IGas Holdings, Inc. v. EPA

United States Court of Appeals

FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued October 8, 2024 Decided August 1, 2025

No. 23-1261

IGAS HOLDINGS, INC., ET AL.,

PETITIONERS

v.

ENVIRONMENTAL PROTECTION AGENCY,

RESPONDENT

AIR-CONDITIONING, HEATING, AND REFRIGERATION

INSTITUTE AND ALLIANCE FOR RESPONSIBLE ATMOSPHERIC

POLICY,

INTERVENORS

Consolidated with 23-1263

On Petitions for Review of a Final Rule

of the Environmental Protection Agency

JoAnn T. Sandifer argued the cause for petitioners IGas

Holdings, Inc., et al. With her on the briefs were Jamie

Shookman and Daniel G. Solomon.

2

Zhonette M. Brown argued the cause for petitioner RMS

of Georgia, LLC. With her on the briefs were Kaitlyn D.

Schiraldi and David M. Williamson.

Michael Pepson was on the brief for amicus curiae

Americans for Prosperity Foundation in support of petitioners.

Sarah A. Buckley, Attorney, U.S. Department of Justice,

argued the cause for respondent. With her on the brief was

Todd Kim, Assistant Attorney General.

Elizabeth B. Dawson argued the cause for intervenors for

respondent. With her on the brief were Thomas A. Lorenzen

and Robert J. Meyers.

Sarah C. Tallman, David Doniger, Nanding Chen, and Ian

Fein were on the brief for amicus curiae Natural Resources

Defense Council in support of respondent.

Before: PILLARD, PAN, and GARCIA, Circuit Judges.

Opinion for the Court filed by Circuit Judge PAN.

PAN, Circuit Judge: Hydrofluorocarbons (HFCs) are

synthetic cooling agents used in a variety of applications,

including refrigeration and air conditioning. Despite their

utility, HFCs are extremely potent greenhouse gases that

increase global warming. To address that problem, Congress

passed the American Innovation and Manufacturing (AIM) Act

of 2020. The AIM Act requires an 85 percent reduction in U.S.

production and consumption of HFCs by 2036. Congress

specified that the HFC phasedown would be accomplished with

a cap-and-trade program, and it tasked the Environmental

Protection Agency (EPA) with administering that program.

3

In 2021, the EPA issued a rule to implement the cap-and-

trade program for the years 2022 and 2023 (the Framework

Rule). The program required the EPA to calculate and allocate

“allowances” that authorized industry members to produce and

consume HFCs. The EPA allocated the allowances to market

participants according to their historic market share, and

determined the market share of each participant based on its

production-and-consumption activities in the years 2011 to

2019. Subsequently, the EPA issued a new rule to set the

allocation methodology for the years 2024 through 2028 (the

2024 Rule). In the new rule, the EPA again allocated

allowances to market participants according to their historic

market share, and again used data from the years 2011 to 2019

to calculate that market share.

We now consider two challenges to the 2024 Rule.

Petitioner RMS of Georgia, LLC (which goes by its trade

name, “Choice”) argues that Congress violated the

nondelegation doctrine when it granted the EPA authority to

allocate use allowances, and that the EPA unconstitutionally

exercised legislative power when it promulgated the 2024

Rule. Petitioner IGas Holdings, Inc. (IGas) argues that the

EPA’s exclusion of 2020 data from its market-share

calculations was arbitrary and capricious. We deny both

petitions for review.

I.

The 2024 Rule is not the first of its kind. Congress has

employed cap-and-trade programs to phase out industrial use

of other hazardous refrigerants, including chlorofluorocarbons

(CFCs) and hydrochlorofluorocarbons (HCFCs). Those

predecessor programs are the model for the one at issue in this

case.

4

Both CFCs and HCFCs are ozone-depleting substances. In

1986, the United States agreed to regulate such substances

when it ratified the 1985 Vienna Convention for the Protection

of the Ozone Layer. The subsequent 1987 Montreal Protocol,

ratified by the United States in 1988, set specific targets for the

global elimination of CFCs and HCFCs. To make good on

those treaty obligations, Congress enacted Title VI of the Clean

Air Act, 42 U.S.C. § 7671 et seq., which effectuated a phaseout

of CFC- and HCFC-emissions in the United States. Title VI

created a cap-and-trade program that (1) set limits (caps) on the

total level of emissions for CFCs and HCFCs, (2) authorized

the EPA to issue emissions allowances to market participants

(not to exceed the overall cap), (3) allowed companies to sell

(trade) their unused allowances, and (4) made it unlawful for

anyone to emit the regulated substances without having a

corresponding allowance. See id. §§ 7671c(a)–(c), 7671d(a)–

(c), 7671f. Today, CFCs have been eliminated, and new

production and importation of most HCFCs were phased out as

of 2020 (although some HCFCs are still used in existing air

conditioners and refrigeration equipment).

HFCs have proven to be an effective replacement for the

phased-out refrigerants. With the increased global use of air-

conditioning and refrigeration, the demand for HFCs also has

surged. Although HFCs do not deplete the ozone layer, they

present their own problem: HFCs are potent greenhouse gases

with a relative climatic impact “that can be hundreds to

thousands of times that of carbon dioxide.” J.A. 341. Thus, in

2016, signatories of the Montreal Protocol passed the Kigali

Amendment, which mandates reductions in the production and

consumption of HFCs. Although the United States did not

ratify the Amendment until 2022, Congress passed the AIM

Act to address HFCs in 2020.

