Natural Resources Defense Council v. Wheeler, 040720 FEDDC, 18-1172

Docket Nº:18-1172, 18-1174
Opinion Judge:Srinivasan Chief Judge.
Party Name:Natural Resources Defense Council, Petitioner v. Andrew Wheeler, Administrator, U.S. Environmental Protection Agency and Environmental Protection Agency, Respondents Arkema Inc. and Mexichem Fluor, Inc., Intervenors
Attorney:Peter J. DeMarco argued the cause for petitioner Natural Resources Defense Council. With him on the briefs were Melissa J. Lynch and David D. Doniger. Joshua M. Tallent, Assistant Attorney General, Office of the Attorney General for the State of New York, argued the cause for State Petitioners. W...
Judge Panel:Before: Srinivasan, Chief Judge, and Tatel and Rao, Circuit Judges. Rao, Circuit Judge, dissenting:
Case Date:April 07, 2020
Court:United States Courts of Appeals, Court of Appeals for the District of Columbia Circuit

Natural Resources Defense Council, Petitioner

v.

Andrew Wheeler, Administrator, U.S. Environmental Protection Agency and Environmental Protection Agency, Respondents

Arkema Inc. and Mexichem Fluor, Inc., Intervenors

Nos. 18-1172, 18-1174

United States Court of Appeals, District of Columbia Circuit

April 7, 2020

Argued May 3, 2019

On Petitions for Review of an Action of the United States Environmental Protection Agency

Peter J. DeMarco argued the cause for petitioner Natural Resources Defense Council. With him on the briefs were Melissa J. Lynch and David D. Doniger.

Joshua M. Tallent, Assistant Attorney General, Office of the Attorney General for the State of New York, argued the cause for State Petitioners. With him on the briefs were Letitia James, Attorney General, Barbara D. Underwood, Solicitor General, Steven C. Wu, Deputy Solicitor General, Michael J. Myers, Senior Counsel, and Morgan A. Costello, Chief, Office of the Attorney General for the State of New York; Kwame Raoul, Attorney General, and Daniel I. Rottenberg, Assistant Attorney General, Office of the Attorney General for the State of Illinois; Xavier Becerra, Attorney General, David A. Zonana, Supervising Deputy Attorney General, and Megan K. Hey, Deputy Attorney General, Office of the Attorney General for the State of California; Maura Healey, Attorney General, Christophe G. Courchesne, Assistant Attorney General, and Megan M. Herzog, Special Assistant Attorney General, Office of the Attorney General for the Commonwealth of Massachusetts; Ellen F. Rosenblum, Attorney General, and Paul A. Garrahan, Attorney-in-Charge, Office of the Attorney General for the State of Oregon; Kathleen Jennings, Attorney General, and Valerie M. Edge, Deputy Attorney General, Office of the Attorney General for the State of Delaware; Keith Ellison, Attorney General, and Max H. Kieley, Assistant Attorney General, Office of the Attorney General for the State of Minnesota; Robert A. Reiley, Assistant Counsel, Commonwealth of Pennsylvania Department of Environmental Protection; Karl A. Racine, Attorney General, and Loren L. AliKhan, Solicitor General, Office of the Attorney General for the District of Columbia; Gurbir S. Grewal, Attorney General, and Lisa J. Morelli, Deputy Attorney General, Office of the Attorney General for the State of New Jersey; Thomas J. Donovan, Jr., Attorney General, and Nicholas F. Persampieri, Assistant Attorney General, Office of the Attorney General for the State of Vermont; Robert W. Ferguson, Attorney General, and Katharine G. Shirey, Assistant Attorney General, Office of the Attorney General for the State of Washington.

Benjamin Carlisle, Attorney, U.S. Department of Justice, argued the cause for respondent. With him on the brief were Jeffrey Bossert Clark, Assistant Attorney General, Jonathan Brightbill, Deputy Assistant Attorney General, and Jan M. Tierney and Diane E. McConkey, Attorneys, U.S. Environmental Protection Agency.

Keith Bradley argued the cause for intervenors. With him on the brief were W. Caffey Norman, Dan Himmelfarb, John S. Hahn, Roger W. Patrick, and William J. Hamel.

Before: Srinivasan, Chief Judge, and Tatel and Rao, Circuit Judges.

OPINION

Srinivasan Chief Judge.

Thirty years ago, Congress amended the Clean Air Act to require that users of ozone-depleting substances transition to use of less harmful substitutes. Many users replaced ozone-depleting substances with hydrofluorocarbons (HFCs). Over time, though, scientists came to understand that HFCs, while not ozone-depleting substances, are powerful greenhouse gases that contribute to climate change.

In 2015, EPA issued a regulation disallowing the use of HFCs as a substitute for ozone-depleting substances. That rule was challenged in our court in Mexichem Fluor, Inc. v. EPA, 866 F.3d 451 (D.C. Cir. 2017). We determined that EPA could validly forbid current users of ozone-depleting substances from switching to HFCs. But we also concluded that EPA lacked authority to force users who had already switched to HFCs to make a second switch to a different substitute. We thus vacated the rule in part and remanded to the agency.

