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.

On Petitions for Review from the United States

Environmental Protection Agency

JOINT MOTION OF ARKEMA INC., SOLVAY FLUORIDES LLC,

AND SOLVAY SOLEXIS, INC. TO DISMISS PETITIONS

FOR LACK OF JURISDICTION

David M. Williamson

Gia V. Cribbs

ANDREWS KURTH LLP

1350 I Street, N.W., Suite 1100

Washington, DC 20005

(202) 662-2700

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

Stephen E. Sachs

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 PARTIES AND AMICI CURIAE

PURSUANT TO CIRCUIT RULES 27(a)(4) AND 28(a)(1)(A)

The parties to this proceeding are:

 Petitioners Honeywell International Inc. (“Honeywell”) and E. I. du

Pont de Nemours and Company (“DuPont”);

 Respondents United States Environmental Protection Agency (“EPA”

or “the Agency”) and Lisa P. Jackson, Administrator; and

 Arkema Inc. (“Arkema”), Solvay Fluorides, LLC, and Solvay Solexis,

Inc. (collectively, “Solvay”), which have been granted leave to

intervene as respondents in this proceeding.

There are no amici.

Arkema and Solvay have previously filed with the Court their Corporate

Disclosure Statements pursuant to Circuit Rule 26.1.

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Pursuant to Federal Rule of Appellate Procedure 27 and D.C. Circuit Rule

27(g), Intervenors Arkema and Solvay move to dismiss the consolidated petitions

for lack of jurisdiction. In support of their motion, Intervenors state as follows:

INTRODUCTION

In Spring 2008, EPA approved Arkema and Solvay’s applications to transfer

some of their allowances to produce and consume hydrochlorofluorocarbons

(“HCFCs”) from one chemical to another. Honeywell and DuPont received notice

of these transfers in December 2008, when EPA published a related notice of

proposed rulemaking in the Federal Register. They argued in comments to EPA

that the transfers were unlawful under the Clean Air Act. In response, EPA

attempted to undo these completed transactions, but this Court vacated its action as

impermissibly retroactive. Arkema Inc. v. EPA, 618 F.3d 1, 8-10 (D.C. Cir. 2010).

Honeywell and DuPont disagree with the Arkema decision. They believe

that EPA’s action was authorized, and they tried (and failed) to intervene in

Arkema out-of-time. But in an attempted collateral attack on that decision,

Honeywell and DuPont now seek review of the underlying transfers themselves—

challenging, in the instant petitions, EPA’s approvals of the transfers more than

two and a half years ago.

This Court lacks jurisdiction to consider the petitions. Challenges to final

EPA action under the Clean Air Act must be brought within 60 days after notice of

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the action is published in the Federal Register. 42 U.S.C. § 7607(b)(1). This

limitation is jurisdictional and cannot be extended by the Court. See Am. Rd. &

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

cert. denied, 131 U.S. 388 (2010); Natural Res. Defense Council v. EPA (NRDC),

571 F.3d 1245, 1265 (D.C. Cir. 2009) (per curiam); see also Fed. R. App. P.

26(b)(2). As Honeywell and DuPont have conceded elsewhere, notice of the

factual basis of their claim was published in the Federal Register on December 23,

2008. Accordingly, the petitions are 612 days late.

To evade the time bar, Honeywell and DuPont assert that this Court’s

decision in Arkema provides “new grounds for petitioning for review.” Pet. for

Review 1. That argument is meritless. Arkema invalidated EPA’s attempted

reversal of these transfers, but did not in any way modify the underlying transfers

or their legal consequences. The decision therefore cannot provide “new grounds

* * * for review” of the transfers themselves.

Honeywell and DuPont’s objections to Arkema cannot be pursued through

this collateral proceeding. The petitions must be dismissed.

BACKGROUND

A. Statutory and Regulatory Framework

The Clean Air Act (“Act”) protects the ozone layer by limiting total U.S.

output of HCFCs. 42 U.S.C. §§ 7671c(d), 7671f. Under the Act’s cap-and-trade

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program, EPA issues allowances for HCFC production and consumption, which

can be transferred among different companies or chemicals. § 7671f(a)-(c).

EPA issued implementing regulations in 2003. Protection of Stratospheric

Ozone: Allowance System for Controlling HCFC Production, Import and Export,

68 Fed. Reg. 2820 (Jan. 21, 2003) (“2003 Rule”). The 2003 Rule assigns various

companies “baseline” allowances representing their shares of the then-existing

market. Id. at 2823; see also 40 C.F.R. §§ 82.17, 82.19. To determine a

company’s allowance for a specific calendar year, EPA multiplies that company’s

baseline allowance by a fixed percentage stated in the Rule. § 82.16. EPA can

reduce the total output of HCFCs—and each company’s allocation pro rata—

simply by decreasing the percentages over time. Thus, each company’s allocation

“remain[s] the same from * * * one calendar year to the next,” unless “the

percentage of baseline allowances is reduced to ensure compliance with the

[Montreal] Protocol cap” or the baselines themselves are changed “through

permanent transfers of allowances.” 68 Fed. Reg. at 2823.

The 2003 Rule also permits transfers of allowances between companies and

between HCFCs. § 82.23(a)-(c). (These transfers must be structured so that they

do not increase total ozone depletion, meaning that the relative distribution of

allowances has no environmental consequence.) A company may apply to transfer

an allowance for a specific calendar year or a portion of its baseline allowance

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(e.g., the right to produce 1 kg of HCFC-22 per year, as diminished by the

percentages in § 82.16). See § 82.23(d). EPA reviews applications and either

allows or disallows them, notifying the parties to the transfer and giving the

transferor 10 days to appeal. § 82.23(a)(ii), (b)(4)(ii). While calendar-year

allowances cannot be traded from one year to another, EPA decided to allow

“trades of annual and permanent allowances between HCFCs and between

companies” (Ex. 1 at 1 (emphasis added)), so as to achieve “maximum flexibility”

in the marketplace (68 Fed. Reg. at 2833). What distinguished these baseline

trades from calendar-year trades is “[t]he permanent nature of the [baseline]

transfer.” Id. at 2835 (emphasis added).

B. The Interpollutant Baseline Transfers

Arkema and Solvay hold substantial baseline allowances to produce and

consume HCFC-22 and HCFC-142b. So do Honeywell and DuPont, their major

competitors. In April 2008, Arkema applied to convert baseline allowances from

HCFC-142b to HCFC-22. Ex. 2. EPA issued “non objection notices” approving

Arkema’s “baseline” transfers. Exs. 3-4. In subsequent letters, EPA re-confirmed

that Arkema’s baseline allocations reflected the 2008 transfers. Exs. 5-6. Solvay,

too, chose to convert HCFC-142b baseline allowances to HCFC-22. Exs. 7-8.

EPA approved those transfers in February and March 2008. Exs. 9-10. These

approvals entitled Arkema and Solvay to produce or consume greater amounts of

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HCFC-22, in exchange for giving up the right to produce a certain amount of

HCFC-142b.

C. The Proposed Rule and the Final Rule

On December 23, 2008, EPA initiated a rulemaking to reduce HCFC output.

EPA’s “preferred” option was “to apportion company-specific baselines * * *

equivalent to those currently published * * *, adjusted as necessary to reflect

permanent transfers of baseline allowances.” Protection of Stratospheric Ozone:

Adjustments to the Allowance System for Controlling HCFC Production, Import

and Export, 73 Fed. Reg. 78,680, 78,686 (Dec. 23, 2008) (“Proposed Rule”). The

Agency then would “grant[] a certain percent of that baseline as necessary to

achieve compliance with the cap.” Id. Because “[b]oth inter-pollutant and intercompany transfers of allowances are possible, either on a calendar-year or

permanent basis” (id. at 78,701), EPA listed company-specific baselines

“reflect[ing] adjustments resulting from approved inter-pollutant and/or intercompany transfers of baseline allowances (i.e., permanent rather than calendar-year

allowances)” (id. at 78,693). The figures printed in the Federal Register reflected

Arkema’s and Solvay’s 2008 baseline transfers. Id. at 78,694.

Honeywell and DuPont did not challenge Arkema’s and Solvay’s transfers

in court within 60 days after the publication of the Proposed Rule. Instead, 76 days

later (on March 9, 2009), they submitted comments to EPA arguing that the Act

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and EPA regulations forbade inter-pollutant transfers of baseline allowances.

Honeywell stated in its comments that under the Act, EPA could “approve interpollutant transfers of allowances only on a current year basis,” not as baseline

transfers. Ex. 11 at 2. Likewise, DuPont Fluoroproducts complained that “EPA’s

authority relating to inter-pollutant transfers is limited to annual adjustments” and

that EPA was “inappropriately allowing selected companies to convert allowances

from the HCFC-142b baseline into permanent baseline allowances for HCFC-22.”

Ex. 12 at 3. The companies therefore called on EPA to disregard those transfers

and to re-calculate each company’s baselines—which, of course, would increase

their own market shares in HCFC-22.

On December 15, 2009, EPA reversed its prior stance and adopted this new

interpretation of the Act. Protection of Stratospheric Ozone: Adjustments to the

Allowance System for Controlling HCFC Production, Import, and Export, 74 Fed.

Reg. 66,412, 66,421 (Dec. 15, 2009) (“Final Rule”). Rather than acknowledge the

change, EPA claimed that its past statements were all “consistent with this

interpretation.” Id. at 66,422. Interpreting the Act to require “that all interpollutant transfers * * * be conducted on a yearly—and thus temporary—basis,”

the Agency applied that interpretation to Petitioners’ prior baseline transfers,

prescribing a new allocation “reflect[ing] the changes * * * from inter-company

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transfers” only. Id. As a result, EPA allocated fewer HCFC-22 allowances to

Arkema and Solvay and more to Honeywell and DuPont.

D. This Court’s Decision

Arkema and Solvay timely sought review of the Final Rule. They argued, in

part, that the Final Rule had an impermissibly retroactive effect, rejecting

permanent baseline transfers “that took place in 2008 and were approved by the

Agency at that time.” Petrs’ Br. at 61-65, 2010 WL 1535910, Arkema, 618 F.3d 1

(No. 09-1318).

On August 27, 2010, this Court held that the Final Rule was impermissibly

retroactive and vacated it in part. Arkema, 618 F.3d at 10. The Court agreed with

the Agency’s revised position on appeal, that the Act was ambiguous and that

“‘Congress [had] left it to the broad discretion of EPA to determine how transfers

of baselines are to be treated.’” Id. at 7 (quoting Resp. Br. at 48, 2010 WL

1535912, Arkema, 618 F.3d 1 (No. 09-1318)). But it held that the Agency could

not adopt a different interpretation of the statute and, at the same time, apply that

new interpretation “to undo what the EPA had, in practice, approved under the

2003 Rule.” Id. at 9. Because EPA already had “approved permanent changes to

the baseline as a result of inter-pollutant transfers,” it could not, “without

Congress’ express authorization, use its new statutory interpretation to undo these

completed transactions.” Id.

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Honeywell and DuPont were not parties to Arkema. In mid-October 2010,

they sought leave to intervene out-of-time; those motions were denied. See Order

of Dec. 7, 2010, Arkema, 618 F.3d 1 (No. 09-1318). EPA has sought rehearing of

the panel decision, and its petition remains pending.

E. The Instant Petitions for Review

On October 26, 2010, Honeywell and DuPont filed these four petitions,

since consolidated, seeking review of EPA’s approvals of Arkema’s and Solvay’s

interpollutant baseline transfers. Each petition alleged that it had been “filed

within 60 days of new grounds for petitioning for review, which arose no earlier

than August 27, 2010.” Pet. for Review 1.