5

The AIM Act, 42 U.S.C. § 7675, mandates an 85 percent

phasedown of HFC production and consumption by 2036. To

accomplish that goal, the Act employs a cap-and-trade program

like those that were used to phase out CFCs and HCFCs.

Subsection (e) of the AIM Act creates a program that schedules

the HFC phasedown and authorizes the allocation of

production-and-consumption allowances that are capped and

traded. Subsection (e)(1) sets production-and-consumption

baselines according to specific formulas,1 while subsection

(e)(2) sets a timeline for gradually reducing HFC use as a

“capped” percentage of the baseline. Subsection (e)(3) directs

the EPA to allocate the allowances, which then can be traded.

The program accomplishes the targeted reductions in HFC

production and consumption by lowering the number of

available allowances each year.

Specifically, under subsection (e)(2)(C), HFC production

and consumption is capped at 90 percent of the baseline for the

years 2020 to 2023; at 60 percent of the baseline for the years

2024 to 2028; at 30 percent of the baseline for the years 2029

to 2033; at 20 percent of the baseline for the years 2034 to

2035; and, finally, at 15 percent of the baseline by the year

2036. See 42 U.S.C. § 7675(e)(2)(C).

For each year, the EPA must “ensure that the annual

quantity of all regulated substances produced or consumed in

the United States does not exceed” the targets in subsection

(e)(2)(C). 42 U.S.C. § 7675(e)(2)(B). To accomplish that task,

the EPA “shall use” the listed targets “to determine the quantity

1

The statute directs the EPA to set the baselines as the average

annual quantity of all regulated substances produced or consumed

from 2011 to 2013, plus the sum of 15 percent of the production or

consumption level of HCFCs in 1989 and 0.42 percent of the

production or consumption level of CFCs in 1989. See 42 U.S.C.

§ 7576(e)(1)(B)–(D).

6

of allowances” for each year. Id. § 7675(e)(2)(D)(i). The AIM

Act describes an “allowance” as “a limited authorization for the

production or consumption of a regulated substance.” Id.

§ 7675(e)(2)(D)(ii)(I)(bb). Under subsection (e)(2), “no

person shall” produce or consume “a quantity of a regulated

substance without a corresponding quantity of [production-

and-consumption] allowances.” Id. § 7675(e)(2)(A).

Subsection (e)(3) of the Act gives the EPA authority to

“issue a final rule” that accomplishes the following:

(A) phasing down the production of regulated

substances in the United States through an

allowance allocation and trading program in

accordance with this section; and

(B) phasing down the consumption of regulated

substances in the United States through an

allowance allocation and trading program in

accordance with the schedule under

paragraph (2)(C) . . . .

42 U.S.C. § 7675(e)(3).

Finally, Congress provided for certain exceptions and also

mandated that the EPA initially “allocate the full quantity of

allowances necessary” for a small class of “essential uses.” 42

U.S.C. § 7675(e)(4)(B)(iv).

A.

In 2021, the EPA promulgated its Framework Rule, which

implements subsection (e) of the AIM Act for the years 2022

and 2023. See Phasedown of Hydrofluorocarbons:

Establishing the Allowance Allocation and Trading Program

Under the [AIM] Act (Framework Rule), 86 Fed. Reg. 55116

7

(Oct. 5, 2021). As directed by the statute, the Framework Rule

calculated HFC production-and-consumption baselines under

subsection (e)(1) and then determined the quantity of

allowances that would be available in 2022 and 2023 under

subsection (e)(2) — i.e., the quantity that would achieve 90

percent of the baseline level of production and consumption.

The Framework Rule also established an allocation plan

for the 2022–2023 allowances. First, the EPA decided that

allowances would be issued to entities that had historical

production-and-consumption data and that were still active in

2020, with case-by-case exceptions for companies with

pandemic-related disruptions in 2020. Next, the EPA allocated

the available allowances to those entities according to their

historical market share. To calculate an entity’s market share,

the EPA looked to that entity’s three highest years of

production or consumption activity between the years 2011 and

2019. It then averaged the data from those three high years and

divided that number by the sum of all entities’ high-three

averages. Finally, the EPA multiplied that number by the total

number of allowances in the pool (which was 90 percent of the

baseline amount). The EPA said it would reconsider this

methodology before the next step of the phasedown, in 2024.

B.

Subsequently, the EPA proposed an allocation

methodology for HFC allowances for the years 2024 through

2028, the period for which subsection (e)(2) capped production

and consumption at 60 percent of the baseline. After

calculating the quantity of allowances available, the EPA

proposed “to continue using historic production and

consumption data from 2011 to 2019” to allocate allowances

by market share, in part to “minimize disruption to the market

in 2024,” and in part because the “EPA ha[d] conducted

8

multiple rounds of outreach and review” on that dataset.

Phasedown of Hydrofluorocarbons: Allowance Allocation

Methodology for 2024 and Later Years (Proposed Rule), 87

Fed. Reg. 66372, 66377–78 (Nov. 3, 2022).

The EPA noted, however, that it was “considering whether

to include more recent data” to reflect the current state of the

HFC production and import market. Proposed Rule, 87 Fed.

