Response to Comments

For the Notice of Proposed Rulemaking:

Protection of the Stratospheric Ozone: 

Adjustments to the Allowance System for 

Controlling HCFC Production, Import, 

and Export

Docket: EPA-HQ-OAR-2008-0496

U.S. Environmental Protection Agency

Office of Air and Radiation

Stratospheric Protection Division

1200 Pennsylvania Avenue, NW

Washington, DC 20460
Contents

1. GENERAL SUMMARY OF COMMENTS.................................................................... 1-1

2. ALLOCATION OPTIONS FOR HCFC-22 AND HCFC-142B .................................... 2-1

2.1. EPA’s Proposed Allocation Method: allocating the same percentage of baseline allowances 

on a pro-rata basis to entities that received baseline allowances in 2003............................ 2-1

2.1.1. Support for the proposed allocation method with permanent inter-pollutant 

transfers..................................................................Error! Bookmark not defined.

2.1.2. Support for the proposed allocation method without permanent inter-pollutant 

transfers..................................................................Error! Bookmark not defined.

2.1.3. General opposition to the proposed allocation system ........ Error! Bookmark not 

defined.

2.2. Allocating allowances based on evaluation of the most recent three years of production, 

import, and/or export data.................................................................................................. 2-13

2.3. Allocating allowances based on evaluation of past sales of HCFCs by allowance holders by 

considering how HCFCs were ultimately used.................................................................. 2-14

2.4. Allocating allowances based on aggregated ODP tons...................................................... 2-15

2.5. Allocating a total amount of allowances and allowing for purchase by establishing an 

auction system.................................................................................................................... 2-15

2.5.1. Support for an auction system............................................................................ 2-15

2.5.2. Opposition to an auction system........................................................................ 2-17

3. MEETING HCFC-22 SERVICING DEMAND IN 2010-2014 .................................... 3-18

3.1. Appropriateness of EPA’s assumption that 20% of total HCFC-22 in retired/converted 

equipment can be recovered in 2010 ................................................................................. 3-19

3.2. Setting the HCFC-22 allocation total based on meeting 80% of servicing demand.......... 3-22

3.2.1. Greater than 80% of servicing demand needs to be met through HCFC-22 

consumption allowances .................................................................................... 3-22

3.2.2. Meeting 80% of servicing demand through HCFC-22 consumption allowances 

with the remaining 20% of demand being met through recovered material is 

appropriate ......................................................................................................... 3-22

3.2.3. The HCFC-22 allocation total should be less than the amount needed to meet 80% 

of servicing demand........................................................................................... 3-23

3.3. Allocations of HCFC-22 allowances set aside for reclaimers for blending....................... 3-24

3.4. Allocation should be reduced each year based on the projected decline in servicing need... 3-

30

3.5. Facilitating an effort to improve reclaim (i.e., contractor participation) and increase the 20% 

rate...................................................................................................................................... 3-36

3.6. Servicing Tail Report Clarifications and Potential Modifications..................................... 3-38
4. ALLOCATIONS OF ALLOWANCES OF HCFCs OTHER THAN HCFC-22 AND 

HCFC-142b............................................................................................................................... 4-39

4.1. Support for EPA’s proposed baselines and allocations for the “other” HCFCs................ 4-39

4.2. Opposition to EPA’s proposed baselines and allocations for the “other” HCFCs ............ 4-41

5. 605(A) USE RESTRICTION .......................................................................................... 5-44

5.1. “Manufactured” Clarification ............................................................................................ 5-45

5.2. Accelerating the 605A use restriction under the authority of Section 606........................ 5-51

5.3. Introducing HCFCs into Interstate Commerce .................................................................. 5-52

5.4. Niche applications for HCFC-22 and HCFC-142b............................................................ 5-54

6. RECLAIM USE: ENFORCEMENT/COMPLIANCE ISSUES.................................. 6-58

7. SMALL BUSINESS CONCERNS ................................................................................. 7-59

7.1. Costs to small businesses................................................................................................... 7-60

7.2. Specific Requests for Allowances from Small Businesses................................................ 7-62

8. TIMELY COMPLETION OF THE RULE .................................................................. 8-64
1-1

1. GENERAL SUMMARY OF COMMENTS

This document summarizes comments on the proposed rule, Protection of the Stratospheric 

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

Export, which are found in EPA’s docket, EPA-HQ-OAR-2008-0496. A total of 61 comments

were submitted and are listed in Table 1 by document ID and organization. Ninety-six

commenters are represented by these comments, including five commenters who spoke at the 

January 7, 2009, public hearing but did not submit a written comment. A total of seven

comments (representing 32 commenters) were submitted after the close of the comment period 

on March 9, 2009. Four of these comments are currently listed by date of submission rather than

Docket ID number. The docket also contains two comments with multiple signatories. These 

signatories are listed individually in the table below. In the comments sections, the two 

comments are listed by their group name, “Reclaimers without Allocations” and “Reclaimers for 

Environmental Benefits”, and contain 15 and 25 signatories, respectively. The docket also 

contains a comment by the organization, Alliance for Responsible Atmospheric Policy, an 

industry coalition which represents 47 members (23 of whom submitted individual comments). 

Commenters represent a variety of industry stakeholders.