The same day, Honeywell and DuPont petitioned EPA to reconsider and

rescind all four transfers. Ex. 13. They acknowledged that the Proposed Rule had

“publicly disclosed the Solvay and Arkema interpollutant transfers from earlier in

2008” (id. at 2), but argued that “new grounds * * * arose no earlier than the date

of the Panel’s decision” (id. at 4). EPA has not yet responded to that petition.

ARGUMENT

The petitions are jurisdictionally out of time. Under 42 U.S.C. § 7607(b)(1),

Petitioners cannot obtain review more than 60 days after notice of the challenged

actions was published in the Federal Register. Thus, any petition was barred after

February 21, 2009.

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Petitioners do not seem to dispute this. Instead, they assert that their

petitions were filed “within 60 days of new grounds for petitioning for review”

(Pet. for Review 1)—presumably the decision in Arkema, published on August 27,

2010. Their theory apparently relies on § 7607(b)(1)’s exception for petitions

“based solely on grounds arising after such sixtieth day,” which must be filed

“within sixty days after such grounds arise.” Yet Petitioners’ claims are not “based

solely” (or even partially) on grounds arising after the 60-day period expired, but

rather on grounds that have been available since December 2008. This Court’s

decision in Arkema cannot afford “new grounds for * * * review” of transfers it did

not alter.

A. The Petitions Were Filed Outside the Statutory Period for Review

A petition for review of “any * * * nationally applicable * * * final action

taken” by EPA under the Clean Air Act must be filed in this Court “within sixty

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

Federal Register.” § 7607(b)(1). The “action[s]” challenged here are EPA’s

approvals, in early 2008, of Arkema’s and Solvay’s inter-pollutant baseline

allowance transfers. See Pet. for Review 1 & Ex. 1. Notice of these actions

appeared in the Federal Register on December 23, 2008, when the Proposed Rule

referenced the effect of the Arkema and Solvay inter-pollutant baseline trades that

had been previously approved and reported increased HCFC-22 baselines (and

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diminished HCFC-142b baselines) for Arkema and Solvay. See 73 Fed. Reg. at

78,693-94. At that point, the factual basis of Honeywell and DuPont’s claim was,

as Petitioners themselves have conceded, “publicly disclosed” in the Federal

Register. Ex. 13 at 2. But Honeywell and DuPont did not file their petitions by

February 21, 2009, when the 60-day judicial-review period under the Clean Air

Act ended. Because this time limit is jurisdictional (see NRDC, 571 F.3d at 1265),

the petitions must be dismissed.

B. The Petitions Are Not Based Solely on Grounds Arising After the

Statutory Period for Review

The only exception from the 60-day limitation is for petitions “based solely

on grounds arising after” the limitations period had closed. § 7607(b)(1). As this

Court has held, § 7607(b)(1) “amount[s] to an explicit decision to preclude review”

of claims “that could have been brought to our attention” earlier. ARTBA, 588 F.3d

at 1113; cf. Eagle-Picher Indus., Inc. v. EPA, 759 F.2d 905, 913 (D.C. Cir. 1985)

(permitting review where new events “essentially create a challenge that did not

previously exist”).

Petitioners suggest that Arkema created “new grounds” for invalidating the

challenged transfers. Pet. for Review 1. That suggestion is both implausible and

irrelevant: Petitioners’ claims rest entirely on old grounds. A judicial decision that

merely declares existing law can hardly provide “new grounds” for challenge, and

to the extent Petitioners argue that Arkema changed the law, entertaining such a

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suggestion would require this Court to question a prior panel’s opinion. In any

case, whatever “new grounds” Petitioners identify must be presented in the first

instance to EPA, not to this Court. Petitioners’ collateral attack on Arkema is not

cognizable here.

1. Petitioners’ claims do not rely on “new grounds * * * for

review”

a. The holding in Arkema cannot provide “new grounds” for review

when that decision did not alter, or even purport to alter, the transfers challenged

here. Arkema addressed a challenge to the Final Rule, which applied a new

interpretation of the Clean Air Act—one that forbade inter-pollutant baseline

transfers—to transactions the Agency had approved under a previous, contrary

interpretation of the text. The Court recognized that Congress, by writing an

ambiguous statute, had “left it to the broad discretion of EPA to determine how

transfers of baselines are to be treated.’” 618 F.3d at 7 (internal quotation marks

omitted). But it held that the Final Rule, by “revisit[ing] the baseline transactions

[EPA] previously approved,” violated traditional principles of retroactivity. Id. at

10. This holding addresses the lawfulness of the Final Rule, and it does not in any

way modify the underlying transfers themselves. Nothing in the Arkema decision

suggests that EPA’s 2008 approvals of the transfers could be unlawful today if they

were not unlawful at the time.

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b. As one would expect, Petitioners’ claims do not depend on Arkema.

The gravamen of Petitioners’ complaint is that EPA’s approvals of the transfers

were illegal at the time they occurred. For example, Petitioners raise a variety of

procedural challenges to EPA’s actions, arguing that EPA approved the transfers

without “a written record of evidence” or “a reasoned explanation”; that EPA did

so in contravention of miscellaneous executive orders and statutes (such as the

Congressional Review Act) imposing procedural requirements on agency action;

and that EPA “fail[ed] to provide notice” of its approvals to Petitioners, violating

their rights under the Due Process Clause. Petrs’ Statement of Issues 2. All of

these claims are, of course, no more valid today than they were two years ago: the

procedures that EPA followed are part of the historical record, and the facts have

not changed.1

Petitioners also raise a substantive claim, that EPA “improperly approv[ed]

the interpollutant transfers in a manner that perpetuated those transfers beyond

2009”—namely as transfers of baseline allowances rather than calendar-year

allowances. Petrs’ Statement of Issues 2. Petitioners’ argument that the transfers

were unlawful, under the Clean Air Act or then-current EPA regulations, neither

emerged for the first time with Arkema nor rested on that decision for its

1 Nor were those procedures a surprise: as the 2003 Rule made clear, EPA

provides notice of its transfer decisions only to those privy to the transfer. See 40

C.F.R. § 82.23(a)(ii), (b)(4). The time for challenging that Rule has expired also.

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foundation. As it happens, Arkema held that the Act could be read either way, and

in fact that EPA had read the Act to permit inter-pollutant baseline transfers before

the Agency changed course in the Final Rule. 618 F.3d at 7-8. But as this Court

has made clear, 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). The “manner” in which

EPA approved the transfers, just like the procedures it followed in doing so, was a

matter of record as of 2008, and the requirements of the Clean Air Act have not

changed. Thus, “all the arguments [Petitioners] make * * * were available to them

at the time” each transfer was approved. Id.

c. Petitioners in fact made these very arguments in their comments to

EPA in March 2009. See Ex. 11 at 2; Ex. 12 at 3. They could have made the same

argument in timely petitions for review to this Court. On Petitioners’ theory of

standing, “EPA’s approval of these transfers” entitled Arkema and Solvay to

produce a greater amount of HCFC-22, thereby “dilut[ing]” the value of

allowances held by Honeywell and DuPont. Petrs’ Docketing Statement, Attach.

at 3. That was as true in 2008 as it is today. The approvals immediately increased

the number of HCFC-22 allowances on the market (and decreased the number of

HCFC-142b allowances). Through the normal functioning of the HCFC allocation

system, this change necessarily “dilut[ed]” the value of HCFC-22 allowances

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owned by Honeywell and DuPont. Those alleged injuries could have equally well

supported a suit to challenge the approvals within the 60-day period. The issue

presented was “purely legal”; the agency’s action in approving the transfers was

“sufficiently final”; and no “more concrete setting” would have improved

consideration of the issue: either the transfers were unlawful or they were not.

Reckitt Benckiser Inc. v. EPA, 613 F.3d 1131, 1137 (D.C. Cir. 2010) (internal

quotation marks omitted). The exception for after-arising grounds simply “does

not apply * * * [when] the substantive grounds for the petitions arose, if at all,

before the time limit expired.” Petro-Chem Processing, Inc. v. EPA, 866 F.2d 433,

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

d. The only ground Petitioners have advanced that is founded on Arkema

has nothing whatsoever to do with the agency actions under review. According to

the motion to hold this case in abeyance, filed jointly by Petitioners and EPA,

“Petitioners in this action assert, inter alia, that in order to restore baseline

allowances for HCFCs to Arkema [and Solvay], EPA will necessarily have to take

allowances from Petitioners and other HCFC suppliers or take other action that

will have a similar effect.” Joint Mot. to Hold Case in Abeyance 2-3. Petitioners

claim that this “cannot be done because the decision in Arkema * * * created

vested rights in the HCFC allowances held by those companies.” Id. at 3.

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This argument was not raised in Petitioners’ Statement of Issues. Assuming

that it has not been abandoned, the claim is entirely unrelated to the underlying

transfers. Once EPA takes remedial action in response to Arkema, Petitioners will

have 60 days to challenge that action, and to raise any argument not foreclosed by

previous agency decisions or already decided by Arkema. Cf. ARTBA, 588 F.3d at

1113. But they cannot argue that Arkema should have ordered a different remedy

(or none at all) in a petition to review EPA actions taken long before the Court’s

decision issued.

2. Arkema did not create “new grounds” simply by clarifying

existing law

a. In their reconsideration petition before EPA, Petitioners suggest that

Arkema’s clarification of the law justifies their new challenge. They say that

before the decision was issued, “EPA ha[d] never taken the position [presumably

adopted in Arkema] that the four interpollutant transfers created vested rights that

EPA was required to carry forward to the 2010-2014 stepdown period.” Ex. 13 at

4.2 Assuming that it is true that EPA had never taken this position, and assuming

further that this is an accurate description of the Court’s holding in Arkema, the

essence of Petitioners’ argument is that they did not anticipate, before this Court

2

Petitioners presumably make such arguments because, under 42 U.S.C.

§ 7607(d)(7)(B), EPA reconsideration is unavailable once “the time specified for

judicial review” has expired.

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ruled, what the full legal consequences of EPA’s 2008 approval of the Arkema and

Solvay baseline transfers might be.

It is well established, however, that “a plaintiff's ignorance of his legal

rights” will not toll a statutory time limit. United States v. Kubrick, 444 U.S. 111,

122 (1979). Petitioners might not have thought of their current arguments before

Arkema was issued, but that would not make those arguments “new grounds * * *

for review.” Petitioners “could have investigated” EPA’s transfer approval “as

soon as they were put on notice of it * * * and filed a timely lawsuit based on the

results thereof.” Hardin v. Jackson, 625 F.3d 739, 744 (D.C. Cir. 2010). “To

excuse [them] from promptly doing so by postponing the accrual of [their] claim

would undermine the purpose of [§ 7607(b)], which is to require the reasonably

diligent presentation” of petitions for review. Kubrick, 444 U.S. at 123.

No rule or other agency action would be safe from challenge if a judicial

decision construing it reopened the period for review. As EPA successfully argued

in Cement Kiln Recycling Coalition v. EPA, No. 00-1302, 2000 WL 1946580 (D.C.

Cir. Dec. 19, 2000) (per curiam), “[a]llowing periods of limitation to be reopened

every time a new, possibly precedential opinion was issued would result in a

constant revisiting of years-old regulations and * * * an end to the very concept of

finality.” Reply Supp. Mot. for Order to Show Cause at 5 (filed Oct. 10, 2000),

Cement Kiln (No. 00-1302) (Ex. 14). Even if Arkema had clarified previously

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unsettled law, that would not delay the accrual of Petitioners’ claim (see Commc’ns

Vending Corp. v. FCC, 365 F.3d 1064, 1074 (D.C. Cir. 2004))—nor would

Petitioners’ “legal doubts” toll the deadline (Atchison, Topeka & Santa Fe Ry. v.

