```

[Federal Register Volume 79, Number 208 (Tuesday, October 28, 2014)]
[Rules and Regulations]
[Pages 64253-64290]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2014-25374]

[[Page 64253]]

Vol. 79

Tuesday,

No. 208

October 28, 2014

Part II

Environmental Protection Agency

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40 CFR Part 82

Protection of Stratospheric Ozone: Adjustments to the Allowance System 
for Controlling HCFC Production, Import and Export, 2015-2019; Rule

Federal Register / Vol. 79 , No. 208 / Tuesday, October 28, 2014 / 
Rules and Regulations

[[Page 64254]]

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ENVIRONMENTAL PROTECTION AGENCY

40 CFR Part 82

[EPA-HQ-OAR-2013-0263; FRL-9917-98-OAR]
RIN 2060-AR04

Protection of Stratospheric Ozone: Adjustments to the Allowance 
System for Controlling HCFC Production, Import and Export, 2015-2019

AGENCY: Environmental Protection Agency.

ACTION: Final rule.

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SUMMARY: The Environmental Protection Agency (EPA) is adjusting the 
allowance system for the consumption and production of 
hydrochlorofluorocarbons (HCFCs). Under the Clean Air Act, EPA is 
required to phase out production and import of these chemicals in 
accordance with the Montreal Protocol on Substances that Deplete the 
Ozone Layer (Protocol). Under the Protocol, total United States HCFC 
production and consumption is capped, and will be completely phased out 
by 2030. Today's action announces the availability of annual production 
and consumption allowances for HCFC-22, HCFC-142b, HCFC-123, and HCFC-
124 for 2015-2019. This rule also makes minor changes to the 
reclamation regulations, updates the use restrictions to account for a 
recent amendment to the Clean Air Act, and finalizes a de minimis 
exemption to the use restrictions for certain uses of HCFC-225ca/cb and 
HCFC-124.

DATES: This final rule is effective on January 1, 2015.

ADDRESSES: EPA has established a docket for this action under Docket ID 
No. EPA-HQ-OAR-2013-0263. All documents in the docket are listed on the 
www.regulations.gov Web site. Although listed in the index, some 
information is not publicly available, e.g., CBI or other information 
whose disclosure is restricted by statute. Certain other material, such 
as copyrighted material, is not placed on the Internet and will be 
publicly available only in hard copy at: EPA Docket Center, WJC West 
Building, Room 3334, 1301 Constitution Avenue NW., Washington, DC 
20004. The Public Reading Room is open from 8:30 a.m. to 4:30 p.m., 
Monday through Friday, excluding legal holidays. The telephone number 
for the Public Reading Room is (202) 566-1744, and the telephone number 
for the Air and Radiation Docket is (202) 566-1742.

FOR FURTHER INFORMATION CONTACT: Elizabeth Whiteley by telephone at 
(202) 343-9310 or by email at whiteley.elizabeth@epa.gov, or by mail at 
United States Environmental Protection Agency, Stratospheric Protection 
Division, Stratospheric Program Implementation Branch (6205J), 1200 
Pennsylvania Ave. NW., Washington, DC 20460. You may also visit the Web 
site of EPA's Stratospheric Protection Division at www.epa.gov/ozone/strathome.html for further information about EPA's stratospheric ozone 
protection regulations, the science of ozone layer depletion, and 
related topics.

SUPPLEMENTARY INFORMATION: 
    Acronyms and Abbreviations. The following acronyms and 
abbreviations are used in this document.

ANPRM--Advance Notice of Proposed Rulemaking
CAA--Clean Air Act
CAAA--Clean Air Act Amendments of 1990
CFC--Chlorofluorocarbon
CFR--Code of Federal Regulations
EPA--Environmental Protection Agency
FR--Federal Register
GWP--Global Warming Potential
HCFC--Hydrochlorofluorocarbon
HVACR--Heating, Ventilating, Air Conditioning and Refrigeration
Montreal Protocol or Protocol--Montreal Protocol on Substances that 
Deplete the Ozone Layer
MOP--Meeting of the Parties
MT--Metric Ton
ODP--Ozone Depletion Potential
ODS--Ozone-Depleting Substance(s)
Party--States and regional economic integration organizations that 
have consented to be bound by the Montreal Protocol on Substances 
that Deplete the Ozone Layer
RACA--Request for Additional Consumption Allowances

    Organization of This Document. The following outline is provided to 
aid in locating information in this preamble.

I. General Information
    A. Does this action apply to me?
II. Background
    A. How does the Montreal Protocol phase out HCFCs?
    B. How do the Clean Air Act and EPA regulations phase out HCFCs?
    C. What sections of the Clean Air Act apply to this rulemaking?
III. Summary of This Final Action
IV. Clean Air Act Requirements That Begin in 2015
    A. What are the existing HCFC product labeling requirements at 
40 CFR Part 82 subpart E?
    1. Minor Modifications to Existing Regulatory Text
    2. Comments on the Existing Labeling Requirements and EPA's 
Response
    B. What actions is EPA taking regarding the use and sales 
restriction in Clean Air Act section 605(a)?
    1. Treatment of Existing Inventory of HCFC-225ca and HCFC-225cb 
for Solvent Uses
    2. Treatment of Existing Inventory of HCFC-124 for Sterilant 
Uses
    3. Update to Regulations to Account for Recent Changes to 
Section 605(a)
    C. Which Montreal Protocol requirements take effect in 2015 and 
2020?
V. HCFC Baselines for 2015-2019
VI. HCFC Allowance Allocation Amounts for 2015-2019
    A. What is the 2015-2019 HCFC-22 consumption allocation?
    1. Summary of Final HCFC-22 Consumption Allocation
    2. EPA's Collection, Consideration and Use of Aggregate HCFC-22 
Inventory Data
    3. Explanation of the Agency's Final Decision and Response to 
Comments
    4. Timing of the Final Rule
    B. What is the 2015-2019 HCFC-22 production allocation?
    C. What is the 2015-2019 HCFC-142b consumption and production 
allocation?
    D. What is the 2015-2019 HCFC-123 consumption allocation?
    E. What is the 2015-2019 HCFC-124 consumption and production 
allocation?
    F. How is EPA addressing the end of the HCFC-141b Exemption 
Program?
    G. Other HCFCs that Are Class II Controlled Substances
VII. Other Adjustments to the HCFC Allowance System
    A. What is EPA's response to comments on dry-shipped HCFC-22 
condensing units?
    B. How is EPA treating requests for additional consumption 
allowances in 2020 and beyond?
    C. What is EPA's response to comments on maximizing compliance 
with HCFC regulations?
VIII. Modifications to Section 608 Regulations
    A. Overview of Current Reclamation Standards
    B. Benefits of Reclamation
    C. What regulatory changes is EPA finalizing under CAA section 
608?
    1. Consideration of AHRI 700-2012 Standards
    2. Notification to EPA of Changes to Business Management, 
Location, or Contact Information
    3. Reporting and Recordkeeping Requirements
    4. Other Section 608 Reclamation Program Options
    5. Other Issues Related to Section 608's National Recycling and 
Emissions Reduction Program
IX. Statutory and Executive Order Reviews
    A. Executive Order 12866: Regulatory Planning and Review and 
Executive Order 13563: Improving Regulation and Regulatory Review
    B. Paperwork Reduction Act
    C. Regulatory Flexibility Act (RFA)
    D. Unfunded Mandates Reform Act
    E. Executive Order 13132: Federalism
    F. Executive Order 13175: Consultation and Coordination With 
Indian Tribal Governments
    G. Executive Order 13045: Protection of Children From 
Environmental Health and Safety Risks

[[Page 64255]]

    H. Executive Order 13211: Actions That Significantly Affect 
Energy Supply, Distribution, or Use
    I. National Technology Transfer and Advancement Act
    J. Executive Order 12898: Federal Actions To Address 
Environmental Justice in Minority Populations and Low-Income 
Populations
    K. Congressional Review Act

I. General Information

A. Does this action apply to me?

    This rule may affect the following categories:

--Industrial Gas Manufacturing entities (NAICS code 325120), including 
fluorinated hydrocarbon gas manufacturers and reclaimers;
--Other Chemical and Allied Products Merchant Wholesalers (NAICS code 
424690), including chemical gases and compressed gases merchant 
wholesalers;
--Air-Conditioning and Warm Air Heating Equipment and Commercial and 
Industrial Refrigeration Equipment Manufacturing entities (NAICS code 
333415), including air-conditioning equipment and commercial and 
industrial refrigeration equipment manufacturers;
--Air-Conditioning Equipment and Supplies Merchant Wholesalers (NAICS 
code 423730), including air-conditioning (condensing unit, compressors) 
merchant wholesalers;
--Electrical and Electronic Appliance, Television, and Radio Set 
Merchant Wholesalers (NAICS code 423620), including air-conditioning 
(room units) merchant wholesalers;
--Plumbing, Heating, and Air-Conditioning Contractors (NAICS code 
238220), including Central air-conditioning system and commercial 
refrigeration installation, HVACR contractors;
--Refrigerant reclaimers, manufacturers of recovery/recycling 
equipment, and refrigerant recovery/recycling equipment testing 
organizations;
--Fire Extinguisher Chemical Preparations Manufacturing (325998); 
Portable Fire Extinguishers Manufacturing (339999); Other Aircraft 
Parts and Auxiliary Equipment Manufacturing (336413);
--Surgical Appliance and Supplies Manufacturing (339113); Ophthalmic 
goods manufacturing (339115); General Medical and Surgical Hospitals 
(622110); Specialty (Except Psychiatric and Substance Abuse) Hospitals 
(622310);
--Entities Performing Solvent Cleaning, (including but not necessarily 
limited to NAICS subsector codes 332 and 335).

    This list is not intended to be exhaustive, but rather provides a 
guide for readers regarding the types of entities that could 
potentially be regulated by this action. Other types of entities not 
listed in this table could also be affected. To determine whether your 
facility, company, business organization, or other entity is regulated 
by this action, you should carefully examine these regulations. If you 
have questions regarding the applicability of this action to a 
particular entity, consult the person listed in the FOR FURTHER 
INFORMATION CONTACT section.

II. Background

A. How does the Montreal Protocol phase out HCFCs?

    The Montreal Protocol on Substances that Deplete the Ozone Layer is 
the international agreement aimed at reducing and eventually 
eliminating the production and consumption of ozone-depleting 
substances (ODS). The United States was one of the original signatories 
to the 1987 Montreal Protocol and ratified the Protocol in 1988. 
Congress then enacted, and President George H.W. Bush signed into law, 
the Clean Air Act Amendments of 1990 (CAAA) to ensure that the United 
States could satisfy its obligations under the Montreal Protocol. Title 
VI of the Act (codified as 42 U.S.C. Chapter 85, Subchapter VI), titled 
Stratospheric Ozone Protection, includes restrictions on production, 
consumption, and use of ODS that are subject to acceleration if ``the 
Montreal Protocol is modified to include a schedule to control or 
reduce production, consumption, or use * * * more rapidly than the 
applicable schedule'' prescribed by the statute (see Clean Air Act 
section 606(a)(3)). Both the Montreal Protocol and the Clean Air Act 
(CAA) define consumption as production plus imports minus exports (see 
CAA section 601(6)).
    In 1990, as part of the London Amendment to the Montreal Protocol, 
the Parties identified HCFCs as ``transitional substances'' to serve as 
temporary, lower ozone depletion potential (ODP) substitutes for 
chlorofluorocarbons (CFCs) and other ODS. EPA similarly viewed HCFCs as 
``important interim substitutes that will allow for the earliest 
possible phaseout of CFCs and other class I substances.\1\'' (58 FR 
65026, December 10, 1993). In 1992, through the Copenhagen Amendment to 
the Montreal Protocol, the Parties created a detailed phaseout schedule 
for HCFCs, beginning with a cap on consumption for developed countries 
not operating under Article 5 of the Montreal Protocol (non-Article 5 
Parties), a schedule to which the United States adheres. The 
consumption cap for each non-Article 5 Party was set at 3.1 percent 
(later tightened to 2.8 percent) of a Party's CFC consumption in 1989, 
plus a Party's consumption of HCFCs in 1989 (weighted on an ODP basis). 
Based on this formula, the HCFC consumption cap for the United States 
was set at 15,240 ODP-weighted metric tons, effective January 1, 1996. 
This cap is the United States HCFC consumption baseline.
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    \1\ Class I refers to the controlled substances listed in 
appendix A to 40 CFR part 82 subpart A. Class II refers to the 
controlled substances listed in appendix B to 40 CFR part 82 subpart 
A; HCFCs are class II substances.
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    The 1992 Copenhagen Amendment created a schedule with graduated 
reductions and eventual phaseout of HCFC consumption (Copenhagen, 23-25 
November, 1992, Decision IV/4). The schedule for non-Article 5 Parties 
initially called for tighter consumption caps based on a Party's 
baseline, as follows: An annual consumption cap equal to 65 percent of 
baseline in 2004, 35 percent of baseline in 2010, 10 percent of 
baseline in 2015, and 0.5 percent of baseline in 2020, with a complete 
HCFC phaseout by 2030.
    The Copenhagen Amendment did not cap HCFC production. In 1999, the 
Parties created a cap on production for non-Article 5 Parties through 
an amendment to the Montreal Protocol agreed to at the Eleventh Meeting 
of the Parties (Beijing, 29 November-3 December 1999, Decision XI/5). 
The cap on production was set at the average of: (a) 1989 HCFC 
production plus 2.8 percent of 1989 CFC production, and (b) 1989 HCFC 
consumption plus 2.8 percent of 1989 CFC consumption. Based on this 
formula, the HCFC production cap for the United States was set at 
15,537 ODP-weighted metric tons (MT), effective January 1, 2004. This 
cap is the United States HCFC production baseline.
    To further protect human health and the environment, the Parties to 
the Montreal Protocol adjusted the phaseout schedule for HCFCs at the 
19th Meeting of the Parties in September 2007. As a result of the 
Montreal Adjustment (reflected in Decision XIX/6),\2\ the United States 
and other non-Article 5 parties were obligated to reduce HCFC 
production and consumption to 25 percent of baseline by 2010, rather 
than 35 percent as previously required. The other milestones remain the 
same. The

[[Page 64256]]

adjustment also resulted in a phaseout schedule for HCFC production 
that parallels the consumption phaseout schedule. All production and 
consumption for non-Article 5 Parties must be phased out by 2030.
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    \2\ The adjustment entered into force and became binding for all 
Parties on May 14, 2008.
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    Decision XIX/6 also adjusted the provisions for Parties operating 
under paragraph 1 of Article 5, considered as developing countries 
under the Protocol: (1) To set HCFC production and consumption 
baselines based on the average 2009-2010 production and consumption, 
respectively; (2) to freeze HCFC production and consumption at those 
baselines in 2013; and (3) to add stepwise reductions to 90 percent of 
baseline by 2015, 65 percent by 2020, 32.5 percent by 2025, and an 
average of 2.5 percent for 2030-2039. All production and consumption 
for Article 5 Parties must be phased out by 2040.
    In addition, Decision XIX/6 adjusted Article 2F to allow non-
Article 5 Parties to produce ``up to 10 percent of baseline levels'' 
for export to Article 5 countries ``in order to satisfy basic domestic 
needs'' until 2020. Paragraph 14 of Decision XIX/6 notes that no later 
than 2015, the Parties would consider ``further reduction of production 
for basic domestic needs'' in 2020 and beyond. Paragraph 3 of Decision 
XIX/6 contains the accelerated phaseout schedule, allowing consumption 
and production up to 0.5 percent of baseline from 2020-2030 for 
servicing needs only. Pursuant to paragraph 13 of Decision XIX/6, the 
Parties will review in 2015 and 2025, respectively, the need for the 
``servicing tails'' for Article 5 and non-Article 5 countries. EPA uses 
the term ``servicing tail'' to refer to an amount of HCFCs used to 
service existing equipment, such as certain types of air-conditioning 
and refrigeration appliances.

B. How do the Clean Air Act and EPA regulations phase out HCFCs?

    The Clean Air Act schedules for the phaseout of HCFC production and 
consumption, and for the restriction of HCFC use, appear in section 
605. EPA has used its authority under section 606 to accelerate those 
schedules. EPA regulations that apply to production and consumption of 
HCFCs are designed to enable the United States to meet the phaseout 
schedule under the Montreal Protocol.
    The United States has chosen to implement the Montreal Protocol 
phaseout schedule on a chemical-by-chemical basis. In 1992, 
environmental and industry groups petitioned EPA to implement the 
required phaseout by eliminating the HCFCs with the highest ozone 
depletion potential first. Based on data available at that time, EPA 
believed the United States could meet, and possibly exceed, the 
required Montreal Protocol reductions through a chemical-by-chemical 
phaseout that employed a ``worst-first'' approach. In 1993, as 
authorized by section 606 of the CAA, EPA established a phaseout 
schedule that eliminated HCFC-141b first and would greatly restrict 
HCFC-142b and HCFC-22 next, followed by restrictions on all other HCFCs 
and ultimately a complete phaseout (58 FR 15014, March 18, 1993, and 58 
FR 65018, December 10, 1993).
    On January 21, 2003, EPA promulgated regulations (68 FR 2820, 
January 21, 2003, ``2003-2009 Rule'') to ensure compliance with the 
first reduction milestone in the HCFC phaseout: The requirement that by 
January 1, 2004, the United States reduce HCFC consumption to 65 
percent of baseline and freeze HCFC production. In the 2003-2009 Rule, 
EPA established chemical-specific consumption and production baselines 
for HCFC-141b, HCFC-22, and HCFC-142b for the initial regulatory period 
ending December 31, 2009. Section 601(2) states that EPA may select ``a 
representative calendar year'' to serve as the company baseline for 
HCFCs. In the 2003-2009 Rule, EPA concluded that because the entities 
eligible for allowances had differing production and import histories, 
no single year was representative for all companies. Therefore, EPA 
assigned an individual consumption baseline year to each company by 
selecting its highest ODP-weighted consumption year from 1994 through 
1997. EPA assigned individual production baseline years in the same 
manner. EPA also provided for new entrants that began importing after 
1997 but before April 5, 1999, the date the advanced notice of proposed 
rulemaking (ANPRM) was published. EPA took this action to ensure that 
small businesses that might not have been aware of the impending 
rulemaking would be able to continue in the HCFC market.
    In the United States, an allowance is the unit of measure that 
controls production and consumption of ODS. EPA allocates calendar-year 
allowances equal to a percentage of the baseline--they are valid from 
January 1 to December 31 of that control period. A calendar-year 
allowance represents the privilege granted to a company to produce or 
import one kilogram (not ODP-weighted) of the specific substance. 
``Production allowance'' and ``consumption allowance'' are defined at 
40 CFR 82.3. To produce an HCFC for which EPA has issued allowances, an 
allowance holder must expend both production and consumption 
allowances. To import an HCFC for which EPA has issued allowances, an 
allowance holder must expend only consumption allowances. An allowance 
holder exporting HCFCs for which it has expended consumption allowances 
may request a refund of those consumption allowances by submitting 
proper documentation and receiving approval from EPA.
    The 2003-2009 Rule set production and consumption baselines for the 
2003-2009 regulatory period, using each company's highest ``production 
year'' or ``consumption year.'' The 2003-2009 Rule prohibited 
production and import of those HCFCs that were subject to the allowance 
system without the appropriate allowances (40 CFR 82.15(a),(b)). EPA 
set the maximum production and consumption of each HCFC by issuing 
allowances that are valid for a single calendar year, equal to a 
certain percentage of each company's baseline.\3\ It completely phased 
out the production and import of HCFC-141b by granting zero percent of 
baseline for production and consumption in the table at 40 CFR 82.16. 
EPA created a petition process to allow applicants to request small 
amounts of HCFC-141b beyond the phaseout. For production and 
consumption of HCFC-22 and HCFC-142b in 2003 through 2009, EPA 
allocated allowances at 100 percent of baseline. The complete phaseout 
of HCFC-141b, the allocations for HCFC-22 and HCFC-142b, combined with 
projections for consumption of all other HCFCs, remained below the 2004 
cap of 65 percent of the United States baseline.
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    \3\ The process for assigning consumption baseline percentages 
works as follows: First, all the company-specific baselines listed 
in the tables at 40 CFR 82.19 are added to determine the aggregate 
consumption baseline. Second, EPA determines how many consumption 
allowances to allocate for a given year and divides that amount by 
the aggregate baseline. The resulting percentage listed in the table 
at section 82.16 becomes what each company is allowed to consume in 
a given control period. For example, a company with 100,000 kg of 
HCFC-22 consumption baseline allowances would multiply that number 
by the percentage allowed in a given year (for example, 25 percent) 
to determine its calendar-year consumption allowance is 25,000 kg. 
EPA uses the same process to determine production baseline 
percentages.
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    Since EPA is implementing the phaseout on a chemical-by-chemical 
basis, it allocates and tracks production and consumption allowances on 
a kilogram basis for each chemical. Upon EPA approval, an allowance 
holder may transfer calendar-year allowances of one type of HCFC for 
calendar-year allowances of another type of HCFC, with transactions 
weighted according to the ODP of the chemicals involved.

[[Page 64257]]

Pursuant to section 607 of the CAA, EPA applies an offset to each HCFC 
transfer by deducting 0.1 percent from the transferor's allowance 
balance. The offset benefits the ozone layer since it ``results in 
greater total reductions in the production in each year of * * * class 
II substances than would occur in that year in the absence of such 
transactions'' (see CAA section 607(a)).
    The 2003-2009 Rule announced that EPA would allocate allowances for 
the 2010-2014 regulatory period in a subsequent action and that those 
allowances would be lower than for 2003-2009, consistent with the next 
stepwise reduction for HCFCs under the Montreal Protocol. EPA 
subsequently monitored the market to estimate servicing needs and 
market adjustments in the use of HCFCs, including HCFCs for which EPA 
had not established baselines in the 2003-2009 Rule. In the 2010-2014 
Rule (74 FR 66412, December 15, 2009), EPA issued production and import 
allowances for HCFC-22, HCFC-142b, and other HCFCs not previously 
included in the allowance system, for the 2010-2014 control periods.
    In the 2010-2014 Rule, EPA estimated the need for HCFC-22 during 
the 2010-2014 regulatory period and the percentage of that need for 
which it was appropriate to allocate allowances. EPA decided that the 
percentage of the estimated need allocated in the form of allowances 
should not remain constant from year to year, but rather should decline 
on an annual basis. For 2010, EPA allocated HCFC-22 allowances equal to 
80 percent of the estimated need, concluding that reused, recycled, and 
reclaimed material could meet the remaining 20 percent. The percentage 
of estimated need for which there was no allocation, and that would 
therefore need to be met through recycling and reclamation, rose from 
20 percent in 2010 to 29 percent in 2014. The intent of this approach 
was to foster reclamation and to ensure that the United States could 
meet the 2015 stepdown under the Montreal Protocol.
    However, part of the 2010-2014 Rule was vacated in an August 27, 
2010, decision issued by the United States Court of Appeals for the 
District of Columbia Circuit (Court) in Arkema v. EPA (618 F.3d 1, D.C. 
Cir. 2010). Certain allowance holders affected by the 2010-2014 Rule 
contended that the rule was impermissibly retroactive because in 
setting the baselines for the new regulatory period, EPA did not take 
into account certain inter-pollutant baseline transfers that 
petitioners had performed during the prior regulatory period. 
Accounting for these transfers in the 2010-2014 Rule and applying the 
same methodology would have resulted in different baselines and 
calendar-year allowances for HCFC-22 and HCFC-142b.
    The Court agreed with petitioners that ``the [2010-2014] Final Rule 
unacceptably alters transactions the EPA approved under the 2003 
Rule,'' (Arkema v. EPA, 618 F.3d at 3). The Court vacated the rule in 
part, ``insofar as it operates retroactively,'' and remanded to EPA 
``for prompt resolution,'' (618 F.3d at 10). EPA's petition for 
rehearing was denied on January 21, 2011. EPA addressed the Court's 
partial vacatur as it related to 2011 in an August 5, 2011, interim 
final rule, ``Protection of Stratospheric Ozone: Adjustments to the 
Allowance System for Controlling HCFC Production, Import, and Export,'' 
(76 FR 47451, August 5, 2011, ``2011 Interim Final Rule''). In that 
rule, EPA established new baselines that (1) credited the 2008 inter-
pollutant trades at issue in Arkema v. EPA based on the Court's 
decision; (2) reflected inter-company, single-pollutant baseline 
transfers that occurred since the 2010-2014 Rule was signed; (3) 
allocated HCFC-22 and HCFC-142b allowances for 2011; (4) clarified 
EPA's policy on all future inter-pollutant transfers; and (5) updated 
company names. The HCFC-22 and HCFC-142b use restrictions and the 
allocation for other controlled HCFCs were not affected by the partial 
vacatur.
    To complete its response to the Court's decision, EPA published a 
final rule with the same name on April 3, 2013, allocating HCFC-142b 
and HCFC-22 allowances for 2012-2014 (78 FR 20004, ``2012-2014 Rule''). 
That rule reduced HCFC-22 allowances in 2012-2014 by almost 30 percent 
relative to the 2010-2014 Rule in order to incentivize proper handling 
and recovery of HCFC-22 and encourage transition to non-ODS 
alternatives.
    On December 24, 2013, EPA published a proposed rule that would 
issue allowances for HCFC-22, HCFC-142b, HCFC-123, and HCFC-124 for the 
2015-2019 regulatory period (78 FR 78071, ``2015-2019 Proposed Rule''). 
Today's action finalizes the HCFC allowance allocations for those years 
based on the options presented in the 2015-2019 Proposed Rule and 
comments submitted to EPA. For more information on the history of the 
HCFC phaseout and applicable rulemakings, see: http://www.epa.gov/ozone/title6/phaseout/classtwo.html.

C. What sections of the Clean Air Act apply to this rulemaking?

    Several sections of the CAA \4\ apply to this rulemaking. Section 
602 states that EPA shall publish an initial list of class II 
substances, which is to include the HCFCs specified in the statute as 
well as their isomers. EPA's listing of class II substances appears at 
appendix B to 40 CFR part 82, subpart A.
---------------------------------------------------------------------------

    \4\ The Clean Air Act provisions that address stratospheric 
ozone protection are codified at 42 U.S.C. 7671-7671q.
---------------------------------------------------------------------------

    Section 605 of the CAA phases out production and consumption and 
restricts the use of HCFCs in accordance with the schedule set forth in 
that section. As discussed in the 2010-2014 Rule (74 FR 66416), section 
606 provides EPA authority to set a more stringent phaseout schedule 
based on (1) current scientific information that a more stringent 
schedule may be necessary to protect human health and the environment, 
(2) the availability of substitutes, or (3) to conform to any 
acceleration under the Montreal Protocol. EPA previously set a more 
stringent schedule than the section 605 schedule through a rule 
published December 10, 1993 (58 FR 65018). The 2010-2014 Rule made a 
further adjustment from the section 605 schedule based on the 
acceleration under the Montreal Protocol as agreed to at the Meeting of 
the Parties in September 2007. The more stringent schedule established 
in that rule was unaffected by the decision in Arkema v. EPA and is 
still in effect.
    Section 608 of the CAA, titled National Recycling and Emission 
Reduction Program, requires EPA to establish standards and requirements 
for the use and disposal of class I and class II substances. Those 
requirements must reduce the use and emissions of controlled substances 
to the lowest achievable level, as well as maximize their recapture and 
recycling. Additionally, section 608(c) prohibits any person 
maintaining, servicing, repairing, or disposing of an appliance that 
contains refrigerant from knowingly venting, releasing, or disposing of 
that substance to the environment, regardless of whether the 
refrigerant is an ODS or a substitute. Substitutes are exempted from 
this prohibition only if EPA has determined that venting, releasing, or 
disposing of the substitute does not pose a threat to the environment. 
The full list of substitutes that are exempt from this prohibition can 
be found at 40 CFR section 82.154(a).
    Section 611 of the CAA requires EPA to establish and implement 
labeling

[[Page 64258]]

requirements for containers of, and products containing or manufactured 
with, class I or class II ODS. While containers of class II substances 
(HCFCs) already are subject to labeling requirements, products 
containing or manufactured with class II substances must be labeled 
beginning January 1, 2015. The specific requirements and existing 
regulation implementing those requirements are discussed in Section 
IV.A. of this preamble.
    Finally, section 614 of the CAA describes the relationship of Title 
VI to the Montreal Protocol. Section 614(b) states: ``In the case of 
conflict between any provision of this title and any provision of the 
Montreal Protocol, the more stringent provision shall govern.'' Section 
614 ensures that EPA regulations are in accordance with United States 
obligations under the Montreal Protocol.