On remand, even though we had sustained EPA's bar against use of HFCs with regard to entities who were still using ozone-depleting substances, the agency decided to implement our decision by suspending the rule's listing of HFCs as unsafe substitutes in its entirety, meaning that even current users of ozone-depleting substances can now shift to HFCs. And EPA did so without going through notice-and-comment procedures.

The Natural Resources Defense Council and a group of states have now filed petitions for review in our court. They argue among other things that EPA's rule on remand improperly amended the agency's earlier rule without adhering to notice-and-comment procedures. We agree, and we therefore grant the petitions for review and vacate the challenged rule.

I.

In the 1970s, scientists realized that some chemicals used by humans deplete the layer of ozone gas above the Earth's surface that protects humans from ultraviolet radiation's harmful effects. See Nat. Res. Def. Council v. EPA, 464 F.3d 1, 3 (D.C. Cir. 2006). Based on those concerns, the United States and other countries, in the late 1980s, developed the Montreal Protocol on Substances that Deplete the Ozone Layer, Sept. 16, 1987, S. Treaty Doc. No. 100-10, 1522 U.N.T.S. 29. The Protocol is an international agreement requiring signatories to regulate ozone-depleting substances.

In 1990, Congress implemented the United States' obligations under that agreement by adding to the Clean Air Act a new Title VI, 42 U.S.C. § 7671 et seq. Title VI requires that, "[t]o the maximum extent practicable," ozone-depleting substances "be replaced by chemicals, product substitutes, or alternative manufacturing processes that reduce overall risks to human health and the environment." Id. § 7671k(a). And to help guard against the replacement of ozone-depleting substances with alternatives that are themselves harmful, the statute directs EPA to promulgate rules making it unlawful to replace ozone-depleting substances with substances that "may present adverse effects to human health or the environment." Id. § 7671k(c). To that end, EPA must maintain lists of "prohibited" and "safe" substitutes for specific uses. Id.

EPA has promulgated a number of regulations approving or prohibiting various substitutes for certain end-uses. See, e.g., Protection of Stratospheric Ozone: Listing of Substitutes for Ozone-Depleting Substances, 68 Fed. Reg. 4004 (Jan. 27, 2003); Protection of Stratospheric Ozone, 59 Fed. Reg. 13, 044 (Mar. 18, 1994). One group of substitutes addressed in many of those regulations is hydrofluorocarbons (HFCs), a family of "substances that contain hydrogen, fluorine, and carbon." Mexichem, 866 F.3d at 455. In 1994, EPA "concluded that certain HFCs were safe substitutes for ozone-depleting substances when used in aerosols, motor vehicle air conditioners, commercial refrigerators, and foams, among other things." Id. Over the following decade, EPA "added HFCs to the list of safe substitutes for a number of other products." Id. Throughout the 1990s and 2000s, as businesses transitioned away from ozone-depleting substances, they often employed HFCs as a substitute. See id.

But over time, EPA became increasingly concerned about HFCs. Although HFCs are not ozone-depleting substances, they are powerful greenhouse gases that, in EPA's view, "may contribute to climate change, increasing the incidence of mortality and the likelihood of extreme weather events such as floods and hurricanes." Id. In 2015, after going through notice-and-comment procedures, EPA promulgated a rule moving some HFCs from the safe substitutes list to the prohibited substitutes list. See Protection of Stratospheric Ozone: Change of Listing Status for Certain Substitutes Under the Significant New Alternatives Policy Program, 80 Fed. Reg. 42, 870 (July 20, 2015). The 2015 Rule prohibited current users of ozone-depleting substances from replacing those substances with HFCs. But the Rule also went further, prohibiting the continued use of certain HFCs by users who had already switched from ozone-depleting substances to HFCs. See Mexichem, 866 F.3d at 456.

The latter measure proved too ambitious. In Mexichem, we determined that EPA's attempt to regulate users who had already switched from ozone-depleting substances to HFCs exceeded the agency's statutory authority. Title VI, we concluded, only "makes it unlawful to 'replace' an ozone-depleting substance that is covered . . . with a substitute substance that is on the list of prohibited substitutes." Id. at 458 (quoting 42 U.S.C. § 7671k(c)). And businesses "'replace' an ozone-depleting substance when they transition to making [or using] the same product with a substitute substance. After that transition has occurred, the replacement has been effectuated," and there is no longer an "ozone-depleting substance to 'replace.'" Id. at 459. And because HFCs are not ozone-depleting substances, we concluded that once an entity replaces ozone-depleting substances with HFCs, its HFC use is no longer regulated by Title VI. In that situation, we held, EPA lacks authority to require a second substitution in place of HFCs. See id.

At the same time, with regard to EPA's decision to move HFCs to the list of prohibited substitutes on a going-forward basis, we reaffirmed that the agency may "move a substitute from the list of safe substitutes to the list of prohibited substitutes" and "may prohibit a manufacturer [or other regulated entity] from replacing an ozone-depleting substance that is covered under Title VI with a prohibited substitute." Id. at 457. We also...

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