ICC, 851 F.2d 1432, 1439 (D.C. Cir. 1988) (internal quotation marks omitted)),

especially given that a jurisdictional time bar may not be equitably tolled (see John

R. Sand & Gravel Co. v. United States, 552 U.S. 130, 134 (2008)).

b. By suggesting that the Court’s decision in Arkema affords “new

grounds * * * for review,” Petitioners necessarily allege that Arkema in some way

altered the previous legal landscape—that it did something other than apply

existing law to existing facts. But that is not what the opinion said. It asked

whether the Final Rule violated traditional standards of retroactivity. 618 F.3d at

7. Petitioners’ implicit argument that Arkema did change the law, notwithstanding

the panel’s claims to the contrary, is an argument that the panel got it wrong—that

Arkema departed from existing law without realizing it. That argument is not

cognizable here.

Honeywell and DuPont obviously believe that the panel’s analysis was

incorrect. Under Union Electric Co. v. EPA, 427 U.S. 246 (1976), however, if the

Administrator of EPA is barred from relying on particular grounds in reconsidering

agency action, a court likewise may not rely on those “new ‘grounds’” to establish

jurisdiction under the Clean Air Act. Id. at 256. Surely EPA could not base a

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decision to revisit these transfers on the supposition that this Court’s decision in

Arkema was wrong. For the same reasons, an allegation of error on the part of this

Court cannot be the “new grounds” supporting Petitioners’ challenge.

To the extent that these petitions address a consequence of Arkema at all,

they directly conflict with a necessary predicate of the Court’s holding. As

Arkema noted, Congress had written an ambiguous statute and had “left it to the

broad discretion of EPA to determine how transfers of baselines are to be treated.”

618 F.3d at 7 (internal quotation marks omitted). This description of EPA’s

authority was not merely dicta: Arkema’s core holding was that EPA had lawfully

interpreted the Act to permit these transfers, then changed its tune when it adopted

the Final Rule. Id. at 7-8. By applying the new interpretation to previously

approved transactions, the Agency retroactively and unlawfully changed “the past

legal consequences of past actions.” Id. at 7 (internal quotation marks omitted).

Petitioners here argue that the Act unambiguously forbids inter-pollutant baseline

transfers, and that EPA never had authority to approve them. But if Petitioners

were right, then the Final Rule could not have “change[d] the legal landscape”

(id.): the transfers never would have been lawful in the first place, and EPA’s

decision to undo them could not have had retroactive effect. It was necessary to

the holding in Arkema that EPA had a choice about how to apply the statute, and

that the Agency’s first reading was not unambiguously foreclosed.

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Petitioners’ claim to jurisdiction amounts to a collateral attack on Arkema.

Arkema could not have provided “new grounds” for review in 2010 simply by

describing accurately the law as it stood in 2008. Moreover, Arkema is the law of

the Circuit, and will remain so unless the opinion is vacated or withdrawn. See

Ass’n of Civilian Technicians, Montana Air Chapter v. FLRA, 756 F.2d 172, 176

(D.C. Cir. 1985) (“[W]e are bound by the principle of stare decisis to abide by a

recent decision of one panel of this court unless the panel has withdrawn the

opinion or the court en banc has overruled it.” (internal quotation marks omitted)).

Because Arkema remains controlling authority, this Court cannot exercise

jurisdiction on the premise that Arkema is in error.

3. Any “new grounds” must be presented to EPA in the first

instance

Even assuming that the petition were “based solely on grounds arising after”

the period for review, § 7607(b)(1), this Court could not address those new

grounds in the first instance. Instead, any new developments that might support

subsequent review must be presented to the Agency first. See Columbia Falls

Aluminum Co. v. EPA, 139 F.3d 914, 921 (D.C. Cir. 1998); Oljato Chapter of the

Navajo Tribe v. Train, 515 F.2d 654, 665-67 (D.C. Cir. 1975). That is because the

“‘grounds arising after’” exception was “designed to ‘assure that standards were

revised whenever necessary’ on the basis of new information” by the

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Administrator of EPA, not by the courts. Columbia Falls, 139 F.3d at 921

(quoting Oljato, 515 F.2d at 660); see also Union Elec., 427 U.S. at 255-56.

This rule, too, is jurisdictional. Natural Res. Defense Council, Inc. v.

Thomas, 845 F.2d 1088, 1091-92 (D.C. Cir. 1988); cf. ARTBA, 588 F.3d at 1114.

Although Honeywell and DuPont have filed a petition before EPA, the Agency has

not yet responded to it. Review in this Court is therefore premature. See Western

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

CONCLUSION

The petitions for review should be dismissed for lack of jurisdiction.

Dated: January 11, 2011

/s/ David M. Williamson

(with permission)

David M. Williamson

Gia V. Cribbs

ANDREWS KURTH LLP

1350 I Street, N.W., Suite 1100

Washington, DC 20005

(202) 662-2700

Of Counsel:

Carlos R. Escobar

SOLVAY NORTH AMERICA, LLC

3333 Richmond Avenue

Houston, TX 77098

Counsel for Solvay Fluorides, LLC

and Solvay Solexis, Inc.

Respectfully submitted.

/s/ Dan Himmelfarb

Dan Himmelfarb

John S. Hahn

Roger W. Patrick

Stephen E. Sachs

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 SERVICE

I hereby certify, pursuant to Fed. R. App. P. 25(d), that on January 11, 2011,

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.

I also certify that on January 11, 2011, the foregoing was served by U.S.

Mail, first-class delivery, on:

Richard E. Ayres

Ayres Law Group

1615 L Street, NW

Suite 650

Washington, DC 20036

Dated: January 11, 2011 /s/ Dan Himmelfarb

Dan Himmelfarb

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Exhibit 1

EPA, Proposed Rule Fact Sheet,

EPA-HQ-OAR-2008-0496-0081 (Jan. 16, 2009)

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Continuing the HCFC Phasedown – 

Two Proposed Rules to Protect the Ozone Layer 

 On December 23, 2008, EPA published two proposed rules that, working 

together, will restrict the availability and use of HCFCs (including R-22) starting in 2010. 

One proposal would allocate allowances to continue the Montreal Protocol phasedown of 

production and import of HCFCs. The other proposal would ban the sale or distribution 

(including import) of pre-charged air-conditioning and refrigeration products and 

components containing HCFC-22 or HCFC-142b. 

2010 Allocation Rule: The first rule proposes to set HCFC production and 

import limits for the period 2010-2014 in order to meet the 2010 phasedown caps under 

the Montreal Protocol. This rule would allocate HCFC allowances totaling 2,920 ozonedepleting potential (ODP)-weighted metric tons for consumption and 2,646 ODP tons for 

production. Aggregate levels of HCFC production and import must be reduced 

significantly from current amounts to allow the U.S. to meet its obligations under the 

Montreal Protocol. 

The proposed rule would reduce the allocations for HCFC-22 and -142b, which 

are already part of the allowance system. The current regulations allow production and 

import of those HCFCs after January 1, 2010 only to service equipment manufactured 

before January 1, 2010; this restriction would remain in place under the proposed rule. 

EPA is also proposing to issue consumption and production allowances for HCFC-123, 

HCFC-124, HCFC-225ca, and HCFC-225cb, which are not yet part of the allowance 

system. In addition, the proposed allocation rule would amend the regulatory provisions 

concerning allowances for HCFC production for developing countries’ basic domestic 

needs. 

 EPA has proposed to continue to issue allowances to specific companies, and 

continue to provide flexibility by allowing EPA-approved trades of annual and permanent 

allowances between HCFCs and between companies. As before, allowances would not 

be needed for material that is produced or imported for transformation or destruction. 

Nor would allowances be necessary to import used HCFCs – although EPA approval of 

an import petition on a per-shipment basis would still be required. 

Pre-Charged Appliances Rule: The second proposal complements the proposed 

2010 Allocation rule. The proposed Pre-Charged Appliances rule would ban the sale or 

distribution of pre-charged air-conditioning and refrigeration products and components 

containing HCFC-22, HCFC-142b, or blends containing one or both of these substances, 

beginning January 1, 2010. As proposed, the ban would apply to appliances and 

components manufactured on or after January 1, 2010, but not to appliances or 

components manufactured before that date. While the 2010 Allocation Rule, along with 

existing requirements at 40 CFR 82.16(c), would have the effect of prohibiting U.S. 

manufacturers from charging newly-manufactured appliances with newly-produced or 

imported HCFC-22 or -142b beginning January 1, 2010, the Pre-Charged Appliances 

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Rule would affect the sale and distribution of products that are charged with HCFC-22 or 

-142b before entering the United States. 

Regulatory coverage of pre-charged appliances is warranted. Over 9.7 million 

pre-charged air-conditioning and refrigeration appliances (such as window air 

conditioners, upright freezers, and refrigerators) were imported into the United States in 

2006. Considered together with pre-charged appliances that were manufactured 

domestically, they represent a concern for ozone layer recovery. 

The proposed Pre-Charged Appliances rule would apply the same restrictions to 

pre-charged components for appliances, such as line-sets and pre-charged condensing 

units. When sold charged with refrigerants, these components present the same concerns 

as the pre-charged appliances. 

How Would the Proposed Rules Work Together?

 The two proposed rules contains some important terms that affect their 

applicability. 

• “Appliance” means any device that contains and uses a refrigerant and which is 

used for household or commercial purposes, including an air conditioner, 

refrigerator, chiller, or freezer. Components such as condensing units, line sets, 

and expansion valves would not be considered “appliances.” 

• “Appliances manufactured prior to January 1, 2010” means that before that date, 

the refrigerant loop is completed and the appliance can function, holds the complete 

and proper charge, and is ready for use for its intended purposes. 

• “Interstate commerce” means the product’s entire distribution chain up to and 

including the point of sale to the ultimate consumer. It includes the sale or 

distribution of imported products within the United States, as well as the sale or 

distribution of products intended for export. 

Starting January 1, 2010, the two proposed rules would have the following effects on 

the sale, distribution, and installation of air-conditioning and refrigeration products 

charged with HCFC-22, HCFC-142b, or blends containing one or both of these 

substances: 

• Sale and distribution would be allowed for self-contained, factory-charged appliances 

such as pre-charged window units, packaged terminal air conditioners (PATCs), and 

some commercial refrigeration units, if manufactured before January 1, 2010. 

• Sale and distribution would also be allowed for pre-charged appliance components

that are manufactured before January 1, 2010 and used for the purpose of servicing 

existing (pre-2010) appliances. This means that components such as condensing 

units, line sets, and expansion valves that are charged with refrigerant and completely 

manufactured before January 1, 2010, but not yet installed in an appliance, could be 

sold and distributed for this purpose. 

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• Generally, sale and distribution would not be allowed for pre-charged appliances and 

pre-charged components charged with HCFC-22, -142b, or a blend containing either 

of these HCFCs and manufactured on or after January 1, 2010. 

o There is an exemption for pre-charged appliances and pre-charged 

components that are charged with used and reclaimed refrigerant. 

(“Reclamation” means the reprocessing of used refrigerant back to virgin 

specifications (based upon ARI Standard 700, “Specifications for 

Fluorocarbon and Other Refrigerants”). 

o Servicing of existing appliances is distinct from manufacture, and is 

discussed below. 

• Split systems and other field-installed air-conditioning or refrigeration appliances 

could not be initially field-charged with virgin HCFC-22 or HCFC-142b or blends 

containing either of these substances. 