Reg. at 66378. The EPA therefore “request[ed] comment on

whether to expand the range of years to use to develop each

allowance holder’s high three-year average to include 2020 and

2021.” Id. But the agency previewed its concerns about using

the more recent data, stating: “[T]he Agency recognizes that

production and importation of HFCs in 2020 and 2021 were

likely influenced by external factors such as the COVID–19

pandemic, and supply chain disruptions. In addition, EPA is

concerned that data from 2020 and 2021 could be distorted due

to an entity’s awareness that the AIM Act may be, or had been,

passed,” leading to stockpiling. Id. The EPA further worried

that “[e]xpanding the range of years could also significantly

change each entity’s market share, which could disrupt the

market and negatively affect ongoing adjustments to the HFC

Allocation Program that have taken place in 2022 and 2023.”

Id. Finally, the EPA said it was “unaware of any environmental

benefit associated with changing the years used to determine

allowance allocations.” Id.

Petitioners Choice and IGas each submitted comments on

the proposed rule. Choice is a small business that reclaims

HFCs and invents HFC blends. Its comments argued that

subsection (e) of the AIM Act unconstitutionally delegated

legislative power to the EPA. IGas is a participant in

refrigerant aftermarkets for existing HFC-containing

equipment. IGas’s comments urged the EPA to include data

from the years 2020 and 2021 in its allocation methodology

9

because, in its view, the EPA’s focus on years 2011 to 2019

ignored the aftermarket’s growth in more recent years and

favored companies that were not involved in the aftermarket.

In its final 2024 Rule setting the allocation methodology

for the years 2024 to 2028, the EPA continued to rely on

market-share data from 2011 to 2019 and thus excluded data

from 2020 and 2021. See Phasedown of Hydrofluorocarbons:

Allowance Allocation Methodology for 2024 and Later Years

(2024 Rule), 88 Fed. Reg. 46836, 46842 (July 20, 2023). The

EPA explained that the data from 2020 and 2021 were not

representative of the typical market due to the pandemic, had

not been as thoroughly vetted as the 2011 to 2019 dataset, and

could cause market disruptions by drastically changing

entities’ market share from what had been implemented under

the Framework Rule.

C.

Choice and IGas timely petitioned for review of the 2024

Rule, and their appeals were consolidated. Two trade

associations whose members are regulated HFC importers and

producers — the Air-Conditioning, Heating, and Refrigeration

Institute, and the Alliance for Responsible Atmospheric Policy

— intervened as respondents.2

2

Article III standing is a prerequisite to intervention, even as a

respondent. See Deutsche Bank Nat’l Tr. Co. v. FDIC, 717 F.3d 189,

193 (D.C. Cir. 2013). But see Inst’l Shareholder Servs. v. SEC, --

F.4th --, 2025 WL 1802786, at *4 n.3 (D.C. Cir. July 1, 2025)

(recognizing tension with cases holding that “intervenors that seek

the same relief sought by at least one existing party need not” show

standing (citing Little Sisters of the Poor Saints Peter & Paul Home

v. Pennsylvania, 591 U.S. 657, 674 n.6 (2020))). Although no party

10

II.

Petitioner Choice argues that the AIM Act

unconstitutionally delegates legislative power to the EPA by

granting the agency “unconstrained authority” to allocate HFC

allowances. Choice Br. 1. Choice asks us to vacate the EPA’s

2024 Rule because it is “contrary to constitutional right, power,

privilege, or immunity.” 42 U.S.C. § 7607(d)(9)(B) (made

applicable to the AIM Act through 42 U.S.C. § 7675(k)(1)(C)).

A.

Amicus National Resources Defense Council (NRDC)

argues that Choice lacks standing to challenge the EPA’s 2024

Rule. We disagree. Choice imports HFCs that are regulated

by the EPA under the AIM Act, and Choice receives

allowances for that import activity. Choice therefore “has

standing to challenge an allegedly illegal statute or rule under

which it is regulated.” State Nat’l Bank of Big Spring v. Lew,

795 F.3d 48, 53 (D.C. Cir. 2015).

NRDC contends, however, that Choice has not established

standing because it has not alleged that its injury will be

redressed by the court striking down the only section of the

AIM Act that Choice challenges: subsection (e)(3), which

provides for the allocation of allowances. According to

NRDC, if subsection (e)(3) is vacated and the EPA thereby

loses its authority to allocate allowances, then no entity could

contests the Intervenors’ standing, “we have an independent

obligation to assure ourselves that standing exists.” Pub. Emps. for

Env’t Resp. v. EPA, 77 F.4th 899, 912 (D.C. Cir. 2023) (cleaned up).

Because the Intervenors are both trade associations whose members

are regulated HFC importers and producers, they have associational

standing. See Fund Democracy, LLC v. SEC, 278 F.3d 21, 25 (D.C.

Cir. 2002).

11

produce or consume HFCs at all because subsection (e)(2)

prohibits the production and consumption of HFCs without a

corresponding allowance. NRDC reasons that the resulting

inability to import HFCs would exacerbate, not redress,

Choice’s injury of having its “market activity limited” and its

“market share . . . reduced.” Choice Br. 15, 18.

