ORAL ARGUMENT NOT YET SCHEDULED

No. 10–1347 (consolidated with Nos. 10–1348, 10–1349, 10–1350)

United States Court of Appeals for the D.C. Circuit

HONEYWELL INTERNATIONAL INC. AND

E. I. DU PONT DE NEMOURS AND COMPANY,

Petitioners,

v.

ENVIRONMENTAL PROTECTION AGENCY and LISA P. JACKSON, ADMINISTRATOR,

Respondents,

ARKEMA INC., SOLVAY FLUORIDES, LLC, AND SOLVAY SOLEXIS, INC.,

Intervenors for Respondents.

JOINT BRIEF OF INTERVENORS ARKEMA INC.,

SOLVAY FLUORIDES, LLC, AND SOLVAY SOLEXIS, INC.

On Petitions for Review from the United States

Environmental Protection Agency

Roscoe C. Howard, Jr.

Gia V. Cribbs

ANDREWS KURTH LLP

1350 I Street, N.W., Suite 1100

Washington, DC 20005

(202) 662-2760

Of Counsel:

Carlos R. Escobar

SOLVAY NORTH AMERICA, LLC

3333 Richmond Avenue

Houston, TX 77098

Counsel for Solvay Fluorides, LLC and

Solvay Solexis, Inc.

Dan Himmelfarb

John S. Hahn

Roger W. Patrick

Brian J. Wong

MAYER BROWN LLP

1999 K Street, N.W.

Washington, DC 20006

(202) 263-3000

Of Counsel:

William J. Hamel

ARKEMA INC.

2000 Market Street

Philadelphia, PA 19103

Counsel for Arkema Inc.

USCA Case #10-1347 Document #1360790 Filed: 02/28/2012 Page 1 of 58
i

CERTIFICATE OF PARTIES, RULINGS,

AND RELATED CASES PURSUANT TO CIRCUIT RULE 28(a)(1)

AND RULE 26.1 STATEMENT

A. Parties. All parties, intervenors, and amici appearing before

this Court are correctly listed in petitioners’ brief.

Intervenor Arkema Inc. certifies that it is a wholly owned subsidiary of Arkema Delaware, Inc. There are no publicly held companies that

own 10% or more of the stock of Arkema Inc. However, Arkema Inc. is

indirectly owned by Arkema, S.A., a French public company. Arkema

Inc. is a world-class producer of industrial chemicals. Among its products are hydrochlorofluorocarbons, which are regulated pursuant to

Title VI of the Clean Air Act, 42 U.S.C. §§ 7671-7671q. As relevant here,

Arkema Inc. is a recipient of baseline production and consumption allowances for HCFC-22 and HCFC-142b from the U.S. Environmental

Protection Agency.

Intervenor Solvay Fluorides, LLC, a Delaware limited liability

company, certifies that it is a wholly owned subsidiary of Solvay Chemicals, Inc. Intervenor Solvay Solexis, Inc., a Delaware corporation, certifies that it is a wholly owned subsidiary of Ausimont Industries, Inc. No

publicly held corporation owns 10% or more of the membership interUSCA Case #10-1347 Document #1360790 Filed: 02/28/2012 Page 2 of 58
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ests of Solvay Fluorides, LLC or 10% or more of the stock of Solvay Solexis, Inc. Solvay Fluorides, LLC and Solvay Solexis, Inc. are indirectly

owned by Solvay, S.A., a Belgian public company. Solvac S.A. owns approximately 30% of Solvay S.A. and is also publicly traded in Europe.

Solvay Fluorides, LLC and Solvay Solexis, Inc. are not aware of any

other publicly held corporation that owns 10% or more of their stock.

B. Rulings Under Review. Accurate references to the rulings at

issue appear in petitioners’ brief.

C. Related Cases. There are two sets of related cases: (1) Arkema Inc. v. EPA, Nos. 09-1318, 09-1335, 618 F.3d 1 (D.C. Cir. 2010), in

which this Court granted intervenors’ petitions for review of EPA’s

2010-2014 Final Rule entitled Protection of Stratospheric Ozone: Adjustments to the Allowance System for Controlling HCFC Production,

Import, and Export, 74 Fed. Reg. 66,412 (Dec. 15, 2009), and (2) Honeywell International, Inc. v. EPA, No. 11-1370, in which petitioners untimely filed, and then voluntarily dismissed, a petition for review of

EPA’s Interim Final Rule entitled Protection of Stratospheric Ozone: Adjustments to the Allowance System for Controlling HCFC Production,

Import, and Export, 76 Fed. Reg. 47,451 (Aug. 5, 2011).

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TABLE OF CONTENTS

Page

CIRCUIT RULE 28(a)(1) CERTIFICATE ................................................i

TABLE OF AUTHORITIES..................................................................... v

GLOSSARY .............................................................................................. x

JURISDICTIONAL STATEMENT.......................................................... 1

STATEMENT OF ISSUES....................................................................... 1

STATUTES AND REGULATIONS ......................................................... 2

STATEMENT OF FACTS ........................................................................ 3

A. The CAA And The 2003 Rule................................................. 3

B. EPA’s 2008 Approvals Of Intervenors’ Interpollutant

Baseline Transfers ................................................................. 4

C. EPA’s 2010-2014 Proposed Rule And Final Rule.................. 5

D. Intervenors’ Successful Challenge To The 2010-2014

Final Rule............................................................................... 7

E. The Instant Petitions For Review.......................................... 9

F. Subsequent Proceedings Before EPA .................................... 9

SUMMARY OF ARGUMENT ................................................................ 11

ARGUMENT .......................................................................................... 15

I. THE COURT LACKS JURISDICTION........................................ 15

A. Petitioners Were Not Injured By The 2008 Approvals

And Thus Lack Standing To Challenge Them .................... 16

B. If Petitioners Have Standing To Challenge The 2008

Approvals, The Petitions For Review Are

Untimely............................................................................... 17

1. Notice of the 2008 Approvals appeared in the

Federal Register with publication of the 2010-

2014 Proposed Rule, and so the petitions were

filed too late................................................................. 18

2. If Federal Register publication did not occur at

the time of the 2010-2014 Proposed Rule, it occurred at the time of the Interim Final Rule, and

so the petitions were filed too early............................ 22

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TABLE OF CONTENTS—continued

Page

iv

3. Arkema is not an “arising after” ground that

renders the petitions timely........................................ 23

II. IF THE COURT HAS JURISDICTION, THE PETITIONS

SHOULD BE DENIED ................................................................. 29

A. The CAA Permits Interpollutant Baseline Transfers......... 30

B. The 2008 Approvals Did Not Effect A Change In Policy

That Required Notice-And-Comment Rulemaking............. 33

C. Petitioners’ Challenge To The Adequacy Of The Record

Is Meritless........................................................................... 37

D. The 2008 Approvals Did Not Deprive Petitioners Of

Property Without Due Process ............................................ 39

CONCLUSION ....................................................................................... 44

CERTIFICATE OF COMPLIANCE....................................................... 45

CERTIFICATE OF SERVICE................................................................ 46

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TABLE OF AUTHORITIES*

Page(s)

CASES

21st Century Telesis Joint Venture v. FCC,

318 F.3d 192 (D.C. Cir. 2003) .............................................................42

Am. Ass’n of Paging Carriers v. FCC,

442 F.3d 751 (D.C. Cir. 2006) .............................................................43

Am. Rd. & Transp. Builders Ass’n v. EPA,

588 F.3d 1109 (D.C. Cir. 2009) ...........................................................18

* Arkema Inc. v. EPA,

618 F.3d 1 (D.C. Cir. 2010)...........................................2, 7-9, 11-14, 20

............................................................................23-30, 32-33, 35-40, 42

Bd. of Regents v. Roth,

408 U.S. 564 (1972).............................................................................41

BDPCS, Inc. v. FCC,

351 F.3d 1177 (D.C. Cir. 2003) ...........................................................43

Braniff Airways, Inc. v. Civil Aeronautics Bd.,

379 F.2d 453 (D.C. Cir. 1967) .............................................................39

Commc’ns Vending Corp. v. FCC,

365 F.3d 1064 (D.C. Cir. 2004) ...........................................................29

Daniels v. Union Pac. R.R.,

530 F.3d 936 (D.C. Cir. 2008) .............................................................42

Envtl. Def. v. EPA,

467 F.3d 1329 (D.C. Cir. 2006) ...........................................................27

Graceba Total Commc’ns, Inc. v. FCC,

115 F.3d 1038 (D.C. Cir. 1997) ..................................................... 42, 43

* Authorities upon which we chiefly rely are marked with asterisks.

