Two federal judges took President Donald Trump's administration to task on Friday over its decision to return to the market a group of banned refrigeration chemicals that are potent greenhouse gases.
The oral arguments over the Trump Environmental Protection Agency's policy on hydrofluorocarbons, or HFCs, indicate that even as the Trump administration remakes the federal courts, it will continue to face judicial resistance to its broad view of its legal authority.
It was the first day on the U.S. Court of Appeals for the D.C. Circuit for Judge Neomi Rao, the former law professor and regulatory critic who Trump named to replace Brett Kavanaugh when he was elevated to the U.S. Supreme Court. Rao, who served for a year in the Trump White House in a post often nicknamed "regulatory czar"—head of the Office of Information and Regulatory Affairs—now sits on the leading federal court deciding the ground rules for federal regulatory agencies.
Her first regulatory case was a challenge of the legality of the so-called "guidance" on HFCs issued last year by the Trump EPA. The case was brought by the environmental group Natural Resources Defense Council, 11 states and the District of Columbia.
Rao, a former clerk to Supreme Court Justice Clarence Thomas, took a narrow view of agency regulatory authority when she was director and founder of the Center for the Study of the Administrative State at George Mason University's Antonin Scalia Law School. But in the HFCs case, Rao's line of questioning—unlike the questions from her two colleagues' on the court panel—gave significant leeway to the EPA's own interpretation of its guidance and the law.
"What about the language of the guidance itself, saying that it's near-term, pending another rulemaking?" Rao asked the environmental and state petitioners. The courts can only review agency actions if they are "final."
But Peter DeMarco, arguing the case for the NRDC, cited previous court rulings holding that whether a regulatory decision is "final" depends not on what the agency says, but on the impact of the agency's decision.
In the case of the HFCs "guidance" that former EPA Administrator Scott Pruitt issued in April 2018, U.S. HFCs emissions will increase by the equivalent of 83 million metric tons of carbon dioxide—more than the annual carbon dioxide emissions of 20 average U.S. coal-fired power plants—for every year the guidance remains in effect, NRDC argued.
"The 'guidance' has immediate binding effects, and tells regulated entities they are free to change their conduct," DeMarco said.
Because it has the impact of a final rule, EPA must provide public notice, a public comment period and a rationale for its decision-making—none of which EPA did, he said. In its written case brief, NRDC said that the EPA "did not even mention, let alone analyze, the harms from [the] additional emissions" of greenhouse gases that will result from its guidance.
U.S. Manufacturers Supported HFCs Rules
HFCs are short-lived climate pollutants hundreds to thousands of times more potent than carbon dioxide at trapping heat in the atmosphere. Because they have a shorter life span in the atmosphere than CO2, restrictions on their use can have a big impact on climate change as the world grapples with the more difficult job of reducing long-lasting CO2.
The chemicals were originally developed as alternatives for ozone-depleting substances that were phased out under a 1987 international treaty known as the Montreal Protocol. But the HFCs were found to be harmful in another way: as greenhouse gases.
With safer alternatives to HFCs being developed, President Barack Obama's administration in 2015 put HFCs on a list of prohibited substitutes for ozone-depleting chemicals. It was a regulation that would have provided about 4 percent of the pollution cuts that the United States needed to meet its short-term goal under the Paris climate agreement.
The Obama rule was supported by large U.S.-based chemical manufacturers that have invested heavily in developing HFCs alternatives, including DuPont spinoff Chemours and Honeywell International.
But two foreign HFCs manufacturers—Mexichem Fluor of Mexico and France-based Arkema—challenged the Obama rule. A federal appeals court in 2017 gave the foreign HFCs makers a partial victory—upholding EPA's authority to regulate HFCs, but ruling that the agency could not require manufacturers currently using the substances to stop.
Pruitt's EPA, arguing that the decision was confusing to the regulatory community, issued guidance that, in effect, said the agency would no longer apply any HFCs restrictions, even those upheld by the court.
The Other Judges Question EPA's Reasoning
Benjamin Carlisle, a Department of Justice attorney arguing the case for the EPA, said the Mexichem decision had the impact of entirely vacating the Obama HFCs rule, because the court did not leave the "legal scaffolding" in place for EPA to enforce the regulation.
"Suppose I don't agree with your interpretation," asked Appeals Court Judge David Tatel, who was appointed in 1994 by President Bill Clinton. When Carlisle indicated he didn't want to respond to a hypothetical, Tatel provoked laughter in the staid courtroom, saying, "That's what hypotheticals are for!"
Both Tatel and Judge Sri Srinivasan, an appointee of Obama, were harsher in their questioning of Keith Bradley, an attorney for the foreign HFC manufacturers, who intervened in the case in support of the Trump administration. Bradley asked the judges to consider the difficult spot that the EPA was in after the court's Mexichem decision in deciding which regulated entities fell within its jurisdiction.
"There are going to be situations that are complicated," Srinivasan said. "But what the EPA can't say is that it doesn't matter if they switched [from HFCs] or not, and that's what the agency did. What it can't do is take the kind of blanket measure it undertook."
Tatel asked Bradley, "Do you think an agency that has a regulation under a statutory program can stop enforcing it because it plans to change it?"
DeMarco, given the last word in the oral arguments on behalf of the environmental group and states, jumped in to answer that question—the D.C. Circuit itself had ruled in 2017 that the agency can't do that when it overturned Pruitt's attempt to put Obama's methane rules on hold before going through a notice and comment process.
The Trump administration has lost 95 percent of its court battles over deregulation, according to a tally kept by the Institute of for Policy Integrity, a nonpartisan think tank at New York University School of Law. That is a dramatically worse record than previous administrations. The government in the past has won about nearly 70 percent of the cases involving challenges to agency action, according to an average of 11 studies on the matter.