III. Summary of This Final Action

    This action amends the existing regulations to implement the next 
major milestone in the HCFC phaseout. As a party to the Montreal 
Protocol, the United States has agreed to decrease HCFC consumption and 
production levels to 10 percent of the U.S. baseline by 2015. In this 
rule, EPA is allocating HCFC allowances starting at approximately five 
percent of the U.S. consumption baseline in 2015, or half of the 
Montreal Protocol cap.
    EPA is issuing allowances for four HCFCs, implementing a narrow de 
minimis exemption for use of existing inventory of HCFC-225ca/cb \5\ 
and HCFC-124, and is updating regulations to account for a recent 
change to the Clean Air Act. In addition, EPA is making minor changes 
to the regulations promulgated under section 608 of the Act. These 
final agency actions are summarized below:
---------------------------------------------------------------------------

    \5\ Throughout this preamble, the term `HCFC-225ca/cb' refers to 
either the HCFC-225ca or HCFC-225cb isomers, as well as blends 
containing both isomers.
---------------------------------------------------------------------------

    --HCFC-22: EPA is finalizing the lowest proposed 5-year linear 
approach of HCFC-22 consumption allowances. The consumption allocation 
in 2015 is approximately 10,000 MT, decreasing by approximately 2,000 
MT per year until it is phased out in 2020. EPA is also providing 
approximately 28,000 MT of HCFC-22 production allowances each year. 
Under existing regulations, HCFC-22 production and consumption are zero 
in 2020. The agency considered market information, comments, regulatory 
and statutory requirements and its long-standing policy objectives as 
it weighed the merits of the proposed approaches. The final consumption 
allocation meets the 2020 phaseout deadline, and should help achieve a 
smooth transition to more environmentally-friendly alternatives, while 
also providing regulatory certainty to consumers and industry.
    --HCFC-123: EPA is finalizing its preferred consumption allocation 
of approximately 2,000 MT per year through 2019. EPA is also finalizing 
its proposal to align its regulations with the recent amendment to CAA 
section 605(a) and allow for continued use of HCFC-123 in 
nonresidential streaming fire suppression applications.
    --HCFC-124: EPA is finalizing its preferred production and 
consumption allocation of 200 MT per year through 2019.
    --HCFC-142b: EPA is finalizing its preferred production and 
consumption allocation of 35 MT in 2015, decreasing by 5 MT per year 
through 2019. Under existing regulations HCFC-142b allowances for 
production and consumption are zero in 2020.
    --HCFC-225ca/cb: EPA is allocating zero percent of the baseline for 
production and consumption of HCFC-225ca or HCFC-225cb effective 
January 1, 2015.
    --De minimis use exemption: EPA is finalizing its proposed de 
minimis exemption allowing any person with HCFC-225ca/cb in inventory 
prior to January 1, 2015, to use that material as a solvent. EPA is 
also finalizing a de minimis exemption allowing any person with HCFC-
124 in inventory prior to January 1, 2015, to use that material as a 
sterilant for biological indicators.
    --CAA Section 608 Reclamation Requirements: EPA is finalizing its 
proposal (1) to require a reclaimer to notify EPA when there is a 
change in business management, location, or contact information and (2) 
to require disaggregated information for all reclaimed refrigerants as 
part of annual reporting to EPA. The agency is not finalizing its 
proposed incorporation by reference of AHRI 700-2012 at this time due 
to the ongoing review of the standard by ASHRAE and AHRI.

IV. Clean Air Act Requirements That Begin in 2015

A. What are the existing HCFC product labeling requirements at 40 CFR 
part 82 subpart E?

    Section 611 of the CAA requires EPA to establish and implement 
labeling requirements for containers of, and products containing or 
manufactured with, class I or class II ODS. In 1993, EPA published 
regulations on these labeling requirements (58 FR 8136, February 11, 
1993, Labeling Rule), codified at 40 CFR part 82 subpart E. Currently, 
these requirements only apply to containers containing class I or II 
ODS and products containing or manufactured with class I ODS. Products 
containing or manufactured with class II substances will be subject to 
these requirements beginning on January 1, 2015.
    In 2015, containers containing, products containing, and products 
manufactured with a class I or class II substance must bear a product 
label stating: ``Warning: Contains [or Manufactured with, if 
applicable] [insert name of class I or II substance], a substance which 
harms public health and environment by destroying ozone in the upper 
atmosphere'' (40 CFR 82.106). The wording of the label is specified 
verbatim in CAA section 611.
    EPA defines a ``product containing'' a class II substance as a 
product including, but not limited to, containers, vessels, or pieces 
of equipment, that physically holds a controlled substance at the point 
of sale to the ultimate consumer which remains within the product, (40 
CFR 82.104). Two examples of a ``product containing'' a class II 
substance that would require a label are (1) portable fire 
extinguishers containing an HCFC and (2) appliances that incorporate 
closed-cell foam blown with an HCFC. Foams are plastics (such as 
polyurethane or polystyrene) that are manufactured using blowing agents 
to create bubbles or cells in the material's structure. Closed-cell 
foam physically holds blowing agent within the cells. While HCFCs are 
no longer used as blowing agents in the United States, they are used in 
other countries from which the United States may import products. In 
the case of portable fire extinguishers, the fire suppression agent is 
contained in a reservoir within the extinguisher and released by the 
user when needed.
    The definition of a product ``manufactured with'' a class II 
substance is a product for which the manufacturer used a class II 
substance directly in that product's manufacturing, but where the 
product itself does not contain more than trace quantities of the ODS 
at the point of introduction into interstate commerce. A product 
``manufactured with'' a class II substance would include electronics 
cleaned with an HCFC solvent or open cell foam blown with an HCFC. Open 
cell foam is different from closed cell foam in that it was 
manufactured with a blowing agent, but no longer contains the blowing 
agent because the cells or bubbles in open cell foam are open to the 
surrounding environment. Since

[[Page 64259]]

HCFCs are no longer used as foam blowing agents in the United States, 
and the Nonessential Products Ban prohibits the sale or distribution of 
open cell plastic foam products made with HCFCs (40 CFR 82.70(c)), EPA 
expects the requirement for a ``manufactured with'' label should not be 
relevant to most open cell foam products.
    Final products that incorporate another product that was 
``manufactured with'' a class I or class II ODS do not have to bear a 
label so long as the manufacturer of the final product is distinct from 
the manufacturer of the product ``manufactured with'' the ODS (40 CFR 
82.116). By contrast, final products that incorporate ``products 
containing'' a class I or II ODS will require a warning label, even if 
the final product manufacturer purchases the ``product containing'' the 
ODS from another manufacturer or supplier (40 CFR 82.114).
1. Minor Modifications to Existing Regulatory Text
    The agency proposed and is now finalizing three minor edits to 40 
CFR subpart E to clarify the intent of the regulatory language with 
respect to class II substances. EPA received no adverse comments 
regarding these minor clarifying revisions.
    The first two clarifications are to replace ``class I substance'' 
with ``controlled substance.'' While the emphasis in 1993 was on class 
I substances, EPA is now removing any ambiguity with respect to class 
II substances by reconciling inconsistent terminology, specifically at 
82.110(c) and 82.112(d). The text of 40 CFR 82.110(c) clearly applies 
to both class I and class II products, so EPA is revising the title of 
this paragraph to make it consistent with the existing operative text.
    Similarly, 82.112(d) includes the more general term ``controlled 
substances'' in the title, but not the existing operative text. Through 
today's action, EPA is replacing ``class I substance'' with 
``controlled substance'' to clarify that this narrow exemption to the 
labeling requirements also applies to class II products in the same way 
it applied to class I products.
    Third, EPA proposed to correct a citation in 82.122(a)(1). The 
first sentence incorrectly refers to 82.106(b)(2) as the exemption for 
certain methyl chloroform uses; this exemption is actually provided for 
in 82.106(b)(4). EPA is revising the text to reference the correct 
paragraph. EPA also notes that this exemption ended May 15, 1994.
2. Comments on the Existing Labeling Requirements and EPA's Response
    EPA created a preliminary list of products that might be affected 
by these requirements in 2015. This list, along with guidance for 
manufacturers and importers of potentially affected products, is titled 
Summary of HCFC Product Labeling Requirements & Potentially Affected 
Products (Labeling Memo) and can be found in the docket for this 
rulemaking. EPA sought comment on whether this list is accurate and 
complete, and where products made with or containing HCFCs are 
manufactured. The agency sought comment on which products have mainly 
switched to non-ODS alternatives so it can continue to assist companies 
in determining whether the labeling requirements are likely to apply to 
their products. The agency also sought comment on whether any 
clarification to the regulations at 40 CFR subpart E (82.100-82.124) is 
needed to implement the existing labeling requirement for products 
containing or manufactured with class II substances. EPA received five 
comments regarding the existing labeling requirements implementing CAA 
section 611(c), specifically on the effectiveness and applicability of 
such requirements.
    RMS of Georgia commented that the labeling requirements will not be 
an effective way to increase awareness and ensure compliance because 
EPA does not have an enforcement arm to handle complaints. The Alliance 
does not think the labeling requirements are beneficial, and encourages 
EPA to focus its enforcement efforts towards compliance with 
regulations promulgated under CAA section 608 (40 CFR subpart F). The 
Alliance also commented that it believes the list of products included 
in the docket is complete, and it does not support additional labeling 
of products. In contrast, Carrier commented that EPA should revise the 
labeling requirements to apply to dry-shipped HCFC-123 chillers and 
residential air conditioning condensing units, not just products 
containing or manufactured with HCFCs. American Pacific (AMPAC) 
believes fire extinguishers containing HCFC-123 should not be subject 
to labeling because the ODP of HCFC-123 is very low and it is used as a 
replacement to Halon 1211, which has a very high ODP. The commenter 
also noted that the list of products potentially subject to this 
requirement does include the HCFC Blend B nonresidential fire 
suppressant that it has manufactured since 1994.
    The agency appreciates comments on the effectiveness of the 
labeling requirements. EPA takes enforcement of its regulations 
seriously, and notes that the comment that the agency ``does not have 
an enforcement arm to handle complaints'' is inaccurate. EPA has also 
made an effort to focus its outreach toward the industries most likely 
to be affected by the HCFC product labeling requirement. Applicability 
of this CAA requirement is to all class II products, which includes all 
products that contain or are manufactured with HCFC-123. The labeling 
requirements for ``products containing'' or ``products manufactured 
with'' class II substances in CAA section 611(c) apply January 1, 2015, 
without any action by the Administrator. The commenter asking for an 
exemption for HCFC-containing fire extinguishers did not explain how 
EPA could create an exemption, given that such products are clearly 
``products containing'' class II substances. Similarly, the commenter 
requesting an extension of the labeling requirements did not explain 
how or under what authority EPA could extend those requirements to 
equipment that does not contain an HCFC when introduced into interstate 
commerce. In addition, EPA did not propose to take any such actions.
    Finally, Honeywell commented on labeling requirements for closed 
cell polyurethane insulated refrigerated trailers and containers where 
the foam was blown with HCFC-141b. Honeywell suggests that EPA require, 
or at least offer guidance stating, that the warning label be applied 
to transactional paperwork as well as the actual trailer, container, or 
panels containing the HCFC-blown foam.
    To the extent that these HCFC-141b trailers or containers are 
imported into the U.S. (and therefore introduced into interstate 
commerce), they would require a label. The existing labeling 
requirements allow flexibility in where the label may be placed, 
including on the bill of lading, supplemental printed material, or 
promotional printed material (see 40 CFR 82.108). However, the label 
must be placed where the person purchasing the HCFC-containing product 
(or product manufactured with HCFCs) is likely to read and understand 
the warning statement before purchasing the product. In the preamble to 
the rule that implemented the statutory labeling requirements (58 FR 
8136, February 11, 1993), EPA explained that ``the warning statement 
may appear on a display panel other than the [principal display panel] 
as long as that label can be readily seen and understood by the 
consumer at the time of purchase,'' (58 FR 8152). EPA continues to 
communicate with and offer guidance to companies that must

[[Page 64260]]

determine whether the HCFC labeling requirements apply to their 
products. More background on the labeling requirements, including a 
discussion of the labeling pass-through requirements, can be found in 
the 1993 Labeling Rule.

B. What actions is EPA taking regarding the use and sales restriction 
in Clean Air Act section 605(a)?

    Starting January 1, 2015, section 605(a) of the Clean Air Act 
prohibits the use or introduction into interstate commerce of any class 
II substance that does not meet one of four exceptions. Specifically, 
use or introduction into interstate commerce is allowed only if (1) the 
substance has been used, recovered and recycled; (2) it is entirely 
transformed, except for trace quantities, in the production of other 
chemicals; (3) it is used as a refrigerant in appliances manufactured 
prior to 2020; or (4) it is listed as acceptable for use as a 
nonresidential fire suppression agent in accordance with CAA section 
612(c).\6\ Section 612 is the statutory authority for EPA's Significant 
New Alternatives Policy (SNAP) program, under which the agency reviews 
information on the human health and environmental impacts of 
substitutes for class I and class II substances in certain end-uses and 
lists those substitutes as acceptable, acceptable subject to use 
conditions, acceptable subject to narrowed use limits, or unacceptable 
(see 40 CFR subpart G).
---------------------------------------------------------------------------

    \6\ The fourth exception in this list is a recent change to the 
Clean Air Act, which was included in the National Defense 
Authorization Act for Fiscal Year 2012 [112th Congress, H.R. 1540, 
Title III, Section 320, Fire Suppression Agents].
---------------------------------------------------------------------------

    In the 2010-2014 Rule (74 FR 66412), EPA used its authority under 
section 606 to accelerate the section 605(a) restrictions on use and 
introduction into interstate commerce for HCFC-22 and HCFC-142b \7\ to 
January 1, 2010, five years earlier than the date specified in section 
605(a). Effective January 1, 2010, EPA prohibited the use of virgin 
HCFC-22 and HCFC-142b to manufacture or service new air-conditioning 
and refrigeration appliances. In a separate rule, under the authority 
provided in section 615 of the CAA, EPA also prohibited the sale and 
distribution of appliances and appliance components pre-charged with 
either virgin or used, recovered, and recycled HCFC-22 and HCFC-142b 
(74 FR 66450). For all other HCFCs, including those for which EPA has 
not historically issued allowances, the CAA section 605(a) prohibitions 
and exceptions apply as of January 1, 2015. All HCFCs other than HCFC-
22 and HCFC-142b may continue to be used and sold as refrigerants, but 
only for use in appliances manufactured before 2020.
---------------------------------------------------------------------------

    \7\ EPA also accelerated the restrictions for HCFC-141b in the 
same rulemaking; however, HCFC-141b is not discussed further in this 
section because it is not used for refrigeration purposes.
---------------------------------------------------------------------------

    EPA believes the term ``use'' is ambiguous in the context of 
section 605(a) with respect to potential categories of use that 
Congress did not directly address. Historically, in the context of 
section 605, EPA has focused on use of refrigerants to manufacture and 
service appliances and the section 605(a)(3) exception for servicing 
existing equipment. In 1993, EPA took the section 605(a) use 
restrictions into account in establishing the HCFC chemical-by-chemical 
phaseout. The 1993 Proposed Rule (58 FR 15014, March 18, 1993) 
discusses the acceleration of the use restriction for HCFC-22 and HCFC-
142b from the standpoint of when it would be technologically feasible 
to end the use of these two chemicals in new refrigeration and air-
conditioning equipment. In that rulemaking, EPA did not explore how to 
interpret or apply the term ``use'' in other circumstances. EPA 
considered various interpretations of that term in developing the 2010-
2014 Rule but again focused on refrigerants. In the 2008 Proposed Rule 
(73 FR 78680, December 23, 2008), EPA noted that the three statutory 
exceptions that existed at that time ``inform EPA's understanding of 
the term `use' '' (73 FR 78698). The preamble to the 2010-2014 Rule 
states: ``With regard to HCFCs used as refrigerants, EPA interprets the 
term `use' to mean initially charging as well as maintaining and 
servicing refrigeration equipment'' (74 FR 66437). In regard to non-
refrigerant uses, EPA addressed two manufacturing uses of HCFC-22 
(manufacture of sterilant blends for medical equipment and manufacture 
of thermostatic expansion valves); EPA also concluded that section 
605(a) would ban the primary pre-2010 use of HCFC-142b (foam-blowing). 
At that time, however, EPA was not yet implementing section 605(a) with 
respect to other HCFCs and did not fully explore what ``use'' might 
mean in the context of non-refrigerants.
    In the development of the 2010-2014 Rule, EPA did consider whether 
section 605(a) applies to the operation of products containing HCFCs. 
With regard to refrigeration equipment, EPA concluded: ``the section 
605(a) `use' ban does not apply to a consumer's operation of equipment 
containing HCFCs'' (74 FR 66438). The agency's conclusion was partially 
based on the third exemption to 605(a), for class II substances that 
are used as refrigerants in appliances manufactured before a specified 
date. This exemption indicated ``that Congress intended to permit the 
continued use of previously manufactured appliances.'' EPA also stated 
that for ``products containing HCFCs for non-refrigerant uses. . . . 
EPA interprets the term `use' as relating to the manufacture (and where 
applicable, the service) of those products, not the utilization of 
those products in the hands of the end user'' (74 FR 66437).
    EPA is not revisiting its interpretation of section 605(a) with 
respect to how it interprets ``use'' for products containing HCFCs. For 
purposes of implementing the 2015 use restriction in section 605(a), 
``use'' of a controlled substance includes the manufacture of products 
that contain or are made with HCFCs; however, it would not include use 
of existing products containing HCFCs. (Products that contain class II 
controlled substances other than HCFC-22, HCFC-142b and HCFC-141b may 
still be manufactured before January 1, 2015). As EPA explains in the 
preamble to the 2010-2014 Rule, EPA interprets section 605(a) as 
prohibiting the use of substances, not the use of products. The 
statutory language does not directly address whether use of a product 
containing controlled substances might constitute a prohibited use of 
the substance. However, consistent with its earlier statements, EPA 
does not treat the use of a product containing HCFCs as use of the 
HCFC.
    The agency has a long history of distinguishing between products 
and substances in its ODS phaseout regulations. The definition of 
controlled substances in 40 CFR part 82 subpart A excludes any such 
substance or mixture that is in a manufactured product other than a 
container used for the transportation or storage of the substance or 
mixture. EPA distinguishes between bulk containers of HCFCs and 
products containing HCFCs. The subpart A definition of controlled 
substance clarifies that if a substance needs to be transferred from a 
bulk container to a piece of equipment or another container to realize 
its intended use, it will be treated as a ``substance.'' Examples of 
bulk containers include jugs, drums, and cylinders.
    EPA refers readers to the preamble of the 2010-2014 Rule for two 
other clarifications on how EPA interprets the term ``use'' in the 
context of section 605(a). First, the agency clarified how the 
Nonessential Products Ban (CAA section 610) and the HCFC use 
restriction (CAA section 605(a)) should be interpreted together: ``By 
prohibiting use and introduction into interstate

[[Page 64261]]

commerce of HCFCs as bulk substances, section 605(a) effectively 
prohibits the continued manufacture of any products containing HCFCs 
(which qualifies as a type of `use') unless specifically exempted in 
that section.'' EPA explained that while the section 610(a) 
Nonessential Products Ban exempts certain products, these exempted 
products may not be manufactured after 2014 due to the HCFC use 
restrictions in section 605(a). EPA clarified that ``such products are 
prohibited from continued manufacture, unless manufactured with 
recovered HCFCs'' (74 FR 66439). Second, in the preamble to the 2010-
2014 Rule the agency clarified that ``EPA does not interpret `use' [in 
the context of section 605] to include destruction, recovery for 
disposal, discharge consistent with all other regulatory requirements, 
or other similar actions where the substance is part of a disposal 
chain'' (74 FR 66439).
    Because the use prohibition will apply to a variety of sectors and 
circumstances beginning in 2015, EPA believes it may be helpful to 
define ``use'' in the phaseout regulations (40 CFR part 82 subpart A). 
There is currently a definition of ``use'' in the regulations for the 
SNAP program (40 CFR part 82 subpart G), under which ``use'' means any 
use of a substitute for a class I or class II substance, including but 
not limited to, use in a manufacturing process or product, in 
consumption by the end-user, or in intermediate uses, such as 
formulation or packaging for other subsequent uses (40 CFR 82.172). EPA 
proposed a related definition for purposes of the section 605(a) use 
prohibition. Under this proposed definition, use of a class II 
controlled substance, for the purposes of section 82.15, would include 
use in a manufacturing process, use in manufacturing a product, 
intermediate uses such as formulation or packaging for other subsequent 
uses, and use in maintaining, servicing, or repairing an appliance or 
other piece of equipment. It would also include use of that controlled 
substance when it is removed from a storage or transportation vessel. 
However, the definition of ``use'' would not include use of a 
manufactured product containing a controlled substance. The primary 
difference between the proposed definition under section 605(a) and the 
SNAP regulations' definition is that the SNAP definition includes use 
by the consumer of a product containing ODS. This difference reflects 
EPA's interpretation of the section 605(a) use restriction as set forth 
in the preamble to the 2010-2014 Rule.
    EPA received three comments on its proposed definition of ``use.'' 
Two commenters support adopting a formal definition as proposed. One 
commenter opposes EPA's interpretation, particularly as it relates to 
the proposed HCFC-225ca/cb exemption for existing inventory. The 
commenter in opposition provides no justification for their opposition 
to EPA's definition of use, so EPA believes this comment is in fact a 
comment in opposition to the de minimis exemption for existing 
inventory of HCFC-225ca/cb, which is discussed in the following section 
(IV.B.1). In light of the comments received, EPA is finalizing its 
proposed definition of ``use'' at 40 CFR 82.3.
1. Treatment of Existing Inventory of HCFC-225ca and HCFC-225cb for 
Solvent Uses
    Numerous stakeholders have asked what they will be able to do with 
inventory of HCFC-225ca, HCFC-225cb, and mixtures thereof (abbreviated 
as ``HCFC-225ca/cb'' for the remainder of the preamble) that exists as 
of January 1, 2015. To EPA's knowledge, HCFC-225ca/cb is used only as a 
solvent, primarily for precision cleaning in the aerospace and 
electronics industries. As explained above, the section 605(a) use ban 
does not apply to the use of products that contain class II controlled 
substances. However, some substances, including HCFC-225ca/cb, may be 
used directly to clean equipment or to manufacture a product without 
first being put into a manufactured product themselves. For example, a 
person may take HCFC-225ca/cb from a bulk container, in a mixture or 
neat, and either add it to a vapor degreaser or pour it on a hand wipe 
to clean a piece of equipment. In those circumstances, the substance 
itself--not a product containing the substance--is being used. This 
differs from the use of products that contain HCFC-225ca/cb, such as 
aerosol cans or pre-soaked wipes. In general, EPA proposed to interpret 
the section 605(a) use ban to apply to use when the substance is 
removed from a container used for transportation or storage. The agency 
did not receive any adverse comment on EPA's proposed interpretation 
and is therefore finalizing this interpretation.
    However, EPA believes the use of HCFC-225ca/cb entered into 
inventory prior to January 1, 2015, by persons that use these 
substances as solvents may fairly be considered de minimis. Thus, for 
reasons discussed below, the agency is finalizing its proposed de 
minimis exemption to the use prohibition in section 605(a), which 
allows any person with HCFC-225ca/cb in inventory prior to January 1, 
2015, to use that material as a solvent.\8\ ``Person'' is defined in 40 
CFR 82.3 to include corporations and Federal agencies, as well as their 
employees and agents. Agents include contractors and subcontractors, as 
well as other entities performing a service or task on behalf of the 
corporation or Federal agency. One of those tasks could be storing and/
or using HCFC-225ca/cb that was in existing inventory prior to January 
1, 2015.
---------------------------------------------------------------------------

    \8\ Since the section 605(a) prohibition only limits the use of 
virgin or unused HCFC-225ca/cb solvent, used, recovered, and 
recycled solvent can still be used for precision cleaning and 
manufacturing products after January 1, 2015.
---------------------------------------------------------------------------

    EPA did not propose an exemption to the prohibition on introduction 
into interstate commerce, nor did it propose to change the existing 
regulatory phaseout date for production and import of HCFC-225ca/cb. 
Effective January 1, 2015, a person holding HCFC-225ca/cb in inventory 
may not transfer or sell it to another person (unless for destruction), 
nor is EPA issuing any allowances to produce or import new HCFC-225ca/
cb.
    Additionally, neither companies that manufacture products for their 
own use, nor companies that manufacture products for sale to others are 
allowed to manufacture products containing virgin HCFC-225ca/cb, as 
that is a prohibited use of the substance. A person may sell any 
products containing HCFC-225ca/cb that had been manufactured and 
entered into initial inventory prior to January 1, 2015, since at that 
point they would be ``products'' and not ``class II controlled 
substances.'' A product is considered to be a part of ``initial 
inventory'' at the point where the original product has completed its 
manufacturing process and is ready for sale by the product 
manufacturer. For more discussion of EPA's interpretation of the term 
``initial inventory,'' see the 1993 Nonessential Products Ban. Also, 
for purposes of section 605(a), manufacturers may continue to use HCFC-
225ca/cb to make both products ``manufactured with'' and products 
``containing'' HCFC-225ca/cb as of January 1, 2015, so long as the 
HCFC-225ca/cb has been used, recovered and recycled. Labeling 
requirements for these products manufactured with either virgin or 
used, recovered, and recycled HCFC-225ca/cb will apply beginning 
January 1, 2015 (see Section IV.A. of this preamble). Manufacturers 
should also ensure that they are in compliance with the Nonessential 
Products Ban and with SNAP regulations.
    EPA received seven comments on its proposed de minimis exemption to 
the

[[Page 64262]]

use restriction in section 605(a) for entities that use HCFC-225ca/cb 
as solvents and have HCFC-225ca/cb in their inventory prior to January 
1, 2015. Six commenters supported the exemption because it would 
provide valuable flexibility while they evaluate and qualify 
alternatives that can satisfy specialized applications. Charles Stark 
Draper Laboratory (CSDL) and AGC Chemicals both note that EPA has 
adequate authority in the CAA to issue this exemption. Three commenters 
also noted that the exemption would help industry avoid costs 
associated with disposing of HCFC-225ca/cb already held in inventory.
    One commenter, AGC Chemicals, stated that EPA should clarify that 
``owners'' of HCFC-225ca/cb can use their inventory in any of their 
affiliated organizations, allowing transfer among facilities in 
different locations. In the preceding text describing the exemption, 
EPA has attempted to clarify that the term ``person'' applies to 
subcontractors and other agents working on the person's behalf. 
Transferring a chemical between different facilities of the same person 
within the United States would be allowed by this exemption.
    Another commenter supports EPA's proposed de minimis exemption for 
HCFC-225ca/cb inventory prior to January 1, 2015, because at that point 
the inventory would be a product and not a class II controlled 
substances. EPA would like to clarify that bulk HCFC-225ca/cb produced 
or imported before 2015 is not a product. As explained in this section, 
bulk HCFC-225ca/cb in existing inventory is still a controlled class II 
substance. As such, EPA is providing an exemption to the use 
prohibition for class II controlled substances and is not reclassifying 
HCFC-225ca/cb as a product merely because time has passed.
    One commenter, NRDC, opposes the exemption and believes that 
section 605(a) is intended to be interpreted strictly. According to 
NRDC, justifying the de minimis argument based on the limited 
quantities of this chemical in use is inappropriate and unjustified. 
NRDC further asserts that EPA's statutory interpretation has the 
potential to cause harm in future years of the phaseout if small 
amounts of a chemical were made available for ``as long as needed'' and 
that such an exemption would be contrary to the goals of Title VI of 
the Clean Air Act and the Montreal Protocol.
    As explained in the proposal and in this rule, EPA is not allowing 
for new production or new import of virgin HCFC-225ca/cb, but only for 
the continued use of a small amount of material that was previously 
produced and/or imported using the appropriate allowances prior to 
2015. The production and consumption allocation for HCFC-225ca/cb is 
zero starting in 2015. EPA sees the de minimis exemption as consistent 
with how EPA has treated other ODS, and with the goals of Title VI. For 
example, production and consumption of CFCs were phased out in 1996, 
yet amounts in inventory continued to be used. Additionally, there will 
still be continued use of HCFC-22 after EPA phases out production and 
import of HCFC-22 in 2020. In general, the term ``phaseout'' applies to 
the decrease and eventual elimination of production and import of a 
virgin substance, not to the use of a particular substance. While 
section 605(a) limits the use of virgin HCFCs starting in 2015, use of 
class I substances and certain uses of particular class II substances 
will continue without undermining the overarching goals of CAA Title 
VI.
