Amicus Curiae Brief — Natural Resources Defense Council, Petitioner v. Mexichem Fluor, Inc., et al.

Nos. 17-1703 & 18-2

IN THE

Supreme Court of the United States

————

HONEYWELL INTERNATIONAL INC., et al.,

Petitioners,

v.

MEXICHEM FLUOR, INC., et al.,

Respondents.

————

NATURAL RESOURCES DEFENSE COUNCIL,

Petitioner,

v.

MEXICHEM FLUOR, INC., et al.,

Respondents.

————

On Petition for a Writ of Certiorari to the

United States Court of Appeals

for the District of Columbia Circuit

————

AMICI CURIAE BRIEF OF CARRIER

CORPORATION, INGERSOLL RAND, LENNOX

INTERNATIONAL INC., NORTEK GLOBAL

HVAC, AND RHEEM MANUFACTURING CO.

IN SUPPORT OF PETITIONERS

————

JEFFREY R. HOLMSTEAD

SCOTT H. SEGAL

Counsel of Record

CHRISTINE G. WYMAN

BRACEWELL LLP

2001 M Street, N.W., Suite 900

Washington, D.C. 20036

(202) 828-5845

scott.segal@bracewell.com

Counsel for Amici Curiae

July 26, 2018

WILSON-EPES PRINTING CO., INC. – (202) 789-0096 – WASHINGTON, D. C. 20002

i

TABLE OF CONTENTS

TABLE OF AUTHORITIES ....................................... ii

INTEREST OF AMICI CURIAE ............................... 1

SUMMARY OF ARGUMENT .................................... 6

ARGUMENT ............................................................ 10

I.

The Decision Below is Incorrect as

a Legal Matter .................................... 10

II.

The Adverse Impacts of the

Decision Below are So Substantial

that Supreme Court Review is

Warranted ........................................... 16

A.

The Decision Below Upsets

the Legitimate Reliance

Interests

of

Many

Companies ................................ 16

B.

The Decision Below Has

Created

Long-Lasting

Regulatory Uncertainty ........... 21

CONCLUSION ......................................................... 24

ii

TABLE OF AUTHORITIES

Page(s)

Cases

Chevron U.S.A. Inc. v. Natural Resources

Defense Council, Inc.,

467 U.S. 837 (1984) .............................................. 15

Encino Motorcars, LLC v. Navarro,

136 S. Ct. 2117 (2016) ...................................... 8, 16

FCC v. Fox Television Stations,

129 S.Ct. 1800 (2009) ............................................. 8

Mexichem Fluor, Inc. v. Envtl. Prot. Agency,

866 F.3d 451 (D.C. Cir. 2017) ............................ 1, 6

Util. Air Regulatory Grp. v. E.P.A.,

134 S. Ct. 2427 (2014) .......................................... 14

Statutes

42 U.S.C. § 7607(b)(1) ............................................... 21

42 U.S.C. § 7671k .................... 3, 10, 12, 17, 18, 19, 21

42 U.S.C. § 7671k(a) .................................... 3, 6, 10, 15

42 U.S.C. § 7671k(b) .................................................. 10

42 U.S.C. § 7671k(c) ............ 7, 8, 10, 12, 13, 16, 17, 19

42 U.S.C. § 7671k(d) ............................................ 10, 15

42 U.S.C. § 7671k(e) .................................................. 18

iii

Other Authorities

136 Cong. Rec. H12908 (daily ed. Oct. 26,

1990), reprinted in 1 A LEG. HIST. OF

THE CLEAN AIR ACT AMENDMENTS OF

1990, at 1428 (1993) ............................................... 3

Justin Gillis, “The Montreal Protocol, a

Little Treaty That Could,” N.Y. Times,

Dec. 9, 2013 ............................................................ 2

Patrick Low, “Why the Montreal Protocol is the

Most Successful Climate Agreement Ever,”

So. China Morning Post, Oct. 26, 2016 ................. 2

Regulations

40 C.F.R. § 82.174(d) ................................................. 20

40 C.F.R. § 82.184(b)(3) ............................................. 20

59 Fed. Reg. 13,044 (Mar. 18, 1994) .... 3, 4, 10, 11, 13,

15, 17, 18, 19, 20, 21

59 Fed. Reg. 13,048 ..................................................... 7

80 Fed. Reg. 42,870

(July 20, 2015) .......................... 6, 11, 18, 21, 22, 23

83 Fed. Reg. 18,431 (Apr. 27, 2018) ............ 8, 9, 22, 23

1

INTEREST OF AMICI CURIAE1

Amici are five of the leading U.S.

manufacturers

of

heating,

ventilation,

air

conditioning and commercial refrigeration (“HVACR”)

equipment. Together with another manufacturer

filing its own amicus brief, they account for well over

75% of the residential and commercial air

conditioning and commercial refrigeration equipment

that is manufactured and sold in North America. In

reliance on the 25-year-old regulatory program that

the D.C. Circuit invalidated in Mexichem Fluor, Inc.

v. Envtl. Prot. Agency, 866 F.3d 451 (D.C. Cir. 2017),

they have collectively invested well over a billion

dollars in developing new air conditioning and

refrigeration equipment that can operate on safer

substitutes for ozone-depleting chemicals. This is over

and above the investments that chemical producers

have made to develop these substitutes.

