Honeywell Intern. Inc. v. E.P.A.

• Decision Date: 23 July 2004
• Docket Number: No. 02-1294.,02-1294.
• Citation: 374 F.3d 1363
• Parties: HONEYWELL INTERNATIONAL INC., Petitioner, v. ENVIRONMENTAL PROTECTION AGENCY, Respondent. ATOFINA Chemicals, Inc., Intervenor.
• Court: U.S. Court of Appeals — District of Columbia Circuit

Page 1363

374 F.3d 1363

HONEYWELL INTERNATIONAL INC., Petitioner, v. ENVIRONMENTAL PROTECTION AGENCY, Respondent.

ATOFINA Chemicals, Inc., Intervenor.

No. 02-1294.

United States Court of Appeals, District of Columbia Circuit.

Argued February 26, 2004.

Decided July 23, 2004.

On Petition for Review of an Order of the Environmental Protection Agency.

Angus Macbeth argued the cause for petitioner. With him on the briefs were Timothy K. Webster and Richard E. Ayres. Barry S. Neuman entered an appearance.

Thomas A. Lorenzen, Attorney, U.S. Department of Justice, argued the cause for respondent. With him on the brief were Steven Edward Rusak, Attorney, Lisa M. Jaeger, Acting General Counsel, U.S. Environmental Protection Agency, and Jan M. Tierney, Attorney.

Sheila A. Millar argued the cause for intervenor ATOFINA Chemicals, Inc. With her on the brief were Peter L. de la Cruz and Jean-Cyril Walker.

Before: SENTELLE, RANDOLPH and ROGERS, Circuit Judges.

Opinion for the Court filed PER CURIAM.

Concurring opinion filed by Circuit Judge RANDOLPH, with whom Circuit Judge SENTELLE joins.

Opinion concurring in part and dissenting in part filed by Circuit Judge ROGERS.

PER CURIAM:

The opinion of the court is presented in two parts. In the first part, Judge Rogers writes for a unanimous court to introduce the issues presented and to hold that Honeywell International Inc. has standing to challenge the rule on review promulgated by the Environmental Protection Agency ("EPA"). In the second part, Judge Sentelle writes for himself and Judge Randolph on Honeywell's challenge to EPA's reliance on economic considerations in promulgating the rule on review, concluding that the rule must be vacated; Judge Randolph writes on the remedy; and Judge Rogers concurs in part and dissents in part, and would remand the rule to EPA for further explanation.

PART I

ROGERS, Circuit Judge, writing in PART I the opinion of the court:

Title VI of the Clean Air Act ("CAA"), 42 U.S.C. §§ 7671-7671q (2004), implements the policies and directives of the Montreal Protocol on Substances that Deplete the Ozone Layer, Sept. 16, 1987, 26 I.L.M. 1550 (entered into force Jan. 1, 1989), in two ways relevant to this appeal: first, by setting timetables for phasing out production and importation of chemicals that deplete the protective stratospheric ozone layer, such as chlorofluorocarbons ("CFCs") and hydrochlorofluorocarbons ("HCFCs"), and second, by identifying substitutes for ozone-depleting substances thus phased out. Among the industrial uses of CFCs and HCFCs is the manufacture of foam products. In 1999 the Environmental Protection Agency ("EPA") designated HFC-245fa, a non-ozone depleting hydrofluorocarbon ("HFC") product developed by Honeywell International Inc. ("Honeywell"), as an acceptable listed substitute for HCFC-141b, an ozone-depleting chemical scheduled to be phased out in 2003, for all foam uses. Honeywell now challenges a final rule also authorizing as substitutes for HCFC-141b the use of two ozone-depleting chemicals — HCFC-22 and HCFC-142b — in certain foam end-uses if technical constraints prevent use of an approved listed alternative. Honeywell contends that EPA exceeded its statutory authority and departed from its policy without rational explanation by approving ozone-depleting chemicals because EPA (1) failed to provide adequate notice of its decision to approve HCFC-22 and HCFC-142b where its rule had proposed the opposite; (2) had previously approved substitutes that, in relative terms, present a reduced risk to human health and the environment; and (3) improperly considered potential economic impact when rendering its final decision. EPA responds, as a threshold matter, that Honeywell lacks standing, and on the merits, that there was adequate notice, and that Honeywell misconstrues the effect of the listing of an approved substitute chemical and ignores that continued use of ozone-depleting chemicals under the rule turns only on technical feasibility and not costs. On reply, Honeywell also contends that the rule impermissibly delegates certain determinations to the regulated end users. We hold that Honeywell has standing.

I.