Table 1. Public Comments Received by EPA on the Adjustments to the Allowance System 

for Controlling HCFC Production, Import, and Export

Count Document ID Organization

1 EPA-HQ-OAR-2008-0496-0074 York/Johnson Controls

2 EPA-HQ-OAR-2008-0496-0076 Weitron

3 EPA-HQ-OAR-2008-0496-0079 Welch Heating & A/C

4 EPA-HQ-OAR-2008-0496-0080.2 Goodman

5 EPA-HQ-OAR-2008-0496-0082 EPA Public Hearing Transcripta

6 EPA-HQ-OAR-2008-0496-0084.1 Danfoss

7 EPA-HQ-OAR-2008-0496-0085.1 Dometic

8 EPA-HQ-OAR-2008-0496-0086.1 Dometicb

9 EPA-HQ-OAR-2008-0496-0087 Refrigerants Inc.

10 EPA-HQ-OAR-2008-0496-0088.1 Goodman

11 EPA-HQ-OAR-2008-0496-0089 Association of Home Appliance Manufacturers (AHAM)

12 EPA-HQ-OAR-2008-0496-0090.1 U.S. Small Business Administration’s Office of Advocacy (SBA)

13 EPA-HQ-OAR-2008-0496-0091 NA

14 EPA-HQ-OAR-2008-0496-0092 NA

15 EPA-HQ-OAR-2008-0496-0093.1 Peoples Welding Supply

16 EPA-HQ-OAR-2008-0496-0094.1 Airgas

17 EPA-HQ-OAR-2008-0496-0095.1 Ascent Healthcare Solutions, Inc.

18 EPA-HQ-OAR-2008-0496-0096.1 Alcon Laboratories, Inc.

19 EPA-HQ-OAR-2008-0496-0097.1 DuPontc

20 EPA-HQ-OAR-2008-0496-0098.1 Carrier

21 EPA-HQ-OAR-2008-0496-0099.1 Trane/Ingersoll-Rand

22 EPA-HQ-OAR-2008-0496-0100.1 McQuay
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Count Document ID Organization

23 EPA-HQ-OAR-2008-0496-0101.1 Mondy Global, Inc.

24 EPA-HQ-OAR-2008-0496-0102.1 Polar Technology LLC.

25 EPA-HQ-OAR-2008-0496-0103.1 Rheemd

26 EPA-HQ-OAR-2008-0496-0104.1 Emerson Climate Technologies

Reclaimers without Allocationse

Remtec International

Certified Refrigerant Services

Golden Refrigerant

AllCool Refrigerant Reclaim, LLC

Refrigerants, Inc.

Refrigerant Exchange Corp

Polar Technology, LLC.

Newcomb Mechanical Inc.

Total Reclaim, Inc.

Refrigerant Management Services of Georgia, LLC

Perfect Cycle - PTC, LP

Safe Disposal Systems

Pure Chemical Separation, LP

ICOR International Inc.

27 EPA-HQ-OAR-2008-0496-0105.1

Refrigerant Recycling, Inc.

28 EPA-HQ-OAR-2008-0496-0106.1 Solvay Chemicals

29 EPA-HQ-OAR-2008-0496-0107 DuPontf

30 EPA-HQ-OAR-2008-0496-0108 DuPontg

31 EPA-HQ-OAR-2008-0496-0109 DuPonth

32 EPA-HQ-OAR-2008-0496-0110.1 National Refrigerants, Inc. (NRI)

33 EPA-HQ-OAR-2008-0496-0111.1 Arkema

34 EPA-HQ-OAR-2008-0496-0112.1 Hudson Technologies 

35 EPA-HQ-OAR-2008-0496-0113.1 Coolgas Inc. and Dynatemp International

36 EPA-HQ-OAR-2008-0496-0114.1 Hudson Technologiesi

37 EPA-HQ-OAR-2008-0496-0115.1 North Lakes Distributing, Inc.

38 EPA-HQ-OAR-2008-0496-0116.1 Refricenter of Miami Inc.

39 EPA-HQ-OAR-2008-0496-0117.1 Heating, Airconditioning & Refrigeration Distributors International

(HARDI)

40 EPA-HQ-OAR-2008-0496-0118.1 Honeywell 

41 EPA-HQ-OAR-2008-0496-0119.1 Air-Conditioning, Heating, and Refrigeration Institute (AHRI)

42 EPA-HQ-OAR-2008-0496-0120.1 Alliance for Responsible Atmospheric Policyj

43 EPA-HQ-OAR-2008-0496-0121 MDA Manufacturing

44 EPA-HQ-OAR-2008-0496-0122.1 Air Conditioning Contractors of America (ACCA)

45 EPA-HQ-OAR-2008-0496-0123 C.C. Dickson Co.

46 EPA-HQ-OAR-2008-0496-0124 Refrigerant Supply Inc.

47 EPA-HQ-OAR-2008-0496-0125.1 Ineos Fluor
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Count Document ID Organization

48 EPA-HQ-OAR-2008-0496-0126.1 Johnson Controls

49 EPA-HQ-OAR-2008-0496-0127.1 Lennox International

50 EPA-HQ-OAR-2008-0496-0128 Altair Partners, LP

51 EPA-HQ-OAR-2008-0496-0129 ICOR International

52 EPA-HQ-OAR-2008-0496-0130 DuPont

53 EPA-HQ-OAR-2008-0496-0131 Rheem

54 EPA-HQ-OAR-2008-0496-0132 Refricentro INC.

55 EPA-HQ-OAR-2008-0496-0133.1 Air-Conditioning, Heating, and Refrigeration Institutek

56 EPA-HQ-OAR-2008-0496-0134 Perfect Technology Center, LP, dba “Perfect Cycle” 

57 EPA-HQ-OAR-2008-0496-0135 Hudson Technologiesl

58 EPA-HQ-OAR-2008-0496-0136 Solvay Fluoridesm

59 EPA-HQ-OAR-2008-0496-0137 Arkeman

Reclaimers for Environmental Benefitso

Advanced Refrigerant Technologies

AeroSys Inc.

AllCool Refrigerant Reclaim

Brady Trane Service

Certified Refrigerant Services, Inc.

Clean Air Refrigerant Recovery and Reclaiming, Inc.

