RE: 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. 11/29/2011 01:35 PM

Hi Nathan,

The two memos are attached. Please let me know if you or the interagency reviewers have any additional 

questions.

Best,

Luke

OverviewMemo_final_11.29.2011.docx OverviewMemo_final_11.29.2011.docx AdjustmentMemo_final_11.29.2011.docx AdjustmentMemo_final_11.29.2011.docx

"Frey, Nathan J." Luke, In an effort to better understand the basis f... 11/29/2011 09:37:07 AM

From: "Frey, Nathan J." <Nathan_J._Frey@omb.eop.gov>

To: Luke Hall-Jordan/DC/USEPA/US@EPA

Date: 11/29/2011 09:37 AM

Subject: RE: 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,

In an effort to better understand the basis for the new approach that the 

Agency has taken regarding consumption allowances, interagency reviewers have 

requested to see the Adjustment Memo and Overview Memo found in the docket. 

Could you please pass them along as soon as convenient? Many thanks,

Nathan

-----Original Message-----

From: Hall-Jordan.Luke@epamail.epa.gov [

mailto:Hall-Jordan.Luke@epamail.epa.gov]

Sent: Thursday, November 17, 2011 11:36 AM

To: Frey, Nathan J.

Subject: RE: Summary of Interagency Comments under EO 12866/13563 -- 

Protection of Stratospheric Ozone: Adjustments to the Allowance System for 

Controlling HCFC Production, Import, and Export

Nathan,

Please see our revised preamble. This should address all concerns raised in 

the interagency review process.

Best,

Luke
[attachment "winmail.dat" deleted by Luke Hall-Jordan/DC/USEPA/US] [attachment 

"message_body.rtf" deleted by Luke Hall-Jordan/DC/USEPA/US] 
ATTACHMENT 1 

OverviewMemo_final_11.29.2011.docx
*** E.O. 12866 Review – Draft – Do Not Cite, Quote, or Release During Review *** 

Page 1 of 4 

Overview of the Proposed Rule Regarding HCFC Allowances Between 2012 and 2014 

EPA is proposing and taking comment on a number of options and changes in this Notice of Proposed 

Rulemaking (NPRM) titled “Adjustments to the Allowance System for Controlling HCFC Production, 

Import, and Export,” regarding HCFC allowances for 2012 through 2014. The preamble presents many 

overlapping options for how production and consumption allowances for HCFC-22 and HCFC-142b are 

determined for the years 2012 through 2014. Baselines and allocations for all HCFCs other than HCFC22 and HCFC-142b are the same as in the 2009 Final Rule (74 FR 66412). In this rule, EPA is proposing 

to do and taking comment on the following: 

(1) Use the HCFC-22 and HCFC-142b baselines established in the 2011 Interim Final Rule for 2012 

through 2014; 

(2) Address 2010 allowances in light of the U.S. Appeals Court for the D.C. Circuit’s decision in 

Arkema v. EPA; 

(3) Use the same formula to provide HCFC-142b consumption and production allowances for 2012 

through 2014 as the agency did in the 2009 Final Rule; 

(4) Provide the same or fewer HCFC-22 consumption allowances relative to the 2009 Final Rule; 

(5) Provide the same or more HCFC-22 production allowances relative to the 2009 Final Rule; and 

(6) Revise the regulations at 40 CFR Part 82.23 to clarify EPA’s position on inter-pollutant transfers. 

A summary of each proposal is provided below. Full discussion and references to additional supporting 

documentation can be found in the preamble to the NPRM. 

