Wednesday, January 23, 2013

Honeywell International, Inc. v. U.S. EPA

Jan 22: In the U.S. Court of Appeals, D.C. Circuit, Case No. 10-1347, consolidated with 10-1348, 10-1349, 10-1350. On Petitions for Review of Rules of the Environmental Protection Agency. The Appeals Court explains that under the Clean Air Act, U.S. EPA administers a cap-and-trade program regulating the production and consumption of hydrochlorofluorocarbons, a class of ozone-depleting pollutants. (It is noted parenthetically: "We frown on excessive use of acronyms, but in a case involving a 24-letter word, we think it appropriate to use HCFCs for hydrochlorofluorocarbons.") This cap-and-trade program entails overall caps on production and consumption of various HCFCs for each year, as well as EPA-administered baseline allowances of HCFCs for each participating company. Companies are then permitted to transfer their
allowances, subject to certain statutory and regulatory restrictions.
    The Appeals Court said, "Honeywell and DuPont, whom we refer to collectively as Honeywell, complain that certain 2008 transfers made by their competitors Arkema and Solvay were deemed to permanently increase those competitors' future baseline
allowances of HCFC-22. Because there is an overall cap on HCFC-22 production, this is a zero-sum system: The increased allowances to Arkema and Solvay in turn reduced Honeywell's market share and allowances of HCFC-22. The problem for Honeywell here is that this Court concluded in Arkema Inc. v. EPA that those permanent transfers were valid under the Clean Air Act. 618 F.3d 1, 6-9 (D.C. Cir. 2010). Honeywell believes that Arkema was incorrectly decided. Absent en banc review, we must adhere to circuit precedent. And because Honeywell's other challenges to the 2008 transfers are meritless, we deny the petitions for review."
    The Appeals Court said further and concluded, "Honeywell disagrees strongly with this Court's decision in Arkema. For that matter, EPA says that it too disagrees with Arkema. (Intervenors Arkema and Solvay are of course happy with Arkema.) Absent en banc review, we are bound by the Arkema decision. In a roundabout attempt to undermine the now-permanent 2008 transfers, Honeywell also raises longshot procedural challenges to the 2008 transfers themselves. The basic answer to those various arguments is that Honeywell had notice and an opportunity to present its views during EPA's pre-Arkema regulatory proceedings, during the Arkema litigation, and during EPA's subsequent post-Arkema proceedings. Because Honeywell had notice and an opportunity to comment, and EPA's reasonable interpretation of its regulation controls, see Auer v. Robbins, 519 U.S. 452, 461 (1997), its procedural objections to the 2008 transfers are unavailing. As is apparent from the briefing, Honeywell's real problem here is the permanence of the 2008 interpollutant transfers by Arkema and Solvay and the altered HCFC-22 allowances for the 2010-2014 period. In other words, Honeywell's real problem is Arkema. But a panel cannot remedy that problem."
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