But the impact of the decision below on Amici

goes well beyond this dollar amount. The decision

completely upends a regulatory program that has

worked well for almost 25 years – for chemical

producers and users, for consumers, and for the

environment. In reliance on this program, our

Pursuant to Rule 37.6, counsel hereby certifies that the brief

authored on behalf of Amici curiae was not authored in whole or

in part by counsel for a party, and no party or counsel for a party

have made a monetary contribution intended to fund the

preparation or submission of this brief. No person other than

amicus curiae, its members, or its counsel made a monetary

contribution to its preparation or submission. Each party’s

counsel has been contacted regarding the submission of this

Amici brief, and counsel for each party has responded and

confirmed its client’s consent to the filing of this brief.

1

2

industry and the chemical producers that supply it

have been on a well-established and reasonable path

toward new, environmentally safer alternatives, but

the decision below has torn up this path and created

enormous uncertainty and associated costs for all of

us. Given the importance of the U.S. market, it is not

an exaggeration to say that, unless the decision below

is overturned by this Court (or by Congress), it will

disrupt ongoing international efforts to develop and

transition to more environmentally benign chemicals

in a number of industries.

Air conditioning and refrigeration equipment

relies on chemicals known as refrigerants –

substances that have certain thermodynamic and

other properties that allow for efficient cooling. For

many years, chlorofluorocarbons (CFCs) and related

compounds were the most widely used refrigerants

worldwide, but as researchers came to understand

that these chemicals were depleting the stratospheric

ozone layer, there was an international effort to phase

them out and switch to safer substitutes. This effort

culminated in the Montreal Protocol, which is widely

regarded as the most successful and consequential

international environmental agreement in history.2

2

Patrick Low, “Why the Montreal Protocol is the Most

Successful Climate Agreement Ever,” So. China Morning Post,

Oct.

26,

2016,

https://www.scmp.com/business

/article/2040177/why-montreal-protocol-most-successfulclimate-agreement-ever (“The Montreal Protocol has been

characterised by former UN Secretary General Kofi Annan as

‘perhaps the most successful international agreement to date.’

Among other things, this refers to its singular success in

addressing the problem it was set up to fix – a growing hole in

the earth’s ozone layer…”); Justin Gillis, “The Montreal Protocol,

a Little Treaty That Could,” N.Y. Times, Dec. 9, 2013,

3

In order to carry out U.S. obligations under the

Montreal Protocol, Congress adopted Title VI of the

Clean Air Act in 1990. In certain key respects, Title VI

goes beyond the Protocol. An important example is the

statutory provision at issue in this case – Section 612,

which is titled “Safe Alternatives Policy.” 42 U.S.C.

§ 7671k. With Section 612, Congress sought to ensure

that that the chemicals used to replace CFCs and

other ozone-depleting substances would not cause

other health or environmental problems – and in fact

would be the safest possible products that would work

effectively in any particular application. The express

purpose of Section 612 is to ensure “[t]o the maximum

extent practicable” that substitutes for ozonedepleting chemicals “reduce overall risks to human

health and the environment.” Id. § 7671k(a).

Congress made it clear that, to determine

whether a chemical substitute would “reduce overall

risks to human health and the environment,” the

U.S. Environmental Protection Agency (“EPA” or

“Agency”) must take into account all potential risks,

including toxicity, flammability, and atmospheric

impacts – and not just risks related to ozone depletion.

136 Cong. Rec. H12908 (daily ed. Oct. 26, 1990),

reprinted in 1 A LEG. HIST. OF THE CLEAN AIR ACT

AMENDMENTS OF 1990, at 1428 (1993). Since the

beginning of the program, EPA has considered the

global warming impact of potential substitutes as an

important part of this determination (a practice

reaffirmed by the court below). 59 Fed. Reg. 13,044,

https://www.nytimes.com/2013/12/10/science/the-montrealprotocol-a-little-treaty-that-could.html (“The Montreal Protocol

is widely seen as the most successful global environmental

treaty.”).