1) Baselines would be the same as set in the 2011 IFR 

a. 2008 inter-pollutant trades made by Arkema and Solvay would be reflected consistent 

with the decision in Arkema v. EPA

b. Single-pollutant, inter-company trades occurring after the 2009 Final Rule would be 

reflected 

c. All other baselines would be the same as 2009 Final Rule 

2) Addressing 2010 Allowances 

EPA is proposing to provide or not provide recoupment to the following:

Company Chemical Consumption 

Allowances (kg) 

Production 

Allowances (kg) 

Arkema HCFC-22 4,749,692 4,611,848 

DuPont HCFC-142b 2,339 0 

Honeywell HCFC-142b 58,291 107,097 

Solvay Fluorides HCFC-22 1,157,895 0 

Solvay Solexis HCFC-142b 0 289,800 

a. The agency is providing four options to address recoupment (i.e. the missed opportunity 

to produce or import HCFCs in 2010): 
*** E.O. 12866 Review – Draft – Do Not Cite, Quote, or Release During Review *** 

Page 2 of 4 

i. In addition to the total allocation (“the pie”) for either chemical in 2013 only 

ii. In addition to the pie in 2013 and 2014 

iii. From the pie in 2013 and 2014 

1. If EPA goes with this option, it would need to allocate additional HCFC142b production allowances as there are too few allowances to provide 

full recoupment. 

iv. No recoupment: EPA cannot provide meaningful recoupment since 2010 

allowances have no value beyond December 31, 2010 

v. If EPA decides to provide recoupment, the agency is taking comment on whether 

it should provide recoupment for (1) HCFC-22 and HCFC-142b consumption and 

production allowances or (2) only HCFC-22 consumption allowances. 

3) Annual HCFC-142b Allocation 

EPA is proposing to allocate HCFC-142b allowances, both consumption and production, using 

the same methodology as in the 2009 Final Rule. In order to maintain approximately the same 

level of consumption as in the 2009 Final Rule, the new baseline percentage would be 4.9%, 

which would result in the allowance allocations shown below:

 2012 2013 2014 

 MT ODP MT MT ODP MT MT ODP MT 

R-142b 

Cons. 100 7 100 7 100 7 

Prod. 463 30 463 30 463 30 

% 4.9% 4.9% 4.9% 

NB: The numbers listed here are rounded 

4) Annual HCFC-22 Consumption Allocation 

EPA is considering two options for the HCFC-22 consumption allocation. The first is to leave 

aggregate consumption allowances the same as the 2009 Final Rule—which corresponds to a 

decrease in the baseline percentage issued each year. The other option is to decrease the total 

consumption allocation by between 11 and 47 percent each year, which would affect all 

companies proportionally. 

a. With no decrease in aggregate allocation levels, the number of HCFC-22 consumption 

allowances (and the corresponding percentage of baseline) would be as follows: 

 2012 2013 2014 

 MT ODP MT MT ODP MT MT ODP MT 

R-22 Cons. 40,700 2,200 35,900 2,000 31,100 1,700 

% 28.7% 25.3% 21.9% 

NB: The numbers listed here are rounded 

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

Page 3 of 4 

b. Under the second option, EPA would allocate an amount within the range included in the 

table below: 

 2012 2013 2014 

 MT ODP MT MT ODP MT MT ODP MT 

Highest Annual 

Allocations 

Cons. 36,200 2,000 31,400 1,700 26,200 1,400 

% 25.5% 22.1% 18.5% 

Lowest Annual 

Allocations 

Cons. 25,100 1,400 20,900 1,100 16,500 900 

% 17.7% 14.7% 11.6% 

NB: The numbers listed here are rounded 

5) Annual HCFC-22 Production Allocation

EPA is proposing to (1) provide the same amount of HCFC-22 production allowances as in the 

2009 Final Rule, (2) provide the same percentage of baseline for HCFC-22 production 

allowances as in the 2009 Final Rule, or (3) provide production allowances at the same level as 

consumption allowances. Under option 2, the number of HCFC-22 production allowances would 

increase relative to the 2009 Final Rule, which would allow companies whose baselines were not 

changed to produce HCFC-22 at the same level as established in the 2009 Final Rule. The 

agency would need to decide to decouple production and consumption in order to finalize 

options 1 or 2. 

a. Under option 1 (same approximate amount as the 2009 Final Rule), EPA would provide 

the following number and percentage of allowances: 

 2012 2013 2014 

 MT ODP MT MT ODP MT MT ODP MT 

Prod. 37,000 2,000 32,700 1,800 28,300 1,600 

% 28.7% 25.3% 21.9% 

NB: The numbers listed here are rounded 

b. Under option 2 (same percentage of baseline allocated for production as in the 2009 Final 