We disagree with NRDC’s assumption that subsection

(e)(2) would remain operative if we invalidated subsection

(e)(3). An unconstitutional provision is “presumed severable”

from the statute only “if what remains after severance is fully

operative as a law.” INS v. Chadha, 462 U.S. 919, 934 (1983)

(cleaned up). Any presumption of severability is overcome

where “it is evident that the Legislature would not have enacted

those provisions which are within its power, independently of

that which is not.” Buckley v. Valeo, 424 U.S. 1, 108 (1976)

(cleaned up); see also Regan v. Time, Inc., 468 U.S. 641, 653

(1984) (“Whether an unconstitutional provision is severable

from the remainder of the statute in which it appears is largely

a question of legislative intent[.]”).

In our view, the interrelated subparts of subsection (e) are

not severable. Subsection (e)(2) prohibits HFC production and

consumption without a corresponding allowance. That

provision cannot be “fully operative as a law” without

subsection (e)(3)’s mechanism for allocating allowances.

Chadha, 462 U.S. at 934 (cleaned up). Congress plainly would

not have enacted the remainder of subsection (e) if there were

no way to allocate HFC allowances because the entire cap-and-

trade program depends on the availability of allowances.

Accordingly, we are satisfied that Choice has standing to

challenge the constitutionality of subsection (e)(3).

12

B.

Turning to the merits, we hold that the AIM Act does not

unconstitutionally delegate legislative power because it

sufficiently constrains the EPA’s discretion to allocate HFC

allowances.

1.

The Constitution vests “[a]ll legislative Powers herein

granted . . . in a Congress of the United States.” U.S. Const.

art. I, § 1. “This text permits no delegation of those powers[.]”

Whitman v. Am. Trucking Ass’ns, 531 U.S. 457, 472 (2001).

That does not mean, however, that Congress may not seek

“assistance from another branch.” J.W. Hampton, Jr., & Co. v.

United States, 276 U.S. 394, 406 (1928). “[I]n particular,

[Congress] may confer substantial discretion on executive

agencies to implement and enforce the laws.” Gundy v. United

States, 588 U.S. 128, 135 (2019) (plurality opinion). The

Constitution is not offended when Congress “vest[s] discretion

in” agencies “to make public regulations interpreting a statute

and directing the details of its execution,” so long as that

discretion is “within defined limits.” J.W. Hampton, 276 U.S.

at 406; Wayman v. Southard, 23 U.S. (10 Wheat.) 1, 46 (1825)

(Marshall, C.J.) (“[T]he maker of the law may commit

something to the discretion of the other departments[.]”); Am.

Trucking, 531 U.S. at 475 (“A certain degree of discretion

. . . inheres in most executive . . . action.” (cleaned up)); cf.

Loper Bright Enters. v. Raimondo, 603 U.S. 369, 394 (2024)

(“In a case involving an agency, of course, the statute’s

meaning may well be that the agency is authorized to exercise

a degree of discretion.”).

“Once it is conceded, as it must be,” that some discretion

— and “even some judgments involving policy considerations”

— “must be left to the officers executing the law,” the

13

remaining debate is “not over a point of principle but over a

question of degree.” Mistretta v. United States, 488 U.S. 361,

415 (1989) (Scalia, J., dissenting). The Court has said that “the

degree of agency discretion that is acceptable varies according

to the scope of the power congressionally conferred.” Am.

Trucking, 531 U.S. at 475. “The guidance needed is greater . . .

when an agency action will affect the entire national economy

than when it addresses a narrow, technical issue[.]” FCC v.

Consumers’ Rsch., No. 24-354, slip op. at 11 (June 27, 2025)

(cleaned up). Still, “even in sweeping regulatory schemes,” the

nondelegation doctrine has “never demanded . . . that statutes

provide a determinate criterion.” Am. Trucking, 531 U.S. at

475 (cleaned up).

The nondelegation analysis boils down to this: When

“confer[ring] decisionmaking authority upon agencies,”

Congress “must lay down by legislative act an intelligible

principle to which the person or body authorized to act is

directed to conform.” Am. Trucking, 531 U.S. at 472 (cleaned

up). When setting forth an “intelligible principle,” Congress is

not required to “prescribe detailed rules” but rather to “clearly

delineate[] the general policy, the public agency which is to

apply it, and the boundaries of this delegated authority.” Am.

Power & Light Co. v. SEC, 329 U.S. 90, 105 (1946). If a

federal law contains such an intelligible principle to guide an

agency’s actions, then there is no nondelegation problem: The

law permissibly grants discretion to an agency rather than

unconstitutionally transfers legislative power. See Consumers’

Rsch., slip op. at 6 (Kavanaugh, J., concurring) (“[W]hen

implementing legislation that contains an intelligible principle,

the President is exercising executive power.”).

Consistent with the foregoing principles, the Supreme

Court has invalidated only two federal laws for violating the

nondelegation doctrine, both times in 1935, and “in each case

14

because Congress had failed to articulate any policy or standard

to confine discretion.” Gundy, 588 U.S. at 146 (cleaned up)

(emphasis in original); see also A.L.A. Schechter Poultry Corp.

v. United States, 295 U.S. 495 (1935); Panama Refining Co. v.