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TABLE OF AUTHORITIES—continued

Page(s)

vi

* Horsehead Res. Dev. Co. v. EPA,

130 F.3d 1090 (D.C. Cir. 1997) ...........................................................23

Indep. Cmty. Bankers v. Bd. of Governors,

195 F.3d 28 (D.C. Cir. 1999)...............................................................42

Jones Stevedoring Co. v. Director, OWCP,

133 F.3d 683 (9th Cir. 1997)...............................................................24

Kennecott Utah Copper Corp. v. U.S. Dep’t of Interior,

88 F.3d 1191 (D.C. Cir. 1996) .............................................................27

LaShawn A. v. Barry,

87 F.3d 1389 (D.C. Cir. 1996) ............................................................31

Lichoulas v. FERC,

606 F.3d 769 (D.C. Cir. 2010) .............................................................36

Mobile Relay Assocs. v. FCC,

457 F.3d 1 (D.C. Cir. 2006).................................................................26

* Nat’l Fuel Gas Supply Corp. v. FERC,

59 F.3d 1281 (D.C. Cir. 1995) ................................................. 24, 25, 26

Nat’l Mining Ass’n v. Dep’t of Interior,

70 F.3d 1345 (D.C. Cir. 1995) .............................................................28

NRDC v. EPA,

571 F.3d 1245 (D.C. Cir. 2009) ...........................................................18

NRDC v. NRC,

666 F.2d 595 (D.C. Cir. 1981) .............................................................21

Ohio v. EPA,

838 F.2d 1325 (D.C. Cir. 1988) ...........................................................27

Perlmutter v. CIR,

373 F.2d 45 (10th Cir. 1967)...............................................................39

Petro-Chem Processing, Inc. v. EPA,

866 F.2d 433 (D.C. Cir. 1989) .............................................................28

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TABLE OF AUTHORITIES—continued

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vii

Pub. Citizen v. NRC,

845 F.2d 1105 (D.C. Cir. 1988) ...........................................................23

Rivers v. Roadway Express, Inc.,

511 U.S. 298 (1994)................................................................. 24, 26, 29

Steel Co. v. Citizens for a Better Env’t,

523 U.S. 83 (1998)...............................................................................18

Union Oil Co. v. EPA,

821 F.2d 678 (D.C. Cir. 1987) .............................................................21

United States v. McCallum,

970 F.2d 66 (5th Cir. 1992).................................................................39

United States ex rel. Eisenstein v. City of New York,

129 S. Ct. 2230 (2009).........................................................................29

W. Union Tel. Co. v. FCC,

773 F.2d 375 (D.C. Cir. 1985) .............................................................23

Waterway Commc’ns Sys., Inc. v. FCC,

851 F.2d 401 (D.C. Cir. 1988) .............................................................23

STATUTES

* 42 U.S.C. § 7607(b)(1)..................................... 1, 13, 18-19, 21, 23, 27-28

42 U.S.C. § 7607(d)(3).........................................................................21-22

42 U.S.C. § 7671e(a) ................................................................................34

42 U.S.C. § 7671f.......................................................................................4

42 U.S.C. § 7671f(a)....................................................................... 3, 32, 33

42 U.S.C. § 7671f(b)............................................................................. 7, 31

42 U.S.C. § 7671f(b)(1) ................................................................ 31, 32, 33

42 U.S.C. § 7671f(c) .................................................................................31

42 U.S.C. § 7671f(d)...................................................................................3

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TABLE OF AUTHORITIES—continued

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viii

REGULATIONS

40 C.F.R. § 82.3 .......................................................................................39

40 C.F.R. § 82.16 ................................................................................. 3, 40

40 C.F.R. § 82.16(a) .................................................................................11

40 C.F.R. § 82.17 .......................................................................................3

40 C.F.R. § 82.19 .......................................................................................3

40 C.F.R. § 82.23 ................................................................................. 6, 35

40 C.F.R. § 82.23(b)(3)(v).........................................................................33

40 C.F.R. § 82.23(b)(3)(vi) ................................................................. 32, 33

40 C.F.R. § 82.23(b)(4)....................................................................... 38, 41

40 C.F.R. § 82.23(b)(4)(ii) .................................................................... 4, 37

40 C.F.R. § 82.23(d) ...................................................................................4

OTHER AUTHORITIES

D.C. Cir. R. 15(a) .....................................................................................43

EPA, Guidance Document for the Stratospheric Ozone Protection

Program After January 1, 2005, pt. 4, § 2.2. at 19, available at

http://www.docstoc.com/docs/7832523/Guidance-Document-forthe-Stratospheric-Ozone-Protection-Program. ..................................35

Final Rule, Protection of Stratospheric Ozone: Adjustments to the

Allowance System for Controlling HCFC Production, Import,

and Export, 74 Fed. Reg. 66,412 (Dec. 15, 2009) ........................... 7, 31

Final Rule, Protection of Stratospheric Ozone: Adjustments to the

Allowance System for Controlling HCFC Production, Import,

and Export, 76 Fed. Reg. 47,451 (Aug. 5, 2011)............... 10, 17, 22, 30

Final Rule, Protection of Stratospheric Ozone: Allowance System

for Controlling HCFC Production, Import and Export, 68 Fed.

Reg. 2820 (Jan. 21, 2003)................................................ 3, 4, 34, 40, 41

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TABLE OF AUTHORITIES—continued

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ix

Final Rule, Reporting and Recordkeeping Requirements of the

HCFC Allowance System, 71 Fed. Reg. 30,675 (May 30, 2006).........34

Proposed Rule, Protection of Stratospheric Ozone: Adjustments to

the Allowance System for Controlling HCFC Production,

Import, and Export, 73 Fed. Reg. 78,680 (Dec. 23, 2008) .... 5, 6, 19, 20

Proposed Rule, Protection of Stratospheric Ozone: Adjustments to

the Allowance System for Controlling HCFC Production,

Import, and Export, 77 Fed. Reg. 237 (Jan. 4, 2012) ................... 17, 30

USEPA Stratospheric Ozone Protection Program Class II

Controlled Substance Transfer of Production Allowances,

Article 5 Allowances, or Export Allowances Forms,

EPA-HQ-OAR-2003-0039-0014 (May 30, 2006), available at

http://www.regulations.gov/#!documentDetail;D=EPA-HQOAR-2003-0039-0014..........................................................................35

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GLOSSARY

2003 Rule Protection of Stratospheric Ozone: Allowance System

for Controlling HCFC Production, Import and Export, 68 Fed. Reg. 2820 (Jan. 21, 2003)

2006 Reporting

and Recordkeeping Rule

Reporting and Recordkeeping Requirements of the

HCFC Allowance System, 71 Fed. Reg. 30,675 (May

30, 2006)

2008 Approvals The four 2008 interpollutant transfer approvals at

issue in these petitions

2010-2014

Proposed Rule

Proposed Rule, Protection of Stratospheric Ozone:

Adjustments to the Allowance System for Controlling

HCFC Production, Import, and Export, 73 Fed. Reg.

78,680 (Dec. 23, 2008)

2010-2014

Final Rule

Protection of Stratospheric Ozone: Adjustments to

the Allowance System for Controlling HCFC Production, Import, and Export, 74 Fed. Reg. 66,412 (Dec.

15, 2009)

Interim

Final Rule

Protection of Stratospheric Ozone: Adjustments to

the Allowance System for Controlling HCFC Production, Import, and Export, 76 Fed. Reg. 47,451 (Aug.

5, 2011)

Post-Arkema

Proposed Rule

Proposed Rule, Protection of Stratospheric Ozone:

Adjustments to the Allowance System for Controlling

HCFC Production, Import, and Export, 77 Fed. Reg.

237 (Jan. 4, 2012)

APA Administrative Procedure Act

Arkema Arkema Inc.

Arkema EPA Br. Brief of Respondent Environmental Protection

Agency, Doc. No. 1237311, Arkema, 618 F.3d 1 (Nos.

09-1318 et al.) (filed Mar. 30, 2010)

Arkema Pet’rs’

Br.

Joint Brief of Petitioners Arkema Inc., Solvay Fluorides, LLC, and Solvay Solexis, Inc., Doc. No.

1230210, Arkema, 618 F.3d 1 (Nos. 09-1318 et al.)

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(filed Feb. 16, 2010)

Arkema Reply

Br.

Joint Reply Brief of Petitioners Arkema Inc., Solvay

Fluorides, LLC, and Solvay Solexis, Inc., Doc. No.

1239208, Arkema, 618 F.3d 1 (Nos. 09-1318 et al.)

(filed Apr. 9, 2010)

CAA Clean Air Act

CFC Chlorofluorocarbon

DuPont E.I. Du Pont de Nemours and Company

EPA U.S. Environmental Protection Agency

EPA’s Response

to Intervenors’

MTD

EPA’s Substantive Response to Intervenors’ Motion

to Dismiss, Doc. No. 1296479 (Nos. 10-1347 et al.)

(filed Mar. 4, 2011)

HCFC Hydrochlorofluorocarbon

HCFC-22 Chlorodifluoromethane

HCFC-142b 1-chloro-1,1-difluoroethane

Honeywell Honeywell International Inc.

Intervenors’

MTD

Joint Motion of Arkema Inc., Solvay Fluorides, LLC,

and Solvay Solexis, Inc. to Dismiss Petitions for

Lack of Jurisdiction, Doc. No. 1287346 (Nos. 10-

1347 et al.) (filed Jan. 11, 2011)

ODP Ozone depletion potential

Solvay Solvay Fluorides, LLC and Solvay Solexis, Inc.

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JURISDICTIONAL STATEMENT

For two independent reasons, the Court lacks jurisdiction. First,

petitioners do not have standing to challenge the 2008 Approvals.

