According to the Supreme Court, “[d]eciding what competing values will or will not be sacrificed to the achievement of a particular [governmental] objective is the very essence of legislative choice[.]” So if Congress passes a law, but leaves that decision to an administrative agency, is the agency legislating in violation of the constitutional mandate that “[a]ll legislative Powers … shall be vested in a Congress …” ? That question is now before the D.C. Circuit in NCLA’s case, RMS of Georgia LLC v. EPA.
RMS of Georgia, which does business as Choice Refrigerants, built a small company producing and selling refrigerants from the town of Alpharetta, Georgia. Choice became an innovator, developing and patenting a special hydrofluorocarbon (HFC) blend and slowly increasing its market share in the refrigerant business. HFCs were widely adopted in the early 1990s as a replacement for the ozone-depleting substances previously used in refrigeration. By 2015, however, EPA decided that it wanted to limit HFC usage. EPA first tried to do that on its own but was informed by a court that it didn’t have the power it needed.
Then, in the waning days of 2020, Congress passed the American Innovation and Manufacturing (AIM) Act as one of the riders to an omnibus budget bill. An earlier version of the Act had been considered by a Congressional sub-committee but not adopted. The bill was supported by big business and touted as creating incentives for American leadership in transitioning to “next generation” refrigerants (which those businesses were developing). The AIM Act mandated that HFC production and imports decrease over time, cutting the industry 85% by 2036. To track and control usage, businesses may no longer produce or import HFCs without “allowances” issued by EPA—essentially a golden ticket that grants permission to continue business. What the AIM Act did not do, however, was decide how allowances would be distributed: who would have their business slashed to achieve the objective. EPA was left to pick favorites.
EPA ultimately made decisions that disproportionately burdened Choice Refrigerants, granting it 30% fewer allowances that it needed to maintain its market share. In the interest of “administrative ease,” EPA decided to distribute allowances, in part, based on EPA’s own records. So, the company that filled out EPA’s paperwork for imports Choice ordered got allowances instead of Choice. In the interest of “equity,” EPA decided to set aside allowances for new but “disadvantaged” market entrants—literally taking market share from existing participants in Robinhood-fashion. EPA also decided to ignore whether prior imports were lawful, and granted allowances to a foreign owned company that illegally imported a version of Choice’s product.
Would Congress have made those same decisions? It’s doubtful. Did EPA have constitutional authority to make those decisions? No, it didn’t. As stated above, deciding what values, whose liberty or property must be sacrificed in service of a law passed for an alleged greater good is “the very essence of legislative choice.”
Misconstruing Supreme Court precedent, EPA argues that so long as Congress sets a “general policy,” picks an agency to implement the policy, and sets “boundaries” for agency authority, for example, establishing temporary priorities for military and medical uses, that’s good enough. EPA can take it from there, creating its own standards for who is granted allowances for at least 98% of the HFC market. EPA feels empowered to make this argument because for the last 90 years, the Supreme Court has approved ever-increasing transfers of power from Congress to the Executive Branch. Using the metric of self-serving interpretations of modern court decisions rather than the Constitution, EPA sees no error in its conduct.
So what? Maybe you are fine with EPA picking the winners and losers in the refrigerants market. But are you fine with politically unaccountable bureaucrats having the power to decide if you are the one who will bear the burden of the next government program? The AIM Act gives EPA unbounded control over the initial market share for refrigerants—a form of central economic planning. EPA also believes that it can retire allowances, further shrinking the market. With every “crisis” there is a reason for one more agency to ration one more industry: energy, medicine, agriculture (i.e. food production), etc. The excuse this time is “climate crisis,” but the true crisis is agency invasion of constitutionally defined boundaries and incremental erosion of liberty.
It is time to return administrative agencies, courts, and Congress to the first principles of our Constitution. Our government was established to protect liberty and rights. Through the Constitution, “We the People” authorized only Congress to legislate—to make general laws adjusting the legal relationships, rights, and duties between us. Allowing EPA to decide whose rights must give way in the interest of innovation or in service to EPA efforts to change the global climate is unconstitutional.