[00:00:01] Speaker 00: Case number 15-1328 et al. [00:00:05] Speaker 00: Mexican Floor Inc. [00:00:07] Speaker 00: Petitioner, Environmental Protection Agency. [00:00:11] Speaker 00: Mr. Himmelfarb for the petitioner, Mr. Magumfar for respondent, Mr. Lorenzen for the intervener. [00:00:20] Speaker 03: Good morning. [00:00:21] Speaker 07: Good morning, Judge Brown, and may it please the Court. [00:00:26] Speaker 07: This case involves the so-called SNAP program that EPA created pursuant to Section 612 of the Clean Air Act, which authorizes the agency to determine what substances may replace ozone-depleting substances as they are phased out under other provisions of the Act. [00:00:45] Speaker 07: Primary question in the case is whether EPA may use the SNAP program to ban non-ozone depleting substances that have already replaced ozone depleting substances in particular uses. [00:00:58] Speaker 07: The answer is no. [00:01:00] Speaker 07: In attempting to use SNAP for this purpose, EPA has exceeded its authority under the statute. [00:01:07] Speaker 07: The SNAP regulations, the initial SNAP rule, [00:01:11] Speaker 07: and prior agency practice. [00:01:13] Speaker 07: In the process, EPA has turned a limited program into a limitless one. [00:01:20] Speaker 07: I'll begin with a statute which makes clear that the regulatory authority that Congress granted EPA encompasses the replacement of ozone-depleting substances and nothing more. [00:01:32] Speaker 05: Can I, before you get into that, address timeliness so your contention is that you're not challenging the SNAP program or the SNAP regulations, right? [00:01:44] Speaker 07: That's right. [00:01:45] Speaker 07: Well, we've raised a number of challenges. [00:01:47] Speaker 07: The one I was just discussing is a challenge to the statutory authority, and for that matter, the regulatory authority of the agency to ban non-ozone depleting substances that are currently in use. [00:02:03] Speaker 07: And it's our submission that that challenge is timely because EPA had never attempted to assert its authority for that purpose before. [00:02:12] Speaker 05: Hadn't they done so using the SNAP regulation? [00:02:16] Speaker 05: I'm sorry? [00:02:16] Speaker 05: Hadn't they done so, in fact, using the SNAP regulation? [00:02:19] Speaker 07: No, not at all. [00:02:20] Speaker 07: The only time it had delisted substances under the program were the listings of ozone-depleting substances. [00:02:30] Speaker 07: And it's our position that that's entirely consistent with the statute and with the regulations and with the program. [00:02:39] Speaker 07: And far from having ever done that before, EPA said in the initial SNAP rule, principally on page 13,052 of volume 59 of the Federal Register, this is in 1994, that it wasn't going to do what it has now done. [00:02:56] Speaker 07: It talked about the difference between first generation substitutes and second generation substitutes. [00:03:01] Speaker 07: And it made clear that for these industrial sectors and for these end uses, [00:03:07] Speaker 07: There was a time when ozone-depleting substances were in use, Class 1 or Class 2, CFCs or HCFCs, and at that point in time, EPA could, under the SNAP program, create a list of chemicals that could replace those ozone-depleting substances. [00:03:25] Speaker 07: Those would be first-generation substitutes. [00:03:29] Speaker 07: But once first generation non-ozone depleting substitutes are in use and all agree that they are in use now for all of the relevant sectors covered by the rule, for all of the relevant end uses, the SNAP program no longer has any work to do. [00:03:44] Speaker 07: EPA is of the view that first-generation, non-ozone-depleting substances have some adverse effect on human health or the environment. [00:03:53] Speaker 07: There may be other mechanisms for banning or otherwise limiting them. [00:03:58] Speaker 07: Indeed, in the very portion of the Federal Register that I just alluded to, EPA itself said [00:04:06] Speaker 07: Other regulatory programs, example, other sections of the CAA, Clean Air Act, or Section 6 of the Toxic Substance Control Act, exist to ensure protection of human health and the environment in these situations. [00:04:20] Speaker 07: So EPA may have authority to take care of what it perceives to be a problem with non-ozone depleting substances, but that authority, we submit, does not come from SNAP. [00:04:33] Speaker 02: They can change the list, correct? [00:04:37] Speaker 07: Judge Kavanaugh, they can change the list so long as ozone-depleting substances are in use. [00:04:42] Speaker 07: And they have done that. [00:04:42] Speaker 02: And where do you get that latter part from the statutory language? [00:04:47] Speaker 02: Because it does speak in terms of adverse effects to human health or the environment. [00:04:53] Speaker 02: And then says, do a list of safe alternatives and do a list of prohibited substitutes. [00:05:04] Speaker 02: It would seem that EPA could alter that list over time. [00:05:09] Speaker 02: And just to give you where I'm headed with this, if I'm right that EPA can alter the list over time, then the question really becomes here, can they alter the list over time and then retroactively apply the new list to someone who took advantage of a safe alternative listed under the previous list? [00:05:28] Speaker 02: Is that not the right way to look at it, or where am I missing something? [00:05:31] Speaker 07: Well, let me try to start with the first part of your question, which is where in the statute [00:05:37] Speaker 07: this prohibition or more precisely lack of authority exists. [00:05:41] Speaker 07: The provisions dealing with the lists and adding to them and removing from them is in subsection C and D. This is section 612-7671K. [00:05:53] Speaker 07: I mean, those provisions have to be read in light of, you know, what are really the substantive provisions of the statute, which are found in A and C, which refer unmistakably to replacing class one and class two substances. [00:06:08] Speaker 07: And the list is of [00:06:10] Speaker 07: substitutes for and alternatives to class one and class two substances. [00:06:18] Speaker 07: So when you're talking about what can be on the list, the list is supposed