Consolidated Refrigerant Reclaim

Consolidated Refrigerant Solutions, Inc.

Golden Refrigerant

J.R.’s Appliance Disposal, Inc.

Newcomb Mechanical, Inc.

Perfect Cycle CFC Group

Pierce Refrigerant Mgmt

Polar Refrigerant Technology

Reclamation Technologies, Inc.

Refri-Claim, a Division of ICOR Int.

Refrigerant Exchange Corp.

Refrigerant Management Service of Georgia

Refrigerant Recycling, Inc.

Refrigerants, Inc.

Refrigeration Salvage, Inc.

RemTec International

Safe Disposal Systems

SpecGas, Inc.

60 EPA-HQ-OAR-2008-0496-0138

Total Reclaim, Inc.

61 EPA-HQ-OAR-2008-0496-0139 Solvay Fluorides

62 EPA-HQ-OAR-2008-0496-0140 Williams & Associatesp

63 EPA-HQ-OAR-2008-0496-0141 American Medical Systemsq
1-4

Count Document ID Organization

64 EPA-HQ-OAR-2008-0496-0142 The Spectranetics Corporationr

65 EPA-HQ-OAR-2008-0496-0143 Hudson Technologies

66 EPA-HQ-OAR-2008-0496-0144 USA Refrigerantss

a. EPA’s Public Transcript, “Adjustments to the Allowance System for Controlling HCFC Production, Import, and Export,” on 

January 7, 2009, reports comments by AHRI, Coolgas, Condor Products, and Discount Refrigerants, HARDI, 

Trane/Ingersoll-Rand, RemTec International, CFM Distributors, Coolgas Inc and Dynatemp International, ACCA, and USA 

Refrigerants. Of these commenters, AHRI, HARDI, Coolgas Inc. and Dynatemp International, and ACCA also submitted 

written comments by the same commenter. In the following sections, commenters are listed individually, including those 

that submitted written comments. b. Duplicate copy of EPA-HQ-OAR-2008-0496-0085.1. All Dometic comments listed under EPA-HQ-OAR-2008-0496-

0085.1 in the following sections. c. DuPont submitted supplemental comments (EPA-HQ-OAR-2008-0496-0130) after the close of the comment period. All 

comments are listed under the original Docket ID# EPA-HQ-OAR-2008-0496-0097.1. d. This comment was removed from the docket due to a draft of the comment being submitted rather than the final version. The 

final docket is comment EPA-HQ-OAR-2008-0496-0131. e. For the remainder of the document, the group of 15 reclaimer signatories are referred to as “Reclaimers without 

Allocations.” Several of these commenters submitted individual written comments. However, when summing the number of 

commenters per comment, the total of 15 commenters will be added to each section. f. Blank submission. g. Blank submission. h. Blank submission. i. Duplicate copy of EPA-HQ-OAR-2008-0496-0112.1.

j. The Alliance for Responsible Atmospheric Policy represents 47 members. Members are listed in the comment. As the 

Alliance is an established organization, when summing the number commenters per comment, the Alliance will be summed 

as a single entity rather than by individual commenters. k. AHRI submitted supplemental comments (EPA-HQ-OAR-2008-0496-0133.1) after the close of the comment period. All 

comments are listed under the original Docket ID# EPA-HQ-OAR-2008-0496-0119.1. l. Hudson Technologies submitted supplemental comments (EPA-HQ-OAR-2008-0496-0135 and -0143) after the close of 

the comment period. All comments are listed under the original Docket ID# EPA-HQ-OAR-2008-0496-0119.1. m. Solvay Fluorides submitted supplemental comments (EPA-HQ-OAR-2008-0496-0136 and -0139) after the close of the 

comment period. All comments are listed under the original Docket ID# EPA-HQ-OAR-2008-0496-0106.1. n. Arkema submitted supplemental comments (EPA-HQ-OAR-2008-0496-0137) after the close of the comment period. All 

comments are listed under the original Docket ID# EPA-HQ-OAR-2008-0496-0111.1. o. For the remainder of the document, the collective group of 25 reclaimer signatories will be referred to as “Reclaimers for 

Environmental Benefits”. Several of these commenters submitted individual written comments. However, when summing 

the number of commenters per comment, the total of 25 commenters will be added to each section. p. Late Comment q. Late Comment r. Late Comment s. Submitted to OMB through Executive Order 12866 stakeholder meeting.

All comments have been reviewed, summarized, and organized by main topics to highlight major 

issues and clarification requests pertinent to the rule. For the purpose of this comment summary, 

section organization does not follow the outline established in the Notice of Proposed 

Rulemaking document, but follows a logical order of discussion; the selection and organization 

of these section topics are based on topic frequency and relative importance. 

At the beginning of each section, an outline of topics is provided followed by a table detailing 

commenters that contributed comments, which is organized by document ID. Below each 

individual topic heading of a section, a bulleted list of comments is provided. Special attention 

was paid to ensure that comments were properly addressed with sufficient and relevant detail

extracted from their submittal. Commenters are listed at the beginning and Docket ID number is

provided in parentheses at the end of each comment.
2-1

2. ALLOCATION OPTIONS FOR HCFC-22 AND HCFC-142B 

Nineteen commenters submitted 18 comments on the various options to allocate allowances for 

HCFC-22 and HCFC-142b in 2010 through 2014. Comments were in reference to five options

presented in the proposed rule:

2.1. EPA’s Proposed Allocation Method: allocating the same percentage of baseline 

allowances on a pro-rata basis to entities that received baseline allowances in 2003

