1

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### GOVERNMENT OF THE DISTRICT OF COLUMBIA 1


### U.S. Environmental Protection Agency 2


### Office of Atmospheric Programs, Stratospheric 3



### Protection Division 4

5

6

7


### Public hearing on the 2015

- 2019 Proposed HCFC 8



### Allocation Rule 9

10

11


### 2:34 to 5:20 p .m. 12


### Thursday, January 23 , 201 4 13

14



### R oom 152 15



### 1310 L Street Northwest 16


### Washington, D.C. 17

18

19

20

21

222

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### Speakers present : 1



### DAVID DONALDSON 2



### ELIZABETH WHITELEY 3



### KEVIN FAY 4



### DAVE STIRPE 5



### MICHAEL PARR 6



### RUSTY THARP 7



### JERRY DYKSTRA 8



### BENJAMIN LONGSTRETH 9



### JILL TRONCA 10



### JAMES BURKE 11



### DON MAGID 12



### ALEXANDER VONBISMARCK 13



### KRISTINA FOEHRKOLB 14



### W. CAFFEY NORMAN 15



### JON MELCHI 16



### STEVE PORTER 17



### STEPHEN MANDRACCHIA 18

19

20

21

223

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### P R O C E E D I N G S 1


### MR. DONALDSON: So, I'm David Donaldson. 2


### I'm going to welcome you all to our hearing here 3


### on the proposed HCFC allocation rule , and I thank 4


### you for making the trip to Washington, D.C. and 5



### our EPA facility here on L Street, if you're 6



### local. 7


### I'm joined here at the front with my 8


### colleague, Liz Whiteley. Liz is the lead author 9


### of our proposed rule. I'm the branch chief on 10



### the St ratospheric Program Implementation Branch, 11



### and both Liz and I are in that branch here in the 12


### Office of Atmospheric Programs. 13


### I'm also joined here at the front by 14


### Jennifer, who is our court reporter. So thank 15


### you for your participation, Jennifer. 16



### We al so have Diane McConkey of our Office 17



### of General Counsel in the room, and several other 18



### EPA staff who are here as well. 19


### So, please be aware of the sign

- in table 20


### at the back of the room. I suspect that everyone 21


### has signed in. But if you haven't already, 224

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### please provide your name and affiliation. The 1


### people at the sign

- in table can also sort of 2


### answer logistical questions, if you have any, 3


### about the hearing or you know, the EPA 4



### facilities. 5


### So, the purpose of this hearing is for 6



### EPA to take verbal comment on the proposed rule 7


### titled Protection of Stratospheric Ozone: 8


### Adjustment to the Allowance System for 9


### Controlling HCFC Production, Import/Export for 10



### 2015

- 19. The proposed rule was published on the 11


### Federal Register on December 24th, 2013. 12



### Your verbal c omment will be transcribed 13


### by a court reporter and made available as a 14


### transcript on the public docket for the rule 15


### making in approximately two weeks. 16


### Providing verbal comment this afternoon 17


### does not keep you from providing written comment 18


### separately and providing that directly to the 19


### docket. And we hope that you'll do that as well. 20



### Written comment s are due March 10, 2014. 21


### The docket number for the proposed rules is EPA

- 225

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### HQ

- OER

- 2013

- 0263. We are providing a fact sheet 1


### that explains how to give written c omment on the 2



### rule, and that fact sheet is available at the 3


### sign

- in table. 4


### The purpose of today's hearing is not to 5


### answer individual questions on the rule. 6



### However, we do welcome stakeholder actions and 7


### you can speak to any of us here today from EPA to 8


### set up a separate time to meet. That meeting and 9


### any documents that you provide during that 10


### meeting would also be put into the public docket 11


### for the rule making. 12


### So, we will first hear verbal comments 13


### from Kevin Fay of the Alliance. He'll be up 14



### first an d then we will rip through the list of 15


### others who RSVP'd to the meeting. We will then 16


### move on to folks who signed up to give verbal 17


### comment today. 18


### And instructions for testifying, please 19


### come to the podium and use the microphone, state 20


### your name and affi liation, speak slowly, clearly, 21


### and directly into the microphone. And to ensure 226

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### that all interested parties have the opportunity 1


### to provide verbal comment, please be concise and 2


### try to limit your comments to no more than 10 3



### minutes. 4


### If you are reading from a prepared 5


### statement please consider providing a copy of 6


### that to our court reporter to ensure that it's 7


### transcribed accurate, most accurately and 8


### efficiently. 9


### So for those people who just signed up 10


### today to provide comment, please also either 11


### provi de your name and affiliation in writing, or 12


### if you can't do that, please make sure that you 13


### spell any difficult words, such as names and 14


### business names for our court reporter. 15


### So with that I'll invite Kevin to begin. 16



### MR. FAY: Thank you, David. My nam e is 17


### Kevin Fay. I’m the executive director of the 18


### Alliance for Responsible Atmospheric Policy, and 19


### we're pleased to have this opportunity to provide 20


### oral comments regarding EPA's proposed rule on 21


### adjustments to the Allowance System for 227

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### controlling HCFC pr oduction import and export. 1


### As you know, the Alliance is an industry 2


### coalition organized in 1980 to address the issues 3


### of stratospheric ozone depletion and the 4


### production and use of fluorocarbon compounds. It 5


### is composed of manufacturers and businesses, 6


### including their trade associations which rely on 7



### HCFCs and HFCs

. 8


### Today the Alliance coordinates industry 9


### participation in the development of policies 10


### regarding both ozone protection and climate 11


### change, and the Alliance has a long successful 12


### history of w orking in a positive and cooperative 13



### manner with EPA on these issues. 14


### We appreciate the opportunity to comment 15



### on the proposed allocation of HCFC

- 22 allowances 16


### for the 2015 to 2019 period. There are several 17


### additional issues raised in the proposed rule. 18



### We intend to address them in our written 19


### comments, as well as address the allocation 20


### proposals for HCFCs other than HCFC

- 22. 21


### The Alliance believes it is important to 228

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### focus at this time on the 22 allocation amounts 1


### and schedule. It is noted that the Age ncy 2


### indicates in its proposal that stockpile 3



### information collect ed last year from 114 letters 4


### has produced information that the stockpile of 5


### this compound is larger than previously 6


### estimated. But the Agency does not provide a 7


### figure. 8


### It is important that this figure be taken 9


### into account as part of the allocation proposal. 10


### In light of the larger than anticipated size of 11


### the stockpile it is questionable whether the 12


### Agency's preferred option proposal best reflects 13


### the market dynamics and the goal of an ord erly 14



### transition. 15


### EPA's preferred allocation level may in 16


### fact create additional surplus supply that will 17


### discourage the efficient operation of the 18


### nation's underutilized reclamation capacity, 19


### impede the necessary market transition to the 20


### full phase out of HCFC

- 22, and could lead to 21


### greater emissions than is environmentally or 229

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### economically feasible or desirable

. 1



### The Alliance believes that a more 2


### aggressive approach should be considered and 3


### encourages the Agency to adopt the more 4


### aggressive five

- year al location schedule for 5



### HCFC

- 22. This option is a five

- year linear draw 6


### down beginning with 10,000 metric tons of HCFC

- 22 7


### in 2015, which would result in the lowest 8


### allocations of any of the proposals in the first 9


### two years of this 2015 to 2019 period. 10



### The Alliance believes this early signal 11


### is important for an orderly market transition. 12


### In December 2011 the Alliance urged EPA, quote, 13


### "To use processes and tools available to it in 14


### order to obtain appropriate production and 15


### stockpile data," end quote. We c ommend the 16


### Agency for doing so in 2013 and believe that you 17


### now have sufficient data on this topic to inform 18


### this rule making. 19


### We encourage EPA to collect stockpile 20


### information as part of its routine annual 21


### reporting requirements for the remainder of the 2210

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### 2015 to 2019 period, although we do have a range 1


### of views on this issue among our membership. But 2


### we believe it is important first that the 3


### allocation rule be completed promptly and do not 4


### want changes in the reporting requirements to 5


### slow the completion of a final allocation rule. 6



### If such were to be the case we'd 7


### recommend the reporting change, but as a separate 8



### administrative action. 9


### In finalizing a decision on the 10


### allocations for the 2015 to 2019 period, it is 11


### important that adequate notice be provide d in 12


### order to allow for the markets to adjust. This 13


### is an additional reason why the alliance urges 14


### the agency to move expeditiously and complete its 15


### proposal as quickly as possible. 16


### On a cautionary note, as HCFC

- 22 17


### allocations are declining, the user ind ustries 18


### are experiencing more frequent occasions of 19


### problems with substitutes that are either unsafe, 20


### unsuitable, or contaminated, thereby harming the 21


### equipment relying on these refrigerants. 2211

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### It is important that the Agency utilizes 1