to consist of things that can be used instead of ozone depleting substances. [00:06:27] Speaker 02: Once ozone depleting substances... True, but then in talking about what will be permitted, [00:06:34] Speaker 02: As substitutes, it seems to say – again, correct me if I'm wrong – it seems to say that EPA can then determine that some substitutes are okay and some substitutes are not okay. [00:06:51] Speaker 07: Exactly. [00:06:52] Speaker 07: I'm in agreement with you on that. [00:06:55] Speaker 02: Depending, I think. [00:06:59] Speaker 02: the substitutes, plural substitutes, adverse effects on human health or the environment? [00:07:06] Speaker 07: There's no question that human health and the environment is one of the critical elements of the statute and indeed of the program. [00:07:16] Speaker 07: But there's another critical element, which is that when making determinations about what is appropriate in light of effects on human health and the environment, those determinations are limited to the circumstance where you're replacing class one and class two substances. [00:07:32] Speaker 07: And one of the consequences of EPA's current reading of this statute is that it, in effect, reads out that limitation, the limitation on replacing ozone-depleting substances, and turns this into [00:07:45] Speaker 07: sort of a freestanding, ongoing, perpetual program that allows it to decide forever and ever, long after ozone-depleting substances have been phased out under Section 603 or 604, that something that is in use in an industry that at one time used ozone-depleting substances has an adverse effect on human health and the environment, and EPA wants something else. [00:08:12] Speaker 05: But does your reading read out to the maximum extent practicable? [00:08:17] Speaker 07: Not at all, Judge Wilkins. [00:08:18] Speaker 07: All to the maximum. [00:08:19] Speaker 05: What work does that do? [00:08:22] Speaker 07: What it does is when you are within the universe of permissible regulatory authority that I've just described, meaning when you're talking about replacing an ozone-depleting substance, and the question is what should be used instead as they're phased out, [00:08:39] Speaker 07: You have to ensure to the maximum extent practicable that the things that are replacing them are, you know, consistent with human health and the environment. [00:08:49] Speaker 07: To the maximum extent practicable does not, you know, cannot be read to in effect [00:08:57] Speaker 07: read out of the statute this limitation. [00:09:00] Speaker 05: So to the maximum extent practicable means that once you've got one bite at the apple and you should take the biggest bite you can, you can't go back and take the second bite. [00:09:13] Speaker 07: Well, let me address that, because I think that's an important part of the case. [00:09:17] Speaker 07: And it's one of the principal arguments that my adversaries make in this case, which is that it's essentially our position that once a substance is added to the list, [00:09:31] Speaker 07: it's gotta stay there, it can't be delisted. [00:09:34] Speaker 07: And that's not our position at all. [00:09:36] Speaker 07: Our position is that EPA can add and remove as much as it wants, so long as it's complying with other provisions of the regulations, so long as there is an ozone-depleting substance in use. [00:09:49] Speaker 07: So if CFCs are in use, as they were at one time, EPA could say, as CFCs are phased out under Title VI of the Clean Air Act, [00:09:59] Speaker 07: These are the permissible replacements, and they might include other ozone-depleting substances. [00:10:05] Speaker 07: For example, HCFCs, which were replacements for CFCs but are themselves ozone-depleting, they might include non-ozone-depleting substances. [00:10:15] Speaker 07: Then there might be a transition to HCFCs, [00:10:18] Speaker 07: And EPA could amend the list at that point, because ozone-depleting substances are still in use. [00:10:23] Speaker 07: So what's on the list are indeed substitutes for and alternatives to ozone-depleting substances. [00:10:31] Speaker 07: Go ahead. [00:10:33] Speaker 03: What you are saying, I think, is that once [00:10:36] Speaker 03: EPA has a list which does not include any ozone-depleting substances, that is, that they've substituted for those, then they could make no changes, at least no deletions to that list. [00:10:52] Speaker 07: Well, I guess what we're saying is that the critical point, and I think this is a recurring theme and in one form or another, I think it's an answer to almost all of the court's questions. [00:11:03] Speaker 07: The critical question is what is in use? [00:11:05] Speaker 07: And EPA itself made this clear in the initial SNAP rule. [00:11:08] Speaker 07: If ozone-depleting substances are in use, EPA can list and delist. [00:11:14] Speaker 07: It can list or delist ozone depleting substances and non-ozone depleting substances because the list at that point is consisting of things that will replace the things that are in use, which are ozone depleting substances. [00:11:26] Speaker 07: But once the relevant industrial sectors and end uses [00:11:30] Speaker 07: have moved away from ozone-depleting substances, and again, all agree that that's what's happened here, the SNAP program no longer has any work to do, and if EPA wants to do something about non-ozone-depleting substances that have replaced ozone-depleting substances, it has to look somewhere else. [00:11:51] Speaker 02: When it originally does the list, and say it's considering two potential substitutes, [00:11:59] Speaker 02: It compares those substitutes to each other based on effects of those substitutes on human health or the environment. [00:12:10] Speaker 02: And it may conclude one substitute is better than the other for that purpose. [00:12:15] Speaker 02: And so substitute A is going to be listed as safe, and the other substitute is going to be prohibited. [00:12:23] Speaker 02: Is that correct so far? [00:12:25] Speaker 04: Yes. [00:12:25] Speaker 02: OK. [00:12:26] Speaker 02: So suppose then 10 years later it concludes, EPA concludes, actually we were wrong. [00:12:33] Speaker 02: The one substitute we said is safe is actually more harmful to human health or the environment