4

13055 (Mar. 18, 1994) (“1994 Rule”); Pet. App. 23a24a.3

This

case

involves

chemicals

called

hydrofluorocarbons (“HFCs”), which do not deplete

ozone and have low toxicity but are very potent

greenhouse gases, with a global warming potential

more than a thousand times higher than carbon

dioxide (although still lower than most CFCs). In

1994, when EPA approved the use of HFCs as

substitutes for CFCs in certain applications (including

refrigeration and air conditioning), the Agency

expressed concern that, although they were clearly

better than CFCs in terms of overall environmental

impacts, “rapid expansion of the use of some HFCs

could contribute to global warming.” 59 Fed. Reg. at

13,071. Accordingly, the Agency made it clear that

HFCs might only be a “near-term option for moving

away from CFCs.” Id. at 13,071-72. In the same rule,

EPA made clear that certain approved substitutes

could be disapproved in the future based on new

health or environmental risk information or the

emergence of safer alternatives. Id. at 13,047.

Thus, HVACR manufacturers and their

chemical suppliers have known for many years that,

under the framework established by the 1994 Rule,

they would likely need to develop and use substitute

refrigerants with much lower global warming

potential than HFCs. In reliance on this same

framework, chemical manufacturers and their

suppliers have invested more than a billion dollars to

develop safer substitutes and to construct new

3

Amici cite to the Appendix to the Petition for a Writ of

Certiorari of Honeywell International Inc., et al., in Honeywell

International Inc. v. Mexichem Fluor, Inc. (“Pet. App.”).

5

facilities to manufacture them. Pet. Honeywell 21-22.

These new compounds have most of the performance

characteristics of CFCs, but they are not “drop-in”

substitutes. As a result, our industry and others as

well have also invested hundreds of millions of dollars

to develop equipment and products that can employ

these new, safer substitutes. At the same time, we

have worked with EPA and the Department of Energy

(“DOE”) to establish a reasonable schedule for moving

to these new refrigerants while at the same time

meeting new energy efficiency standards that DOE is

required to develop for HVACR equipment.

Our industry has made very substantial

investments and worked closely with our chemical

suppliers and our regulators for many years to ensure

that there would be a reasonable regulatory scheme

and timeline for transitioning away from HFCs. All

these efforts were made in reliance on the regulatory

framework that was established in 1994 – a

framework that petitioners below could have

challenged then but chose not to pursue. Everyone

involved in our industry (except perhaps for the two

Respondents in this case) has made business and

investment decisions based on the understanding that

EPA would require all HVACR manufacturers that

sell products in the U.S. to transition away from HFCs

and employ safer substitutes on the schedule that

EPA and DOE have established after extensive

consultation with the industry. The decision below

has completely upended all these actions and created

enormous uncertainty.

We are in a very competitive industry, and the

new, safer substitutes are more expensive than the

HFCs that Respondents want to continue selling. If

this Court allows the decision below to stand, there

6

will be business and competitive pressures to continue

using cheaper HFCs, even for companies that are

committed to environmental protection and want to

use safer substitutes.

It is notable that, of all the companies involved

in the U.S. HVACR industry, only two multinational

chemical manufacturers challenged the 2015 EPA

rule that required the industry to transition away

from HFCs.

These companies have not made

significant investments in developing safer

alternatives and will benefit disproportionately from

continued HFC sales. No other chemical producer and

none of the many companies involved in

manufacturing air conditioning or refrigeration

equipment challenged the 2015 rule, which everyone

expected. The decision below rewards two companies

who want to continue selling an environmentally

harmful product at the expense of the rest of the

industry and the environment. If the law mandated

this result, then this would of course be

understandable. But, for the reasons discussed below,

the D.C. Circuit’s 2-1 decision in Mexichem was

wrongly decided and should be reversed.

SUMMARY OF ARGUMENT

The decision by the divided court below is

wrong. In Title VI of the Clean Air Act (“CAA”),

Congress created a comprehensive framework to

phase out the use of CFCs and other ozone-depleting

substances and gave EPA authority to manage the

transition to ensure that, “to the maximum extent

practicable” the use of substitutes would “reduce

overall risks to human health and the environment.”

42 U.S.C. § 7671k(a).

To accomplish this goal,

7

Congress required EPA to maintain lists of acceptable

and unacceptable substitutes and to update those lists

as new, safer substitutes were developed. It also

provided that “it shall be unlawful to replace any

[ozone-depleting substance] with any substitute

substance” that, in EPA’s view, may be harmful to

human health or the environment if EPA has

identified a safer substitute. Id. at § 7671k(c).

Despite this statutory framework, the majority

below held that EPA may not require a company to

use safer CFC substitutes if the company had

previously started to use a non-ozone-depleting

substance to replace CFCs. Cherry-picking just one of

several dictionary definitions of “replace” – “to take

the place of” what immediately came before – the

majority insists that, once a company has replaced

any ozone-depleting substance with one that does not

deplete ozone, it may forever use that product no

matter how harmful it may be to human health or the

environment.

