May 17, 2011

Ms. Drusilla Hufford, Director, 

Stratospheric Protection Division, Office of Atmospheric Programs

United States Environmental Protection Agency

1310 L Street, NW

Washington, DC 20005

Re: HCFC Allowance Allocation

Dear Ms. Hufford:

Thank you and your colleagues for taking meeting with Milton Cuevas and me on April 14, 2011. To 

recap, we asked at the meeting that EPA revise and recalibrate the baseline allocations to grant additional 

allocation to ICOR International under the HCFC allocation system. Such allocation recalibration would 

reflect a small part of HCFC stocks which are currently permitted under the Montreal protocol allowances 

but not used by allocation holders. The granting to ICOR of such additional allocation is not prohibited 

either by the Montreal protocol or the Clean Air Act. Most importantly, our request would allow EPA to 

remedy an allocation system which has effectively become a cap and NO trade system, to the detriment of 

innovative smaller firms and the consumers they serve. During the meeting we reviewed several points:

ICOR is a small business founded in 1989 by my wife, Karen Tieken, and me. We employ 25 

people in Indianapolis, Indiana, Dallas Texas, and Henderson, Nevada. ICOR manufactures both 

HCFC and HFC refrigerant blends, and is also an EPA approved refrigerant reclaimer.

ICOR’s flagship product, Hot Shot (R-414B), has been manufactured by ICOR since 1995, and 

is now the number one selling blended refrigerant replacement for R-12 in the United States and 

Canada. Sales of Hot Shot are the majority of ICOR’s total sales volume.

Hot Shot is an HCFC refrigerant blend, and as such, the availability of the components to manufacture the product are controlled by EPA’s HCFC allocation rules designed to meet U.S. obligations under the Montreal Protocol to phase out ozone depleting substances.

ICOR has very few allocation allowances to import the components it needs to manufacture Hot 

Shot. Although ICOR was making the product during the baseline periods designated in the rule, 

it was buying the components from domestic producers, and not importing the products, therefore 

the allocation allowances were awarded to the companies that either produced the components, or 

in one case, imported them for ICOR.

During the last several years we have repeatedly warned EPA that the three companies that received approximately 90% of the total HCFC allocation would use the extraordinary competitive 

advantage that the HCFC allocation rule gave them to put small businesses like ICOR out of business by denying them the components to make products, or effectively reclaim HCFC refrigerants. 

10640 East 59th Street •Indianapolis, IN 46236 • 317-826-3200 • Toll Free 800-497-6805 •Fax: 317-826-3214

www.icorinternational.com • icorinfo@icorinternational.com
This has come to pass and ICOR is at the breaking point. We have been starved of HCFC components. Two of three companies will not sell to ICOR, and the other will only sell one component, 

and has doubled the price this year. ICOR’s price for allocation is 130% of the cost of the refrigerant. 

This sorry situation is entirely a consequence of the mechanics of EPA’s allocation system, and completely unnecessary and irrelevant to meeting Montreal protocol standards. The adjustment ICOR seeks does 

not upset the current rule in which EPA grants HCFC import allowances depending if a firm produced or 

imported refrigerant during the baseline years. The allocation locked in an EPA sanctioned oligopoly, in 

which three firms control (but do not fully use) nearly all the consumption allowances for key refrigerants 

granted by EPA. Now a decade after the baseline years we merely are requesting an updated recalibration, recognizing that millions of pounds of U.S. HCFC allowance is left unused every year. Failure to 

use some flexibility in applying these rules to a successful small innovative firm will yield the loss of the 

number one blended R-12 replacement in the industry, with forced conversion of hundreds of thousands 

of pieces of equipment to a less efficient, more costly alternative.

The 2009 HCFC allocation rule considered five proposals to modify the 2003 rule. The 2003 rule was a 

cap and trade system - the allowances EPA allocated could be traded among companies producing and using the regulated HCFCs. The 2009 proposal reflected EPA’s intent to further phase down total U.S. baseline HCFC production and consumption. But to do this EPA adopted the option that most benefited the 

legacy chemical producers, effectively a continuation of the existing cap and trade system for R-22 and 

R-142b with further reductions in the caps, and extending the allocations to R 124 and other substances. 

The 2009 rule allocated nearly 120 million kg in R 22 consumption allowances, 87% of which is held by 

only three firms. The rule allocated about 21 million kg in R 142b allowances, all held by just four companies. As explained above, because the 2003 allocation system focused on legacy firms, our firm has no 

consumption allocation of its own for either substance under the 2003 or 2009 rule. The 2009 rule did 

grant ICOR an allowance for R 124, 3.3% of the total allotted. Three companies received more than 94% 

of the R 124 allocation. 

What has resulted, as ICOR predicted, is now a system of cap and NO trade. The three producers with 

the majority of allocation are not using all their allocation, but now refuse to trade. EPA allowed no 

flexibility to empower small refrigerant manufacturers like ICOR to fill the consumer demand in existing 

equipment for our product or innovate new products.

Further, EPA stated its intent that the allocation decrease would “promote recycling and reclamation, 

which in turn should prevent shortages which might otherwise occur upon the stepdown in 2015.” 74 Fed. 

Reg. 66418. Unfortunately, EPA did nothing to follow through that intent and ignored the opportunity 

to encourage refrigerant reclaimers by granting them HCFC allowance. This lack of action on reclaimers effectively allows large refrigerant producers to default into control of the reclamation industry, as a 

reclaimer must align itself with a producer to obtain the material to economically reclaim HCFCs. 