Rule), EPA would provide the following number and percentage of allowances: 

 2012 2013 2014 

 MT ODP MT MT ODP MT MT ODP MT 

Prod. 44,000 2,400 38,900 2,100 33,700 1,900 

% 34.1% 30.1% 26.1% 

NB: The numbers listed here are rounded 

c. If EPA provides the same percentage of baseline for production allowances as it does for 

consumption, EPA would allocate between the high and low amounts included in the 

table below: 

 2012 2013 2014 

 MT ODP MT MT ODP MT MT ODP MT 

Highest Annual 

Allocations 

Prod. 32,900 1,800 28,500 1,600 23,900 1,300 

% 25.5% 22.1% 18.5% 

Lowest Annual 

Allocations 

Prod. 22,800 1,300 19,000 1,000 15,000 800 

% 17.7% 14.7% 11.6% 

NB: The numbers listed here are rounded 

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

Page 4 of 4 

6) Inter-pollutant transfers 

EPA is proposing to:

a. Modifiy the language at 82.23(d) to memorialize EPA’s policy not to allow permanent 

inter-pollutant transfers of baseline allowances 

b. Modifiy the language at 82.23(b) to clarify that EPA allows inter-pollutant transfers of 

Article 5 allowances 

c. Modifiy the language at 82.23(a) to clarify that a 0.1 percent offset applies to Article 5 

allowance transfers

In addition to the options summarized above, EPA is also taking comment on: 

• Whether the installation of dry-shipped HCFC-22 condensing units will affect the phaseout of 

virgin HCFC-22 production and import. 

• Whether providing allowances to reclaimers would affect the market price of R-22, and what 

effect that price change would have on the transition away from ODS and the sustainability of 

the reclamation industry. 

• Whether other companies (in addition to the one small business who commented on this issue) 

are having difficulty acquiring HCFCs or HCFC allowances. 

• Whether an allocation to manufacturers of HCFC blends who are having difficulty acquiring 

HCFCs or HCFC allowances would be appropriate. Commenters supporting such an allocation 

should consider (1) how EPA might determine the total amount of such an allocation, (2) how 

EPA might determine which companies should receive allowances, (3) how EPA would verify 

that allowance holders are refusing to sell HCFCs and HCFC allowances, (4) how EPA might set 

baselines for these companies, (5) whether EPA should provide allowances in addition to the 

amount proposed in this rule, or as part of the amount proposed in this rule, and (6) how 

providing allowances to an additional set of companies would affect the U.S. transition away 

from HCFCs. 

• The analysis, supporting data, and assumptions presented in the Adjustment Memo (formally 

titled, “Analysis of HCFC-22 Servicing Needs in the U.S. Air Conditioning and Refrigeration 

Sector”). 

• Whether there would be an environmental benefit to updating company baselines for 2015 and 

beyond based on more recent data. 

• Whether, relative to the 2009 Final Rule, an increase in the total number of production 

allowances would result in (1) an increase in U.S. consumption, (2) an increase in U.S. 

production, either for domestic use or for export, and/or (3) an increase in worldwide production 

and/or consumption of HCFCs. Moreover, given that one potential outcome might be an increase 

in U.S. exports of HCFC-22, EPA invites comment on the implications of such an increase for 

the U.S. economy and the global environment, particularly as it relates to the smooth U.S. 

phaseout of HCFC-22. EPA also requests comments on whether section 605(c) would preclude 

allocating a different percentage of baseline for production than for consumption. 
ATTACHMENT 2 

AdjustmentMemo_final_11.29.2011.docx
*** E.O. 12866 Review – Draft – Do Not Cite, Quote, or Release During Review *** 

Page 1 

Adjustment Memo 

Analysis of HCFC‐22 Servicing Needs in the U.S. Air 

Conditioning and Refrigeration Sector 

Additional Considerations for Estimating Virgin Demand 

Background 

In December 2009, EPA published its final hydrochlorofluorocarbon (HCFC) allocation rule, “Protection 

of Stratospheric Ozone: Adjustments to the Allowance System for Controlling HCFC Production, Import, 

and Export,” (2009 Final Rule). That rule contained consumption and production allocations for HCFC‐22, 