    As stated in the proposed rule, EPA believes it has implied 
authority to create a de minimis exemption from the section 605(a) use 
restriction. The United States Court of Appeals for the District of 
Columbia Circuit has recognized that ``[u]nless Congress has been 
extraordinarily rigid, there is likely a basis for an implication of de 
minimis authority to provide exemption when the burdens of regulation 
yield a gain of trivial or no value.'' Alabama Power Co. v. Costle, 636 
F.2d 323, 360-61 (D.C. Cir. 1980). In Alabama Power, the Court held 
that ``[c]ategorical exemptions from statutory commands may . . . be 
permissible as an exercise of agency power, inherent in most statutory 
schemes, to overlook circumstances that in context may fairly be 
considered de minimis. It is commonplace, of course, that the law does 
not concern itself with trifling matters, and this principle has often 
found application in the administrative context. Courts should be 
reluctant to apply the literal terms of a statute to mandate pointless 
expenditures of effort.'' Id. (internal citations omitted).
    In an earlier case cited by the court in Alabama Power, the court 
described the doctrine as follows: ``The `de minimis' doctrine that was 
developed to prevent trivial items from draining the time of the courts 
has room for sound application to administration by the Government of 
its regulatory programs . . . The ability, which we describe here, to 
exempt de minimis situations from a statutory command is not an ability 
to depart from the statute, but rather a tool to be used in 
implementing the legislative design.'' District of Columbia v. Orleans, 
406 F.2d 957, 959 (1968).
    In this respect, the Alabama Power opinion observed in a footnote 
that the de minimis principle ``is a cousin of the doctrine that, 
notwithstanding the `plain meaning' of a statute, a court must look 
beyond the words to the purpose of the act where its literal terms lead 
to `absurd or futile results.' '' Id. at 360 n. 89 (citations omitted). 
To apply an exclusion based on the de minimis doctrine, ``the agency 
will bear the burden of making the required showing'' that a matter is 
truly de minimis which naturally will turn on the assessment of 
particular circumstances. Id. The Alabama Power opinion concluded that 
``most regulatory statutes, including the CAA, permit such agency 
showings in appropriate cases.'' Id.
    A notable limitation on the use of the de minimis doctrine is that 
it does not authorize the agency to exclude something on the basis of a 
cost-benefit analysis. As the court explained, this ``implied authority 
is not available for a situation where the regulatory function does 
provide benefits, in the sense of furthering the regulatory objectives, 
but the agency concludes that the acknowledged benefits are exceeded by 
the costs.'' Id. The court held that any ``implied authority to make 
cost-benefit decisions must be based not on a general doctrine but on a 
fair reading of the specific statute, its aims and legislative 
history.'' Id.
    Several courts have recognized de minimis exceptions (1) so long as 
they are not contrary to the express terms of the statute \9\ and (2) 
the agency's interpretation of the exception is a permissible reading 
of the statute. See e.g., Ober v. Whitman, 243 F.3d 1190 (9th Cir. 
2001); see also Ohio v. EPA, 997 F.2d 1520 (D.C. Cir. 1993).
---------------------------------------------------------------------------

    \9\ In Sierra Club v. EPA, 705 F.3d 458 (D.C. Cir. 2013), the DC 
Circuit held that EPA had no de minimis authority to create an 
exemption from the preconstruction monitoring requirement in Sec.  
165(e)(2) of the CAA. ``Whether we call preconstruction monitoring a 
`plain requirement' or a requirement mandated by an `extraordinarily 
rigid' statute, the result is the same: The EPA has no de minimis 
authority to exempt the requirement.'' Id. at 468.
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    A de minimis exemption is permissible in this situation for several 
reasons. First, section 605(a) is not extraordinarily rigid. Second, 
the use prohibition in section 605(a) is ambiguous with respect to 
potential categories of use that Congress did not directly address. 
Third, banning the use of HCFC solvent inventory held by the end-user 
would not advance the statutory purpose of Title VI of the

[[Page 64263]]

Clean Air Act. These arguments are discussed in more detail in the 
following paragraphs.
    The purpose of Title VI of the Clean Air Act, as its title 
suggests, is stratospheric ozone protection. Title VI can be 
categorized into three principal areas: The phaseout of production and 
import of ozone depleting substances (sections 602-607); reduction in 
emissions of these substances via various means such as required 
servicing practices, restrictions on sale and distribution of products, 
and consumer education (sections 608-611); and the transition to 
alternatives that reduce overall risk to human health and the 
environment compared to other alternatives (section 612).
    Section 605 specifically addresses the phaseout of production and 
consumption of class II controlled substances. Section 604 applies to 
the phaseout of production and consumption of class I substances. There 
are notable differences between the two phaseouts. The phaseout under 
section 604 works much more quickly than the phaseout under section 
605. In addition, the section 604 phaseout applies much earlier than 
the section 605 phaseout. Section 604 required the first reductions in 
class I substances in 1992, followed by a series of stepdowns 
culminating in the complete phaseout of nearly all class I substances 
by 2000. For class II substances, section 605 freezes production and 
consumption in 2015, with the complete phaseout not occurring until 
2030.\10\ Two principal factors drive the distinction in phaseout 
schedules. First, class I substances have much higher ODPs relative to 
class II substances.\11\ Second, class II substances were recognized as 
and often developed expressly to be important transitional chemicals, 
beneficial in phasing out class I substances as quickly as possible. 
During the development of the 1990 Clean Air Act Amendments, Congress 
heard testimony on the need to phase out HCFCs as well as class I 
substances. Senator Chaffee acknowledged that ``one difficulty, 
however, is the fact that achieving the goal of eliminating the potent 
long-lived CFCs as rapidly as possible is, to some extent, dependent on 
the continued availability of HCFCs as intermediate substitutes pending 
development of other, safe, non-ozone depleting substances or 
processes.'' (A Legislative History of the Clean Air Act Amendments of 
1990, volume 1, p. 5210 (Senate debate)).
---------------------------------------------------------------------------

    \10\ Through rulemakings, EPA accelerated the statutory 
deadlines in sections 604 and 605, in accordance with the 
requirements in section 606. See 57 FR 3354 and 58 FR 65013.
    \11\ For example, all CFCs have an ODP of 0.6 or greater, with 
most having an ODP of 1.0, whereas the HCFC with the highest ODP is 
HCFC-141b, which has an ODP of 0.11.
---------------------------------------------------------------------------

    It is clear that Congress' intent was to phase out production and 
import of class I substances ``as rapidly as possible,'' and certainly 
more rapidly than class II substances given the difference in the start 
and duration of the two phaseout schedules; however, nowhere in section 
604 does Congress restrict the use of class I substances. Instead, 
Congress phases out the production and import for domestic use, and 
allows for certain exemptions to the phaseout for specific uses (see, 
e.g., section 604 (f) and (g).) Given the comparable titles of sections 
604 and 605 and the overarching goal of phasing out both class I and 
class II ODS,\12\ Congress likely intended that the ``use'' 
restriction, which is unique to section 605, should be interpreted in a 
manner that furthers the phaseout of production and import of HCFCs 
while recognizing the role of HCFCs as transitional substances.
---------------------------------------------------------------------------

    \12\ ``The centerpiece of the stratospheric ozone protection 
program established by this title is the phaseout of production and 
consumption of all ozone depleting substances.'' Clean Air Act 
Amendments--Conference Report (Senate--October 27, 1990) (136 Cong. 
Rec. S16946).
---------------------------------------------------------------------------

    Congress' overall approach to the class II phaseout is generally 
less rigid than its approach to the class I phaseout, considering the 
longer timeframes and the presence of only one intermediate reduction 
step (see section 605(b)). Given this context, EPA does not view 
section 605(a) as ``extraordinarily rigid.'' In addition, section 
605(a) provides an explicit exception for class II substances that have 
been ``used, recovered, and recycled.'' Thus, Congress clearly did not 
envision that all HCFC use in applications not specifically exempted 
would come to a halt by 2015. Indeed, end-users of HCFC-225ca/cb could 
avail themselves of this exception by putting their entire existing 
inventory of HCFC-225ca/cb into their equipment before January 1, 2015. 
For example, an end-user could use its entire inventory of virgin HCFC-
225ca/cb in its vapor degreaser, recover the HCFC-225ca/cb from the 
degreaser, and then recycle it for reuse in 2015 and beyond. In other 
instances, an end-user could take virgin HCFC-225ca/cb, apply it to a 
surface via the typical application method such that the surface is 
cleaned as intended, at which point any recovered HCFC-225ca/cb would 
be rendered ``used.'' EPA does not wish to encourage this approach to 
meeting section 605(a) requirements, which would do nothing to advance 
the statutory purpose of stratospheric ozone protection. Rather than 
insist on an inflexible reading of the statute that may create ``absurd 
or futile results,'' EPA believes the better option is to allow end-
users to continue to use virgin HCFC-225ca/cb inventory that was 
manufactured and is in their possession prior to 2015.
    EPA views section 605(a) as ambiguous with respect to potential 
categories of use that Congress did not explicitly address. Section 
605(a) explicitly addresses refrigerant uses of HCFCs but is silent 
with respect to solvents. At the time the 1990 Clean Air Act Amendments 
were written, HCFCs were used predominantly as refrigerants and much 
consideration was given to this use in the legislative history. HCFC 
solvent uses, on the other hand, were not considered by Congress in the 
context of the class II phaseout, because they did not exist. At that 
time, two class I substances, CFC-113 and methyl chloroform, were used 
as solvents. Far from expecting an early transition, Congress allowed 
production and import of methyl chloroform until 2002, two years after 
the phaseout date for most class I substances. In addition, in section 
604(d)(1), Congress specifically allowed for limited exemptions to the 
production and import phaseout for methyl chloroform for ``use in 
essential applications.'' It was not until 1995 that the SNAP program 
listed HCFC-225ca/cb as acceptable subject to use conditions in 
electronics cleaning and precision cleaning (see 60 FR 31092, June 13, 
1995). HCFC-225ca/cb was listed as acceptable in metals cleaning as 
recently as 2002 (see 67 FR 77927, December 20, 2002). In all three of 
these end-uses, HCFC-225ca/cb, which has an ODP of 0.025/0.033, is a 
substitute for CFC-113 and methyl chloroform, which have ODPs of 0.8 
and 0.1, respectively. While HCFC-225ca/cb solvents have acted since 
1995 as transitional substances between class I ODS and non-ODS 
substitutes for certain niche needs, there is no evidence that Congress 
anticipated in 1990 that any HCFCs would be used as solvents. Thus, 
Congress did not have the opportunity to consider whether to apply the 
section 605(a) use restriction to HCFC-225ca/cb solvents.
    EPA does not believe that it would advance the goals of Title VI to 
prohibit persons that use HCFC-225ca/cb as a solvent to clean their 
equipment or to clean components of products they manufacture--
resulting in products ``manufactured with'' these HCFCs--from using 
their existing inventory of HCFC-225ca/cb. As discussed above, any 
person could avoid such a

[[Page 64264]]

prohibition by rendering all their inventory ``used'' in advance of the 
effective date. From the perspective of potential ozone destruction, 
there is little or no difference in this instance whether the person 
uses de minimis quantities already on site at the end of 2014 or after 
January 1, 2015.
    EPA believes a de minimis exemption is appropriate for the reasons 
provided, and also because the quantities involved are extremely 
limited. This is a small niche use and EPA is only proposing to exempt 
HCFC-225ca/cb held in inventory by persons that use these substances as 
a solvent. Allowances act as a ceiling on the quantities that can be 
produced or imported and thus comprise pre-2015 inventory. The annual 
allocation of allowances for HCFC-225ca/cb from 2010-2014 has been only 
20.7 ODP-weighted MT per year. Recent data showing HCFC-225ca/cb 
consumption has been substantially less than the allocation, further 
decreasing the absolute maximum amount that could remain in inventories 
as of 2015, when production and import are prohibited.
    EPA also considered its past use of de minimis authority under 
Title VI of the Clean Air Act. The agency is modeling this exemption to 
section 605(a) on the de minimis exemption to the Nonessential Products 
Ban for class II substances (CAA section 610(c) and (d)). In the 1993 
Nonessential Products Rule, EPA exempted products manufactured with or 
containing HCFCs from the ban if they were placed in initial inventory 
by December 27, 1993, which was 90 days after the proposed rule 
published and four days prior to the statutory ban on sale and 
distribution in interstate commerce (58 FR 50464, September 27, 1993 
and 58 FR 69638, December 30, 1993). EPA adopted this narrow 
``grandfather'' exception for existing inventories based on a de 
minimis rationale: ``The crux of EPA's reasoning for providing any 
exemption for existing inventories was that emissions from products 
already in existence were de minimis'' (58 FR 69660). EPA believes that 
emissions from pre-2015 existing inventories of HCFC-225ca/cb would 
also be de minimis.
    As discussed, EPA believes it has sufficient authority to adopt a 
de minimis exemption to the section 605(a) use prohibition for use of 
HCFC-225ca/cb held in inventory by persons using these substances as 
solvents. EPA has also considered policy aspects of an exemption. In 
the 1993 Nonessential Products Rule, EPA identified various reasons for 
exempting existing inventory. One policy goal was to relieve a 
potentially onerous burden on small businesses because, absent a sell 
through provision, existing inventories would otherwise have to be 
liquidated (or in the case of the section 605(a) use restriction, 
intentionally used, recovered, and recycled prior to the effective date 
of the prohibition).
    Another important consideration is that the nature of precision 
cleaning is such that the group of affected entities is small, but 
their needs are very specific. Those needs often include minimal to 
zero flammability as well as excellent solvency properties. If those 
needs are not met, human safety can be jeopardized. Prior to the 
proposal, EPA had heard from several entities that use HCFC-225ca/cb as 
solvents for cleaning existing equipment or for cleaning surfaces that 
are part of a newly-produced product that still have not found a 
suitable alternative to HCFC-225ca/cb. In some instances, they need 
more time to test alternatives to ensure that the chosen replacement 
has acceptable solvency, flammability, and usability characteristics. 
Also, in some areas of the United States, a number of Federal, state, 
and local regulations affect the choice of solvents. In particular, 
areas that do not meet the national ambient air quality standard for 
ground-level ozone may regulate solvents that are volatile organic 
compounds (VOCs) to reduce emissions that contribute to the formation 
of smog. HCFC-225ca and HCFC-225cb are exempt from the definition of 
VOC under CAA regulations (see 40 CFR 51.100(s)) addressing the 
development of State Implementation Plans (SIPs) to attain and maintain 
the national ambient air quality standards. Only a few SNAP-listed 
alternatives to HCFC-225ca/cb are exempt from the definition of VOC 
(e.g., trans-1-chloro-3,3,3-trifluoroprop-1-ene).
    After taking into account public comments, as well as the legal and 
policy considerations above, EPA is finalizing its proposed de minimis 
exemption to the use restriction in CAA section 605(a) for entities 
that use HCFC-225ca/cb as solvents and that have HCFC-225ca/cb in their 
inventory prior to January 1, 2015. The exemption will appear at 40 CFR 
82.15(g). The exemption does not pertain to manufacturers of products 
containing HCFC-225ca/cb, such as technical aerosol solvents, or to 
producers and importers of HCFC-225ca/cb. Any aerosol solvent product 
manufactured prior to January 1, 2015, could be sold and used after 
that date, since an aerosol spray can is a product, not a controlled 
substance. However, manufacture of the product or HCFC blends used in 
those products would be considered use of a controlled substance, and 
would be prohibited after January 1, 2015, unless the HCFC were used, 
recovered, and recycled.
2. Treatment of Existing Inventory of HCFC-124 for Sterilant Uses
    In the proposed rule, EPA also sought comment on whether there are 
other small, niche uses of HCFCs that Congress may not have 
contemplated in the 1990 CAA Amendments and for which a prohibition on 
continued use of existing inventory would yield trivial or no benefits 
in light of the statutory purpose. In the proposal, the agency stated 
that it might consider extending the proposed exemption to other such 
niche uses in the final rule.
    EPA received one comment from Mesa Labs, requesting continued use 
of HCFC-124 already held in inventory as a sterilant for the 
manufacture and testing of biological indicators (BIs). BIs contain 
biological spores and are used in the pharmaceutical, medical device 
and healthcare markets to monitor sterilization cycles. In this case, 
the commenter manufactures BIs for use in monitoring ethylene oxide 
(EtO) sterilization cycles. Two sources of EtO currently available for 
use are 100 percent EtO and a blend called Oxyfume 2000 (which consists 
of 8.6 percent EtO and 91.4 percent HCFC-124). The commenter requests 
an exemption to the section 605(a) HCFC use restriction for their HCFC-
124 inventory for the specific reasons listed below:
    (1) BIs in the commenter's stability program may need to be tested 
for up to two years after the production date of the BI (i.e. up until 
the expiration date). This is a regulatory compliance issue connected 
to the FDA and ISO 9001:2008 standards.\13\ Since initial resistance 
assessment of these BIs was conducted using the Oxyfume 2000 blend gas, 
the commenter cannot obtain relevant comparison data if subsequent 
testing is performed using 100 percent EtO as the source gas. 
Transitioning to a non-HCFC sterilant would affect the commenter's 
ability to comply with the ISO standards as well as FDA expectations.
---------------------------------------------------------------------------

    \13\ According to www.iso.org, ISO 9001:2008 ``specifies 
requirements for a quality management system where an organization 
needs to demonstrate its ability to consistently provide product 
that meets customer and applicable statutory and regulatory 
requirements, and aims to enhance customer satisfaction through the 
effective application of the system, including processes for 
continual improvement of the system and the assurance of conformity 
to customer and applicable statutory and regulatory requirements.''

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[[Page 64265]]

    (2) According to the ISO 11138-2 standard,\14\ the minimum 
acceptable resistance for a BI used for EtO monitoring is 2.5 minutes. 
This is achievable using the Oxyfume blend but not achievable using the 
100 percent EtO source. The ISO 11138-2 standard has not yet been 
changed to reflect this difference. Therefore, the commenter would not 
be able to comply with the ISO resistance requirements using 100 
percent EtO, which would affect the medical industry's ability to 
source suitable BIs.
---------------------------------------------------------------------------

    \14\ According to www.iso.org, ISO 11138-2:2006 ``provides 
specific requirements for test organisms, suspensions, inoculated 
carriers, biological indicators and test methods intended for use in 
assessing the performance of sterilizers and sterilization processes 
employing ethylene oxide gas as the sterilizing agent, either as 
pure ethylene oxide gas or mixtures of this gas with diluent gases, 
at sterilizing temperatures within the range of 29 [deg]C to 65 
[deg]C.''
---------------------------------------------------------------------------

    (3) The manufacturer of Oxyfume 2000 has stopped producing the 
material and will no longer accept unused material for destruction.
    (4) The company's existing supplies of Oxyfume 2000 are small (300-
400 pounds) and will last for up to 2 years.
    The commenter also stated that they are active on the Association 
for the Advancement of Medical Instrumentation (AAMI) BI Working Group. 
Efforts are underway to change the ISO 11138-2 standard to reflect 
appropriate resistance values associated with the use of 100 percent 
EtO as the sterilants source gas. However, changes to the ISO standard 
will likely take 18-24 months.
    Prior to the December 2013 proposal, EPA spoke with the domestic 
manufacturer of Oxyfume 2000 and also with representatives from the 
Ethylene Oxide Sterilization Association (EOSA). Through these 
conversations, the agency confirmed that the medical sterilant industry 
was aware of the upcoming use prohibition and that sterilant users were 
in the process of, or had already transitioned to, non-ODS sterilants. 
However, EPA appreciates that the standards for the minimum acceptable 
resistance for a BI used for EtO monitoring are currently being revised 
and that revision may take up to two years to complete. Due to strict 
requirements for BI testing, it may not be feasible for BI 
manufacturers to transition to a non-ODS sterilant before January 1, 
2015. Therefore, in developing this final rule, EPA considered whether 
to create a de minimis exemption for this use similar to the exemption 
being finalized for use of HCFC 225ca/cb. EPA believes a de minimis 
exemption for use of HCFC-124/EtO sterilant blends in existing 
inventory is permissible for several reasons. First, as described 
above, section 605(a) is not extraordinarily rigid. Second, as 
discussed, the use prohibition in section 605(a) is ambiguous with 
respect to potential categories of use that Congress did not directly 
address. There is no mention of sterilant uses of HCFCs in section 
605(a). It is unlikely that Congress considered sterilant uses of HCFCs 
in developing the 1990 CAA Amendments. Estimates indicate that in 1989, 
CFC-12/EtO was used for over 95 percent of all sterilization in 
hospitals (59 FR 13044). HCFC-124 containing sterilants were listed as 
acceptable by SNAP in the March 1994 rule establishing the SNAP program 
(59 FR 13044), several years after the 1990 CAA Amendments. Following 
that action, use of an HCFC-124/EtO blend largely replaced 
sterilization with a CFC-12/EtO blend. Third, banning the use of HCFC 
sterilant inventory held by the end-user would not advance the 
statutory purpose as companies could render the material ``used'' prior 
to the 2015 use prohibition, and then be able to utilize the ``used'' 
material in 2015 and beyond.
    Additionally, the quantities of HCFC-124 that are being exempted 
are extremely limited. This is a small niche use and EPA is only 
exempting HCFC-124 held in inventory prior to January 1, 2015. 
Allowances act as a ceiling on the quantities that can be produced or 
imported and thus comprise pre-2015 inventory. The annual allocation of 
allowances for HCFC-124 from 2010-2014 has been 66 ODP-weighted MT per 
year. Recent data showing HCFC-124 consumption has been less than the 
full allocation, further decreasing the absolute maximum amount that 
could remain in inventories as of 2015, when production and import are 
prohibited. Honeywell, the manufacture of the Oxyfume 2000 HCFC-124 
sterilant blend, stopped producing this product as of November 1, 2013. 
The company also encouraged their customers to ship back unused 
material and has a Web site dedicated to informing customers about the 
use restriction that takes effect on January 1, 2015 (see http://www.honeywell-sterilants.com/questions-and-answers/ or the PDF in the 
docket). It is likely that the remaining HCFC-124 inventory is very 
small, and is held by end-users with niche sterilization needs (e.g. 
testing the efficacy of BIs).
    For the reasons discussed above, EPA is including in this final 
rule a limited use exemption for sterilants containing HCFC-124. EPA is 
not creating an exemption to the prohibition on introduction into 
interstate commerce. Similarly, EPA is not changing the existing 
regulatory phaseout date for production and import of HCFC-124 for use 
as a sterilant, nor is EPA issuing any allowances to produce or import 
new HCFC-124 for use as a sterilant. Effective January 1, 2015, a 
person holding HCFC-124 in inventory may not transfer or sell HCFC-124 
to another person (unless for destruction or for use as a refrigerant). 
EPA is creating a de minimis exemption to the use restriction in CAA 
section 605(a) for entities that use HCFC-124 as a sterilant for 
manufacture and testing of biological indicators and that have HCFC-124 
in their inventory prior to January 1, 2015. The exemption will appear 
at 40 CFR 82.15(g). The exemption does not pertain to manufacturers of 
products containing HCFC-124 (e.g., aerosol spray cans); however, a 
product manufactured prior to January 1, 2015, could be sold and used 
after that date, since an aerosol spray can is a product, not a 
controlled substance.
3. Update to Regulations To Account for Recent Changes to Section 
605(a)
    In the National Defense Authorization Act (NDAA) for fiscal year 
2012, Congress amended section 605(a) of the Clean Air Act to allow for 
continued use and introduction into interstate commerce of a class II 
substance that ``is listed as acceptable for use as a fire suppression 
agent for nonresidential applications in accordance with section 
612(c).''
    Section 612 of the Clean Air Act requires EPA to develop a program 
for evaluating alternatives to ozone-depleting substances. EPA refers 
to this program as the Significant New Alternatives Policy (SNAP) 
program. Section 612(c) requires EPA to publish a list of the 
substitutes unacceptable for specific uses and to publish a 
corresponding list of substitutes acceptable for specific uses. The 
list of acceptable substitutes is found at www.epa.gov/ozone/snap/lists, and the lists of ``unacceptable,'' ``acceptable subject to use 
conditions,'' and ``acceptable subject to narrowed use limits'' 
substitutes are found in the appendices to subpart G of 40 CFR part 82.
    HCFC-123, HCFC-124, and several blends containing an HCFC are 
currently listed as acceptable and acceptable subject to narrowed use 
limits as fire suppression agents, where the use limit restricts use to 
only nonresidential fire suppression. EPA assumes that Congress 
intended the statutory phrase ``listed as acceptable for use'' to 
include HCFCs listed as

[[Page 64266]]

acceptable and acceptable subject to narrowed use limits. In light of 
the 2012 statutory revision, EPA proposed to update its regulations for 
use and introduction into interstate commerce of HCFCs (82.15(g)), as 
well as the regulations governing production and import (82.16). 
Specifically, the agency proposed amending 82.15(g)(4) to allow for use 
and introduction into interstate commerce of any class II controlled 
substance not governed by the acceleration of the use prohibition to 
2010, when used as a fire suppression streaming agent listed as 
acceptable for use or acceptable subject to narrowed use limits for 
nonresidential applications. EPA believes this addition is necessary 
and appropriate, given Congress' addition to section 605(a).
    Though section 605(a) pertains only to use and introduction into 
interstate commerce, EPA believes that allowing for continued HCFC 
production and import for nonresidential fire suppression uses is in 
accordance with Congressional intent. Section 605 does not establish a 
production phaseout date for any specific HCFC. EPA previously used its 
discretion to establish a regulatory phaseout date, which the agency is 
modifying in this action. This change has minimal effect on the overall 
allocation since the primary HCFC used for fire suppression, HCFC-123, 
has a low ODP, and the quantities used for fire suppression are small 
relative to the other uses of HCFCs.
    In large part, the regulatory phaseout date for HCFCs used in fire 
suppression was driven by the section 605(a) limitations on use and 
introduction into interstate commerce of class II controlled 
substances, to which Congress has now created an exception. Therefore, 
EPA also proposed to amend 82.16(d), by allowing for HCFC production 
and import in the 2015-2019 regulatory period for use in nonresidential 
streaming fire suppression applications. To give practical effect to 
this proposed change, EPA proposed allocating consumption allowances 
for HCFC-123 for use as both a refrigerant and as a fire suppression 
agent. As discussed in section VI.D. of this preamble, EPA is 
finalizing its proposal to allocate the maximum allowed amount of HCFC-
123 consumption allowances under section 605(b). This is 100 percent of 
the HCFC-123 baseline, which is still less than three percent of the 
Montreal Protocol cap for 2015-2019.
    EPA is allowing production and import for fire suppression purposes 
for the 2015-2019 regulatory period only. Beginning January 1, 2020, 
Article 2F of the Montreal Protocol limits United States production and 
import of HCFCs to use only in servicing and repair of existing 
refrigeration and air conditioning equipment. Under section 614(b), 
where either the Montreal Protocol or Title VI is more stringent, the 
more stringent provision governs. To reflect this Montreal Protocol 
time limitation, EPA proposed adding language to 82.16(e) indicating 
the purposes for which production and import may continue in 2020 and 
beyond. Fire suppression was not included on the list.
    The agency received three comments regarding its plans to update 
regulations to account for recent changes to section 605(a), all of 
which agreed with EPA's rationale and language regarding continued use 
of HCFCs as a fire suppression agent. One fire suppressant 
manufacturer, AMPAC, commented that the word ``streaming'' should be 
deleted from the proposed changes to section 82.15(g)(4) and 82.16(d), 
on the ground that limiting the exemption to streaming agents only is 
inconsistent with legislative intent and what is stated in section 320 
of the 2012 NDAA.
    EPA recognizes that the language included in section 320 of the 
2012 NDAA is broader than the regulatory language proposed. In 
particular, the 2012 NDAA does not provide any guidance on whether 
Congress intended to exempt only those applications in which HCFCs are 
currently used. EPA proposed language that was limited to streaming 
applications to reflect its understanding that current use of HCFCs in 
fire suppression is limited to streaming applications. The agency 
sought comment on whether HCFCs were used for other nonresidential fire 
suppression applications, such as total flooding. EPA did not receive 
any comments that would counter its understanding that current use of 
HCFCs in fire suppression is limited to streaming applications. 
Therefore, the agency is not including total flooding applications and 
is finalizing its changes to 40 CFR 82.15(g)(4), 82.16(d),\15\ and 82. 
16(e)(2) as proposed.
---------------------------------------------------------------------------

    \15\ EPA intended to use parallel language for production and 
import of HCFCs for fire suppression in Sec.  82.16(d) but 
inadvertently omitted the phrase ``listed as acceptable for use or 
acceptable subject to narrowed use limits'' from the clause 
regarding imports. EPA is correcting this omission in the final 
rule.
