. AR 324-35. JCI responded on May 22, 2017 disagreeing with Lennox's...