Ryan, 293 U.S. 388 (1935). Since then, the Court has “over

and over upheld even very broad delegations.” Gundy, 588

U.S. at 146. To name a few: The Court has upheld laws

authorizing agencies to regulate broadcast licensing as “public

interest, convenience, or necessity” requires, Nat’l Broad. Co.

v. United States, 319 U.S. 190, 225–26 (1943); set “just and

reasonable” rates for natural gas, Fed. Power Comm’n v. Hope

Nat. Gas Co., 320 U.S. 591, 600 (1944); and set air-quality

standards that are “requisite to protect the public health,” Am.

Trucking, 531 U.S. at 472–76. In so doing, the Court has

affirmed and reaffirmed that the governing standards for a

permissible delegation are “not demanding.” Gundy, 588 U.S.

at 146.

2.

Against that backdrop, the AIM Act easily passes muster.

Congress enacted a detailed program for capping and trading

HFC allowances, in which the EPA has discretion to decide

how to allocate the allowances. Congress provided ample

direction to guide the EPA’s exercise of discretion: The Act’s

text, structure, and history demonstrate that Congress intended

for the EPA to model its cap-and-trade program on similar

programs established under the Clean Air Act, and those

programs allocated allowances to market participants

according to their market share. “Given that statutory

meaning,” Choice’s “constitutional claim must fail” —

subsection (e)(3)’s “delegation falls well within permissible

bounds.” Gundy, 588 U.S. at 136.

15

The question of whether Congress has supplied an

intelligible principle to guide the agency’s use of discretion

begins with statutory interpretation. We must “constru[e] the

challenged statute to figure out what task it delegates and what

instructions it provides.” Gundy, 588 U.S. at 136. “Only after

a court has determined a challenged statute’s meaning can it

decide whether the law sufficiently guides executive discretion

to accord with Article I.” Id. The established rules of statutory

interpretation “hold[] good for delegations, just as for other

statutory provisions.” Id. at 141. And so, when reviewing a

statute for an intelligible principle, “we do not confine

ourselves to the isolated phrase in question, but utilize all the

tools of statutory construction, including the statutory context

and, when appropriate, the factual background of the statute to

determine whether the statute provides the bounded discretion

that the Constitution requires.” Owens v. Republic of Sudan,

531 F.3d 884, 890 (D.C. Cir. 2008); see Consumers’ Rsch., slip

op. at 22 (noting that previous nondelegation cases “did not

examine . . . statutory phrases in isolation but instead looked to

the broader statutory contexts, which informed their

interpretation and supplied the content necessary to satisfy the

intelligible-principle test”).

We thus review the AIM Act’s “text, considered alongside

its context, purpose, and history.” Gundy, 588 U.S. at 136. We

agree with the EPA that the statute guided the agency “to

allocate . . . allowances among persons that have produced or

imported hydrofluorocarbons.” EPA Br. 27–29. The statutory

text commands the EPA to allocate allowances “in accordance

with” the Act, 42 U.S.C. § 7675(e)(3); and the Act focuses on

reducing HFC “production and consumption.” See id.

§ 7675(e)(3)(A)–(B) (directing the EPA to “issue a final rule”

“phasing down the production . . . [and] consumption” of

HFCs); see also id. § 7675(e)(2)(C) (setting schedule for

reducing baseline levels of “production and consumption” of

16

HFCs). To accomplish the statute’s goal of phasing down

HFCs, the EPA must require the existing players in the HFC

market to lower their HFC “production and consumption” to a

degree that is commensurate with the capped number of

allowances issued by the agency. A natural way to allocate the

allowances to achieve that purpose is to rely on the market

participants’ historical market share.

Moreover, precedent supports that approach: The AIM

Act follows the lead of two predecessor cap-and-trade

programs that virtually eliminated the emissions of CFCs and

HCFCs. Indeed, legislative history demonstrates that the AIM

Act was “modeled on” Title VI of the Clean Air Act. See

Promoting American Innovation and Jobs: Legislation to

Phase Down Hydrofluorocarbons: Hearing on H.R. 5544

Before the Subcomm. on Env’t & Climate Change of the H.

Comm. on Energy & Com., 116th Cong. 2, 7 (2020) (statements

of Rep. Paul Tonko, Chairman, H. Subcomm. on Env’t &

Climate Change, and Rep. Frank Pallone, Jr., Chairman, H.

Comm. on Energy & Com.) (Title VI “proved an able vehicle

to foster an orderly, market-based phasedown of HFCs’

predecessors,” and the AIM Act “builds upon [Congress’s]

previous experience in phasing out CFCs and their replacement

chemicals, HCFCs.”). Thus, in both statutes, Congress used

“baseline” years to set caps and phaseout schedules for the

regulated refrigerants. Compare 42 U.S.C. §§ 7671(2)(A)–

(C), 7671c(a), 7671d(b), with id. § 7675(e)(1). Congress also

directed the EPA to allocate allowances to accomplish the

refrigerant phaseouts “in accordance with” each controlling

Act. Compare 42 U.S.C. §§ 7671c(c), 7671d(c), with id.

§ 7675(e)(3). Congress even expressly incorporated certain

provisions of Title VI into the AIM Act, such as the penalty,

recordkeeping-and-monitoring, citizen-suit, and judicial-

review provisions. See id. § 7675(k)(1)(C).

