1

September 26 , 2011

Docket # EPA

- HQ

- OAR

- 2010

- 1040 Air and Radiation Docket and Information Center, U.S. Environmental Protection Agency Mail Code: 6102T 1200 Pennsylvania Ave., NW Washington, DC 20460

Re: Comments On August 2011 Interim Final Rule Adjusting Allocation System for HCFC

- 22 (EPA

- HQ

- OAR

- 2010

- 1040)

On behalf of the Natural Resources Defense Council (NRDC), I respectfully submit the following comments regarding EPA’s interim final rule, “Protection of Stratospheric Ozone: Adjustm ent to the Allowance System for Controlling HCFC Production, Import, and Export, 76 Fed. Reg. 47,451 (Aug. 5, 2011) (“IFR”). NRDC encourages EPA to accelerate the phase

- out schedule for HCFC

- 22 in its rulemaking for 2012 and beyond

.

I. EPA Should Not Increas e Production Allowances

As I expressed in our June 2, 2011, letter to the Administrator regarding EPA’s response
to Arkema v. EPA (attached), NRDC opposes any increase in allowances of HCFC

- 22 for 2011 or any subsequent year. NRDC appreciates EPA’s decis ion in the IFR to maintain total allocation levels for 2011 and urges EPA not to make any upward adjustments to current production allocations in response to comments. Increasing HCFC

- 22 production, whether for domestic use or export, would result in addit ional burdens on the stratosphere, public health

, and the natural environment.

Arguments that increasing production allocations will result in net environmental benefits are counterintuitive and unfounded. Some commenters have claimed that greater US p roduction allocations will allow increased exports and displace dirtier HCFC

- 22 production abroad

– production that takes place with more HFC

- 23 byproduct emissions. The claimed benefit occurs only if it is assumed that increased HCFC

- 22 exports would be c ounterbalanced by reduced foreign production. Recent history of the HCFC

- 22 market suggests this would not be the case

– that increasing domestic exports would only increase the global HCFC

- 22 supply and push down HCFC

- 22 prices. Because total current HCF C

- 22 production is below Montreal Protocol caps, N ATURAL R ESOURCES D EFENS E C OUNCIL2

increasing exports of HCFC

- 22 will not push foreign competitors out of the international market. Instead, increased exports will only worsen the glut of HCFC

- 22 on the market and further depress prices . Thi s is especially t rue considering the carbon offset projects under the Clean Development Mechanism of the Kyoto Protocol incentivize participating plants in developing countries to continue production of HCF C

- 22 in order to receive compensation for destruct ion of the unwanted byproduct, HFC

- 23

.

Because increas ing production allowance allocations will increase worldwide production, increasing allocations would result in environment al harm. I ncreasing oversupply of HCFC

- 22 would further drive down prices. Cheap prices correspond with an increase in demand that would prolong dependence on this harmful substance. In fact, low prices have already encouraged equipment manufacturers to return to producing HCFC

- 22 based equipment. Even worse, low prices are hampe ring HCFC

- 22 reclamation from be com ing competitive in the market place

. We should be encouraging reclamation and re

- use of already existing HCFC

- 22 in preference to new production. Permitting any increase in production allocations would work in exactly th e wrong direction.

Additionally, increasing production allocations is not warranted by the Clean Air Act. Title VI states that the “[transfer] rules shall insure that the transactions under the authority of this section will result in greater total redu ctions in the production in each year of class I and II substances than would occur in that year in the absence of such transactions.” 1 This IFR adjusts allocations as a result of the transfers made by Arkema and Solvay. In the process of that transfer, EP A took into account this provision such that the transfer resulted in a net reduction of emissions. This proceeding is an incident of that transfer transaction. Increasing production allowances now would conflict with the requirement for the transfer tran saction to result in reductions.

II. EPA Should Accelerate the Phase Out Schedule

The comments already filed reflect a general consensus that there is a glut of HCFC

- 22 on the market and that the oversupply is driving down prices and increasing productio n of HCFC

- 22 based equipment. The current glut and low prices are compelling evidence that the current HCFC

- 22 phase

- down schedule is not rapid enough. The glut is bad for both business and the environment, and the EPA should solve this problem by acceler ating the phase

- out and reducing allocations.

The EPA has a statutory mandate under Clean Air Act §606 to accelerate phase out of an Ozone Depleting Substance (ODS) where it is both necessary and feasible. The “necessary” component requires the EPA Admin istrator to determine if “such or more stringent schedule may be necessary to protect human health and environment.” 2 The science has long established the need to phase out ODS emissions as soon as possible. ODS emissions increase the risk of fatal and no n

- fatal skin cancers, cataracts, and immunological disorders across the globe. The sooner emissions are phased out, the sooner the ozone will be able to repair itself.

1 Clean Air Act 42 U.S.C. §7671f(a).
2 Id . at §7671e(a)(1).3

Current evidence demonstrates that a faster HCFC

- 22 phase

- out is also “feasible.” This component requires the Administrator to determine whether a “more stringent schedule is practicable” based on “availability of substitutes,” in addition to “technology achievability, safety and other relevant factors.” 3 The present glut of HCFC

- 22 and the unused consumption allocations demonstrates that more stringent standards are practicable taking into account all these factors. Further supporting the practicability of more stringent standards is that current HCFC

- 22 prices are too low to incentivize re clamation or conversion to non

- HCFC

- 22 dependant products. This means that it is the HCFC

- 22 oversupply, not concerns about the availability of substitutes that is preventing a timely transition from HCFC

- 22 dependence.

Since more stringent standards are both necessary and feasible, EPA should accelerate the phase out schedule and implement larger reductions in the 2012

- 2014 allocation period. NRDC urges EPA to include this accelerated phase

- out in its next allocation rulemakings.

Sincerely,

David D. Doniger Policy Director NRDC Climate and Clean Air Program

3 Id. at §7671e(a)(2).