than the other substitute. [00:12:42] Speaker 02: So we're going to flip those two. [00:12:44] Speaker 02: And the one that was listed as safe is now going to be prohibited. [00:12:47] Speaker 02: And the one that was prohibited is now going to be listed as safe. [00:12:51] Speaker 02: You're saying EPA can't do that. [00:12:52] Speaker 07: Well, it can do that if ozone-depleting substances are in use when it does that, because either or both of them are going to be replacements for ozone-depleting substances. [00:13:01] Speaker 07: If they've already been phased out or replaced, and a non-ozone-depleting substance is in use, it has no authority to do any of that, understand? [00:13:10] Speaker 07: And that's precisely what has happened here. [00:13:16] Speaker 02: Unless the court... I mean, it seems like the problem here, though, and I guess I'll be asking this more to EPA, is... [00:13:23] Speaker 02: And you're challenging my premise. [00:13:25] Speaker 02: But if my premise is that they can change the list 10 years later in the way I just described in the hypothetical, is it fair, permissible, consistent with statutory authority, whatever, to then retroactively tell someone who already relied on the previously listed safe alternative that actually you have to now change, as opposed to telling someone that still has the ozone depleting [00:13:52] Speaker 02: substance in use that you have to choose the safe alternative as we see it now rather than the prohibited alternative as we see it now? [00:14:00] Speaker 07: Right, I mean, it's not fair, but I don't think the court has to decide whether it's fair because Congress decided it's not fair by limiting the SNAP authority to situations where ozone-depleting substances are in use. [00:14:14] Speaker 07: And I think [00:14:15] Speaker 07: Ultimately, although they never really say this explicitly, EPA's position reduces to the idea that when you replace something and then you replace the replacement and so on and so forth forever, [00:14:31] Speaker 07: Every single time you do that, you're replacing the first thing that was replaced. [00:14:35] Speaker 07: I just don't think that's the way people speak English. [00:14:39] Speaker 02: And the example we have in our brief, which I think is – makes the point pretty well, is that – But you – you acknowledge they can replace a replacement, but only if it's an ozone-depleting substance, right? [00:14:54] Speaker 07: Right, so if HCFCs, which are ozone-depleting, replace CFCs, they can replace the HCFCs because under the statute they're replacing an ozone-depleting substance. [00:15:06] Speaker 07: But once ozone-depleting substances are no longer in use, they don't have that authority under SNAP. [00:15:15] Speaker 07: I'd like to reserve the remainder of my time for both. [00:15:39] Speaker 01: Good morning and may it please the court. [00:15:41] Speaker 01: My name is Dustin Magomfar and I represent the United States. [00:15:44] Speaker 01: With me at council table is Jan Tierney from EPA's Office of General Counsel. [00:15:49] Speaker 01: This case is straightforward when the agency action before the court is properly understood. [00:15:54] Speaker 01: Acting pursuant to Section 612 of the Clean Air Act and EPA's implementing regulations, EPA restricted the use of certain chemicals, primarily HFCs, which were approved in the 1990s as substitutes for ozone-depleting substances. [00:16:10] Speaker 01: This rulemaking does not ban HFCs. [00:16:14] Speaker 01: In fact, it actually restricts them in the final rule less than what EPA proposed in its proposal. [00:16:19] Speaker 01: The rulemaking applied EPA's longstanding multi-factor comparative analysis and reasonably concluded that the HFCs in question that were restricted presented a higher overall risk to human health and the environment than other approved substitutes. [00:16:36] Speaker 01: The only substitutes before the court today are those that EPA restricted. [00:16:41] Speaker 01: The ones that EPA used as part of its comparative analysis are not before the court. [00:16:46] Speaker 01: EPA's reasonable analyses and conclusions are entitled to deference, and accordingly, the petition for review should be denied. [00:16:54] Speaker 05: Can you just clarify a factual issue? [00:16:58] Speaker 05: Is it true, as your colleague, opposing colleague said, that EPA never used this authority prior to the current rule under SNAP to delist a non-official [00:17:16] Speaker 01: I believe it is correct that the prior delistings have involved ozone depleting substitutes, and I may not be correct for that, but we can assume for this morning that that is correct, because it doesn't change the outcome here. [00:17:32] Speaker 01: Because Section 612 is not, as petitioners contend, limited to only replacing ozone depleting substances. [00:17:41] Speaker 01: Section 612 is about regulating the substitutes to ozone-depleting substances. [00:17:47] Speaker 01: There are other sections of Title VI that focus on the ozone-depleting substitutes themselves. [00:17:53] Speaker 01: 612 not only allows but requires EPA where it finds that there are other substitutes currently or potentially available that reduce overall risk to human health and the environment to put those on the acceptable list and to delist, to remove as acceptable the substitutes that pose a higher overall risk to human health and the environment. [00:18:15] Speaker 01: Nowhere in the statute, and certainly not EPA's regulations, is there a limitation to only having that authority if the substitute itself is an ozone-depleting substance. [00:18:26] Speaker 05: What about your opposing counsel's statement, well, in their briefs and also this morning, that EPA itself in 1994 in the Federal Register articulated that point of view, that i.e. [00:18:43] Speaker 05: that it can't replace the replacement? [00:18:45] Speaker 01: That's simply not correct, Your Honor. [00:18:47] Speaker 01: And in fact, EPA, in multiple instances in the initial rulemaking in 1994, articulated that [00:18:54] Speaker 01: based on either later developed alternatives or new data about previously existing alternatives, that EPA could move a substitute from the acceptable list to the unacceptable list. [00:19:07] Speaker 02: Can