### its authorities unde r SNAP and Section 608 in 2


### order to help minimize this problem, and we look 3


### forward to working with you on this challenge. 4



### The Montreal Protocol and the Clean Air 5


### Act Title VI implementation have succeeded 6


### because they have allowed for long

- term 7



### management principles in order to achieve the 8


### desired environmental policy objectives. This 9


### rule should ensure an adequate supply of HCFCs 10


### for existing equipment, but not an oversupply. 11


### This rule should also recognize the significant 12


### capacity for effective recover y, recycle, and 13


### reclamation of this material, and encourage 14


### greater product stewardship through leak 15


### reduction, product recovery, and management. The 16


### inventory of HCFC

- 22 is substantial and efforts 17



### should be made to ensure maximum reliance on 18



### these measur es as an important means of servicing 19


### the existing equipment base, in addition to safe 20


### and reliable alternative refrigerants. 21


### Finally, we believe that an update of the 2212

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### Agency vintaging model should be conducted to 1



### include more current information on leak rates 2


### and charge size s in order to better determine 3



### actual need over the next five to 15 years for 4


### servicing the installed equipment base. Alliance 5



### members welcome the opportunity to work with EPA 6


### staff on this update. 7



### The Alliance looks forward to worki ng 8


### with the Agency in an expeditious manner to 9


### achieve rapid completion of this allocation rule. 10


### Thank you. 11


### MS. WHITELEY: So up next is Dave Stirpe 12


### from Honeywell. And I'm just going to turn our 13



### mic on here. 14


### If you are providing verbal testimony, if 15


### you could speak directly into the mic, we'd 16


### really appreciate it. It's one of those mics 17


### where you have to be really close. 18



### MR. STIRPE: Good afternoon. My name 19


### Dave Stirpe and I am Manager of Regulatory 20



### Affairs at Honeywell International for the 21



### F luorine Products Business. Thank you for the 2213

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### opportunity to speak on behalf of Honeywell on 1


### EPA's Proposed Rule addressing the HCFC 2



### Allocation. 3


### Honeywell International is a global 4


### leader in providing energy efficient technologies 5



### and innovations that c an help the world solve its 6


### energy and environmental challenges. Honeywell 7


### products and services respond to the urgent and 8


### complex challenge of energy security and climate 9


### change while driving economic growth through 10


### enhanced productivity. Honeywell's por tfolio 11


### delivers energy savings and efficiency across the 12


### residential, transportation, industrial, and 13



### commercial sectors. 14


### We are a recognized leading innovator in 15


### the development of environmentally preferable 16


### fluorocarbons for use as refrigerants, blowing 17


### agents, solvents, propellants, and other uses. 18



### Since the 1990s, Honeywell has helped 19


### businesses replace ozone

- depleting substances in 20



### these applications with alternatives that are 21


### more energy efficient, have less ozone

- depletion 2214

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### potential, and less clima te change impact. 1


### Today Honeywell Fluorine Products has 2


### invested significantly in a new platform of low 3



### and lower

- global warming potential compounds for 4


### use by equipment and product manufacturers 5


### worldwide. Our plans for alternatives have been 6



### shared with EPA, and announced over the last 7


### several years at many conferences and workshops 8



### in the US and around the world. We are 9


### working with manufacturers today to implement 10


### these new compounds in their products and 11


### equipment. 12


### In December, Honeywell announced plans to 13


### build a new facility in Geismar, Louisiana to 14


### produce HFO

- 1234yf, a new refrigerant for motor 15


### vehicle air conditioning with a Global Warming 16



### Potential of less than 1. Nearly half a million 17


### cars in the world today are using HFO

- 1234yf. 18



### That numbe r is growing daily , and by the end of 19


### 2014, over 2 million cars in the world will be 20


### using this compound. 21


### Honeywell is a strong supporter of EPA's 2215

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### actions under the Clean Air Act and its 1


### commitment to phasing down the use of ozone

2


### depleting substances. We are very much in favor 3


### of aggressive reductions in the HCFC allocation 4



### and have been working hard to develop 5



### t echnologies to further those goals. We also 6



### stress that it would be tremendously helpful for 7


### our business planning, and for the industry as a 8



### whole, to finalize and publish this final rule 9


### well in advance of January 1, 2015, when 10


### compliance obligations go into effect. 11


### Thank you for consideration of these 12



### comments. 13


### MS. WHITELEY: Up next we have Michael 14



### Parr from Du P ont. 15



### MR. PARR: Thank you . I'm Michael Parr 16



### with DuPont . Thanks for the opportunity to speak 17


### today. Let me begin by noting how important the 18



### timeliness and the content of these rules are to 19


### this industry sector. It is critical to 20


### everything from our ability to source raw 21



### mater ials, plan production, to write contracts. 2216

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### And so we appreciate the timeliness of the 1


### proposal and hope this leads to a very timely 2



### finalization so that we can service our markets 3


### in a proper fashion. 4



### As we've looked at this issue I think 5



### there's several factors that we think are 6


### important to take into consideration as you 7


### decide on a final allocation option. One of 8


### course is the significant amount of inventory 9


### that's in the market and how that might affect 10


### the necessary transition. 11



### Second is the abil ity to finalize this 12


### rule in a very timely manner. As you know, we've 13


### struggled a little bit in the last couple of 14


### rules and I think stepping the pace up this time 15


### would be quite important in this last period for 16



### 22. 17


### Thirdly, because in 2020 we are 18



### essen tially done with Virgin, the transition is 19


### very important to get started early, and a smooth 20


### and manageable transition so that the industry is 21


### fully prepared come 2020 to deal with the new 2217

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### market reality that we will face. 1


### As we look at the options that a re in the 2


### Agency's rules, we think the accelerated five

3


### year option strikes a reasonable balance amongst 4


### those factors. And as Kevin Fay noted, it's 5


### helpful in that it starts at a level that sends a 6


### clear signal to the market, but it provides a 7



### reasonable glide path to the industry. 8


### We are also evaluating some other 9


### potential options at lower levels of total 10


### allocation that might similarly balance those 11


### criteria effectively, but have not reached final 12


### determination on those as of yet. We certainly 13



### will b y the time the comments come. 14



### But let me reiterate that timeliness and 15


### full accounting for the significant inventory in 16


### the market is an important aspect of 17


### finalization. Thank you. 18


### MS. WHITELEY: Up next we have Rusty 19


### Tharp from Goodman Manufacturing. 20



### MR. THARP: Thank you. Goodman is a 21


### manufacturer of HVAC products. Who we are. We 2218

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### support the comments that have been made from 1


### Kevin and the Alliance. Goodman strongly 2


### encourages EPA to adopt a five

- year fixed linear 3


### rate phase

- down because we are concerned with the 4


### regulatory uncertainty that we've dealt with in 5


### recent years, and thus we are proponents of the 6



### fixed non

- adjusting phase down. 7


### We're also concerned with the potential 8


### for poor performance, potential increases in 9


### energy consumption of H VAC product and potential 10


### reliability and safety issues such as the notice 11


### the EPA issued last July of 2013, regarding 12


### potential propane or other unsafe alternates and 13



### other such issues associated with HCFC

- 22 14



### alternatives

. 15



### And for these reasons we also

- - and due 16


### to the enormity of the installed base out there, 17


### we support the five

- year time frame. And as just 18


### mentioned, we also support the final rule being 19


### issued in a timely manner. Thank you. 20


### MS. WHITELEY: Thank you. Up next we 21


### have Jerry Dykstra fr om Rapid Recovery. 2219

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### MR. DYKSTRA: Jerry Dykstra with Rapid 1



### Recovery. 2


### As the representative of Rapid Recovery , 3



### I want to thank the staff of the Environmental 4


### Protection Agency, and particularly Ms. Hufford, 5


### even though she's not able to be with us today 6



### f or the opportunity to present our comments and 7


### concerns regarding the proposed adjustments for 8


### the allowance system for controlling the 9


### production and importation of HCFCs. 10


### Rapid Recovery is the largest refrigerant 11


### recovery in the United States with loca tions from 12



### coast to coast. Our entire business focuses 13


### exclusively on the recovery and processing of 14


### used refrigerant gases. As such, we are in a 15


### unique position to address not only the 16


### reclamation of recovered refrigerants but more 17


### importantly we have a n in

- depth understanding of 18


### the forces that encourage and increase the 19


### recoveries necessary to feed the reclamation 20


### industry. 21


### We have read and studied the EPA proposal 2220

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### at length. And while it contains much that 1



