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

Supreme Court briefSep 11, 2018

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No. 18-2

IN T H E

Supreme Court of the United States

NATURAL RESOURCES DEFENSE COUNCIL,

Petitioner,

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

REPLY BRIEF FOR PETITIONERS

DAVID D. DONIGER

Counsel of Record

DAVID R. BAAKE

IAN FEIN

GERALD GOLDMAN

BENJAMIN LONGSTRETH

MELISSA J. LYNCH

NATURAL RESOURCES

DEFENSE COUNCIL

1152 15th St. NW Suite 300

Washington, DC 20005

(202) 289-6868

ddoniger@nrdc.org

Counsel for Petitioner

September 11, 2018

TABLE OF CONTENTS

Page

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

REPLY BRIEF ...................................................................................

The Exceptionally Harmful Impacts and

Permanent Legal Consequences of the

Decision Below Warrant This Court’s

Review ......................................................................................... 1

A. The Decision Will Cause Grave Health

and Environmental Harm ....................................... 2

B. The Decision Upends Legitimate Business

Reliance Interests and Burdens States .............. 4

C. EPA’s About-Face Would Forever Disable

Section 612 While Leaving No Viable

Regulatory Alternative .............................................. 4

II.

The Decision Below is Wrong........................................ 8

TABLE OF AUTHORITIES

CASES

Page(s)

Util. Air Regulatory Grp. v. EPA,

134 S. Ct. 2427 (2014) ............................................. 6

STATUTES AND REGULATIONS

42 U.S.C. § 7607(b)(1) ................................................. 9

42 U.S.C. § 7671k(a) .................................................... 3

42 U.S.C. § 7671k(e) .................................................. 11

Lautenberg Chemical Safety Act, Pub. L. No.

114-182, 130 Stat. 448 (2016)................................... 7

64 Fed. Reg. 3,865 (Jan. 26, 1999) .............................. 3

80 Fed. Reg. 42,870 (July 20, 2015) ............................ 2

83 Fed. Reg. 18,431 (Apr. 27, 2018) ............................ 6

OTHER AUTHORITIES

EPA, TSCA Work Plan for Chemical

Assessments: 2014 Update (Oct. 2014) .................... 7

Exec. Order No. 13,783, 82 Fed. Reg. 16,093

(Mar. 31, 2017) ......................................................... 8

Montfort A. Johnsen, Propellant Injection,

SPRAY Technology and Marketing

(Oct. 2014) ................................................................ 3

REPLY BRIEF

The decision below will cause grave health and

environmental harm affecting millions of Americans

and will permanently disable the Clean Air Act

program Congress designed specifically to prevent

that harm. The decision disrupts billion-dollar investments in safer alternatives made in reliance on that

program. And the decision substitutes a divided

panel’s cramped interpretation of statutory language

for a manifestly reasonable and longstanding agency

interpretation consistently held across multiple

administrations. Absent this Court’s review, that single, divided panel decision will permanently preclude

any future administration from using this Clean Air

Act provision to protect the public in the way Congress

intended. This Court should grant certiorari.

The Exceptionally Harmful Impacts and

Permanent Legal Consequences of the

Decision Below Warrant This Court’s Review

The permanent harmful consequences of the

lower court ruling require this Court’s review. The

decision will cause grave health and environmental

harm by blocking the 2015 HFC Rule at issue in this

case. More than that, it precludes EPA, whether in

this or any future administration, from ever again using Section 612 of the Clean Air Act to curb any kind

of dangerous substitutes for ozone-depleting substances – including ones that are highly toxic, flammable, or otherwise harmful – unless they also happen to deplete the ozone layer. The exclusive jurisdiction of the D.C. Circuit means the issue can never be

litigated again in any court of appeals. This Court’s

review is the only way to correct the lower court’s

error and restore Section 612 to its intended scope and

function.