it do that retroactively though? [00:19:14] Speaker 02: In other words, can it [00:19:16] Speaker 02: Can it alter the list and then tell a company that had previously made the substitution to a previously listed safe alternative, actually now you have to substitute again because we've recalculated or redetermined what is safe or not? [00:19:35] Speaker 01: It can, Your Honor, although I would not necessarily agree that the application of this rule, for example, is retroactive. [00:19:41] Speaker 02: Well, I think it is. [00:19:44] Speaker 02: To someone who's never replaced the ozone-depleting substance, it's not retroactive, because they haven't made the replacements. [00:19:54] Speaker 02: You're telling them you have to make the replacement, but you have to replace it with something that's listed today as safe. [00:19:59] Speaker 02: But for someone who already made the replacement, [00:20:02] Speaker 02: to something that was previously listed as safe, you are telling them, actually, you have to go back and now change. [00:20:11] Speaker 02: Well, moving forward, the company would have to change because what Section 612 requires is that... Yeah, moving forward, but they had previously made a change in reliance, presumably, on EPA telling them that this was a safe alternative. [00:20:26] Speaker 01: Well, there's a number of points, Your Honor. [00:20:27] Speaker 01: In 1994, I think one issue here is the definition of replace. [00:20:31] Speaker 01: And in 1994, EPA interpreted replace to mean each time a substitute is replacing an ozone-depleting substance. [00:20:40] Speaker 01: So the act of replacing does not occur only at the first instance that a company adopts a substitute. [00:20:46] Speaker 02: That's a stretch. [00:20:49] Speaker 02: I mean, replace does seem [00:20:51] Speaker 02: like a one-time thing. [00:20:54] Speaker 02: You replace the ozone-depleting substance with a safe alternative, period. [00:20:58] Speaker 02: Okay, now you're telling them actually [00:21:02] Speaker 02: what we thought was safe is no longer, we no longer think is safe, so you have to go back and replace the safe alternative with something else. [00:21:10] Speaker 02: That's common parlance, I believe, on replace. [00:21:13] Speaker 01: I disagree, Your Honor. [00:21:14] Speaker 01: In 1994, EPA expressly addressed this question. [00:21:17] Speaker 01: This interpretation of the statute by EPA has been in place for over 20 years, and EPA explains... That doesn't make it right, but go ahead. [00:21:24] Speaker 01: EPA explained in the initial rulemaking that otherwise the implication is that EPA would not, anyone who started using a substitute before EPA put it on the unacceptable list would be able to use it forever. [00:21:39] Speaker 01: And that that could not possibly reflect Congress's intent to reduce to the maximum extent practicable the use of substitutes that pose a higher overall risk to human health and the environment. [00:21:51] Speaker 01: And this comes back to the example that, Judge Kavanaugh, you raised this morning that we discussed in our brief, which is that under petitioners' interpretation, EPA could never change the listing status of a non-ozone-depleting substitute once it's on the acceptable list. [00:22:06] Speaker 01: So EPA could learn years later that it's a powerful carcinogen that will literally kill people and nothing could be done [00:22:13] Speaker 02: Now petitioners come back... Well aren't there other authorities that EPA could use in that hypothetical? [00:22:17] Speaker 01: Potentially, but they don't need to rely on it. [00:22:20] Speaker 02: And EPA has said they can look up... But if there are other authorities, this is their point, so I'll ask, if there are other authorities, then we don't need to... [00:22:29] Speaker 02: stretch, that would be their term, stretch this statute to cover that circumstance when there are other authorities that plainly would cover such a circumstance. [00:22:37] Speaker 02: So when you say perhaps, that could be, the perhaps could be a key issue in the case. [00:22:42] Speaker 01: The problem is that there's, this isn't a stretch of the statute. [00:22:45] Speaker 01: I mean, the statute requires EPA to compare alternatives to one another, and if one alternative poses a [00:22:53] Speaker 01: higher overall risk to human health and the environment, then EPA must restrict its use. [00:22:59] Speaker 01: Now, petitioners respond in their reply brief and this morning that EPA could compare the now understood to be toxic substitute to an ozone depleting substance, and then that could allow a change. [00:23:10] Speaker 01: But as I just said, 612 requires EPA to compare substitutes to one another and reject those with a higher overall risk. [00:23:19] Speaker 05: Just so that I'm clear, what language in the statute most supports this argument that EPA is supposed to compare alternatives to each other? [00:23:32] Speaker 01: Section 612C, and particularly 1 and 2, which says that it shall be unlawful for an end user to replace any ozone-depleting substance with any substitute substance which the administrator determines may present adverse effects to human health and the environment, where the administrator has identified an alternative to such replacement that reduces overall risk and is currently or potentially available. [00:23:59] Speaker 01: So if there is another alternative out there that reduces overall risk to human health and the environment and is currently or potentially available, then EPA must make it unlawful to use the substitute that presents a higher overall risk. [00:24:13] Speaker 02: And your point is that they have to compare substitutes, potential substitutes, and two substitutes to one another and say this one substitute is actually less harmful to [00:24:28] Speaker 02: It poses less of a risk to human health and the environment than the other one. [00:24:31] Speaker 02: So one is going to be listed as safe and the other one's going to be listed as prohibited. [00:24:35] Speaker 01: That's right, or otherwise restricted. [00:24:37] Speaker 01: There's some intermediary steps that EPA can use. [00:24:40] Speaker 02: But one more fundamental... I guess I'm still stuck, and maybe I'm unique in seeing the problem that