### deserves careful evaluation and considerati on, I 2


### would like to focus my comments directly on the 3


### options presented for the allowance system and 4


### the proposed phase

- down of the production and 5


### importation of HCFC

- 22, more commonly known as R

6



### 22. 7


### We have observed, with great interest, 8


### the impact tha t recent EPA decisions have had on 9


### the price and availability of R

- 22 in the 10


### marketplace. The market uncertainty caused by 11


### the delay of the issuance of allocations and the 12



### use of non

- enforcement levies created the 13


### perception of an impending shortage in th e 14


### marketplace, which drove prices very high, very 15



### fast. 16


### This action suddenly provided higher 17



### values and contractor incentives to recover. And 18


### as a result compliance increased. 19



### Then the ultimate decision to set 20


### production import allocations higher tha n 21


### industry expectations drove the prices back down 2221

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### again very quickly. Not only did this result in 1


### an immediate decline in recovery compliance, it 2


### sent an extremely damaging shockwave through the 3


### refrigerant reclamation and distribution 4


### industry. 5



### After c areful consideration , Rapid 6


### Recovery is convinced that the proposed options 7


### do not provide a viable solution to the 8


### challenges faced by the reclamation industry. 9


### While the most aggressive five

- year 10


### phase

- out is certainly the best of the options 11



### offered, w e strongly encourage a faster phase

- out 12



### of R

- 22 production and importation. We believe 13


### the supply of current inventories of R

- 22 can 14


### support the service needs during a transition to 15



### alternatives. 16


### Relying on those inventories will raise 17


### the price of exi sting inventories to a reasonable 18


### level which will support the recovery and 19


### reclamation of massive stockpiles which are still 20


### being underutilized in operating equipment. 21


### While we appreciate the EPA's willingness 2222

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### to address the particular issue of R

- 22 1



### all ocations and its impact on the industry, it is 2


### far more important to consider the broader 3


### question. What can be done to support the 4


### recovery and reclamation industry in the long 5



### term? 6


### The EPA regulations created this industry 7



### in the 1990's. If the EPA is to follow its 8


### mandate to protect the atmosphere from these 9


### chemicals, the EPA must find ways to sustain the 10


### industry it created. Without the reclamation 11


### industry all refrigeration chemicals currently in 12


### use, be it ozone depleting or global warming, ar e 13


### going to be vented. And as a result much more 14


### will need to be produced. 15


### We are talking today about the supply, 16


### and therefore the price of R

- 22. What about 134

- 17



### A, 410

- A, and all of the replacement blends? The 18


### current market price of these materials do es not 19


### support the cost of recovery, reclamation, and 20



### distribution. 21


### What the industry and the EPA needs to 2223

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### fulfill the EPA mandate is a return to the excise 1


### tax that was so effectively supported the price 2


### of CFC during that phase

- out. Like any other 3



### rec ycling incentive all ODS and GWP refrigerants 4


### need to have a fixed price support that can 5


### provide incentives to contractors for recovery 6


### and provide stability and sufficient volume to 7


### support the reclamation industry

. R eturning to a 8



### time

- tested strategy su ch as that deployed on ODS 9


### expanded to encompass all imported and 10


### manufactured refrigerants would achieve this 11


### objective. 12


### Of course, I cannot close without once 13


### again beating the most important drum of all. As 14


### we have expressed in other communications to the 15


### Stratospheric Protection Division Office of 16


### Atmospheric Programs, we are convinced that the 17


### best way to reduce the release of R

- 22 and other 18


### refrigerants into the atmosphere is fair and 19


### consistent enforcement of the regulations already 20


### in place at the contractor level. 21



### On the local level we have seen that 2224

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### enforcement can have a significant impact on 1


### compliance. But on a national level the failure 2


### to enforce existing regulations has been 3


### devastating to this industry. A lack of 4



### contractor level enforc ement not only results in 5


### more illegal venting, but creates a significant 6


### competitive disadvantage to those companies that 7


### handle their refrigerants safely and legally. 8


### Rather than providing an economic 9


### advantage to those HVAC and refrigeration 10



### contractor s who abide by the law, these companies 11


### are effectively penalized for their compliance 12


### efforts. One would hope that the EPA as well as 13



### the Small Business Administration would find such 14



### a situation intolerable. It is our continued 15


### hope that the EPA will a ddress this lack of 16


### enforcement and the tilted playing field it 17


### presents to those in the industry. 18


### I wish to close my remarks by once again 19


### thanking the director and her staff for this 20


### opportunity. Thank you. 21


### MS. WHITELEY: Speaking next we have Ben 2225

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### Lon gstreth of Natural Resources Defense Counsel

. 1


### MR. LONGSTRETH: My name is Benjamin 2


### Longstreth. I'm with the Natural Resources 3


### Defense Counsel. Thank you for providing the 4


### opportunity for me to present NRDC's views on the 5


### HCFC Allocations, and thank you also for your 6


### historic leadership in implementing the Montreal 7



### Protocol. 8


### We remain concerned that the proposed 9


### Rule EPA has issued remains on a path that will 10


### prove too much HCFC

- 22. Specifically we continue 11


### to believe that the size of the stockpiles of 12


### HCFC are sufficient that no new consumption 13


### allocations should be approved. 14



### In our view allocation should be set with 15


### the general objective of ensuring that as little 16


### HCFC is released to the atmosphere as possible. 17



### In order to achieve this, the allocat ion level 18


### should support three additional objectives 19


### concerning leakage, recycling, and alternatives. 20


### First, the allocation should provide 21


### significant incentives for users of HCFCs to 2226

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### bring down the alarmingly high rates of leakage. 1


### The evidence suggests that the leak rate in the 2


### United States continues to be signature higher 3


### than it would be if proper leak management 4


### practices were followed. 5


### We were encouraged by EPA's settlement 6


### with Safeway this past fall, and encourage EPA to 7


### continue such investig ations. But the allocation 8


### decisions EPA makes are also important to the 9


### objective of preventing leakage. 10



### EPA Must ensure that it's allocations do 11


### not contribute to the oversupply of HCFC, which 12


### makes it easier for users to simply add more 13



### HCFCs rather than fixing leaks. 14



### Second, the allocation decision should be 15


### aimed at substantially increasing the level of 16


### recycling of HCFCs, the effect of over 17


### allocations on the recycling market was made 18


### clear during the last allocation rule making. As 19


### you've heard already, prior to the rule of the 20


### market, anticipated significantly reduced 21


### allocation levels, and the level of recycling 2227

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### increased substantially after EPA announced its 1


### rule allocating more than had been expected. 2


### Recycling became significantly more dif ficult 3


### because recyclers were no longer able to offer 4


### technicians attractive prices. 5


### Third, the level of allocation should 6


### also support the move toward alternatives, to 7



### HCFC

- 22. Although we don't know the precise 8


### level of the stockpile ourselves, we bel ieve that 9


### it is large enough that no new consumption 10


### allowances are needed. In other words, any new 11


### consumption allowances will simply lead to 12


### continued over supply. 13


### EPA may be concerned that if it does not 14


### approve new allowances HCFC prices will rise to o 15


### quickly. We think the capacity of the recycling 16


### industry, the capacity of the users such as the 17


### supermarket industry to reduce leakage, and the 18


### availability of alternatives are all sufficient 19


### to contain upward pressure on prices. 20


### It's true that prices will rise as the 21


### oversupply is removed, but as the price increases 2228

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### more demand will be met by recycling and leak 1


### reduction, and this will reduce the amount of 2


### HCFCs that end up in the atmosphere. 3


### If EPA is not willing to consider zero 4


### allocation, which we think it should, we 5


### certainly believe that it should select the 6


### lowest allocation level possible. 7


### Finally we believe the stockpiles of HCFC 8


### have continued to grow in 2013, and will continue 9


### to grow in the coming year, and we therefore urge 10



### EPA to use its authority under Section 114 of the 11


### Act to request updated dat a on those stockpiles. 12


### Thank you. 13


### MS. WHITELEY: Thanks. Up next we have 14


### Jill Trunca from North Lakes Distributing. 15


### MS. TRONCA: My name is Jill Trunca, and 16


### I'm the president and owner of No rth Lakes 17


### Distributing. I'm speaking for myself and my 18


### business, and not on behalf of any other group 19



### that I am a member of. 20


### I'm here to impress upon EPA that further 21


### analysis is necessary to arrive at the 2229

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### appropriate allocation level for the 2015 throug h 1


### 2019 rule, and that the appropriate allocation 2


### level that will be supported by this analysis is 3



### zero. 4


### In light of the impact of the April 3rd, 5



### 201 4

-- or 2013 final rule, EPA has an obligation 6



### per E xecutive O rder, 13563 Section 6, requiring 7


### retrospectiv e analysis of existing rules. This 8


### order instructs agencies to seek the views of 9


### those likely to be affected by a proposed rule, 10


### including likely beneficiaries and those who 11


### would be subject to a rule. 12


### Notably the order directs agencies to do 13



### so before i ssuing announcement of a proposed rule 14


### making. Without having to solicit this 15



### information , EPA has been made aware by numerous 16


### sources of the damage created by its 2013 ruling. 17


### EPA is obligated to address a more realistic 18


### economic assessment of the impac t of its 2013 19


### ruling on the subsequent docket for 2015 through 20



### 2019. 21


### I made the Agency aware of the damage to 2230

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### my business and I know a lot of other members of 1