2.1.1 Support for permanent inter- pollutant and/or inter-company transfers

2.1.2 Opposition to permanent inter- pollutant and/or inter-company transfers 

2.2. Allocating allowances based on evaluation of the most recent three years of 

production, import, and/or export data

2.3. Allocating allowances based on evaluation of past sales of HCFCs by allowance 

holders by considering how HCFCs were ultimately used

2.4. Allocating allowances based on aggregated ODP tons

2.5. Allocating a total amount of allowances and allowing for purchase by establishing 

an auction system

2.5.1 Support for an auction system

2.5.2 Opposition to an auction system

Count Commenter Organization Document ID No

1 Tony Digmanese York/Johnson Controls EPA-HQ-OAR-2007-0496-0074

2 Deborah Dayton Weitron EPA-HQ-OAR-2008-0496-0076

3 Charlie McCrudden Air Conditioning Contractors of America

(Public Hearing)

EPA-HQ-OAR-2008-0496-0082

4 Jesse Combs Coolgas, Condor Products, & Discount 

Refrigerants (Public Hearing)

EPA-HQ-OAR-2008-0496-0082

5 Mack McFarland DuPont EPA-HQ-OAR-2008-0496-0097.1

6 Khar Yegparian Mondy Global, Inc EPA-HQ-OAR-2007-0496-0101.1

7 Don Magid and Charles 

Jones

Solvay Chemicals EPA-HQ-OAR-2008-0496-0106.1

8 Maureen Beatty National Refrigerants, Inc. EPA-HQ-OAR-2007-0496-0110.1

9 Emanuel (Manny) Katz Arkema EPA-HQ-OAR-2007-0496-0111.1

10 Adam T. Devoe Coolgas Inc. and Dynatemp International EPA-HQ-OAR-2007-0496-0113.1

11 Jill Tronca North Lakes Distributing, Inc. EPA-HQ-OAR-2008-0496-0115.1

12 Jose A. Armas Refricenter of Miami Inc. EPA-HQ-OAR-2008-0496-0116.1

13 Steven Bernhardt Honeywell EPA-HQ-OAR-2007-0496-0118.1

14 Peter M. Koelsch MDA Manufacturing EPA-HQ-OAR-2008-0496-0121

15 Jon Perry C.C. Dickson Co. EPA-HQ-OAR-2008-0496-0123

16 Robert Allen Kamins Altair Partners, LP EPA-HQ-OAR-2007-0496-0128

17 Francisco Palacio Refricentro INC. EPA-HQ-OAR-2008-0496-0132

2.1. EPA’s Proposed Allocation Method: allocating the same percentage of baseline 

allowances on a pro-rata basis to entities that received baseline allowances in 2003

Comments on EPA’s proposed allocation method primarily focus on the consideration of

permanent baseline transfers and/or inter-pollutant transfers as presented in Sections Error! 

Reference source not found. and Error! Reference source not found.. 
2-2

2.1.1. Support for the proposed allocation method with the permanent inter-pollutant 

transfers

The following commenters state that they support retaining existing baselines with recognition of 

inter-pollutant and/or inter-company transfers of baseline allowances.

 Solvay Chemicals states that the baseline EPA developed for the 2003 through 2009 

allocation period accurately reflected the position of both the major producers and 

consumers, based on company –specific data that EPA had collected from U.S.

companies. Solvay Chemicals recommends EPA make minimal changes to its baseline 

to reflect permanent transfers of allowances, name changes, and the sale of businesses. 

Solvay Chemicals also notes that the ability to transfer allowances between products and 

between companies provided critical flexibility to meet marketplace demands, and EPA 

should maintain the transfer mechanism as it expands coverage under the allowances to 

the other HCFCs. Arkema states they strongly support EPA’s proposal to implement the 

2010 reduction step by applying a percentage reduction to the 2003 HCFC-22 and 

HCFC-142b baselines with recognition of permanent transfers and name changes over 

the past six years. This approach is transparent, well settled, understood by the market 

participants, and consistent with expectations. To do otherwise would be to penalize 

parties for having participated in EPA’s transfer system. Arkema believes that, to be fair, 

every existing allowance holder should receive allowances for the years after 2010, 

whether or not they are active participants in the current market. Eventually, any 

allowances distributed to passive holders will find their way into circulation if needed.

EPA’s preferred approach – 2003 baselines brought up to date with permanent transfers –

would not artificially exclude any players. It would assure a level playing field. By 

incorporating the effects of trades, it would update the 2003 allowances to reflect the 

evolution of the market in response to changing conditions. [106.1, 0111.1]

EPA Response: EPA is updating the baselines for HCFC-22 and HCFC-142b to reflect 

name changes and permanent inter-company baseline transfers. Doing so reflects the 

changes in the marketplace that have occurred since the last time EPA addressed these 

baselines. When EPA allocated allowances for 2004 through 2009, the Agency made 

minor changes to reflect such permanent trades of baseline allowances. EPA agrees that

permanent inter-company baseline transfers could provide a mechanism for new entrants 

to join or expand in the HCFC-22 market or for current allowance holders to expand their 

businesses. EPA also agrees that any allowances distributed to passive holders will find 

their way into circulation if needed. This has been a mechanism by which new entrants 

have entered the HCFC allocation system in the past.

 Arkema notes in their supplemental comment that Section 607(b) requires the Agency to 

allow inter-pollutant transfers on an ozone depletion potential (“ODP”) weighted basis. 

Section 607 must be read as expressly allowing inter-pollutant trades of both production 

and consumption allowances for “any year,” including the “baseline year” as defined by 

the Clean Air Act and EPA. [0111.1]

EPA Response: After considering the language of section 607 and the legislative history, 

EPA believes that section 607(b) is best read as permitting only year-by-year interpollutant transfers. Section 607(b) states that EPA’s rules are to permit “a production 
2-3

allowance for a substance for any year to be transferred for a production allowance for 

another substance for the same year.” This language emphasizes the year-by-year nature 

of such transactions. No parallel language appears in section 607(c). That section does, 

however, provide that any inter-pollutant transfers between two or more persons must 

meet the requirements of section 607(b). Hence, EPA interprets section 607 as requiring 

that all inter-pollutant transfers, whether occurring between companies or within a single 

company, be conducted on a yearly – and thus temporary – basis.