As the dissent explains, other dictionary

definitions,” including “to substitute for” or “to

assume the former role, position, or function of”

something that came before – are consistent with

EPA’s long-standing interpretation of Section 612(c):

“that [ozone-depleting] substances are ‘replaced’

within the meaning of section 612(c) each time a

substitute is used, so that once EPA identifies an

unacceptable substitute, any future use of such

substitute is prohibited.” 59 Fed. Reg. 13,048. This

interpretation is not just reasonable, but is the only

way to read the term “replace” that is consistent with

the structure and purpose of Title VI.

8

Just as important, EPA’s interpretation was

developed through notice-and-comment rulemaking

and finalized in 1994. Petitioners below could have

challenged it then but chose not to. As a result, Amici

and many other companies have made investment

and other business decisions in reliance on EPA’s

interpretation of Section 612(c) that they reasonably

believed was settled long ago. This Court has

recognized that “[l]ongstanding [regulatory] policies

may have ‘engendered serious reliance interests.’”

Encino Motorcars, LLC v. Navarro, 136 S. Ct. 2117,

2126 (2016) (quoting FCC v. Fox Television Stations,

129 S.Ct. 1800, 1811 (2009)). In reliance on EPA’s

long-standing interpretation, chemical producers and

their suppliers have invested more than a billion

dollars to develop and produce CFC replacements that

are safer than HFCs. Pet. Honeywell 21-22. Amici

and other manufacturers of HVACR equipment, in

reliance on the same interpretation, have also made

substantial investments in developing equipment that

accommodates HFC-alternatives. The HVACR

industry and its chemical suppliers have been on a

well-established and reasonable path to transition

away from harmful HFCs, but the majority’s decision

has blocked this path and produced enormous

uncertainty.

In addition, the decision below has created a

regulatory mess that EPA has been unable to fix even

now, almost a year after the decision was handed

down. In a recent notice, EPA admitted that it does

not know how to implement it. 83 Fed. Reg. 18,431,

18,435-36 (Apr. 27, 2018). Under the 1994 regulatory

framework, product manufacturers knew that they

were prohibited from using certain chemicals in

certain applications after a specified date. Now, the

9

court below has called upon EPA and the industry to

make distinctions that have never before been

relevant – distinctions between companies that have

already switched to HFCs and those that have not –

without any guidance as to how this can be done when

many companies employ different chemicals in many

different products in many different facilities. A

company that manufactures many types of equipment

may have started to use HFCs in some products but

not others, and chemical users may use HFCs in some

locations but not others, and there are no

recordkeeping requirements designed to track these

distinctions and when they may have arisen.

In light of these (and other) difficulties, EPA

threw up its hands and issued a notice saying that it

could not apply any aspect of the 2015 Rule’s HFC

prohibitions against anyone (manufacturer, retailer,

or end-user) until it could go through a new

rulemaking to figure out how the D.C. Circuit’s

decision can be applied in the real-world. Id. Not

surprisingly, there is now litigation over this decision.

Unless this Court steps in, the result will be an

extended period of regulatory uncertainty, almost

certainly including years of litigation challenging the

new rule that EPA ultimately develops to implement

a confusing D.C. Circuit decision that was wrongly

decided. Given that this decision has completely

upended a major regulatory program that many

companies have relied on for almost 25 years and has

created regulatory uncertainty for major industrial

sectors that will otherwise last well into the future,

this case clearly merits review by this Court.

10

ARGUMENT

I.

The Decision Below is Incorrect as a Legal

Matter

Title VI of the CAA requires users of ozonedepleting substances to transition to safer substitutes

and gives EPA a number of regulatory tools to manage

this process. Under Section 612(c), it is “unlawful to

replace” an ozone-depleting substance with a

substitute that EPA has listed as prohibited because

a safer alternative is available. 42 U.S.C. § 7671k(c).

Section 612 does not just require the use of non-ozonedepleting alternatives, but of alternatives that

“reduce overall risks to human health and the

environment.”

42 U.S.C. § 7671k(a); see id.

§§ 7671k(b), (c). To incentivize the research and

development needed to identify and produce safer

alternatives, Congress also required EPA to maintain

lists of prohibited and acceptable substitutes and gave

the Agency explicit authority to add or remove

substances from either list and to move substances

from one list to the other as new alternatives become

available. Id. §§ 7671k(c), (d).

In the 1994 Rule, EPA established the

Significant New Alternatives Policy—or “SNAP”—

program to implement this statutory framework.

Since then, as safer alternatives became available,

EPA has periodically moved substances from the

acceptable list to the unacceptable list. This is what

happened here. In 1994, EPA had listed HFCs as

acceptable substitutes for CFCs in certain

applications, including refrigeration and air

conditioning. In that same rule, the Agency expressed

concern that, although they were clearly safer than

11

CFCs in terms of overall environmental impacts, “the

rapid expansion of the use of some HFCs could

contribute to global warming.” 59 Fed. Reg. at 13,071.

