…EPA’s use of a Clean Air Act provision regarding the ozone layer in an effort to advance the President’s international climate goals.
This ongoing regulatory regime is known as the Significant New Alternatives Policy program, and it represents the worst of all worlds: it’s a naked power grab; it’s bolstered by rent-seeking; and it actually endangers public health. On account of all of these factors, it’s the pound-for-pound worst regulation promulgated yet by Obama’s EPA.
- In the 1970s and 1980s, people became increasingly concerned with the possibility that common household and commercial chemicals (primarily aerosols and refrigerants) were depleting the ozone layer. In the face of this public concern, countries were reluctant to act, because (at the time) there were no readily available alternatives to ozone-depleting chemicals. As a result, the costs were deemed prohibitive.
- Industry stridently opposed regulation. However, by the mid-1980s, certain influential chemical companies (Du Pont being foremost among them) had developed alternatives to ozone depleting substances. Sensing a business opportunity, in 1986 the chemical industry suddenly threw its support behind regulation. Having pioneered ozone-safe products, major chemical corporations stood to reap windfall profits if governments forced consumers to use their *new and improved*chemicals for aerosols and refrigeration.
- Of course, once the largest corporations supported a global regulatory regime for protecting the ozone layer, governments were soon to follow. In September of 1987, 46 countries agreed to the Montreal Protocol on Substances that Deplete the Ozone Layer, a treaty to phase out the use of chemicals that threatened the ozone layer. Thus, the Montreal Protocol was born of rent-seeking.
- The U.S. Senate ratified the Montreal Protocol in March 1988, and the treaty went into effect in January 1989.
- A year later, in 1990, Congress amended the Clean Air Act to create a regulatory regime for implementing the Montreal Protocol. Accordingly, Clean Air Act §612 establishes the Significant New Alternatives Policy (SNAP) program, which is the primary mechanism for achieving the ozone treaty’s goals. Under SNAP, EPA is empowered to ban chemicals that deplete the ozone layer, if the agency concludes that there are alternatives that would do less environmental harm. [Editor’s note: By authorizing EPA to literally pick winners and losers in the chemical industry, the SNAP program is a rent seekers dream. More on this below]
- For the first 25 years of the SNAP program, EPA effectively mandated the use of a class of chemicals known as “HFCs.” These HFCs made ideal substitutes: They didn’t pose a threat to the ozone layer, they were non-toxic, and they were non-flammable.
- Notwithstanding these beneficial attributes, HFCs are potent greenhouse gases. On a per-molecule basis, they have a much higher “global warming potential” than carbon dioxide, the benchmark GHG. For example, the most commonly used HFC, HFC-134a, has 1,430 times more heat-trapping potential than CO2.
- Due to the aforementioned high “global warming potential” of HFCs, the Obama administration in each of the last four years has proposed an amendment to the Montreal Protocol that would phase out their use. The amendment has not been adopted. Therefore, the Montreal Protocol is not in any way a climate change mitigation treaty.
- Having failed to achieve an international treaty to reduce HFCs as a climate mitigation strategy, President Obama decided to do so unilaterally, without any input from Congress. In September 2013, the Obama administration released his “Climate Action Plan,” which included a provision ordering EPA to use the SNAP program to phase out HFCs.
- EPA abided the President’s command. On August 6, 2014, the agency proposed a rule that would prohibit the most commonly used HFCs (79 FR 46126). And on February 27, 2015, the agency finalized a rule that approved certain substitutes for the banned HFCs (pre-publication version)
Without further ado, I list the reasons why this obscure regulatory regime, as it is currently being implemented, is the worst of the Obama-bunch.
EPA’s SNAP Program Is Another Executive Power Grab by the Obama Administration
There is neither a legal nor electoral basis for EPA’s basing climate change mitigation strategies on ozone layer protections added to the Clean Air Act pursuant to the Montreal Protocol. As such, this is a power grab on multiple fronts.
For starters, no one in the Senate thought that the Montreal Protocol had anything to do with global warming when the upper chamber ratified the treaty in 1988. And while the Obama administration repeatedly has tried to amend the treaty to incorporate climate policy, these efforts thus far have been unsuccessful. Now, the administration is unilaterally imposing its proposed treaty commitments, via the EPA.
EPA’s climate policy to phase out HFCs also makes a mockery of the agency’s statutory bounds. When Congress amended the Clean Air Act in 1990 to implement the Montreal Protocol, lawmakers thought they were addressing a hole in the ozone layer. Now, EPA is interpreting a Clean Air Act chapter titled “stratospheric ozone protection” such that its purpose has become climate change mitigation.
So… the Obama administration has unilaterally implemented a proposed amendment to the Montreal Protocol—without the Senate’s consent. And with the same stroke, EPA has taken a Clean Air Act program that addresses harm to the ozone layer, and—without any congressional input— leveraged it into a regulatory regime for fighting global warming. It would seem that limits imposed by laws and treaties always yield to this administration’s policy desires (which themselves are functions of the special interests responsible for electing the president).
EPA’s SNAP Program Is the Archetype of Rent-Seeking
Indeed, rent-seeking was crucial to providing cover for the above-described power grab. The Obama administration would not have unilaterally changed the terms of the Montreal Protocol and Title VI of the Clean Air Act, unless the agency had the full backing of the biggest businesses in the industry.
In this case, the rent-seeking parties are Du Pont and Honeywell. They’re lending full-throated support for the Obama administration’s SNAP program, for the simple reason that they stand to benefit handsomely. The two business giants aren’t content winning in the marketplace; instead, they’re intent on winning over administration officials at the EPA, who have the power to force consumers to use Honeywell/Du Pont products.
Five years ago, the two companies entered into a partnership to produce an alternative to HFCs in motor vehicle air conditioning systems. The new chemical is known as “R-1234yf.” In a summer 2014 announcement, EPA proposed banning the primary HFC used as a refrigerant in cars and trucks, known as HFC-134a, based on the existence of an adequate supply of R-1234yf, due to the latter’s lower global warming potential. As a result, Honeywell and Du Pont stand to make a fortune. Notably, the EU Commission has launched a formal antitrust investigation into the two companies’ cooperation in the manufacture of R-1234yf.
That the rule is welcomed by rent seekers is no secret inside the beltway. In late 2014, InsideEPA’s Dawn Reeves reported,
Another industry source says the stepped-up administration effort likely won broad industry support and commitments for voluntary action because it will guarantee some of the larger chemical manufacturers a market for safer alternatives. “To get the [companies] to the table on voluntary commitments, the White House promised that EPA would move faster to accept the alternative technology that those guys are in a position to produce. So they are getting something out of it,” the source says.
EPA’s SNAP Program Endangers Human Health
For manufacturers of retail and residential food refrigerating units, EPA is phasing out HFCs because they are allegedly riskier than certain alternatives, including ethane, propane, isobutene, and R-441A.
Here’s the problem. Whereas the soon-to-be-banned HFCs are nonflammable and can be operated under low pressures, the alternatives that are closest to market availability for commercial refrigeration are either highly flammable or must be used with very high pressure. In fact, EPA concluded that the non-flammable HFCs posed a greater risk to human health than the flammable/high pressure alternatives, due to the former’s larger carbon footprint.
This is patently absurd. EPA administrator Gina McCarthy has conceded that her agency’s regulations won’t actually impact the climate, so it’s impossible for EPA’s SNAP program to actually mitigate any risk. By contrast, EPA’s SNAP program, by mandating the use of flammable chemicals, threatens to blow someone up. The threat of being blown up is a clear and present danger; the threat of AGW is an abstract. EPA’s reasoning is plainly ridiculous.