---------------------------------------------------------------------------

C. Which Montreal protocol requirements take effect in 2015 and 2020?

    As discussed in section II.A. of this preamble, the United States 
has agreed under the Montreal Protocol to limit consumption and 
production of HCFCs by January 1, 2015, to no more than 10 percent of 
its Montreal Protocol baseline. Starting in 2015, the United States cap 
on consumption will be 1,524 ODP-weighted MT and the cap on production 
will be 1,553.7 ODP-weighted MT. By January 1, 2020, the United States 
is required to limit consumption and production of HCFCs to 0.5 percent 
of baseline. As required under sections 606(a) and 614(b) of the Clean 
Air Act, EPA phaseout regulations reflect the Montreal Protocol 
schedule for phasing out HCFCs, including the 2015 and 2020 stepdowns. 
In developing and finalizing the HCFC allocation schedule for 2015-
2019, the agency bore in mind that as of January 1, 2020, the 
consumption and production caps will be approximately 76 and 77.5 ODP-
weighted MT, respectively. Also, as of January 1, 2020, Article 2F of 
the Protocol limits United States production and consumption of HCFCs 
to servicing needs for refrigeration and air conditioning equipment. In 
addition, CAA section 605(a) limits the use of virgin HCFCs as of 
January 1, 2015, to use as a refrigerant in equipment manufactured 
prior to 2020, and use as a nonresidential fire suppressant. EPA 
regulations also prohibit the production and import of virgin HCFC-22 
or HCFC-142b for refrigeration uses as of January 1, 2020 (see 40 CFR 
82.16(e)). The 2015 and 2020 milestones in the Montreal Protocol and 
the Clean Air Act provide a framework within which EPA proposed, and is 
now finalizing, the HCFC allocations for 2015-2019.

V. HCFC Baselines for 2015-2019

    EPA proposed to keep the post-Arkema historical baselines in the 
December 2013 proposal (as adjusted to reflect subsequent name changes 
and inter-company baseline allowance transfers), for the 2015-2019 
regulatory period. The baselines for production and consumption of the 
seven HCFCs for which EPA has allocated allowances can be found at 40 
CFR 82.17 and 82.19, respectively. Through today's final rule, EPA is 
finalizing those same baselines for 2015-2019 for all HCFCs subject to 
the allocation system. More information on the HCFC baseline system and 
the Arkema lawsuit is found in section II.B. of this preamble.
    EPA received six comments on how it would determine baselines for 
2015-2019 regulatory period, all in support of maintaining the existing 
baseline system. National, the Alliance, Combs Investment Properties, 
Arkema, Honeywell, and AMPAC all support (or in the case of AMPAC, do 
not object to) EPA's proposal to maintain existing

[[Page 64267]]

baselines. Several commenters reference the certainty and stability 
that maintaining the current system would provide, or the confusion 
that new baselines would cause, and agree with EPA that altering 
baselines would not provide environmental benefit. One commenter 
explicitly referenced EPA's statements that revised baselines would not 
affect the overall, aggregate allocation since it is the percentage of 
baseline issued--not the aggregate baseline itself--that determines the 
allowed amount of production and import in a given year. AMPAC states 
that it supports establishment of baselines such that only actively 
consuming companies receive baseline allowances and it supports 
reallocating any allowances proportionately from non-active companies 
to those that are still using allowances.
    Since EPA proposed to maintain the current baseline system, and 
commenters were supportive of the proposal, the agency is finalizing 
the same baselines it used in the 2012-2014 Rule. In response to 
AMPAC's comments, the agency believes that reallocating baselines, 
especially this far into the phaseout of HCFCs, would cause uncertainty 
and confusion. As discussed above, altering baselines would not provide 
environmental benefit. In addition, changing baselines for 2015-2019 
could interfere with the agency's longstanding goal of an orderly 
transition out of HCFCs. Since baseline allowances are tradable, there 
is flexibility within the current system to allow companies to grow or 
shrink their activity in the market. The agency's consideration of 
updated baselines and its reasons for not proposing to revise baselines 
are discussed in more detail in the proposed rule (78 FR 78083).

VI. HCFC Allowance Allocation Amounts for 2015-2019

    Section 605(a) of the Clean Air Act limits the use of newly-
produced (i.e. virgin) HCFCs beginning January 1, 2015. Under the 
statute, the uses of virgin HCFCs are limited to use as a refrigerant 
in appliances \16\ manufactured prior to 2020 (EPA accelerated this 
manufacturing date to 2010 for HCFC-22 and HCFC-142b) \17\ and as a 
nonresidential fire suppressant, if listed as acceptable under SNAP for 
this end-use. HCFC-22 and HCFC-123 are both used as refrigerants, and 
thus EPA is issuing allowances for these chemicals. EPA is also issuing 
consumption and production allowances for HCFC-142b and HCFC-124, since 
both are listed as acceptable for certain refrigerant end-uses and 
limited, albeit decreasing, demand for refrigerant blends containing 
these HCFCs continues.
---------------------------------------------------------------------------

    \16\ The Clean Air Act defines appliance as ``any device which 
contains and uses a class I or class II substance as a refrigerant 
and which is used for household or commercial purposes, including 
any air conditioner, refrigerator, chiller or freezer.''
    \17\ EPA accelerated the 605(a) use restrictions for HCFC-22 and 
HCFC-142b in the 2010-2014 Rule. Consequently, HCFC-22, HCFC-142b, 
and blends containing either can only be used as a refrigerant in 
appliances manufactured before January 1, 2010, not 2020. 
Additionally, the Clean Air Act allows use and introduction into 
interstate commerce of virgin HCFCs for use in transformation, but 
since this use does not require consumption or production 
allowances, it is not discussed in this section.
---------------------------------------------------------------------------

    EPA is not issuing allowances for HCFC-225ca or HCFC-225cb because 
neither is used as a refrigerant nor as a fire suppressant, though the 
agency is finalizing a narrow de minimis exemption for the use of 
existing inventory of HCFC-225ca, HCFC-225cb, or a mixture of the two 
isomers (HCFC-225ca/cb) in specialty precision cleaning needs. EPA is 
also adopting a narrow de minimis exemption for the use of inventory of 
sterilants containing HCFC-124. Both of these exemptions are discussed 
at section IV.B. of this preamble.
    Use of HCFC-141b was banned effective January 1, 2010 (see 
82.15(g)(1),(3)), with limited exceptions. In addition, the exemption 
from the class II phaseout that allows for HCFC-141b exemption 
allowances does not continue beyond 2014 (see 40 CFR 82.16(b),(d)). The 
agency is finalizing its proposal to remove 40 CFR 82.16(h), which 
described the petition requirements for receiving HCFC-141b exemption 
allowances. EPA did not receive any adverse comments on removing this 
regulatory language.
    As stated in the proposal and in accordance with 40 CFR 82.18(a)(2) 
and (3), EPA is issuing Article 5 allowances \18\ for 2015-2019 to each 
company with a production baseline for any HCFC. The allocation is 
equal to 10 percent of the company's production baseline for that HCFC, 
regardless of whether production or consumption allowances are issued 
for that HCFC in 2015-2019.
---------------------------------------------------------------------------

    \18\ Article 5 allowances allow a company with an HCFC baseline 
to produce that HCFC only for export to Article 5 Parties under the 
Montreal Protocol. See 40 CFR 82.18(a).
---------------------------------------------------------------------------

    The final HCFC allowance allocations discussed in the following 
sections were developed with consideration of many factors, including: 
Production, import, and use restrictions in the CAA and Montreal 
Protocol; current HCFC uses and trends, including inventory trends for 
HCFC-22; historic allowance use; the expected availability of recovered 
and reused material; servicing need projections in EPA's 2013 Servicing 
Tail Report; comments received on the proposed rule; the availability 
of alternatives for each HCFC in each end-use; and proposed EPA action 
through the SNAP program regarding higher-global warming potential \19\ 
(GWP) alternatives. In the case of HCFC-22 and HCFC-142b, EPA also 
considered the fact that under long-standing regulations, production 
and import of these two HCFCs must be phased out by January 1, 2020.
---------------------------------------------------------------------------

    \19\ Global warming potential is a measure of the total energy 
that a gas absorbs over a particular period of time (usually 100 
years), compared to carbon dioxide.
---------------------------------------------------------------------------

    The agency released its HCFC servicing need projections (i.e., 
estimates of HCFC use) and other data supporting its proposed 
allocations for 2015-2019 in the 2013 Servicing Tail Report on HCFC 
market needs with the proposed rule in December 2013. The agency made 
several revisions to the HCFC-123 fire suppression sections of the 
report and released the revised report with the Notice of Data 
Availability published April 7, 2014 (79 FR 19077). With this final 
action, the agency is releasing the updated 2014 Servicing Tail Report, 
which reflects data and certain comments received during the public 
comment period. Both the 2013 and 2014 versions of the Servicing Tail 
Report are found in the docket for this rulemaking.

A. What is the 2015-2019 HCFC-22 consumption allocation?

1. Summary of Final HCFC-22 Consumption Allocation
    In developing the proposed rule, EPA considered three options for 
determining the quantity of HCFC-22 consumption allowances to allocate. 
Each involved a declining allocation from year to year. The overarching 
goal of all of the proposed approaches was to meet servicing needs and 
encourage a smooth transition away from HCFC-22, while meeting the 
Clean Air Act and Montreal Protocol phaseout requirements. Under the 
linear approach (Option 1), which was EPA's preferred approach, the 
agency proposed to decrease the allocation by the same amount each 
year, such that there is a linear decrease in allowances from 2015 
through 2019, ending at zero in 2020.
    Within Option 1, EPA's preferred starting point in the proposal was 
approximately 13,700 MT, but the agency also proposed to start at 
16,700 MT or 10,000 MT--each with consistent

[[Page 64268]]

annual decreases in allocation, ending at zero in 2020. EPA based the 
preferred starting point of 13,700 MT on a linear decrease from the 
lowest allocation previously proposed for 2014 (see 78 FR 78072). The 
higher starting point of 16,700 MT was based on the 2014 allocation, 
prior to the addition of approximately 3,000 MT of recoupment 
allowances (20,100 MT), and the lower proposed starting point of 10,000 
MT was approximately half of the 2014 pre-recoupment allocation.
    For each starting point within this linear five-year approach, EPA 
considered information concerning the HCFC-22 market in 2012 and 2013, 
particularly (1) changes in inventory, (2) the availability of recycled 
and reclaimed HCFC-22, (3) recent sales of HCFC-22 alternatives, and 
(4) allowance expenditure in recent years.
    Under Option 2, EPA proposed a three-year linear approach, where 
consumption would be zero in 2018 instead of 2020. The proposed 
starting points in 2015 were 12,300 MT or 15,000 MT.
    Under Option 3, EPA proposed to estimate servicing need as 
published in the 2013 Servicing Tail Report, and then make adjustments 
to account for estimated recovery and reuse and for inventory, much 
like it did in the 2010-2014 and 2012-2014 Rules. Under the estimation 
approach, the maximum starting allocation in 2015 would be 23,100 MT, 
but with a wide range of possible allocations in each year, including 
2015. Under the estimation approach EPA proposed to ``account for up to 
10,000 MT of inventory each year.'' Since the estimation approach is 
predicated on modeled servicing need, it has a significantly higher 
starting allocation than either of the linear approaches (Options 1 and 
2). This is why EPA specifically proposed to account for existing 
inventory, whereas the linear approaches inherently account for 
inventory, given their lower starting points relative to past 
allocations and projected need.
    For the reasons discussed in the remainder of this section of the 
preamble, EPA is finalizing an HCFC-22 consumption allocation that 
starts at approximately 10,000 MT in 2015 (7.0% of baseline), and 
decreases by approximately 2,000 MT each year, such that the allocation 
in 2020 is zero. This is the lowest proposed variant of EPA's preferred 
five-year linear approach (Option 1). EPA is revising the table at 
82.16(a) to reflect the percentage of consumption allowance baseline 
issued in each year from 2015-2019.
2. EPA's Collection, Consideration and Use of Aggregate HCFC-22 
Inventory Data
    On August 8, 2013, EPA sent requests to nine companies asking for 
each company's year-end inventory of HCFC-22 from 2008-2012. Under 
section 114(a) of the Clean Air Act, EPA has the authority to ask any 
person who is subject to any requirement of the Act to establish and 
maintain such records, make such reports, and provide such other 
information as the Administrator may reasonably require. These nine 
companies included HCFC-22 producers, importers, distributors, and 
reclaimers; some are large allowance holders and others are not. The 
group has a significant role in the HCFC-22 market, and because they 
are different types of entities, data from these companies provide 
information on how much HCFC-22 might be in the supply chain. In 
collecting inventory data, EPA did not intend to determine exactly how 
much inventory or ``stockpiled gas'' exists, but to understand the 
general scale of inventory and trends in the growth or decrease in 
inventory as HCFC-22 allowance allocations changed.
    2008 through 2012 aggregate inventory data from these nine entities 
was fully available to EPA before the proposed rule was signed and EPA 
considered these data in development of the proposed rule. Aggregate 
data was subsequently placed in the docket as explained below. 
Aggregate inventory as of December 31, 2011, was approximately 62,000 
MT. At the end of 2012, inventory had decreased by 17.5 percent 
(approximately 10,000 MT) to just over 51,000 MT.
    Prior to signature of the proposal, on November 23, 2013, NRDC 
filed a FOIA request for the aggregate inventory data; however, the 
agency did not immediately release the data with the proposed rule or 
in response to the FOIA request because two responding companies had 
claimed the aggregate data as confidential business information (CBI). 
Per EPA's regulations at 40 CFR Part 2 Subpart B, when the agency 
desires to determine whether business information in its possession is 
entitled to confidential treatment, or when the agency learns that it 
is responsible for responding to a FOIA request for the information, it 
must first determine which businesses, if any, have asserted claims of 
business confidentiality and generally must provide the affected 
businesses an opportunity to comment. The agency subsequently issues a 
final administrative determination of whether the business information 
is entitled to confidential treatment. If the agency determines that 
the information is not entitled to confidential treatment, it provides 
notice to the affected businesses, stating that the agency will make 
the information available to the public on the tenth business day after 
the business' receipt of the written notice unless the business 
commences an action in federal court for judicial review of the 
determination and to obtain a preliminary injunction against 
disclosure.
    The agency followed these procedures with respect to the inventory 
data and on February 18, 2014, EPA issued a final determination that 
the aggregate inventory data are not entitled to confidential 
treatment. After notifying the two companies of its intent to release 
the aggregate data and waiting the required 10 business days before 
releasing the data, EPA made the 2008-2012 inventory data public on its 
Web site and responded to the FOIA submitted by NRDC. EPA sent a second 
letter under the authority of section 114 of the Clean Air Act to the 
same nine entities on February 27, 2014, requesting each company's 
HCFC-22 inventory as of December 31, 2013. No company claimed the 
aggregate inventory data for 2013 as CBI. Aggregate inventory at the 
end of 2013 was approximately 54,000 MT, an increase of 5.4 percent 
over 2012 inventory.
    EPA posted the 2008-2012 aggregate inventory data on the agency's 
Web site at http://www.epa.gov/ozone/title6/phaseout/classtwo.html and 
notified stakeholders via email on March 10, 2014. EPA posted the 2013 
aggregate inventory data on the agency's Web site and notified 
stakeholders via email on March 27, 2014. In addition, the agency 
formally announced the availability of these data on April 7, 2014, in 
a Notice of Data Availability (NODA). The aggregate HCFC-22 inventory 
data (2008-2013 HCFC-22 Aggregate Inventory Data) and the April 7 NODA 
can be found in the docket at www.regulations.gov/#!docketDetail;D=EPA-
HQ-OAR-2013-0263.
    In addition to the section 114 requests, the agency also held more 
than 60 meetings with stakeholders and in almost every meeting 
inventory was discussed in a general sense to gauge how large industry-
wide inventory might be. While not definitive, most of these 
stakeholder conversations confirmed our view that inventory identified 
through the 114 process represents a significant share of total 
inventory in the United States.

[[Page 64269]]

3. Explanation of the Agency's Final Decision and Response to Comments
    In this section, EPA explains the rationale and process for 
reaching a final decision on the HCFC-22 consumption allocation. The 
agency's overarching goal is to meet the 2020 phaseout deadline for 
HCFC-22 production and import in a manner that achieves a smooth 
transition to more environmentally-friendly alternatives. Further, EPA 
has sought to accomplish this transition in a way that provides 
regulatory certainty to consumers and industry without prematurely 
stranding equipment (i.e., equipment owners should not feel forced out 
of HCFC-22 if their equipment is still within its expected lifetime). 
EPA's focus in this rule is stratospheric ozone protection, and the 
focus on this section is the HCFC production and consumption phaseout 
under section 605(b)-(c) of the CAA, taking into account the HCFC use 
restrictions in section 605(a). EPA has also been mindful, however, of 
actions the agency is proposing under section 612, and has noted, where 
applicable, the climate implications of various options for 
implementing the HCFC-22 phaseout.
    The reasoning for determining the final HCFC-22 allocation, as 
discussed more in this section, can be summarized as follows:
    (i) The first question the agency considered was whether to issue 
allowances, as proposed, or to move forward with some commenters' 
suggestion of issuing zero allowances starting in 2015. As discussed in 
this section, EPA did not propose to issue zero allowances for several 
reasons, and those reasons were reaffirmed by several other commenters.
    (ii) After determining that consumption allowances would be issued, 
EPA considered the question of methodology: A linear approach, with 
consistent annual decreases (Options 1 and 2 from the proposal) or the 
estimation approach (Option 3), which is an approach used in past HCFC 
allocation rulemakings. The agency concluded that a five-year linear 
approach is most appropriate for the last five years of the HCFC-22 
phaseout. A five-year approach conforms to long-standing market 
expectations and provides much needed market certainty.
    (iii) The final consideration was what level to use as the starting 
point in 2015. A starting point of 10,000 MT in 2015 addresses the 
concerns about over-supply of HCFC-22 and the large existing 
inventories, while encouraging transition, reclamation and proper 
refrigerant management.
    The agency carefully considered market information, comments, 
regulatory and statutory requirements, and its long-standing policy 
objectives as it weighed the merits of the proposed approaches and came 
to a final decision on the amount to allocate for 2015-2019. In the 
remainder of this section, EPA summarizes and responds to a majority of 
the comments. The full Response to Comments, which summarizes and 
responds to each comment received on the proposed rule, is available in 
the public docket at www.regulations.gov/#!docketDetail;D=EPA-HQ-OAR-
2013-0263.
i. EPA's Decision To Issue Allowances for 2015-2019
    Sixteen commenters support a lower allocation than any of the 
proposed options, with most of them advocating for an allocation of 
zero in 2015. EPA did not propose a zero allocation option for 2015-
2019, but commenters assert that dramatically reducing or eliminating 
the allocation would: (1) Provide decisive action needed to correct the 
oversupply of HCFC-22; (2) encourage development of new low-GWP 
alternatives and use of non-ODS alternatives; (3) encourage responsible 
reclamation practices and revive the reclamation industry; and (4) 
encourage improved leak reduction and product stewardship. Commenters 
also state that between the large amount of HCFC-22 currently in 
inventory, decreased demand, better leak control, use of reclaimed 
HCFC-22, and availability of alternative refrigerants, consumers can be 
assured of sufficient capacity to service their existing systems 
without EPA granting a significant amount of new HCFC-22 allowances. 
Among others, these commenters include NRDC, EIA, Hudson Technologies, 
and other reclamation companies that commented individually and also as 
part of the New Era Group, Inc. coalition.
    Two commenters, NRDC and EIA, state that the lower allocations they 
advocate for (zero allowances of HCFC-22, or if not zero, then Option 2 
with a modified three-year phasedown) are logical outgrowths of the 
proposal and as such, satisfy the legal requirements to offer 
opportunity for comment.
    EPA is not finalizing commenters' suggestion of issuing zero 
allowances in this rule for several reasons. First, recent market data 
support the issuance of allowances. Data from 2012 and 2013 show that 
there is still considerable servicing need for HCFC-22. Data collected 
through EPA's section 114 process show that inventory drawdown in 2012 
was over 10,000 MT. Given that consumption was 25,600 MT, and 
reclamation was over 4,000 MT, it is clear that in 2012 there was still 
significant servicing demand for HCFC-22. In 2013, consumption was 
29,146 MT, and inventory build from the nine companies was only 2,800 
MT, or about a 5 percent increase in their aggregate inventory levels. 
(The increase in inventory from these nine companies is about equal to 
the number of recoupment allowances that were issued in addition to the 
final consumption allocation.) Reclamation was also more than 3,500 MT. 
Based on these data, the agency concludes that there is still 
significant servicing need for HCFC-22. Continued servicing need for 
existing equipment is not unexpected, problematic or otherwise contrary 
to the goals of the phaseout. Allowing consumers to continue operating 
equipment using the refrigerant for which it was designed is 
instrumental to the agency's goal of a smooth transition while 
safeguarding the viability of the reclamation industry.
    Second, while there would be a benefit to the stratospheric ozone 
layer from not allocating allowances for 2015-2019, the total level of 
HCFC consumption allowances allocated over the five year period covered 
by this rule is already 75 percent below the maximum level of 
consumption permitted by the Montreal Protocol and EPA's regulations 
implementing sections 605 and 606 of the Clean Air Act. In addition, by 
finalizing the option starting at 10,000 MT rather than the option 
starting at 13,700 MT, EPA is taking an additional step towards 
stratospheric ozone protection by preventing the consumption of more 
than 11,000 MT of HCFC-22 over the five year period. EPA disagrees with 
commenters about the climate benefits of a zero allocation approach. 
Some of these commenters state that the future emissions resulting from 
a large allocation of HCFC-22 would have significant climate impacts 
and be contrary to the President's Climate Action Plan. Hudson states 
that eliminating or further reducing HCFC-22 allowances beyond EPA's 
preferred approach in the proposal would be ``one of the most 
significant actions the Administration could take in the short-term to 
address global climate change.'' Two commenters believe EPA's preferred 
approach may benefit the consumer, but is at odds with the agency's 
greenhouse gas reduction goals. In total, twelve commenters state that 
EPA's preferred approach will result in significant and unnecessary

[[Page 64270]]

emissions of HCFC-22 to the atmosphere, and recommend adopting a faster 
phaseout schedule to minimize environmental impact.
    On the other hand, Arkema and the Department of Defense (DoD) do 
not believe that eliminating HCFC-22 allowances before 2020 would have 
environmental benefits, especially since the agency is reducing 
consumption at a faster rate than the Montreal Protocol requires. They 
believe that an overly quick phaseout schedule may accelerate equipment 
replacement, and DoD points out that the commercial availability of 
equipment using low-GWP alternatives is limited for some uses. DoD 
states that accelerating transition to equipment using high-GWP 
alternative refrigerants may not benefit the environment. One commenter 
is concerned about emissions from the venting of HCFC-22, but also 
states that the movement to switch out of HCFC-22 is creating a problem 
related to the high GWPs of the HCFC-22 substitutes. FMI is concerned 
about accelerated or poorly planned retrofits in the retail food sector 
from a shrinking HCFC-22 supply, which could lead to an increase in 
energy use.
    EPA notes that commenters claiming that a zero allocation would 
reduce HCFC-22 emissions and accordingly have climate benefits, do not 
account for the emissions of the refrigerant that would replace HCFC-
22. Calculating potential HCFC emissions avoided, without considering 
emissions from replacement refrigerants, does not give a true picture 
of climate impacts. In addition, while new systems like R-410A 
residential unitary air-conditioners often have smaller charge sizes 
and lower leak rates than the HCFC-22 equipment they replace, this is 
not the case for retrofits of existing unitary equipment.
    A zero allocation would likely accelerate retrofits, particularly 
in residential unitary air-conditioning. The agency heard from numerous 
stakeholders that retrofits and system replacements increased when the 
price of HCFC-22 went up in 2012 and early 2013. Data collected from 
alternatives producers show a dramatic increase in sales of HCFC-22 
retrofit refrigerants \20\ since 2011. EPA has also heard that during 
the last several years, service technicians have become more aware of 
and comfortable using non-ODS retrofit refrigerants. As the phaseout 
progresses, the percentage of HCFC-22 demand met by retrofit 
refrigerants is expected to continue to rise.
---------------------------------------------------------------------------

    \20\ e.g., R-407C, R-421A, R-422D, R-438A, and numerous other 
non-ODS alternatives.
---------------------------------------------------------------------------

    EPA believes retrofits are an important option for many consumers 
as HCFC-22 is phased out; however, the agency does not want to 
prematurely drive consumers away from the refrigerant their system was 
designed to run with. EPA is concerned that a zero allocation could 
unnecessarily push equipment owners to retrofits, potentially 
discouraging continued operation of HCFC-22 equipment with reclaimed 
refrigerant. In addition, HCFC-22 systems generally run most 
efficiently on HCFC-22, and to the extent stakeholders wish to evaluate 
the climate impacts of various options, energy efficiency is also an 
important climate consideration. Retrofitting an existing system can 
also decrease capacity, meaning a system must run longer and use more 
electricity in order to generate the same cooling output. A decreased 
capacity may also result in the inability of equipment to meet the 
sensible (temperature) and latent (humidity) cooling needs required 
throughout the season.
    Additionally, stakeholders should be aware that most retrofit 
refrigerants (often inaccurately called ``drop-ins'' \21\) have higher 
GWPs than HCFC-22's GWP of 1810, particularly in residential unitary 
air-conditioning--the predominant use of HCFC-22. While not a retrofit, 
R-410A is the most common non-ozone depleting substitute for use in 
residential air conditioning, with a GWP of approximately 2090. In 
retail food refrigeration, which is the second largest HCFC-22 end-use, 
some of the alternatives are high GWP refrigerants. For example, the 
most common refrigerants used for refrigeration equipment in 
supermarkets, R-404A, R-507A and R-407A, have GWPs of approximately 
3920, 3990 and 2110, respectively. Certain high-GWP alternatives in the 
retail food sector may be subject to additional constraints in the 
future since the agency is proposing to change their acceptability 
status under its SNAP regulations. If the HCFC allocation level were 
set at zero, that could encourage a near-term transition into high GWP 
gases that the agency has proposed to remove from the list of 
acceptable ODS substitutes (e.g., R-404A and R-507A). Such a result 
would mean that a zero allocation would fail to achieve the climate 
benefits envisioned by the commenters.
---------------------------------------------------------------------------

    \21\ EPA finds the use of the term ``drop-in replacement'' as 
misleading when advertising refrigerants that substitute for an ODS 
refrigerant, such as HCFC-22, since the term confuses and obscures 
several important regulatory and technical points. At minimum, a new 
type of lubricant will often be needed, certain parts such as 
elastomer gaskets will need to be replaced, and/or settings such as 
on TXVs will need adjustment. EPA also encourages technicians to 
repair leaks before re-charging with refrigerant.
---------------------------------------------------------------------------

    Several commenters supporting a zero allocation assert that an 
over-supply of HCFC-22 discourages the transition to alternatives. Two 
commenters make statements on the rate of transition to HCFC 
alternatives. One commenter, ICOR International, notes that recent 
history shows that when the HCFC-22 allocation is low and the price of 
HCFC-22 is high, recovery rates go up and the transition to 
alternatives rapidly accelerates. Hudson Technologies states that 
programs like EPA's GreenChill Advanced Refrigeration Partnership have 
resulted in a more rapid transition away from HCFC-22 in the 
supermarket sector and the proliferation of HFC alternatives now 
represent 25 percent of the market. But Hudson Technologies also notes 
that HCFC-22 systems operate more efficiently with HCFC-22 than HFC-
based alternatives and states that the use of reclaimed HCFC-22 is the 
best solution for HCFC-22 system owners. Several commenters assert that 
the 2012-2014 Rule hurt the alternative refrigerant industry, whose 
sales decreased significantly. USA Refrigerants believes that the 2012-
2014 Rule was working well to encourage a transition to alternatives 
and that SNAP-approved refrigerants are providing cost-effective 
alternatives to Americans. Three commenters note that there are several 
HCFC-22 alternatives available across a range of applications that are 
reducing dependence on HCFC-22.
    The agency supports encouraging new alternatives that offer 
improved environmental profiles to HCFC-22. However, as noted above, 
many of the existing alternatives in sectors that rely on HCFC-22 
(e.g., residential AC and retail food refrigeration) have GWPs 
comparable to or higher than HCFC-22. In later parts of this section, 
EPA addresses existing HCFC-22 inventories and the importance of 
encouraging transition, reclamation and improved refrigerant management 
practices.