HCFC‐142b and other HCFCs for the regulatory period of 2010 to 2014. As a result of the decision in 

Arkema v. EPA, which vacated the HCFC‐22 and HCFC‐142b allocations for 2011‐2014, EPA published an 

interim final rule allocating HCFC‐22 and HCFC‐142b allowances for 2011. The proposed rulemaking that 

this memo accompanies proposes various options for providing HCFC‐22 and HCFC‐142b allowances in 

2012 through 2014. The HCFC allowance system is part of EPA’s Clean Air Act program to phase out 

ozone‐depleting substances (ODS) and also supports U.S. compliance with the Montreal Protocol on 

Substances that Deplete the Ozone Layer. The most recent milestone of EPA’s HCFC phaseout schedule 

was on January 1, 2010, limiting the production and import of HCFC‐142b and HCFC‐22 to specified 

amounts significantly lower than limits set for 2003 through 2009. Between 2010 and 2020, the 

production and import of HCFC‐22 is permitted to service existing refrigeration and air conditioning (AC) 

equipment. 

The allocation levels in EPA’s 2009 Final Rule and 2011 Interim Final Rule were based in part on 

projections of HCFC‐22 servicing demand, as estimated in The U.S. Phaseout of HCFCS: Projected 

Servicing Needs in the U.S. Air‐Conditioning and Refrigeration Sector (known as the Servicing Tail 

Report). The report (1) examined the primary sources of HCFC‐22 for the service of the installed base of 

refrigeration and AC equipment after 2010, (2) estimated the amounts of HCFC‐22 recovered from 

equipment that could be subsequently recycled or reclaimed for reuse, and (3) based on these 

projections, estimated servicing demand for virgin HCFC‐22. 

Since the 2009 Final Rule was published, the Agency has heard from stakeholders that the market for 

HCFC‐22 has evolved. Stakeholders cite a number of factors that indicate a change in the market, 

including low HCFC‐22 prices, increased reuse in certain end uses, increased installation of dry‐shipped 

condensing units for repair, un‐expended consumption allocations for HCFC‐22 in past years, and 

reports of a potential surplus inventory of HCFC‐22. Some of these factors have been identified in public 

comments by industry members. In addition to this information, the U.S. economy is in a dramatically 

different position than when the Servicing Tail Report was developed. 
*** E.O. 12866 Review – Draft – Do Not Cite, Quote, or Release During Review *** 

Page 2 

This analysis summarizes industry feedback and suggests adjustments to the amount of modeled 

servicing demand for HCFC‐22 in 2012 through 2014. In the proposed rule for 2012 through 2014, EPA is 

seeking comment on the assumptions EPA is making in this memo. 

Methodology Overview 

The analysis uses EPA’s Vintaging Model to form the basis of quantitative estimates of current and 

projected HCFC‐22 servicing demand, including from virgin and used sources. The Vintaging Model 

estimates the annual chemical emissions from industry sectors that have historically used ODS, including 

AC, refrigeration, foams, solvents, aerosols, and fire protection. Within these industry sectors, there are 

59 independently modeled end‐uses. The model uses information on the market size and growth for 

each end‐use, as well as a history and projections of the market transition from ODS to alternatives. As 

ODS are phased out, a percentage of the market share originally filled by the ODS is allocated to each of 

its substitutes. The model tracks emissions of annual “vintages” of new equipment that enter into 

operation by incorporating information on estimates of the quantity of equipment or products sold, 

serviced, and retired or retrofitted each year, and the quantity of the compound required to 

manufacture, charge, and/or maintain the equipment. EPA’s Vintaging Model uses this market 

information to build an annual inventory of in‐use stocks of equipment and the ODS and non‐ODS 

substitutes in each end‐use. 

Estimates of HCFC‐22 servicing demand from EPA’s Vintaging Model were the starting point for this 

analysis. Targeted industry research—through interviews and public submissions—was conducted to 

identify factors affecting the current market for HCFC‐22. Then, overall servicing demand was adjusted 

to account for surplus inventory from past years and supplies of recovered refrigerant (either reclaimed 

or directly reused in the owner’s equipment). More detail is provided on these sources and adjustments 

in the sections that follow. 

