Page 1 of 5

Overview of the Proposed Rule Regarding HCFC Allowances Between 2012 and 2014

EPA is proposing and taking comment on a number of options and changes in this Notice of Proposed 

Rulemaking (NPRM) titled “Adjustments to the Allowance System for Controlling HCFC Production, 

Import, and Export,” regarding HCFC allowances for 2012 through 2014. The preamble presents many

overlapping options for how production and consumption allowances for HCFC-22 and HCFC-142b are 

determined for the years 2012 through 2014. Baselines and allocations for all HCFCs other than HCFC22 and HCFC-142b are the same as in the 2009 Final Rule (74 FR 66412). In this rule, EPA is proposing

to do and taking comment on the following: 

(1) Use the HCFC-22 and HCFC-142b baselines established in the 2011 Interim Final Rule for 2012 

through 2014; 

(2) Address 2010 allowances in light of the U.S. Appeals Court for the D.C. Circuit’s decision in 

Arkema v. EPA; 

(3) Use the same formula to provide HCFC-142b consumption and production allowances for 2012 

through 2014 as the agency did in the 2009 Final Rule; 

(4) Provide the same or fewer HCFC-22 consumption allowances relative to the 2009 Final Rule;

(5) Provide the same or more HCFC-22 production allowances relative to the 2009 Final Rule; and 

(6) Revise the regulations at 40 CFR Part 82.23 to clarify EPA’s position on inter-pollutant transfers. 

A summary of each proposal is provided below. Full discussion and references to additional supporting 

documentation can be found in the preamble to the NPRM. 

1) Baselines would be the same as set in the 2011 IFR

a. 2008 inter-pollutant trades made by Arkema and Solvay would be reflected consistent 

with the decision in Arkema v. EPA

b. Single-pollutant, inter-company trades occurring after the 2009 Final Rule would be

reflected

c. All other baselines would be the same as 2009 Final Rule

2) Addressing 2010 Allowances

EPA is not proposing to provide recoupment, but is taking comment on the issue. If the agency

decides to address 2010 allowances, it would consider providing recoupment to the following

entities:

Company Chemical Consumption 

Allowances (kg)

Production 

Allowances (kg)

Arkema HCFC-22 4,749,692 4,611,848

DuPont HCFC-142b 2,339 0

Honeywell HCFC-142b 58,291 107,097

Solvay Fluorides HCFC-22 1,157,895 0

Solvay Solexis HCFC-142b 0 289,800
Page 2 of 5

a. The agency is providing four options to address recoupment (i.e. the missed opportunity

to produce or import HCFCs in 2010):

i. In addition to the total allocation (“the pie”) for either chemical in 2013 only

ii. In addition to the pie in 2013 and 2014 

iii. From the pie in 2013 and 2014

1. If EPA goes with this option, it would need to allocate additional HCFC142b production allowances as there are too few allowances to provide 

full recoupment.

iv. No recoupment: EPA cannot provide meaningful recoupment since 2010 

allowances have no value beyond December 31, 2010

v. If EPA decides to provide recoupment, the agency is taking comment on whether 

it should provide recoupment for (1) HCFC-22 and HCFC-142b consumption and 

production allowances or (2) only HCFC-22 consumption allowances.

3) Annual HCFC-142b Allocation

EPA is proposing to allocate HCFC-142b allowances, both consumption and production, using 

the same methodology as in the 2009 Final Rule. In order to maintain approximately the same 

level of consumption as in the 2009 Final Rule, the new baseline percentage would be 4.9%, 

which would result in the allowance allocations shown below:

2012 2013 2014

MT ODP MT MT ODP MT MT ODP MT

R-142b

Cons. 100 7 100 7 100 7

Prod. 463 30 463 30 463 30

% of 

Baseline 

Allocated

4.9% 4.9% 4.9%

NB: The numbers listed here are rounded 

4) Annual HCFC-22 Consumption Allocation

EPA is considering two options for the HCFC-22 consumption allocation. The first is to leave 

aggregate consumption allowances the same as the 2009 Final Rule—which corresponds to a 

decrease in the baseline percentage issued each year. The other option is to decrease the total 

consumption allocation by between 11 and 47 percent each year, which would affect all 

companies proportionally.

a. With no decrease in aggregate allocation levels, the number of HCFC-22 consumption 

allowances (and the corresponding percentage of baseline) would be as follows:

2012 2013 2014

MT ODP MT MT ODP MT MT ODP MT

R-22

Cons. 40,700 2,200 35,900 2,000 31,100 1,700

% of 

Baseline 

Allocated

28.7% 25.3% 21.9%

NB: The numbers listed here are rounded 
Page 3 of 5

b. Under the second option, EPA would allocate an amount within the range included in the 

table below:

