The Alliance

for Responsible Atmospheric Policy

2111 WILSON BOULEVARD, 8TH FLOOR

ARLINGTON, VIRGINIA 22201

Phone: 703-243-0344· Fax: 703-243-2874

E-mail: alliance98@aol.com

December 1,2011

Ms. Drusilla Hufford

Director, Stratospheric Protection Division

Office of Atmospheric Programs

U.S. EPA

Ariel Rios Building

1200 Pennsylvania Ave., NW

Mail Code 6205J

Washington, DC 20140

Dear Ms. Hufford:

On behalf of the Alliance for Responsible Atmospheric Policy (Alliance), I am

responding to your October 20, 2011 letter regarding the allocation for HCFC-22 and the

effort to reduce emissions of this compound, and incentivize the use of more energy

efficient, non-ozone depleting compounds and equipment.

The Alliance appreciates EPA's efforts to examine all issues related to the allocation of

HCFC-22 and potential adjustments ofthese allocations to meet reduction, recycling, and

reclamation goals through 2014. Alliance members are mindful of the importance of

properly assessing the aftermarket demand to achieve the EPA's stated goals detailed in

the 2009 Final Rule, namely: (i) to achieve a smooth transition for system owners and the

public through an orderly phase down of HCFC-22; and (ii) to develop a vibrant

reclamation industry that can continue to support the industry for many years into the

future and allow further reductions of virgin supplies of HCFC-22.

As correctly noted in your letter, the Alliance has heard from many of its members and

other stakeholders that the supply of HCFC-22 has exceeded the service demand for the

period 2010-2011. This has created an over-supply that has, in large part, impeded the

stated goals of the 2009 Rule and put the industry at risk of not being prepared for the

next major HCFC reduction in 2015. EPA data provides strong support for that

conclusion. Specifically, the total number of allowances actually expended in calendar

year 2010 was approximately 43,000 MT, or approximately 86% of the total available

allowances for 2010. In addition, according to EPA data, less than 8 million pounds of

HCFC-22 were reclaimed in 2010, representing a 20% decrease from the peak levels

reported in calendar year 2008, and representing less than 30% of the EPA's stated goal

for reclamation. Moreover, as of this writing, the EPA should have the actual

consumption data for the first nine months of 2011.
In light of the foregoing and the uncertainty associated with the global recession, the

Alliance believes that the estimated aftermarket demand as set forth in the 2009 Rule was

overstated; and therefore, the total number of allowances awarded in the 2009 Rule was

likewise overstated and resulted in a significant over-supply of HCFC-22 in the market

place. The Alliance also believes that the reclamation industry has more than sufficient

collection capability and capacity to achieve and surpass the 12,500 MT goal for

reclamation as stated in the 2009 Rule. Further, there are numerous SNAP-approved

options, including non-ozone depleting reliant equipment with much higher energy

efficiency savings, that are available to consumers to support a smooth transition away

from HCFC-22 in air conditioning and refrigeration equipment.

The Alliance believes that the actual 2010 HCFC-22 consumption and reclamation data,

combined with the capability of the reclamation industry to reclaim much more

refrigerant, support reductions in the total number of HCFC-22 allowances that should be

issued in 2012 - 2014. While the Alliance members have diverse views on appropriate

allocation levels, we have no information available to suggest that 2011 was an

improvement over 2010 nor that the situation will change significantly in the next couple

of years.

EPA's own data is instructive to the evaluation as it shows the gap between unused

allocations and umealized reclaimed material is nearly 16,000 MT, or more than 30% of

the 2010 allocation. EPA's own data, therefore, would suggest the ability to reduce the

allocations 20% between now through 2014.

The Alliance urges the EPA to expedite the rulemaking process to ensure issuance of a

Final Rule for the 2012 control period by the end of 2011. The use of non-enforcement

letters to manage this process fosters business interruptions and creates uncertainty in the

market and is not the appropriate way to manage a process requiring timely, ongoing

responses. Issuing the rule and allowances before 2012 will also help restore confidence

to the market by allowing the planning and management ofHCFC-22 to be completed in

a structured program.

In addition, the Alliance addresses the five specific factors listed in your letter which are

being considered by EPA as it "allocates allowances in future years":

1. Current amount of stockpiled HCFC-22. Information regarding the size of the

HCFC-22 stockpile is generally not available unless obtained voluntarily or through

measures conducted by the government. The Alliance continues to have discussions on

this issue. We encourage EPA to use processes and tools available to it in order to obtain

such data.

2. Amount of demand being met by recovered, but not reclaimed HCFC-22. The

Alliance believes that there has always been some amount of demand that has been met

by recovered but not reclaimed material, and that such amount will increase over time,

responding to normal market driven supply and demand. The increase of reclaimed
material will be supported by the continued use of existing HCFC-22 systems and the

decrease ofthe virgin supply.

3. Capacity of the reclaim industry to provide additional reclaimed HCFC-22. As

stated above, the Alliance believes that the reclamation industry has more than sufficient

processing capability and capacity to achieve and surpass the 12,500 MT goal for

reclamation as stated in the 2009 Rule. In this regard we note that, at page 66,426 of the

2009 rule, EPA stated, "the reclamation companies together provided a comment stating

that they currently have sufficient capacity to reclaim 36 million pounds of refrigerants

each year, which is equal to 16,329 MT, or 26% of the estimated demand in 2010." The

Alliance notes that current capacity can be easily expanded in the short-term by

increasing utilization of existing assets through commitment of additional labor. In

addition, since the 2009 Rule was published, there has been growing acceptance of

HCFC-22 replacement refrigerants that provide alternatives to the industry as they

transition away from HCFC-22.

4. Price point at which reclaimed HCFC-22 becomes competitive. The Alliance is

not in a position to offer any information or take a position on this issue. Individual

member companies, however, may choose to comment on this. But, it is apparent from

EPA's own data that refrigerant recycling and reclamation goals will not be met with the

current HCFC-22 allocation construct.

5. Economic downturn as it relates to demand for HCFC-22. The Alliance is not in

a position to offer any information on this issue. Individual member companies may

choose to express their views in this regard.

The Alliance welcomes the opportunity to meet with you to discuss these comments and

the rulemaking process in general, and encourages meetings with individual members of

the Alliance and other stakeholders to provide a forum to share more specific

information. We look forward to the continuation of a productive working relationship

with EPA on these issues.

Regards,

Dq~ Executive Director