EPA does not read the phrase “any year” in 607(b)(1) to include the baseline year, as 

suggested by the commenter. Rather, EPA believes this phrase refers to any subsequent 

control period. 

 Arkema states in their supplemental comment that if an allowance for substance A in any 

one year could be converted to an allowance for substance B in a subsequent year, then 

no “reduction” would occur in the latter year as required under Section 607(a) (regardless 

of any offset that might be applied), and the United States would be at risk of violating 

the Montreal Protocol (because, on an ODP weighted basis, the total number of expended 

EPA allowances then could be greater than the U.S. cap under the Protocol). Those 

problems cannot arise when permanent trades of allowances for the baseline year are 

made, or when a trade in any year otherwise has a permanent effect such that a reduction 

carries forward through the life of EPA’s allowance program. [0111.1]

EPA Response: Under section 607(b) an allowance for Substance A can only be 

converted to an allowance for Substance B in the same year, not for any subsequent year. 

Thus, the hypothetical situation would not arise. 

 Arkema states in their supplemental comment that it is not aware of any commenter 

previously having taken the position that section 607 actually limits industry flexibility 

by somehow creating a mandatory expiration date for all inter-pollutant transfers. On the 

other hand, for years EPA has been interpreting the statute as allowing permanent interpollutant baseline trades. [0111.1]

EPA Response: EPA disagrees that it has been interpreting the Clean Air Act as allowing 

permanent inter-pollutant baseline trades. EPA decided in the 2003 rule to “allow 

permanent transfers of baseline allowances with those allowances disappearing at the 

phaseout date for the specific HCFC, regardless of what inter-pollutant transfers had 

taken place” (68 FR 2835). Thus, EPA has allowed for permanent inter-company 

transfers but noted that any inter-pollutant transfers are not carried forward into the 

future. Only one company has consistently used year-by-year inter-pollutant trades and 

commenters have not raised this subject because it has not been an issue before this 

rulemaking.

 

 Arkema in their supplemental comment addressed two pie charts of HCFC-22 allowances

found in another commenter’s submission: one without and one with permanent interpollutant transfers. Arkema states that the chart with inter-pollutant transfers more closely 

approximates existing positions in the after- market, which will be the only domestic 

outlet for HCFC-22 after 2009. Refusing to recognize baseline transfers would upset 
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existing relationships in and business planning for HCFC-22 after- market sales without 

yielding any environmental benefit. [0111.1]

EPA Response: Making permanent the prior inter-pollutant trades would have effects on 

the broader allocation that would not align with the current market. To maintain the total 

production and consumption caps under the Montreal Protocol, all of the other market 

participants would receive fewer allowances to compensate for the increase to the 

companies that transferred allowances. Thus, the distribution of allowances among all 

the other companies and related to the market as a whole would not be more accurate.

Second, trying to most closely match the after-market is not the only goal of the 

allocation system provided for in this rule. The Agency did consider the market 

disruption that could occur under the 5 alternative scenarios for allocating allowances and 

this was one consideration for allocating allowances based on a smaller percentage of the 

existing baseline. However, avoiding market disruption and most closely matching the 

future HCFC-22 after-market are two separate issues. EPA rejected an alternate approach

whereby EPA would allocate allowances based on an evaluation of past sales of HCFCs 

by allowance holders by considering how the HCFCs were ultimately used (e.g., 

servicing refrigeration or air-conditioning vs. original manufacture of refrigeration or airconditioning equipment and foam blowing). This approach was specifically designed to 

closely match the anticipated after-market distribution channels. No commenter favored 

this approach, including this commenter here.

 Solvay Fluorides comments that including permanent transfers in the updated baseline 

would not distort the marketplace or create confusion for producers and consumers. 

Solvay Fluorides states that for each of the past three years (2006-2008), they have 

converted at least 95% of their HCFC-142b allowances into HCFC-22 allowances, which 

were then consumed to meet the needs of their U.S. customers engaged primarily in the 

aftermarket service of refrigeration equipment. A decision to exclude their inter-pollutant

transfers would disrupt many years of sales to the refrigerants aftermarket – the market 

niche that will remain the longest.

In addition, as Solvay Fluorides is a relatively small market supplier of HCFC-22 in 

comparison to Honeywell, DuPont, and Arkema, the inclusion of the permanent transfers 

of Solvay Fluoride’s HCFC-142b to HCFC-22 allowances would only increase the total 

quantity of consumption allowances would only increase the total quantity of 

consumption allowances in the baseline by 1 percent. Therefore, approximately 85% of 

the baseline would continue to be held by only the three companies noted above, and it 

would be very unlikely that this would affect manufacturing decisions that domestic 

producers will make related to staffing needs considering the size of their operations. 

The commenter states that to maintain strong competition, it is important that multiple 

suppliers remain the marketplace. Therefore, allowing Solvay Fluorides to continue its 

historical practice of making HCFC-22 allowances for the import of product for sale to 

the servicing market would help achieve this objective. [106.1]
2-5

EPA Response: EPA recognizes that Solvay Fluorides has transferred most of its 

allowances of HCFC-142b to HCFC-22 in each of the control periods 2006-2008, as is 

allowed under section 607(b). These annual transfers have provided flexibility to Solvay 

Fluorides to engage in the HCFC-22 market with limited HCFC-22 baseline allowances. 

These transfers have not resulted in any market disruption because the effect is to only 

increase Solvay Fluoride’s allowances for the year, not decrease the allowances of other 

companies as well.