    Three commenters explicitly oppose a zero allocation approach, 
which they believe would cause unanticipated market disruptions. In 
meetings after the issuance of the proposed rule and in their comments, 
Heating, Air-conditioning and Refrigeration Distributors, International 
(HARDI) expressed concerns that a zero allocation approach would leave 
insufficient time for distributors to plan their business, especially 
considering the long-standing expectation of an allocation through the 
end of 2019. Additionally, there are concerns that going to zero so 
quickly would leave

[[Page 64271]]

some distributors without access to HCFC-22 for the customers who 
operate and service HCFC-22 equipment. Another commenter, Arkema, 
questions the reclamation industry's ability to be the sole source of 
refrigerant needed to service consumer demand. Arkema also notes that 
the five-year timeline is especially important as EPA and the 
international community shift to regulation of HFCs; there should be no 
precipitous incentive to make inefficient switches to alternatives that 
may be phased out later. EPA believes its decision to issue allowances 
for 2015-2019 addresses these commenters' concerns. The third 
commenter, ACCA, does not support a zero allocation because they 
believe it would cause tremendous volatility and uncertainty in the 
market, which would likely lead to upward price fluctuations.
    In the proposal, EPA recognized that some stakeholders had 
encouraged the agency to cease allocating allowances for HCFC-22 in 
2015. The proposal noted that a zero allocation could have unintended 
consequences, given the longstanding expectation that the agency would 
issue allowances through 2019, and could adversely affect the business 
and transition planning for much of industry, particularly owners and 
operators of HCFC-22 equipment. In their comments and in subsequent 
meetings with EPA, many commenters point out that going to zero in 2015 
is not supported by a majority of market participants, both small and 
large businesses, including but not limited to: Producers, importers, 
distributors, contractors, and the end-user community. Given the long-
standing expectation that allowances for production and import of HCFC-
22 would be available through 2019, EPA agrees with comments that 
issuing zero allowances for 2015 could cause chaotic and unanticipated 
market disruptions, particularly because a zero option was not 
proposed.
    The agency continues to believe that a zero allocation is contrary 
to the goal of an orderly transition, and would lead to a high degree 
of market uncertainty. Given the diverse, and in some cases competing, 
legitimate needs, objectives and interests of the HCFC-22 stakeholder 
community, EPA can best meet its goal of a smooth transition and a 2020 
production phaseout by sending a clear market signal for 2015-2019. 
Based on the rationale laid out in the proposed rule and in today's 
final rule, EPA is issuing consumption allowances for HCFC-22 in 2015 
and beyond.
ii. EPA's Decision To Use a Five-Year Linear Approach for 2015-2019
    Having decided to issue allowances for HCFC-22 during the 2015-2019 
regulatory period, the agency's next decision was which methodology to 
use in setting the allocation. Based on the considerations below, EPA 
is finalizing allowances using a five-year linear approach.
    As a methodology, a linear approach has many clear benefits, not 
least of which is that it is simple and easy to communicate to affected 
parties. This aspect is important for service technicians, since they 
are often the ones directly interacting with home and business owners. 
It is often their job to explain what the HCFC phaseout means and how 
it works. Providing technicians with an easier-to-explain common sense 
approach should improve consumers' understanding of the phaseout and 
the options available to them. EPA developed several fact sheets that 
discuss the HCFC phaseout and the choices available to consumers to 
provide technicians and equipment owners with additional information. 
These fact sheets can be found at: www.epa.gov/ozone/title6/phaseout/classtwo.html.
    EPA recognizes that as a chemical reaches its production phaseout, 
modeling HCFC-22 servicing needs with precision becomes increasingly 
difficult. While EPA's Vintaging Model is updated frequently to reflect 
changes in the marketplace, it is not designed to model how the 
specific allocation amounts in recent years affects servicing need in 
future years, nor is it designed to model certain other events that may 
affect supply, e.g., the effects of a hot or cold summer, or the 
general state of the economy. The difficulty of predicting certain 
real-time market factors is one reason that the agency has not relied 
heavily on modeled servicing need in the final HCFC-22 allocation for 
2015-2019, and why EPA has always relied on modeling as one tool among 
many considered in deciding the final allocation.
    One commenter favors the estimation approach (Option 3) in order to 
stabilize the market. Other commenters oppose the estimation approach 
because in their view it would reduce incentives for recovery, does not 
account appropriately for stockpiles, and allocates more HCFC-22 than 
is needed. Another commenter, Johnstone Supply, supports a five-year 
phaseout similar to Option 3 but with approximately two-thirds of the 
allocation cut.
    Six commenters specifically address technical aspects or parameters 
in EPA's 2013 Servicing Tail Report. Several of these commenters 
question the report's accuracy and say EPA's projected servicing need 
for HCFC-22 does not adequately account for: Sales of alternative and 
retrofit refrigerants, declining leak rates (especially for GreenChill 
partners), servicing needs, existing HCFC-22 stockpiles, the 
capabilities of the reclamation industry, recycling, and future 
economic and weather conditions. One commenter, EOS Climate, 
incorrectly asserts that EPA assumes growth rates in all categories of 
HCFC-22 equipment despite the fact that virgin HCFC-22 can only be used 
for pre-2010 equipment and that imports of dry-shipped condensing units 
are decreasing. Another commenter, North Lakes Distributing, Inc., 
believes EPA ``has displayed a pervasive unwillingness to scrap the old 
inaccurate bottom up analysis,'' such as that used in the Servicing 
Tail Report. The commenter believes that if top down manufacturing 
supply information is not collected, estimates of usage in individual 
market sectors are not useful. EPA reiterates that the five-year linear 
approach uses a common sense approach, focused on a 2015 starting 
allocation that will encourage transition and a gradual phase out 
production and consumption of HCFC-22 by 2020. Also, since the 2015 
allocation is less than one-quarter of modeled servicing need as 
presented in the 2013 Servicing Tail Report, EPA believes that it has 
adequately addressed these commenters' concerns for the purposes of the 
2015-2019 allocation. The agency responds to specific comments more 
fully in the Response to Comments document.
    Since the market for virgin HCFC-22 is solely for servicing air-
conditioning and refrigeration equipment that was installed prior to 
2010,\22\ EPA believes that annually decreasing the allocation by the 
same amount over five years is appropriate. Such an allocation schedule 
should drive the necessary changes in the service market to prepare for 
the 2020 phaseout, without unnecessarily forcing transition or 
retrofits out of HCFC-22 equipment that is still within its expected 
lifetime. A five-year linear approach sends a clear market signal about 
the allowed production and import of HCFC-22 in each year leading up to 
the 2020 phaseout date. It also allows industry time to digest, comment 
on and participate in the public regulatory process related to actions 
EPA is proposing to take under SNAP to further

[[Page 64272]]

the goals of the President's Climate Action Plan. Actions under SNAP 
may bear on end-users' decisions about continuing to operate equipment 
with HCFC-22, or retrofitting or replacing the equipment. EPA is 
concerned that a three-year linear reduction to zero could increase the 
likelihood that end-users would rush to transition from HCFC-22 without 
adequately considering their longer-term options. A five-year approach 
provides more time for the introduction of alternatives that reduce 
overall risk, before the complete phaseout of HCFC-22 production and 
virgin import. A five-year approach with consistent annual decreases 
strikes an important balance: Recognizing that the phaseout of virgin 
production and import is only five years away, without forcing end-
users to retrofit or replace their equipment designed for HCFC-22. 
Continued operation of HCFC-22 equipment also helps ensure that HCFC-22 
is valuable; HCFC-22 is less likely to be vented and more likely to be 
reclaimed and reused if it has economic value.
---------------------------------------------------------------------------

    \22\ With limited exceptions through the end of 2011.
---------------------------------------------------------------------------

    EPA received numerous comments in support of the five-year linear 
approach. Commenters stated that the five-year linear approach will 
``provide steady incentives'' to reclaim material and move to 
alternatives, while also giving consumers and equipment manufacturers 
``sufficient time'' to prepare for the transition. Competition, market 
stability and ensured access to HCFC-22 were also cited as reasons to 
use a five-year linear schedule for issuing HCFC-22 allowances from 
2015 through 2019. EPA generally agrees with these comments.
    EOS Climate prefers the three-year drawdown, claiming that it 
partially accounts for existing stockpiles and provides significant 
environmental benefits compared to EPA's lead proposal at no additional 
cost. NRDC, Combs Investment Properties, Hudson Technologies, and EIA 
support a modified 3-year approach if EPA does decide to issue 
allowances. One commenter, DuPont, opposes a three-year schedule 
because ending the allocation in 2018 would result in a chaotic market. 
EPA sees the three-year schedule as having some of the same drawbacks 
as the zero allocation approach, given the longstanding expectation 
that the agency would issue allowances through 2019. Not allocating 
allowances in 2018-2019 could adversely affect the business planning 
and transition plans for much of industry, particularly owners and 
operators of HCFC-22 equipment. EPA addresses the role of inventory in 
the next section and the environmental benefits of EPA's chosen 
approach in the previous section.
    EPA has explained here the merits of the linear approach, which are 
supported by many commenters. Based on the available data, current 
market perceptions and the 2020 phaseout deadline, the agency believes 
a five-year linear drawdown best addresses the concerns and suggestions 
of a majority of the commenters. In the following paragraphs, EPA 
explains why it is finalizing a starting point lower than its preferred 
starting point of 13,600 MT.
iii. EPA's Decision To Use a Five-Year Linear Approach, Starting at 
10,000 MT in 2015
    Twelve commenters support Option 1, with the lower starting point 
of 10,000 MT in 2015. Several of these commenters are industry 
associations representing anywhere from 50 to several hundred small and 
large businesses. Commenters favor this option because it is one of the 
lowest allowance options proposed, it would provide the fewest 
allowances in 2015 and 2016, and because the linear approach provides 
market stability through its consistent annual decreases in allocation. 
The commenters generally advocate for a lower allocation than EPA's 
proposed starting point of 13,700 MT in order to send a strong early 
market signal of tightening supply, compensate for larger-than-
estimated HCFC-22 inventories, and stimulate reclamation. Five 
commenters support Option 1 starting at 13,700 MT. Those in support of 
EPA's preferred starting point of 13,700 MT believe that it offers the 
smoothest transition, while faster reductions may result in refrigerant 
shortages and high prices. The Food Marketing Institute supports a 
linear approach, but suggests a higher starting point than 13,700 MT. 
Options 2 and 3 each received support as the preferred option from one 
commenter.
    The agency is finalizing a 2015 allocation of 10,000 MT, with a 
decrease of approximately 2,000 MT each year thereafter. In deciding on 
the amount of the 2015 allocation, EPA gave further consideration to 
the market factors discussed in the proposal. Many of these market 
factors are discussed earlier in this section as support for EPA's 
decision to issue allowances in 2015-2019. EPA's decision to finalize a 
starting point of 10,000 MT was primarily based on three 
considerations: The availability of larger-than-anticipated inventory, 
the importance of a viable reclamation industry and the market-
signaling effects of a sufficiently low 2015 and 2016 allocation.
    In the 2012-2014 Rule, the agency estimated industry-wide inventory 
to be between 22,700 MT and 45,500 MT. As explained in section VI.A.2, 
in the fall of 2013, the agency asked nine entities in the HCFC-22 
market about their year-end inventory. Aggregate inventory data from 
these nine entities were fully available to EPA while developing the 
proposed rule. With the knowledge that aggregate inventory held by 
these nine major entities at the end of 2012 was 51,100 MT, which is 
higher than the upper end of EPA's estimate used in the 2012-2014 
rulemaking, EPA proposed 13,700 MT as its preferred starting point for 
2015. At the request of industry, EPA also collected 2013 year-end 
inventory data from these same nine companies. At the end of 2013, 
inventory had grown by 2,800 MT, an increase of 5.6% from 2012. The 
proposed 2015 starting points for the linear draw-down approaches are 
much lower than under the estimation approach, in part because of the 
inventory data EPA was able to collect and consider while developing 
the proposal.
    EPA is aware that these nine entities do not hold all inventory 
industry-wide. EPA was not seeking precise inventory numbers. The 
agency did not consider inventory as a result of a statutory mandate to 
do so. Rather, EPA believed it was reasonable to allow the approximate 
scale of inventory and inventory trends to inform its general 
understanding of the market. Given the data collected in the fall of 
2013, and the numerous conversations with many companies throughout the 
supply chain, EPA believes that the data from these nine companies are 
representative of the trends and scale of inventory across the entire 
market, and that the aggregate held by these nine companies accounts 
for a large proportion of total inventory. The data collected show that 
aggregate inventory is large enough to justify a starting allocation of 
10,000 MT instead of 13,700 MT. While additional inventory data from 
more entities might further support a 10,000 MT starting point, these 
data would not eliminate the considerations that led EPA to finalize a 
non-zero allocation for 2015-2019.
    In addition to comments on the proposal that discuss existing HCFC-
22 inventory as it relates to the proposed allocation options, EPA 
received 15 comments on its April 4, 2014, Notice of Data Availability, 
announcing the 2008-2013 aggregate HCFC-22 inventory data collected 
from nine companies. Six comments reiterated that HCFC-22 aggregate 
inventory is higher than expected or previously estimated by EPA. Six 
commenters

[[Page 64273]]

believe that the nine companies that EPA collected data from do not 
represent the entire market, while one commenter believes that nine 
entities likely hold a majority of HCFC-22 inventory. One commenter 
specifically names other potential sources of HCFC-22 inventory, while 
two comment that EPA needs to consider other sources of inventory 
beyond the nine surveyed companies like grocery stores and apartment 
buildings. Several comments explicitly state that the inventory data 
proves that no additional allowances are needed, while another 
commenter believes that the aggregate data supports issuing allowances 
in all five years. Two commenters add together recent allowance use, 
reported reclamation amounts and the change in aggregate inventory to 
show an estimate of actual market demand for HCFC-22, though the 
commenters believe that their servicing need calculations support a 
zero allocation in 2015 and beyond. Three commenters believe EPA needs 
additional inventory data to proceed with its rulemaking, but also 
believe that EPA should issue zero allowances.
    The agency's goal is to phase out the production of HCFC-22 by 
2020, consistent with Title VI of the CAA and the long-standing 
regulatory phaseout date, not to remove all HCFC-22 from inventory by 
2020. The statute does not specify the factors EPA is to consider in 
setting an allocation level, other than the applicable phaseout step. 
Existing inventory can be beneficial during a time of transition, 
allowing equipment owners more flexibility in planning and implementing 
their transition. The availability of HCFC-22 inventory after 2020 
along with continued reclamation is important for allowing equipment 
owners to continue using their equipment after the production phaseout. 
However, EPA also recognizes that current inventory grew in 2013 and is 
higher than some in industry expected, which is one of several reasons 
why EPA is finalizing a 2015 allocation of 10,000 MT instead of 13,700 
MT. Now that the inventory data is public, awareness as to the scale of 
existing inventory should help moderate potential price spikes and 
allow equipment owners to plan a thoughtful transition to alternatives.
    Several commenters appear to be confused about how EPA considered 
inventory information in development of this rulemaking, as compared to 
the 2012-2014 Rule that issued allowances for 2012-2014. In the 
proposal covering 2012 through 2014, EPA considered the servicing need 
estimates from the Vintaging Model and made reductions to that number 
to derive a possible allocation that approximates the need for virgin 
HCFC-22, just as in the 2010-2014 Rule. For 2012 through 2014, EPA 
proposed to decrease annual allocations by 6,000 MT each year to 
account for existing inventory. In the fall of 2012, the agency 
estimated that inventory was between 22,700 MT and 45,400 MT, based on 
preliminary market research and industry feedback. The agency finalized 
the annual 6,000 MT reduction in the 2012-2014 Rule, thus lowering the 
aggregate allocation for 2012-2014 compared to the 2010-2014 Rule. 
EPA's intent was not to immediately deplete all inventory, as inventory 
can help provide for a smoother transition out of HCFC-22, but to draw 
out some of the inventory prior to 2015. In the 2015-2019 proposal, EPA 
specifically proposed to account for up to 10,000 MT of inventory under 
the estimation approach, which, unlike the linear approaches, is most 
similar to the allocation methodology EPA used in the 2010-2014 Rule 
and the 2012-2014 Rule.
    In response to comments stating that EPA must consider prevailing 
market conditions and inventory held by entities from which it did not 
collect data, EPA explains above its different understanding of the 
role of inventory data in this rulemaking. The agency did not intend to 
allocate allowances at a level that would result in inventory being 
drawn down to zero immediately or even by 2020. The agency believes 
that the additional expenditure of effort, particularly the information 
collection burden imposed on industry, is not required to establish a 
reasonable and predictable allocation level for the final five years of 
the HCFC-22 phaseout.
    EPA appreciates that many commenters believe additional HCFC-22 
production and import is unneeded based on their position in the 
market. EPA's allocation considers the perspectives of both the end-
users that need HCFC-22 to operate their equipment and the companies 
recovering and reclaiming HCFC-22, because both play an integral role 
in meeting EPA's policy objective of a smooth transition from HCFC-22. 
In particular, the capability of recovery and reclamation companies is 
an important consideration as reclamation decreases the need for new 
production, thereby allowing EPA to allocate fewer HCFC-22 allowances.
    In response to comments about potential inventory held by grocery 
stores, apartment buildings, and other large end-users, EPA points out 
that inventory held by a building or supermarket in preparation for a 
possible leak is different from inventory in the supply chain. 
Inventory held by these large end-users is refrigerant that they intend 
to use, not sell. Therefore, this type of inventory is more like 
refrigerant already charged into a system than inventory in the supply 
chain (i.e. channel inventory) that will eventually be sold to an end-
user. Equipment owners have this refrigerant on-hand in order to keep 
operating their system, whereas inventory in the supply chain is 
waiting for someone to purchase it.
    Although existing stocks of HCFC-22 are important for meeting 
continued servicing need, EPA recognizes that too much existing 
inventory could be contrary to the agency's goal of a smooth transition 
to alternatives. Proper refrigerant management and a viable reclamation 
industry are also critical to a smooth transition, which is why EPA 
believes that a sufficiently low allocation is needed in order to 
encourage the use of some existing stocks and also to encourage--but 
not immediately force--transition. The final 2015 allocation of 10,000 
MT is less than one-quarter of the modeled 2015 servicing need. By 
allocating well below the projected need for HCFC-22 each year, EPA is 
accounting for retrofitted equipment, recovery and reuse of 
refrigerant, use of reclaimed refrigerant, and existing inventory of 
virgin HCFC-22, in addition to realizing the benefits of a linear 
drawdown already discussed.
    Twenty-seven commenters addressed market issues related to the 
supply or price of HCFC-22; most of these commenters believe the 2012-
2014 Rule led to an oversupply in the market, with adverse effects on 
the reclamation and alternative-refrigerant industries. Several 
commenters assert that the 2012-2014 Rule led to a 50-60 percent 
decline in the price of HCFC-22 relative to the peak price reached in 
2013, a decline in volume of returned used HCFC-22, a decline in 
reclamation and recycling, and an increase in volume of HCFC-22 being 
leaked or vented. One commenter, USA Refrigerants, states that their 
organization and other EPA certified reclaimers were negatively 
affected by the change in the price of HCFC-22 and the inability to 
provide high buyback prices for used refrigerant, which they said 
dropped to as low as $1.00 per pound. Another commenter, EIA, notes 
that the price of virgin HCFC-22 in 2011 was $4.50/pound but claims 
that the price needs to exceed $8/pound for reclaimed HCFC-22 to be 
competitive. One distribution company reports already seeing 50 percent 
less reclaimed material available to sell in 2014. On the other hand, 
Polar Technologies states that its internal analysis on the market 
dynamics of

[[Page 64274]]

HCFC-22 found no correlation between price and reclaim volume. The 
commenter asserts that as prices increase, hoarding occurs and 
reclamation decreases. As HCFC-22 prices jumped and supplies seemingly 
were shrinking, contractors were speculating and buying up cylinders to 
store material to hedge against the pending shortage.
    Three commenters make statements on investments by the reclamation 
and alternative refrigerants industry. A-Gas RemTec notes that they 
invested in additional capacity for reclaimed refrigerants but have 
since halted this development as a result of the 2012-2014 Rule. A-Gas 
RemTec notes that other entities may also question committing to 
increased capacity in an unpredictable market, which could lead to a 
refrigerant shortage in future years. Another commenter, Hudson 
Technologies, asserts that the reclamation industry invested millions 
of dollars in infrastructure, but since the supply gap never 
materialized, reclamation has not grown. USA Refrigerants notes that 
companies that invested in alternative refrigerants saw prices for 
HCFC-22 plummet as a result of the 2012-2014 Rule, undercutting the 
sale of alternatives.
    Six commenters are concerned about venting of HCFC-22, which they 
believe is perpetuated by an oversupply of HCFC-22 and the 
corresponding low value of the gas. Specifically, these commenters 
believe that a lower (or in some cases, zero) allocation would 
incentivize the use of reclaimed gas and better refrigerant management.
    The agency believes the best way to encourage reclamation, as well 
as development and use of expanded reclaimer capacity, is to send a 
clear market signal: A substantial decrease in allocation in 2015 with 
a continued, but decreasing, allocation over all five years. Such a 
signal should encourage recovery and reclamation, while also giving 
equipment owners confidence that they can have access to refrigerant 
for their installed HCFC-22 equipment through 2020 and beyond. The 
linear drawdown starting at 10,000 MT should encourage more recycling 
and reclamation, without creating such dramatic market changes as to 
incentivize hoarding of used refrigerant. This approach has the lowest 
allocation in 2015 and 2016 of all options discussed in the proposed 
rule, which should encourage better refrigerant management practices, 
while a small, decreasing allocation in later years should allow for a 
smooth transition to zero in 2020. Compared to a 2014 allocation of 
23,100 MT, a 2015 allocation of 10,000 MT should encourage proper 
refrigerant management and more reclamation; it should also encourage 
planning for a transition to alternative refrigerants without 
unnecessarily forcing equipment owners to immediately abandon their use 
of HCFC-22.
    The agency views its final allocation as sending appropriate 
signals to the market by decreasing the HCFC-22 allowance allocation by 
almost sixty percent between 2014 and 2015. Further, by providing a 
predictable but declining number of allowances through 2019, the agency 
believes this final rule will give HCFC-22 equipment owners the 
information they need to choose between maintaining their HCFC-22 
systems, retrofitting their existing systems, and purchasing new 
systems that rely on alternative refrigerants. EPA intends to strike a 
balance with the final allocation: A significant decrease from the 2014 
allocation promotes alternatives, reclamation, and transition, while a 
non-zero allocation avoids stranding HCFC-22 equipment or forcing 
premature retrofits.
4. Timing of the Final Rule
    Eighteen commenters urge EPA to finalize today's action as quickly 
as possible. They cite several reasons for expeditious action specific 
to the HCFC-22 allocation: To allow industry to properly plan and 
prepare for complying with the rule; to provide certainty and stability 
for business planning; and to minimize market disruption and foster a 
smoother transition during these final stages of the HCFC-22 phaseout. 
One of these commenters states that EPA is not acting quickly enough. 
AHRI specifically calls out the need for timely action as it relates to 
the HVAC market, a major use for HCFC-22, which will transition to new 
minimum energy efficiency standards on January 1, 2015. AHRI states 
that uncertainty in the HCFC-22 allocation adds complexity to this 
transition and that lack of knowledge regarding the HCFC-22 allocation 
could be detrimental to manufactures and small business owners.
    On the other hand, RMS, New Era Group Inc., and ICOR International 
comment that EPA needs to update its models or obtain more accurate 
data prior to finalizing this rule. New Era Group Inc. suggests that 
the proposed rule be withdrawn and the NODA republished along with 
immediate steps to mitigate the serious damage to small companies, 
human health, and the environment. EPA does not see a need to re-
propose or to publish another NODA. As discussed earlier in this 
notice, EPA does not believe it needs to gather additional data or to 
propose additional options. The agency believes the information it has 
at its disposal currently is sufficient to justify the significantly 
lower allocation of HCFC-22 as compared to the preferred option in the 
proposal, especially since finalizing a rule this year will support 
EPA's goal of a smooth transition to alternatives.
    EPA appreciates the many comments stressing the value of a timely 
rulemaking in providing regulatory certainty to the market. The agency 
agrees that it can best realize its goal of a smooth transition to 
alternatives via a timely 2015-2019 rule, especially in the case of 
HCFC-22. In addition to a timely rule, the agency and many commenters 
believe a linear drawdown will also provide certainty and help 
stabilize the market by setting a straightforward, predictable schedule 
for the final years of the HCFC-22 phaseout.

B. What is the 2015-2019 HCFC-22 production allocation?

    Since the start of the HCFC allocation program in 2003, the agency 
has determined the HCFC-22 production allocation in one of two ways. 
Under either method, EPA first determines the aggregate consumption 
allocation, divides by the aggregate baseline, and assigns the 
percentage of the consumption baseline accordingly. EPA describes this 
process in more detail in section II.B.
    In the 2003-2009 Rule, and again in the 2010-2014 Rule, EPA 
allocated the same percentage of baseline allowances for production as 
it did for consumption. A company with a production baseline at 40 CFR 
82.17 would simply multiply its baseline by the percentage listed at 
82.16 to determine its calendar-year production allocation. However, in 
the 2012-2014 Rule covering 2012-2014, EPA provided a larger percentage 
of baseline and more HCFC-22 production allowances than it did for 
consumption. EPA amended section 82.16 to include two tables, one 
listing the baseline percentage for consumption and the other listing 
the percentage for production. As discussed in the 2012-2014 Rule, the 
reason for this change was to allow United States manufacturers to 
produce at the same level as under the 2010-2014 Rule (see 78 FR 
20020).
    For the 2015-2019 regulatory period, EPA proposed two options for 
the HCFC-22 production allocation: (1) Issue production allowances at 
the highest allowable level under the Montreal Protocol, or (2) provide 
approximately the same number of

[[Page 64275]]

production allowances as consumption allowances.
    EPA noted that the first approach was its preferred option. EPA 
believes that allocating more production allowances than consumption 
allowances cannot lead to an increase in United States consumption and 
would not result in a global increase in production or consumption of 
HCFC-22; all countries' consumption are capped under the Montreal 
Protocol and presumably global production would be driven by market 
conditions. Allocating additional production allowances may have 
environmental benefits, to the extent that U.S. production displaces 
production in foreign plants that lack HFC-23 byproduct controls and 
destruction technologies. For more discussion on EPA's rationale for 
this approach, see the preambles for the 2012-2014 Final Rule (78 FR 
20020) and the 2015-2019 Proposed Rule (78 FR 78089).
    EPA received eight comments on how it will determine the HCFC-22 
production allocation for 2015-2019. Comments from EIA, a private 
citizen, and Hudson Technologies stated that the industry or 
marketplace does not need any additional HCFC-22, and that EPA should 
not issue production allowances. Additionally, EIA believes that 
issuing production allowances is contrary to helping developing 
countries transition to low-GWP and zero-ODP technologies through the 
Multilateral Fund of the Montreal Protocol (which is the financial 
mechanism to help those Parties meet their Montreal Protocol 
obligations). Airgas is also against EPA's preferred option on the 
grounds that more production allowances for export will lead to further 
oversupply globally. Airgas believes that consumption and production 
allocations should be the same and should be set at zero or minimal 
levels. A private citizen supports cutting the production allocation to 
encourage a shift in U.S. production of ODS alternatives for export, 
instead of HCFC-22. The commenter acknowledges the importance of 
considering HFC-23 byproduct emissions, but thinks it is less important 
since HCFCs will be phased out globally.
    DuPont and Honeywell commented in favor of EPA's proposal to 
allocate the maximum HCFC-22 production allowed under the Protocol 
after accounting for other HCFC production allocations. The commenters 
believe that more production for export could allow production from 
U.S. facilities to displace production from facilities abroad that may 
not control HFC-23 emissions, thus providing environmental benefits and 
reductions in GHG emissions. The commenters reference EPA's prior 
statements that allowing for additional U.S. production for export 
could not result in a domestic or global increase in consumption since 
HCFC producers are already limited by consumption allowance limits 
established under the Montreal Protocol. A third commenter supported a 
production allocation that is higher than allowed under the Montreal 
Protocol, starting at 25 percent of U.S. HCFC production baseline in 
2015 (whereas the Montreal Protocol cap is 10 percent of baseline for 
all HCFCs).
    In response to the five adverse comments on EPA's preferred option, 
the agency points out that allocating more production allowances than 
consumption allowances does not provide United States producers the 
opportunity to exceed their consumption allocation. Production of one 
kilogram of an HCFC still requires both a production allowance and a 
consumption allowance (82.15(a)(1), (2)). Allocating more production 
allowances than consumption allowances would provide United States 
producers the opportunity to continue production for export subject to 
existing regulatory constraints. A company must submit documentation to 
verify the export of an HCFC for which consumption allowances were 
expended in order to request a reimbursement of spent consumption 
allowances. The agency reviews the documentation and issues a notice to 
either deny or grant the request. Therefore, a company would not be 
able to produce more HCFC-22 unless it had exported an equal amount of 
material and been granted a refund of spent consumption allowances. To 
the extent that commenters support a lower production allocation to 
address concerns about U.S. consumption, EPA responds to those comments 
in Section VI.A. of this preamble.