I'm seeing, but is the [00:24:48] Speaker 02: telling someone it's safe, and then someone says, okay, we're gonna spend all this money to replace the substance that's ozone depleting with the safe alternative, and then telling them a few years later, actually, you gotta go spend a lot more money to replace that safe alternative with what we now think is actually a safe alternative. [00:25:07] Speaker 02: And it's that second step that seems to me, I don't know if it's retroactivity or what the right term is, but it does seem [00:25:18] Speaker 02: to pull the rug out from someone who relied on an EPA list to do what EPA wanted them to do to make the environment safer. [00:25:27] Speaker 01: I would add a couple additional points to the ones I've already made, Your Honor. [00:25:31] Speaker 01: One is that, and the 1994 rulemaking, producers were fully on notice that being put on the acceptable list was not an indication of permanence. [00:25:40] Speaker 01: We discussed this in pages four to five in our brief. [00:25:43] Speaker 01: It's also at JA 51 and 866, for example. [00:25:46] Speaker 01: and producers of HFCs in particular were fully on notice that HFCs were not guaranteed permanence, in fact because EPA articulated concerns about the high global warming potential of HFCs and identified them as a near-term solution. [00:26:02] Speaker 01: So that's one reason, one additional reason. [00:26:04] Speaker 01: Another is that EPA does take into account some of the issues related to transition. [00:26:10] Speaker 02: What's the best site you have for that the companies were warned that the list could change in the future and you could be required to change from a now listed safe alternative to what we in the future think is a safer alternative? [00:26:23] Speaker 01: Well, we discuss, we quote to a number of passages from the initial 94 rulemaking in pages four to five of our brief. [00:26:31] Speaker 01: I would also point to JA 51 and 866. [00:26:36] Speaker 01: And then two, I have several pin sites to the initial rulemaking in 94, which would be pages 13,000, 47, 49, 64, 71 to 72. [00:26:49] Speaker 01: 83. [00:26:50] Speaker 02: I didn't see I mean I guess I missed I didn't see a specific warning in that sense and again this matters for the reliance interest point which like I said maybe I'm the only one seeing that as an issue. [00:27:04] Speaker 01: For example, on page 4, we talk about there were concerns raised in 94 about the need for regulatory certainty versus the list not being fixed forever, and EPA essentially said we're taking the middle ground, which is we're not expecting to make massive changes to the list every other day, but certainly we're not promising that once you're on the acceptable list, you get to stay there forever. [00:27:27] Speaker 01: EPA also expressly interpreted Section 612 as giving it the authority to move a substitute off of the acceptable list and onto the unacceptable list. [00:27:38] Speaker 01: So companies were fully on notice that EPA interpreted the statute as giving it that authority. [00:27:45] Speaker 01: If I may make, might make one more fundamental point, which is that Petitioner's Council this morning has- Does that really respond to the argument that [00:27:55] Speaker 01: There's there's nothing that suggests in the rulemaking that in the 1994 rulemaking that EPA was interpreting section 612 is limiting its authority to only replacing alternatives that are [00:28:18] Speaker 01: themselves ozone-depleting substances. [00:28:20] Speaker 01: And I would point to the definition of an unacceptable listing determination in EPA's regulations also has no such calving authority and simply says that if an alternative poses higher overall risk to human health than the environment, then it can be designated as unacceptable. [00:28:42] Speaker 01: Council for petitioners this morning [00:28:44] Speaker 01: has arguably essentially reduced the case to a simple factual question of whether we have moved beyond ozone-depleting substances and replaced all ozone-depleting substances. [00:28:54] Speaker 01: And the answer is simply no. [00:28:56] Speaker 01: Contrary to what Petitioner's Council said this morning, EPA does not agree that we have moved on beyond ozone-depleting substances. [00:29:03] Speaker 01: Ozone-depleting substances are still in use in many of the end uses that are at issue in this rule. [00:29:11] Speaker 01: And also, very importantly, [00:29:14] Speaker 01: They also have this first generation versus second generation argument. [00:29:18] Speaker 02: Every substitute considered... What about on 13047? [00:29:22] Speaker 02: It says EPA expects future changes to the SNAP list to be minor and thus not to represent an undue burden on the regulated community. [00:29:32] Speaker 01: And that, I would argue, has proven to be true because EPA... You think this is minor? [00:29:38] Speaker 01: a EPA said that they expect future changes to be minor, not that they promised that there would never ever be a change that wouldn't be minor. [00:29:46] Speaker 01: When you consider it in the context and in light of all the other statements that I appointed to from the 1994 rulemaking, the fact that EPA has delisted other substitutes in the past [00:29:56] Speaker 02: The principal change is the agency expects to make in the future to add new substitutes or sectors to the list rather than to change a substitute's acceptability. [00:30:06] Speaker 01: And that, generally speaking, over the last 20 plus years... Generally speaking, but not this case. [00:30:13] Speaker 01: EPA did not say they were never going to delist. [00:30:16] Speaker 01: And let's also keep in mind, this again, this is not a ban on HFCs as petitioners routinely mischaracterize this action. [00:30:23] Speaker 01: There are numerous. [00:30:24] Speaker 02: I'm just looking at the language you pointed me to where they said, where it was quote, the warning, don't rely on these lists, don't rely on these lists. [00:30:33] Speaker 02: And actually the language does say, don't rely 100% on these lists, but you can expect that the lists are not gonna have [00:30:42] Speaker 02: more than minor changes. [00:30:43] Speaker 01: And there are other statements from the rulemaking, such as the