2012 2013 2014

MT ODP MT MT ODP MT MT ODP MT

Highest Annual 

Allocations

Cons. 36,200 2,000 31,400 1,700 26,200 1,400

% of 

Baseline 

Allocated

25.5% 22.1% 18.5%

Lowest Annual 

Allocations

Cons. 25,100 1,400 20,900 1,100 16,500 900

% of 

Baseline 

Allocated

17.7% 14.7% 11.6%

NB: The numbers listed here are rounded 

5) Annual HCFC-22 Production Allocation

EPA is proposing to (1) provide the same amount of HCFC-22 production allowances as in the 

2009 Final Rule, (2) provide the same percentage of baseline for HCFC-22 production 

allowances as in the 2009 Final Rule, or (3) provide production allowances at the same level as 

consumption allowances. Under option 2, the number of HCFC-22 production allowances would 

increase relative to the 2009 Final Rule, which would allow companies whose baselines were not 

changed to produce HCFC-22 at the same level as established in the 2009 Final Rule. The 

agency would need to decide to decouple production and consumption in order to finalize 

options 1 or 2.

a. Under option 1 (same approximate amount as the 2009 Final Rule), EPA would provide 

the following number and percentage of allowances:

2012 2013 2014

MT ODP MT MT ODP MT MT ODP MT

Prod. 37,000 2,000 32,700 1,800 28,300 1,600

% of Baseline Allocated 28.7% 25.3% 21.9%

NB: The numbers listed here are rounded

b. Under option 2 (same percentage of baseline allocated for production as in the 2009 Final 

Rule), EPA would provide the following number and percentage of allowances:

2012 2013 2014

MT ODP MT MT ODP MT MT ODP MT

Prod. 44,000 2,400 38,900 2,100 33,700 1,900

% of Baseline Allocated 34.1% 30.1% 26.1%

NB: The numbers listed here are rounded
Page 4 of 5

c. If EPA provides the same percentage of baseline for production allowances as it does for 

consumption, EPA would allocate between the high and low amounts included in the 

table below:

2012 2013 2014

MT ODP MT MT ODP MT MT ODP MT

Highest Annual 

Allocations

Prod. 32,900 1,800 28,500 1,600 23,900 1,300

% of 

Baseline 

Allocated

25.5% 22.1% 18.5%

Lowest Annual 

Allocations

Prod. 22,800 1,300 19,000 1,000 15,000 800

% of 

Baseline 

Allocated

17.7% 14.7% 11.6%

NB: The numbers listed here are rounded 

6) Inter-pollutant transfers

EPA is proposing to:

a. Modifiy the language at 82.23(d) to memorialize EPA’s policy not to allow permanent 

inter-pollutant transfers of baseline allowances

b. Modifiy the language at 82.23(b) to clarify that EPA allows inter-pollutant transfers of 

Article 5 allowances

c. Modifiy the language at 82.23(a) to clarify that a 0.1 percent offset applies to Article 5 

allowance transfers

In addition to the options summarized above, EPA is also taking comment on:

 Whether the installation of dry-shipped HCFC-22 condensing units will affect the phaseout of 

virgin HCFC-22 production and import.

 Whether providing allowances to reclaimers would affect the market price of R-22, and what 

effect that price change would have on the transition away from ODS and the sustainability of 

the reclamation industry. 

 Whether other companies (in addition to the one small business who commented on this issue)

are having difficulty acquiring HCFCs or HCFC allowances.

 Whether an allocation to manufacturers of HCFC blends who are having difficulty acquiring 

HCFCs or HCFC allowances would be appropriate. Commenters supporting such an allocation 

should consider (1) how EPA might determine the total amount of such an allocation, (2) how 

EPA might determine which companies should receive allowances, (3) how EPA would verify

that allowance holders are refusing to sell HCFCs and HCFC allowances, (4) how EPA might set 

baselines for these companies, (5) whether EPA should provide allowances in addition to the 

amount proposed in this rule, or as part of the amount proposed in this rule, and (6) how 

providing allowances to an additional set of companies would affect the U.S. transition away

from HCFCs.
Page 5 of 5

 The analysis, supporting data, and assumptions presented in the Adjustment Memo (formally 

titled, “Analysis of HCFC-22 Servicing Needs in the U.S. Air Conditioning and Refrigeration 

Sector”).

 Whether there would be an environmental benefit to updating company baselines for 2015 and 

beyond based on more recent data.

 Whether, relative to the 2009 Final Rule, an increase in the total number of production 

allowances would result in (1) an increase in U.S. consumption, (2) an increase in U.S. 

production, either for domestic use or for export, and/or (3) an increase in worldwide production 

and/or consumption of HCFCs. Moreover, given that one potential outcome might be an increase 

in U.S. exports of HCFC-22, EPA invites comment on the implications of such an increase for 

the U.S. economy and the global environment, particularly as it relates to the smooth U.S. 

phaseout of HCFC-22. EPA also requests comments on whether section 605(c) would preclude 

allocating a different percentage of baseline for production than for consumption.