    In response to concerns about an increase in global consumption, 
EPA explained in the 2015-2019 Proposed Rule that allowing United 
States production allocation to be higher than the consumption 
allocation could not result in increased global consumption. Providing 
more production than consumption allowances could allow companies to 
continue exporting to non-Article 5 countries, which have the same 
overall Montreal Protocol phaseout schedule as the United States but 
may not use the United States' chemical-by-chemical approach to phasing 
out HCFCs. Also, consumption of HCFCs in Article 5 countries was capped 
starting in 2013, which further limits global HCFC-22 demand (see 
Montreal Protocol Art. 5, para. 8 ter.). Finally, at least one company 
holding production allowances does not produce HCFC-22 in the United 
States; therefore, it is unlikely that every production allowance 
issued will be used.\23\ EPA is concerned that the alternative 
approach--issuing production allowances at the same level as 
consumption, instead of at the maximum level allowed under the cap--
reduces flexibility for industry without a benefit to the environment.
---------------------------------------------------------------------------

    \23\ Data submitted to the Greenhouse Gas Reporting Program on 
byproducts of the HCFC-22 production process indicate that only 
three of the four companies holding production allowances actually 
produced HCFC-22 in 2010, 2011 and 2012. While the non-producing 
allowance holder can transfer its allowances to another producer, 
the fact that they do not produce in the U.S. makes it unlikely that 
all calendar-year production allowances will be used.
---------------------------------------------------------------------------

    EPA disagrees with EIA's comment that issuing production allowances 
is contrary to helping developing countries transition to low-GWP and 
zero-ODP technologies through the Multilateral Fund of the Montreal 
Protocol. The U.S. is committed to helping Article 5 Parties transition 
to non-ODP and low-GWP alternatives via the Multilateral Fund. Since 
HCFC consumption in Article 5 Parties was only capped starting in 2013, 
and because those Parties still have servicing needs for HCFC-22 in 
existing equipment, EPA does not see HCFC-22 exports during 2015 
through 2019 as contrary to the goals of encouraging a transition to 
alternatives. Given that Article 5 countries are not required to 
completely phase out HCFCs until 2040, it is expected that demand for 
HCFC-22 will continue while low-GWP alternatives are developed and 
deployed to replace existing HCFC technologies.
    As mentioned previously, EPA also believes that allocating more 
production allowances than consumption allowances could have 
environmental benefits if United States production displaces production 
at facilities that do not control byproduct emissions of HFC-23, which 
has a global warming potential of 14,800.\24\ Comments on the 2015-2019 
proposal cited the growth of HFC-23 emissions globally and indicated 
that facilities in Article 5 countries do not control HFC-23 emissions 
to the same degree as companies operating in the United States. EPA has 
historically worked with industry through its HFC-23

[[Page 64276]]

Emission Reduction Partnership to encourage companies to reduce HFC-23 
byproduct emissions from the manufacture of HCFC-22. For further 
discussion see the 2015-2019 Proposed Rule at 78 FR 20021.
---------------------------------------------------------------------------

    \24\ GWP of HFC-23 presented in the Intergovernmental Panel on 
Climate Change (IPCC) Fourth Assessment Report: Climate Change 2007 
(AR4)
---------------------------------------------------------------------------

    Based on the consideration of the comments, and for reasons 
discussed here, EPA is issuing the maximum number of HCFC-22 production 
allowances allowed under the Montreal Protocol cap, after accounting 
for production allocations of all other HCFCs provided under this rule. 
Starting in 2015, the United States production cap under the Montreal 
Protocol is 1,553.7 ODP-weighted MT. The final production allocations 
for HCFC-124 and HCFC-142b are 4.4 and 2.3 ODP-MT, respectively (see 
VI.E and VI.C, respectively), leaving the remainder of the cap 
available for HCFC-22 production. For 2015-2019, EPA is issuing 21.7% 
percent of HCFC-22 production baseline, which is approximately 28,000 
MT of HCFC-22, as shown in the regulatory text at 82.16(a).
    To put the 2015 cap in historical perspective, EPA issued 41,200 MT 
of HCFC-22 production allowances in 2013, 36,000 MT in 2014, and is 
only issuing 28,000 MT of HCFC-22 production allowances for each year 
from 2015-2019.

C. What is the 2015-2019 HCFC-142b consumption and production 
allocation?

    The 2010-2014 Rule allocated 100 MT of HCFC-142b consumption 
allowances annually. When EPA re-established HCFC-22 and HCFC-142b 
baselines in the 2011 Interim Final Rule and 2012-2014 Rule, the HCFC-
142b consumption allocation remained at 100 MT. Because the HCFC-142b 
production baseline was significantly higher than the consumption 
baseline, and the same percentage of baseline was used for both 
consumption and production, the production allocation became 463 MT per 
year in 2011-2014.
    As discussed in the proposed rule, several HCFC manufacturers 
anticipate continued, albeit decreasing, sales of refrigerant blends 
containing HCFC-142b in 2015 and later. HCFC-142b is predominantly used 
in refrigerant blends that have historically served as replacements for 
CFC-12 and R-500 in medium- and large-sized refrigeration equipment. 
Some of these blends containing HCFC-142b, particularly R-409A, are in 
use today, but in small quantities. Because the volumes are very small, 
EPA does not model servicing need for equipment using these HCFC-142b 
blends. Refrigerant sales data collected by the California Air 
Resources Board,\25\ along with industry feedback, confirm that there 
is some R-409A equipment still in use. For this reason, EPA proposed to 
allocate 35 MT of consumption allowances in 2015 with a decrease of 5 
MT each year through 2019.
---------------------------------------------------------------------------

    \25\ See Preliminary 2011 and 2012 Sales and Distribution Data 
from the California Air Resources Board's Refrigerant Management 
Program in the docket.
---------------------------------------------------------------------------

    As stated in the proposed rule, a consumption allocation of 35 MT 
in 2015 is an appropriate balance between the 2010-2014 allocation of 
100 MT, the actual consumption of HCFC-142b in recent years, and the 
reasonable assumption that R-409A is used mainly in retrofitted 
equipment designed for CFCs that is nearing expected retirement. With 
an annual decrease of 5 MT, the HCFC-142b allocation would be 15 MT in 
2019 before going to zero in 2020. A decreasing allocation sends a 
stronger market signal that production and import of HCFC-142b are 
ending, as compared to a constant allocation in all five years. Such a 
signal will help encourage equipment owners to transition to equipment 
that uses non-ODS refrigerants, while also providing them with an 
opportunity and time to select alternatives that are more energy 
efficient. EPA is finalizing its proposed consumption allocations of 35 
MT in 2015, 30 MT in 2016, 25 MT in 2017, 20 MT in 2018, and 15 MT in 
2019. HCFC-142b consumption and production in 2020 will be zero based 
on EPA's chemical-by-chemical phaseout rule (58 FR 65018).
    For production, EPA proposed issuing HCFC-142b production 
allowances at the same level as consumption, not the same percentage of 
baseline. Unlike HCFC-22 production, historic exports of HCFC-142b do 
not indicate a need for additional production allowances to meet export 
demands. EPA stated that it would consider issuing up to 100 MT of 
production allowances, even if the final consumption allocation is 
lower, if there is documented need for United States-produced HCFC-142b 
in other non-Article 5 countries; however, the agency has not received 
any such documentation. In this rule, EPA is finalizing its preferred 
allocation of 35 MT of HCFC-142b production allowances, decreasing by 5 
MT per year through 2019.
    EPA received five comments related to how it will determine the 
HCFC-142b allocation. Three comments support EPA's proposal to allocate 
35 MT of HCFC-142b consumption allowances in 2015 with a decrease of 5 
MT each year. Three commenters support EPA's proposal to issue 
production allowances at the same level as consumption, asserting that 
a lower percentage would discourage U.S. production and harm the U.S. 
economy. One commenter, Arkema, requests that EPA make the percentage 
allocations for HCFC-142b production allowances the same as the 
proposed percentage for consumption allowances, which would result in a 
higher absolute number of production allowances. As proposed, the rule 
would provide 35 MT of total production allowances, but for some 
companies, their production allowances would be much lower than their 
consumption allowances. Arkema argues that an individual company 
receiving fewer production allowances than consumption allowances would 
discourage U.S. production of HCFC-142b, resulting in both 
environmental and economic consequences. Another commenter, CIP, stated 
during the January 2014 public hearing on the proposed rule that they 
support issuing HCFC-142b allowances only through 2017 (instead of 
2019) to enhance good handling, emissions control, and enforcement.
    While one commenter recommends going to a three-year approach that 
stops providing consumption allowances for HCFC-142b in 2018, EPA did 
not propose that option and believes it may be too rapid for many of 
the same reasons EPA is not finalizing the 3-year approach for HCFC-22. 
A three-year approach would be contrary to long standing market 
expectations and EPA's goal of allowing equipment owners to realize the 
intended life of their equipment and plan a smooth, thoughtful 
transition to alternatives.
    For production allowances, EPA does not agree that the percent 
allocations for consumption and production should be the same. The 
production baseline for HCFC-142b is substantially larger than the 
consumption baseline because of the baseline transfers made in 2008 and 
2009. While one company transferred an equal number of its HCFC-142b 
baseline consumption and production allowances, a second company did 
not. As a result, the number of aggregate baseline consumption 
allowances is about 1/5th the number of aggregate baseline production 
allowances. Using the same percentage of baseline for HCFC-142b 
production as for consumption would result in more production 
allowances than consumption allowances. As discussed above, historic 
exports of HCFC-142b do not indicate a need for additional production 
allowances to meet export demands. For more history on these

[[Page 64277]]

trades, see previous HCFC allocation proposed and final rules available 
at 76 FR 47451, 77 FR 237, and 78 FR 20004.
    To address the commenter's concern that an individual company might 
not have the desired number of production allowances, EPA notes that it 
is allocating more HCFC-22 production allowances than consumption 
allowances. HCFC-22 production allowances can easily be transferred 
into HCFC-142b production allowances on a calendar-year basis. 
Alternatively, HCFC-142b allowance holders can seek to transfer 
allowances from another HCFC-142b production allowance holder to their 
company. Finally, EPA has allocated up to 10 percent of baseline in 
Article 5 production allowances that can be used to export 
domestically-produced HCFC-142b. Because of these flexibilities, EPA 
does not see a need to allocate additional HCFC-142b production 
allowances and is finalizing its proposed HCFC-142b production 
allocation of 35 MT in 2015, decreasing by 5 MT per year through 2019.

D. What is the 2015-2019 HCFC-123 consumption allocation?

    HCFC-123 is currently used as a refrigerant and as a fire 
suppression agent, which are the two uses of non-feedstock virgin HCFCs 
permitted by section 605(a) of the CAA as of January 1, 2015. The 
agency proposed to issue consumption allowances to allow import for 
these two uses. For the 2010-2014 regulatory period, EPA issued 
approximately 2,500 MT of HCFC-123 consumption allowances each year, 
which is 125% of the HCFC-123 consumption baseline. EPA has never 
established a production baseline for HCFC-123, and the agency has no 
record of domestic production of HCFC-123 for refrigeration or fire 
suppression uses during the baseline years (2005-2007).
    As stated in the proposal, section 605(b) of the Clean Air Act 
restricts production of any class II substance to 100% of baseline 
levels or less beginning on January 1, 2015. Section 605(c) requires 
that consumption of class II substances be phased out on the same 
schedule as production. The agency's reading of 605(b) and 605(c) 
together is that as of January 1, 2015, EPA may allocate no more than 
100 percent of baseline for production or consumption of each class II 
substance. This milestone is part of the phaseout schedule contained in 
the CAA. EPA has accelerated the section 605 phaseout schedule for some 
HCFCs under the authority of section 606. Nevertheless, the 2015 
milestone in section 605(b) is still relevant because it applies to 
each class II substance individually. This is in contrast to the basket 
approach contained in the Montreal Protocol. Under section 614(b), 
where there is a conflict between Title VI of the CAA and the Montreal 
Protocol, ``the more stringent provision shall govern.'' With respect 
to individual substances, section 605 is more stringent. Thus, for the 
2015 control period and beyond, EPA may not allocate more than 100 
percent of baseline for any class II substance.
    Under the current phaseout regulations, beginning in 2015, 
production and import of HCFC-123 is limited to servicing of existing 
refrigeration and air conditioning equipment only. In this rule, EPA is 
finalizing revisions to section 82.16(d) to allow production and import 
of HCFC-123 for non-residential, streaming fire suppression 
applications to complement section 605(a)(4) of the CAA (see section 
IV.B.3.) This exemption will end on December 31, 2019, because 
beginning in 2020, Article 2F of the Montreal Protocol restricts 
production and import of HCFCs to servicing of existing refrigeration 
and air conditioning equipment.\26\ While virgin HCFCs can continue to 
be used in fire suppression applications, EPA does not intend to issue 
consumption allowances for fire suppression after 2019 because of this 
Montreal Protocol requirement. In addition, beginning January 1, 2020, 
section 605(a) of the CAA prohibits the use of virgin class II 
substances in the installation and/or manufacture of air conditioning 
and refrigeration systems. Any HCFC-123 consumption allowances issued 
after 2019 would only allow import of HCFC-123 for use as a refrigerant 
for servicing systems manufactured prior to January 1, 2020.
---------------------------------------------------------------------------

    \26\ Use of HCFC-123 that was imported prior to 2020, or that is 
used, recovered and recycled, is still allowed for use in fire 
suppression beyond January 1, 2020.
---------------------------------------------------------------------------

    EPA's understanding is that much of the HCFC-123 refrigerant use 
today is to service and manufacture low pressure chillers. Given the 
expectation that these chillers can last for more than 20 years, EPA 
sought comment on whether it should provide a static amount of HCFC-123 
allowances through 2019 at the maximum amount allowed by the CAA (100 
percent of baseline), or whether it should begin to gradually reduce 
HCFC-123 allowances now to foster transition. EPA stated that it 
preferred to issue 100 percent of the HCFC-123 baseline. This approach 
would be consistent with the way EPA allocated HCFC-22 and HCFC-142b 
allowances prior to the 2010 prohibition on manufacturing new HCFC-22 
and HCFC-142b appliances.
    In considering allocation options, EPA looked at the projected need 
for virgin HCFC-123 for refrigeration and nonresidential fire 
suppression uses. EPA's modeled need for each of these uses is 
presented in the 2013 Servicing Tail Report. In the proposed rule, EPA 
sought comment on the remaining refrigerant and fire suppression uses 
of HCFC-123, how much is needed, and why non-ODS alternatives could not 
meet this need. Based on data provided during the comment period, EPA 
provides an updated projection of HCFC-123 need in the 2014 Servicing 
Tail Report.
    EPA received nine comments regarding its proposed options for 
issuing HCFC-123 consumption allowances. Four commenters support EPA's 
preferred option to allocate 100 percent of the HCFC-123 consumption 
baseline. Two of these commenters assert that there is no commercially 
available alternative to replace HCFC-123 in low-pressure centrifugal 
chillers, and one commenter noted that its HCFC-123 alternative 
development strategy is based on the existing date of transition (2020) 
and requires significant chiller redesigns. One commenter believes that 
100 percent allocation is necessary to support new chillers and those 
to be serviced in the future, and that allowing continued HCFC-123 
allowances may prevent global warming because competitors' products 
typically use HFC-134a (which has a higher GWP than HCFC-123). One 
other commenter states that there is no need to decrease the allowances 
over time to ensure a smooth transition as the EPA will have the 
opportunity to issue allowances post 2019 to allow for servicing of 
existing equipment.
    In an attachment to its comments, AMPAC makes the case for 
continued HCFC-123 production in 2020 and beyond, requesting that EPA 
consider an updated ODP of 0.0098 for the purposes of ``analysis of 
environmental impact.'' This same commenter urged EPA to consider 
increasing the HCFC-123 allocation to 120 percent of baseline to 
provide flexibility in the market and benefits to users and the 
environment. The commenter states that their projected need for HCFC-
123 allowances for nonresidential fire suppression is more than what is 
proposed in EPA's preferred allocation and the increased allocation 
they are recommending still falls well under the Montreal Protocol cap. 
Specifically, AMPAC believes that within section 605(b) and 605(c), 
there could be EPA

[[Page 64278]]

discretion, subject to meeting the HCFC cap, to increase the 
consumption allowance allocations for HCFC-123 in 2015-2019 beyond the 
values found in the baseline years (2005-2007). The commenter finds 
that exercising this discretion is appropriate given that the highest 
contemplated level of planned allocation of HCFC-22 allowances in the 
Proposed Rule still results in the U.S. being well below the Montreal 
Protocol cap. AMPAC also requests that EPA increase HCFC-123 allowances 
for 2015-2019 by 100 MT to account for higher than initially cited use 
for fire suppression.
    Five other commenters state that EPA's preferred HCFC-123 
allocation is too high. Three of these commenters believe that EPA's 
justification for its preferred allocation is deficient because 
commercially-viable alternatives exist for HCFC-123 in centrifugal 
chillers, such as Solstice-1233zd(E) (trans-1-chloro-3,3,3-
trifluoroprop-1-ene) and HFC-134a. One commenter also noted that they 
have a chiller using HFC-134a that surpasses industry standards for 
energy efficiency. This commenter also believes that EPA has made no 
effort to encourage the development and use of alternatives for HCFC-
123. Another commenter believes that EPA has given preferential 
treatment to an ODS that favors one manufacturer in the air 
conditioning business. Two other commenters support an allocation of 
less than 100 percent of the consumption baseline to account for 
recovery and recycling.
    The isomer of HCFC-123 that is primarily used in fire suppression 
has an ODP of 0.02 under long-standing CAA regulations \27\ and a GWP 
of 77. While EPA is aware of studies showing a lower ODP for HCFC-123, 
the specific ODP used for HCFC-123 does not affect the section 605(b) 
and (c) requirement to limit the production and consumption of each 
class II substance to at most 100 percent of baseline starting in 2015. 
The baseline is not ODP-weighted, so a change in the ODP would not 
change the amount that EPA could allocate. Additionally, the Montreal 
Protocol uses an ODP of 0.02, so EPA will continue to use that value. 
HCFC-123 has a lower GWP than some of the refrigerant alternatives 
available (e.g. HFC-134a with a GWP of 1,430). However, compared to a 
recently SNAP-listed alternative, Solstice-1233zd(E), HCFC-123 has both 
a higher ODP (0.02 vs. 0.00024-0.00034) and a higher GWP (77 vs. 4.7-
7). Of note, Solstice-1233zd(E) equipment is still being 
commercialized, but should be available in the future.
---------------------------------------------------------------------------

    \27\ See Appendix B to 40 CFR Part 82 Subpart A.
---------------------------------------------------------------------------

    EPA is not attempting to favor any type of equipment or any 
specific company with this allocation as some commenters have 
suggested. EPA does not have control over the number of manufacturers 
that use a particular chemical in their equipment. The agency is merely 
attempting to meet needs for HCFC-123 that are consistent with market 
projections, while also encouraging transition and the development of 
non-ODP and low-GWP alternatives.
    Several commenters indicated that allocating 100 percent of 
baseline is counter to how the agency has handled other HCFCs. In 
response, EPA notes that handling HCFC-22 and HCFC-142b differently 
from HCFCs with lower ODPs has been a long-standing agency policy. 
While EPA could have accelerated the phaseout schedule for HCFC-123 as 
it did for HCFC-22 and HCFC-142b, it did not. In the 1993 proposed 
rule, EPA stated that ``no change to the statutorily specified 
timetable would be imposed on HCFC-123 [. . .] because of [its] 
substantially shorter lifetime[] and lower ODP[],'' (58 FR 15027). EPA 
continues to believe this logic is appropriate for the HCFC-123 
allocation during the 2015-2019 time period. The agency is finalizing a 
consumption allocation of 2,000 MT, which is 100 percent of baseline, 
for the years 2015-2019.
    Additionally, allocating 100 percent of baseline is consistent with 
how EPA handled the allocations of HCFC-22 and HCFC-142b prior to 2010. 
As of January 1, 2010, it became illegal to use virgin HCFC-22 or HCFC-
142b in the manufacture of a new appliance. In 2003-2009, EPA allocated 
100% of the HCFC-22 and HCFC-142b baselines right up until the 
prohibition on use in manufacturing took effect. In this final rule, 
EPA is taking similar action with HCFC-123 by allocating 100 percent of 
baseline up until the January 1, 2020, ban on using virgin HCFC-123 in 
the manufacture of appliances takes effect.
    There is one important difference between how EPA is allocating 
allowances for HCFC-123 compared to HCFC-22 and HCFC-142b. In 2003-
2009, EPA allocated more HCFC-22 and HCFC-142b consumption than 
estimated market need. In this rule, EPA is allocating fewer HCFC-123 
consumption allowances than the amount of estimated market need. 
Allocating below EPA's estimate for market need, combined with the 2020 
ban on the manufacture of new HCFC-123 appliances, should provide 
incentive to recover and recycle used refrigerants, as well as to 
transition to alternative non-ODS refrigerants, all while meeting 
anticipated market need.

E. What is the 2015-2019 HCFC-124 consumption and production 
allocation?

    The primary use of HCFC-124 beginning January 1, 2015, will be in 
refrigerant blends. Though HCFC-124 has sterilant and fire suppression 
applications that are listed as acceptable under the SNAP program, EPA 
is adopting only a narrow de minimis exemption to the CAA section 
605(a) use prohibition for the use of virgin HCFCs as sterilants, and 
there are no remaining commercial applications of HCFC-124 fire 
suppression products. Several refrigerant blends with HCFC-124 are 
listed as acceptable by the SNAP program: R-401A, R-401B, R-409A, R-
414A, R-414B, R-416A and others. Given EPA projected some continued use 
of certain refrigerant blends containing HCFC-124, the agency proposed 
to issue HCFC-124 allowances in 2015-2019. As mentioned in the 
proposal, the Servicing Tail Report likely does not capture all current 
uses of HCFC-124 refrigeration equipment.
    EPA proposed to allocate both consumption and production at the 
level of 200 MT. However, the agency requested comments on a lower 
allocation of as few as 4 MT of HCFC-124 consumption and production 
allowances, consistent with the Servicing Tail Report projections. 
While not the preferred allocation, EPA said it would consider a lower 
allocation if commenters could provide evidence that the allocation 
should be that low. Similarly, EPA requested data from commenters in 
support of allocating up to 400 MT of HCFC-124 consumption and 
production allowances. The agency also sought comment on the transition 
or retrofit plans of equipment owners, and for how long they expect to 
need virgin HCFC-124.
    The agency received five comments about the HCFC-124 allocation. 
Two companies support EPA's proposal to allocate 200 MT of production 
and consumption allowances; one of these commenters believes that 200 
MT of consumption and production allowances would allow for continued 
use of refrigerants containing HCFC-124 while limiting the growth of 
this market as the industry transitions to non-ODS refrigerants. One 
commenter believes the agency failed to account for exports in their 
allocation, and thus allowances should be either 400 MT for production 
and 200 MT for consumption or 400 MT for both production and 
consumption, if the agency prefers to allocate the same

[[Page 64279]]

quantity of production and consumption allowances.
    Two commenters do not support the proposed allocation. EIA asserts 
that EPA's proposal is not based on real demand. EIA states that if the 
major use for HCFC-124 is as a sterilant blend that will be banned 
under the CAA in 2015, and the estimated need from the Vintaging Model 
is so low, without taking into account recovery and reuse of any of the 
refrigerant nor potential stockpiles, there is no reason to allocate 
any more production or consumption. NRDC commented that HCFC-124 
allowances should not be set higher than 4 MT per year--i.e., the level 
estimated by the Vintaging Model--to foster markets in recycling and 
safer alternatives.
    Commenters opposed to EPA's preferred allocation of 200 MT cite the 
Servicing Tail Report and the prohibition on the use of HCFC-124 as a 
sterilant, combined with the need to encourage recovery and 
reclamation, as justification for a lower allocation. As EPA stated in 
the proposal, niche refrigerant blends with low servicing need, like R-
409A, are not typically modeled. R-409A is predominantly used as a 
replacement for CFC-12 and R-500 in medium- and large-sized 
refrigeration equipment. Included in the docket with the proposed rule 
is Preliminary 2011 and 2012 Sales and Distribution Data from the 
California Air Resources Board's Refrigerant Management Program. This 
document shows that in California alone, the amount of HCFC-124 
included in blends sold in 2012 totaled more than 40 MT--well above the 
amount modeled in the Servicing Tail Report. If use were proportional 
to population, a California value of 40 MT would imply approximately 
330 MT of HCFC-124 for the entire U.S. in 2012.\28\ This level would 
then be expected to decrease by 2015; a linear decrease from 2012 to 
zero in 2020 would bring this amount to 206 MT in 2015. Based on these 
data and comments from stakeholders, allocating an amount lower than 
200 MT for consumption throughout the entire U.S. may not meet the 
servicing need for equipment containing HCFC-124 refrigerant blends. 
EPA notes that 200 MT is a greater than 90 percent reduction from the 
2014 consumption and production allocation levels for HCFC-124. For 
reference, the 2014 consumption and production allocations are roughly 
3,000 MT and 5,000 MT, respectively.
---------------------------------------------------------------------------

    \28\ Population data from http://www.census.gov/popest/data/state/totals/2013/index.html.
---------------------------------------------------------------------------

    One commenter also requests that EPA increase production allowances 
to allow for export of HCFC-124. After reviewing recent export data to 
both Article 5 and non-Article 5 countries, EPA concludes the preferred 
allocation of 200 MT of production, combined with Article 5 allowances, 
should provide an adequate amount of flexibility. Article 5 allowances 
for HCFC-124 will be approximately 400 MT in 2015-2019, ten percent of 
the aggregate HCFC-124 production baseline. If additional production 
allowances are needed to allow for export, companies can transfer HCFC-
22 production allowances into HCFC-124 production allowances or Article 
5 allowances for HCFC-22 into Article 5 allowances for HCFC-124. As 
discussed in Section VI.B of the preamble, EPA is allocating a greater 
number of HCFC-22 production allowances than HCFC-22 consumption 
allowances.
    Based on industry feedback and public comments on the needs and 
uses of HCFC-124, and the use of HCFC-124 consumption allowances in 
recent years, EPA is finalizing its proposal to allocate 200 MT of 
HCFC-124 consumption and production allowances each year between 2015 
and 2019. EPA's goal is to ensure that servicing needs can be met, 
while also encouraging recovery and reuse or transition to non-ODS 
refrigerant blends. An allocation of 200 MT supports this goal.

F. How is EPA addressing the end of the HCFC-141b exemption program?

    The HCFC-141b exemption program has been in place since the start 
of the HCFC allowance program in 2003. In the preamble to the 2010-2014 
Rule, EPA stated that the petition process for HCFC-141b exemption 
allowances at 40 CFR 82.16(h) would end in 2015, since HCFC-141b is not 
used as a refrigerant and thus does not meet the criteria established 
by section 605(a) for continued use. HCFC-141b similarly is not used as 
a fire suppression agent and therefore would not be covered by the 
recent modification to CAA section 605(a). EPA proposed to remove the 
HCFC-141b petition process from 40 CFR 82.16(h) effective January 1, 
2015.
    EPA received only one comment on HCFC-141b. The commenter supports 
EPA's proposal to remove the petition process from the regulations, 
thereby eliminating unnecessary use of HCFC-141b and facilitating a 
smooth transition to alternatives. The agency is finalizing its 
proposal to remove the petition process for HCFC-141b exemption 
allowances at section 82.16(h) from the regulations and is terminating 
the HCFC-141b exemption allowance program, effective January 1, 2015.

G. Other HCFCs That Are Class II Controlled Substances

    EPA has not established baselines or issued allowances for the 
production or import of HCFCs that are not included in the tables at 40 
CFR 82.16(a). The prohibitions in 40 CFR 82.15(a) and (b) on production 
and import without allowances do not apply to such HCFCs. However, the 
phaseout schedule in 40 CFR 82.16 applies to all class II substances, 
whether or not they are governed by the allowance system. Similarly, 
all class II substances are subject to the restrictions on introduction 
into interstate commerce and use contained in 40 CFR 82.15(g). HCFCs 
that EPA has listed as class II controlled substances are identified in 
appendix B to subpart A.
    Beginning January 1, 2015, the use of all class II substances is 
banned, unless specifically exempted (see section IV.B. of this 
preamble for more details). EPA sought comment on whether any of the 
HCFCs not governed by the allowance system qualify for the 
nonresidential fire suppression and/or refrigeration servicing 
exemptions and what quantity the market would need going forward for 
these purposes. Should the need for any of these chemicals grow, EPA 
would consider establishing baselines and allocating calendar-year 
allowances via a separate rulemaking. EPA received no comments on the 
production, import, or use of HCFCs not governed by the allocation 
system.