17

Based on the strong similarity between the programs

created by the AIM Act and Title VI, it is evident that Congress

expected the EPA to implement the HFC cap-and-trade

program in a manner that tracked the successful predecessor

programs for CFCs and HCFCs — and those predecessor

programs allocated allowances according to market share.

Compare Protection of Stratospheric Ozone, 57 Fed. Reg.

33754, 33754 (July 30, 1992) (“[The EPA] [a]pportions

baseline allowances to produce or import ozone depleting

substances to companies that produced or imported certain

ozone depleting substances in the baseline years[.]”), with 2024

Rule, 88 Fed. Reg. at 46837 (“The Agency is basing these

general pool allocations on entities’ market shares derived from

the average of the three highest years of production and

consumption, respectively, of regulated substances between

2011 and 2019.”). That interpretation of the AIM Act is

consistent with “the familiar principle that Congress legislates

with a full understanding of existing law.” Am. Fed’n of Gov’t

Emps. v. FLRA, 46 F.3d 73, 78 (D.C. Cir. 1995). Congress

intended that the EPA would implement the AIM Act by

allocating allowances in an orderly, market-based fashion, as it

did when implementing cap-and-trade programs under Title

VI. See Am. Power & Light Co., 329 U.S. at 104 (concluding

that the relevant delegation “derive[d] much meaningful

content from the purpose of the Act, its factual background and

the statutory context”).3

3

We also note that, to the extent the AIM Act is susceptible to

more than one plausible construction, we should read the statute to

avoid granting discretion that is so broad that it could create a

nondelegation problem. See Consumers’ Rsch., slip op. at 30

(“Statutes (including regulatory statutes) should be read, if possible,

to comport with the Constitution, not to contradict it.”); Gundy, 588

U.S. at 136 (rejecting the petitioner’s preferred reading of the statute,

under which the Court “would face a nondelegation question”).

18

“Now that we have determined what [the statute] means,

we can consider whether it violates the Constitution.” Gundy,

588 U.S. at 145. The foregoing analysis reveals that our

interpretation of the statute all but answers the constitutional

question of whether Congress provided an intelligible principle

to guide the agency’s discretion. See id. at 136 (“[I]ndeed, once

a court interprets the statute, it may find that the constitutional

question all but answers itself.”).

Here, the AIM Act directs the EPA’s regulatory authority

“to a particular subject matter . . . in a particular industry” —

i.e., the allocation of a capped number of allowances for the

production and consumption of HFCs. Sanchez v. Off. of State

Superintendent of Educ., 45 F.4th 388, 401–02 (D.C. Cir.

2022). “Within that narrow sphere,” Congress “can delegate

considerable discretion.” Id. at 402. Indeed, how to allocate

allowances in a cap-and-trade program is the sort of “technical

issue” for which little guidance is necessary. Consumers’

Rsch., slip op. at 11; see Am. Trucking, 531 U.S. at 475 (“[T]he

degree of agency discretion that is acceptable varies according

to the scope of the power congressionally conferred.”). By

modeling the AIM Act on Title VI, Congress “imposed

ascertainable and meaningful guideposts for” the EPA “to

follow when carrying out its delegated function of” allocating

HFC allowances: The guideposts are found in Title VI and its

implementing regulations, which allocated allowances

according to the historical market share of industry

participants. Consumers’ Rsch., slip op. at 19. The AIM Act’s

allocation provisions, read in context, are constitutionally

sufficient and do not violate the nondelegation doctrine. See

Gundy, 588 U.S. at 135–36; see also Sanchez, 45 F.4th at 401–

02 (concluding that the “implication of the Act, read as a

whole,” clearly guided the Mayor’s discretion).

19

The AIM Act plainly does not give the EPA the sort of

unbounded discretion that renders a statute unconstitutional.

Subsection (e)(3) is very different from the only two

precedents, from over ninety years ago, that applied the

nondelegation doctrine to strike down a law. See Panama

Refining Co., 293 U.S. 388; A.L.A. Schechter Poultry Corp.,

295 U.S. 495. The Supreme Court overturned statutes “in each

case because Congress had failed to articulate any policy or

standard to confine discretion.” Gundy, 588 U.S. at 146

(cleaned up) (emphasis in original). By contrast, as discussed,

the history and context of the AIM Act show that Congress

provided ample direction to confine the EPA’s discretion in

implementing the statute’s allowance-allocation program.

3.

We are unpersuaded by Choice’s counterarguments.

Choice complains that the AIM Act’s language directing the

EPA to distribute allowances “in accordance with this section,”

42 U.S.C. § 7675(e)(3), is not as specific as the direction

provided in other sections of the Act. But the Constitution does

not require the degree of specificity demanded by Choice. See

Am. Trucking, 531 U.S. at 475 (noting that the nondelegation

doctrine has “never demanded . . . that statutes provide a

determinate criterion” (cleaned up)).

Choice further disputes Title VI’s relevance to the AIM

Act and says that Title VI cannot provide limiting principles

here because Congress “expressly incorporated certain

procedural provisions of the Clean Air Act” while “declin[ing]

to refer to any substantive provisions.” Choice Reply Br. 14.

As already discussed, however, the Act’s structure and history

clearly show that Congress relied on Title VI for more than the

procedural provisions expressly incorporated. See, e.g.,

Hearing on H.R. 5544, 116th Cong. 2 (statement of Rep. Paul

20

Tonko) (“The legislation is modeled on Title VI of the Clean

Air Act,” which “proved an able vehicle to foster an orderly,

market-based phasedown of HFCs’ predecessors.”).