EPA also agrees that due to its small size, were Solvay Fluorides the only company that 

had engaged in, and from this point forward will engage in, the permanent transfer of 

baseline allowances, there would still not be a significant disruption to the marketplace, 

though there would be some effect on the allocation amounts of other companies. 

However, Solvay was not the only company that sought to engage in permanent transfers, 

and additional companies could seek to do the same in future. EPA’s greatest concern is 

that all other companies could seek to permanently transfer their allowances from one 

substance to another. It is that action that would introduce the greatest uncertainty into 

the marketplace.

Adjusting the baselines to reflect intra-company, inter-pollutant transfers could create 

incentives for future manipulation of the allocation system in anticipation of the future 

control periods. For example, in 2020 EPA will no longer be issuing HCFC-22 

allowances. EPA has anticipated that companies with HCFC-22 allowances would no 

longer be in the HCFC market at that date if they did not hold allowances for other 

HCFCs that are still allowed after 2020. For example, if EPA were to establish an 

allocation framework based on inter-pollutant trades, in 2019 companies with HCFC-22 

allowances could convert them all to allowances for HCFC-123 or some other compound 

for which allowances are available and thus remain in the market. As another example, 

in 2015 a producer or importer that previously had not participated in the HCFC-123 

market could dominate that market by converting its HCFC-22 allowances in 2014 to 

HCFC-123 allowances. Given the different ODPs of HCFC-22 and HCFC-123, 

converting one allowance of HCFC-22 would result in 2.75 allowances of HCFC-123. 

Also, since companies hold many more HCFC-22 allowances than HCFC-123 

allowances, converting those HCFC-22 allowances would have an overwhelming effect 

on the current HCFC-123 allowance holders. In effect, establishing allocations based on 

permanent inter-pollutant transfers would transform the U.S. HCFC phasedown from a 

chemical-by-chemical phaseout, as established under the “worst-first” approach in the 

1993 rule, to an ODP-weighted phasedown. Under an ODP-weighted phasedown, 

allowance holders could permanently transfer their production and import of specific 

HCFCs so long as the total ODP cap is not affected. Companies that do not transfer their 

allowances, however, would remain holding a smaller percentage of the total ODP cap, 

and thus would be left with fewer allowances. The ODP-weighted method was rejected 

in both the 2003 rule and this rule, though EPA did take comment on it in the proposal.
2-6

2.1.2. Support for the proposed allocation method without permanent inter-pollutant 

transfers

Condor Products, Discount Refrigerants, DuPont, Mondy Global Inc., NRI, Coolgas Inc. and 

Dynatemp International, Refricenter of Miami Inc, Honeywell, MDA Manufacturing, C.C. 

Dickson Co., Altair Partners LP, and Refricentro Inc. oppose EPA’s proposal to make permanent

previous inter-pollutant transfers. These commenters request that EPA utilize the 2003 baseline 

as the most-equitable way of reducing and allocating allowances among the entire community. 

[0082, 0097.1, 0101.1, 010.1, 0113.1, 0116.1, 0118.1, 0121, 0123, 0128, 0132]

 DuPont, Mondy Global Inc., Coolgas Inc. and Dynatemp International, Refricenter of 

Miami Inc, Honeywell, MDA Manufacturing, C.C. Dickson Co., Altair Partners LP, and 

Refricentro Inc. state that making prior inter-pollutant transfers permanent would result in 

an inequitable redistribution of allowances. In effect, this would increase the aggregate 

amount of baseline production allowances for HCFC-22 by 17% and the aggregate 

amount of baseline consumption allowances for HCFC-22 by 19% in a non-uniform 

manner that shifts market share. The 2003 baseline in the Federal Register for R-22 was 

119,284,000 kg. The 2003 baseline in the Proposed Rule, which allows inter-pollutant

trades to become part of the new baseline, is 141,865,000 kg, a difference of 20 million

kg. The transfer would result in a net increase of nearly 5 million kg of HCFC-22 

consumption allowances for Arkema and 1 million kg for Solvay. 19 other companies, 

including all three U.S. based manufacturers and the U.S. industry servicers, would

receive a permanent reduction in their HCFC-22 consumption allowances, in the amounts

shown in the table provided by Honeywell:

Table 1: Permanent inter-pollutant transfers and impact on U.S. companies

Company Allowances(kg)

DuPont -2,572,863

Honeywell -2,346,010

National Refrigerants -366,447

Ineos Fluor Americas -168,783

MDA Manufacturing -168,468

Kivlan and Company -137,941

Coolgas -39,157

Refricenter of Miami -25274

Discount Refrigerants -24,879

Altair Partners -20,019

Mondi-Global -18,681

ABCO -18,518

Condor Products -4961

R-Lines -4,187

Auto Equipment Sales -3,585

Refricentro -3,048

HG Refrigeration Supply -2,656

Saez Distributors -2,515

Full Circle -985

EPA Response: EPA is concerned about the effect that making permanent previous interpollutant transfers will have on the rest of the entities in the marketplace. While EPA 

proposed to make permanent both the inter-company and the inter-pollutant transfers, 
2-7

EPA recognizes now that the two are different in substantial ways. Permanent baseline 

trades between companies do not change the total number of allowances nor affect 

anyone not engaged in the transfer. What is purchased by one company is simply 

subtracted from another company; the overall “pie” and the other market participants 

remain unaffected. Making prior inter-pollutant trades permanent would change the 

overall number of allowances and, as discussed above, all other market participants’ 

allocations are adjusted to account for the change. Under the proposed rule, the effect 

would be a 15.85% reduction to all the other participants. EPA is concerned not only 

with the 15.85% reduction that would be the result in this rule but also the potential for 

future market manipulation, as discussed above and in the preamble. 