    Also, as proposed, EPA is amending the list of class II controlled 
substances in appendix B of subpart A to better match the lists in 
Clean Air Act section 602 and the Montreal Protocol (Group I, Annex C). 
Both the Protocol and CAA section 602 include all isomers of listed 
substances, but 40 CFR part 82, subpart A, appendix B has not included 
all isomers, only those that are specifically named (e.g., HCFC-141b is 
listed as such, but there are other isomers of HCFC-141b, namely HCFC-
141 and HCFC-141a, that are not included in appendix B).
    CAA section 602 states that EPA ``shall publish'' a list of class 
II substances that shall include the specified HCFCs and ``shall also 
include the isomers'' of those substances. EPA's intent was to list all 
isomers in appendix B, as indicated by the footnote explaining that 
when a range of ODPs is listed for a chemical, the range applies to an 
isomeric group. EPA proposed a change to correct this omission and did 
not receive any adverse comment. Therefore, EPA is reconciling the

[[Page 64280]]

statutory and Montreal Protocol lists with the list in the regulations 
by adding a footnote to 40 CFR part 82 subpart A appendix B stating 
that the appendix includes all isomers of a listed chemical, even if 
the isomer itself is not listed on its own.

VII. Other Adjustments to the HCFC Allocation System

A. What is EPA's response to comments on dry-shipped HCFC-22 condensing 
units?

    Condensing units are a type of component in split system air 
conditioners. Under current regulations, the sale or distribution of a 
condensing unit pre-charged with HCFC-22 is prohibited (40 CFR 82 
subpart I); however, a dry-shipped unit may be sold and used to repair 
an existing system that uses HCFC-22 as the refrigerant. In February 
2011, the Carrier Corporation sent a letter to EPA asking the agency to 
ban this particular type of repair. In the proposed rule providing 
2012-2014 HCFC-22 allocations (77 FR 237, January 4, 2013), EPA took 
comment on whether repairs using dry-shipped condensing units affect 
the phaseout of HCFC-22. The agency received numerous comments, and 
responded to them in the 2012-2014 Rule. While many comments discussed 
dry-shipped condensing units, very few provided EPA any additional data 
or information to indicate that repairs using condensing units affect 
the HCFC phaseout. In the proposed rule to today's action the agency 
again sought quantifiable information on the number of dry-shipped 
condensing units being shipped, whether they are being used as a repair 
in lieu of a compressor or motor replacement, and whether and to what 
extent condensing unit replacements extend the life of an existing 
system. Most comments focused on the merits of banning or not banning 
the manufacture, sale, or installation of dry-shipped condensing units. 
That action is beyond the scope of this rulemaking. While EPA did not 
propose a ban on dry-shipped condensing units in the 2015-2019 
proposal, the agency is summarizing and responding to comments on dry-
shipped units in the Response to Comments found in the docket.
    EPA's purpose in requesting comment on this topic was to gain 
additional data. Since the agency did not receive quantifiable data, 
particularly on the number of dry-shipped HCFC-22 condensing units 
shipped in the past several years, EPA intends to exercise its 
authority under CAA section 114 to collect additional information in 
order to confirm shipment trends between January 1, 2008, and January 
1, 2015. After reviewing this data, EPA intends to consider whether 
additional regulatory action is appropriate to meet the goals of CAA 
Title VI.

B. How is EPA treating requests for additional consumption allowances 
in 2020 and beyond?

    The regulations at 82.20(a) allow a person to obtain consumption 
allowances equivalent to the quantity of class II controlled substances 
that the person exported during the control period, provided that the 
substances were originally produced or imported with consumption 
allowances. The exporter must submit certain information to EPA which 
the agency reviews before either granting or denying the request for 
additional consumption allowances. Historically, a person could submit 
this request (known as a Request for Additional Consumption Allowances, 
or RACA) upon export of any HCFC for which consumption allowances were 
originally expended, regardless of what control period the production 
or import took place.
    EPA proposed to modify the RACA regulations in light of the 
approaching phaseout deadlines for certain HCFCs. For example, consider 
1,000 kg of HCFC-22 that is produced in 2019 using consumption and 
production allowances. Under the previous regulations, in 2020 or 
later, that material could be exported and that exporter would have 
been eligible to request 1,000 additional HCFC-22 consumption 
allowances. However, there will not be any consumption allowances for 
HCFC-22 in 2020 or subsequent years. Therefore, the agency proposed to 
clarify the RACA regulations.
    Specifically, EPA proposed to add the requirement that both the 
export and the request for additional consumption allowances must occur 
in a year in which consumption allowances were issued. Such clarifying 
language about RACA eligibility already exists for class I controlled 
substances. EPA did not receive any adverse comments on this 
clarification and is finalizing the proposed text at 82.20(a).
    The agency did receive one comment from the Alliance for 
Responsible Atmospheric Policy supporting EPA's proposal to not issue 
any additional consumption allowances after consumption of a particular 
chemical has been entirely phased out. The Alliance also stated that it 
supports requiring the export of HCFCs and the request for additional 
consumption allowances to occur in the same year as the consumption 
allowances were expended. EPA is clarifying here that use of 
consumption allowances to produce or import HCFCs may still occur in 
one year, with export and the RACA occurring in a subsequent year, so 
long as export and the RACA occur in a year prior to the complete 
phaseout of that particular HCFC.

C. What is EPA's response to comments on maximizing compliance with 
HCFC regulations?

    In the proposed rule, EPA requested comments and suggestions for 
ensuring compliance with HCFC regulations. The 2015 stepdown and the 
approaching phaseout of HCFC-22 may affect prices, which could increase 
the incentive for illegal activity, particularly illegal imports of 
HCFCs or HCFC blends. On the other hand, the agency believes that 
reduced allocations and market changes increasing the value of the 
material will encourage proper recovery and decrease motivation to vent 
HCFCs, especially HCFC-22. EPA sought comment on how it could alter 
existing regulations to encourage compliance with the HCFC phaseout 
requirements and section 608 refrigerant regulations. In addition, the 
agency was interested in ways it could increase awareness and ensure 
compliance with the section 605(a) use restrictions and the section 611 
labeling requirements that will begin in 2015.
    EPA received nine comments providing suggestions on how the agency 
can maximize compliance with HCFC regulations. Several commenters 
suggested increased educational efforts on regulatory requirements and 
the consequences of non-compliance for distributors, contractors, and 
homeowners. Other commenters asserted that the best way to maximize 
compliance is to bolster the reclamation industry.
    Two commenters noted the importance of addressing illegal trade, 
especially as the availability of HCFC-22 declines. One commenter 
suggested increasing the efficiency of the current import and export 
documentation practices by either requiring electronic transfer/
acceptance of documents prior to shipments arriving at the port/border 
or by creating a license system for HCFC imports similar to what 
already exists in some countries.
    Other suggestions for maximizing compliance with HCFC regulations 
include: Implementing additional recordkeeping requirements for 
contractors, similar to those of system owners; reducing leak rate 
requirements from the current 35% per year and reducing the size of the 
systems subject

[[Page 64281]]

to recordkeeping and leak rate requirements to below 50 lbs.; returning 
to the excise tax that was used for CFCs during its phaseout; 
establishing a system for regulating the venting of appliances and 
residential units during maintenance and installation; and enforcing a 
fixed price support that can provide incentives to contractors for 
recovery and provide stability and sufficient volume to support the 
reclamation industry.
    EPA appreciates stakeholders' thoughts on ways to maximize 
compliance with the HCFC regulations. With respect to educational 
materials, EPA has several guidance documents and FAQs on HCFC-22 on 
its Web site at: http://www.epa.gov/ozone/title6/phaseout/classtwo.html, as well as guidance on labeling requirements, found in 
the docket and at: http://www.epa.gov/ozone/title6/labeling. In 
addition, EPA has a list of previous enforcement actions on its Web 
site at: http://www.epa.gov/ozone/enforce. The agency also encourages 
stakeholders to share any of this information with their clients, 
members, or fellow industry stakeholders.
    The agency also is committed to preventing illegal trade of HCFCs, 
and works closely with colleagues at Customs and Border Protection 
(CBP), as well as Homeland Security Investigation (HSI). In addition, 
EPA is participating in the greater International Trade Data System 
(ITDS) initiative to leverage the benefits of a single-window Automated 
Commercial Environment (ACE). The transition to broker import filings 
in ACE is expected to play an important role in EPA's ability to 
proactively examine data associated with imports of HCFCs. For more 
information see http://www.itds.gov/xp/itds/toolbox/background/background.xml and CBP's Federal Register Notice from December 2013 on 
the ODS ITDS pilot (78 FR 75931). Under this pilot, ``pre-approved 
importers'' will be automatically checked and their imports released. 
This helps ensures compliance with import regulations, while expediting 
the import process. EPA notes the greater ITDS efforts should address 
some of the issues raised by the commenter suggesting EPA restructure 
the import and export documentation requirements.
    The agency is appreciative of the other recommendations submitted 
by commenters and will consider whether it is appropriate for the 
agency to take additional regulatory action.

VIII. Modifications to Section 608 Regulations

    The portion of the stratospheric ozone regulations titled Recycling 
and Emissions Reduction (40 CFR part 82 subpart F) contains 
requirements promulgated under CAA section 608. The requirements under 
section 608 are intended to reduce emissions of class I and class II 
refrigerants and their substitutes to the lowest achievable level by, 
among other things, designing standards for the use of refrigerants 
during the service, maintenance, repair, and disposal of appliances. 
(See 40 CFR 82.150).
    To support this goal, EPA is finalizing several updates to its 
reclamation requirements. Specifically, EPA is finalizing its proposal 
(1) to require a reclaimer to notify EPA when there is a change in 
business management, location, or contact information and (2) to 
require disaggregated information for all reclaimed refrigerants as 
part of the annual reporting. EPA is not finalizing its proposed 
incorporation by reference of AHRI 700-2012 at this time due to the 
ongoing review of the standard by a joint ASHRAE and AHRI research 
group.

A. Overview of Current Reclamation Standards

    Recovered refrigerant often contains contaminants, including air, 
water, particulates, acids, chlorides, high boiling residues, and other 
impurities. Reclamation is the re-processing and upgrading of a 
recovered controlled substance through such mechanisms as filtering, 
drying, distillation, and chemical treatment in order to restore the 
substance to a specified standard of performance. EPA's definition of 
reclaim at 40 CFR 82.152 refers to specifications in appendix A to 40 
CFR part 82, subpart F that are based on ARI Standard 700-1995, 
Specification for Fluorocarbons and Other Refrigerants. A used 
refrigerant may not be sold, distributed or offered for sale or 
distribution, unless certain requirements have been met; one such set 
of requirements provides in part that the used refrigerant must be 
reclaimed to the purity level specified by the regulations and its 
purity must be verified (see 40 CFR 82.154(g)(1)).
    Additionally, reclamation companies must meet certain EPA 
certification requirements to become a reclaimer and must satisfy 
recordkeeping and reporting requirements, including reporting annually 
on the amount of ODS refrigerant that they reclaim (see 40 CFR 82.164 
and 82.166(g-h)).

B. Benefits of Reclamation

    Proper recovery, recycling or reclamation, and reuse of HCFC-22 and 
other ODS refrigerants is an essential component of stratospheric ozone 
protection. Refrigerant reuse is preferable to venting or destruction. 
Recovery and reuse reduces emissions of HCFCs to the atmosphere. Reuse 
also reduces the amount of virgin material that needs to be produced. 
Section 608(c) of the CAA contains certain prohibitions on knowingly 
venting or releasing HCFCs during maintenance, service, repair, or 
disposal of an appliance and EPA regulations require that HCFCs be 
recovered during service or disposal of appliances (see 40 CFR 82.154 
and 82.156).
    Recovery and reuse is becoming increasingly important as the United 
States continues its progress in the phaseout of ODS. As discussed 
earlier in this preamble, EPA is reducing the number of HCFC-22 
consumption allowances provided in 2015 by almost 60 percent relative 
to 2014. Reclamation will continue to be a key component of a smooth 
transition from HCFC-22 to non-ODS alternatives.

C. What regulatory changes is EPA finalizing under CAA section 608?

1. Consideration of AHRI 700-2012 Standards
    In the proposed rule, EPA sought comment on revising the 
reclamation standards in appendix A of 40 CFR subpart F to incorporate 
by reference the current version of the ARI (now AHRI) Standard 700-
2012, including addenda added in August 2008 and August 2012 (AHRI 
700C-2008: Appendix C to AHRI Standard 700-Analytical Procedures for 
AHRI Standard 700-06 and AHRI 700D-2012: Appendix D Gas Chromatograms 
for AHRI Standard 700-2012-Informative, all three of which are included 
in the docket). While EPA would prefer to update the standards to use 
the most current industry best practices, the agency is not finalizing 
its proposal to incorporate the AHRI 700-2012 standard at this time 
because of concerns about the 40 ppm limit for unsaturated contaminants 
(unsaturates).
    EPA received ten comments related to the adoption of AHRI Standard 
700-2012. Six comments oppose the adoption of AHRI Standard 700-2012 at 
this time, stating that the specification of 40 ppm limit for 
unsaturates will cause undue hardship to the reclamation industry since 
most reclaimers do not have the capability to detect contamination at 
this level. One comment opposing the change is signed by ten companies. 
Commenters also

[[Page 64282]]

note that studies and testing are ongoing and EPA should wait until 
they are complete before adopting the new standard to ensure the 
unsaturates limit is appropriate for HVACR equipment performance. One 
commenter believes that any new standard will need to be phased in over 
a five-year period to give companies ample time to adapt. Another 
commenter recommends that reclaimed refrigerant collected and processed 
in the U.S. that is not mixed or blended with new refrigerants be 
exempt from the unsaturates specification in the AHRI Standard 700-
2012. The commenter notes that a significant quantity of reclaimed 
refrigerant that would have passed the previous AHRI standard would 
fail this new standard.
    Five commenters support the adoption of AHRI Standard 700-2012, 
stating that it reflects the most up to date testing procedures which 
have already been recognized and adopted by the industry since 2006. 
Two commenters strongly recommend that EPA institute a process by which 
it will adopt future versions of the AHRI standard in a timely manner. 
Since an AHRI and ASHRAE joint research project has not yet concluded 
its assessment of the appropriateness of the 40 ppm limit for 
unsaturates, EPA is not finalizing its proposed revision to appendix A 
and the definition of ``reclaim'' at this time. Once the research 
project, Effect of Unsaturated Fluorocarbon Contaminates on the 
Reliability and Performance of HVACR Equipment, is completed, EPA will 
reassess how to proceed.
2. Notification to EPA of Changes to Business Management, Location, or 
Contact Information
    Reclaimer certification does not transfer when there is a change in 
ownership. Section 40 CFR 82.164(f) requires the new owner of the 
reclamation company to certify with EPA within thirty days of the 
change of ownership; however, there are no provisions that a 
reclamation company must notify EPA of changes in business management, 
location, or contact information for the refrigerant manager who 
communicates with EPA. EPA believes that notification of changes in 
business information would improve accountability and benefit 
reclaimers in the long run. Without accurate information, EPA may not 
be able to communicate with a reclaimer in a timely manner. 
Additionally, as a benefit to the public, the agency wants to ensure 
that its Web site listing certified reclaimers and their contact 
information is accurate. All of the comments received on the proposed 
change were supportive, EPA is finalizing its proposal to require 
notification from the reclaimer when there is a change in business 
management, location, or contact information. The change will appear at 
40 CFR 82.164(f).
3. Reporting and Recordkeeping Requirements
    Currently, 40 CFR 82.166(h) requires that reclaimers, on an annual 
basis, report how much material was received for reclamation, the mass 
of refrigerant reclaimed, and the mass of waste product generated as a 
result of reclamation activities. However, the regulations do not 
clearly state that reported information must be broken down by 
refrigerant type. Some reclaimers do submit information broken down by 
refrigerant, and EPA typically asks for refrigerant-specific 
information when it is not provided. EPA uses this information as part 
of its review of refrigerant supply to help ensure the continued smooth 
transition out of ODS refrigerants. The agency believes it is essential 
for EPA and the public to have accurate information concerning the 
amounts of specific types of refrigerants that are available from 
reclaimers for reuse.
    All comments received on the proposal were supportive of EPA's 
proposed change. EPA is finalizing its proposal to require 
disaggregated information for all reclaimed refrigerants as part of the 
annual reporting. The revision will appear at 40 CFR 82.166(h). The 
agency believes that this proposed change will clarify what information 
it needs from reclaimers up front, and will alleviate the need for 
additional back-and-forth between EPA and reclamation companies that in 
the past were not submitting refrigerant-specific data, thereby 
potentially reducing burden associated with reporting for those 
companies.
4. Other Section 608 Reclamation Program Options
    EPA also sought comment on whether the agency should initiate a 
rulemaking that would require (1) reporting of inventory information 
from reclaimers and on the possibility of future reporting and 
recordkeeping changes that would help minimize emissions and facilitate 
a smooth transition away from ODS, (2) a more robust reclaimer 
certification application, and (3) expanded end product testing. EPA 
appreciates the diverse comments that were received and will consider 
those comments as it determines whether to take additional action in 
future.
5. Other Issues Related to Section 608's National Recycling and 
Emissions Reduction Program
    EPA also received a comment in support of a petition that EPA 
recently received from the Alliance dated January 31, 2014, requesting 
that the agency initiate rulemaking to extend the section 608 
refrigerant management regulations to hydrofluorocarbons (HFCs) and 
other substitutes for class I and class II ODS. The Alliance cites 
section 608(c)(2) of the CAA as authority. While action on this 
petition is beyond the scope of this rulemaking, EPA is actively 
considering the merits and environmental benefits of this petition 
under a separate process. A copy of the petition is included in the 
docket for this rulemaking as a reference.

IX. Statutory and Executive Order Reviews

A. Executive Order 12866: Regulatory Planning and Review and Executive 
Order 13563: Improving Regulation and Regulatory Review

    Under Executive Order 12866 (58 FR 51735, October 4, 1993), this 
action is a ``significant regulatory action'' since it raises ``novel 
legal or policy issues.'' Accordingly, EPA submitted this action to the 
Office of Management and Budget (OMB) for review under Executive Orders 
12866 and 13563 (76 FR 3821, January 21, 2011) and any changes made in 
response to OMB recommendations have been documented in the docket for 
this action.
    EPA did not conduct a specific analysis of the benefits and costs 
associated with this particular action because many previous analyses 
provide a wealth of information on the costs and benefits of the United 
States ODS phaseout, and specifically the HCFC phaseout:
     The 1993 Addendum to the 1992 Phaseout Regulatory Impact 
Analysis: Accelerating the Phaseout of CFCs, Halons, Methyl Chloroform, 
Carbon Tetrachloride, and HCFCs.
     The 1999 Report Costs and Benefits of the HCFC Allowance 
Allocation System.
     The 2000 Memorandum Cost/Benefit Comparison of the HCFC 
Allowance Allocation System.
     The 2005 Memorandum Recommended Scenarios for HCFC 
Phaseout Costs Estimation.
     The 2006 ICR Reporting and Recordkeeping Requirements of 
the HCFC Allowance System.
     The 2007 Memorandum Preliminary Estimates of the

[[Page 64283]]

Incremental Cost of the HCFC Phaseout in Article 5 Countries.
     The 2007 Memorandum Revised Ozone and Climate Benefits 
Associated with the 2010 HCFC Production and Consumption Stepwise 
Reductions and a Ban on HCFC Pre-charged Imports.
    A memorandum summarizing these analyses is available in the docket.

B. Paperwork Reduction Act

    This action does not impose any new information collection burden. 
The Office of Management and Budget (OMB) has previously approved the 
information collection requirements contained in the existing 
regulations at 40 CFR part 82, subpart A under the provisions of the 
Paperwork Reduction Act, 44 U.S.C. 3501 et seq. and has assigned OMB 
control number 2060-0498.
    While this rule modifies the recordkeeping and reporting 
regulations, it does not increase the information collection burden. 
The changes are as follows: (1) Requiring reclaimers to provide updated 
contact information and (2) requiring reclaimers to provide the amount 
of each refrigerant reclaimed in their annual reporting. These changes 
reflect customary business practices and therefore do not affect 
information collection burden. In both of these cases, EPA is modifying 
the regulations so they align with current practices. EPA has posted to 
the docket and submitted to OMB completed an Information Collection 
Request (ICR) Change Worksheet, documenting the changes and their non-
effect on the collection burden. The OMB control numbers for EPA's 
regulations in 40 CFR are listed in 40 CFR part 9.

C. Regulatory Flexibility Act (RFA)

    The Regulatory Flexibility Act (RFA) generally requires an agency 
to prepare a regulatory flexibility analysis of any rule subject to 
notice and comment rulemaking requirements under the Administrative 
Procedure Act or any other statute, unless the agency certifies that 
the rule will not have a significant economic impact on a substantial 
number of small entities. Small entities include small businesses, 
small organizations, and small governmental jurisdictions.
    For purposes of assessing the impacts of this rule on small 
entities, a small entity is defined as: (1) A small business as defined 
by the Small Business Administration's (SBA) regulations at 13 CFR 
121.201; (2) a small governmental jurisdiction that is a government of 
a city, county, town, school district or special district with a 
population of less than 50,000; and (3) a small organization that is 
any not-for-profit enterprise which is independently owned and operated 
and is not dominant in its field. This action will potentially affect 
the following categories:

--Industrial Gas Manufacturing entities (NAICS code 325120), including 
fluorinated hydrocarbon gas manufacturers and reclaimers;
--Other Chemical and Allied Products Merchant Wholesalers (NAICS code 
424690), including chemical gases and compressed gases merchant 
wholesalers;
--Air-Conditioning and Warm Air Heating Equipment and Commercial and 
Industrial Refrigeration Equipment Manufacturing entities (NAICS code 
333415), including air-conditioning equipment and commercial and 
industrial refrigeration equipment manufacturers;
--Air-Conditioning Equipment and Supplies Merchant Wholesalers (NAICS 
code 423730), including air-conditioning (condensing unit, compressors) 
merchant wholesalers;
--Electrical and Electronic Appliance, Television, and Radio Set 
Merchant Wholesalers (NAICS code 423620), including air-conditioning 
(room units) merchant wholesalers;
--Plumbing, Heating, and Air-Conditioning Contractors (NAICS code 
238220), including Central air-conditioning system and commercial 
refrigeration installation, HVACR contractors;
--Refrigerant reclaimers, manufacturers of recovery/recycling 
equipment, and refrigerant recovery/recycling equipment testing 
organizations;
--Fire Extinguisher Chemical Preparations Manufacturing (325998); 
Portable Fire Extinguishers Manufacturing (339999); Other Aircraft 
Parts and Auxiliary Equipment Manufacturing (336413);
--Surgical Appliance and Supplies Manufacturing (339113); Ophthalmic 
goods manufacturing (339115); General Medical and Surgical Hospitals 
(622110); Specialty (Except Psychiatric and Substance Abuse) Hospitals 
(622310);
--Entities Performing Solvent Cleaning, (including but not necessarily 
limited to NAICS subsector codes 332 and 335).

    After considering the economic impacts of today's final rule on 
small entities, I certify that this action will not have a significant 
economic impact on a substantial number of small entities. In 
determining whether a rule has a significant economic impact on a 
substantial number of small entities, the impact of concern is any 
significant adverse economic impact on small entities, since the 
primary purpose of the regulatory flexibility analyses is to identify 
and address regulatory alternatives ``which minimize any significant 
economic impact of the rule on small entities.'' 5 U.S.C. 603 and 604. 
Thus, an agency may certify that a rule will not have a significant 
economic impact on a substantial number of small entities if the rule 
relieves regulatory burden, or otherwise has a positive economic effect 
on all of the small entities subject to the rule.
    Without allowances for the 2015-2019 regulatory period, existing 
regulations would prohibit the production and import of HCFCs. Since 
the direct result of this final action is to allocate HCFC allowances 
for production and import, thereby relieving a prohibition, the direct 
effects of this final decision are not a potential burden to small 
business. EPA's HCFC Phaseout Benefits and Costs Memo, included in the 
docket for this rulemaking, provides a summary of previous small 
business analyses. Though EPA certified in the proposal that this 
rulemaking would not have a significant impact on a substantial number 
of small entities, EPA completed an economic screening analysis prior 
to development of this final rule, titled, ``Economic Impact Screening 
Analysis for Proposed Adjustments to the Allowance System for 
Controlling HCFC Production, Import and Export'' (Screening Analysis). 
EPA's Screening Analysis, which is available in the docket, shows that 
the HCFC allocation for 2015-2019 is expected to have a net economic 
benefit to the small businesses that are directly impacted by this 
rulemaking. Therefore, EPA continues to believe that this rulemaking 
does not have a significant impact on a substantial number of small 
entities.
    Although this final rule will not have a significant economic 
impact on a substantial number of small entities, EPA nonetheless has 
tried to reduce the impact of this rule on small entities. The agency 
is also aware that there is substantial interest in this rule among 
small entities, particularly recovery and reclamation companies and 
HVACR distributors and wholesalers. In light of this interest, on 
January 31, 2014, one week after the January 23 public hearing, EPA 
participated in a Small Business Administration Environmental 
Roundtable on the proposed HCFC-22 allocation options and discussed the 
proposal with small business attendees.

[[Page 64284]]

The presentation from that roundtable is available in the docket. As 
explained during the roundtable, if a small entity will have 
obligations imposed on them directly by the rule then the potential 
impact on those small entities should be included in the RFA screening 
analysis. The direct effect of this rulemaking is to issue allowances 
that allow for continued production and import of a salable commodity. 
Allowances for production and import of four HCFCs in 2015-2019 are 
being issued to baseline allowance holders, including both large and 
small businesses.
    The January 31 roundtable had approximately 20 participants, 
representing both small and large businesses. The small businesses in 
attendance did not have a uniform position on the size of the HCFC-22 
allocation. Some spoke in support of a zero allocation; other small 
businesses or organizations representing small businesses spoke out 
against a zero allocation, stating the importance of market certainty 
and a continued HCFC-22 allocation for their business planning needs.
    EPA received two written comments on the RFA. One commenter stated 
that RFA and SBREFA issues have not been met because the agency's 
statement that this action does not have a significant economic impact 
on a substantial number of small entities applies to allowance holders. 
The commenter writes, ``this rule alters or changes other elements of 
40 CFR Title VI, Section 608 and 609.'' EPA assumes the commenter meant 
40 CFR part 82, and is then referring to Clean Air Act Title VI, 
specifically sections 608 and 609. EPA is not taking any action under 
CAA section 609 in this rulemaking. EPA is finalizing two minor changes 
to recordkeeping and reporting provisions in 40 CFR part 82 subpart F 
under the authority of CAA section 608; however, these changes do not 
increase burden and may in fact lessen burden on small reclamation 
businesses by ensuring that businesses that have already reported do 
not have to spend additional time responding to follow-up requests from 
EPA. These changes also ensure that EPA can reach businesses in a 
timely manner with any necessary information.
    The other commenter claims that EPA has not given due diligence to 
its obligations under the RFA to ensure that the rule does not inflict 
undue financial burden on small businesses. As explained above, the 
direct result of this final action is to allocate HCFC allowances for 
production and import, thereby relieving a prohibition; thus, the 
direct effects of this final decision are not a potential burden to 
small business. EPA explains the considerations and rationale for its 
final HCFC-22 consumption allocation in section VI.A. of this preamble.
    I have therefore concluded that today's final rule will relieve 
regulatory burden for directly affected small entities.

D. Unfunded Mandates Reform Act

    This action contains no Federal mandates under the provisions of 
Title II of the Unfunded Mandates Reform Act of 1995 (UMRA), 2 U.S.C. 
1531-1538 for State, local, or tribal governments or the private 
sector. UMRA does not apply to rules that are necessary for the 
national security or the ratification or implementation of 
international treaty obligations. This rule implements the2015 
milestone for the phase-out of HCFCs under the Montreal Protocol. 
Therefore, this action is not subject to the requirements of sections 
202 or 205 of the UMRA.
    This action is also not subject to the requirements of section 203 
of UMRA because it contains no regulatory requirements that might 
significantly or uniquely affect small governments. This action 
apportions production and consumption allowances and establishes 
baselines for private entities, not small governments.

E. Executive Order 13132: Federalism

    This action does not have federalism implications. It does not have 
substantial direct effects on the States, on the relationship between 
the national government and the States, or on the distribution of power 
and responsibilities among the various levels of government, as 
specified in Executive Order 13132. This action is expected to 
primarily affect producers, importers, and exporters of HCFCs. Thus, 
Executive Order 13132 does not apply to this action.