A. The Decision Will Cause Grave Health

and Environmental Harm

The health and environmental significance of the

ruling below is difficult to overstate. As EPA recognized in 1994, HFCs are extremely potent greenhouse

gases, with thousands of times the heat-trapping

power of carbon dioxide. NRDC Pet. 8–9. By 2015

EPA found that HFC use was growing much faster

than anticipated in 1994, and at a rate much faster

than any other greenhouse gas. NRDC Pet. 14. EPA

found that absent regulation, ever-increasing HFC

emissions will significantly intensify the devastating

impacts of climate change, including deadly heatwaves, droughts, extreme storms, rising seas, and the

spread of disease. Id. EPA also found the grave

harms from HFCs could be largely averted at low cost

because safer alternative chemicals are now readily

available. NRDC Pet. 12–13.1 Yet despite affirming

all of EPA’s fact-finding on HFCs’ serious climatechange impacts, the lower court decision blocks any

effective remedy under the very statute Congress designed to regulate them.

1 EPA found the Rule would produce large climate benefits at low

costs. It would avoid HFC emissions equivalent to as much as

31 million metric tons of carbon dioxide in 2020, 64 million metric tons in 2025, and 101 metric tons in 2030, with amounts rising every subsequent year. 80 Fed. Reg. 42,870, 42,949 (July 20,

2015). The cost of the Rule fell “well below the $100 million per

year threshold to consider this an economically significant rule”

under Executive Order 12,866. Id. at 42,944.

The decision will have even further-reaching

health and environmental consequences because it

strips EPA of authority to curb any dangerous substitute that is already in use but does not happen to deplete ozone. Though EPA’s brief ignores it, the agency

used this authority at least twice before – stopping the

use of hexafluoropropylene (HFP) (a kidney toxin) in

refrigeration in 1999 and the use of sulfur hexafluoride (SF6) (a potent greenhouse gas) in aerosols in

1996. See NRDC Pet. 11–12.2 If it were confronted by

those dangerous substitutes now, EPA would be powerless to respond. Even more disconcerting, the majority opinion allows any person who no longer uses

ozone-depleting substances to reintroduce toxic, flammable, and otherwise dangerous alternatives that

have long been banned. NRDC Pet. 31. Congress created no such protected status for harmful but nonozone-depleting substitutes. Rather, in a clear formulation used repeatedly in Section 612, Congress focused on “reduc[ing] overall risk to public health and

the environment.” E.g., 42 U.S.C. § 7671k(a).

Industry Respondents (“Mexichem”) falsely imply these substitutes were not already in use and thus are no precedent for stopping incumbent manufacturers from continuing to use prohibited

non-ozone-depleting substitutes. Mexichem Opp. 7 n.2. In fact,

“[a]s late as about 1995, [SF6] was being used in at least two automotive products” (aerosols products for inflating flat tires).

Montfort A. Johnsen, Propellant Injection, SPRAY Technology

and Marketing (Oct. 2014), https://www.spraytm.com/propellant-injection.html. And EPA acted quickly to ban the kidney

toxin HFP because “refrigerant blends that contain HFP may

currently be commercially available and in actual use around the

nation.” 64 Fed. Reg. 3,865, 3,867 (Jan. 26, 1999).

B. The Decision Upends Legitimate Business

Reliance Interests and Burdens States

The ruling also does grave damage to the wellfounded reliance interests of the industry petitioners

and amici companies that have developed safer alternatives to perform the functions of the original ozonedepleting substances. The decision upends the quarter-century-old regulatory structure they relied on to

invest well over a billion dollars to develop these safer

substitutes and redesign products to use them.

Honeywell Pet. 3–4, 21–22; Carrier Br. 4–5, 8; Daikin

Br. 2–3, 6.

The decision harms the State amici as well by saddling them with new regulatory burdens to achieve at

least a portion of the health and environmental protections they had long counted on EPA to deliver.

Massachusetts Br. 8–11.