### the reclamation industry have contacted EPA 2


### repeatedly of the effect of the market escalation 3



### an d crash after the April 13

-- or April 3rd 4


### ruling. 5


### Executive Order 13563, Section 6, signed 6


### by President Obama, requiring retrospective 7


### analysis of existing rules would have uncovered 8


### dated material and incorrect assumptions in data 9


### and inadequate methods which are the underpinning 10


### of EPA's frequent regulations, refrigerant 11


### regulations, and all subsequent decisions made 12


### regarding these regulations. 13


### Such relevant analysis of the 2013 rule 14


### would have avoided the catastrophic effect the 15



### 2013 rule had on sm all business and consumers in 16


### the refrigerant industry. Without relevant 17


### analysis , the 2015 through 19 rule will 18


### perpetuate this damage. 19


### EPA's vintaging model and service tail 20


### analysis has relied on and referenced qualitative 21


### analysis on the most micro o f microeconomic 2231

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### concerns of the market and is dated and 1



### inaccurate. 2


### The microeconomic analysis has never been 3


### completed, never addresses the actual overall 4


### microeconomic market structure, including its 5


### impact on firms in the structure. Twenty years 6



### of ex perience since then should have easily 7


### provided a wealth of accurate quantitative 8


### economic analysis. 9



### Most notable of these deficiencies is 10


### EPA's complete lack of recognition of the R

- 22 11


### market as an oligopoly, which has resulted in a 12



### lack of understandi ng of the impact of its 13


### decisions on that type of market. Over 86 14



### percent of allocations in the R

- 22 market are 15


### held by only three companies. 16


### Normally an oligopoly exists when 17


### concentration ratio, the market share of the top 18


### five or fewer firms, taken ag ainst the total 19


### market accounts for more than 60 percent of the 20



### market. 21


### The implementation of the allocation 2232

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### system had the effect of freezing the market in 1


### time and forming a Government sanctioned 2


### oligopoly on the R

- 22 market. Without EPA 3


### regulation a nd without U.S. protectionism, the 4


### oligopoly would not exist. And R

- 22 would be in 5


### a free market system which would allow the prices 6


### to fall as they have for 134

- A and 410

- A, into 7


### the $50, $60 cylinder range. 8


### I am imploring EPA to collect additional 9



### 114 information from allocation holders and other 10


### entities that they can identify as having 11


### stockpiled refrigerant. Market information 12


### should be easy to collect as 86 percent of the 13


### information on allocations is held by only three 14


### companies. 15



### As reclamation numbers are already 16


### reported, I estimate 80 percent of market 17


### information can be gathered using these three 18


### sources. An agency is allowed to use qualitative 19


### assumptions when quantitative information is 20



### difficult to collect. EPA has relied on dated 21


### quali tative data when quantitative data was 2233

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### readily available. 1


### Not only has EPA not understood the right 2


### questions to ask, they have displayed a pervasive 3


### unwillingness to scrap the old inaccurate bottom 4


### up approach and start again with top down 5



### concrete dat a. 6


### Interestingly, scrapping the old 7


### assumptions and asking the correct questions is 8



### not more work, but would be less work and a 9


### fraction of the cost to the Agency than trying to 10


### do it from the bottom up. 11


### If top down information is not collected , 12


### any esti mates of usage in individual market 13



### sectors has no quantitative reference and is 14


### useless. Real quantitative data is readily 15


### available, so why don't we use it? 16


### I find it interesting that the 2015 17


### through 2019 proposed rule addresses additional 18



### information required of reclaimers, but puts no 19


### expectations on basic information from allocation 20


### holders. EPA can use its 114 powers to demand 21


### the information now. Interestingly this further 2234

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### analysis is readily available and easily 1



### collected in the time frame of t his rule making. 2


### Oligopolies by definition have a nearly 3


### perfect knowledge of market conditions. Each 4


### oligopol y knows most of what the other 5


### oligopolies are doing. 6


### In an oligopolistic market, where the 7


### goods are homogonous, some level of overt or 8



### ta cit collusion is necessary to bring about 9


### market stability. These companies know a lot 10


### about their customers, and about the market. So 11


### why aren't we collecting the information from 12



### them? 13


### The fact that it is historically nearly 14


### impossible to divine how m uch R

- 22 of what was 15


### consumed was actually released and how much was 16


### stockpiled tells the tale. To add to this, that 17


### the stockpiled refrigerant can be introduced into 18


### the environment for years to come makes this 19


### important to all of us. This is not privil eged 20



### information. 21


### An even more frightening aspect of this 2235

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### lack of information is that the majority of the 1


### available and pertinent information was not 2


### collected by EPA, even though it is impossible to 3



### make informed decisions without it. Instead of 4



### listeni ng to the reclamation industry's 5


### persistent warning against the damage of surplus 6


### to our industry, the EPA has allowed itself to be 7


### steered by the propaganda perpetuated by the 8


### oligopoly in a successful effort to preserve 9


### their market share, about quantity and shortage 10


### when the oligopoly knew that in fact there never 11


### was a shortage. 12


### In January and February, 2013, DuPont and 13


### Honeywell, after creating a perception of 14



### s hortage, took advantage of the consumer with 15



### exorbitant price gouging. Since DuPont was a 16


### price leader, this price gouging drove the market 17



### to all

- time highs, which set the stage for the 18


### catastrophic devaluation of R

- 22, which followed 19



### EPA's final rule. 20


### EPA didn't take this market volatility 21



### and the elasticity of a declining market into 2236

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### accoun t when it issued the surplus large amount 1


### of additional allocations on April 3rd. Falling 2


### market demand and the excess capacity allowed by 3



### EPA caused the cartel to break down and the 4



### market crashed. 5


### In addition, the Agency seems to believe 6


### that by mainta ining high supply and in fact an 7


### enormous surplus, has somehow protected the 8


### consumer from high prices and undue economic 9


### burden. Nothing could be further from the truth. 10


### Reclamation should have, and does, bring 11


### diversity and elasticity of supply into th e 12


### market, ultimately keeping prices down and makes 13


### the market less susceptible to disruption. 14


### In addition, a stable healthy market 15


### allows recyclers to keep harmful chemicals out of 16


### the environment. Without supporting reclamation, 17


### the market remains ope n to further manipulation 18


### and instability. There is plenty of material out 19



### there. There is no reason at this time to not 20



### set the allocations at zero. 21



### Free the market from its oligopolistic 2237

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### structure and let the free market correct itself. 1



### Zero allocati ons are necessary to correct the 2


### trajectory of the 2013 rule. 2015 through 2019 3


### creates a unique opportunity to correct this 4


### oversight. 5


### It is EPA's opportunity to easily close 6


### the holes in its market analysis. The events of 7



### 2013, and the events of 2014, do and will tell a 8


### tale. In light of what has clearly happened, the 9


### only logical and appropriate choice for EPA is to 10


### set the allocations at zero. Thank you. 11


### MS. WHITELEY: Thanks, Jill. Next up is 12


### James Burke from USA Refrigerants. 13



### MR. BURKE: My na me is James Burke from 14


### USA refrigerants. I thank you for having me here 15


### today. I don't know if you're going to be happy 16


### with what I have to say, but I'm going to say it. 17


### Stockpiled inventory. This is an excerpt 18


### from your rule. In the last rule making EPA 19



### estimated HCFC

- 22 inventory at 22,700 to 45,400 20



### metric tons. Based on information received 21


### recently, the inventory is above that range. 2238

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### We don't know how above that range it is, 1


### but if it's above your highest number, it's too 2


### high. So that gas that' s above that number has 3


### to be removed from any future gas produced. If 4


### it's 30 million pounds higher than that number, 5


### get rid of 2015, just like that. When you get 6


### rid of 2015 just like that, the entire market 7


### will go back into some stableness. 8



### Every body talks about an oversupply

. 9


### There's plenty of oversupply. Just announcing 10


### immediately the 2015 gas is going to be off the 11


### table and 2016 through ' 19 will be looked at and 12


### may be also off the table. As you're going 13


### through the process of finding out how much gas 14


### is in the market, you might find out there's just 15


### so much more gas in the marketplace, and zero is 16



### needed. 17


### That being said, obsolete inventory

-- I 18


### wrote something down here. And this is the 19


### problem. Unless and until the grist of dead 20



### inven tory, and I mean R

- 22 equipment and the 22 21


### that's in it, is considered by experts and 2239

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### explained to the enforcers of refrigerant 1