    In the spirit of Executive Order 13132, and consistent with EPA 
policy to promote communications between EPA and State and local 
governments, EPA specifically solicited, but did not receive, comment 
from State and local officials on this issue.

F. Executive Order 13175: Consultation and Coordination With Indian 
Tribal Governments

    This action does not have tribal implications, as specified in 
Executive Order 13175 (65 FR 67249, November 9, 2000). This action does 
not significantly or uniquely affect the communities of Indian tribal 
governments. It does not impose any enforceable duties on communities 
of Indian tribal governments. Thus, Executive Order 13175 does not 
apply to this action.
    Although Executive Order 13175 does not apply to this action, EPA 
participated in a National Tribal Air Association conference call 
hosted by EPA regarding EPA air policy. EPA provided a summary of the 
proposed rule, the importance of protecting and restoring the 
stratospheric ozone layer, and how the 2015-2019 rule would further the 
goals of the HCFC phaseout. EPA provided contact information and 
offered to answer any specific questions following the call or at any 
point in the future.

G. Executive Order 13045: Protection of Children From Environmental 
Health and Safety Risks

    This action is not subject to EO 13045 (62 F.R. 19885, April 23, 
1997) because it is not economically significant as defined in EO 
12866. The agency nonetheless has reason to believe that the 
environmental health or safety risk addressed by this action may have a 
disproportionate effect on children. Depletion of stratospheric ozone 
results in greater transmission of the sun's ultraviolet (UV) radiation 
to the earth's surface. The following studies describe the effects of 
excessive exposure to UV radiation on children: (1) Westerdahl J, 
Olsson H, Ingvar C. ``At what age do sunburn episodes play a crucial 
role for the development of malignant melanoma,'' Eur J Cancer 1994: 
30A: 1647-54; (2) Elwood JM Japson J. ``Melanoma and sun exposure: an 
overview of published studies,'' Int J Cancer 1997; 73:198-203; (3) 
Armstrong BK, ``Melanoma: childhood or lifelong sun exposure,'' In: 
Grobb JJ, Stern RS Mackie RM, Weinstock WA, eds. ``Epidemiology, causes 
and prevention of skin diseases,'' 1st ed. London, England: Blackwell 
Science, 1997: 63-6; (4) Whiteman D., Green A. ``Melanoma and 
Sunburn,'' Cancer Causes Control, 1994: 5:564-72; (5) Heenan, PJ. 
``Does intermittent sun exposure cause basal cell carcinoma? A case 
control study in Western Australia,'' Int J Cancer 1995; 60: 489-94; 
(6) Gallagher, RP, Hill, GB, Bajdik, CD, et al. ``Sunlight exposure, 
pigmentary factors, and risk of nonmelanocytic skin cancer I, Basal 
cell carcinoma,'' Arch Dermatol 1995; 131: 157-63; (7) Armstrong, DK. 
``How sun exposure causes skin cancer: an epidemiological 
perspective,'' Prevention of Skin Cancer. 2004. 89-116.
    This action implements the commitment of the United States to 
reduce the production and import of HCFCs under the Montreal Protocol. 
While on an ODP-weighted basis, this is

[[Page 64285]]

not as large a step as previous actions, such as the 1996 class I 
phaseout, it is one of the most significant remaining actions the 
United States can take to complete the overall phaseout of ODS and 
further decrease impacts on children's health from stratospheric ozone 
depletion. The final HCFC consumption allocation for 2015 is more than 
95 percent below the United States HCFC baseline, decreasing further 
through 2019.

H. Executive Order 13211: Actions That Significantly Affect Energy 
Supply, Distribution, or Use

    This action is not a ``significant energy action'' as defined in 
Executive Order 13211 (66 FR 28355, May 22, 2001), because it is not 
likely to have a significant adverse effect on the supply, 
distribution, or use of energy. The rule issues allowances for the 
production and consumption of HCFCs.

I. National Technology Transfer and Advancement Act

    Section 12(d) of the National Technology Transfer and Advancement 
Act of 1995 (``NTTAA''), Public Law 104-113, 12(d) (15 U.S.C. 272 note) 
directs EPA to use voluntary consensus standards in its regulatory 
activities unless to do so would be inconsistent with applicable law or 
otherwise impractical. Voluntary consensus standards are technical 
standards (e.g., materials specifications, test methods, sampling 
procedures, and business practices) that are developed or adopted by 
voluntary consensus standards bodies. NTTAA directs EPA to provide 
Congress, through OMB, explanations when the Agency decides not to use 
available and applicable voluntary consensus standards.
    The proposed rule involved technical standards because EPA proposed 
to incorporate by reference AHRI Standard 700-2012 Specification for 
Fluorocarbons and Other Refrigerants and its appendices. The proposed 
standard is an updated version of the standard contained in the current 
regulations. The agency is not finalizing its proposal to update the 
standard, therefore, this final rule does not involve any technical 
standards.

J. Executive Order 12898: Federal Actions To Address Environmental 
Justice in Minority Populations and Low-Income Populations

    Executive Order (EO) 12898 (59 FR 7629, Feb. 16, 1994) establishes 
Federal executive policy on environmental justice. Its main provision 
directs Federal agencies, to the greatest extent practicable and 
permitted by law, to make environmental justice part of their mission 
by identifying and addressing, as appropriate, disproportionately high 
and adverse human health or environmental effects of their programs, 
policies, and activities on minority populations and low-income 
populations in the United States.
    EPA has determined that this action will not have 
disproportionately high and adverse human health or environmental 
effects on minority or low-income populations. The 2015 phaseout step 
increases the level of environmental protection for all affected 
populations without having any disproportionately high and adverse 
human health or environmental effects on any population, including any 
minority or low-income population. This action implements the 
commitment of the United States to reduce the production and import of 
HCFCs under the Montreal Protocol. While on an ODP-weighted basis, this 
is not as large a step as previous actions, such as the 1996 class I 
phaseout, it is one of the most significant remaining actions the 
United States can take to complete the overall phaseout of ODS and 
further lessen the adverse human health effects for the entire 
population. The final HCFC consumption allocation for 2015 is more than 
95 below the United States HCFC consumption baseline, outperforming the 
requirements set by the Montreal Protocol and Title VI of the Clean Air 
Act.
    The agency did receive two comments pertaining to this executive 
order. The National Association for the Advancement of Colored People 
(NAACP) states that climate change has a disproportionate impact on 
communities of color in the United States and around the world. NAACP 
supports efforts to eliminate chemicals that have dangerous or damaging 
effects on our communities, and points to both the ozone depleting 
potential and global warming potential of HCFCs. NAACP asks to be 
included during the drafting of the 2015-2019 final rule. The other 
commenter, New Era Group, Inc., believes that EPA blocks organizations 
such as the NAACP from engaging on this issue and states that climate 
change is a significant issue for minorities and people of color.
    As part of the 2009 Endangerment Finding under CAA section 
202(a)(1),\29\ the Administrator considered climate change risks to 
minority or low-income populations, finding that certain parts of the 
population may be especially vulnerable based on their circumstances. 
These include the poor, the elderly, the very young, those already in 
poor health, the disabled, those living alone, and/or indigenous 
populations dependent on one or a few resources. The Administrator 
placed weight on the fact that certain groups, including children, the 
elderly, and the poor, are most vulnerable to climate-related health 
effects.
---------------------------------------------------------------------------

    \29\ ``Endangerment and Cause or Contribute Findings for 
Greenhouse Gases Under Section 202(a) of the Clean Air Act,'' 74 FR 
66,496 (Dec. 15, 2009) (``Endangerment Finding'').
---------------------------------------------------------------------------

    Since HCFCs are ozone depleting substances and also greenhouse 
gases that can contribute to climate change, the agency takes seriously 
its mandate to phase out production and import of these substances. In 
fact, this rulemaking far outperforms domestic and international caps 
on U.S. HCFC production. In addition, both stratospheric ozone 
depletion and climate change are global issues. That is, the impact of 
HCFC emissions on stratospheric ozone or atmospheric greenhouse 
concentrations is independent of where the HCFCs were used or 
eventually emitted. The agency discusses the environmental implications 
of the chosen HCFC-22 allocation levels in section VI.A. of this 
preamble. The agency appreciates NAACP's comment, and invited 
representatives from NAACP to meet with EPA while developing this final 
rule.

K. Congressional Review Act

    The Congressional Review Act, 5 U.S.C. 801 et seq., as added by the 
Small Business Regulatory Enforcement Fairness Act of 1996, generally 
provides that before a rule may take effect, the agency promulgating 
the rule must submit a rule report, which includes a copy of the rule, 
to each House of the Congress and to the Comptroller General of the 
United States. EPA will submit a report containing this rule and other 
required information to the U.S. Senate, the U.S. House of 
Representatives, and the Comptroller General of the United States prior 
to publication of the rule in the Federal Register. A Major rule cannot 
take effect until 60 days after it is published in the Federal 
Register. This action not a ``major rule'' as defined by 5 U.S.C. 
804(2). This rule will be effective January 1, 2015.

List of Subjects in 40 CFR Part 82

    Environmental protection, Administrative practice and procedure, 
Air pollution control, Chemicals, Exports, Hydrochlorofluorocarbons, 
Imports.

[[Page 64286]]

    Dated: October 16, 2014.
Gina McCarthy,
Administrator.

    For the reasons stated in the preamble, 40 CFR part 82 is amended 
as follows:

PART 82--PROTECTION OF STRATOSPHERIC OZONE

0
1. The authority citation for part 82 continues to read as follows:

    Authority:  42 U.S.C. 7414, 7601, 7671- 7671q.

Subpart A--Production and Consumption Controls

0
2. Amend Sec.  82.3 by adding the definition of ``Use of a class II 
controlled substance'' in alphabetical order to read as follows:

Sec.  82.3  Definitions for class I and class II controlled substances.

* * * * *
    Use of a class II controlled substance, for the purposes of Sec.  
82.15 of this subpart, includes but is not limited to, use in a 
manufacturing process, use in manufacturing a product, intermediate 
uses such as formulation or packaging for other subsequent uses, and 
use in maintaining, servicing, or repairing an appliance or other piece 
of equipment. Use of a class II controlled substance also includes use 
of that controlled substance when it is removed from a container used 
for the transportation or storage of the substance but does not include 
use of a manufactured product containing a controlled substance.

0
3. Amend Sec.  82.15 by redesignating paragraph (g)(4) as (g)(4)(i) and 
revising it, and adding paragraphs (g)(4)(ii) and (iii) to read as 
follows:

Sec.  82.15  Prohibitions for class II controlled substances.

* * * * *
    (g) * * *
    (4)(i) Effective January 1, 2015, no person may introduce into 
interstate commerce or use any class II controlled substance not 
governed by paragraphs (g)(1) through (3) of this section (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, 2020; for use 
as a fire suppression streaming agent listed as acceptable for use or 
acceptable subject to narrowed use limits for nonresidential 
applications in accordance with the regulations at subpart G of this 
part; for export to Article 5 Parties under Sec.  82.18(a); as a 
transhipment or heel; for exemptions permitted under paragraph (f) of 
this section; or for exemptions permitted under paragraph (g)(4)(ii) or 
(iii) of this section.
    (ii) Effective January 1, 2015, use of HCFC-225ca or HCFC-225cb as 
a solvent (excluding use in manufacturing a product containing HCFC-
225ca or HCFC-225cb) is not subject to the use prohibition in paragraph 
(g)(4)(i) of this section if the person using the HCFC-225ca or HCFC-
225cb placed the controlled substance into inventory before January 1, 
2015. This paragraph does not create an exemption to the prohibition on 
introduction into interstate commerce in paragraph (g)(4)(i) of this 
section.
    (iii) Effective January 1, 2015, use of HCFC-124 as a sterilant for 
the manufacture and testing of biological indicators is not subject to 
the use prohibition in paragraph (g)(4)(i) of this section if the 
person using the HCFC-124 placed the controlled substance into 
inventory before January 1, 2015. This paragraph does not create an 
exemption to the prohibition on introduction into interstate commerce 
in paragraph (g)(4)(i) of this section.
* * * * *

0
4. Amend Sec.  82.16 by revising paragraphs (a)(1), (d), and (e) and 
removing and reserving paragraph (h).
    The revisions read as follows:

Sec.  82.16  Phaseout schedule of class II controlled substances.

    (a) Calendar-year Allowances. (1) In each control period as 
indicated in the following tables, each person is granted the specified 
percentage of baseline production allowances and baseline consumption 
allowances for the specified class II controlled substances apportioned 
under Sec. Sec.  82.17 and Sec.  82.19:

                                                        Calendar-Year HCFC Production Allowances
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                             Percent of   Percent  of   Percent  of   Percent of   Percent  of   Percent of   Percent of
                      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          41.9          0.47            0         125            125          125
2011......................................................            0          32.0          4.9             0         125            125          125
2012......................................................            0          17.7          4.9             0         125            125          125
2013......................................................            0          30.1          4.9             0         125            125          125
2014......................................................            0          26.1          4.9             0         125            125          125
2015......................................................            0          21.7          0.37            0           5.0            0            0
2016......................................................            0          21.7          0.32            0           5.0            0            0
2017......................................................            0          21.7          0.26            0           5.0            0            0
2018......................................................            0          21.7          0.21            0           5.0            0            0
2019......................................................            0          21.7          0.16            0           5.0            0            0
--------------------------------------------------------------------------------------------------------------------------------------------------------

                                                        Calendar-Year HCFC Consumption Allowances
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                             Percent of   Percent  of   Percent  of   Percent of   Percent  of   Percent of   Percent of
                      Control period                         HCFC-141b      HCFC-22      HCFC-142b     HCFC-123     HCFC-124     HCFC-225ca   HCFC-225cb
--------------------------------------------------------------------------------------------------------------------------------------------------------
2003......................................................            0         100          100     ...........  ............  ...........  ...........
2004......................................................            0         100          100     ...........  ............  ...........  ...........

[[Page 64287]]

 
2005......................................................            0         100          100     ...........  ............  ...........  ...........
2006......................................................            0         100          100     ...........  ............  ...........  ...........
2007......................................................            0         100          100     ...........  ............  ...........  ...........
2008......................................................            0         100          100     ...........  ............  ...........  ...........
2009......................................................            0         100          100     ...........  ............  ...........  ...........
2010......................................................            0          41.9          0.47          125         125            125          125
2011......................................................            0          32.0          4.9           125         125            125          125
2012......................................................            0          17.7          4.9           125         125            125          125
2013......................................................            0          18.0          4.9           125         125            125          125
2014......................................................            0          14.2          4.9           125         125            125          125
2015......................................................            0           7.0          1.7           100           8.3            0            0
2016......................................................            0           5.6          1.5           100           8.3            0            0
2017......................................................            0           4.2          1.2           100           8.3            0            0
2018......................................................            0           2.8          1.0           100           8.3            0            0
2019......................................................            0           1.4          0.7           100           8.3            0            0
--------------------------------------------------------------------------------------------------------------------------------------------------------

* * * * *
    (d) Effective January 1, 2015, no person may produce class II 
controlled substances not previously controlled for any purpose other 
than for use in a process resulting in their transformation or their 
destruction, for use as a refrigerant in equipment manufactured before 
January 1, 2020, for use as a fire suppression streaming agent listed 
as acceptable for use or acceptable subject to narrowed use limits for 
nonresidential applications in accordance with the regulations at 
subpart G of this part, for export under Sec.  82.18(a) using 
unexpended Article 5 allowances, for export under Sec.  82.18(b) using 
unexpended export production allowances, or for exemptions permitted in 
Sec.  82.15(f). Effective January 1, 2015, no person may import class 
II controlled substances not subject to the requirements of paragraph 
(b) or (c) of this section (other than transhipments, heels, or used 
class II controlled substances) for any purpose other than for use in a 
process resulting in their transformation or their destruction, for 
exemptions permitted in Sec.  82.15(f), for use as a refrigerant in 
equipment manufactured prior to January 1, 2020, or for use as a fire 
suppression streaming agent listed as acceptable for use or acceptable 
subject to narrowed use limits for nonresidential applications in 
accordance with the regulations at subpart G of this part.
    (e)(1) Effective January 1, 2020, no person may produce HCFC-22 or 
HCFC-142b for any purpose other than for use in a process resulting in 
their transformation or their destruction, for export under Sec.  
82.18(a) using unexpended Article 5 allowances, or for export under 
Sec.  82.18(b) using unexpended export production allowances, or for 
exemptions permitted in Sec.  82.15(f).
    Effective January 1, 2020, no person may import HCFC-22 or HCFC-
142b for any purpose other than for use in a process resulting in their 
transformation or their destruction, or for exemptions permitted in 
Sec.  82.15(f).
    (2) Effective January 1, 2020, no person may produce HCFC-123 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, 2020, for export under Sec.  
82.18(a) using unexpended Article 5 allowances, or for export under 
Sec.  82.18(b) using unexpended export production allowances, or for 
exemptions permitted in Sec.  82.15(f). Effective January 1, 2020, no 
person may import HCFC-123 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, 2020, or for 
exemptions permitted in Sec.  82.15(f).
* * * * *

0
5. Revise Sec.  82.17 to read as follows:

Sec.  82.17  Apportionment of baseline production allowances for class 
II controlled substances.

    The following persons are apportioned baseline production 
allowances for HCFC-22, HCFC-141b, HCFC-142b, HCFC-123, HCFC-124, HCFC-
225ca, and HCFC-225cb as set forth in the following table:

------------------------------------------------------------------------
                                      Controlled
             Person                    substance       Allowances  (kg)
------------------------------------------------------------------------
AGC Chemicals Americas..........  HCFC-225ca........             266,608
                                  HCFC-225cb........             373,952
Arkema..........................  HCFC-22...........          46,692,336
                                  HCFC-141b.........          24,647,925
                                  HCFC-142b.........             484,369
DuPont..........................  HCFC-22...........          42,638,049
                                  HCFC-124..........           2,269,210
Honeywell.......................  HCFC-22...........          37,378,252
                                  HCFC-141b.........          28,705,200
                                  HCFC-142b.........           2,417,534
                                  HCFC-124..........           1,759,681
MDA Manufacturing...............  HCFC-22...........           2,383,835
Solvay Specialty Polymers USA,    HCFC-142b.........           6,541,764
 LLC.
------------------------------------------------------------------------

[[Page 64288]]

0
6. Revise Sec.  82.19 to read as follows:

Sec.  82.19  Apportionment of baseline consumption allowances for class 
II controlled substances.

    The following persons are apportioned baseline consumption 
allowances for HCFC-22, HCFC-142b, HCFC-123, HCFC-124, HCFC-225ca, and 
HCFC-225cb as set forth in the following table:

------------------------------------------------------------------------
                                      Controlled
             Person                   substance        Allowances  (kg)
------------------------------------------------------------------------
ABCO Refrigeration Supply......  HCFC-22............             279,366
AGC Chemicals Americas.........  HCFC-225ca.........             285,328
                                 HCFC-225cb.........             286,832
Altair Partners................  HCFC-22............             302,011
Arkema.........................  HCFC-22............          48,637,642
                                 HCFC-141b..........          25,405,570
                                 HCFC-142b..........             483,827
                                 HCFC-124...........               3,719
Carrier........................  HCFC-22............              54,088
Continental Industrial Group...  HCFC-141b..........              20,315
Coolgas, Inc...................  HCFC-141b..........          16,097,869
Combs Investment Property......  HCFC-22............           1,040,458
                                 HCFC-123...........              19,980
                                 HCFC-124...........               3,742
Discount Refrigerants..........  HCFC-141b..........                 994
DuPont.........................  HCFC-22............          38,814,862
                                 HCFC-141b..........               9,049
                                 HCFC-142b..........              52,797
                                 HCFC-123...........           1,877,042
                                 HCFC-124...........             743,312
H.G. Refrigeration Supply......  HCFC-22............              40,068
Honeywell......................  HCFC-22............          35,392,492
                                 HCFC-141b..........          20,749,489
                                 HCFC-142b..........           1,315,819
                                 HCFC-124...........           1,284,265
ICC Chemical Corp..............  HCFC-141b..........              81,225
ICOR...........................  HCFC-124...........              81,220
Mexichem Fluor Inc.............  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............           5,528,316
                                 HCFC-123...........              72,600
                                 HCFC-124...........              50,380
Perfect Technology Center, LP..  HCFC-123...........               9,100
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, LLC..........  HCFC-22............           3,781,691
                                 HCFC-141b..........           3,940,115
Solvay Specialty Polymers USA,   HCFC-142b..........             194,536
 LLC.
Tulstar Products...............  HCFC-141b..........              89,913
                                 HCFC-123...........              34,800
                                 HCFC-124...........             229,582
USA Refrigerants...............  HCFC-22............              14,865
------------------------------------------------------------------------

0
7. Amend Sec.  82.20 by revising paragraph (a) introductory text to 
read as follows:

Sec.  82.20  Availability of consumption allowances in addition to 
baseline consumption allowances for class II controlled substances.

    (a) A person may obtain at any time during the control period, in 
accordance with the provisions of this section, consumption allowances 
equivalent to the quantity of class II controlled substances that the 
person exported from the United States and its territories to a foreign 
state in accordance with this section, when that quantity of class II 
controlled substance was produced in the U.S. or imported into the 
United States with expended consumption allowances. Both the export of 
the class II controlled substance and the request for additional 
consumption allowances must occur during a calendar year in which 
consumption allowances were issued for that class II controlled 
substance.
* * * * *

0
8. Revise appendix B to subpart A to read as follows:

[[Page 64289]]

Appendix B to Subpart A of Part 82--Class II Controlled Substances \a\ 
\b\

------------------------------------------------------------------------
                  Controlled substance                          ODP
------------------------------------------------------------------------
1. HCFC-21 (CHFCl2) Dichlorofluoromethane...............            0.04
2. HCFC-22 (CHF2Cl) Monochlorodifluoromethane...........           0.055
3. HCFC-31 (CH2FCl) Monochlorofluoromethane.............            0.02
4. HCFC-121 (C2HFCl4) Tetrachlorofluoroethane...........       0.01-0.04
5. HCFC-122 (C2HF2Cl3) Trichlorodifluoroethane..........       0.02-0.08
6. HCFC-123 (C2HF3Cl2) Dichlorotrifluoroethane..........            0.02
7. HCFC-124 (C2HF4Cl) Monochlorotetrafluoroethane.......           0.022
8. HCFC-131 (C2H2FCl3) Trichlorofluoroethane............      0.007-0.05
9. HCFC-132 (C2H2F2Cl2) Dichlorodifluoroethane..........      0.008-0.05
10. HCFC-133 (C2H2F3Cl) Monochlorotrifluoroethane.......       0.02-0.06
11. HCFC-141 (C2H3FCl2) Dichlorofluoroethane............      0.005-0.07
12. HCFC-141b (CH3CFCl2) Dichlorofluoroethane...........            0.11
13. HCFC-142 (C2H3F2Cl) Chlorodifluoroethane............      0.008-0.07
14. HCFC-142b (CH3CF2Cl) Monochlorodifluoroethane.......           0.065
15. HCFC-151 (C2H4FCl) Chlorofluoroethane...............     0.003-0.005
16. HCFC-221 (C3HFCl6) Hexachlorofluoropropane..........      0.015-0.07
17. HCFC-222 (C3HF2Cl5) Pentachlorodifluoropropane......       0.01-0.09
18. HCFC-223 (C3HF3Cl4) Tetrachlorotrifluoropropane.....       0.01-0.08
19. HCFC-224 (C3HF4Cl3) Trichlorotetrafluoropropane.....       0.01-0.09
20. HCFC-225 (C3HF5Cl2) Dichloropentafluoropropane......       0.02-0.07
21. HCFC-225ca (CF3CF2CHCl2) Dichloropentafluoropropane.           0.025
22. HCFC-225cb (CF2ClCF2CHClF)                                     0.033
 Dichloropentafluoropropane.............................
23. HCFC-226 (C3HF6Cl) Monochlorohexafluoropropane......        0.02-0.1
24. HCFC-231 (C3H2FCl5) Pentachlorofluoropropane........       0.05-0.09
25. HCFC-232 (C3H2F2Cl4) Tetrachlorodifluoropropane.....       0.008-0.1
26. HCFC-233 (C3H2F3Cl3) Trichlorotrifluoropropane......      0.007-0.23
27. HCFC-234 (C3H2F4Cl2) Dichlorotetrafluoropropane.....       0.01-0.28
28. HCFC-235 (C3H2F5Cl) Monochloropentafluoropropane....       0.03-0.52
29. HCFC-241 (C3H3FCl4) Tetrachlorofluoropropane........      0.004-0.09
30. HCFC-242 (C3H3F2Cl3) Trichlorodifluoropropane.......      0.005-0.13
31. HCFC-243 (C3H3F3Cl2) Dichlorotrifluoropropane.......      0.007-0.12
32. HCFC-244 (C3H3F4Cl) Monochlorotetrafluoropropane....      0.009-0.14
33. HCFC-251 (C3H4FCl3) Monochlorotetrafluoropropane....      0.001-0.01
34. HCFC-252 (C3H4F2Cl2) Dichlorodifluoropropane........      0.005-0.04
35. HCFC-253 (C3H4F3Cl) Monochlorotrifluoropropane......      0.003-0.03
36. HCFC-261 (C3H5FCl2) Dichlorofluoropropane...........      0.002-0.02
37. HCFC-262 (C3H5F2Cl) Monochlorodifluoropropane.......      0.002-0.02
38. HCFC-271 (C3H6FCl) Monochlorofluoropropane..........      0.001-0.03
------------------------------------------------------------------------
\a\ According to Annex C of the Montreal Protocol, ``Where a range of
  ODPs is indicated, the highest value in that range shall be used for
  the purposes of the Protocol. The ODPs listed as single value have
  been determined from calculations based on laboratory measurements.
  Those listed as a range are based on estimates and are less certain.
  The range pertains to an isomeric group. The upper value is the
  estimate of the ODP of the isomer with the highest ODP, and the lower
  value is the estimate of the ODP of the isomer with the lowest ODP.
\b\ This table includes all isomers of the substances above, regardless
  of whether the isomer is explicitly listed on its own.

Subpart E--The Labeling of Products Using Ozone-Depleting 
Substances

0
9. Amend Sec.  82.110 by revising the paragraph (c) heading to read as 
follows:

Sec.  82.110  Form of label bearing warning statement.

* * * * *
    (c) Combined statement for multiple controlled substances * * *
* * * * *

0
10. In Sec.  82.112, amend paragraph (d) by revising the first sentence 
to read as follows:

Sec.  82.112  Removal of label bearing warning statement.

* * * * *
    (d) * * * Manufacturers, distributors, wholesalers, and retailers 
that purchase spare parts manufactured with a class I or class II 
substance from another manufacturer or supplier, and sell such spare 
parts for the sole purpose of repair, are not required to pass through 
an applicable warning label if such products are removed from the 
original packaging provided by the manufacturer from whom the products 
are purchased. * * *
* * * * *

0
11. Amend Sec.  82.122 by revising paragraph (a)(1) to read as follows:

Sec.  82.122  Certification, recordkeeping, and notice requirements.

    (a) * * *
    (1) Persons claiming the exemption provided in Sec.  82.106(b)(4) 
must submit a written certification to the following address: Labeling 
Program Manager, Stratospheric Protection Division, Office of 
Atmospheric Programs, 6205-T, 1200 Pennsylvania Ave. NW., Washington DC 
20460.
* * * * *

[[Page 64290]]

Subpart F--Recycling and Emissions Reductions

0
12. Amend Sec.  82.164 by revising paragraph (f) to read as follows:

Sec.  82.164  Reclaimer certification.

* * * * *
    (f) Certificates are not transferrable. In the event of a change in 
ownership of an entity which reclaims refrigerant, the new owner of the 
entity shall certify within 30 days of the change of ownership pursuant 
to this section. In the event of a change in business management, 
location, or contact information, the owner of the entity shall notify 
EPA within 30 days of the change.
* * * * *

0
13. Amend Sec.  82.166 by revising paragraph (h) to read as follows:

Sec.  82.166  Reporting and recordkeeping requirements.

* * * * *
    (h) Reclaimers must maintain records of the quantity of material 
(the combined mass of refrigerant and contaminants) sent to them for 
reclamation, the mass of each refrigerant reclaimed, and the mass of 
waste products. Reclaimers must report this information to the 
Administrator annually within 30 days of the end of the calendar year.
* * * * *
[FR Doc. 2014-25374 Filed 10-27-14; 8:45 am]
BILLING CODE 6560-50-P
```