Projected HCFC-22 Servicing Needs 

Refrigeration and AC equipment commonly requires servicing, which may include adding refrigerant to 

account for refrigerant losses that occur over time.1

 While EPA banned the production and import of 

HCFC‐22 for use in new appliances starting in 2010, the agency continues to allow limited production 

and import of virgin HCFC‐22 to service appliances manufactured prior to January 1, 2010. 

Figure 1 presents projected HCFC‐22 demand for servicing equipment in 2012, 2013, and 2014. These 

estimates were developed based on EPA’s Vintaging Model. As shown, approximately 56,200 metric 

tons (MT) of HCFC‐22 will be required to service AC and refrigeration equipment in 2012, 51,200 MT in 

2013, and 45,900 MT in 2014. Residential AC represents the majority of HCFC‐22 demand for 2012 to 

2014. 

 

1

 The servicing need estimates projected in this analysis include refrigerant to replace quantities that leak from 

operating equipment as well as losses that may occur while servicing operating equipment. 
*** E.O. 12866 Review – Draft – Do Not Cite, Quote, or Release During Review *** 

Page 3 

HCFC‐22 servicing demand projected in this analysis differs slightly from the demand presented in the 

2009 Servicing Tail Report and the 2009 Final Rule. These differences result from updates to the 

Vintaging Model. EPA’s Vintaging Model is periodically updated and peer‐reviewed as new information 

is incorporated. Since the 2009 Final Rule, updates to unitary AC and water & ground‐source heat pump 

growth rates, future growth rates, stock of refrigerated appliances, and residential unitary AC servicing 

emission rates were applied to produce these estimates.

Figure 1: 2012‐2014 Demand for Servicing Refrigeration and AC Equipment, by End Use* 

*"Other" refers to window units, packaged terminal units, dehumidifiers, water & ground source heat pumps, motor vehicle AC, 

small & medium retail food and mobile AC. 

Sources of HCFC-22 for Servicing 

As of 2010, only existing sources of HCFC‐22 and a controlled quantity of virgin HCFC‐22 (limited through 

allowance allocations distributed by EPA) are available to the AC and refrigeration industry to meet 

servicing demand. Existing sources, which can offset the need for virgin HCFC‐22, include (1) recycled 

HCFC‐22, (2) reclaimed HCFC‐22 and (3) imported, used HCFC‐22. Previously‐produced virgin material 

may have also been stored in inventory; this surplus inventory can also offset the need for additional 

virgin production and imports. HCFC‐22 can also be obtained through inter‐pollutant transfers of 

0

10,000

20,000

30,000

40,000

50,000

60,000

2012 2013 2014

Demand (MT)

Year

Other

IPR

Large Retail Food Refrigeration

Cold Storage

Chillers

Large Commercial AC

Small Commercial AC

Residential AC
*** E.O. 12866 Review – Draft – Do Not Cite, Quote, or Release During Review *** 

Page 4 

allowances. Of the five sources described below, this analysis will focus on recycled and reclaimed HCFC‐

22, as well as surplus inventory of virgin material. 

• Recycled: Recycled HCFC‐22 refers to material that has been extracted from an appliance and 

cleaned for reuse without meeting all the requirements for reclamation. EPA regulations allow 

for recharge of recycled refrigerants into the same piece of equipment or another piece of 

equipment with the same owner. EPA does not collect data on the amount of HCFC‐22 that is 

recycled. 

• Reclaimed: Refrigerants that are resold to be used in other equipment must be reclaimed to a 

standard level of purity based on the ARI Standard 700, to ensure sufficient purity of the 

reclaimed refrigerant. Certified reclaimers must report to EPA the total quantity of material sent 

to them each year for reclamation, the mass of refrigerant reclaimed that year and the mass of 

waste products generated that year. 