one quoted on page four of our brief that says, EPA appreciates the need for regulatory certainty, which is certainly reflected by the quotation that your honor just read. [00:30:56] Speaker 01: But we also are not promising permanence. [00:30:58] Speaker 01: We're not saying that something is going to be on here forever. [00:31:02] Speaker 01: And so the other key point I want to make this morning is that on this first generation versus second generation argument, [00:31:10] Speaker 01: Every substitute considered by EPA in this rulemaking, the ones that they actually restricted and all the ones that they used for comparison purposes, are first-generation substitutes. [00:31:22] Speaker 01: And in the rulemaking, many of the substitutes that EPA used as comparisons were also approved by the agency as acceptable in 1994 and thus are clearly substitutes for ozone-depleting substances. [00:31:35] Speaker 01: HFCs at issue are themselves substitutes for ozone-depleting substances, and even the more recently approved substitutes, like the HFOs that are discussed, for example, were expressly found by EPA to be substitutes for ozone-depleting substances when they were put on the list of acceptable substitutes. [00:31:57] Speaker 01: The determination that those substitutes are acceptable and replace ozone depleting substances is not before this court because that's not part of the rulemaking at issue here. [00:32:06] Speaker 01: It is simply the state of the regulatory program that those substitutes are all on the acceptable list as replacements for ozone depleting substances. [00:32:16] Speaker 01: So EPA compared first-generation substitutes against other first-generation substitutes, as we discussed in our brief, walked through its multi-factor comparative analysis, and reasonably concluded that certain HFCs in certain end uses [00:32:32] Speaker 01: posed a higher overall risk to human health and the environment. [00:32:35] Speaker 01: And Judge Kavanaugh, there's one other point I kept not making, which is that in addressing some of these concerns about transition and the fact that some substitutes have been on this list and used for a long time, EPA does take that into account when setting the phase-out dates in its rulemaking. [00:32:51] Speaker 01: So for example, there's a number of instances in the final rule where EPA in the proposal said, we're proposing to move this to the unacceptable list on date X. [00:33:00] Speaker 01: And then they got a whole bunch of comments about why there would be technical delays in transition or concerns about the availabilities of other substitutes. [00:33:07] Speaker 01: And EPA said, OK, we're pushing out that date until why. [00:33:12] Speaker 01: And in some instances, it was a number of years. [00:33:14] Speaker 01: So EPA does take into account. [00:33:15] Speaker 02: And that was foreshadowed as well in the 94. [00:33:19] Speaker 02: Federal Register. [00:33:21] Speaker 02: That's a helpful point for you. [00:33:24] Speaker 03: Thank you. [00:33:25] Speaker 03: So Title VI, you know, is the implementation of the Montreal Protocol, and so that was focused on ozone-depleting substances. [00:33:35] Speaker 03: That's what that was about, as I understand it. [00:33:38] Speaker 03: But as I understand your argument, even if EPA succeeds in substituting different [00:33:49] Speaker 03: chemicals or processes for the ozone-depleting substances so that we're no longer looking at ozone-depleting substances. [00:34:00] Speaker 03: Your position would be the agency could nevertheless continue to substitute better alternatives forever. [00:34:11] Speaker 03: There is no limit to that. [00:34:13] Speaker 03: Am I correct? [00:34:15] Speaker 01: That is not the agency's position, Your Honor. [00:34:17] Speaker 01: I'm very glad that you raised that point. [00:34:18] Speaker 01: And this goes to the 24th versus 25th generation alternative that was raised by petitioners in their briefs. [00:34:25] Speaker 01: And first it's a red herring because, as I just said, we're only dealing with first-generation substitutes here. [00:34:30] Speaker 01: But EPA has signaled, and they did discuss in the 1994 rulemaking with respect to second-generation substitutes, that when we do move beyond ozone-depleting substances, where a substitute is [00:34:44] Speaker 01: truly only replacing the replacement, which petitioners argue incorrectly is what's happening here, then that would not need to be submitted to EPA under section 612E, which is the reporting requirements. [00:34:56] Speaker 01: Now that, to be clear, does not address at all whether EPA could compare a first-generation substitute to a second-generation substitute. [00:35:06] Speaker 01: Now again, that's not what they did here, but EPA has never said that they couldn't. [00:35:10] Speaker 01: But EPA has signaled, or has indicated, [00:35:14] Speaker 01: While ozone-depleting substitutes are still in use and are still being replaced, EPA will continue to review substitutes under the SNAP program. [00:35:24] Speaker 01: But EPA has never taken the position that the program is going to last for all of eternity. [00:35:30] Speaker 02: well, but it could last for a long time, and as long as ozone-depleting substances are in use. [00:35:37] Speaker 02: And your point, and I don't think you need to run away from this, but I think your point is, yeah, if 10 years from now we determine that something on the safe list is no longer as safe as some alternative, we have the authority to alter the list. [00:35:51] Speaker 02: That's right. [00:35:55] Speaker 01: Unless the court has other questions, we would ask the petitions be denied. [00:36:05] Speaker 06: Good morning, Your Honors. [00:36:10] Speaker 06: Thomas Lorenzen for the Respondent Intervenor, the Comoros Company, which, by the way, is a manufacturer, along with Honeywell, of those safer alternatives. [00:36:20] Speaker 06: And they have invested hundreds of millions of dollars in reliance on these long-standing regulations and what we think is a pretty clear statute. [00:36:28] Speaker 06: that this program in Section 612, a part, yes, Your Honor, of the title that is addressed at reducing and phasing out ozone depleting substances, this section is directed specifically at