 Coolgas/Dynatemp, DuPont, and Honeywell agree that allowing transfers is contrary to 

Clean Air Act language. The language of section 607 of CAA is clear that inter-pollutant 

transfers are authorized only on a year-to-year basis, and should not be considered 

“permanent.” There is no apparent authority for EPA to allocate baseline on expired year 

to year inter-pollutant transfers. [0113.1, 0097.1, 0118.1]

EPA Response: EPA provides its interpretation of section 607 above and in the preamble.

 Honeywell states that the limits on the Agency’s authority to grant permanent interpollutant transfers is reinforced by the legislative history of the 1990 Clean Air Act 

Amendments, which demonstrates that Congress intended to limit inter-pollutant 

transfers to the current year. [118.1]

EPA Response: The Senate bill used a “basket” approach to the phaseout of ozonedepleting substances, requiring reductions on an ozone-depletion potential (ODP) 

weighted basis. The phaseout provisions contained in that bill would have prohibited 

“any person” from producing ODS in “annual quantities” greater than the ODP-weighted 

amount of ODS produced by that person in the baseline year.1 While this language does 

not refer specifically to inter-pollutant transfers, the concept of intra-company, interpollutant transfers in inherent in an ODP-weighted approach. The Statement of Senate 

Managers explained that “a producer may decide to reduce CFC-11 by an amount greater 

than is required in a given year and, in the same year, be authorized to produce a greater 

amount of CFC-113 than would otherwise be allowed.”2

 The Senate bill did not contain 

language permitting any other types of transfers. 

The House bill, in contrast, took a chemical-to-chemical approach to the phaseout. It 

directed EPA to promulgate rules providing for inter-company transfers. Such rules were 

to allow “any person” to produce “a class I or class II substance in annual quantities 

greater than those specified” by acquiring production allowances from another person 

who would be subject to “an enforceable and quantifiable reduction in the annual 

 1

 S. 1630 as passed the Senate, A Legislative History of the Clean Air Act Amendments of 1990, vol. 3, 

4760.

2

 Chafee-Baucus Statement of Senate Managers, S.1630, A Legislative History of the Clean Air Act 

Amendments of 1990, vol. 1, 927. 
2-8

production of such substance.”3 The phrase “such substance” would have limited this 

provision to exchanges of allowances for the same substance. The House bill contained 

no language explicitly providing for inter-pollutant transfers. Nor were such transfers 

inherent in the chemical-by-chemical approach adopted in the House bill. 

The exchange provision in the House bill could have applied to both year-by-year and 

permanent inter-company transfers of allowances for a single pollutant. But the interpollutant transfers allowed under the ODP-weighted approach in the Senate bill would 

have been conducted solely on a year-by-year basis. The concept of permanent interpollutant trades has no relevance in an ODP-weighted system because the company 

baselines are not associated with particular pollutants. 

Thus, neither the House nor the Senate bill contemplated permanent inter-pollutant 

transfers. There is no indication that the conference agreement was intended to introduce 

this concept. We agree with the commenter that the legislative history of the 1990 Clean 

Air Act Amendments supports the view that section 607 does not provide for such 

transfers. 

 Coolgas/Dynatemp state that with few exceptioms, the impacted entities from EPA’s 

proposal to make permanent previous inter-pollutant transfers are small businesses with 

fewer than 20 employees. Refricenter of Miami Inc. notes that the proposed allowance 

schedule results in a loss to them of 25,274 kg of HCFC allowances per year while the 

same represents a loss of approximately $227,000 in annual sales revenues. Refricentro 

Inc. also notes that the proposed allowance schedule results in a loss of approximately 

$26,625 in annual sales revenues for their company. [0113.1, 0116.1, 0132]

EPA Response: EPA recognizes that adjustments to the allocation amounts can 

negatively affect the importers/producers that market the relevant compounds. This 

effect may likely be felt more by small businesses that receive a larger part of their 

income from the import of these compounds. 

 

 Coolgas/Dynatemp favors “option 1” but states that option 1 should consider intercompany sale of baseline allowances, but should exclude intra-company, inter-pollutant 

transfers. Nothing in the 2003 rulemaking suggested that companies would be able to 

increase their relative percentage of the baseline by making intra-company, interpollutant transfers. Coolgas/Dynatemp states that if the original and continuing intent is 

to prevent companies from gaining market share by making their baseline demand appear 

greater, the proposal to allow inter-pollutant transfers runs directly contrary to that goal.

[0113.1]

EPA Response: EPA discusses reasons for including inter-company transfers above and 

in the preamble. EPA agrees that it did not signal in the 2003 Allocation Rule that 

companies could increase their relative percentage of the baseline by conducting intracompany, inter-pollutant transfers. EPA now recognizes the market disruption that such 

 3

 S. 1630 as passed the House, A Legislative History of the Clean Air Act Amendments of 1990, vol. 2, 

2384, 2387-2388. 
2-9

transfers could cause in the 2010-2014 control periods covered by this rule as well as 

later control periods. 

 National Refrigerants, Inc. states that recognizing inter-pollutant transfers will have an 

adverse effect not only on producers and importers of but also on their distributors and 

customers, resulting in a dramatic market distortion. Similarly, Honeywell states that 

customers will be forced to scramble to identify new sources of HCFC-22 as certain 

producers and importers may not be able to meet anticipated customer demand based on 

the changed number of allowances that they will receive. [0110.1, 0118.1]

EPA Response: EPA agrees that producers and importers are not the only entities affected 

by EPA’s choice of allocation option (Options 1-5) and its decision whether or not to 

consider making permanent prior inter-pollutant transfers. EPA has considered the 

effects on distributors, OEMs, and customers in its decision to select Option 1 without 

accounting for permanent inter-pollutant transfers. 