### allocation, there will be an unprecedented glut 2



### of R

- 22 at some time in the future with zero 3


### demand. And it is frustrating that the glut we 4


### speak of is mitigated to the here and now, and 5


### not the inevitable future calamity approaching. 6


### And what I'm saying is allocation equals 7


### venting. All right? If you allocate it today, 8



### it's going to be vented some day in the future. 9



### There is no destruction in the world that 10


### destroys gas. The 2 billion pounds of gas that's 11


### made every year, gets vented. There is very 12


### little gas that gets destroyed. 13


### So if you want to feel comfortable in 14


### your position, realize that you made that 15



### decision base d on if you allocate it and somebody 16


### produces it, it's getting vented. It's not 17



### needed. I know it's not needed. I know how much 18


### gas is in the marketplace. I know you know how 19


### much gas is in the marketplace, and it's 20



### exorbitant

. 21


### Give you an example. T here's 100 million 2240

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### pieces of equipment out there. I'm going to give 1


### you the number of five pounds per piece of 2


### equipment. That's 500 million pounds of product 3


### that's out in the marketplace. Five hundred 4


### million pounds is a lot of gas. It could be 5



### taken out of those systems in the future. Some 6


### of it is going to be replaced with the blends. 7


### Some of it is going to be reclaimed and reused. 8


### Or you can keep the virgin gas way high and it's 9


### going to get vented now. 10


### But you can stop the gas from being 11



### vente d by using that 500 million pounds. Five 12


### hundred million pounds is a big number. Nobody 13


### in the room knows what it is, so let's put it in 14


### perspective. 15


### Five hundred million pounds, if you put 16


### it in cylinders, 11,020 cylinders for truckload, 17



### it is 15,000 t ruck loads. All right? It's 18


### 15,000 truck loads. Still, you don't know what 19



### it is. 20


### If a truckload is 53 feet long and you 21


### had 100 of them, it would be 5,300 feet. So a 2241

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### little more than a mile. If you had all of them 1


### put together for the 15,000 truck l oads, it's 15 0 2


### miles. I can drive from here to my house in New 3


### Jersey alongside truckloads of gas. All right? 4


### That's how much is in the marketplace today. All 5


### right? 6


### So I can drive here, all the way out the 7


### parking lot, out to the highway, get up past 8


### Baltimore, go over the Delaware Bridge, 50 miles 9


### up to the Garden Turnpike, and all you see is 10


### truckloads of full gas. That's what's in the 11


### marketplace today. It's all going to the 12


### atmosphere. 13


### It could be used to sustain the products 14



### in the future. Y ou've got an unlimited supply of 15



### -- I don't want to get anybody's names wrong, but 16


### Choice, I know, and n u - 22, and everybody else 17



### these R

- 22 replacements. You have an unlimited 18


### supply of replacement gases that have no ozone 19


### depletion. 20



### So in the future w hen you consider making 21


### any allocation, and you need none for 2015, you 2242

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### need none for 2014, and you need none for 2016, 1


### and you'll find out when you get the reports back 2


### from all the gas that's in the marketplace. But 3


### stop the pleading and right now and a nnounce, no 4


### gas for 2015. That will stabilize the market, 5


### reclamation could resolve this gas that would be 6


### coming out of those 500 million pounds that's in 7



### existence. 8


### And I have actually 100 pages to read 9


### here, but I'm not going to do it at this point in 10


### time. But like, that's only page one. You know. 11


### Thank you for your time and I hope you 12


### consider that there's plenty of gas. We do not 13


### need any more allocation. Thank you. 14


### MR. DONALDSON: Thank you, James. 15


### MS. WHITELEY: Thank you. Up next is Don 16


### Magid from Combs Investment Properties. 17



### MR. MAGID: Good afternoon. I'm Don 18


### Magid, Re g u l atory Affairs Manager for Combs 19


### Investment Property. Thank you for providing us 20


### with the opportunity today to present out views 21


### on the 2015/2019 rule. 2243

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### Combs Invest ment Properties is a small 1


### business, defined as compressed gas merchant 2


### wholesaler, and most importantly an allowance 3


### holder as well, and as such we're directly 4


### affected by the 2015 to 2019 final rule which 5


### will ultimately be released. 6


### Just going back in summary very quickly, 7


### we've heard it from several other people as well, 8


### so far. The market was in, if you want to say in 9


### balance in the beginning of 2013 when there was 10


### 17,902 metric tons issued on the non

- enforcement 11


### action, and at that point things were sort of 12


### turning around and I'd say, as you sustained in 13


### your rule, incentivizing the reclaim on recovery 14



### market and the use of alternative drop

- ins that 15



### are not HCFC based. 16



### When the final rule came out , we saw that 17


### number compared to where we were at t he beginning 18


### of 2013 jump for 2013. Then it was 53 percent of 19


### an increase, and for 2014, 29 percent of an 20



### increase, and of course that does include the 21


### recoupment allowances which we feel had a 2244

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### dramatic effect as well on that overall balance, 1



### and also add ed to the overall emissions that 2


### would ultimately result from the R

- 22. 3


### Once that happened there was a collapse 4


### in the value. Everything sort of got turned 5


### upside down on its head, and all of a sudden then 6


### recycling efforts, along with the demand for non

7


### HCFC based drop

- ins that were approved under SNAP 8


### were basically adversely impact and dropped. 9


### Combs Investment Property strongly 10


### supports a reduction in the initial 2015 starting 11


### point. We'd like to just to be well below the 12


### level of 10,000 metric tons , which is the lowest 13


### proposed alternative in the proposed rule. And 14


### we would also include that we would support even 15


### going down to zero for the 2015 to 2019 control 16


### period. So as close to zero as possible would be 17


### our goal. 18


### Also, we liked option two, w hich was for 19


### the three year draw down, not at those levels but 20


### at the lower levels. And especially if the role 21


### is put out promptly, say the middle of this year, 2245

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### that would give in essence three and a half years 1


### for the industry to respond in terms of gett ing 2


### reclamation and drop

- ins into the market place, 3



### and we feel that that should be a n adequate time 4


### for the market to respond and five years is not 5



### needed. 6


### If you do go with the 10,000 metric ton 7


### rule, which again we would consider as the 8



### maximum. We wo uld prefer zero, that would then 9


### go down to 7,500 metric tons in '15, 5,000 tons 10


### in '16, and 2,500 metric tons in '17, with zero 11


### tons in '18 and '19. And again, anything more 12


### aggressive than that, we would welcome. 13


### Other actions, while this is what we're 14


### really focused on and we'll address other actions 15


### in our formal written comments as well, is with 16


### regards to 142

- B. We would support going into 17



### the same three

- year draw down, just for the sake 18


### of consistency, and as was mentioned by others to 19



### enhance eff orts relating to good handling 20


### practices, emissions control, and enforcement of 21


### the smuggling activity as well, which has been 2246

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### brought up. 1


### So in conclusion we think that by being 2


### aggressive, the actions will result in an 3


### increase in the value of 22, which will 4


### subsequently result in the development of a 5


### robust reclamation industry. And the approved of 6



### non
- HFC based drop

- in alternatives in a 7


### responsible manner. If this is done, again, 8


### prior to 2018, which is a three

- year step

- down. 9



### With these actions and combined with the 10


### large availability of stockpiled material, we 11



### think we can have an effective transition and 12


### meet the needs for 22 after the complete phase 13


### out in 2018. Thank you. 14


### MS. WHITELEY: Thank you. Next up we 15



### have Alexander v on Bismarck from E nvironmental 16


### Investigation Agency. 17



### MR. VON BISMARCK: Thank you very much. 18


### My name is Alexander v on Bismarck. I'm the 19



### executive director of the E nvironmental 20



### I nvestigation Ag ency. We are a nonprofit that 21



### has worked for almost two decades with the 2247

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### Montr eal Protocol, and with the U.S. F

- Gas 1


### Sectors to most effectively implement phase outs 2



### with an evidence

- based approach. It's become a 3


### little unclear today why the environmental NGO 4


### still needs to speak at this point, considering 5


### what the industry is sayin g about the 6


### availability of R

- 22 in the market. Normally 7


### when we agree on something to this extent, you 8


### know, we've got something figured out. 9



### Section 605 of the CAA mandates that EPA 10


### ensure that the production and consumption of 11


### HCFCs are phased out un der the schedule of the 12



### Montreal Protocol. But if that schedule is not 13


### stringent enough to protect human health or the 14


### administrator determines that a more stringent 15


### schedule is practicable, Section 606 provides the 16


### authority for EPA to promulgate regulat ions that 17


### establishes schedule for production and 18


### consumption that is more stringent than what is 19



### set forth in Section 605. 20



### In t he proposed regulations EPA has set 21



### allocation rates that do not reflect the current 2248

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### need of the industry and the market for R