• Servicing of existing (pre-2010) appliances containing HCFC-22 or HCFC-142b 

would be allowed. As the 2010 allocation proposal notes at 73 FR 78699, servicing 

includes the replacement of components. 

o A pre-charged component manufactured before January 1, 2010 could be 

used to service an existing appliance. For example, the regulatory text for 

the proposed pre-charged appliances rule lists condensing units as a type 

of component. Thus the proposed rules would not prohibit the sale or 

installation of stockpiled pre-charged condensing units that were 

manufactured before January 1, 2010 and used to replace a condensing 

unit in an existing residential split system. 

o Components manufactured on or after January 1, 2010 for the servicing of 

existing appliances could be sold and installed as long as they do not 

contain a charge of virgin HCFC-22 or HCFC-142b or a blend of these 

substances. 

 EPA is accepting comments until March 9, 2009, on the 2010 Allocation 

proposed rule and until February 6, 2009, on the Pre-charged Appliances proposed rule. 

More information, including copies of the proposed rules, is available at 

http://epa.gov/ozone/title6/phaseout/classtwo.html. 

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Exhibit 2

Arkema Inc., Class II Controlled Substance Transfer Form

(Apr. 18, 2008)

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Exhibit 3

Non-Objection Notice from Ross Brennan, EPA, to Dawn

Mattia, Arkema Inc., concerning transfer dated Apr. 18, 2008

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Exhibit 4

Non-Objection Notice from Ross Brennan, EPA, to Dawn

Mattia, Arkema Inc., concerning transfer dated Apr. 19, 2008

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Exhibit 5

Letter from Ross Brennan, EPA,

to Dawn Mattia, Arkema Inc. (Aug. 14, 2008)

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Exhibit 6

Letter from Ross Brennan, EPA,

to Dawn Mattia, Arkema Inc. (Jan. 9, 2009)

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Exhibit 7

Letter from Charles M. Jones, Solvay Solexis, Inc.,

to Mike James, EPA (Feb. 15, 2008)

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Exhibit 8

Letter from Chuck Jones, Solvay Solexis, Inc.,

to Mike James, EPA (Mar. 4, 2008)

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Exhibit 9

Non-Objection Notice from Ross Brennan, EPA,

to Charles Jones, Solvay Solexis, Inc., and Don Magid,

Solvay Fluorides, LLC, concerning transfer dated Feb. 15, 2008

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Exhibit 10

Non-Objection Notice from Ross Brennan, EPA,

to Charles Jones, Solvay Solexis, Inc., and Don Magid,

Solvay Fluorides, LLC, concerning transfer dated Mar. 5, 2008

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Exhibit 11

Comment by Steven H. Bernhardt, Ph.D.,

Honeywell Specialty Materials, to Cindy Axinn Newberg, EPA,

EPA-HQ-OAR-2008-0496-0118.1 (Mar. 9, 2009)

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Exhibit 12

Comment by DuPont Fluoroproducts to EPA,

EPA-HQ-OAR-2008-0496-0097.1 (Mar. 9, 2009)

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 DuPont Fluoroproducts 

 DuPont Fluoroproducts 

 Chestnut Run Plaza 

 Building 702 

 P.O. Box 80702 

 Wilmington, DE 19880-0702 

Docket ID No. EPA-HQ-OAR-2008-0496 

Air and Radiation Docket and Information Center 

U.S Environmental Protection Agency 

Mail Code: 6102T 

1200 Pennsylvania Avenue, NW 

Washington, DC 20460 

DuPont Fluoroproducts provides these comments on the proposed rule published in the 

Federal Register on December 23, 2008 on pages 78680-78705 (73 FR 78681, December 23, 

2008): “Protection of Stratospheric Ozone: Adjustment to the Allowance System for 

Controlling HCFC Production, Import, and Export.” 

DuPont congratulates EPA on its continued leadership in ozone protection. The Montreal 

Protocol is widely recognized as the most successful multilateral environmental agreement 

ever benefiting both stratospheric ozone and the global climate. The U.S. has consistently led 

in developing the Protocol and its subsequent amendments and adjustments including the 

acceleration of the HCFC phaseout agreed in September 2007. The EPA has implemented the 

Protocol and the Clean Air Act amendments of 1990 in a manner that protects both 

stratospheric ozone and climate and minimizes both disruption to the industry and burdens on 

consumers. This rule is the next step in EPA leadership. 

Except for the few issues discussed below, we believe that with this proposed rule EPA has 

done an excellent job of ensuring U.S. compliance with the Montreal Protocol, protecting the 

global ozone layer and taking into account needs of consumers regarding these products. 

EPA has acquired adequate data on market needs through the Servicing Tail report to 

appropriately allocate different percentages of baseline production allowances and baseline 

consumption allowances to HCFC-22 and HCFC-141b on a chemical-by-chemical basis. 

Appropriately setting baselines and allocating allowances for all HCFCs will ensure 

compliance with the Montreal Protocol now and in the future and will allow adequate time for 

business planning. EPA has appropriately chosen not to abandon the baseline allowances set 

in the 2003 rule as a basis for allocating HCFC-22 and HCFC-142b allowances for 2010-

2014. The addition of the direct use prohibitions contemplated in 1993 will facilitate 

enforcement of the rule. The sunset of provisions for export production allowances for 

HCFC-141b is entirely appropriate to be consistent with the fact that use of the chemical has 

been banned in the U.S., except for limited and scrutinized exemption needs, since 2003. 

We have one major objection (Increasing Baseline Allowances for HCFC-22) and suggest 

two other modifications (Export of HCFCs and Annual HCFC-22 Allocation) to the proposed 

rule. We provide detailed comments on these three issues and then comment on the specific 

issues upon which EPA requested comment. 

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We strongly encourage EPA to publish the final rule as early as possible. Producers, 

importers and distributors of HCFCs will begin sourcing planning for 2010 as early as the 

middle of 2009. The uncertainty created by the lack of a final allocation rule will complicate 

this planning process. Delays in publishing the final rule could cause sourcing problems 

during the first quarter of 2010 when the supply chain is preparing for spring, the time of 

highest demand for HCFCs for servicing. 

Please contact Mack McFarland by e-mail at mack.mcfarland@usa.dupont.com or by phone 

at 302 999 2505 if there are questions on these comments. 

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Increasing Baseline Allowances:

Summary: 

EPA’s Proposed Rule to adjust the allowance system for control of U.S. consumption and 

production of hydrochlorofluorocarbons (HCFCs), specifically HCFC-22 and HCFC-142b, 

for the control periods 2010–2014 (73 FR 78681, December 23, 2008) is in error, an error we 

believe may be inadvertent. This error contravenes EPA’s stated policy goals of avoiding 

disruption of the current HCFC market. The proposed approach would artificially modify 

market shares and improperly advantage foreign producers over domestic producers in a way 

that will serve to offshore US jobs. 

While EPA has the authority to reduce production and consumption allowances to comply 

with limits under the Montreal Protocol, EPA's authority relating to inter-pollutant transfers is 

limited to annual adjustments. EPA is improperly proposing to make previously temporary 

inter-pollutant transfers permanent, resulting in radical increases in one company’s HCFC-22 

production baseline and two companies’ HCFC-22 consumption baselines. The proposed 

increase in the production baseline has the effect of increasing the HCFC-22 production 

allocations for the period 2010-2014 for one foreign producer and decreasing the HCFC-22 

production allocations for three domestic producers. The proposed increases in consumption 

baselines increase the consumption allocations for two companies and decrease the HCFC-22 

consumption allocations of nineteen companies, including the three domestic producers. The 

net result is a shift in proposed HCFC-22 consumption allocations of almost six million kg 

per year from nineteen companies to the two foreign producers. Thus the proposal would 

have the effect of shifting 12% market share from nineteen companies to the two foreign 

producers. Such a shift in market share is inconsistent with the Clean Air Act. 

 

To comply with the Montreal Protocol, the EPA established a chemical-by-chemical 

phaseout system. The 2003 Final Rule established, on a one-time basis, an aggregate 

baseline amount of production and consumption allowances for HCFC-22. The Clean Air 

Act allows EPA, through inter-pollutant transfers, to adjust an entity’s annual allowance 

allocation. However, the Proposed Rule would improperly change two companies' baselines 

by allowing previously temporary inter-pollutant transfers to become permanent, increasing 

the aggregate amount of baseline production allowances for HCFC-22 by 17% and the 

aggregate amount of baseline consumption allowances for HCFC-22 by 19% in a nonuniform manner that shifts market share. In the process, the EPA is inappropriately allowing 

selected companies to convert allowances from the HCFC-142b baseline into permanent 

baseline allowances for HCFC-22. 

EPA should not create a permanent change of a company’s baseline allocation of any HCFC 

chemical established in the 2003 Final Rule based on any inter-pollutant transfers that 

occurred in the control periods prior to 2010. If finalized as proposed, the Proposed Rule 

would not only be in contradiction with the 2003 Final Rule governing the control periods 

2003–2009, but would also violate the Clean Air Act with respect to inter-pollutant transfer 

of allowances. 

Background: 

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“In 1992, a graduated consumption phaseout was established under the Montreal Protocol for 

industrialized countries and in 1993 the EPA established a chemical-by-chemical phaseout 

system to implement the graduated consumption phaseout (58 FR 65018, December 10, 

1993).”i In its 2003 Final Rule, EPA established “the chemical-by-chemical absolute 

kilogram system to allocate and transfer allowances in the HCFC allowance system.”ii

EPA stated that it was “allocating HCFC allowances on a one-time basis. This would mean 

the allocations would remain the same from control period to control period (one 

calendar year to the next) until each chemical is phased out or until the percentage of baseline 

allowances is reduced to ensure compliance with the Protocol cap.”iii EPA considered but 

rejected proposals to “allocate on a year-by-year or period-by-period basis”.iv

In the explanatory language to the 2003 Final Rule, it was stated that “EPA recognizes the 

need to determine the allocation level for the 2010 reduction step in HCFC–22 and HCFC–

142b allowances and will monitor the market to determine the quantity needed for servicing 

equipment manufactured before December 31, 2009. EPA intends to achieve this reduction 

step through notice and comment prior to 2010 and will likely implement the reduction by 

simply listing a percent of baseline allowances to be granted in Section 82.16 for years 

after 2009.”v

 “EPA is therefore distributing baseline HCFC allowances only for HCFC–

141b, HCFC–22 and HCFC–142b on a one-time basis.”vi EPA allocated “consumption 

allowances to listed individual companies only for HCFC–141b, HCFC–22, and HCFC–

142b.”

vii “Only through permanent transfers of allowances would a company’s baseline 

allocation be changed.”viii

“The permanent transfer of baseline allowances is a lasting shift of some quantity of a 

company’s allowances to another company. The permanent nature of the transfer makes it 

different from the transfer of current-year allowances. In all relevant subsequent years, 

the transferor’s quantity of baseline allowances would be permanently reduced, while the 

transferee’s quantity of baseline allowances would be permanently increased. For example, if 

a person transfers baseline allowances of HCFC– 22, their baseline would be decreased 

permanently by the transfer amount, and the recipient would gain HCFC–22 baseline 

allowances, minus the offset, on a permanent basis. Subsequent inter-pollutant transfers of 

these baseline allowances would also be permitted. However, at the time of a reduction step or 

a phaseout of the substance, the current holder of baseline allowances that were received in a 

permanent transfer would be the person who would have them deducted.”ix

 The total 

number of allowances for the HCFC chemical does not increase as a result of a permanent 

transfer because, as the number of allowances of a transferee increases, the number of 

allowances of the transferor correspondingly decreases.

x

In the 2003 Final Rule, EPA allowed inter-pollutant transfers (or intra-company transfers) in 

conjunction with the chemical-by-chemical tracking system.xi However, under Section 607 

(b) and (d) of the Clean Air Act, the inter-pollutant transfer of allowances must be “for the 

same year”. “Inter-pollutant transfers, also known as intra-company transfers or trades, 

allows a company to shift allowances internally from one HCFC to another to respond to 

market forces, e.g. HCFC–142b allowances for HCFC–22 allowances.”xii “Current-year 

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trades are temporary trades and are reflected in a company’s balance of allowances in the 

control period in which the trade occurs.”xiii In other words, an inter-pollutant transfer of a 

consumption allowance of one chemical for 2008 may only occur in conjunction with a 

consumption allowance of another chemical for 2008. In effect, each inter-pollutant transfer 

expires at the end of the calendar year in which the transfer occurred. 