Finally, Choice accuses the EPA of taking different

positions in prior proceedings and argues that the EPA’s

decision to model its HFC phasedown on Title VI today does

not prevent the EPA from “abandon[ing] this system in the

future.” Choice Reply Br. 14; see also Am. Trucking, 531 U.S.

at 472 (“[A]n agency [cannot] cure an unlawful delegation of

legislative power by adopting in its discretion a limiting

construction of the statute.”). We decline to consider this

possibility because it is not our job to address hypothetical

future applications of the AIM Act. Cf. Nat’l Endowment for

the Arts v. Finley, 524 U.S. 569, 584 (1998) (We will not

“invalidate legislation on the basis of . . . hypothetical . . .

situations not before” us. (cleaned up)). If the EPA

“abandon[s] this system in the future,” Choice Reply Br. 14,

that action can be subject to further APA challenge.

For the reasons discussed, we deny Choice’s petition.

III.

Petitioner IGas challenges the EPA’s 2024 Rule as

arbitrary and capricious. According to IGas, the EPA’s

decision to calculate market share by considering an entity’s

three highest years of production and consumption between

2011 and 2019 was unreasonable because it excluded 2020

data.4 Because the EPA’s methodology was reasonable, we

reject IGas’s challenge and deny its petition for review.

4

IGas has standing to challenge the 2024 Rule. IGas imports

HFCs regulated by the EPA’s Rule and receives allocations for that

21

A.

As a threshold matter, we disagree with the EPA’s

contention that IGas forfeited its argument that the agency

“failed to independently consider whether 2020 data should be

included” in the allocation methodology. IGas Br. 15. The

EPA argues that IGas’s comments during the agency-review

process urged the agency to adopt data from both 2020 and

2021, which did not adequately preserve its argument on appeal

that EPA should consider only the 2020 data. See 42 U.S.C.

§ 7607(d)(7)(B) (An argument is preserved for appeal if it was

made “with reasonable specificity during the period for public

comment” before the agency.). But the EPA’s assertion that

IGas did not previously “point[] to any material difference

between the 2020 and 2021 data,” EPA Br. 41, is belied by the

record. In direct response to the EPA’s concern about

stockpiling in 2020 and 2021, IGas offered different reasons

for disproving the stockpiling theory for each year. Compare

J.A. 260–61, with J.A. 262–63. Because IGas pointed out

differences in the 2020 and 2021 data, IGas’s “comment to the

agency was adequate notification of the general substance” of

a claim that the agency should consider each year’s data

separately. S. Coast Air Quality Mgmt. Dist. v. EPA, 472 F.3d

882, 891 (D.C. Cir. 2006); see also Appalachian Power Co. v.

EPA, 135 F.3d 791, 817–18 (D.C. Cir. 1998) (“[T]he [Clean

Air] Act does not require that precisely the same argument that

was made before the agency be rehearsed again, word for word,

on judicial review.”).

import activity. It is thus an “object of the action . . . at issue,” and

there is “little question” that the action has caused it injury and that

a judgment preventing the action will redress that injury. Sierra Club

v. EPA, 292 F.3d 895, 900 (D.C. Cir. 2002) (cleaned up).

22

B.

On the merits, we conclude that the EPA reasonably

excluded the 2020 data. Under the Clean Air Act, made

applicable to the AIM Act through 42 U.S.C. § 7675(k)(1)(C),

we “may reverse any [] action found to be arbitrary, capricious,

[or] an abuse of discretion.” 42 U.S.C. § 7607(d)(9)(A). “To

determine whether EPA’s rules are arbitrary and capricious, we

apply the same standard of review under the Clean Air Act as

we do under the Administrative Procedure Act (APA).” Allied

Loc. & Reg’l Mfrs. Caucus v. EPA, 215 F.3d 61, 68 (D.C. Cir.

2000) (cleaned up). Under that standard, an agency must

engage in reasoned decision-making. See Michigan v. EPA,

576 U.S. 743, 750 (2015). This means that “the agency must

examine the relevant data and articulate a satisfactory

explanation for its action including a rational connection

between the facts found and the choice made.” Motor Vehicle

Mfrs. Ass’n of U.S., Inc. v. State Farm Mut. Auto. Ins. Co., 463

U.S. 29, 43 (1983) (cleaned up). Agency action is arbitrary and

capricious if the agency “relied on factors which Congress has

not intended it to consider, entirely failed to consider an

important aspect of the problem,” or “offered an explanation

for its decision that runs counter to the evidence before the

agency or is so implausible that it could not be ascribed to a

difference in view or the product of agency expertise.” Id. But

our “scope of review under the ‘arbitrary and capricious’

standard is narrow,” and we are not to “substitute [our]

judgment for that of the agency.” Id. Further, “when an agency

relies on multiple grounds for its decision,” we may “sustain

the decision as long as one is valid and the agency would

clearly have acted on that ground even if the other were

unavailable.” Casino Airlines, Inc. v. NTSB, 439 F.3d 715, 717

(D.C. Cir. 2006) (cleaned up).