- 22. 1



### EIA , and clearly many in the industry , believe 2


### that based on current stockpile data industry 3


### needs, recovery and recycling capabilities and 4


### international norms, the 2015 R

- 22 consumption 5



### allocation should be zero. This is in line with 6



### the allocations in other developed countries 7


### around the world who have already taken action to 8


### phase out HCFCs ahead of 2020. 9


### In the U for instance, the consumption of 10


### virgin R

- 22 was completely phased out in 2010, 11


### and the use of recovered and recycled R

- 22 will 12



### be bann ed in January 1st, 2015. 13


### Similarly Japan and Switzerland phased 14


### out virgin R

- 22 in 2010. 15


### In the proposed rule , the EPA states that 16


### the estimated industry stockpiles alone of R

- 22, 17


### were an unspecified amount above the current 18


### servicing needs for R

- 22. Further , EPA states 19



### that in its 2013 Servicing T ail R eport that it, 20


### quote, expects that a significant amount of HCFC

21


### 22 servicing need in 2015 to 2019 can be met by 2249

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### existing stocks. 1



### In addition to that , the estimate is that 2


### indeed up to 80 percent of t otal demand could be 3


### filled by current capacity of the reclamation 4



### sector. 5



### Market trends such as better leak 6


### detection and increased recovery have spent HCFC

7



### 22 and transitions to alternatives should 8



### increase the availability of recycled 22. 9



### Unfortunat ely prior to the allocation period of 10



### R

- 22

-- I'm sorry. The prior allocation period 11



### of R

- 22 oversaturated the market. The price 12


### plummeted for recovered and recycled R

- 22. 13


### As cited in the adjustment memo, included 14


### in the docket of this rulemaking, vir gin 22 in 15


### 2011 was priced at around $4.50 per pound. But 16


### industry representatives suggested that the price 17



### would need to exceed $8 .00 per pound for 18



### reclaimed HCFC

- 22 to become competitive again. 19


### The EPA, in its 2009 final rule, found 20



### the numbers to be less than predicted , the 21


### numbers of recycling capacity, because of the 2250

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### relatively low price of virgin HCFC

- 22, which 1


### quote, challenge the economic viability of 2


### reclamation practices. Once allocation numbers 3


### are decreased, recovery and recycling industry 4



### c an begin to rebound, further increasing the 5



### amount of available R

- 22 in the marketplace. 6



### The adjustment memo again supports this 7


### assertion stating that, quote, recent interviews 8


### with reclaimers suggests that reclamation 9


### facilities have the technical capac ity to meet a 10


### greater proportion of servicing demand and that 11



### many have stated that they were currently 12


### operating significantly below capacity. 13


### The adjustment memo goes further, stating 14


### that interviews suggest that anywhere from 25 15


### percent to 80 percent o f servicing demands could 16


### be met by increasing utilization of existing 17


### machinery and increasing the number of shifts. 18


### Additionally, supermarkets themselves 19


### have been recovering R

- 22 from their own 20


### equipment as they begin to move towards newer 21



### systems. 2251

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### Th e adjustment memo points out that, 1



### quote, s ome supermarkets have converted a 2


### substantial proportion of their 22 equipment

-- 3


### that have converted a substantial proportion of 4


### their equipment, indic a ted that they have 5



### sufficient recovered 22 in stock for serv icing, 6


### such that they do not anticipate a need to 7


### purchase any more virgin material in the future. 8


### Some example, Hudson Technologies, who is 9


### here in their comments, specifically say that, 10



### quote, t he industry does not need another pound 11



### of R

- 22 to be produ ced. The existing stockpiles 12


### supplemented by reclamation and alternatives are 13


### more than sufficient to meet the servicing need 14



### for R

- 22 equipment. 15



### ICORP International in their comments 16


### submitted for this rulemaking support a zero 17


### allocation in 2015, among many others. 18


### Yet, despite the historical evidence of 19



### increased allocations of R

- 22 leading to less 20


### recovery and recycling, and despite industry and 21


### NGO support for reduced allocations, the EPA is 2252

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### currently putting forward a preferred consumption 1



### alloca tion of 40,000 metric tons of virgin R

- 22 2



### from 2015 to ' 19. 3



### The effect of such an allocation would 4


### keep the price of virgin 22 low, discourage leak 5


### prevention, 22 recovery and recycling, and will 6


### increase stocks of virgin HFCs that will continue 7



### to decrea se the price of 22, even after the phase 8


### out is completed. 9


### This is in direct conflict of the goals 10


### of Title 6 of the Clean Air Act, since it is 11


### unnecessary and endangers public health. 12


### Regarding production, the allocations for 13


### production of 22, in the proposed rule the EPA is 14


### seeking comments on whether to allow more 15


### production allowances than consumption allowances 16


### or to provide approximately the same number. EI A 17


### believes that production and consumption 18



### allowances should be the same and both should b e 19



### zero in 2015. 20


### We understand EPA's comments on wanting 21


### to allow industry to sell virgin R

- 22 abroad, but 2253

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### this , too , could discourage recovery and 1


### recycling in developing countries in the same way 2


### that it does here, indeed should expect to, and 3


### discourage transitions to new more climate 4


### friendly alternatives. 5


### EPA and the U.S. government broadly has a 6


### history of supporting transitions in developing 7


### countries to low GWP and ODP technologies at the 8



### multilateral fund and the Montreal Protocol. The 9



### actions he re should be in support of that 10


### history. 11


### The U.S. is a leader in advocating for a 12



### reduction of F

- gases globally. It is a major 13


### piece, also, of the administration's Climate 14



### Action Plan. 15


### It is inconsistent with that leadership 16


### to produce as much as one can get away with under 17


### the Montreal Protocol without any analysis of 18


### that impact. We understand concern that 19


### production would simply occur in other countries. 20


### But the solution should not be to follow, say 21


### China, and compete with them to produce more 22. 2254

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### The solution should be to work with China under, 1


### for example the Obama /Xi agreement to produce 2



### less. 3


### In summary, consumption and production

-- 4


### zero consumption and production sends a message 5



### that is consistent with the United States ' 6


### leadership and goal s in this space. Higher 7


### allowances endangers those goals directly and 8


### should only be considered with a clear rationale. 9



### We do not have that rationale. 10


### The EPA also requested comment on dry 11


### condensing units. In considering these units , it 12



### is well known in the industry that these types of 13


### units have created a major loophole under the 14



### Clean Air Act that undermines the purpose of the 15


### ozone regulations to phase out the use of R

- 22 by 16


### 2020 by allowing their installation and 17


### subsequent charging with 22, rather than 18


### converting to more climate friendly alternatives. 19


### EPA should ban these units under rulemaking as 20


### soon as possible. 21


### EIA would briefly like to flag two 2255

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### additional related issues. First, stockpile 1


### data. For the currently existing stockpiled 2



### informat ion the EPA should publically disclose 3


### the stockpiles of HCFC

- 22 inventory that was 4


### solicited by the EPA t o further transparency for 5


### this rule, and further rulemakings related to 6



### HCFCs , p ublic accessed information as a hallmark 7


### of this administration, and to bolster the 8


### purpose of the EPA to provide accurate and timely 9


### data to inform future policy decisions. 10


### EPA should conduct expanded and ongoing 11


### data collection from the entire industry to 12


### ensure an accurate accounting within the industry 13



### and to ensure th at there will be a smooth 14


### transition from 22 and other chemicals following 15



### to '20. 16


### Finally regarding illegal trade. With 17


### the decrease in availability in R

- 22, increases 18


### in illegal trade are to be expected. The HCFC 19


### phase out is now at the same stage as the CFC 20


### phase out was when that spike in illegal trade 21


### occurred. HCFC consumption figures reveal both 2256

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### stronger growth and a larger overall market than 1