The 2003 Final Rule clearly explains the way in which a permanent change to a company’s 

baseline allocations can be made.xiv There was no suggestion that inter-pollutant transfers (or 

intra-company transfers) could cause a permanent change to a company’s baseline 

allocations. To the contrary, it was intended that, “as the phaseouts and reductions in 

consumption proceed, the opportunities for inter-pollutant transfers will decrease over time. 

This tightening of the ability to transfer allowances parallels the tightening of the overall 

quantity of allowances, leading to greater incentives for research into and development of 

alternatives.” xv

The fact that an inter-pollutant transfer cannot carry forward into another calendar year is also 

reflected in the following statements: 

“EPA will allow permanent transfers of baseline allowances with those 

allowances disappearing at the phaseout date for the specific HCFC, 

regardless of what inter-pollutant transfers had taken place.” xvi

“Because the consumption and production allowances for a specific 

HCFC disappear after its phaseout date, inter-pollutant transfers of 

those allowances will no longer be possible after the phaseout date. For 

example, after HCFC–141b is phased out on January 1, 2003, a 

company cannot transfer ODP-weighted HCFC–141b production or 

consumption allowances for HCFC–22 allowances. No production or 

consumption allowances for HCFC– 141b will exist after December 31, 

2002.”xvii

Description of the Problem: 

In the Proposed Rule the EPA states, “To meet the 2010 cap for the 2010– 2014 control 

periods, EPA is proposing to continue its past practice of apportioning company-specific 

production and consumption baselines for individual HCFCs, and granting a certain percent of 

that baseline as necessary to achieve compliance with the cap.”xviii The 2003 allocation rule 

assigned an individual consumption baseline year to each company on a chemical-bychemical basis. EPA assigned individual production baseline years in the same manner. EPA 

purports that “EPA is not proposing to revisit decisions made in the 2003 allocation rule

....”xix 

And yet, EPA now proposes to increase HCFC-22 production and consumption baselines for 

selected companies, thus increasing the aggregate production and consumption baselines for 

HCFC-22 by 17% and 19% respectively. This result occurs because EPA has proposed 

allowing two companies to convert 2008 approved inter-pollutant transfers that were 

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originally intended to be temporary, into permanent transfers. EPA provides no explanation 

why it proposes to make this dramatic departure from the decisions made in the 2003 

allocation rule. EPA merely states: 

The proposed company-specific baselines also reflect adjustments 

resulting from approved inter-pollutant and/or inter-company 

transfers of baseline allowances (i.e., permanent rather than calendaryear allowances) through the process described in § 82.23. xx

EPA points out that inter-company transfers of baseline allowances were intended to be 

“permanent rather than calendar-year allowances,” as contemplated by the Final Rule in 2003. 

But EPA does not justify the proposal to make selected calendar-year allowances permanent 

as well. 

Discussion:

Contrary to many of EPA’s stated beliefs, permanent changes to allowances based on 

temporary intra-company transfers have been proposed. Surprisingly, and without 

explanation, EPA proposes converting selected transfers that were intended to be only 

calendar-year allowances into permanent adjustments to the baselines established in 2003. 

The absolute amounts of production and consumption baselines for individual HCFCs were 

intended to be fixed. EPA established “a baseline on a one-time basis, whereby the 

allowance allocations would remain consistent (or be moved through permanent trades) 

from control period to control period (one calendar year to the next), until each chemical is 

phased out via subtraction of its commensurate allowances, or until the percentage of baseline 

allocated is changed to ensure compliance with the Protocol cap.”xxi “As under the class I 

system, the allowances for any control period can only be used during that control period 

and cannot be carried over into the following calendar year.”xxii

In the 2003 Final Rule, EPA issued baseline consumption allowances for HCFC–22 totaling 

119,384,852 kilograms. EPA, taking into consideration market demand for the product, has 

now proposed that it is appropriate to allocate consumption allowances for HCFC–22 of only 

49,936,614 kilograms. This proposed allocation for HCFC-22 equals 41.83% of the total 

2003 baseline consumption allowances. Nonetheless, EPA now proposes that §82.16(a) be 

amended to reflect a 35.2% allocation of baseline consumption allowances for HCFC–22, 

because EPA is proposing to increase the baseline consumption allowances for HCFC–22 

by 22,480,529 kilograms. There is absolutely no need for EPA to increase the baseline 

consumption allowances for HCFC–22. 

The 22,480,529 kilograms EPA is now proposing to add to the original baseline consumption 

allowances for HCFC–22 would be a result of making “adjustments resulting from approved 

inter-pollutant” transfers that expired on December 31, 2008. There is no legislative basis for 

this proposal. Under the 2003 Final Rule, and more importantly, under the Clean Air Act, 

inter-pollutant transfers were to be temporary, reverting back at the end of the calendar year 

Case: 10-1347 Document: 1287346 Filed: 01/11/2011 Page: 7
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of the transfer. Section 607 (b) of the Clean Air Act clearly states, “The rules under this 

section 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.”xxiii Inter-pollutant transfers of consumption allowances also expire at the end 

of end of the calendar year of the transfer.xxiv

The permanent baseline consumption allowances for HCFC–142b assigned in 2003 were 

21,044,929 kilograms. However, under the proposed rule, EPA would change the baseline 

consumption allowances for HCFC–142b to 2,046,979 kilograms. This is less than 10% of 

the original “permanent” baseline. Changing the number of baseline allocations is 

unprecedented. 

Without basis or authority, the EPA is, in effect, trying to convert 90.27% of the permanent 

baseline consumption allowances for HCFC–142b assigned in 2003 into permanent 

baseline consumption allowances for HCFC–22. This is totally inconsistent with “the 

chemical-by-chemical absolute kilogram system to allocate and transfer allowances in the 

HCFC allowance system” that has been established.xxv

“EPA believes for these control periods, maintaining a constant number of allowances 

would reduce the overall burden for the allowance holders and would ease business 

practices.”xxvi Indeed, strategic business decisions have been made by many individual 

chemical producers and importers relying on the previous decision of the EPA that the 

baseline allowances for HCFC-22 were fixed and permanent. 

EPA’s analysis shows that there will be a significantly greater need for HCFC–22 than for 

HCFC–142b during the control periods 2010-2014.xxvii EPA has projected servicing needs in 

the period 2010 – 2014 for HCFC–142b is extremely low: Approximately 100,000 kilograms. 

This amount is less than one-half of one percent (0.5%) of the 2003 HCFC–142b baseline 

consumption allowances of 21,044,929 kilograms. In contrast, it is estimated that 

approximately 62,500,000 kilograms of HCFC–22 will be needed for servicing in 2010. This 

is more than fifty percent (50%) of the original 2003 HCFC–22 baseline consumption 

allowances of 119,384,852 kilograms. 

It is obvious that those who decided to manufacture or import HCFC–142b did not select a 

chemical for which there remains a strong market demand, as is the case with respect to 

HCFC–22. If EPA were to allow conversion of HCFC–142b permanent baseline allowances 

into permanent HCFC–22 baseline allowances, it would unnecessarily interfere with the 

momentous past business decisions made by the individual chemical producers. It would 

allow those who have received virtually all of the value to be extracted from their past 

decisions to build a business based on HCFC–142b, to now receive additional value from a 

business based on HCFC–22, without making a commensurate investment. This would most 

certainly create an ‘‘uneven playing field’’ and would skew allocations. 

To illustrate with specific examples, the 2003 Final Rule allocated to Arkema [formerly Elf 

Atochem (ATOFINA)] 24.73% of the aggregate HCFC–22 baseline consumption allowances 

for 2003-09. The 2008 Proposed Rule would allocate to Arkema 34% of the new aggregate 

Case: 10-1347 Document: 1287346 Filed: 01/11/2011 Page: 8
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HCFC–22 baseline consumption allowances for 2010-14. [Note that the Proposed Rule 

appropriately continues to include allowances originally related to Arkema’s only U.S. 

HCFC-22 production plant, even though Arkema closed that U.S. plant in 2002.] In other 

words, the percentage of the aggregate HCFC–22 baseline consumption allowances for 

Arkema for 2010-14 would be 138.6% of its percentage for 2003-09. 

Similarly, for 2003-09, Solvay Solexis [formerly Ausimont] and Solvay Fluorides (together, 

hereinafter, “the Solvay Group”) were allocated 0.35% of the total HCFC–22 baseline 

consumption allowances. The 2008 Proposed Rule would allocate to the Solvay Group 2.67% 

of the HCFC–22 baseline consumption allowances. In other words, the percentage of the 

HCFC–22 baseline consumption allowances for the Solvay Group for 2010-14 would be 

769% of the allowances for 2003-09. 

Only two companies would receive increases in HCFC–22 consumption baselines allowances 

under the Proposed Rule: Arkema and the Solvay Group. Those increases would adversely 

affect the nineteen other HCFC-22 allowance holders. Each of these nineteen companies 

would receive only 84.15% of the allowances they would receive if the aggregate HCFC–22 

consumption baselines allowances are not increased. Of these nineteen allowance holders 

whose percentage of the aggregate HCFC-22 baseline consumption allowances would 

decrease, the largest impact, in terms of absolute allowances, would be on two U.S. based 

companies, DuPont and Honeywell. 

The tables provided below quantify the impact of the proposed inter-pollutant transfers on the 

four companies with baseline HCFC-22 production allowances and the twenty-one companies 

with HCFC-22 consumption allowances. 