C. EPA’s

About-Face

Would

Forever

Disable Section 612 While Leaving No

Viable Regulatory Alternative

EPA’s brief affirms that the agency had consistently interpreted Section 612 since 1994 to authorize

the agency to prohibit the use of any harmful substitute – whether ozone-depleting or not – and to forbid

any person – whether a current user or not – from using it thenceforth, if the Administrator determines

that a safer alternative is available. See EPA Opp. 4–

6 (“[A]ny substitute designed to replace [an ozone-depleting substance] is subject to review under section

612,” because 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.”) (citations and quotation marks

omitted). EPA notes that the agency “reiterated” that

longstanding view when it adopted the 2015 HFC

Rule. EPA Opp. 6.

The current administration defended this

longstanding interpretation and the 2015 Rule in the

court below. The government’s brief here marks the

first time EPA has ever endorsed the convoluted construction adopted by the panel majority.

The agency’s about-face in litigation does not diminish the need for certiorari. Today’s EPA management, with different policy preferences than three

prior administrations, may now wish to disavow its legal authority. But that is not a sound basis for forever

locking in a divided panel’s restrictive construction of

Congress’s enactment. Far from serving “little or no

purpose” or being “of limited prospective importance,”

EPA Opp. 9–10, this Court’s review is essential.

In response to our showing that the majority opinion cuts the heart out of Section 612, EPA wanly observes that the lower court left a remnant on the operating room floor. To be sure, the opinion lets EPA

bar the few manufacturers that still use ozone-depleting substances from switching to HFCs. EPA Opp. 11.

But far more consequential is the authority the opinion takes away. When EPA listed HFCs in 1994 as

acceptable “near-term” substitutes for CFCs, it gave

industry fair notice that it could revisit that listing if

new data emerged on the dangers of HFCs or if safer

substitutes became available. NRDC Pet. 8–9. That

is exactly what EPA did in the 2015 Rule. The majority opinion destroys that authority. It does not just

block this one rule. It forever grandfathers all current

uses of any dangerous substitute (not just HFCs) that

does not deplete ozone.

Neither EPA nor Mexichem have shown any feasible or timely alternative path forward. EPA asserts

that an “upcoming rulemaking” may resolve “some” of

petitioners’ concerns. EPA Opp. 12–13. That rulemaking, however, cannot solve the fundamental problem: the lower court’s erroneous construction of Section 612, which absent this Court’s review will permanently foreclose EPA’s authority over dangerous substitutes like HFCs.3

Mexichem (but not EPA) invokes the panel majority’s suggestion that EPA might be able to re-regulate

HFCs under other Clean Air Act provisions or the

Toxic Substances Control Act (TSCA). Mexichem Opp.

15. Regulating HFCs under these other authorities

would require interpretive efforts far more challenging than reasonably construing Section 612.4 There is

3 In fact, EPA’s initial steps in that rulemaking have only made

things worse. In April 2018 EPA stated, with no prior notice or

opportunity to comment, that the agency “will not apply the HFC

listings in the 2015 Rule for any purpose.” 83 Fed. Reg. 18,431,

18,436 (Apr. 27, 2018) (emphasis added). This will allow even more

manufacturers to adopt HFCs and gain a permanent grandfather

status – even manufacturers still using ozone-depleting substances,

which the lower court agreed are properly subject to regulation.

4 The Prevention of Significant Deterioration program, for exam-

ple, requires permits for a small number of large new industrial

sources, not millions of small products like air conditioners. See

Util. Air Regulatory Grp. v. EPA, 134 S. Ct. 2427, 2444 (2014).

Also, in 2016 Congress directed EPA to address a backlog of other

harmful chemicals under TSCA, including those that have long

lingered on the agency’s TSCA work plan, a task that will

no reason to attempt that task when Congress designed Section 612 specifically for this job. Further,

EPA’s current management has given no indication

that it would consider using these authorities, nor has

Mexichem committed not to oppose that effort.

Also without EPA, Mexichem references a “retroactive disapproval” theory advanced by the majority

opinion. Mexichem Opp. 17. This would require EPA

– 25 years later – to establish on the 1994 record that

it made a mistake in originally approving HFCs. See

Pet. App. 19a–22a. The theory would seem to require

EPA to ignore information on risks and alternatives

that became available only after 1994. In any case, we

know of no instance where a “retroactive disapproval”

theory was used so aggressively or over this expanse

of time, and EPA has shown no interest in the option.