• Surplus Inventory from Past Years: Refrigerants that are imported, produced or reclaimed in 

previous calendar years can be stored in inventory and sold in later years. This practice is 

possible at all levels of the refrigerant distribution chain (producers, distributors, technicians, 

etc.). 

• Used imports: Used HCFC‐22 can be imported via EPA’s shipment‐by‐shipment petition process. 

The petition process ensures that HCFCs have been used (and were not newly produced) prior 

to import. Currently, the quantity of used HCFC‐22 import is minimal and has not been included 

in this analysis. 

• Inter‐pollutant transfers of allowances: Another source of HCFC‐22 can result from allowance 

holders transferring their allowances from one HCFC to HCFC‐22, which EPA permits on an 

annual and ODP‐weighted basis with a 0.1 percent deduction. Industry sources have indicated 

that the number of inter‐pollutant transfers is low, so this factor has not been included in this 

analysis. 

Adjusting for Additional Considerations to Estimate Virgin HCFC-22 

Demand 

Based on new industry research, EPA could adjust servicing demand as modeled by the Vintaging Model 

to produce estimates that better reflect current and anticipated market conditions. These adjustments 

incorporate new information about (1) surplus inventory from past years, (2) the capacity of reclaimers 

to meet servicing demands, and (3) recovery and reuse of HCFC‐22 in the large retail food sector (i.e., 

supermarkets), as described below.2

 A list of companies consulted for this analysis is provided at the end 

of this report. 

 

2

 Other factors may also influence servicing demand, but data were not readily available at the time of this writing 

to support quantitative adjustments. These factors might include a faster or slower transition out of HCFC‐22 than 
*** E.O. 12866 Review – Draft – Do Not Cite, Quote, or Release During Review *** 

Page 5 

Exhibit 1: HCFC‐22 Economics

Industry representatives report substantial 

reclamation capacity and access to 

recovered materials to meet a large 

proportion of servicing demand—as long as 

the price for virgin HCFC‐22 increases 

sufficiently to provide a market incentive 

for recovery and reclamation. The fact that 

2010 HCFC‐22 consumption allowances 

were not fully expended suggests that there 

is more than sufficient virgin HCFC‐22 in the 

aftermarket, and that supply of virgin HCFC‐

22 would have to decrease sizably to cause 

the price for virgin HCFC‐22 to increase. 

Currently virgin HCFC‐22 is priced at around 

$4.50 per pound; some industry 

representatives suggest that this price 

would have to exceed $8.00 per pound for 

reclaimed HCFC‐22 to become competitive, 

given reclamation costs associated with 

storage, handling, processing, and cross‐

contamination.

• Surplus Inventory Drawdown: Because HCFC‐

22 inventory information is not officially 

reported to EPA, this analysis relies on 

estimates provided by industry. Feedback 

suggests approximately 100 million pounds 

(45,400 MT) of surplus HCFC‐22 from past 

years was in inventory at the end of 2010. Half 

of that figure (22,700 MT, or about six months 

worth of demand) is comprised of packaged 

virgin HCFC‐22 and the rest is bulk gas in large 

storage containers (e.g., ISO tanks). There is 

less certainty on the amount of bulk gas in 

inventory; various factors may have 

contributed. For example, industry contacts 

suggested that a cooler‐than‐anticipated 

summer in 20093

 may have resulted in 

significant quantities going to inventory due to 

low servicing demands. Entities may also be 

holding virgin HCFC‐22 produced prior to 2010 

in anticipation of higher prices in future years 

or as preparation for the 2010 stepdown under 

the Montreal Protocol. 

This analysis assumes surplus inventory between 22,700 and 45,400 MT existed at the beginning 

of 2012. Given expectations about the transition away from HCFCs, as well as the 2015 and 2020 

HCFC phase‐out milestones, it is estimated that the complete drawdown could take somewhere 

between four to eight years. This analysis also assumes that surplus inventory of virgin HCFC‐22 

will be drawn down at an annual rate of approximately 6,000 MT. This quantity is an average 

estimate given the ranges in amounts and potential drawdown periods. EPA is seeking comment 

on this assumption in the proposed rule for 2012 through 2014.