Second, even if petitioners have standing, their challenge is untimely

under 42 U.S.C. § 7607(b)(1).1

STATEMENT OF ISSUES

1. Whether this Court lacks jurisdiction to consider the petitions for review, in that:

a. petitioners lack standing to challenge the 2008 Approvals, because the approvals themselves did not reduce the quantity

of HCFC-22 that petitioners could produce in 2008 and 2009 and their

effect in any subsequent years was contingent on, inter alia, EPA’s decision—made in a separate rulemaking not before this Court—to retain

the baseline-based allocation system; and

b. if petitioners do have standing, the petitions for review

are untimely under Section 307(b)(1) of the CAA, § 7607(b)(1), which

requires petitions for review to be filed “within sixty days from the date

1 Unless otherwise stated, all subsequent statutory references are

to Title 42 of the United States Code.

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notice of such promulgation, approval, or action appears in the Federal

Register.”

2. Whether, if this Court has jurisdiction, the petitions for review should be denied, in that:

a. the 2008 Approvals were not unambiguously forbidden

by statute, because, inter alia, this Court held in Arkema Inc. v. EPA,

618 F.3d 1 (D.C. Cir. 2010), that the CAA gave EPA the interpretive

discretion under step two of Chevron to permit interpollutant baseline

transfers and that EPA could not retroactively invalidate them;

b. it was EPA’s longstanding policy and “practice under

the 2003 Rule” to allow interpollutant baseline transfers, Arkema, 618

F.3d at 8, which was established at the latest by 2006, and therefore the

2008 Approvals did not effect a change in policy;

c. the 2008 Approvals were supported by the record; and

d. the 2008 Approvals did not deprive petitioners of property without due process.

STATUTES AND REGULATIONS

All applicable materials are contained in petitioners’ brief.

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STATEMENT OF FACTS

A. The CAA And The 2003 Rule

The CAA requires EPA to “promulgate rules * * * providing for the

issuance of allowances” for the production and consumption of HCFCs.

§ 7671f(a), (d). EPA’s 2003 Rule allocated “baseline” production and

consumption allowances for several HCFCs to companies based on their

shares of the then-existing market. 68 Fed. Reg. at 2823; see also 40

C.F.R. §§ 82.17, 82.19. To determine the quantity that each company

could produce or consume in a specific calendar year, EPA multiplied

that company’s number of baseline allowances by a percentage stated in

the rule (which we will call the “calendar-year percentage multiplier”)

that is fixed across all companies. Id. § 82.16. Thus, EPA can reduce the

total output of a given HCFC—and each company’s allocation pro rata—by decreasing that percentage over time.2 The 2003 Rule specified

2 Put mathematically, suppose that EPA’s desired total quantity of

HCFC-22 to be produced in a given year was Q, and there were three

companies that produced HCFC-22 with respective baseline allowances

X, Y, and Z. EPA would set the calendar-year percentage multiplier, P,

for HCFC-22 in that year such that (X + Y + Z) x P = Q. Stated differently, P would be equal to Q divided by the sum of X plus Y plus Z, or,

in other words, P = Q / (X + Y + Z).

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calendar-year percentage multipliers for each HCFC for the years 2003

through 2008. 68 Fed. Reg. at 2849.

The CAA provides that allowances may be traded between companies, between different HCFCs, or both, so long as the trades decrease

the overall potential for ozone depletion. § 7671f. Under EPA’s 2003

Rule, a company could apply to transfer either an allowance for a specific calendar year or a baseline allowance. See 40 C.F.R. § 82.23(d). What

distinguishes calendar-year trades from baseline trades is “[t]he permanent nature of the [baseline] transfer.” 68 Fed. Reg. at 2835. “Only

through permanent transfers of allowances would a company’s baseline

allocation be changed.” Id. at 2823. EPA would review applications and

either allow or disallow the transfer, notifying the parties to the transfer and giving the transferor 10 days to appeal if the transfer is disallowed. 40 C.F.R. § 82.23(b)(4)(ii).

B. EPA’s 2008 Approvals Of Intervenors’ Interpollutant

Baseline Transfers

Intervenors Arkema and Solvay each hold substantial baseline allowances to produce and consume HCFC-22 and HCFC-142b. Petitioners Honeywell and DuPont also hold such allowances and are their

principal competitors. In April 2008, Arkema applied to convert baseUSCA Case #10-1347 Document #1360790 Filed: 02/28/2012 Page 16 of 58
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line allowances from HCFC-142b to HCFC-22. JA___. EPA issued “non

objection notices” approving Arkema’s “baseline” transfers. JA___. In

subsequent letters, EPA re-confirmed that Arkema’s baseline allocations reflected the 2008 transfers. JA___. Solvay, too, chose to convert

baseline allowances from HCFC-142b to HCFC-22. JA___. EPA approved those transfers in February and March 2008. JA___.

The 2008 Approvals had no effect on petitioners’ baseline allowances. Furthermore, because EPA did not adjust the calendar-year percentage multipliers—which had already been set through 2009 in the

2003 Rule—the 2008 Approvals had no effect on the quantity of HCFC22 that petitioners could produce or consume in either 2008 or 2009.

C. EPA’s 2010-2014 Proposed Rule And Final Rule

On December 23, 2008, EPA initiated a rulemaking to reduce U.S.

production and consumption of HCFCs in the 2010-2014 period. In its

2010-2014 Proposed Rule, EPA explicitly reaffirmed that “[b]oth interpollutant and inter-company transfers of allowances are possible, either

on a calendar-year or permanent basis.” 73 Fed. Reg. at 78,701 (emphasis added). EPA therefore proposed to continue in force the existing

company-specific allocations, which “reflect[ed] adjustments resulting

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from approved inter-pollutant and/or inter-company transfers of baseline allowances (i.e., permanent rather than calendar-year allowances)

through the process described in [40 C.F.R.] § 82.23.” Id. at 78,693. The

figures printed in the Federal Register reflected EPA’s 2008 approvals

of intervenors’ baseline transfers. Id. at 78,694.

Petitioners did not challenge intervenors’ transfers in court within

60 days after publication of the 2010-2014 Proposed Rule. Instead, 76

days later (on March 9, 2009), they submitted comments to EPA arguing that the CAA and EPA regulations forbade interpollutant baseline transfers. Intervenors’ MTD Exs. 11-12. The comments stated that

intervenors had made “permanent inter-pollutant transfers,” id. Ex. 11

at 2, from “HCFC-142b baseline [allowances] into permanent baseline

allowances for HCFC-22,” id. Ex. 12 at 3. On the basis of the tables

supplied in the 2010-2014 Proposed Rule, petitioners identified the precise amounts of these transfers and the parties and substances involved. Id. Ex. 11 at 5-7; id. Ex. 12 at 6-9. Petitioners called on EPA to

disregard the 2008 Approvals and to recalculate each company’s baselines.

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EPA published the 2010-2014 Final Rule on December 15, 2009.

The Rule reversed EPA’s longstanding policy on permanent interpollutant transfers in general, as well as its position on intervenors’ transfers in particular, contending that it never had confirmed them and indeed was prohibited from doing so under Section 607(b) of the CAA. 74

Fed. Reg. at 66,419, 66,421-66,422. The HCFC-22 baseline allowances

for intervenors in the 2010-2014 Final Rule did not reflect the 2008 Approvals.

D. Intervenors’ Successful Challenge To The 2010-2014

Final Rule

Intervenors timely sought review of the 2010-2014 Final Rule in

this Court. They argued, inter alia, that the rule had an impermissibly

retroactive effect, in that it invalidated EPA’s 2008 approvals of intervenors’ permanent baseline transfers. Arkema Pet’rs’ Br. 61-65.

On August 27, 2010, the Court granted the petitions for review.

The Court agreed with intervenors that the “2003 Rule allowed these

companies to trade their allocations, subject to EPA approval, * * * between regulated HCFCs on a[] * * * permanent basis” and that EPA

had, in fact, “approved changes to [Arkema’s and Solvay’s] baseline allowances as a result of [the 2008] inter-pollutant trades.” Arkema, 618

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F.3d at 2, 7-8. The Court understood EPA’s policy of approving such

transfers as a permissible exercise of its interpretive discretion under

the CAA. Id. at 6, 9-10; see id. at 7 (agreeing that “Congress left it to the

broad discretion of EPA to determine how transfers of baselines are to

be treated”) (internal quotation marks omitted). But EPA could not

“chang[e] its interpretation” of the CAA, the Court said, and then use

“its new statutory interpretation to undo these completed transactions.”

Id. at 9-10 (emphasis added). Thus, the Court concluded that EPA’s “refusal to account for [the 2008] baseline transfers of inter-pollutant allowances in the [2010-2014] Final Rule is impermissibly retroactive.”

Id. at 9. Accordingly, the Court “vacate[d] the Final Rule insofar as it

operate[d] retroactively” and “remand[ed] the case for prompt resolution

consistent with this opinion.” Id. at 10.

EPA filed a petition for rehearing and rehearing en banc, which

the Court denied. Orders of Jan. 21, 2011, Arkema, 618 F.3d 1 (No. 09-

1318). Because EPA did not petition for certiorari, the Court’s decision

in Arkema is final and the law of the Circuit.

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E. The Instant Petitions For Review

Petitioners were not parties to Arkema. They did not timely intervene in the case, but tried to intervene out of time after this Court issued its opinion. The Court denied the motions for leave to intervene.