Accordingly, the Agency made it clear that HFCs

might only be a “near-term option for moving away

from CFCs.” Id. at 13,071-72.

In the 2015 Rule at issue here, EPA reclassified

HFCs as unacceptable and prohibited their use in

certain products (including new commercial

refrigeration systems and motor-vehicle air

conditioners) because several companies had

developed new alternative non-ozone-depleting

chemicals that have very little impact on global

warming but perform the same function as CFCs. See

80 Fed. Reg. 42,870 (July 20, 2015) (“2015 Rule”). In

the decision below, the D.C. Circuit unanimously

upheld EPA’s decision to reclassify HFCs as

unacceptable and prohibit their use in the listed

applications, but a divided court went on to say that

this prohibition could not apply to any company that,

before the publication of the 2015 rule, had already

started to use HFCs as a substitute for any ozonedepleting substances. Under this decision, EPA could

add HFCs to the prohibited list where a safer

alternative became available, but could not apply the

prohibition to manufacturers or others that had

already begun using HFCs to replace CFCs or other

similar substances. Given that virtually all (if not all)

HVACR manufacturers companies had previously

transitioned to HFCs in at least some of their

products, this holding made EPA’s prohibition on

HFCs essentially meaningless. Surely this is not

what Congress intended when it called upon EPA to

reclassify acceptable products as prohibited when

new, safer products became available and called on

12

EPA to ensure that CFC substitutes would “reduce

overall risks to human health and the environment”

“to the maximum extent possible.”

Rather than considering the statutory

structure of Section 612, the majority insists that the

following language in 612(c) can be interpreted in only

one way:

[T]he Administrator shall promulgate

rules . . . providing that it shall be

unlawful

to

replace any [ozonedepleting substance] with any substitute

substance which the Administrator

determines may present adverse effects

to human health or the environment,

where the Administrator has identified

an alternative to such replacement

that—

(1) reduces the overall risk to human

health and the environment; and

(2)

is currently or potentially available.

42 U.S.C. § 7671k(c).

According to the majority, the word “replace”

here can only mean one thing: “to take the place of”

what immediately came before. Under this reading,

because EPA is authorized only to make it “unlawful

to replace” an ozone-depleting substance with a

substance listed as unacceptable by EPA, once a

company has started to use a CFC substitute that is

not an ozone depleter, EPA cannot require the

company to replace the initial substitute with a safer

substance, no matter how harmful the initial

substitute turns out to be. Thus, the majority

13

explicitly rejects the interpretation of Section 612(c)

that had been adopted through notice-and-comment

rulemaking back in 1994 and not challenged:

EPA believes that [ozone-depleting]

substances are “replaced” within the

meaning of section 612(c) each time a

substitute is used, so that once EPA

identifies an unacceptable substitute,

any future use of such substitute is

prohibited.

59 Fed. Reg. 13,048.

As the dissent explained, the majority’s narrow

interpretation, which is based on just one of several

dictionary definitions of “replace,” is inconsistent with

the structure and express purpose of Section 612(c).

It is also contrary to common usage and common

sense. As noted by Petitioners Honeywell and

Chemours (hereinafter “Honeywell”), the term

“replace” has several different meanings, including “to

substitute for” or “to assume the former role, position,

or function of” something that came before. Pet.

Honeywell 32. Not surprisingly, the term

“replacement,” which is also used in Section 612(c),

also has multiple meanings, including something

“that replaces another especially in a job or function.”

Id. Section 612(c)’s language is thus broad enough to

encompass EPA’s interpretation of “replace”:

someone “replaces” an ozone-depleting substance each

time it uses another chemical to perform the same

function in a specific application.

In common usage, this is how the words

“replace” and “replacement” are often used. As

Honeywell points out, the case of sweeteners is a good

14

example. Pet. Honeywell 33-34. When someone starts

using stevia in his coffee, it would be natural to say

that he is using it to “replace” sugar, even if he has

been using NutraSweet for many years. Similarly,

after Coca-Cola started to use Splenda instead of

aspartame in Diet Coke, the company referred to

Splenda as a “sugar substitute” – not an “aspartame

substitute.” 4

As Judge Wilkins observed, the

“ubiquitous product” (sugar) is “replaced” by a number

of functional substitutes (high fructose corn syrup

saccharin, aspartame, sucralose, stevia) that were

developed “over the course of years” and “not at a

specific point in time, not just once, and not by a single

substitute.” Pet. App. 30a-31a.