• Reclaimer Capacity Adjustment: In its 2009 Final Rule, EPA estimated that 12,500 MT of HCFC‐

22 would be provided annually by recovery and reclamation through 2014. To date, reported 

reclaimed amounts have been lower, purportedly because of weak economic incentives. 

Specifically, the relatively low price of virgin HCFC‐22 has challenged the economic viability of 

reclamation practices. However, recent interviews with reclaimers suggest that reclamation 

facilities have the technical capacity to meet a greater proportion of servicing demand, if the 

price is right (see Exhibit 1Error! Reference source not found.). A number of those interviewed 

 

originally anticipated. EPA is continually reviewing changes in the market and is updating the Vintaging Model 

accordingly. 

3

 While temperatures for the year were slightly higher than average in the contiguous U.S., NOAA reports that 

summer 2009 was cooler than usual (see NOAA: 2009 Global Temperatures Well Above Average; Slightly Above‐

Average for U.S. Available at http://www.noaanews.noaa.gov/stories2009/20091208_globalstats.html). 
*** E.O. 12866 Review – Draft – Do Not Cite, Quote, or Release During Review *** 

Page 6 

stated that reclaimers were currently operating significantly below capacity. Interviews suggest 

that anywhere from 25% to 80% of servicing demands could be met by increasing the utilization 

of existing machinery and increasing the number of operational shifts in a week. This analysis 

uses 12,500 MT as a low bound for reclamation (consistent with the 2009 Final Rule), and 35% 

of total servicing demand in 2012 (19,700 MT) as the higher bound. EPA is seeking comment on 

this assumption in the proposed rule for 2012 through 2014. 

• Large Retail Food Recovery and Reuse Adjustment: Industry sources suggest that recovery and 

direct reuse is a widespread practice amongst supermarkets; however, the extent of recovery 

and reuse can vary significantly between chains, depending largely on the extent to which 

supermarkets are converting their HCFC‐22 equipment to alternatives. For example, some 

supermarkets that have converted a substantial proportion of their HCFC‐22 equipment 

indicated that they have sufficient recovered HCFC‐22 in stock for servicing such that they do 

not anticipate a need to purchase any more virgin material in the future. Other supermarkets 

that have not converted from HCFC‐22 equipment as aggressively indicated that as low as 10% 

to 20% of their servicing needs are met by material recovered from retrofitted stores they own. 

This analysis assumes that recovery and reuse can meet a range of 20% to 70% of the servicing 

needs of the large retail food sector. EPA is seeking comment on this assumption in the 

proposed rule for 2012 through 2014. Specifically, EPA is interested in learning if the percentage 

used in the final rule should be closer to 20% or 70%. 

Table 1 summarizes the assumptions and adjustments that could be applied to the original HCFC‐22 

servicing demand. Two scenarios are considered: a Larger Allocation Scenario and a Smaller Allocation 

Scenario. Under both scenarios, EPA would allocate fewer consumption allowances relative to the 2009 

Final Rule. 

Table 1: Annual Adjustments to Total Servicing Demand 

Adjustment Larger Allocation 

Scenario 

Smaller Allocation 

Scenario 

Assumed annual drawdown of surplus HCFC‐22 inventory 6,000 MT 

(13% to 26% of total surplus per year) 

Market‐wide servicing demand met by reclaimed HCFC‐22 12,500 MT 

(22% in 2012) 

19,700 MT 

(35% in 2012) 

Servicing demand met by recovered HCFC‐22 in the large 

retail food sector 

 1,100 ‐ 1,600 MT 

(20% per year) 

3,800 ‐ 5,500 MT 

(70% per year) 

Applying the adjustments shown in Table 1 results in a range of changes in servicing demand, which 

account for the portion of total demand that can be met through recovery and reuse, reclamation, and 

surplus drawdown. 