Order of Dec. 7, 2010, Arkema, 618 F.3d 1 (No. 09-1318).

While petitioners’ unsuccessful attempt to intervene in Arkema

was pending, they filed the instant consolidated petitions for review on

October 26, 2010, arguing that the 2008 Approvals were unlawful. Each

petition alleged that it had been “filed within 60 days of new grounds

for petitioning for review,” which supposedly “arose no earlier than August 27, 2010,” the date of the Arkema decision. Pet. for Review 1 (Nos.

10-1347 et al.).

F. Subsequent Proceedings Before EPA

The same day that Honeywell and DuPont filed the petitions for

review in this Court, they petitioned EPA to reconsider and rescind the

2008 Approvals. Intervenors’ MTD Ex. 13. Petitioners acknowledged in

the EPA petition that the 2010-2014 Proposed Rule had “publicly disclosed the Solvay and Arkema interpollutant transfers from earlier in

2008,” id. at 2, but argued that “new grounds * * * arose” with this

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Court’s decision in Arkema, id. at 4. EPA has not yet responded to that

petition.

On August 5, 2011, after this Court’s decision in Arkema became

final, EPA promulgated the Interim Final Rule. The rule “adjust[ed]

baseline allowances to reflect” the “2008 inter-pollutant transfers,” 76

Fed. Reg. at 47,459-47,460, which it specifically identified by date, id. at

47,455. As relevant here, the Interim Final Rule revised (for the 2011

calendar year) the baseline allowances for HCFC-22 and HCFC-142b, so

as to reflect the 2008 Approvals that this Court held EPA could not retroactively disapprove. Id. at 47,467-47,468.

Petitioners’ baseline allowances were unaltered by the Interim Final Rule—i.e., they were identical to those set forth in the 2003 Rule

and the 2010-2014 Final Rule. See id. However, because the Interim Final Rule (like the 2010-2014 Proposed Rule and unlike the 2010-2014

Final Rule) reflected the carrying forward of intervenors’ HCFC-142bto-HCFC-22 interpollutant baseline transfers, the total (i.e., summed

over all companies) HCFC-22 baseline increased. In order to maintain

the same cap on the total quantity of HCFC-22 produced and consumed

in 2011, the Interim Final Rule prescribed lower calendar-year percenUSCA Case #10-1347 Document #1360790 Filed: 02/28/2012 Page 22 of 58
11

tage multipliers in 40 C.F.R. § 82.16(a) than did the 2010-2014 Final

Rule. See id. Thus, it was only following EPA’s 2011 promulgation of the

Interim Final Rule that the “aspect” of the 2008 Approvals that petitioners challenge here—reduction of the quantity of HCFC-22 that they

are permitted to produce or consume after 2010, Pet’rs’ Br. 19, 25 n.9,

38 n.14—came into being for the first time.

Honeywell and DuPont filed a petition for review challenging the

Interim Final Rule on October 6, 2011, which was two days late. See

Pet. for Review (No. 11-1370). Twenty days later, they voluntarily dismissed that petition. See Joint Stipulation of Dismissal (No. 11-1370)

(filed Oct. 26, 2011).

SUMMARY OF ARGUMENT

If successful, these petitions for review would effectively nullify

this Court’s decision in Arkema by depriving intervenors of the very allowances that this Court held EPA could not retroactively disapprove.

Petitioners obviously disagree with the Arkema decision. They tried,

and failed, to intervene in Arkema after the decision was issued. Now,

in an attempted collateral attack on the decision, petitioners seek reUSCA Case #10-1347 Document #1360790 Filed: 02/28/2012 Page 23 of 58
12

view of the 2008 Approvals. The petitions should be dismissed for lack

of jurisdiction or, in the alternative, denied.

I. This Court lacks jurisdiction to consider the petitions. As a

threshold matter, petitioners lack standing to challenge the 2008 Approvals, because the approvals themselves had no direct effect on them.

But even supposing that the 2008 Approvals directly injured petitioners, the petitions are untimely.

Challenges to final EPA action under the CAA must be brought

within 60 days after notice of the action is published in the Federal Register. Notice of the basis of petitioners’ claims appeared in the Federal

Register on December 23, 2008, with publication of the 2010-2014 Proposed Rule, which gave petitioners actual knowledge of the total quantity of baseline allowances transferred. Indeed, petitioners’ comments to

EPA admitted that the 2008 Approvals were “publicly disclosed” in the

rule and discussed the approvals at length. Petitioners complain that

the rule did not specify the dates and number of the transfers, but this

level of detail is unnecessary, as demonstrated by the fact that none of

petitioners’ arguments relies on it. The petitions therefore were filed

612 days late.

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If such detail is required, the 60-day period for filing a petition for

review did not begin until August 5, 2011, with publication of the Interim Final Rule. If that is when the period began, the petitions were filed

284 days early.

Insofar as petitioners claim that this Court’s decision in Arkema

created new “grounds arising after [the] sixtieth day,” § 7607(b)(1), that

contention is inconsistent with Arkema’s status as law of the Circuit.

Arkema authoritatively described the legal regime that existed under

the 2003 Rule and EPA’s interpretation of the CAA at the time of the

2008 Approvals. It therefore cannot have created any new grounds for

reviewing the transfers. Even if Honeywell and DuPont did not appreciate the legal and practical consequences of the 2008 Approvals prior to

the Court’s ruling, that would not toll the 60-day limitation period. The

present challenge is based on purely legal arguments that have been

available all along.

II. On the merits, petitioners’ central claims are foreclosed by

Arkema. In particular, their claim that the 2008 Approvals were unlawful under the CAA runs headlong into the decision. Even putting ArkeUSCA Case #10-1347 Document #1360790 Filed: 02/28/2012 Page 25 of 58
14

ma aside, however, there is no basis for reading the CAA as unambiguously forbidding interpollutant baseline transfers.

Petitioners’ contention that EPA’s issuance of the 2008 Approvals

itself amounted to a change in policy without notice-and-comment

rulemaking also is meritless. It was EPA’s policy predating the approvals to allow permanent interpollutant transfers under the 2003 Rule.

The procedures that EPA followed in approving intervenors’ transfers

are a matter of public record, set forth in the rule itself and a noticeand-comment rulemaking that was completed in 2006. Considering the

same materials, Arkema held that EPA’s “practice” and “policy” was to

approve changes to baseline allowances as a result of interpollutant

transfers. 618 F.3d at 7-9. Even assuming that there had been a relevant shift in policy, it must have taken place before the 2008 Approvals.

Petitioners’ other complaints are makeweight. Their challenges to

the adequacy of the record supporting the 2008 Approvals are largely

repackaged collateral attacks on Arkema—e.g., the claim that the 2003

Rule does not permit interpollutant baseline transfers. And those that

are not are patently insubstantial—e.g., petitioners’ desperate assertion

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15

that the individual who signed the 2008 Approvals was not authorized

to do so.

Finally, the 2008 Approvals did not deprive petitioners of property

without due process. It has never been the case that a company has a

right to produce or consume any particular quantity of HCFCs in perpetuity. To the extent that there is a property interest in baseline allowances, the 2008 Approvals did not affect those belonging to petitioners,

so there was no deprivation. To be sure, any sort of interpollutant transfer—whether calendar-year or baseline—might affect market shares.

But that possibility always has been inherent in the regulatory scheme

set up by the 2003 Rule, under which notice of EPA’s transfer decisions

ordinarily is communicated only to those privy to the transfer. And the

time for challenging that rule has long since expired. Petitioners thus

are unable to demonstrate a property interest, a deprivation of property, or a lack of due process.

ARGUMENT

I. THE COURT LACKS JURISDICTION

Petitioners lack standing to challenge the 2008 Approvals, and

therefore this Court has no jurisdiction to consider their petitions for

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16

review. But even assuming that they have standing, petitioners’ challenge is jurisdictionally out of time.

A. Petitioners Were Not Injured By The 2008 Approvals

And Thus Lack Standing To Challenge Them

The 2008 Approvals did not cause petitioners any cognizable injury. For that reason, the petitions must be dismissed on standing

grounds. See generally EPA Br. 31-42.

Petitioners’ baseline HCFC-22 allowances indisputably were (and

remain) unaffected by the 2008 Approvals themselves. Petitioners do

not challenge the validity of the approvals in the 2008 and 2009 period.

Pet’rs’ Br. 25 n.9, 38 n.14. And for good reason. The 2008 Approvals did

not affect the quantity of HCFC-22 that they could produce or consume

in 2008 and 2009, because the approvals did not result in any adjustment to the calendar-year percentage multipliers for those years, which

already were established in the 2003 Rule.

Petitioners’ sole asserted injury is that in future years—i.e., 2010

and beyond—the consequence of the 2008 Approvals is that petitioners

are not allowed to produce or consume as much HCFC-22 as they could

if intervenors’ baseline transfers had not been carried forward. Pet’rs’

Br. 15-16. That injury exists, however, only because EPA provided in

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17

other rulemaking that (1) the same baseline system would be perpetuated into the 2010-2014 period and (2) the industry-wide calendaryear percentage multipliers applicable to HCFC-22 would be decreased

in those years.