In any case, the statutory text alone does not

support the majority’s insistence that “replace” has

only one reasonable meaning. Even without any

statutory context, the term “replace” can be read to

mean “to assume the function of” just as easily as “to

take the place of” what immediately came before. But

this Court has often reminded both agencies and

lower courts that, when interpreting any statutory

provision, they must also consider the statutory

context. Util. Air Regulatory Grp. v. E.P.A., 134 S. Ct.

2427, 2442 (2014) (“Even under Chevron’s deferential

framework, agencies must operate within the bounds

of reasonable interpretation. And reasonable

statutory interpretation must account for both the

specific context in which language is used and the

broader context of the statute as a whole.”)

The Coca-Cola Co., “What Coco-Cola products contain

Splenda?” (“SPLENDA is one of the sugar substitutes we use to

give people great-tasting beverage choices with fewer or no

calories.”),

https://www.coca-colaproductfacts.com/en/faq/

reduced-no-sugar-substitutes/soda-with-splenda/.

4

15

(internal quotations omitted); Chevron U.S.A. Inc. v.

Natural Resources Defense Council, Inc., 467 U.S. 837,

843-44 (1984). In the context of a statutory scheme

that calls on EPA to manage the transition away from

CFCs in a way that “reduce[s] overall risks to human

health and the environment” – in part by changing the

classification of potential substitutes from acceptable

to prohibited as new substitutes are developed –

EPA’s interpretation of “replace” is more than

reasonable.

Since 1994, EPA has exercised authority to

“initiate changes to SNAP determinations” based on

“new data on either additional substitutes or on

characteristics of substitutes previously reviewed,”

and considering risks to human health and the

environment other than ozone depletion. 59 Fed. Reg.

at 13,047. The majority below recognized that “the

lists of safe substitutes and prohibited substitutes are

not set in stone” and that, “if EPA places a substitute

on the list of safe substitutes, EPA may later change

its classification.” Pet. App. 6a. Indeed, Section

612(d) explicitly authorizes anyone, at any time, to

petition EPA to make a change, and requires EPA to

act upon that petition promptly, no matter when it

was filed. 42 U.S.C. § 7671k(d).

But the majority renders this scheme

essentially meaningless by allowing anyone to use a

CFC substitute forever, no matter how harmful it may

turn out to be, as long as the CFC substitute is not an

ozone depleter. The majority did not even try to

reconcile its decision with the statutory mandate for

EPA to ensure, “[t]o the maximum extent practicable,”

the use of substitutes that “reduce overall risks to

human health and the environment.” Id. § 7671k(a).

Interpreting the statute to bar EPA from prohibiting

16

continued use of an unsafe substitute by certain

chemical users is flatly inconsistent with this

mandate.

II.

The Adverse Impacts of the Decision

Below are So Substantial that Supreme

Court Review is Warranted

A.

The Decision Below Upsets the

Legitimate Reliance Interests of

Many Companies

“Longstanding [regulatory] policies may have

‘engendered serious reliance interests.’”

Encino

Motorcars, 136 S. Ct. at 2126. As discussed by

Honeywell, chemical producers and their suppliers, in

reliance on the SNAP program that EPA established

in 1994, have invested more than a billion dollars to

develop and produce CFC replacements that are safer

than HFCs. Pet. Honeywell 4. And the HVACR

industry’s substantial investment in developing

equipment that accommodates HFC-alternative

refrigerants was predicated on the industry’s nearly

twenty-year understanding that, under the SNAP

program, EPA could and likely would require

companies to transition from HFCs to safer

substitutes when they became available. By holding

that EPA lacks authority to prohibit the use of HFCs

as CFC substitutes, even though the Agency has

determined that they “present adverse effects to

human health or the environment,” 42 U.S.C.

§ 7671k(c), the D.C. Circuit has upended the business

decisions made by many companies that have made

substantial investments in reliance on the longstanding understanding that EPA has authority to

require companies to use safer CFC substitutes as

17

they are developed, regardless of whether the CFC

substitute currently being used is itself an ozone

depleter.

As discussed above, Title VI set forth a

comprehensive framework intended to manage the

transition away from ozone-depleting substances. An

important part of this framework is the “Safe

Alternatives Policy” embodied in Section 612, which

instructed EPA to develop a regulatory program to

make it unlawful to replace any identified ozonedepleting substance with any substitute substance

that EPA determines may present “adverse effects to

human health or the environment” when EPA has

identified a safer substitute that can be used in the

same application. 42 U.S.C. § 7671k(c).

Since 1994, EPA has implemented this

statutory requirement under the SNAP program.

59 Fed. Reg. at 13,044. For more than twenty years,

numerous industry sectors5 have relied on the SNAP

program’s regulatory framework to support business

planning decisions and investment in the

development of new products employing safe

alternatives to ozone-depleting substances. With

certainty as to when EPA would phase down unsafe

chemicals, affected industries like ours were able to

determine the appropriate timing and investment for

development of equipment that employs new

alternatives and the phase-out of equipment using

delisted substances.