Case: 10-1347 Document: 1287346 Filed: 01/11/2011 Page: 9
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HCFC-22 Production 

Person 

(a) 

2008 

proposed 

baseline 

(kg) 

(b) 

2003 

baseline 

(kg) 

(c) 

Proposed 

allocation 

(kg) 

(d) 

Allocation 

using 2003 

baseline 

(kg) 

(e) 

Difference 

(kg) 

(f) 

Percentage 

impact on 

allocation 

Arkema 46,692,336 28,219,223 16,435,702 11,803,692 4,632,010 139.24% 

DuPont Company 42,638,049 42,638,049 15,008,593 17,834,878 -2,826,285 84.15% 

Honeywell 37,378,252 37,378,252 13,157,145 15,634,781 -2,477,637 84.15% 

MDA 

Manufacturing 

2,383,835 2,383,835 839,110 997,124 -158,014 84.15%

Total 129,092,472 110,619,359 45,440,550 46,270,476 -829,926 98.21%

HCFC-22 Consumption 

Person 

(a) 

2008 

proposed 

baseline 

(kg) 

(b) 

2003 

baseline 

(kg) 

(c) 

Proposed 

allocation 

(kg) 

(d) 

Allocation 

using 2003 

baseline 

(kg) 

(e) 

Difference 

(kg) 

(f) 

Percentage 

impact on 

allocation 

ABCO 

Refrigeration 

Supply 

279,366 279,366 98,337 116,855 -18,518 84.15% 

Altair Partners 302,011 302,011 106,308 126,327 -20,019 84.15% 

Arkema 48,637,642 29,524,481 17,120,450 12,349,663 4,770,787 138.63% 

Auto Equipment 

Sales 

54,088 54,088 19,039 22,624 -3,585 84.15% 

Condor Products 74,843 74,843 26,345 31,306 -4,961 84.15% 

Coolgas Investment 

Property 

590,737 590,737 207,939 247,097 -39,157 84.15% 

Discount 

Refrigerants 

375,328 375,328 132,115 156,994 -24,879 84.15% 

DuPont Company 38,814,862 38,814,862 13,662,831 16,235,695 -2,572,863 84.15% 

Full Circle 14,865 14,865 5,232 6,218 -985 84.15% 

HG Refrigeration 

Supply 

40,068 40,068 14,104 16,760 -2,656 84.15% 

Honeywell 35,392,492 35,392,492 12,458,157 14,804,167 -2,346,010 84.15% 

Ineos Fluor 

Americas 

2,546,305 2,546,305 896,299 1,065,083 -168,783 84.15% 

Kivlan & Company 2,081,018 2,081,018 732,518 870,460 -137,941 84.15% 

MDA 

Manufacturing 

2,541,545 2,541,545 894,624 1,063,091 -168,468 84.15% 

Mondi-Global 281,824 281,824 99,202 117,883 -18,681 84.15% 

National 

Refrigerants 

5,528,316 5,528,316 1,945,967 2,312,415 -366,447 84.15% 

Refricenter of 

Miami 

381,293 381,293 134,215 159,489 -25,274 84.15% 

Refricentro 45,979 45,979 16,185 19,232 -3,048 84.15% 

R-Lines 63,172 63,172 22,237 26,424 -4,187 84.15% 

Saez Distributors 37,936 37,936 13,353 15,868 -2,515 84.15% 

Solvay Fluorides 3,781,691 413,509 1,331,155 172,965 1,158,190 769.61% 

Total 141,865,381 119,384,038 49,936,614 49,936,614 0 

Case: 10-1347 Document: 1287346 Filed: 01/11/2011 Page: 10
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Explanatory Notes for each column: 

(a) Baseline allowances taken from 73 FR 78681, December 23, 2008 that include both permanent intercompany transfers and proposed inter-pollutant transfers. 

(b) Baseline allowances taken from 68 FR 2833, January 21, 2003 corrected for name changes and 

permanent inter-company transfers. 

(c) Proposed allocations based on 73 FR 78681, December 23, 2008; calculated by multiplying the value in 

column (a) by 0.352. 

(d) Allocations based on 2003 baseline allowances corrected for name changes and permanent intercompany transfers and keeping total allocations at 49,936,614 kg; calculated by multiplying the value in 

column (a) by 0.418285517. Note that the factor would be 0.4188 if total allocations were 50,000,000 

as stated in preamble to 73 FR 78681, December 23, 2008. 

(e) Difference between the values in columns (c) and (d); calculated by subtracting the value in column (d) 

from the value in column (c). The values in this column show each “person’s” gain or lose, in 

kilograms of HCFC-22, by allowing the proposed inter-pollutant transfers to impact baseline 

allowances. 

(f) Percentage impact on allocation; calculated by multiplying 100% by the value in column (c) and 

dividing by the value in column (d). The values in this column show percentage impacts of the baseline 

adjustments resulting from the proposed inter-pollutant transfers.

EPA has stated that allocation of allowances for HCFC–22 and HCFC–142b at less than 100 

percent of the respective baselines during the control periods 2010–2014 is the most 

appropriate method of allocation. “This approach offers a transparent design and 

provides stability in that it uses a well-vetted baseline.”xxviii However, these statements 

are only true if there is no change of that well-vetted baseline for HCFC–22. 

Based on HCFC-22 consumption data released by EPA and DuPont market estimates, we 

believe that none of the inter-pollutant transfers approved in 2008 were needed to meet 

HCFC-22 demand nor were they actually used in 2008. Nor would such inter-pollutant 

transfers be needed in 2009. EPA said it considered but rejected alternative approaches such 

as considering the differences between expended allowances versus allowances acquired via 

inter-pollutant transfers.xxix Instead, EPA has inexplicably proposed creating a new and larger 

permanent HCFC-22 baseline allocation based on inter-pollutant transfers that were approved 

but neither needed to serve market demands nor expended. 

Conclusion: 

Conversion of inter-pollutant transfers, that were originally intended to be temporary and

intended to expire at the end of 2008, into permanent transfers that would increase the total 

number of kilograms of baseline allowances is not permitted by the Clean Air Act and is 

not consistent with the 2003 Final Rule. 

It is appropriate for EPA to avoid unnecessary disruptions in the marketplace and to promote 

a smooth transition for industry.xxx It is also appropriate that EPA should consider projected 

servicing needs for air-conditioning and refrigeration, so as to best protect the interests of 

consumers who are directly and indirectly affected by the regulations. The final rule should 

attempt to avoid shortages of chemicals for which there is a demand when this can be done in 

a manner consistent with EPA’s mandate to achieve compliance with US obligations under 

the Montreal Protocol. 

Case: 10-1347 Document: 1287346 Filed: 01/11/2011 Page: 11
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The regulatory allowance allocation plan laid out in the 2003 Final Rule for years after 2009 

was to implement the required reduction by simply listing a percent of baseline allowances 

granted in 2003 under Section 82.16. There was never a suggestion that the aggregate number 

of baseline allocations for any single chemical could be increased. Proposing to increase a 

company’s permanent baseline allowances to “reflect adjustments resulting from approved 

inter-pollutant” transfers that were originally intended to be temporary is a huge departure 

from decisions made in the 2003 allocation rule and is in conflict with the Clean Air Act. 

Making permanent changes to baseline allocation amounts would have significant impact on 

all individual companies, rewarding two and penalizing nineteen. EPA should endeavor to 

avoid affecting the competitive balances in the marketplace if this can be done in a manner 

consistent with EPA’s mandate to achieve compliance with US obligations under the 

Montreal Protocol. This error can easily be corrected if, “The company-specific baselines 

only reflect adjustments resulting from approved inter-company transfers of baseline 

allowances (i.e., permanent rather than calendar-year allowances) through the process 

described in § 82.23.” 

Modified Tables: 

The three tables in the proposed rule should be changed to those shown below to remove the 

proposed inter-pollutant transfer adjustment to baseline allocations and to provide for yearover-year reductions in HCFC-22 allowances as described later in these comments. 

Control period HCFC-141b HCFC-22 HCFC-142b HCFC-123 HCFC-124 HCFC-225ca HCFC-225cb 

2003 0 100 100 ................. ................. ................. .................

2004 0 100 100 ................. ................. ................. .................

2005 0 100 100 ................. ................. ................. .................

2006 0 100 100 ................. ................. ................. .................

2007 0 100 100 ................. ................. ................. .................

2008 0 100 100 ................. ................. ................. .................

2009 0 100 100 ................. ................. ................. .................

2010 0 41.88 0.475 125 125 125 125

2011 0 38.15 0.475 125 125 125 125

2012 0 34.41 0.475 125 125 125 125

2013 0 30.68 0.475 125 125 125 125

2014 0 26.94 0.475 125 125 125 125

PRODUCTION ALLOWANCES 

Person Controlled substance Baseline Allowances 

(kg.) 

AGC Chemicals Americas ......................... HCFC-225ca............ 

HCFC-225cb............ 

266,608 

373,952 

Arkema ................................................ HCFC-22................ 

HCFC-141b............. 

HCFC-142b............. 

28,219,223 

24,647,925 

16,131,096 

DuPont .................................................... HCFC-22................ 

HCFC-124............... 

42,638,049 

2,269,210 

Honeywell........................................ HCFC-22................ 

HCFC-141b............. 

HCFC-142b............. 

HCFC-124............... 

37,378,252 

28,705,200 

2,417,534 

1,804,121 

MDA Manufacturing............................ HCFC-22................ 2,383.835

Solvay Solexis.................................... HCFC-142b............. 6,541,764 

Case: 10-1347 Document: 1287346 Filed: 01/11/2011 Page: 12
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CONSUMPTION ALLOWANCES 

Person Controlled substance Baseline Allowances 

(kg.) 

ABCO Refrigeration Supply................... HCFC-22................ 279,366 

AGC Chemicals Americas..................... HCFC-225ca............ 

HCFC-225cb............ 

285,328 

286,832 

Altair Partners.................................... HCFC-22................ 302,011 

Arkema............................................ HCFC-22................ 

HCFC-141b............. 

HCFC-142b............. 

HCFC-124............... 

29,524,481 

25,405,570 

16,672,675 

3,719 

Auto Equipment Sales........................... HCFC-22................ 54,088 

Condor Products................................. HCFC-22................ 

HCFC-124............... 

74,843 

3,746 

Continental Industry Group..................... HCFC-141b............. 20,315 

Coolgas, Inc....................................... HCFC-141b............. 

HCFC-123............... 

16,097,869 

20,000 

Coolgas Investment Property................... HCFC-22................ 590,737 

Discount Refrigerants........................... HCFC-22................ 

HCFC-141b............. 

375,328 

994 

DuPont............................................. HCFC-22................ 

HCFC-141b............. 

HCFC-142b............. 

HCFC-123............... 

HCFC-124............... 

38,814,862 

9,049 

52,797 

2,933,906 

743,312 

Full Circle......................................... HCFC-22................ 14,865 

H.G. Refrigeration Supply...................... HCFC-22................ 40,068 

Honeywell......................................... HCFC-22................ 

HCFC-141b............. 

HCFC-142b............. 

HCFC-124............... 

35,392,492 

20,749,489 

1,315,819 

1,284,265 

ICC Chemical Corp.............................. HCFC-141b............. 81,225

ICOR.............................................. HCFC-124............... 81,220 

Ineos Fluor Americas............................ HCFC-22................ 2,546,305 

Kivlan & Company.............................. HCFC-22................ 2,081,018 

MDA Manufacturing............................ HCFC-22................ 2,541,545

Mondy Global.................................... HCFC-22................ 281,824 

National Refrigerants............................ HCFC-22................ 

HCFC-123............... 

HCFC-124............... 

5,528,316 

72,600 

50,380 

Refricenter of Miami............................ HCFC-22................ 381,293 

Refricentro........................................ HCFC-22................ 45,979 

R-Lines............................................ HCFC-22................ 63,172 

Saez Distributors................................. HCFC-22................ 37,936 

Solvay Fluorides................................. HCFC-22................ 

HCFC-141b............. 

413,509 

3,940,115 

Solvay Solexis.................................... HCFC-142b............. 3,047,386 

Tulstar Products................................. HCFC-141b............. 

HCFC-123............... 

HCFC-124............... 