Yet, as EPA explains, it could have adopted any number of methods for allocating allowances—e.g., an auction system—without violating retroactivity doctrine. See EPA Br. 17-18, 35 (citing alternatives

discussed in the 2010-2014 Proposed Rule); see also Post-Arkema Proposed Rule, 77 Fed. Reg. at 245. In particular, it was not until the Interim Final Rule decreased the calendar-year percentage multipliers applicable to HCFC-22 in 2011, see 76 Fed. Reg. at 47,362, 47,467, that

the quantity of HCFC-22 that petitioners were permitted to produce or

consume was for the first time reduced. Petitioners perhaps could have

challenged the Interim Final Rule. But that rule is not before this

Court, because petitioners sought review two days late and then voluntarily dismissed their petition.

B. If Petitioners Have Standing To Challenge The 2008

Approvals, The Petitions For Review Are Untimely

The petitions must be dismissed on the independent ground that

they were filed outside the window within which challenges have to be

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18

brought. A petition for review must be filed “within sixty days from the

date notice of such promulgation, approval, or action appears in the

Federal Register.” § 7607(b)(1). The only exception to the 60-day limitation is for petitions “based solely on grounds arising after” the period

closed. Id. This time limitation is jurisdictional, Am. Rd. & Transp.

Builders Ass’n v. EPA, 588 F.3d 1109, 1112 (D.C. Cir. 2009); NRDC v.

EPA, 571 F.3d 1245, 1265 (D.C. Cir. 2009) (per curiam), and the Court

may dismiss the petitions on the basis of this jurisdictional defect without considering others that may be present, Steel Co. v. Citizens for a

Better Env’t, 523 U.S. 83, 93-94 (1998).

1. Notice of the 2008 Approvals appeared in the

Federal Register with publication of the 2010-

2014 Proposed Rule, and so the petitions were

filed too late

The petitions were filed 612 days too late to challenge the 2008

Approvals. Intervenors’ motion to dismiss pointed out that petitioners

have conceded elsewhere that the “‘Solvay and Arkema interpollutant

transfers from earlier in 2008’” were “‘publicly disclosed’” with publication of the 2010-2014 Proposed Rule in the Federal Register, which occurred on December 23, 2008. Intervenors’ MTD at 8, 10 (quoting Ex. 13

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at 2). Tellingly, petitioners do not even try to explain away this dispositive concession.

Instead, petitioners argue that the 2010-2014 Proposed Rule did

not set forth the text of the 2008 Approvals. Pet’rs’ Br. 18. That is true

but irrelevant, since the CAA’s 60-day period starts running from “the

date notice of such promulgation, approval, or action appears in the

Federal Register.” § 7607(b)(1) (emphasis added). The statute thus

makes clear that it is publication of the notice of approval, not of the

approval itself, that is required. And as EPA observes, it is routine for

agencies to provide notice in terse form, leaving it to potentially affected

parties to ferret out the particulars. See EPA’s Response to Intervenors’

MTD at 14 (citing EPA’s “applicability determinations” under the CAA).

Notice of the 2008 Approvals appeared in the Federal Register

when the 2010-2014 Proposed Rule identified the effect of the interpollutant baseline transfers that EPA previously had approved by reporting increased HCFC-22 baselines and diminished HCFC-142b baselines

for Arkema and Solvay. See 73 Fed. Reg. at 78,693-78,694. At that

point, the basis of the instant petitions was available to petitioners.

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This is clear beyond doubt. The comments that petitioners submitted to EPA in connection with the 2010-2014 Proposed Rule show that

they were able to infer not only the existence of the approvals challenged

here, but also (1) Arkema and Solvay’s identities; (2) the types of

HCFCs involved; (3) the precise amounts transferred; and (4) the potential effect of the baseline transfers on petitioners themselves. For example, Honeywell ascertained that it would experience a decrease of

2,346,010 kilograms in proposed HCFC-22 consumption allowances, Intervenors’ MTD Ex. 11 at 6, and created a chart illustrating shifts in

market share, id. at 10. For its part, DuPont, drawing on the “[b]aseline

allowances taken from [the 2010-2014 Proposed Rule] that include * * *

permanent * * * inter-pollutant transfers,” put together a table that detailed the transfers’ effect on every single company producing or consuming HCFC-22. Id. Ex. 12 at 9-10.3

3 Petitioners’ proffered declarations concerning their knowledge of

the 2008 Approvals are worded with great artfulness. They say that petitioners lacked “contemporaneous” notice of the 2008 Approvals as they

were issued; that the 2010-2014 Proposed Rule did not apprise them of

the “specifics” of the 2008 Approvals (by which they presumably mean

their dates); and that it was not until the Arkema decision that they obtained “copies” of the approvals themselves. Diggs Decl. ¶¶ 6, 8; Austin

Decl. ¶ 6. None of these assertions amounts to a denial that the 2010-

(footnote continued)

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Given all this, petitioners’ grumbling (at 19) that the 2010-2014

Proposed Rule did not “specify how many transfers EPA approved,

when it did so, or under what terms” rings hollow. For similar reasons,

EPA’s insistence (at 41 n.6) that the Rule did not mention the “specific”

transfers challenged here is also beside the point. Like all timeliness

requirements, § 7607(b)(1)’s 60-day window “serves the important purpose of imparting finality into the administrative process, thereby conserving administrative resources and protecting the reliance interests of

regulatees.” NRDC v. NRC, 666 F.2d 595, 602 (D.C. Cir. 1981) (interpreting similar provision). That purpose would be disserved by petitioners’ inordinately stringent “notice” standard, which would permit jurisdictional time limitations to be evaded merely by pointing to picayune

bits of information that were omitted from the Federal Register. “How

many” discrete transfers EPA approved, and “when it did so,” are irrelevant to the challenges that petitioners raise now.4

2014 Proposed Rule provided petitioners with notice of every relevant

fact about the 2008 Approvals that they now rely upon.

4 Petitioners’ reliance (at 19) on Union Oil Co. v. EPA, 821 F.2d 678

(D.C. Cir. 1987), is perplexing. That case involved the “much more detailed” requirements for a “notice of proposed rulemaking” under Section 307(d)(3) of the CAA, and has no bearing on what constitutes “no-

(footnote continued)

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2. If Federal Register publication did not occur at

the time of the 2010-2014 Proposed Rule, it

occurred at the time of the Interim Final Rule,

and so the petitions were filed too early

The petitions would be untimely even if petitioners and EPA were

correct that there is some talismanic significance to publication of the

specific timing of the 2008 Approvals. As EPA recognizes, under this definition of notice, “publication in the Federal Register of notice of the

2008 [A]pprovals * * * occurred in the context of publishing the Interim

Final Rule,” which took place on August 5, 2011. EPA Br. 41. That rule

included the earliest Federal Register reference to the dates of intervenors’ baseline transfers and EPA’s approval of them via non-objection

notices. 76 Fed. Reg. at 47,455. Thus, if publication of notice of the 2008

Approvals did not occur with the 2010-2014 Proposed Rule, it occurred

with the Interim Final Rule. Because the petitions for review were filed

almost a year before publication of the latter rule, they are incurably

premature and therefore untimely.

tice” of the 2008 Approvals for purposes of the judicial-review provision.

Id. at 682 (emphasis added). As EPA explains (at 30), § 7607(d)(3) applies only to specified types of rulemaking proceedings, of which the

2008 Approvals are not one.

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Section 307(b)(1)’s “within sixty days from the date” language

creates a filing “window,” not a filing deadline, which means that the

Court lacks jurisdiction to hear petitions filed before publication in the

Federal Register, even if there is a subsequent publication there. E.g.,

Horsehead Res. Dev. Co. v. EPA, 130 F.3d 1090, 1092 (D.C. Cir. 1997);

Waterway Commc’ns Sys., Inc. v. FCC, 851 F.2d 401, 405-06 (D.C. Cir.

1988); W. Union Tel. Co. v. FCC, 773 F.2d 375, 377 (D.C. Cir. 1985)

(Scalia, J.). As this Court has explained, “premature suits for review of

agency decisions must be dismissed even when the passage of time supplies the item missing at the time of filing.” Pub. Citizen v. NRC, 845

F.2d 1105, 1107 (D.C. Cir. 1988). Accordingly, even if the petitions were

not too late, they necessarily were too early. Either way, they are untimely.

3. Arkema is not an “arising after” ground that

renders the petitions timely

Petitioners contend (at 19) that this Court’s decision in Arkema

“reset the filing clock” by creating new, after-arising grounds for review.

That misapprehends both what judicial decisions in general do and

what Arkema in particular held. Furthermore, the specific challenges

that petitioners raise do not depend on Arkema; they were, to borrow

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24

EPA’s turn of phrase in another proceeding, “equally available, albeit

equally unavailing,” when the 2008 Approvals first were made known to

them. EPA Br., American Chemistry Council v. EPA, Doc. No. 1322352,

at 37 (No. 10-1167) (filed Aug. 3, 2011) (ACC EPA Br.).5

a. “[T]he decision of an Article III court * * * announces the law

as though [it] were finding it—discerning what the law is, rather than

decreeing what it is . . . changed to.” Nat’l Fuel Gas Supply Corp. v.

FERC, 59 F.3d 1281, 1289 (D.C. Cir. 1995) (emphasis added; internal

quotation marks omitted); see Rivers v. Roadway Express, Inc., 511 U.S.

