Honeywell International, Inc. v. EPA

The D.C. Circuit rejected a challenge from two manufacturing companies concerning EPA’s approval of transfers of allowances for production and use of hydrochlorofluorocarbons (HCFCs) by competitor companies under a federal cap-and-trade program. HCFCs are ozone depleting gases that also contribute to climate change. EPA’s allowance system caps overall production and consumption of HCFCs and establishes company-by-company baselines for two HCFCs (HCFC-22 and HCFC-142b) based on their historical usage. Allowances can be transferred between pollutants within the same company or between companies for the same pollutant. In 2008, EPA approved the transfers of allowances by competitors of Honeywell and DuPont, which served to increase the competitor companies’ baseline allowances under the trading program and to reduce the market share and allowances for Honeywell and DuPont. In August 2010, the D.C. Circuit held that EPA must honor the transactions when setting new baseline allowances of HCFCs for companies participating in the program. In the instant case, the D.C. Circuit denied the companies' challenge, holding that it must abide by its August 2010 decision.