Title VI of the Clean Air Act, 42 U.S.C. §§ 7671-7671q, sets restrictions on the use of chemicals known to have ozone-depleting properties as part of the implementation of a set of policies aimed at protecting the ozone layer. Sections 604 and 605 of the CAA, id. §§ 7671c & 7671d, set timetables phasing out, over time, most uses of "Class I" substances (which include chlorofluorocarbons) and "Class II substances" (which include hydrochlorofluorocarbons). As many such chemicals had been put to use in a wide array of commercial applications, the CAA seeks to ensure the availability of ozone-friendly replacements through § 612, id. § 7671k, which establishes the "safe alternatives policy." Section 612(a) provides that, "[t]o the maximum extent practicable, class I and class II substances shall be replaced by chemicals, product substitutes, or alternative manufacturing processes that reduce overall risks to human health and the environment." The Administrator of EPA is directed to take several steps to promote this transition, such as recommending research efforts to identify and develop alternatives for Class I and Class II substances. See CAA § 612(b).

As relevant to Honeywell's petition for review, the Administrator must also "promulgate rules ... providing that it shall be unlawful to replace any class I or class II substance with any substitute substance which the Administrator determines may present adverse effects to human health or the environment, where the Administrator has identified an alternative to such replacement that — (1) reduces the overall risk to human health and the environment; and (2) is currently or potentially available." CAA § 612(c). The Administrator is required to publish lists of substitute chemicals that are prohibited or permitted for specific uses. Id. EPA has implemented CAA § 612 through the Significant New Alternatives Program ("SNAP"), 40 C.F.R. §§ 82.170-82.184 (2004), which establishes criteria and procedures for listing chemicals as approved substitutes for chemicals phased out pursuant to the CAA. Under the SNAP program, substitutes can be listed as " acceptable" or "unacceptable," but the regulations also contemplate that substitutes may be listed as acceptable subject to "use conditions" (in which use of the substitute is permitted if certain procedures to minimize environmental and human risk are followed) or "use limits" (in which use of the substitute is permitted for a "narrowed range of use ... because of the lack of alternatives for specialized applications"). See id. § 82.180(b).

In 1993, EPA, acting pursuant to CAA § 606, 42 U.S.C. § 7671e, which authorizes the acceleration of statutory phaseout dates, promulgated bans on the importation and production of three Class II chemicals relevant to this petition: HCFC-141b, HCFC-22, and HCFC-142b. 58 Fed Reg. 65,018, 65,028 (Dec. 10, 1993). The ban is effective in 2003 for HCFC-141b, and in 2010 for HCFC-22 and HCFC-142b. Id. However, in 1994, EPA also approved these three hydrochlorofluorocarbons, in the interim, as alternatives, in foam uses, to more ozone-damaging chlorofluorocarbons phased out pursuant to CAA Title VI. See 59 Fed.Reg. 13,044, 13,083 (March 18, 1994). In anticipation of the 2003 ban on the importation and manufacture of HCFC-141b, Honeywell developed a non-ozone-depleting hydrofluorocarbon, HFC-245fa, to function as a substitute for HCFC-141b in foam applications. In 1999, EPA approved Honeywell's petition to list HFC-245fa as an acceptable substitute for HCFC-141b in all foam end uses. See 64 Fed.Reg. 68,039, 68,041 (Dec. 6, 1999).

The final rule followed upon intervenor ATOFINA Chemicals, Inc.'s petition of February 17, 1999, requesting that HCFC-22 and HCFC-142b, along with a third chemical, HCFC-124, also be approved as acceptable substitutes for HCFC-141b in foam applications. 65 Fed.Reg. 42,653, 42,656 (July 11, 2000). HCFC-22 and HCFC-142b were already in use in several foam applications, due to EPA's 1994 approval of those chemicals as CFC substitutes, 59 Fed.Reg. at 13,083, and ATOFINA's petition, if granted, would have permitted their use as substitutes for HCFC-141b as well. EPA issued a notice of proposed rulemaking, in which it proposed to revisit the status of HCFC-141b, HCFC-22, HCFC-124, and HCFC-142b, and to list all four as unacceptable in all foam applications, both as substitutes for CFCs and for each other. 65 Fed.Reg. at 42,656. The proposed rule, inter alia, had the effect of denying ATOFINA's petition to allow new users to use HCFC-22, HCFC-124 and HCFC-142b as substitutes for HCFC-141b, but also swept more broadly by effectively proposing to disallow all existing use of the four hydrochlorofluorocarbons. EPA explained that it was proposing to list the chemicals as unacceptable because they had significant ozone-depleting potential and "there are technically feasible zero-ODP [ozone-depleting-potential] substitutes available." Id. at 42,657-58.

EPA received numerous comments on the proposed rule, many of which focused on the economic impact, particularly to small businesses, of comprehensively de-listing the four chemicals at issue; the bulk of these related to the economic hardship that existing users of HCFC-22 and HCFC-142b would face from the proposed ban. After the comment period closed, EPA obtained additional information through new comments, meetings with industry representatives, and a consultant it hired to gather additional information on the feasibility of alternatives to HCFC-141b in certain sectors. EPA's consultant's report in particular expressed doubts about the ability of existing approved alternatives to HCFC-141b to function as viable substitutes across all specific foam end-uses, for economic reasons, such as the cost of HFC-245fa and...