298, 312-13 & n.12 (1994) (explaining that judicial decisions set forth an

“authoritative statement of what the statute meant before as well as after the decision of the case giving rise to that construction”). Thus,

“when a court delivers a ruling, even if it is unforeseen, the law has not

changed. Rather, the court is explaining what the law always was.”

Jones Stevedoring Co. v. Director, OWCP, 133 F.3d 683, 688 (9th Cir.

5 Petitioners’ other arguments on this point—that they could not

have challenged the 2010-2014 Proposed Rule because it was only a

proposed rule and that they did not challenge the 2010-2014 Final Rule

because it was favorable to them, Pet’rs’ Br. 20-21—are red herrings.

Petitioners could, assuming for present purposes that they had standing, have challenged the 2008 Approvals themselves.

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1997). This Court therefore must treat Arkema as “if it had always been

the law.” Nat’l Fuel, 59 F.3d at 1289.

Arkema in particular changed neither the law nor EPA’s policy regarding the effect of the 2008 Approvals. See Intervenors’ MTD at 17-

19. Nor did it “establish[],” as petitioners assert, any new “aspect of the

2008 Approvals.” Pet’rs’ Br. 19. Quite the contrary: Arkema authoritatively declared what the 2008 Approvals always meant.

The Court found that EPA approved intervenors’ interpollutant

baseline transfers in 2008 as “permanent changes to the baseline” under the 2003 Rule. Arkema, 618 F.3d at 7-9. The Court then concluded

that the 2010-2014 Final Rule was impermissibly retroactive because

EPA tried to “use its new statutory interpretation to undo these completed [2008] transactions” and “revisit the baseline transactions it previously approved.” Id. at 9-10. EPA’s “fundamental justification” for its

decision to ignore past interpollutant baseline transfers in the 2010-

2014 Final Rule, the Court said, was its view that, at the time they were

approved, intervenors’ baseline transfers had not really been baseline

transfers at all. Id. at 9. But the Court determined that EPA could not

treat the 2008 Approvals as something other than what they always

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had been—permanent interpollutant transfers—without impermissibly

“‘alter[ing] the past legal consequences of past actions.’” Id. at 7 (quoting Mobile Relay Assocs. v. FCC, 457 F.3d 1, 11 (D.C. Cir. 2006)).

EPA is still reluctant to accept this feature of the Arkema decision,

asserting that it never had a policy about the persistence of baseline

transfers when it made the 2008 Approvals, e.g., EPA Br. 34, 49, 57,

and that the Arkema decision compelled EPA to “change” its policy, e.g.,

id. at 50, 58. But Arkema did nothing of the sort. The Court’s decision

must be understood to have accurately described the legal regime pursuant to which the 2008 Approvals occurred—i.e., the 2003 Rule and

EPA’s then-current interpretation of the CAA—as well as their legal effect. See Rivers, 511 U.S. at 312-13; Nat’l Fuel, 59 F.3d at 1289. What

EPA says it believes it meant to do is beside the point; this Court has

spoken about what EPA did, and that determination is the law of the

Circuit.

A judicial decision like Arkema that declares the past legal consequences of past actions (i.e., the 2008 Approvals) cannot have created

any new or changed grounds for reviewing those actions. By suggesting

that Arkema affords “new grounds” for review, petitioners necessarily

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27

suppose that Arkema did something other than apply existing law to existing facts. But that is not what this Court said it did. It asked whether

the 2010-2014 Final Rule violated traditional standards of retroactivity

by trying to alter the meaning of the 2008 Approvals after the fact and

answered that question yes. There is no daylight between petitioners’

assertion that Arkema changed the law and the conclusion that the

Court was wrong. That argument, which amounts to a collateral attack

on Arkema, is not cognizable here.6

b. In any event, petitioners’ claims do not in fact turn on Arkema. Even assuming that this Court’s decision changed the law, there6 Kennecott Utah Copper Corp. v. U.S. Dep’t of Interior, 88 F.3d

1191 (D.C. Cir. 1996), and Environmental Defense v. EPA, 467 F.3d

1329 (D.C. Cir. 2006), are inapposite. See Pet’rs’ Br. 21-22. Both involve

the “reopener” doctrine, under which the “‘period for seeking judicial review may be made to run anew when the agency in question by some

new promulgation creates the opportunity for renewed comment and objection” on an aspect of a previously promulgated rule. Envtl. Defense,

467 F.3d at 1333 (quoting Ohio v. EPA, 838 F.2d 1325, 1328 (D.C. Cir.

1988)). But even if a “regulation may be constructively reopened when

an agency or court changes the regulatory context,” id. at 1334 (emphasis added), and the agency then “adhere[s] to its resolution of certain issues” without expressly reopening them, Kennecott, 88 F.3d at 1214,

that principle—which expands the scope of an otherwise timely challenge to agency action—cannot help petitioners. There is no underlying

timely petition for review; EPA has never “reopened” the 2008 Approvals; and, in any event, Arkema declared what the 2008 Approvals always meant and so did not effect a “change” in the regulatory regime.

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fore, the petitions are not “based solely” on such after-arising grounds.

§ 7607(b)(1); see Intervenors’ MTD at 11-15.

Petitioners’ complaint, at bottom, is that the 2008 Approvals were

illegal when they occurred. They challenge EPA’s “legal authority for

granting” the 2008 Approvals, Pet’rs’ Br. 25; see id. at 25-29, and raise a

variety of procedural challenges to the “manner” of their approval, see

id. at 29-44, all of which are based on historical facts of record. A “claim

that the [agency action] is ultra vires” is a “ground[] clearly available

within 60 days of [its] promulgation.” Nat’l Mining Ass’n v. Dep’t of Interior, 70 F.3d 1345, 1350 (D.C. Cir. 1995). Accordingly, “all the arguments [petitioners] make * * * were available to them” before Arkema,

and for that reason as well, Arkema does not resurrect their timebarred petitions. Id.; see Petro-Chem Processing, Inc. v. EPA, 866 F.2d

433, 437 n.4 (D.C. Cir. 1989).

Perhaps petitioners will say that they did not fully appreciate the

consequences of the 2008 Approvals before the Arkema decision, notwithstanding the fact that they protested these very transfers to EPA

during the rulemaking process. Cf. Intervenors’ MTD Ex. 11 at 2; id.

Ex. 12 at 3. But that does not matter. No agency action would be safe

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from challenge if a judicial decision construing it reopened the period

for review. See Intervenors’ MTD at 15-17. The “essence of judicial decisionmaking * * * necessarily involves some peril to individual expectations,” see Rivers, 511 U.S. at 312, and confusion about the law will not

toll a deadline, especially a jurisdictional one. E.g., U.S. ex rel. Eisenstein v. City of New York, 129 S. Ct. 2230, 2236 n.4 (2009); Commc’ns

Vending Corp. v. FCC, 365 F.3d 1064, 1074 (D.C. Cir. 2004).

As EPA has cogently explained in another case pending before this

Court, the “grounds arising after” exception is a narrow one and applies

only when the challenge is based on “substantive legal arguments that

were not available during the initial review period.” ACC EPA Br. 37-

38. Petitioners’ challenges to the 2008 Approvals were available, and so

the exception does not apply.

II. IF THE COURT HAS JURISDICTION, THE PETITIONS

SHOULD BE DENIED

The petitions for review also fail on the merits. As EPA observes,

petitioners in large part are trying to “repackage[e] EPA’s arguments”

in Arkema—which were rejected by this Court. EPA Br. 44. What little

that is new is patently without merit.

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A. The CAA Permits Interpollutant Baseline Transfers

Petitioners first assert that the CAA “clearly” forbids interpollutant baseline transfers. Pet’rs’ Br. 27. Intervenors agree with EPA that

the CAA “simply is not clear on its face” and certainly does not unambiguously prohibit such transfers. EPA Br. 29; see id. at 44-47; see also Interim Final Rule, 76 Fed. Reg. at 47,460; Post-Arkema Proposed Rule,

77 Fed. Reg. at 255.

As an initial matter, petitioners’ argument is foreclosed by Arkema, which concluded that the CAA gave EPA the interpretive discretion

to permit interpollutant baseline transfers and that EPA used that discretion in 2008 to allow them. See 618 F.3d at 7 (“The Agency asserts

Congress left it to the broad discretion of EPA to determine how transfers of baselines are to be treated. This is true, and that fact entitles the

Agency to Chevron deference * * * .”) (emphasis added; internal citations and quotation marks omitted). This was not mere dictum, but a

necessary part of this Court’s holding. For if the 2008 Approvals always

had been unlawful under the CAA, then EPA could not have acted retroactively by trying to recharacterize them in the 2010-2014 Final

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Rule. It is only because the transfers were valid when approved that

Arkema came out the way it did.7

Even if petitioners’ “plain language” argument, Pet’rs’ Br. 26, were

not foreclosed by Arkema, it would be unpersuasive. Petitioners rely on

Section 607(b) of the CAA, and similar language in its accompanying

legislative history, which provides that EPA’s rules “shall permit a production allowance for a substance for any year to be transferred for a

production allowance for another substance for the same year on an

ozone depletion weighted basis.” § 7671f(b)(1) (emphasis added). They

contend that the “same year” language means that only calendar-year,

not baseline, interpollutant transfers are permitted. But in context, that

language means the same thing as the limitation of intercompany transfers to “annual” production or consumption. § 7671f(c). It simply en7 Petitioners assert (at 26) that Arkema does not “expressly examine[]” the statutory language, but a court may decide a question either expressly or by necessary implication. See LaShawn A. v. Barry, 87

F.3d 1389, 1394-95 (D.C. Cir. 1996) (en banc). And the proper construction of the CAA was not a question that merely lurked in the record; the

parties as well as the 2010-2014 Final Rule itself discussed it at length.