23

Applying that deferential standard of review, the EPA’s

decision to exclude the 2020 data from its allocation

methodology was not arbitrary and capricious because the

agency reasonably concluded that (1) the data was

unrepresentative of market share, and (2) its inclusion would

disrupt the market.

First, the EPA reasonably determined that the 2020 data

was “less representative due to several important global and

market factors,” “such as the COVID–19 pandemic and supply

chain disruptions,” “and therefore [did] not accurately

represent companies’ market share.” 2024 Rule, 88 Fed. Reg.

at 46843. The EPA conducted extensive stakeholder outreach

and received comments agreeing with its concern that the

“production and importation of HFCs in 2020 [] were

influenced by external factors such as the COVID–19

pandemic and supply chain disruptions.” Id. Indeed, IGas’s

own comments conceded that 2020 was “anomalous as a result

of the COVID–19 pandemic where supply chain difficulties

dominated all markets.” J.A. 60; see also J.A. 256 (continuing

to represent that there were “significant difficulties with supply

and transportation caused by the COVID–19 pandemic”). The

EPA’s final rule further noted that the agency “received

comments from a trade organization whose members represent

70 percent of the dollar value of the HVAC-Refrigeration

market, 400 whole companies, nearly 300 manufacturing

associates and nearly 100 manufacturer representatives, who

supported the Agency’s proposal to exclude 2020 and 2021

from evaluation.” 2024 Rule, 88 Fed. Reg. at 46843. It was

plainly reasonable for the EPA to rely on the comments of a

“breadth of stakeholders,” id. at 46844, as well as IGas’s own

comments about the 2020 data.

We also reject IGas’s argument that the 2020 data should

be included even if it is atypical, to avoid punishing companies

24

that managed to do well in atypical years. The EPA’s decision

that allocations should reflect typical market share is a policy

judgment entitled to deference. See Bluewater Network v.

EPA, 370 F.3d 1, 11 (D.C. Cir. 2004) (We do not “substitute

our policy judgment for that of the Agency.”). Our job is

limited to “ensuring that EPA has examined the relevant data

and articulated a satisfactory explanation for its action.” Id.

(cleaned up). Here, the EPA has done that. The EPA

acknowledged the issue raised by IGas, but disagreed “that it

would be appropriate to incorporate data influenced by the

pandemic because some entities did well during those years.”

2024 Rule, 88 Fed. Reg. at 46845. The EPA reasonably

declined to “provid[e] a company with additional future

allowances based on activity in years that are so unusual.” Id.5

Second, the EPA’s decision to exclude the 2020 data

because of its potential to disrupt the market independently

supports upholding the 2024 Rule. In the 2024 Rule, the EPA

chose to maintain existing market-share calculations — which

did not include 2020 data — because “[r]egulated entities have

. . . previously expressed a preference for allowances to be

allocated using a consistent approach for as long as possible.”

2024 Rule, 88 Fed. Reg. at 46844. The agency determined that

“[a]pplying a similar approach as the one taken” previously

5

And contrary to IGas’s assertions, the EPA was not inconsistent

in its treatment of 2020 data. IGas argues that the EPA’s decision to

exclude 2020 data as unrepresentative is undermined by the

Framework Rule, which required entities to be an active market

participant in 2020 to be eligible for allowances. But the Framework

Rule recognized the atypicality of 2020 by providing exceptions for

entities that were inactive in 2020 due to the COVID–19 pandemic.

See Framework Rule, 86 Fed. Reg. at 55144 (stating that the EPA

will “give individualized consideration to circumstances of historical

importers that were not active in 2020,” “for example if [inactivity]

was due to the COVID–19 pandemic”).

25

“will provide a longer-term planning horizon for HFC

producers and entities importing, which will enable entities to

make decisions about which HFCs, and HFC substitutes, to

produce and import as the market transitions[.]” Id. For those

reasons, the EPA concluded, retaining the Framework Rule’s

dataset to set allowances was the “best means for reducing

(though not eliminating) disruption to the market.” Id. The

EPA thus “justif[ied] its rule with a reasoned explanation.”

Stilwell v. Off. of Thrift Supervision, 569 F.3d 514, 519 (D.C.

Cir. 2009).

We disagree with IGas’s claim that excluding 2020 data

does not advance the EPA’s stated goal of continuity and that

the EPA’s conclusion was “left completely unexplained.” IGas

Br. 42 (quoting West Virginia v. EPA, 362 F.3d 861, 866 (D.C.

Cir. 2004)). And although IGas argues otherwise, the EPA was

not required to conduct studies to conclusively show that the

2020 data would have significantly changed individual

allocations. The APA “imposes no general obligation on

agencies to produce empirical evidence.” Stilwell, 569 F.3d at

519.

For the foregoing reasons, we deny IGas’s petition.6

So ordered.

6

We need not examine the additional reasons that the EPA

provided for excluding the 2020 data, including its statements that

2020 was not a representative year due to stockpiling ahead of the

AIM Act’s passage, and that 2020 data was not as reliable or well-

vetted as data from 2011 to 2019. That analysis would be

superfluous. See Casino Airlines, 439 F.3d at 717 (“We have

consistently held that when an agency relies on multiple grounds for

its decision, some of which are invalid, we may nonetheless sustain

the decision as long as one is valid and the agency would clearly have

acted on that ground even if the other were unavailable.” (cleaned

up)).