Mexichem also urges reliance on the Kigali

Amendment to the Montreal Protocol, which the administration has not yet sent to the Senate for advice

and consent to ratification, and a Senate bill that has

not yet been acted on. Mexichem Opp. 17–18. Neither

one is a present option or has any bearing on the importance of resolving the meaning of Section 612 and

restoring the efficacy of the safe alternatives program

enacted in 1990.

Finally, Mexichem suggests that President Trump’s

Executive Order 13,783, titled “Promoting Energy Inconsume the agency’s capacity under that law for many years.

Lautenberg Chemical Safety Act, Pub. L. No. 114-182, § 6, 130

Stat. 448, 460 (2016). HFCs have never been on the TSCA work

plan. See EPA, TSCA Work Plan for Chemical Assessments: 2014

Update (Oct. 2014), https://bit.ly/2CkWtso.

dependence and Economic Growth,” is somehow relevant. But the Order targeted rules related to “oil, natural gas, coal, and nuclear energy,” not the HFC Rule.

Exec. Order No. 13,783, §2(a), 82 Fed. Reg. 16,093

(Mar. 31, 2017). And even as to the targeted rules, the

Order instructed agencies only to reconsider them “as

appropriate and consistent with law.” Id. § 3(d).

None of these arguments minimizes the gravity

and permanence of the harm done by the lower court

decision. Rather, they underscore the importance of

this Court’s review to preserve an important statutory

authority that a single administration has no right to

give up for all time.

II. The Decision Below is Wrong

In our petition, we showed that the decision below

was wrong twice over: first, because EPA’s longstanding construction is the only reasonable interpretation

of Section 612 in light of the statutory text, structure,

and purpose, NRDC Pet. 24–32, and second, because

Mexichem’s attack on that interpretation was untimely, NRDC Pet. 24.

Notably, EPA does not disagree that the lower

court erred on the latter point. EPA’s brief states that

“[t]he court of appeals viewed the 2015 Rule as representing a ‘new interpretation of Section 612(c)’” and

that the petitions for review were “timely” only “[o]n

that view.” EPA Opp. 7 n.2 (emphasis added). The

brief affirms, however, that EPA interpreted Section

612 consistently since 1994, with no change in 2015.

EPA Opp. 4–6; see supra pp. 4–5. The government

thus acknowledges that the court’s “view” that EPA

changed position in 2015 is factually wrong.

That makes Mexichem’s challenge untimely under

Section 307(b)(1) of the Clean Air Act, which requires

petitions for review to have been brought within 60

days of promulgation of the relevant final action – the

1994 rule. 42 U.S.C. § 7607(b)(1). As we have explained,

the trade association to which Mexichem belongs actually brought – and dropped – this very claim against

the 1994 rule. NRDC Pet. 11, 24; Honeywell Pet. 31.

The lower court should have rejected Mexichem’s second bite at the apple in 2015 as untimely. That error

provides a straightforward basis for reversing the majority’s deeply disruptive decision.

The panel majority is also flatly wrong in its interpretation of Section 612. The dissent and the petitions for certiorari demonstrate that the critical term

“replace” does not unambiguously have the single restrictive meaning the panel majority asserts. To be

sure, “replace” can be a one-time event, like replacing

a broken tea cup. But it equally can be, as Judge Wilkins said in dissent, a multi-step industrial process,

such as replacing the internal combustion engine or

prescription drugs, in which “the ubiquitous product

that has become the industry standard is ‘replaced’ by

a number of substitutes, and the replacement takes

place not at a specific point in time, not just once, and

not by a single substitute.” Pet. App. 30a–31a.

The petitions and amicus briefs give many other

examples of the ordinary English usage of “replace” in

just this sense. NRDC Pet. 25; Honeywell Pet. 33–34;

Massachusetts Br. 19–20 (substitute teachers, hip replacements, sugar substitutes, iconic sports stars).