89,913 

34,800 

229,582 

Case: 10-1347 Document: 1287346 Filed: 01/11/2011 Page: 13
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OTHER ISSUES:

A. Export of Refrigerant HCFCs: 

DuPont believes that it was not the intent of the drafters of Section 605(a) of the Clean Air Act to 

prohibit exports of HCFC refrigerants to non-Article 5 countries that would otherwise be allowed 

both under the Montreal Protocol and by the importing countries. The proposed definition of 

interstate commerce and proposed language at § 82.15(g) (2) and § 82.15(g) (3) would prohibit 

export to non-Article 5 countries of HCFC-22 and HCFC-142b and blends thereof beginning 

1/1/2010 and of HCFC-123 and HCFC-124 and blends thereof beginning 1/1/2015. All of these 

compounds are used as refrigerants either neat and/or in blends. The exception in Section 605(a) 

(3), “Is used as a refrigerant in appliances manufactured prior to January 1, 2020” is not limited to 

appliances within the borders of the U.S. and, hence, export of HCFCs should be allowed to 

service such appliances outside of the U.S. Excluding U.S. HCFC producers from participating 

in export markets, as allowed both under the Montreal Protocol and by the importing countries, 

lessens U.S. international competitiveness and adversely affects our country’s balance of trade. 

Furthermore, it does nothing to enhance protection of stratospheric ozone since the requirements 

for these HCFCs will simply be sourced with HCFCs from other countries. We encourage EPA 

to add to both § 82.15(g) (2) and § 82.15(g) (3) the language “for other export as allowed under 

provisions of the Montreal Protocol” as shown below. 

§ 82.15(g) 

“(2) Effective January 1, 2010, no person may introduce into interstate commerce or use 

HCFC–22 or HCFC– 142b (unless used, recovered, and recycled) for any purpose other than 

for use in a process resulting in its transformation or its destruction, for use as a refrigerant in 

equipment manufactured before January 1, 2010; for export to Article 5 Parties under § 

82.18(a); for other export as allowed under provisions of the Montreal Protocol; as a 

transshipment or heel; or for exemptions permitted in § 82.15(f). 

(3) Effective January 1, 2015, no person may introduce into interstate commerce or use 

HCFC–141b (unless used, recovered, and recycled) for any purpose other than for use in a 

process resulting in its transformation or its destruction; for export to Article 5 Parties under § 

82.18(a); for other export as allowed under provisions of the Montreal Protocol; as a 

transshipment or heel; or for exemptions permitted in § 82.15(f).” 

 

B. Annual HCFC-22 Allocation: 

Under the current rule, effective 2010, new production of HCFC-22 and HCFC-142b will be 

limited to use in servicing equipment manufactured before 1/1/2010. In anticipation of this 

reduction step, EPA stated in the 2003 final rule that it would continue to monitor the market to 

determine the quantity needed for servicing equipment manufactured before December 31, 2009. 

To that end, EPA proactively issued draft reports, in November 2005 and revised in September 

2006 and June 2008, entitled The US Phaseout of HCFCs Projected Servicing Needs in the US 

Air-Conditioning and Refrigeration Sector. These reports provided projections for servicing

needs in the US air conditioning and refrigeration sector post 2010. Figure ES-1 of the June 2008 

draft report clearly shows the need to move the market toward higher recovery and reuse rates to 

avoid significant shortages of HCFC-22 in 2015 and beyond. Furthermore, in the proposed rule

Case: 10-1347 Document: 1287346 Filed: 01/11/2011 Page: 14
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EPA estimates that 20% of the demand for service refrigerant can be met with recovered 

(recycled or reclaimed) HCFC-22. Yet, EPA proposes a constant annual allocation of HCFC-22 

of about 50 million kg for the period 2010-2014 to meet this projected demand. We believe that 

this allocation is adequate for the year 2010 and in excess for subsequent years. 

To prevent a shortfall of material required to meet market demand in 2015 and beyond, DuPont 

urges EPA to take action that will encourage a gradual reduction of demand for virgin product 

and increase recovery and reuse by assigning HCFC-22 allocations over the period 2010-2014 

that will steadily move the market toward the lower consumption of virgin HCFC-22 that will be 

allowed under the requirements of the Montreal Protocol. Allocations for HCFC-22 in 2010 

should be 50 thousand metric tons as proposed by EPA. For the years 2011-2014, allocations for 

HCFC-22 should be reduced year over year toward 90% of the ODP-weighted HCFC 

consumption cap in 2015. Such an allocation is consistent with EPA’s estimate that 20% of the 

service demand can be met with recovered (recycled or reclaimed) HCFC-22. These allocations, 

as shown in the table, would send a strong signal to the market to increase recovery and reuse 

activities and encourage gradual reductions in HCFC-22 demand avoiding “shock” to the US 

economy caused by significant shortages of HCFC-22 in 2015 (or undercutting the regulation by 

allowing stock piling of HCFC-22 inventories at the end of 2014). Furthermore, such a gradual 

reduction schedule would reduce the amount of HCFC-22 consumed in the U.S. over the period 

2010-2014 by 44,580 metric tons, 2,452 metric ODP tons, enhancing protection of stratospheric 

ozone. The table shows recommended total HCFC-22 consumption allocations and percentage of 

baseline consumption and production (excluding baseline adjustments attributable to interpollutant transfers that we believe are inappropriate and unwarranted) assigned to each entity for 

the years 2010-2014. 

 2010 2011 2012 2013 2014 

Recommended 

consumption allocations 

(metric tons) 

50,000 45,542 41,084 36,626 32,168 

Recommended percentage 

of baseline consumption 

and production assigned to 

each entity 

41.88% 38.15% 34.41% 30.68% 26.94% 

Case: 10-1347 Document: 1287346 Filed: 01/11/2011 Page: 15
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Comments on issues raised by the EPA:

1. FR Page 78686: “Please provide information and documentation on newly emerging uses of 

HCFCs and other uses of HCFCs, if any, that are not accounted for by EPA currently. EPA is 

especially interested in information pertaining to the years 2010 through 2014.”

DuPont is not aware of any “newly emerging uses of HCFCs and other uses of HCFCs, if 

any, that are not accounted for by EPA currently.” 

2. FR Page 78688: “EPA requests comments regarding whether it should consider other sources 

of information in addition to the required reports, the Servicing Tail report, and stakeholder 

comments. In particular, EPA is interested in whether these sources provide sufficient 

information to allow EPA to reasonably estimate servicing needs for 2010–2014, especially for 

HCFC–22, which accounts for the majority of the market.” 

DuPont believes that the information available to EPA, and in particular the Servicing Tail 

report, provides an adequate basis to reasonably estimate servicing needs for 2010-2014. 

3. FR Page 78689: “EPA requests comments on allocating different percentages of baseline 

production allowances and baseline consumption allowances for HCFC–22 and HCFC–142b.”

EPA previously established a chemical-by-chemical phaseout system. Each chemical 

should continue to be viewed independently, looking at the projected marketplace needs 

and the impact to the economy that would be caused if supplies are unavailable. DuPont 

supports the proposal by EPA to allocate different percentages of baseline production and 

consumption allowances on a chemical-by-chemical basis for HCFC-22 and HCFC-142b 

based on the much higher projected demand to meet servicing needs for HCFC-22 than 

for HCFC-142b. Specifically, DuPont supports reducing the total HCFC-142b 

consumption allocation from the current amount of 21,044,929 kg to the proposed amount 

of 100,302 kg; a 99.52% reduction. The justification for this reduction is the dramatically 

lower projected demand for HCFC-142b resulting from the ban on its use as a foam 

expansion agent. 

As described in detail above, we do not support the EPA proposal to allow HCFC-22 

baseline increases by effectively converting baseline HCFC-142b consumption and 

production allowances into baseline HCFC-22 allowances. 

DuPont believes that annual HCFC-22 allocations of 50,000,000 kg each year over the 

entire 2010-2014 period leads to allowances in the later years greatly in excess of market 

demand. We support an allocation for HCFC-22 consumption consistent with projections 

in the Servicing Tail report and the estimate that 20% of total projected servicing needs 

can be met with recovered refrigerants. Thus, a linear reduction in annual HCFC-22 

consumption allocation as proposed above is appropriate. Making the phaseouts gradual 

rather than precipitous will result in a smoother transition in the marketplace. 

Case: 10-1347 Document: 1287346 Filed: 01/11/2011 Page: 16
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4. FR Page 78692: “EPA requests comments on the amount of the total servicing need for 

HCFC–22 that can be met with recovered refrigerants, which is between 15 and 25 percent of 

total estimated servicing need.” and “EPA requests comments on its application of a 20 percent 

rate of availability of recovered (recycled or reclaimed) HCFC–22.”

DuPont supports the EPA conclusion that between 15 and 25 percent of total HCFC-22 

estimated servicing need can be met with recovered refrigerants and supports the 

assumption of a 20 percent rate of availability of recovered HCFC-22. Allocations should 

be on a chemical-by-chemical basis using the baselines established in the 2003 rule and, 

as described in detail above, excluding adjustments based on inter-pollutant transfers. 

Furthermore, total HCFC-22 allocations should decline year-over-year consistent with 

projected servicing needs and an estimated 20 percent rate of availability of recovered 

(recycled or reclaimed) HCFC–22. Such a schedule is described above. 

5. FR Page 78694: “EPA requests comments on the proposed method and calculations for 

allocating allowances on an entity-by-entity basis for HCFC–22 and HCFC–142b production 

and consumption.”

EPA’s Proposed Rule to adjust the allowance system for control of U.S. consumption 

and production of hydrochlorofluorocarbons (HCFCs), specifically HCFC-22 and 

HCFC-142b, for the control periods 2010–2014 (73 FR 78681, December 23, 2008) is 

in error, an error we believe may be inadvertent. This error contravenes EPA’s stated 

policy goals of avoiding unnecessary interference with the current HCFC market by 

artificially modifying market share. The proposed approach would improperly 

advantage foreign producers over domestic producers in a way that will serve to 

offshore US jobs. 

While EPA has the authority to reduce production and consumption allowances to 

comply with limits under the Montreal Protocol, EPA's authority relating to interpollutant transfers is limited to annual adjustments. EPA is improperly proposing to 

make permanent inter-pollutant transfers resulting in increases in one company’s 

HCFC-22 production baseline and two companies’ HCFC-22 consumption baselines. 

The proposed increase in production baseline has the effects of increasing the HCFC22 production allocations for the period 2010-2014 for one foreign producer and 

decreasing the HCFC-22 production allocations for three domestic producers. The 

proposed increases in consumption baselines increase the consumption allocations for 

two companies and decrease the HCFC-22 consumption allocations of nineteen 

companies, including the three domestic producers. The net result is a shift in 

proposed HCFC-22 consumption allocations of almost six million kg per year from 

nineteen companies to the two foreign producers. Thus the proposal would have the 

effect of shifting 12% market share from nineteen companies to the two foreign 

producers. Such a shift in market share is inconsistent with the Clean Air Act. 

 

To comply with the Montreal Protocol, the EPA established a chemical-by-chemical 

phaseout system. The 2003 Final Rule established, on a one-time basis, an 

aggregate baseline amount of production and consumption allowances for HCFC-22. 

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The Clean Air Act allows EPA, through inter-pollutant transfers, to adjust an entities 

annual allowance allocation. However, the Proposed Rule would improperly change 

two companies' baselines by allowing previously temporary inter-pollutant transfers to 

become permanent, increasing the aggregate amount of baseline production 

allowances for HCFC-22 by 17% and the aggregate amount of baseline consumption 

allowances for HCFC-22 by 19% in a non-uniform manner that shifts market share. In 

the process, the EPA is inappropriately allowing selected companies to convert 

allowances based on the HCFC-142b baseline into permanent baseline allowances for 

HCFC-22. 

EPA should not create a permanent change of a company’s baseline allocation of any 

HCFC chemical established in the 2003 Final Rule based on any inter-pollutant transfers 

that occurred in the control periods prior to 2010. If finalized as proposed, the Proposed 

Rule would not only be in contradiction with the 2003 Final Rule governing the control 

periods 2003–2009, but would also violate the Clean Air Act with respect to interpollutant transfer of allowances. 