Table 2 shows how these adjustments yield new overall estimates of demand for virgin HCFC‐22 from 

2012 through 2014. 
*** E.O. 12866 Review – Draft – Do Not Cite, Quote, or Release During Review *** 

Page 7 

Table 2: Results of Adjustments to HCFC‐22 Servicing Demand (Metric Tons) 

2012 2013 2014

Larger 

Allocation 

Scenario 

Smaller 

Allocation 

Scenario 

Larger 

Allocation 

Scenario 

Smaller 

Allocation 

Scenario 

Larger 

Allocation 

Scenario 

Smaller 

Allocation 

Scenario 

Total Servicing 

Demand (Vintaging 

Model) 

56,200 51,200 45,900 

Surplus Inventory 

Drawdown ‐6,000 ‐6,000 ‐6,000 

Market‐wide 

Servicing Demand 

Met by Reclaimed 

HCFC‐22 

‐12,500 ‐19,700 ‐12,500 ‐19,700 ‐12,500 ‐19,700 

Servicing Demand 

Met by Reused 

HCFC‐22 in Large 

Retail Food 

Equipment 

‐1,600 ‐5,500 ‐1,300 ‐4,600 ‐1,100 ‐3,800 

Total Adjustment ‐20,100 ‐31,200 ‐19,800 ‐30,300 ‐19,600 ‐29,500 

Revised Allocation 36,200 25,100 31,400 20,800 26,300 16,400 

Totals may not sum due to independent rounding. 

Allocations for HCFC-22 from 2012 to 2014 

Adjusting total servicing demand based on the above factors provides a new estimate of HCFC‐22 virgin 

demand in 2012, 2013 and 2014. These new virgin demand estimates suggest that EPA should allocate 

fewer allowances for 2012 through 2014 than were provided in the 2009 Final Rule. 

Table 3 presents revised demand, the allowance levels in the 2009 Final Rule, and the percentage 

change in overall consumption allocations based on these values. As shown, a consumption allowance 

reduction of 11% to 38% is possible for 2012, 13% to 42% for 2013, and 15% to 47% for 2014. 
*** E.O. 12866 Review – Draft – Do Not Cite, Quote, or Release During Review *** 

Page 8 

Table 3: Allocation Adjustment Relative to the 2009 Final Rule (Metric Tons) 

2012 2013 2014 

Larger 

Allocation 

Scenario 

Smaller 

Allocation 

Scenario 

Larger 

Allocation 

Scenario 

Smaller 

Allocation 

Scenario 

Larger 

Allocation 

Scenario 

Smaller 

Allocation 

Scenario 

HCFC‐22 Consumption 

Allowances in the 2009 

Final Rule 

40,700 35,900 31,100 

Revised Allocation 36,200 25,100 31,400 20,800 26,300 16,400 

Percentage Allocation 

Change Relative to the 

2009 Final Rule 

‐11% ‐38% ‐13% ‐42% ‐15% ‐47% 

Totals may not sum due to independent rounding. 

Table 4 shows the possible allocation amounts for 2012 through 2014 as both an aggregate amount and 

percentage of baseline. The proposed HCFC‐22 consumption baseline for 2012 through 2014 is 

141,864,931 kg. 

Table 4: Summary of Proposed Allocation Adjustments (Metric Tons) 

2012 2013 2014 

Larger 

Allocation 

Scenario 

Smaller 

Allocation 

Scenario 

Larger 

Allocation 

Scenario 

Smaller 

Allocation 

Scenario 

Larger 

Allocation 

Scenario 

Smaller 

Allocation 

Scenario 

Revised Allocation 36,200 25,100 31,400 20,800 26,300 16,400 

Percentage of Baseline 

Allocated 

25.5% 17.7% 22.1% 14.7% 18.5% 11.6% 

Totals may not sum due to independent rounding. 

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

Page 9 

List of Companies Consulted 

Airgas Specialty Products Inc. Personal communication with ICF International. October 7, 2011. 

Coolgas. Personal communication with ICF International. October 6, 2011. 

Food Lion. Personal communication with ICF International. October 3, 2011. 

Hudson Technologies Company. Personal communication with ICF International. October 7, 2011. 

National Refrigerants, Inc. Personal communication with ICF International. October 12, 2011. 

RemTec International. Personal communication with ICF International. October 4 and 17, 2011. 

Supervalu. Personal communication with ICF International. October 5, 2011. 

Weis Markets. Personal communication with ICF International. October 3, 2011.