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Providing outstanding , nationwide refrigerant recovery for the HVAC/Refrigeration/Demolition/Marine industries.

8971 W Bloomfield Rd Peoria, AZ 85381 EPA Allocation Actions

Dear Stratospheric Ozone Depletion EPA team,

My name is Adam Dykstra; I am the CEO of Rapid Recovery. Pl ease allow me a moment of your time to reintroduce you to our company and comment on the current sta te of our industry.

Rapid Recovery is a nationwide network of local refrigerant recovery companies. We are uniquely positioned in a very specialized niche in this industry. We provide one very specific service, refrigerant recovery. As a franchise network we are made up of more than 30 small businesses with well over 100 individuals and their families supported by our organizatio n. Our team works hard everyday to provide value added services in 35 major metropolitan areas across the country. As a result we are the largest refrigerant recovery company in the country. We provide our se rvices to demolition, HVAC, refrigeration and mechanical contractors, appliance decommissioning plants, fa cilities managers and government agencies. Our company was created and continues to exist solel y to meet the demand for services related to compliance with Section 608 of the Clean Air Act.

As a company we have discovered that there are only three reason s our customers comply with the laws governing the recovery, recycling or reclamation of refrigerant - altruism, fear of enforcement and financial incentive. Throughout my nearly twenty years in the industry our company and our industry have lobbied for two actions from the EPA; restricted supply to support co ntractor incentives and visible

enforcement actions. These are the two mechanisms over which the EPA alone has direct impact.

We firmly believed the EPA’s o ption to use a carrot and stick approach would have been the best way to increase compliance and as a result reduce emissions. As a result, this l etter will focus on the areas of influence independently held by the EPA.

Enforcement: Contractor level enforcement, the only truly vi able place to enforce these regulations, is

non-existent. Contractors have no fear of enforcement. T he true reality of the landscape is that the altruistic few who desire to protect the environment find themselves at a significant competitive disadvantage. HARDI, ACCA, The Alliance and numerous reclaimers have voiced the need to enforce the law in order to restore a healthy and competitive industry . Years of engagement at the local level have persuaded us that enforcement is the single most effective way to assure compliance.

Supply: In the late 1990’s supply restrictions put in place as a result o f the phase out of CFCs had a significant impact on the value of R-12. Prices of R-12 ro se in both the new and used refrigerant markets and as a result more refrigerant was recovered. Most of the R- 12 during the CFC phase out cycle was deployed in automobiles and as a result the market quickly p eaked and fell away in lock step with the typically short life cycle of an automobile and it’s air conditioning system.

Fast forward a decade to the initial phase down of HCFC s. In 2008 the EPA’s allocation phase down plan and resulting concern over future supply, began to have a l imited impact on the value of R-22. We, along with others in the recovery and reclamation industry, were ab le to begin offering small contractor incentives. In 2011 the EPA withheld issuing updated alloca tions and instead issued “no actionProviding outstanding , nationwide refrigerant recovery for the HVAC/Refrigeration/Demolition/Marine industries.

8971 W Bloomfield Rd Peoria, AZ 85381 assurance” letters. The HVAC/R industry immediately took notice and as a result created the perception of a looming shortage. Almost immediately prices of HCFCs b egan to climb and Rapid Recovery, along with others, was able to increase buyback prices for recovered refrige rants. In many cases these incentives offset the entire cost of recovery resulting in a significant increase compliance with EPA regulations. Contractors in all of our target market segments and in all of our territories who had previously illegally vented HCFCs began to recover.

Earlier this year the EPA did an about face by allowing allocatio ns to increase to nearly double the market’s anticipated volume. This action effectively wipe d out the R -22 contractor incentives provided to the market by reclaimers. This quickly impacted refrigerant recover y compliance. Rapid Recovery has been forced to reduce our refrigerant incentive by more than 75 % and as of today the price continues to fall. One reclaimer recently released a statement to all of their customers and prospects cutting their contractor incentive from a high of $8 per pound to $1 per pound on R-22. Their announcement included a refusal to accept other refrigerants unless accompanied by R-2 2. The R-22 allocation increase has an immediate and significant impact on recovery compliance for all refrigerants

.

This incredible price collapse is a move of desperation by a d amaged industry. For many reclaimers their actions were simply about survival. One publicly traded recl aimer has seen its company’s valuation drop by more than 65% as a result of the EPA’s recent action. One could interpret the collapse of our “competitors” as an opportunity for us, but such an assumption w ould be incorrect. All quality businesses need a healthy, competitive, and vibrant marketplace. I n fact, because the market is in disarray reclaimers can no longer offer an incentive - the carrot - that was con vincing contractors to recover refrigerants.

