Fw: Summary of Interagency Comments under EO 12866/13563 -- Protection of Stratospheric Ozone : Adjustments to the Allowance System for Controlling HCFC Production, Import, and Export Luke Hall-Jordan to: Frey, Nathan J. 10/11/2011 01:44 PM Cc: JohnB Chamberlin, David Donaldson

Hi Nathan, Attached, please find EPA's response. Let's set up a call to discuss comment one this week if possible. We're still working through comment two.
Best, Luke
Luke Hall-Jordan U.S. Environmental Protection Agency 1200 Pennsylvania Ave, NW (MC-6205J) Washington, DC 20460 Office: 202-343-9591 Cell: 202-230-7589

Response_final.pd f ----- Forwarded by Jeremy Arling/DC/USEPA/US on 09/27/2011 10:19 AM -----

From: "Frey, Nathan J." <Nathan

_ J.

_ Frey@omb.eop.gov> To: Jeremy Arling/DC/USEPA/US@EPA Cc: Drusilla Hufford/DC/USEPA/US@EPA, Cindy Newberg/DC/USEPA/US@EPA Date: 09/27/2011 10:17 AM Subject: Summary of Interagency Comments under EO 12866/13563 -- Protection of Stratospheric Ozone: Adjustments to the Allowance System for Controlling HCFC Production, Import, and Export

Attached please find a summary of interagency comments on the draft proposed rule, Adjustments to the Allowance System for Controlling HCFC Production, Import, and Export for 2012. Also attached are several letters from stakeholders referenced in the summary of interagency comments.
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‐ Jordan/DC/USEPA/US] [attachment "EPA letter

‐ Comments to Interim Final Rule August 5, 2011.pdf" deleted by Luke Hall

‐ Jordan/DC/USEPA/US] [attachment "EPAletter.pdf" deleted by Luke Hall

‐ Jordan/DC/USEPA/US] [attachment "Letter to EPA re ICOR.PDF" deleted by Luke Hall

‐ Jordan/DC/USEPA/US] [attachment "Summary of Interagency Comments

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‐ AQ98 HCFC Allowance Adjustments 2012.docx" deleted by Luke Hall

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# ATTACHMENT 1

Response_final.pdf*** E.O. 12866 Review – Do Not Cite, Quote, or Release During Review ***

Page 1 of 2 

### Response to Interagency Working Comm ents on Draft Language Sent 9/27/2011 under EO12866/13563 Int eragency Review

Comment 1: Some stakeholders have expressed c oncern that EPA’s system of a llocations has allowed for the existence of an oligopoly that is artificially limiting HCFCs in th e economy by refusing to engage in the trading that is essential to mitigating the economic effects of an HC FC phase-out. If true, this should raise significant concerns that EPA’s program is c ontributing to the unnecessary stifling of the very innovation that EPA knows will be necessary in the post-2015 environment. EPA should also be very wary of using current market conditions as a basis for speeding up the phase-out schedule, since both the economic recessions and failure of the trading system would depress production and consumption of HCFCs. It would be helpful to understand how EPA would respond to these conc erns, including whether it can release production and consumption data to confir m ICOR’s allegations and how it will respond to ICOR’s petition for re-allocation. It would also be helpful to better understand whether EPA has seen recycling and reclamation at the levels anticip ated in the 2009 rulemaking and whether the misallocation of consumption allocations is impeding reclamation efforts.
Response 1: Overall, the agency believes that the HCFC pha seout program is functio ning as intended, with flexibility for trading and ability for new entr y and expanded production and import. In addition, EPA will rely on data and industry input to de termine if recent supply and demand levels are such that a reduction in allocations is needed—i n order to foster both reclaim and innovation in non-HCFC alternatives. We look forward to discussing this further with OMB and the commenter.
The commenter also asked EPA to release c onsumption and production data. The ODP-weighted amount of unused HCFC allowances was discus sed in the proposed rule (see section III.B.4.). Additionally, EPA annually reports HCFC use to UNEP (see http://ozone.unep.org/Data_Reporting/Data_Acce ss/). HCFC-22 consumption data are provided below. This table will be added to the docket.*** E.O. 12866 Review – Do Not Cite, Quote, or Release During Review ***

Page 2 of 2 Comment 2:

We would like to encourage EPA to consider whether the rule could or should allow for flexibility to lower further the overall amount of HCFC consumption and production allowances authorized, particularly for HCFC- 22. Doing so would help to fo ster the growth of an HCFC reclamation industry and create the right incentives to ensure that th e United States is able to be a leader in meeting and exceeding phaseout obliga tions under the Montreal Protocol in a way that is environmentally res ponsible. It seems advisable to provide for incentives for reuse/reclamation, recognizing it ne eds to be done in a practical and balanced way. Doing so would also put the United States in a better posit ion to promote a faster phaseout of HCFCs in other countries, which would provide significant ozone and climate benefits.
Response 2: Based on the above comment and comments on the 2011 interim final rule, EPA is currently collecting and reviewing da ta to determine if it is prudent to further reduce the overall allocation.