# TheAlliance forResponsibleAtmosphericPolicy

2111 WILSON BOULEVARD, 8TH FLOOR ARLINGTON, VIRGINIA22201 Phone: 703-243-0344· Fax: 703-243-2874 E-mail: alliance98@aol.com

December 1,2011

Ms. DrusillaHufford Director, Stratospheric ProtectionDivision Office ofAtmospheric Programs U.S. EPA Ariel Rios Building 1200 PennsylvaniaAve., NW Mail Code 6205J Washington, DC 20140

DearMs. Hufford:

On behalf of the Alliance for Responsible Atmospheric Policy (Alliance), I am responding to your October 20, 2011 letterregarding the allocation for HCFC-22 and the effort to reduce emissions ofthis 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 andpotential adjustments ofthese allocations to meetreduction, 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 smoothtransition 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 ofvirgin supplies ofHCFC-22.

As correctly noted in your letter, the Alliance has heard from many ofits members and other stakeholders that the supply ofHCFC-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 ofthe 2009 Rule and put the industry at risk ofnot being prepared for the next major HCFC reduction in 2015. EPA data provides strong support for that conclusion. Specifically, the total number ofallowances actually expended in calendar year 2010 was approximately 43,000 MT, or approximately 86% ofthe 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% ofthe EPA's stated goal for reclamation. Moreover, as of this writing, the EPA should have the actual consumptiondataforthe first nine months of2011.In light ofthe foregoing and the uncertainty associated with the global recession, the Alliance believes thatthe estimated aftermarketdemand as setforth inthe 2009 Rule was overstated; and therefore, the total number ofallowances awarded in the 2009 Rule was likewise overstated and resulted in a significant over-supply ofHCFC-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 andrefrigeration 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, supportreductions inthe total number ofHCFC-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 thatthe situation will change significantly inthe next couple ofyears.
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 suggestthe ability to reduce the allocations 20% betweennowthrough2014.

The Allianceurges theEPAto expeditethe rulemaking process to ensure issuance ofa Final Rule forthe 2012 controlperiodby the end of2011. Theuse ofnon-enforcement lettersto managethis process fosters business interruptions and creates uncertainty inthe marketand is notthe appropriate wayto manage aprocess requiring timely, ongoing responses. Issuingtherule and allowances before 2012 will also help restore confidence to the marketby allowing the planning andmanagementofHCFC-22 to be completedin
a structuredprogram.

In addition, the Alliance addresses the five specific factors listed in your letter which are being consideredbyEPA as it "allocates allowances infuture years":

1. Current amount of stockpiled HCFC-22. Information regarding the size ofthe 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 EPAto use processes andtools available to itin orderto obtain suchdata.

2. Amount ofdemand being met by recovered, but not reclaimed HCFC-22. The Alliance believes that there has always been some amount ofdemand 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 ofreclaimedmaterial will be supported by the continued use ofexisting HCFC-22 systems and the decrease ofthe virgin supply.

3. Capacity ofthe 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, atpage 66,426 ofthe 2009 rule, EPA stated, "the reclamation companies together provided a comment stating that they currently have sufficient capacity to reclaim 36 million pounds ofrefrigerants each year, which is equal to 16,329 MT, or 26% ofthe 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 thatrefrigerant recycling and reclamation goals will not be met with the currentHCFC-22 allocation construct.

5. Economic downturn as itrelates to demand for HCFC-22. The Alliance is notin
a position to offer any information on this issue. Individual member companies may choose to express theirviews inthis 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 ofa productive working relationship withEPA onthese issues.
Regards,

# Dq~ ExecutiveDirector