On August 8, 2013 the EPA issued letters to reclaimers requesting sp ecific information under section 114(a) of the Clean Air Act. Although Rapid Recovery is a n etwork of recovery companies and is not a reclaimer and therefore did not receive the letter directly, we feel compelled to provide additional insight that may not otherwise be presented. Additionally, in a n effort to provide a more comprehensive insight into the recovery and reclamation industry, we have include d information beyond what was requested of the reclaimers. We are hopeful that doing so will provide a better perspective of the refrigerant recovery industry.

The chart provided below graphically depicts the volume of refrigerant, measured in pounds, that was recovered by the Rapid Recovery network annually between 2 008 and 2012. These volumes are broken down into three major categories: R-22 returned for reclamat ion (blue bar), refrigerant of any type recovered and left on-site with the contractor (red bar), and al l other refrigerants which were recovered and sent for reclamation or destruction (green bar). The white line, measured on the right vertical axis, represents the corresponding price paid to contractors for recovered us ed R-22.Providing outstanding , nationwide refrigerant recovery for the HVAC/Refrigeration/Demolition/Marine industries.

8971 W Bloomfield Rd Peoria, AZ 85381 Please note that, as contractor incentives and new refrigerant values for R-22 have risen, recovery rates for all refrigerants have correspondingly climbed. You’ll also note that the volume of refrigerant left on -site has also risen which indicates that a significant volume of r ecovered refrigerant is being reused as opposed to being reclaimed. This phenomenon is most common in the grocery industry where refrigerant that is left on-site is normally reused in the same system or in other systems under common ownership. It is important to note that these refrigerants are not included in annual EPA reclamation reports simply because they are never returned for reclamation.

Both reuse and reclaim are options which indicate compliance w ith recovery requirements. Much of the

EPA’s in formation is limited to reclamation data only, however as you can see recovery has risen considerably as a direct result of previous phase down alloca tion restrictions. Just as recovery rates climbed as a result of an increase in new R-22 pricing and th erefore contractor incentives also climbed, it is also reasonable to project that compliance will correspondin gly fall as R-22 purchase prices and contractor incentives return to previous low values. The following chart provides a breakdown of recovery services Ra pid Recovery provides to various

industries.Providing outstanding , nationwide refrigerant recovery for the HVAC/Refrigeration/Demolition/Marine industries.

8971 W Bloomfield Rd Peoria, AZ 85381 What should be noted in the previous pie chart is the very limited volume of refrigerant removed from contractors who service residential and light commercial systems.

It is worth pointing out that most of the refrigerant in o ur country is contained in systems which hold less than 20 pounds. This can anecdotally be shown by viewi ng any metropolitan area with a satellite level overview and comparing the shear number housing units and the refrigerated appliances they contain, including refrigerators, freezers, dehumidifiers and air condition ing units, to the number of grocery stores and large buildings which utilize larger refrigerant volume systems. Tabulate the volumes in each category and it becomes clear where the majority of refrigeran t lies, in the small systems. This conclusion can also be evidenced by the statistical data available fro m HARDI and AHRI regarding the number of systems sold by size and the life cycles of those units.

As a result, residential and light commercial contractors should “produce ” the highest volume of recovered refrigerant. This simply is not the case. In our significant experience in the refrigerant recovery marketplace the size, ownership structure and makeup of these contractors lend themselves to be less likely to have environmental motives for recovery and typ ically respond more readily to enforcement fear

or financial incentives.

The EPA has never provided a level of effective enforcement su rrounding Section 608 and as a result there is no stick in the carrot and stick approach necessary for co mpliance. The environment and those of us that have developed business models around the recovery e quipment, transportation systems, processing facilities and educational and technical support fo r Section 608 compliance have paid the price

for that lack of enforcement. The combination of limite d enforcement along with the recent decision by the EPA to significantly increase the surplus of R-22 has removed cont ractor incentives to recover and reclaim refrigerants across the industry. The lasting impact is sig nificantly decreased compliance, increased ozone depletion and significant long term negat ive climate change. There is no longer a carrot and never has been an effective stick available to persuad e the local contractor to comply.Providing outstanding , nationwide refrigerant recovery for the HVAC/Refrigeration/Demolition/Marine industries.

8971 W Bloomfield Rd Peoria, AZ 85381 While Rapid Recovery is not a recipient of allocations, t he decisions relating to the overall volume of refrigerant in the marketplace have significant financial im pact on everyone involved in the industry, including reclaimers and recovery companies.

We respectfully request that you immediately amend the a llocations for 2013 and carefully consider a much more aggressive reduction in allocations in 2014. Limi ted supply will raise prices thus encouraging

reasonable contractor incentives. These incentives will in turn create better compliance, reduce venting, limit ozone depletion and result in a reduction of glob al warming. We also implore you to use the most impactful compliance tool available to you, enforcement. There can be no doubt that there is a direct cause and effect relationship between the decisions you make and the health of our industry and the

environment.

Thank you for your consideration,

Adam Dykstra

CEO Rapid Recovery