The 2009 rule was based on incorrect assumptions. They were incorrect at the time, and the inaccuracy 

has since been amply demonstrated by ICOR’s plight. In 2009 EPA stated

“Option 1 does not automatically prohibit new entrants, as they could acquire allowances from existing 

allowance holders under the existing regulatory framework” 

“EPA believes that any new entrants following the ANPRM publication would not be precluded from entering the market, because they could purchase allowances from existing allowance holders who may not 

intend to use their full amount of allowances.”

10640 East 59th Street •Indianapolis, IN 46236 • 317-826-3200 • Toll Free 800-497-6805 •Fax: 317-826-3214

www.icorinternational.com • icorinfo@icorinternational.com
10640 East 59th Street •Indianapolis, IN 46236 • 317-826-3200 • Toll Free 800-497-6805 •Fax: 317-826-3214

www.icorinternational.com • icorinfo@icorinternational.com

EPA was incorrect. There are millions of pounds of allowances unused every year which theoretically 

could be acquired by ICOR or other new entrants, but they are not for sale by the holders who benefitted 

from EPA’s original allocation grant. Additionally the effect of the large refrigerant producers sitting on 

unused allocation has been a steep increase in the market price of the relatively small remaining allocation 

which is for sale by small allocation holders. In 2011 ICOR cannot purchase that unused allocation. 

As to reclamation, the EPA admitted in the 2009 rule that “Forty five commenters encouraged EPA to allocate HCFC-22 consumption allowances to reclaimers...” and that “...EPA also received two comments 

stating that allocations to reclaimers are not necessary...” One of the reasons EPA advanced to justify 

no reclaimer credit was that such a system would reduce the allocations of current allowance holders. 

74 Fed.Reg. 66423. Of course it would, but is that a problem if new companies are providing valuable 

reclamation services! Isn’t reclamation a responsible refrigerant policy goal, more important than slavish 

protection of the full allocation of the status quo companies? It is now very clear that the 45 supporters of 

allowing reclaimers HCFC allocation were correct, and that EPA’s refusal to establish reclamation credit 

allocation was bad policy.

The United States agreed to the Montreal Protocol, and use of the allotted amount of HCFCs should not 

be exclusive to the few companies selected by EPA. The companies given allotment should use it or lose 

it. The EPA’s HCFC allocation system has already shut down two refrigerant blenders this year, shuttered multiple reclamation facilities, and is going to put the employees of ICOR in the United States in 

the unemployment line if something is not changed in the HCFC allocation system. More importantly 

to our economy, the allocation system is preventing us and other independent producers from developing 

innovative products and moving to the next generation of refrigerants.

The industry can live with the lower Montreal production and consumption levels, as long as there is trade 

in the caps, to meet demands and opportunities for innovation. By establishing in 2003 and then further 

encouraging in 2009 a rigid system giving all advantages to a handful of large legacy producers, EPA 

is picking winners and losers, driving any innovative spark or energy from this line of commerce, and 

depriving US consumes of products which are more efficient and competitive than those produced by the 

EPA blessed allocation holders. 

These poor and unnecessary policy choices have pushed our company into a corner, solely because of 

EPA’s decisions. ICOR needs relief now. We need HCFC allocation to continue production of Hot Shot 

into 2012. EPA was wrong when you predicted that allowance would be available for purchase; it is not. 

As EPA knows (and will not share publicly the data) there is much unused HCFC allocation. Additional 

allocation could be granted, not upsetting US ability to stay well under the Montreal caps. The minimum 

allocation ICOR needs, based on our usage during the baseline years outlined in the rules, and R-22 for 

reclamation based on 2 times our annual reclamation amount is:

1997 R-22 usage 172,755 kg

1997 R-142b usage 32,823 kg

2007 R-124 usage 252,000 kg

R-22 for reclamation 363,000 kg
10640 East 59th Street •Indianapolis, IN 46236 • 317-826-3200 • Toll Free 800-497-6805 •Fax: 317-826-3214

www.icorinternational.com • icorinfo@icorinternational.com

Senator Daniel Coats

B40E Dirksen Senate Office Building 

Washington DC 20510

Congressman Dan Burton

2308 Rayburn House Office Building

Washington, D.C. 20515-0001

Senator Harry Reid

522 Hart Senate Office Building 

Washington DC 20510

Congressman Mike Pence

1431 Longworth HOB

Washington, DC 20515

Senator Dean Heller 

4 Russell Courtyard

Washington, DC 20510

Congressman Joe Heck

132 Cannon HOB

Washington, DC 20515

Senator Jon Cornyn

517 Hart Senate Office Building 

Washington DC 20510

Congressman Pete Sessions

2233 Rayburn House Office Building

Washington, DC 20515-4332

Senator Kay Bailey Hutchinson

284 Russell Senate Office Building 

Washington DC 20510

Congressman Fred Upton

2183 Rayburn House Office Building

Washington, D.C. 20515

Senator James M. Inhofe

205 Russell Senate Office Building 

Washington DC 20510

Congressman Darrell Issa

2347 Rayburn House Office Building 

Washington, DC 20515

We would appreciate your formal response to this request. If you have an alternative proposal, we would 

be happy to discuss it. EPA’s hands are not tied by the Montreal Protocol or the Clean Air Act in responding to this request for regulatory flexibility. 

Sincerely,

James Tieken

Owner, President and CEO

tiekenjk@cox.net