Adhering to a predictable

In 1994, EPA identified eight end use sectors: refrigeration and

air conditioning; foam blowing; solvents cleaning; fire

suppression and explosion protection; sterilants; aerosols;

tobacco expansion; and adhesives, coatings, and inks. 59 Fed.

Reg. at 13,070.

5

18

schedule facilitated by SNAP’s ongoing listing and

delisting

of

acceptable

substitutes

allows

manufactures to align design changes with listings

and avoid duplicative design cycles that are costly for

manufactures and consumers alike.

The majority below says that the 2015 rule at

issue here is the first time that EPA claimed authority

to require an industry to switch away from a CFC

substitute that had no impact on ozone depletion –

and that, in the past, EPA had acknowledged that it

could not prohibit anyone from using a non-ozonedepleting chemical that had previously been listed as

an acceptable substitute. This is simply incorrect.

The prior EPA statements quoted in the majority

opinion concerned separate data and reporting

requirements under Section 612(e), 42 U.S.C.

§ 7671k(e), and have nothing to do with the issue here.

Pet. App. 41a-44a (Wilkins, J., dissenting); see 59 Fed.

Reg. at 13,052.

In fact, since 1994, EPA has clearly asserted

authority to require companies to transition from one

CFC substitute (Substitute One) to another

(Substitute Two), when EPA finds that Substitute

Two is safer than Substitute One, regardless of

whether Substitute One is an ozone-depleter. The

express purpose of Section 612 is to ensure that, when

companies transitioned away from CFCs and similar

substances that were widely used until the 1990s,

they would use substitutes that “reduce overall risks

to human health and the environment” – not just that

they would use non-ozone-depleting substances. The

majority below held that EPA does in fact have

authority to require companies that used CFCs in the

past to switch from first- to second- to third generation

substitutes, as long as all the prior substitutes have

19

some impact on ozone depletion. But once a company

employs any non-ozone-depleting substance to replace

an ozone-depleting substance, the majority says, EPA

lacks authority to prohibit its use as a CFC

replacement, regardless of the harm it may cause to

human health and the environment. Such an

interpretation could not reasonably have been

anticipated in 1994 – given the comments on this

issue that were submitted during the 1994

rulemaking and rejected by EPA.

Some commenters in that rulemaking –

including the corporate predecessor of Arkema, one of

the petitioners below – argued that anyone using a

substitute listed as acceptable could never be required

to change.

See Pet. NRDC 9.

Under their

interpretation of Section 612, once a company replaces

an ozone-depleting substance with a substitute

approved by EPA, EPA lacks authority to require that

company to replace it, even if a safer alternative were

to become available after the initial listing.

EPA expressly rejected these arguments in the

final 1994 Rule, stating: “EPA believes that [ozonedepleting] substances are ‘replaced’ within the

meaning of Section 612(c) each time a substitute is

used, so that once EPA identifies an unacceptable

substitute, any future use of such substitute is

prohibited.” 59 Fed. Reg. at 13,048. The agency went

on to say:

Under any other interpretation, EPA

could never effectively prohibit the use

of any substitute, as some user could

always start to use it prior to EPA’s

completion of the rulemaking required

to list it as unacceptable. EPA believes

20

Congress could not have intended such

a result, and must therefore have

intended to cover future use of existing

substitutes.

Id.

The Agency also asserted its authority to

change the listing of a chemical from acceptable to

prohibited based on new information about that

chemical or the emergence of safer alternatives: “[T]he

Agency may revise these [listing] decisions in the

future as it reviews additional substitutes and

receives more data on substitutes already covered by

the program.” Id. at 13,047.

The regulations codified this understanding,

explicitly providing for petitions “to delete a

substitute from the acceptable list and add it to the

unacceptable list.” 40 C.F.R. § 82.184(b)(3). And they

state that “[n]o person may use a substitute after the

effective date of any rulemaking adding such

substitute to the list of unacceptable substitutes.” Id.

§ 82.174(d).

Nothing in the 1994 rulemaking record makes

a distinction between a company that initially uses an

ozone-depleting substance as a CFC replacement and

one that uses a non-depleting substitute. Under the

regulations, if EPA changes the status of a substitute

from acceptable to unacceptable for a particular use,

then “no person” may use it for that particular use,

regardless what that person is currently using.

40 C.F.R. § 82.174(d).

Certain industry commenters petitioned for

review of the 1994 Rule and specifically raised the

issue of “grandfathering in the event of a change in . .

21

. listing.” Pet. NRDC 11. They later dropped the case,

however, and chose not to challenge the interpretation

set forth in the in 1994 Rule. Id.

