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Arkema, Inc. v. EPA

Citation: 40 ELR 20232
No. No. 09-1318, (D.C. Cir., 08/27/2010)

The D.C. Circuit remanded an EPA rule that retroactively altered allowances for controlling the production, import, and export of hydrochlorofluorocarbons that had been allowed under prior regulations. A 2003 rule allowed both inter-pollutant and intercompany transfers of allowances, but in the 2010 rule, EPA chose to honor only intercompany transfers of baseline allowances and to disallow permanent baseline changes resulting from inter-pollutant trades. EPA's reasons for refusing to recognize inter-pollutant transfers may shield the Agency's prospective application of the final rule from an arbitrary and capricious challenge, but the rule has an impermissibly retroactive effect. The rule is a successive iteration in a long-running regulatory regime, and EPA's refusal to include inter-pollutant transfers in baseline allowances undoes what the Agency had, in practice, approved under the 2003 rule. The court therefore vacated the rule insofar as it operates retroactively.