See 74 Fed. Reg. 66,421-66,422; Arkema Pet’rs’ Br. 56-58; Arkema EPA

Br. 48; Arkema Reply Br. 17-19.

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sures that EPA will not authorize transfers from the present into the

future, or vice versa.

Such a requirement tracks the Montreal Protocol, which imposes

year-by-year limits on total ODP. If companies were allowed to transfer

allowances between years, then the United States could exceed its maximum allocation in years to which allowances were transferred. Interpollutant baseline transfers, which are conducted on an ODP-weighted

basis, 40 C.F.R. § 82.23(b)(3)(vi), do not implicate this concern. All they

do is change the relative mix of HCFCs in a given year. They do not alter the total impact of that year’s production on the ozone layer.

Moreover, even if one were to assume that § 7671f(b)(1) refers only

to calendar-year transfers, there would be no reason to read it as exclusive. That subsection provides that EPA’s rules “shall permit” certain

types of interpollutant transfers; it does not say that all others are forbidden. Indeed, a different subsection, § 7671f(a), gives EPA a “single,

clear directive concerning transfers of allowances,” Arkema, 618 F.3d at

3: that it “promulgate rules” to ensure that transfers “will result in

greater total reductions [of HCFCs] in each year * * * than would occur

in that year in the absence of such transactions.” § 7671f(a). InterpolluUSCA Case #10-1347 Document #1360790 Filed: 02/28/2012 Page 44 of 58
33

tant baseline transfers satisfy § 7671f(a)’s broader requirement, because they are ODP-weighted and a 0.1% discount is taken on all transfers. 40 C.F.R. § 82.23(b)(3)(v)-(vi). Thus, however one reads

§ 7671f(b)(1), § 7671f(a) affirmatively confers authority on EPA to approve interpollutant baseline transfers.

B. The 2008 Approvals Did Not Effect A Change In Policy

That Required Notice-And-Comment Rulemaking

Petitioners next contend that the “2008 Approvals themselves”

represented an “impermissible change” in EPA’s policy on interpollutant baseline transfers. Pet’rs’ Br. 30. But the administrative materials

that petitioners cite—e.g., statements in the materials leading up to the

2003 Rule—do not reflect a different policy. As EPA explains, they address a separate topic entirely: the complete phase-out of HCFCs not at

issue in this case. EPA Br. 47-49.8

8 Echoing arguments that EPA presented to this Court in Arkema,

Arkema EPA Br. 30-31, 52, petitioners contend (at 31-34) that interpollutant baseline transfers would allow evasion of the worst-first regime,

under which HCFCs with the greatest potential to harm the ozone layer

are phased out first. That is flatly untrue. Interpollutant transfers have

no bearing on which HCFCs remain in the marketplace; they bear only

on which companies have the right to produce and consume the remaining refrigerants. Nothing about the system could be manipulated to

bring back HCFCs that EPA had already phased out. Moreover, subject

to the usual arbitrary-and-capricious standard and other statutory con-

(footnote continued)

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Beyond this, petitioners would have the Court ignore EPA’s clear

statements of policy approving interpollutant transfers in later regulatory materials from the same 2003 rulemaking. EPA explicitly stated in

the 2003 Rule that “inter-pollutant transfers of * * * baseline allowances would * * * be permitted.” 68 Fed. Reg. at 2835. And EPA emphasized that “[t]he permanent nature of the transfer is what makes [a

baseline transfer] different from the transfer of current-year allowances.” Id.; see also id. at 2823 (“Only through permanent transfers of

allowances would a company’s baseline allocation be changed.”).

Having made the decision to allow permanent interpollutant

transfers with the 2003 Rule, EPA then promulgated Form 2014.03 in

2006 to facilitate such transfers. 2006 Reporting and Recordkeeping

Rule, 71 Fed. Reg. at 30,676. That form required transferors to select

whether they would transfer “Baseline Year Allowances” or “Current

Year Allowances.” USEPA Stratospheric Ozone Protection Program

Class II Controlled Substance Transfer of Production Allowances, Arstraints, e.g., § 7671e(a), EPA may control the total quantity of any

HCFC produced or consumed in a given calendar year, by adjusting the

calendar-year percentage multiplier for that HCFC. See Arkema Reply

Br. 6, 20-25.

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35

ticle 5 Allowances, or Export Allowances Forms (posted May 30, 2006),

available at http://www.regulations.gov/#!documentDetail;D=EPA-HQOAR-2003-0039-0014. And EPA’s official guidance accompanying the

form explained that a “transfer of baseline allowances permanently reduces the number of allowances that the transferor will receive in future allocations.” EPA, Guidance Document for the Stratospheric Ozone

Protection Program After January 1, 2005, pt. 4, § 2.2. at 19, available

at http://www.docstoc.com/docs/7832523/Guidance-Document-for-theStratospheric-Ozone-Protection-Program. The “policy” that petitioners

challenge thus was in place before the 2008 Approvals.

Petitioners’ assertion that the 2008 Approvals “themselves”

changed EPA’s policy, Pet’rs’ Br. 30, is, in addition, fundamentally inconsistent with Arkema. As explained above (at 24-27), Arkema declared the legal effect of, and EPA’s policy regarding, the 2008 Approvals. The procedures that EPA followed in making those approvals were

established in the 2003 Rule and the 2006 Reporting and Recordkeeping Rule. Analyzing the relevant materials—e.g., the 2003 Rule; the

promulgated regulation, 40 C.F.R. § 82.23; Form 2014.03; and nonobjection notices sent in response to the forms—Arkema held that EPA’s

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36

“practice under the 2003 Rule” was to “approve[] permanent changes to

the baseline as a result of inter-pollutant transfers.” 618 F.3d at 7-9; see

id. at 7 (“EPA’s own transfer allowance form, Form 2014.03, apparently

allowed applicants to request inter-pollutant baseline transfers.”). Petitioners do not (and cannot) allege that the 2008 Approvals were irregular in any fashion or obtained other than in the usual course of EPA

business and in accord with those procedures. See Lichoulas v. FERC,

606 F.3d 769, 779 n.8 (D.C. Cir. 2010) (noting “well-settled presumption

of administrative regularity”).

Thus, even assuming that EPA changed its policy between the issuance of the 2003 Rule and the 2008 Approvals, the change occurred at

the latest with the 2006 Reporting and Recordkeeping Rule that put into final form the procedures for processing the 2008 Approvals. The

time for challenging that rule has, of course, expired.9

9 Arkema also examined materials postdating the 2008 Approvals,

such as EPA’s correspondence with intervenors reaffirming the transfers and the 2010-2014 Proposed Rule. But the Court did so only to shed

light on the meaning of the 2008 Approvals at the time that EPA issued

them. In any case, even if those subsequent materials did effect a

change in EPA’s policy, that merely would confirm that petitioners’

challenge to the 2008 Approvals is misdirected.

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C. Petitioners’ Challenge To The Adequacy Of The

Record Is Meritless

Petitioners next argue that the 2008 Approvals were made without any evidence that EPA “conducted the analyses required to meet its

own regulations or engaged in reasoned decision-making.” Pet’rs’ Br. 35.

But EPA had provided for interpollutant baseline transfers in the 2003

Rule and did not need to reiterate its reasoning. The 2003 Rule described the precise conditions under which such transfers would be denied—namely, if the transferor had insufficient allowances to conduct

the transfer or had provided too little information for EPA to make that

determination. See 40 C.F.R. § 82.23(b)(4)(ii). The non-objection notices

issued by EPA indicated Arkema’s and Solvay’s remaining balances and

showed that the requirements of the rule had been satisfied. No further

“analysis” or explanation was required.

Petitioners also claim that EPA lacked the information needed to

approve intervenors’ transfers for 2010 and beyond, because the 2003

Rule did not provide for baseline allowances after 2009. Pet’rs Br. 36.

But as EPA explains (at 52-53), the regulations authorize approval of a

transfer as long as the company has “allowances sufficient to cover the

transfer claim on the date the transfer claim is processed.” 40 C.F.R.

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38

§ 82.23(b)(4) (emphasis added). Intervenors had baseline allowances in

2008, when the approvals were issued, and that is enough.

What petitioners are really challenging is not the approvals as

such, but the fact that intervenors’ baseline transfers were carried forward in the 2010-2014 baselines. In this vein, they assert that the “interpollutant transfer regulations” did not permit EPA to approve the

transfers as permanent. Pet’rs Br. 38. That, however, is just another

way of saying that Arkema was wrong.

Arkema squarely held that the 2003 Rule authorized interpollutant baseline transfers, the distinguishing feature of which was their

“permanent” nature, and that EPA validly approved intervenors’ transfers pursuant to that rule. 618 F.3d at 9. Any claim that the 2008 Approvals or their perpetuation was contrary to EPA regulations runs

straight into the holding of Arkema, as EPA appropriately recognizes.