Although the precise issue raised here certainly

could have been challenged in 1994, petitioners below

were given a second bite at the apple – in apparent

contravention of Section 307(b)(1) of the CAA, which

requires challenges to be filed within 60 days of a

rule’s promulgation. 42 U.S.C. § 7607(b)(1). Even if

petitioners were not barred from raising the issue

below, the Court should recognize the significant

reliance interests at stake. HVACR manufacturers

and their chemical suppliers have invested well over

a billion dollars based on the regulatory framework

established in 1994. These same companies and many

others, including the five companies submitting this

brief, have made other significant business decisions

based on the clear understanding that EPA had

authority to – and would at some point – prohibit the

HVACR industry from continuing to use HFCs as

CFC substitutes. The unexpected decision from the

divided court below, based on an issue that, in our

view, had been resolved in 1994, has completely

upended those business and investment decisions and

warrants review by this Court.

B.

The Decision Below Has Created

Long-Lasting Regulatory

Uncertainty

The majority below wrongly rejected EPA’s

reasonable interpretation of Section 612 and

concluded that the 2015 Rule must be partially

vacated. Because of the disconnect between the

decision below and the regulatory framework

established in 1994 to implement Section 612, EPA

22

recently announced that, even now, almost a year

after the decision was handed down, it has been

unable to figure out how to implement the decision.

83 Fed. Reg. 18,431, 18,435-36 (Apr. 27, 2018).

Among other things, the majority assumes that

there is a clear-cut distinction between regulated

entities that have “replaced” ozone-depleting

substances and those that have not.

Such a

distinction ignores the complexities associated with

the broad use of CFC substitutes and the challenges

associated with determining when such a substance

has been “replaced.” As EPA explains, it is common

for a single manufacturer to own multiple facilities,

operate multiple production lines at a single facility,

and make multiple products. 83 Fed. Reg. 18,435.

At what point has such a manufacturer

“replaced” ozone-depleting substances? If it has used

a non-ozone depleter to replace an ozone-depleter in

any of its products? Only after it has stopped using

any ozone depleters in any of its equipment or

operations. Or perhaps if it has started using nonozone-depleters in a majority of its products? If so,

would this be based on the number of products, the

total number of all products sold (since it may sell few

of some products and many of others), or a majority in

terms of the dollar value of products sold?

In a footnote, the majority recognizes that the

2015 Rule also applies to non-manufacturing

companies that use ozone-depleting substances in a

variety of applications. The footnote says that the

decision applies to them too, but the majority provides

no guidance as to how it could and should be applied

in myriad of different situations where ozonedepleting substances and HFCs are used.

23

The impact of the D.C. Circuit’s decision is not

limited to EPA. As EPA described it, “regulated

entities are experiencing substantial confusion and

uncertainty regarding the meaning of the vacatur in a

variety of specific situations.” 83 Fed. Reg. at 18,434.

Regulated entities need certainty with future

compliance dates to guide plans for future operations.

Phasing out the use of HFCs requires significant

planning and steps in advance to accomplish the

retooling, testing, and certifications necessary for a

shift of such magnitude. Based on their reliance on

the 2015 Rule, Amici began this process several years

ago and have already invested hundreds of millions of

dollars into the transition away from HFCs. EPA’s

inability to give effect to the D.C. Circuit’s decision

and provide certainty to regulated entities throws this

planning into chaos.

Importantly, the decision below has much

broader effect than simply the 2015 Rule. The

decision attacks the heart of EPA’s authority to

prohibit the use of substitutes determined to have

unacceptable health or environmental impacts –

authority underpinning the SNAP program generally.

EPA recognizes the potentially broad import of the

D.C. Circuit’s decision; but again, the path forward is

not clear, with EPA saying that it will eventually need

to undertake notice-and-comment rulemaking.

83 Fed. Reg. 18,435. As to when this may happen, the

Agency is just now identifying the types of questions

it may consider as it prepares to undertake such a

rulemaking. Id.

Unless this Court steps in, the result will be an

extended period of regulatory uncertainty, almost

certainly including years of litigation challenging the

new rule that EPA ultimately develops to implement

24

a confusing D.C. Circuit decision that was wrongly

decided. Given that this decision has completely

upended a major regulatory program that many

companies have relied on for almost 25 years and has

created regulatory uncertainty for major industrial

sectors that will otherwise last well into the future,

this case clearly merits review by this Court.

CONCLUSION

For the reasons discussed above, the Court

should grant certiorari in this case.

Respectfully submitted,

Jeffrey R. Holmstead

Scott H. Segal*

Christine G. Wyman

BRACEWELL LLP

2001 M Street, N.W., Suite 900

Washington, D.C. 20036

scott.segal@bracewell.com

(202) 828-5845

*Counsel of Record

July 26, 2018