encouraging the development of those new safer alternatives. [00:36:43] Speaker 06: We haven't talked about it in this case, but Section 612B is a whole program designed to facilitate [00:36:50] Speaker 06: the innovation and develop these new, safer alternatives. [00:36:53] Speaker 06: That whole program doesn't have much meaning if a substance, once on the list, can never be replaced. [00:36:59] Speaker 06: The market will be flooded with these older, less safe substitutes, and there's simply no room for the new substances to come in if they, in fact, promote human health and the environment. [00:37:10] Speaker 06: But I think the statute, and I also want to reiterate what Mr. Maganfar just said. [00:37:15] Speaker 06: Every one of the alternatives [00:37:18] Speaker 06: that is at issue here, the HFOs, was approved by EPA specifically as a replacement for CFCs. [00:37:25] Speaker 06: They are first generation substitutes, just like the HFCs that the petitioners produce. [00:37:31] Speaker 06: So this first versus second generation issue is a red herring. [00:37:36] Speaker 06: This is first generation versus first generation, something that is plainly within the statute, because Section 612C very plainly says not only that EPA has the discretion to remove substitutes from the list if something else is safer, it shall be unlawful. [00:37:52] Speaker 06: to continue to replace those ozone-depleting substances with a substitute where EPA has identified an alternative that leads to lower overall risk to human health and environment, as the HFOs do compared to HFCs. [00:38:06] Speaker 06: And again, this is not for all end uses. [00:38:09] Speaker 06: It's only for end uses where the HFOs are in fact available. [00:38:13] Speaker 06: HFCs continue to be used in many other end uses. [00:38:16] Speaker 06: CFCs as well continue to be used. [00:38:19] Speaker 06: And, Your Honor, regarding this issue of replacement, EPA has not actually required that CFCs be removed from all cars that are on the road today and all refrigeration units. [00:38:31] Speaker 06: CFCs are still out there. [00:38:32] Speaker 06: They are still being used. [00:38:33] Speaker 06: They're not being produced anymore. [00:38:34] Speaker 06: They haven't been produced since the 1990s. [00:38:37] Speaker 06: But the program actually allows the drawdown in the stocks of those and the continued use of those in older products that are still in service. [00:38:45] Speaker 06: So we are still in a first-generation world where we are slowly but surely replacing CFCs and other ozone-depleting substances with substitutes like HFCs and like HFOs. [00:38:57] Speaker 06: It is plainly within EPA's authority to compare those substitutes, those alternatives, against one another and determine which ones present lower overall risks to human health and environment. [00:39:09] Speaker 06: I would note that when HFOs were approved, they were only approved in terms of were they themselves proper substitutes for the CFCs, for the ozone-depleting substances. [00:39:25] Speaker 06: There is a petition process that is within Section 612, that's 612D, that allows any person, whether it's my client, whether it is an environmental group like NRDC, to petition EPA to move substances between lists or to add them or remove them from either list. [00:39:44] Speaker 06: Your honors, I don't think that provision would have any real meaning if you couldn't evaluate a substitute like HFCs when something new and better comes along. [00:39:54] Speaker 02: And we are still in a real... What about EPA saying at the beginning, we don't expect those substitutions to be more than minor? [00:40:02] Speaker 06: Well, I don't know that they said... [00:40:04] Speaker 06: I don't know their exact words. [00:40:05] Speaker 06: It won't happen often, because it takes time to develop these things. [00:40:09] Speaker 06: It takes substantial investment. [00:40:10] Speaker 02: My clients... The exact words were, EPA expects future changes to the SNAP list to be minor. [00:40:15] Speaker 06: And they have been minor. [00:40:17] Speaker 06: As they said, they're really... You haven't found an instance where it's been done before, because the new safer alternatives haven't really been developed. [00:40:23] Speaker 02: Do you characterize this case as minor? [00:40:26] Speaker 06: Well, minor in the sense of, in terms of the number that have been replaced, [00:40:32] Speaker 06: But, you know, hundreds of millions of dollars have been invested by Chemours and Honeywell to develop these new safer alternatives. [00:40:38] Speaker 06: This is significant to them, too. [00:40:41] Speaker 06: They have relied, just as the petitioners have relied for years, on those 1994 regulations. [00:40:47] Speaker 06: And indeed, Your Honor, those 1994 regulations have been very clear. [00:40:50] Speaker 06: And I refer, Your Honors, to JA 864. [00:40:56] Speaker 06: Actually, I'm sorry, I'm referring to the wrong one. [00:40:59] Speaker 06: Let's get out the statutory addendum at page 218, where EPA said in 1994, the agency believes that as long as Class I or Class II chemicals are being used, any substitute designed to replace these chemicals is subject to review under Section 612. [00:41:18] Speaker 06: So as long as CFCs continue to be used, [00:41:23] Speaker 02: We are merely talking about... Yeah, that doesn't tell you the language you just quoted. [00:41:27] Speaker 02: It doesn't tell you whether we're talking about replacement of the ozone-depleting substance or replacement of something that previously has been deemed a safe alternative. [00:41:36] Speaker 06: Yeah, I'm glad you reminded me of that question, because what EPA has not done, and I think the fact that there are still cars and refrigeration units on the road that are still using CFCs is indicative of the fact that this is prospective only. [00:41:48] Speaker 06: As new model cars are being produced, EPA bars the use in those of the alternatives or the substitutes that have been deemed unacceptable for that use. [00:41:58] Speaker 06: It does not require that you go back and pull the HFCs out of the old cars. [00:42:03] Speaker 06: So that reliance interest [00:42:05] Speaker 06: is not real. [00:42:07] Speaker 06: And by the way, the