EPA Br. 52 n.7. Having chosen to retain the baseline system, EPA could

not retroactively invalidate intervenors’ past transactions that had altered the baselines.

Finally, petitioners assert in a footnote (at 38 n.15) that the 2008

Approvals are invalid because there is no evidence that they were

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39

signed by individuals with the authority to do so. EPA explains (at 54)

why this is irrelevant: a transfer is deemed approved by operation of

law unless timely disapproved by an authorized individual. In any

event, “Administrator” is a defined term, which includes his or her “authorized representative.” 40 C.F.R. § 82.3. There is no evidence—and

certainly none sufficient to overcome the presumption of administrative

regularity—that the Chief of EPA’s Stratospheric Program Implementation Branch usurped the Administrator’s authority. See United States

v. McCallum, 970 F.2d 66, 69 (5th Cir. 1992) (proper authorization and

delegation “may be presumed”); see also Braniff Airways, Inc. v. Civil

Aeronautics Bd., 379 F.2d 453, 462 (D.C. Cir. 1967); Perlmutter v. CIR,

373 F.2d 45, 46 (10th Cir. 1967).

D. The 2008 Approvals Did Not Deprive Petitioners Of

Property Without Due Process

Petitioners’ final challenge to the 2008 Approvals is based on the

Due Process Clause. This claim fails because petitioners cannot demonstrate a cognizable property interest, a deprivation of property, or a lack

of due process.

1. To begin with, nobody—neither petitioners nor intervenors—

has a property interest in the particular quantity of HCFCs that it may

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40

consume or produce. Regardless of changes to the baselines, EPA indisputably can alter the calendar-year percentage multipliers to manage

the number of calendar-year allowances available, and thus the amount

of HCFCs produced or consumed in any year. See 68 Fed. Reg. at 2823

(“percentage of baseline allowances” can be “reduced to ensure compliance with the Protocol cap”); see also 40 C.F.R. § 82.16.

Petitioners try to make hay out of Arkema’s reference to “vested

rights.” Pet’rs Br. 39. Read in context, however, that phrase means only

that EPA could not change the past legal consequences of the 2008 Approvals and pretend that intervenors’ baseline transfers had in fact

been calendar-year transfers all along. 618 F.3d at 7. Arkema makes

clear that EPA could have implemented other rules that “thwart[]” a

company’s “unilateral business expectations” or otherwise “adjust[ed]

its distribution of allowances” without running afoul of retroactivity

principles. Id. at 8, 10. What EPA could not do was undo intervenors’

baseline transfers after they already had been approved. Id. at 10.

In short, nothing in Arkema gives any company a “vested right” in

being able to produce or consume a particular quantity of HCFC-22 or

in a particular share of that market. And to the extent that a company

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41

might have a property interest in its baseline allowances, the 2008 Approvals did not decrease the baseline allowances of DuPont or Honeywell. See supra pp. 5, 16.

2. To be sure, Honeywell and DuPont face additional competition

in the HCFC-22 market now that EPA has given effect to the 2008 Approvals in the retained baseline system via a separate rulemaking—the

Interim Final Rule. But the Interim Final Rule is not before this Court.

Moreover, the possibility of shifts in market share without the opportunity for competitors to comment has always been inherent in the

2003 Rule, under which notice of EPA’s allowance of any interpollutant

transfer—whether calendar-year or baseline—is directly communicated

only to parties to the transfer. 40 C.F.R. § 82.23(b)(4); 68 Fed. Reg. at

2833. Petitioners’ due process argument thus attacks the validity of the

entire HCFC transfer regime, not the 2008 Approvals. Yet petitioners—

which are sophisticated participants in a highly regulated industry and

who accepted their baseline allowances subject to this regulatory

scheme—could not possibly have had a “legitimate claim of entitlement,” Bd. of Regents v. Roth, 408 U.S. 564, 577 (1972), to constant

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42

market share in perpetuity. The 2008 Approvals therefore did not deprive petitioners of any right that EPA had ever granted them.

In addition, as EPA notes (at 57), the 2003 Rule made clear that

notice of EPA’s transfer decisions is not provided to other industry participants. If petitioners believed that these procedures—the same ones

used for the 2008 Approvals, see supra pp. 34-36—were inadequate,

they were required to bring their challenge then. Neither courts nor

agencies are obligated to “review [a] late-filed due process claim because

it raises a constitutional issue.” 21st Century Telesis Joint Venture v.

FCC, 318 F.3d 192, 200 (D.C. Cir. 2003). “[T]he nature of the claim itself does not determine whether [a] jurisdictional bar applies,” and even

a “constitutional challenge” may be forfeited. Daniels v. Union Pac.

R.R., 530 F.3d 936, 943 (D.C. Cir. 2008). That is the case here.10

10 Contrary to petitioners’ suggestion (at 43), Graceba Total Communications, Inc. v. FCC, 115 F.3d 1038 (D.C. Cir. 1997), does not hold

that a constitutional challenge to a regulation is always timely. Instead,

it stands for the unexceptional proposition that a party may pursue asapplied challenges to a rule when the rule is enforced against it. See Indep. Cmty. Bankers v. Bd. of Governors, 195 F.3d 28, 34 (D.C. Cir.

1999). Furthermore, the Court’s subsequent cases interpreting Graceba

have limited it to the narrow circumstance in which (1) the petitioner

timely sought reconsideration before the agency; (2) the petitioner

sought to “supplement” that reconsideration petition, Graceba, 115 F.3d

at 1041, with a new constitutional claim based on an “intervening Su-

(footnote continued)

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3. In any event, petitioners received ample process. They filed

comments with EPA on the 2003 Rule and the 2010-2014 Proposed

Rule. They could have participated in Arkema, and in fact tried to intervene out of time.11 And they submitted comments on, as well as a petition for reconsideration of, the Interim Final Rule with EPA, and then

an untimely petition for review in this Court. Amidst this embarrassment of riches, petitioners can hardly complain that they lacked the opportunity to be heard.

preme Court decision[,] rather than an argument based on the same

record,” Am. Ass’n of Paging Carriers v. FCC, 442 F.3d 751, 756 n.11

(D.C. Cir. 2006); (3) the agency’s “dismissal of the [constitutional] argument as untimely was improper,” BDPCS, Inc. v. FCC, 351 F.3d

1177, 1183 (D.C. Cir. 2003); (4) the agency reopened the proceeding by

also rejecting the claim on the merits, id.; and (5) the petitioner timely

petitioned the Court for review of the agency’s denial of reconsideration.

It is therefore obvious that Graceba does not apply here.

11 Having successfully convinced EPA to deprive intervenors of their

allowances in the 2010-2014 Final Rule, petitioners could not have believed that intervenors would not challenge that rule in this Court. And

as frequent litigants themselves, petitioners surely knew that “in cases

involving informal agency rulemaking * * * , a petitioner or appellant

need serve copies only on the respondent agency,” not on every participant in the rulemaking. D.C. Cir. R. 15(a).

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CONCLUSION

The petitions for review should be dismissed for lack of jurisdiction or, in the alternative, denied.

Dated: February 28, 2012 Respectfully submitted,

/s/ Roscoe C. Howard, Jr.

(with permission)

Roscoe C. Howard, Jr.

Gia V. Cribbs

ANDREWS KURTH LLP

1350 I Street, N.W., Suite 1100

Washington, DC 20005

(202) 662-2760

Of Counsel:

Carlos R. Escobar

SOLVAY NORTH AMERICA, LLC

3333 Richmond Avenue

Houston, TX 77098

Counsel for Solvay Fluorides LLC

and Solvay Solexis, Inc.

/s/ Dan Himmelfarb

Dan Himmelfarb

John S. Hahn

Roger W. Patrick

Brian J. Wong

MAYER BROWN LLP

1999 K Street, N.W.

Washington, DC 20006

(202) 263-3000

Of Counsel:

William J. Hamel

ARKEMA INC.

2000 Market Street

Philadelphia, PA 19103

Counsel for Arkema Inc.

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CERTIFICATE OF COMPLIANCE

Pursuant to Fed. R. App. P. 32(a)(7)(C), I hereby certify that this

brief complies with the type-volume limitation of Cir. R. 32(a)(2)(C) because it contains 8,745 words, excluding the parts exempted by Fed. R.

App. P. 32(a)(7)(B)(iii) and Cir. R. 32(a)(1). I further certify that this

brief complies with the typeface requirements of Fed. R. App. P. 32(a)(5)

and the typeface style requirements of Fed. R. App. P. 32(a)(6) because

the brief was prepared in 14-point Century Schoolbook font using Microsoft Word.

Dated: February 28, 2012 /s/ Dan Himmelfarb

Dan Himmelfarb

USCA Case #10-1347 Document #1360790 Filed: 02/28/2012 Page 57 of 58
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CERTIFICATE OF SERVICE

I hereby certify, pursuant to Fed. R. App. P. 25(c) and Cir. R.

25(c), that on February 28, 2012, the foregoing was electronically filed

with the Clerk of the Court using the CM/ECF system, which will send

a notification to the attorneys of record in this matter who are registered with the Court’s CM/ECF system.

Dated: February 28, 2012 /s/ Dan Himmelfarb

Dan Himmelfarb

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