### was the situation for CFC's pointing to a 2


### potentially larger problem. 3



### Recent seizures indicate that i llegal 4


### trade is growing. The EPA must adequately fund 5


### enforcement and capacity building in this area. 6


### Failure to tackle illegal trade will result in 7


### noncompliance with control measures and increase 8


### emissions of ozone depleting and climate warming 9



### HCFCs. Thank you for your consideration. 10


### MR. DONALDSON: Thank you, Mr. Magid. 11


### MS. WHITELEY: Thank you. Up ne xt we'll 12


### have Kristina Foehrkolb from Patton Boggs. 13


### MS. FOEHRKOLB: My name is Kristina 14


### Foehrkolb of Patton Boggs. I speak on behalf of 15



### a coalition whose members include Altair, Combs 16


### Investment Property, Diversified PureChem, North 17


### Lakes Distributing, Inc., Refrigerants , Inc., 18


### Refrigerants Sal vage , Inc., RMS of Georgia, Safe 19


### Disposal Systems, and USA Refrigerants. 20


### These are mostly small businesses that 21



### are HCFC reclaimers or blenders of alternatives 2257

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### to HCFC

- 22. All have been adversely affected by 1



### the effect on excessive HCFC

- 22 allowances 2


### granted by EPA for 2013 and 2014. By some 3



### estimates , this sector has suffered damages in 4



### excess of $100 milli on. 5


### Our message is simple: 2015 through 2019 6


### is the final phase

- down period for 22. The 7



### Agency must act decisively to eliminate the 8


### oversupply now. To bring the 22 market back into 9


### balance, EPA must take into account existing 10


### inventories of virgin mat erials, reclaiming 11


### capacity, and the availability of alternatives. 12



### The draft Servicing Needs analysis, which relies 13


### on EPA's Vintaging Model, is seriously flawed and 14



### must be corrected. We plan to work closely with 15


### EPA during this rulemaking to improve this 16


### analysis. 17



### For now, I wish to make two points. 18


### First, the current state of the 22 market. In 19


### allocation rules for earlier phase

- down periods, 20


### EPA was guided by the principle that over time 22 21


### allowances would drop significantly, while the 2258

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### reclaiming an d alternatives would account for 1


### more and more of the servicing needs. The market 2


### responded to these expectations

. T he price of 3


### virgin 22 climbed, reaching an all

- time high 4


### prior to the April 2013 rule. The need for 5


### reclaimed 22, as well as alternative 6



### r efrigerants, grew. 7


### In 2012, 22 reclamation rose to nearly 13 8



### percent of servicing needs. And, as the price of 9



### used refrigerant grew, demand for alternatives 10



### soared. This thriving industry collapsed with 11


### the April 2013 rule, which unexpectedly reversed 12


### EPA's prior direction. Instead of pursuing a 13



### g radual but aggressive phase

- down of 22 14



### c onsumption and encouraging a stronger 15



### r eclamation industry, the Agency allowed an 16



### additional 18 million pounds of 22 to be produced 17



### and sold in 2013 and an additional 1 6 million 18


### pounds in 2014. 19


### Such a drastic change of course caused 20


### the price of 22 to plummet. As a result of the 21


### April 20l3 rule, the price of 22 decreased by 50 2259

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### percent from $14 to $7 per pound. The glut of 1


### virgin 22 in the market released by the April 2


### rule was devastating to the small businesses that 3


### make up this coalition. I f the holders of the 4


### consumption allocations can make virgin 22 for as 5



### low as 50 cents a pound, who would want to invest 6


### in reclamation and alternative refrigerants? The 7



### effect o f the 22 oversupply is so evident and so 8


### devastating on the reclamation and alternatives 9


### industry, and the environment , that it is 10


### difficult to fathom how something like that could 11


### be allowed to happen. 12


### As a result of the April 20l3 rule alone, 13



### EPA incre ased the 22 supply by 34 million pounds. 14


### This has the same impact on the environment as 15


### eight coal

- fired power plants' annual emissions 16



### of CO 2. 17



### My s econd point , is how did this 18



### situation come about? The answer to this 19


### question is simple , the 22 market i s where it is 20


### today because of EPA's reliance on inaccurate, 21


### outdated, and insufficient data regarding the 2260

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### need for virgin 22 and the size of the existing 1


### 22 inventory. The root of the problem is the 2


### Agency's Vintaging Model. EPA continues to rely 3



### on thi s m odel despite evidence that it led to 4



### inaccurate assumptions in the earlier phase down 5


### periods. The m odel is flawed because it fails to 6



### account for existing stockpiles of virgin 22 and 7



### r eclaiming and alternative

- refrigerant 8


### capabilities. The m odel is b ased on assumptions 9


### that are just unrealistic. 10



### The a djustment m emo in the docket is 11



### based on interviews and submissions from 2011. 12


### The proposed rule acknowledges that the estimates 13


### of surplus inventory in the a djustment m emo 14



### are wrong. Th e Agency refe rs to a very large and 15


### higher than previously estimated inventory over a 16


### dozen times in the proposed rule. Thank you. 17


### MR. DONALDSON: Thank you. 18


### MS. WHITELEY: Thank you. Up next we 19


### have Caffey Norman from Patton Boggs. 20



### MR. NORMAN: Thank you. My nam e is 21


### Caffey Norman, also with Patton Boggs, 2261

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### representing the same coalition. 1


### It falls me to address how EPA going 2


### forward in this rulemaking can best undo the 3


### damage caused by the excess supply of HCFC

- 22 in 4



### the market. 5


### This past August letters went to a number 6


### of companies under Section 114 of the Clean Air 7


### Act to collect data on stockpiles of R

- 22 as of 8


### the end of 2012. As a first step , we recommend 9


### that EPA immediately issue further Section 114 10


### requests to a broad range of industry 11


### participants to u pdate the inventory and other 12


### information through year end, 2013. As these 13


### letters require a response within 15 business 14


### days, they should provide current information in 15


### time to be of use to EPA as it proceeds with this 16


### rulemaking. 17


### Second, the presence h ere today of so 18


### many small business reclaimers and blenders 19


### demonstrates that EPA's certification, that the 20


### proposed rule will not have a significant 21



### economic effect on a substantial number of small 2262

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### entities, is erroneous. 1


### Although EPA recognizes that th e 2


### allocation may impact small and large allowance 3


### holders in different ways, the cost benefit 4


### analysis in the docket, apparently not updated 5


### since 2010, concludes that information to date 6


### does not suggest that small businesses , as a 7



### whole , will be subject to differential impacts. 8


### This ignores the fact that small 9



### reclaimers and alternatives blenders lack the 10


### financial resources that enable larger market 11


### participants to survive the fallout from the huge 12


### drop since April in the market price for R

- 22. 13



### Such di sparate impact alone justifies the 14


### convening of a small business review panel as 15


### required by the Small Business Regulatory 16


### Enforcement Fairness Act. As such a panel is 17



### mandated to report no later than 60 days after it 18



### has been convened , this step also fit s well 19



### within the time available for the current 20


### rulemaking. 21


### Finally, and most significantly, assuming 2263

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### those steps and other information confirm our 1


### belief that there is already available, a 2


### sufficient supply to cover servicing needs 3


### through 2019, we call on EPA to allocate zero 4


### consumption allowances for R

- 22 for 2015 through 5


### 2019. The idea of zero allowances beginning in 6



### 2015 is not new. 7


### NRDC recommended this approach in a 8



### letter to EPA in the fall of 2013. As did ICORP 9



### International and Hudson Tech nologies. It is 10


### surprising that this was not one of the options 11


### put forward for comment in the proposed rule. 12



### Instead , the proposed rule dismissed this 13


### approach citing only concerns for quote, 14


### "Unintended consequences for end users that had 15


### been making e quipment retrofit and replacement 16


### plans based on EPA's longstanding 2020 deadline 17


### for phasing out HCFC 22," end quote. 18



### These concerns are not warranted. 19


### Existing stockpiles supplemented by reclamation 20


### appear to be more than sufficient to meet the 21



### servici ng needs for 22 equipment. Some of this 2264

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### equipment was phased out more than 10 years 1


### sooner than previously anticipated, and the 2


### earlier allowances have been used to stockpile 3


### inventories. The additional recoupment 4


### allowances issued in 2013 aggravated thi s 5


### oversupply even further. 6


### Completely phasing out 22 consumption 7


### allowances now, as opposed to 2020, is the only 8


### way the reclamation and alternatives industries 9


### can bounce back from the devastating effect of 10


### the April 2013 rule. The reclamation industry 11


### has never functioned at its full capacity, but 12


### given a chance it can readily provide for all the 13


### servicing needs. 14


### Moreover, reduction to zero is necessary 15


### to protect human health and the environment. 16


### Such a step will encourage recycling and reuse, 17



### and im provements in the price structure will 18


### reduce incentives for venting, which in the 19


### absence of targeted enforcement , is believed to 20


### be widespread. This will both limit 21


### stratospheric ozone depletion and reduce global 2265

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### warming. 1


### Finally, removing virgin 22 fr om the 2


### market and going forward would facilitate the 3



### P resident's Climate Action Plan, which EPA is now 4


### implementing. The benefits expected from the 5


### steps being taken by EPA to reduce HFC emissions 6


### would easily be neutralized by production over 7



### the five

- ye ar period from $55 million to $170 8


### million pounds of 22, as contemplated in the 9


### proposed rule. 10



### To conclude , the allocations in the 2013 11


### rule were much too high, combined with the 12


### existing oversupply they resulted in wildly 13



### excessive inventories and a ma rket that is now 14


### flooded with virgin 22. It is urgent that EPA 15


### obtain and make publically available more 16


### accurate and up

- to

- date information on R

- 22 17


### stockpiles and reclamation and alternatives 18


### capabilities. We submit that these will support 19



### a zero R

- 22 c onsumption allowance after 2014. 20


### Thank you. 21


### MR. DONALDSON: Thank you. 2266

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### MS. WHITELEY: Thank you. Up next we 1