EPA and Mexichem offer no response to these many

examples.

The panel majority therefore cannot tenably assert that “replace” has only the one-time broken-teacup meaning. Congress’s purpose in Section 612 was

to regulate an evolving industry, and it is far more

natural for Congress to have used “replace” in the continuing-process sense that Judge Wilkins describes.

The term is certainly broad enough to encompass this

meaning, and it was reasonable for EPA to so interpret it in the context of Section 612.

EPA and Mexichem also ignore the many unreasonable, illogical consequences that flow from adopting the one-time-only meaning of “replace.” See Pet.

App. 31a–37a; NRDC Pet. 29–32; Honeywell Pet. 33–

35. Neither responds to the perverse loophole identified by the dissent, Pet. App. 34a, that a manufacturer

could start using a substitute before EPA has had time

to evaluate it, which – under the majority opinion –

would forever insulate the manufacturer from a subsequent prohibition. NRDC Pet. 29–30. Neither responds to the irrational distinctions between companies introduced by the majority opinion – for example,

the manufacturer of building air conditioners (“chillers”) containing an ozone-depleting HCFC will soon

have to switch to a non-HFC alternative, but its competitors that already use HFCs are forever grandfathered. NRDC Pet. 31.

And neither EPA nor Mexichem has any answer

to the gaping loophole created by the majority opinion

that would allow any person no longer using ozonedepleting substances to reintroduce dangerous alternatives that EPA banned decades ago. NRDC Pet. 31.

Companies could now start using the highly flammable “Hydrocarbon Blend A” – EPA’s flagship example

of a dangerous substitute appropriately banned in

1994. See EPA Opp. 3.

As EPA explained in the 1994 rulemaking, these

loopholes and perverse distinctions are avoided by the

manifestly reasonable interpretation that manufacturers “replace” ozone-depleting substances each time

they use a substitute in an application that formerly

used ozone-depleting substances. See EPA Opp. 4

(quoting 59 Fed. Reg. at 13,048); NRDC Pet. 10.

Mexichem offers two more arguments that EPA

does not join. First, Mexichem references EPA’s 1994

explanation of a different provision, Section 612(e).

Mexichem Opp. 6–7. That provision, which obligates

companies to submit “unpublished health and safety

studies” for potential new substitutes before marketing them, does not even use the term “replace.” 42

U.S.C. § 7671k(e). As the dissent recognized, Section

612(e) has no bearing on EPA’s authority to prohibit

existing substitutes under Section 612(c). See Pet.

App. 40a–43a.

Second, Mexichem echoes the majority’s complaint that under EPA’s interpretation the agency

could prohibit a so-called “twelfth generation” substitute 100 years from now. Mexichem Opp. 28. As we

have already explained, many Clean Air Act provisions operate indefinitely, and there is no evidence

Congress intended Section 612 authority to sunset.

NRDC Pet. 28. The simplest check on unreasonable

EPA action is the “arbitrary and capricious” test, by

which the D.C. Circuit could easily reject a rule that

did not demonstrate a meaningful reduction in overall

health or environmental risk and the availability of

safer alternatives. Regarding HFCs, however, the lower

court unanimously upheld EPA’s authority to act

based on climate impacts and rejected all Mexichem’s

arbitrary and capricious challenges. Pet. App. 22a–25a.

None of these arguments supports the decision below. This Court’s review is essential to restore the vital

health and environmental safeguards Congress enacted

Section 612 to provide. Congress designed this provision precisely to ensure that in responding to one environmental disaster – destruction of the ozone layer

– we would not blunder into new and even greater difficulties. Unless reversed, the divided ruling below will

permanently destroy the effectiveness of that program

and cause great harm to human health and the environment. The Court should grant the petitions.

CONCLUSION

For all these reasons, the Court should grant the

petitions for certiorari in Nos. 18-2 and 17-1703.

Respectfully submitted,