reliance interest would be just as adversely affected if EPA removes a substance from the list under TOSCA or any other health-based statute that says you can't use this substance anymore because [00:42:19] Speaker 06: It's a carcinogen. [00:42:20] Speaker 06: It's a toxin. [00:42:22] Speaker 06: So there can be no expectation. [00:42:24] Speaker 02: Well, on reliance, usually reliance is associated with notice, and you're on notice, of course, with those other statutes. [00:42:30] Speaker 06: Well, you're also on there's notice of comment rulemaking here. [00:42:33] Speaker 06: Each time a substance is added to or removed from the list or moved from one list to the other, there is a full notice and comment process. [00:42:40] Speaker 06: Indeed, Archimedes of Mexico had a full opportunity to demonstrate [00:42:45] Speaker 06: that their substitute was just as safe as the HFOs. [00:42:50] Speaker 06: And the record just doesn't support their position that EPA erred in any way. [00:42:56] Speaker 06: I believe I have more than used my time, unless your honors have more questions. [00:43:00] Speaker 06: I will say thank you. [00:43:02] Speaker 03: Thank you. [00:43:11] Speaker 03: We'll give you two minutes. [00:43:16] Speaker 02: It's very precise. [00:43:25] Speaker 07: One of the arguments my friends made was to, in essence, accept our premise, which is that the SNAP program has work to do only when ozone-depleting substances are still in use, and they make the point that there are some minor [00:43:42] Speaker 07: circumstances where they are still in use, but that's not the important question. [00:43:48] Speaker 07: The important question is EPA itself made clear this is on page 13052 of volume 59 of the Federal Register. [00:43:57] Speaker 07: This is the initial SNAP rule. [00:43:59] Speaker 07: What matters is that [00:44:02] Speaker 07: The thing that's doing the replacement is designed for use primarily in replacing existing non-ozone-depleting substances. [00:44:11] Speaker 07: If that's what they're doing, they are not subject to SNAP. [00:44:15] Speaker 07: Nobody here takes the position that ozone-depleting substances are primarily in use, far from it. [00:44:22] Speaker 07: And you can get a visual proof of this if you look at pages 523 and pages, sorry, and 549 of the Joint Appendix. [00:44:32] Speaker 07: These are charts, which shows for the various end uses in industrial sectors here when ozone-depleting substances were in use and when not. [00:44:42] Speaker 07: And since 2007 or thereabouts, ozone-depleting substances have not been in use in any significant way at all for motor vehicle air conditioning. [00:44:52] Speaker 07: The same is true for foams, which are another use that's affected here. [00:45:00] Speaker 07: I have to say, the idea that EPA has not replaced a replacement by delisting HFCs strikes me as a very odd argument and one I have a hard time understanding. [00:45:13] Speaker 07: If HFCs can no longer be used, that means that something else has to be used. [00:45:18] Speaker 07: And the other thing that has to be used are these other non-ozone depleting substances that are on the list. [00:45:24] Speaker 07: EPA has replaced HFCs with those other substances by virtue of the action it took here that we challenged. [00:45:33] Speaker 05: Those are... But if there's a petition process that was in I guess subsection D, I mean, it wouldn't make sense for Congress to have included that because you wouldn't petition [00:45:48] Speaker 05: to replace something on the list with an alternative that was an ozone depleted substance, right? [00:45:56] Speaker 07: Well, you could, but you could also, again, the key question is whether ozone depleting substances are in use. [00:46:03] Speaker 07: And you could petition to add a different ozone depleting substance to the list, so long as it hasn't been phased out yet. [00:46:10] Speaker 07: You could petition to add a non-ozone depleting substance to the list. [00:46:14] Speaker 07: But the important point we're making is that you can only petition [00:46:19] Speaker 07: When there's an ozone-depleting substance currently in use, what non-ozone-depleting substances are in use, which is the case here, certainly they're primarily and mostly in use, SNAP has no work to do. [00:46:33] Speaker 07: Congress's intent was that SNAP would run in parallel with the phase-out of the ozone-depleting substances. [00:46:40] Speaker 07: As those are phased down and phased out, [00:46:43] Speaker 07: So, too, the SNAP program eventually would be phased down and phased out. [00:46:48] Speaker 07: Instead, under EPA's current interpretation, the phased down and phased out of the ozone-depleting substances are going in one direction. [00:46:57] Speaker 07: The SNAP program is going in the other, and this is really a case of the tail wagging the dog, using a title of the Clean Air Act called depletion of stratospheric ozone to create this sort of freestanding [00:47:12] Speaker 07: you know, Junior Varsity Toxic Substances Control Act, which has taken on a life of its own. [00:47:17] Speaker 07: And it's our submission that EPA had no authority to do that, either under the statute or under its regulations and its rule. [00:47:25] Speaker 02: And under your argument, 13052 makes clear, you would say, [00:47:34] Speaker 02: that they were only contemplating replacing ozone depleting substitutes when they did second generation substitutes. [00:47:43] Speaker 07: Absolutely. [00:47:44] Speaker 07: And if I could just respond to another point my colleagues made, the idea that the things that are replacing the HFCs are themselves first-generation substitutes is something with which we take issue. [00:47:58] Speaker 07: Even if it's true that they were added to the list at a time that ozone-depleting substances were in use, [00:48:05] Speaker 07: and that may or may not be true depending upon the particular sector or end use. [00:48:10] Speaker 07: Now when HFCs are predominantly in use everywhere, whatever those things may have been at one time, they are now second generation substitutes for first generation substitutes. [00:48:22] Speaker 07: They're not first generation substitutes for ozone depleting substances. [00:48:33] Speaker 03: All right, thank you.