### have Jon Melchi from HARDI. 2


### MR. MELCHI: Good afternoon. My name is 3


### Jon Melchi and I represent Heating Air 4


### Conditioning Refrigeration Dist ributors 5


### International, a trade association with 6


### approximately 450 United States

- based wholesale 7


### distributors. The vast majority of our wholesale 8


### distributor members, over 90 percent, classified 9



### as small businesses. 10


### We thank you for the opportunity to speak 11


### to you today. To echo some of the comments made 12


### previously, our members , too , were impacted by 13


### the 2012 through 2014 allocation rule. 14



### Therefore, as we move forward into 2015, into the 15


### ultimate phase down at the end of this period, we 16



### would like to see an aggressive phase down. And 17


### we would also ask that this rule be done quickly 18


### so that our members can prepare both their 19


### businesses, their plans, and their customers, the 20


### contractors that we serve, for this impending 21


### phase down. 2267

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### Doing such will also allow us to better 1


### promote our recycle and reclamation programs, 2


### which our members are extremely supportive of. 3


### To answer a question or two, respond to some of 4


### the talk about potentially going to a zero 5


### allocation for 2015, we have concerns that given 6



### th e timing of this rule, likely at the la tt er 7


### part of this year, that our many members would 8


### have challenges planning their 2015 business 9


### plans. 10


### If they are unable to purchase or to plan 11


### for a zero allocation, that this would give them 12


### challenges with man y of their vendors and 13


### suppliers. We'll further address this in our 14



### written comments before the March deadline. 15


### Thank you very much. 16



### MR. DONALDSON: Thanks. 17


### MS. WHITELEY: Thank you. Up next we 18


### have Steve Porter from Johnstone Supply. 19



### MR. PORTER: I 'm Steve Porter from 20


### Johnstone Supply. We're a cooperative with 118 21


### members nationwide, HVAC wholesaler. 2268

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### Our recommendation is an aggressive phase 1



### down that we'd like to see the EPA take action 2


### on, which is the third proposal, a five

- year 3


### phase down. But we'd like to see that more on 4


### the range of about two

- thirds of the allocation 5


### cut. We do not support a zero allocation. We 6


### believe that would be far too disruptive. 7



### What we need is a n allocation ruling as 8


### quick as possible so we can plan our busines ses 9


### for the following next five years. Thank you. 10



### MS. WHITELEY: U p next we have Stephen 11


### Mandracchia from Hudson Technologies. 12



### MR. MANDRACCHIA: My name is Stephen 13


### Mandracchia. I'm the Vice President of Legal and 14


### Regulatory for Hudson Technologies. We 15


### appreciate the opportunity to speak here today, 16


### and we do plan to submit more detailed comments 17


### in writing in the coming weeks. 18


### The proposed rule, which sets production 19


### and consumption allocation for the last five 20


### years of the R

- 22 phase out, provides th e EPA 21


### with one more opportunity to protect the 2269

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### environment, ensure an orderly and efficient 1


### phase out of R

- 22, and promote the reuse and 2


### proper management of the hundreds of millions of 3


### pounds of R

- 22 currently in use in the installed 4



### base. 5



### Based on what we know about the market, 6


### the industry does not need another pound of R

- 22 7



### to be produced. The existing stockpiles, 8


### supplemented by reclamation and alternatives, are 9



### more than sufficient , we believe, to meet the 10


### servicing need for R

- 22 equipment. 11



### As earl y as December 2008, EPA stated its 12


### goal to grow reclamation three

- fold to nearly 30 13


### million pounds. The reclamation industry 14



### r esponded by investing millions of dollars in 15


### infrastructure, but unfortunately reclamation has 16


### not grown because the supply gap t hat EPA 17


### proposed never materialized. Every year of the 18


### program more allowances have been provided 19



### than were needed to meet aftermarket demand, 20


### creating a substantial stockpile of R

- 22. Any 21


### reasonable analysis would conclude that the 2270

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### market is now flooded with virgin R

- 22. 1


### In 2012 the EPA reduced consumption 2


### allowances by 45 percent , from 100 million pounds 3



### in 2011 , to 55 million pounds in 2012. Despite 4



### that large, if not massive reduction, the EPA has 5



### confirmed that the stockpile of R

- 22 as of 6



### December 2012 was even greater than EPA's 7


### previous high estimate of 100 million pounds. 8


### In the proposed rule the EPA also 9


### acknowledges that there are a number of market 10


### forces that support a far more aggressive phase 11



### down of R

- 22, such as the phase out and the use 12



### of R

- 22 equipment is accelerating. The 13


### successive programs, such as the EPA's Green 14


### Chill, has resulted in a more rapid transition 15



### from R

- 22 in the major supermarket sector. 16



### HFC alternatives to R

- 22 for use in R

- 22 17


### equipment are proliferating to the poi nt where 18


### they now represent at least 25 percent of the 19



### market. And the EPA of course now knows that the 20


### previous estimates of R

- 22 stockpile were too 21



### low. 2271

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### Clearly the R

- 22 allowances needed in 1



### 2012 to serve the aftermarket were less than the 2



### 55 million pounds that were permitted. Yet, 3


### despite the declining need for virgin R

- 22, the 4


### EPA's April 2013 final rule increased the 5


### allocations to 63 million pounds in 2013 and 6


### provides for an additional 51 million pounds in 7



### 2014. As a direct result of that fina l rule, 8


### growth and reclamation has stopped, and appears 9


### to be shrinking. R

- 22 prices have plummeted, 10


### creating a disincentive for property management 11


### practices, and stockpiles of R

- 22 are not being 12


### drawn down to supplement demand, but instead are 13



### continuin g to grow. 14



### As I stated earlier, this is the last 15


### opportunity for the EPA to get this rule right. 16


### Unfortunately, the EPA's preferred allocation 17


### option would continue to flood the market with an 18



### additional 90 million pounds of virgin gas and 19


### will not promot e growth of reclamation. 20



### In addition, the EPA' s preferred option 21



### is not the best environmental outcome. While the 2272

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### proposed rule discusses the environmental risks 1


### of ozone depletion, it fails to even mention the 2


### dramatic global warming effects of the 90 million 3


### pounds of proposed additional production and the 4


### more than 100 million pounds i n the stockpile. 5


### From a global warming standpoint , those nearly 6


### 200 million pounds represent the equivalent of 7



### the annual emissions from nearly 50 coal fired 8


### plants. T his outcome would obviously be counter 9


### to the goals of the Admin istration's Climate 10


### Action Plan announced earlier this year. 11



### The best environmental result and the 12


### best result for the industry, we believe, would 13


### be to eliminate all domestic production of R

- 22. 14


### Again, we do not think that any additional pounds 15


### of virgin R

- 22 are needed in the market, and 16


### believe that the allocation should go to zero by 17



### 2015. 18


### Therefore, we believe that for the sake 19


### of the environment, the allocation should be 20



### zero. To en sure responsible management reduction 21


### of leak rates and to preserve a vibrant 2273

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### reclamation industry, the allocation should be 1


### zero. To ensure an orderly draw down of the more 2


### than 100 million pounds of stockpile, we believe 3



### the allocation should be zero; b ecause the 4


### reclaim industry today has the ability to fully 5


### support the aftermarket, the allocation should be 6



### zero. And because HFC alternatives are available 7


### to supplement any unmet demand, the allocation 8



### should be zero. 9



### W e strongly urge the EPA to go to zero in 10



### 2015. However, t o the extent that EPA determines 11


### to provide for additional production, the 12



### allocation amounts and the schedule need to be 13



### far more aggressive than outlined under EPA's 14


### preferred approach. 15


### In closing, we hope the EPA will be far 16


### more aggressive in the final rule. The 17



### Administration has a real opportunity with this 18


### rule to positively impact ozone depletion and 19


### global climate change and to improve refrigerant 20


### management practices, and to strengthen the 21


### reclamation industry as we no w turn our attention 2274

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### to phasing down of HFCs. But this opportunity 1


### will be wasted, and those goals will be 2



### frustrated if EPA continues to allow the market 3


### to be flooded with virgin R

- 22 production. 4


### Thank you. 5


### MS. WHITELEY: Steve was our last speaker 6


### on the list. Was there anyone else in the 7


### audience who did not sign up who wants to give 8


### verbal testimony? 9


### (No response.) 10


### MR. DONALDSON: Okay. So with that our 11


### hearing concludes. 12


### Thank you all for coming and we 13


### appreciate you taking the time and g iving us 14



### comment. 15


### [Whereupon, at 3 :2 8 p.m., the EPA 16


### meeting, HCFC Allocation Rule , concluded.} 17

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