EPA and the AIM Act: The Very Definition of Tyranny

As James Madison famously observed, “[t]he accumulation of all powers legislative, executive, and judiciary in the same hands, whether one, a few or many, … may justly be pronounced the very definition of tyranny.” Federalist No. 47. Using that definition, the Environmental Protection Agency (“EPA”) is a tyrant, due in part to the poorly crafted American Innovation and Manufacturing Act of 2020 (“AIM Act”).

The AIM Act was one of several measures included in a nearly 5,600-page omnibus budget bill passed in the waning days of 2020 to prevent a government shutdown. Among other things, the Act mandates the creation of a cap-and-trade program for certain refrigerants commonly used in residential and industrial refrigeration. The AIM Act mandates that production and consumption of these products must be reduced by 85% within fifteen years. Once the AIM Act took effect, it became unlawful to produce or import the regulated products without an “allowance.” 

The question of who would receive such allowances and why was left to EPA. Congress provided only that EPA must issue a rule phasing down the products “through an allowance allocation and trading program.”

The power wrongly given to EPA under the AIM Act was legislative. The Supreme Court has stated that “deciding what competing values will or will not be sacrificed to the achievement of a particular objective is the very essence of legislative choice.” Deciding who will and will not receive allowances is deciding whose business and other interests will be sacrificed and to what extent.

Under existing law, the only way to prevent EPA from exercising legislative power was for Congress itself to provide EPA with a standard that would constrain EPA’s power to pick the winners or losers in the phasedown. Yet Congress failed in this regard. As result, EPA has considered everything from distributing allowances by its evaluation of market share to conducting an auction that would allow it to sell allowances to environmental organizations for nonuse. EPA has also reserved its right to change the allocation methodology whenever it sees fit, making sure to point out that this prevents market participants from relying upon a prior distribution for future planning in other steps in the phasedown. Worse, EPA granted some allowances attributable to the market for Choice’s patented product to new market entrants, a paperwork filing import agent, and a foreign intellectual property pirate.

Not only did Congress grant EPA legislative power, but EPA used that grant to create judicial power for itself. Specifically, EPA decided that because it had the power to grant allowances, it also had the power to revoke or retire allowances and even to ban someone from the refrigerants market. EPA created the concept of inflicting “administrative consequences” for the violation of EPA rules, asserting that it could impose such consequences even before it had completed any administrative “adjudication.”

And, as EPA administers the AIM Act, there can be no question as to EPA’s executive power.

Thus, under the AIM Act, EPA is a tyrant, exercising legislative, judicial, and executive power. NCLA has challenged Congress’s unconstitutional divestment of power in the AIM Act and is currently awaiting a ruling from the D.C. Circuit. 

October 10, 2024