Preserving U.S. Manufacturing AND the Environment

On June 28, 2022, Worthington Industries CEO Andy Rose wrote an opinion piece for the Wall Street Journal titled “The EPA’s Supply-Chain Disruption : A ban on nonrefillable cylinders for air-conditioning coolant will cost American jobs and help China.”

Worthington is the last U.S. based manufacturer of lightweight recyclable cylinders for transporting refrigerants. 99 percent of U.S. companies in the heating, ventilation, and refrigeration industry buy their products. Their competition is all in China, and because their cylinders are used to transport hydrofluorocarbons (HFCs), they are on a collision course with the EPA…

Click here to hear the full story, which also includes a fascinating story about Chinese manufacturers dumping cylinders to compete with Worthington in the U.S.

The War of Words

Part of this story is the meaning of three words: refillable, disposable, and recyclable. Disposable and recyclable both describe non-refillable cylinders, but they imply different things. Each interested party has their word of choice, and it is hardly clear which option is best.

• Non-refillable cylinders (either disposable or recyclable depending on your point of view) weigh 35 pounds filled, while refillable cylinders weigh 50 pounds.
• Worthington produces both types on dedicated lines – lines that they say are currently running at full capacity.
• While Worthington uses the word “recyclable,” the EPA and California Air Resources Board prefer “disposable.”
• The PR implications are clear; recycling is a form of disposal, but by using the term disposable to refer to non-refillable cylinders, the suggestion is that the containers will enter the waste stream.

The AIM Act

On December 27th, 2020, Congress enacted The American Innovation and Manufacturing Act (AIM Act). The goal of the act is to reduce HFCs, and it gave the EPA the authority to phase down U.S. HFC production by approximately 85% over the next 15 years.

In September of 2021, the EPA released their “final rule” spelling out how they will enforce the AIM Act. It contained a bit of bad news for Worthington: the EPA banned non-refillable HFC cylinders in the U.S. starting July 1, 2025.?

The ban was not mentioned in congressional debates, and it is not in the text of the law. The EPA claims this authority on the basis that the “heel” (residual HFCs) might not be disposed of properly once the non-refillable cylinder is no longer in use.

In November of 2021, Worthington Industries petitioned the EPA via the D.C. Circuit of the U.S. Court of Appeals and received no response. As a result, Worthington and a few HVAC trade unions sued the EPA in December of 2021. That case is still pending.

Is refillable more sustainable than recyclable?

In the Lifecycle Analysis of High-Global Warming Potential Greenhouse Gas Destruction, the California Air Resources Board uses the term “scrapped disposable” rather than “recyclable.” In their analysis, estimates for cylinder metal reuse range from 15-100 percent, settling on a “conservative estimate” that 75 percent of non-refillable cylinders are eventually recycled.

But as supply chain and procurement professionals know, you have to look at the total cost of ownership and the total cost to service – from a carbon footprint standpoint and a materials standpoint. Remember that the refillable cylinders weigh 50 pounds while the recyclable ones weigh 35 pounds. This size and weight difference has implications for transport.

According to the California Air Resources Board , “Distances to transport refillable cylinders from cylinder manufacture to refrigerant manufacture, to distributor, to technician, are assumed to be the same as those of disposable cylinders. However, due to the increased size/weight of refillable versus disposable cylinders, over 30% more truck trips are assumed to be required to transport them.” (My emphasis)

If we must decide which type of cylinder is better for the environment, we have to take all of the factors – material, reusability, the heel, and transportation costs – into account.

What about West Virginia vs. the EPA?

The Supreme Court recently ruled in favor of West Virginia (et. al.) in a case that seems relevant to Worthington Industries’ petition of the EPA. Without getting into all of the details, the ruling found that the EPA had used interpretation to extend their enforcement rules too far from what Congress spelled out in legislation.

In the case of West Virginia, the EPA was found to have exceeded their authority. They enforced the Clean Air Act by regulating carbon dioxide through emission caps. The Supreme Court ruling wasn’t a question of environmental sustainability, it addressed the question of how clear elected officials need to be in legislation so executive branch agencies understand their bounds.

Non-refillable cylinders are not explicitly mentioned in the AIM Act, and they were not discussed in Congress prior to the bill’s passage. My question is whether the EPA has the right to ban them without explicit direction from Congress…

My takeaways from this series of events are:

• Words matter – non-refillable does not mean the same thing as disposable, but recyclable does not guarantee materials will be recycled. Listen for patterns in word use and variation by specific groups, especially when a subject is hotly debated.
• Private businesses and the government seem to be bumping into each other more and more. In their effort to enforce the AIM Act, the EPA took it upon themselves to ban domestic production for a U.S. based employer with hundreds of employees. Was this the right outcome? Time will tell.
• The devil is in the details when it comes to sustainability goals and policies. If interpretation of the law is necessary, we need to think carefully about who we want in that position. The best of intentions can easily go awry when they are translated into rules.

Last point… after two years of supply chain disruptions: we’ve all heard the word ‘reshoring’ thrown around. The decision to reshore or build new production capabilities in the U.S. comes with risk, and it usually requires private investment. If companies feel the risk is too great and the potential for ROI is too small, they won’t invest.

Building domestic production won’t be possible if the U.S. isn’t friendly to manufacturers. That doesn’t mean regulators should look the other way, and it shouldn’t be taken to imply that manufacturing is bad for the environment. The answer is somewhere in the middle, but there is no hope of solving any of these issues if we can’t work together in accordance with the rules – or at least agree to use the same terminology.

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