6. FR Page 78695: “EPA requests comment on the need to establish baselines for these four 

additional HCFCs at this time. In particular, EPA is interested in comments concerning whether 

establishing and apportioning a baseline for these four HCFCs, and allocating a percentage of 

that baseline for the 2010–2014 control periods, is necessary to ensure that the United States 

does not exceed the 25 percent HCFC cap under the 2007 Montreal Adjustment. EPA requests 

comments on the appropriateness of using each company’s highest reported consumption and 

production for 2005– 2007 rather than the lowest or an average.”

DuPont supports EPA’s proposal to establish and apportion baselines on a chemical-bychemical and entity-by-entity basis for HCFC–123, HCFC–124, HCFC–225ca, and 

HCFC–225cb and to allocate a percentage of those baselines for the 2010–2014 control 

periods. With the reductions in consumption and production of HCFCs allowed under the 

Montreal Protocol in 2010, 2015, 2020 and 2030 it is important to establish baselines for 

all HCFCs in this rule to provide adequate planning time for industry to adjust to the 

phase-down and -out and to ensure the U.S. meets its Montreal Protocol obligations. 

Establishing the chemical-by-chemical baselines using each company’s highest reported 

consumption and production for 2005– 2007 is consistent with the procedure already 

successfully used by the EPA to establish chemical-by-chemical baselines for HCFC141b, HCFC-22 and HCFC-142b. 

7. FR Page 78697: “EPA requests comments on its proposed approach of allocating baseline 

allowances for HCFC–141b, HCFC–22, HCFC–142b, HCFC–123, HCFC–124, HCFC–225ca, 

and HCFC–225cb based on the projected need for virgin material in the U.S., which would have 

the effect of not allocating allowances for the remaining amount under the 3,810 ODP-ton cap.”

EPA’s Proposed Rule to adjust the allowance system for control of U.S. consumption and 

production of HCFC-22 and HCFC-142b for the control periods 2010–2014 is not only 

inconsistent with the 2003 Final Rule governing the control periods 2003–2009, but also 

violates the Clean Air Act with respect to inter-pollutant transfer of allowances. The 

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chemical-by-chemical and entity-by-entity baselines established in 2003, adjusted only for 

permanent inter-company transfers, should be used as the basis for the 2010-2014 entity 

specific allocations. In addition, entity-by-entity and total HCFC-22 allocations should 

decline year-over-year consistent with projected servicing needs and 20 percent rate of 

availability of recovered (recycled or reclaimed) HCFC–22. Both of these issues are 

described in detail earlier in these comments. 

With these two exceptions, DuPont supports the general approach proposed by EPA of 

allocating baseline allowances based on the projected need for virgin material in the U.S. 

The approach ensures compliance with the Montreal Protocol and sets the stage for the 

reductions in production and consumption that must occur in 2015 and 2020. Furthermore, 

the approach demonstrates the U.S. commitment to protection of stratospheric ozone. 

8. FR Page 78698: “EPA requests comments on its proposed revisions to § 82.18(a).” 

EPA established chemical-by-chemical and entity-by-entity baselines for HCFC-22, 

HCFC-142b and HCFC-141b in the 2003 Final Rule and used that as the basis for 

assigning chemical and entity specific Article 5 allowances at 15% of those baselines. 

Consistent with the precedent set in the 2003 Final Rule and the adjustments to the 

Montreal Protocol HCFC phaseout agreed in 2007, DuPont supports the proposal to 

apportion entities 10% of their chemical-by-chemical production baselines established in 

2003, adjusted only for permanent inter-company transfers. 

To comply with the Montreal Protocol, the EPA established a chemical-by-chemical 

phaseout system. The 2003 Final Rule established, on a one-time basis, an aggregate 

baseline amount of production and consumption allowances for HCFC-22. The Clean 

Air Act allows EPA, through inter-pollutant transfers, to adjust an entities annual 

allowance allocation. However, the Proposed Rule would improperly change two 

companies' baselines by proposing to allow inter-pollutant transfers to be permanent, 

increasing the aggregate amount of baseline production allowances for HCFC-22 by 

17% and the aggregate amount of baseline consumption allowances for HCFC-22 by 19% 

in a non-uniform manner that shifts market share. In the process, the EPA is 

inappropriately allowing selected companies to convert allowances based on the HCFC142b baseline into permanent baseline allowances for HCFC-22. It should be noted that 

the proposed increase in HCFC-22 production baseline resulting from inter-pollutant 

transfers positively affects one foreign producer that does not even have HCFC-22 

production facilities in the U.S. The chemical-by-chemical and entity-by-entity 

production baselines established in 2003, adjusted only for permanent inter-company 

transfers, should be used as the basis for the 2010-2014 entity specific Article 5 

allocations. 

 

9. FR Page 78698: “EPA requests comments on adding this definition of interstate commerce to 

subpart A.”

DuPont supports “adding this definition of interstate commerce to subpart A.”

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However, DuPont believes that it was not the intent of the drafters of Section 605(a) of the 

Clean Air Act to prohibit exports of refrigerant HCFCs to non-Article 5 countries that 

would otherwise be allowed, both under the Montreal Protocol and by the importing 

countries. The proposed definition of interstate commerce and proposed language at § 

82.15(g) (2) and § 82.15(g) (3) would prohibit export to non-Article 5 countries of HCFC22 and HCFC-142b and blends thereof beginning 1/1/2010 and of HCFC-123 and HCFC124 and blends thereof beginning 1/1/2015. All of these compounds are used as 

refrigerants either neat and/or in blends. The exception in Section 605(a) (3) “Is used as a 

refrigerant in appliances manufactured prior to January 1, 2020.” is not limited to 

appliances within the borders of the U.S. and, hence, export of HCFCs should be allowed. 

Excluding U.S. HCFC producers from participating in export markets as allowed under 

the Montreal Protocol and by the importing countries lessens U.S. international 

competitiveness and adversely affects our balance of trade. Furthermore, it does nothing 

to enhance protection of stratospheric ozone since the requirements for these HCFCs will 

simply be sourced with HCFCs from other countries. We encourage EPA to add to both § 

82.15(g) (2) and § 82.15(g) (3) the language “for other export as allowed under provisions 

of the Montreal Protocol.” 

10. FR Page 78700: “EPA requests comments on adding these prohibitions and on its 

interpretation of section 605(a).”

We do support the addition of “the direct use prohibitions contemplated in 1993” to 

facilitate enforcement of the rule. Other than labeling of HCFC containers and specifying 

on invoices that the product should only be used as specified in the rule, manufacturers 

and importers of HCFCs have little ability to control how the product is used once it is 

sold to distributors. Adding the direct use prohibitions would appropriately allow 

enforcement at the point in the value chain where the product is actually used. 

To allow use of reclaimed HCFC-22 that cannot easily be purified to required 

specifications, it is standard industry practice to mix such reclaimed product with virgin 

HCFC-22 to achieve the required purity. EPA should clarify that the mere mixing of 

virgin HCFC-22 with reclaimed HCFC-22 does not constitute use of virgin HCFC-22 

under § 82.15. However, the use of the resulting mixture should be limited only to those 

permitted uses of virgin HCFC-22. Without such clarification there would be a strong 

incentive to not recover HCFC-22 that cannot be easily purified since it would need to be 

destroyed. Lack of such clarification could also decrease the amount of reclaimed HCFC22 available to meet market demand. 

11. FR Page 78700: “EPA seeks comment on the sunset of provisions for export production 

allowances.” 

DuPont believes that it was not the intent of the drafters of Section 605(a) of the Clean Air 

Act to prohibit exports of refrigerant HCFCs to non-Article 5 countries that would be 

allowed both under the Montreal Protocol and by the importing countries. The proposed 

definition of interstate commerce and proposed language at § 82.15(g) (2) and § 82.15(g) 

(3) would prohibit export to non-Article 5 countries of HCFC-22 and HCFC-142b and 

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blends thereof beginning 1/1/2010 and of HCFC-123 and HCFC-124 and blends thereof 

beginning 1/1/2015. All of these compounds are used as refrigerants either neat and/or in 

blends. The exception in Section 605(a) (3) “Is used as a refrigerant in appliances 

manufactured prior to January 1, 2020.” is not limited to appliances within the borders of 

the U.S. and, hence, export of HCFCs should be allowed. Excluding U.S. HCFC 

producers from participating in export markets as allowed under the Montreal Protocol 

and by the importing countries lessens U.S. international competitiveness. Furthermore, it 

does nothing to enhance protection of stratospheric ozone since the requirements for these 

HCFCs will simply be sourced with HCFCs from other countries. We encourage EPA to 

add to both § 82.15(g) (2) and § 82.15(g) (3) the language “for other export as allowed 

under provisions of the Montreal Protocol.” 

However, the case for HCFC-141b is different. HCFC-141b is not used as a refrigerant 

and its use has been banned in the U.S. except for limited and scrutinized exemption 

needs. Consistent with that ban in the U.S., DuPont supports EPA’s interpretation of 

section 605(a) for HCFC-141b and the proposed language in § 82.15(g) (1) to effect 

sunset provisions for export production allowances.

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END NOTES

 

i

 68 FR 2820, January 21, 2003. 

ii 68 FR 2822, January 21, 2003, emphasis added. 

iii 68 FR 2823, January 21, 2003, emphasis added. 

iv 68 FR 2820, January 21, 2003. 

v

Id., emphasis added. 

vi68 FR 2823, January 21, 2003, emphasis added. 

vii 68 FR 2823-2824, January 21, 2003. 

viii 68 FR 2823, January 21, 2003, emphasis added. 

ix 68 FR 2835, January 21, 2003, emphasis added. 

x

 See 68 FR 2835, January 21, 2003. 

xi 68 FR 2833, January 21, 2003. 

xii 68 FR 2846, January 21, 2003, emphasis added. 

xiii Id., emphasis added. 

xiv See 68 FR 2834, January 21, 2003. 

xv 68 FR 2833, January 21, 2003. 

xvi 68 FR 2835, January 21, 2003. 

xvii 68 FR 2833, January 21, 2003. 

xviii 73 FR 78686, December 23, 2008. 

xix 73 FR 78687, December 23, 2008, emphasis added. 

xx73 FR 78693, December 23, 2008, emphasis added. 

xxi 66 FR 38070, July 20, 2001, emphasis added. 

xxii Id., emphasis added. 

xxiii Clean Air Act §607 (b), emphasis added. 

xxiv Section 607(d) of the Clean Air Act states “Consumption. The rules under this section 

shall also provide for the issuance of consumption allowances in accordance with the 

requirements of this title and for the trading of such allowances in the same manner as is 

applicable under this section to the trading of production allowances under this section.”. 

xxv 68 FR 2822, January 21, 2003, emphasis added. 

xxvi 73 FR 78691, December 23, 2008, emphasis added. 

xxvii73 FR 78687, December 23, 2008. 

xxviiiId., emphasis added. 

xxix73 FR 78693, December 23, 2008. 

xxx Id. 

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Exhibit 13

Honeywell International Inc. & E. I. du Pont de Nemours and

Co., Petition to Reconsider and Rescind Four Interpollutant

Transfers Made Pursuant to Section 607(b) of the Clean Air Act

(EPA Oct. 26, 2010)

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Exhibit 14

EPA’s Reply in Support of Its Motion

for an Order to Show Cause (filed Oct. 10, 2000),

Cement Kiln Recycling Coal. v. EPA, No. 00-1302,

2000 WL 1946580 (D.C. Cir. Dec. 19, 2000) (per curiam)

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