 North Lakes Distributing, Inc. states that transferring allocations from one type of HCFC 

to another, whether permanently or not, allows companies with greater access to 

information and resources to cross from one market to another. This will concentrate the 

allocation in fewer entities and harm competition. [0115.1]

EPA Response: In general the transfer mechanisms in section 607 increase flexibility and 

can encourage shifts in the marketplace, including allowing for new entrants.

 Refricenter of Miami Inc. states that HCFC-142b is a blowing agent that will be replaced 

by other chemicals and therefore these two companies’ HCFC-142b allowances should 

have been retired and not credited to their baseline of HCFC-22. EPA’s decision to allow 

for the credit of inter-pollutant transfers contradicts the 2003 rulemaking which called for 

a reduction as opposed to a redistribution of HCFC allowances. C.C. Dickson Co.

believes that the proposed allocation would give preferential treatment to a small subset 

of wholesalers that have long-standing supply relationships with both of the companies 

that applied for permanent HCFC-142b transfers. Traditionally the HCFC-22 service 

market was supplied by HCFC-22 allowance holders. HCFC-142b allowances were used 

in the foam blowing market. Honeywell states that reasons for limiting inter-pollutant 

trades to current-year include: 1) otherwise allowances could have a virtually perpetual 

life, as producers and importers transferred them from substances that were being phased 

out to substances that had not yet been phased out; and 2) Congress wanted to provide 

short-term flexibility for manufacturers to respond to the market, but not long-term 

flexibility. [0116.1, 0118.1, 0123]

EPA Response: EPA agrees that in effect, establishing allocations based on permanent 

inter-pollutant transfers would transform the U.S. HCFC phasedown from a chemical-bychemical phaseout, as established under the “worst-first” approach in the 1993 rule, to an 

ODP-weighted phasedown. Under an ODP-weighted phasedown, allowance holders 

could permanently transfer their production and import of specific HCFCs so long as the 

total ODP cap is not affected. Companies that do not transfer their allowances, however, 
2-10

would remain holding a smaller percentage of the total ODP cap, and thus would be left 

with fewer allowances. The ODP-weighted method was rejected in both the 2003 rule 

and this rule.

 DuPont believes that the three tables in the proposed rule should be changed to those 

shown below (see Table 2, Table 3, and Table 4) to remove the proposed inter-pollutant 

transfer adjustment to baseline allocations as well as to provide for year-by-year 

reductions in HCFC-22 allowances. Year-by-year reductions would increase recovery 

and reuse and encourage a gradual reduction of demand thereby avoiding “shock” to the 

U.S. economy caused by significant shortages of HCFC-22 in 2015. DuPont also states 

that each chemical should continue to be viewed independently, looking at projected 

marketplace need and the impact to the economy that would be caused if supplies are 

unavailable. [0097.1]

Table 2: Suggestion for alternate proposed percent of baseline

Control 

Period

HCFC-141b HCFC-22 HCFC-142b HCFC-123 HCFC-124 HCFC225caHCFC225cb

2003 0 100 100 -- -- -- --

2004 0 100 100 -- -- -- --

2005 0 100 100 -- -- -- --

2006 0 100 100 -- -- -- --

2007 0 100 100 -- -- -- --

2008 0 100 100 -- -- -- --

2009 0 100 100 -- -- -- --

2010 0 41.88 0.475 125 125 125 125

2011 0 38.15 0.475 125 125 125 125

2012 0 34.41 0.475 125 125 125 125

2013 0 30.68 0.475 125 125 125 125

2014 0 26.94 0.475 125 125 125 125

Table 3: Suggestion for production allowance distribution among allowance holders 

without an inter-pollutant transfer adjustment

Person Controlled Substance Baseline Allowances (kg)

AGC Chemicals Americas HCFC-225ca 266,608

HCFC-225cb 373,952

HCFC-22 28,219,223

HCFC-141b 24,647,925

Arkema

HCFC-142b 16,131,096

DuPont HCFC-22 42,638,049

HCFC-124 2,269,210

HCFC-22 37,378,252

HCFC-141b 28,705,200

HCFC-142b 2,417,534

Honeywell

HCFC-124 1,804,121

MDA Manufacturing HCFC-22 2,383,835

Solvay Solexis HCFC-142b 6,541764

Table 4: Suggestion for consumption allowance distribution among allowance holders 

without an inter-pollutant transfer adjustment

Person Controlled Substance Baseline Allowances (kg)
2-11

Person Controlled Substance Baseline Allowances (kg)

ABCO Refrigeration Supply HCFC-22 279,366

AGC Chemicals Americas HCFC-225ca 285,328

HCFC-225cb 286,832

Altair Partners HCFC-22 302,011

HCFC-22 29,524,481

HCFC-141b 25,405,570

HCFC-142b 16,672,675

Arkema

HCFC-124 3,719

Auto Equipment Sales HCFC-22 54,088

Condor Products HCFC-22 74,843

HCFC–124 3,746

Continental Industry Group HCFC-141b 20,315

Coolgas, Inc HCFC-141b 16,097,869

HCFC–123 20,000

Coolgas Investment Property HCFC-22 590,737

HCFC-22 38,814,862

HCFC-141b 9,049

HCFC-142b 52,797

HCFC–123 2,933,906

DuPont

HCFC–124 743,312

Full Circle HCFC-22 14,865

H.G. Refrigeration Supply HCFC-22 40,068

HCFC-22 35,392,492

HCFC-141b 20,749,489

HCFC-142b 1,315,819

Honeywell

HCFC–124 1,284,265

ICC Chemical Corp HCFC-141b 81,225

ICOR HCFC–124 81,220

Ineos Fluor Americas HCFC-22 2,546,305

Kivlan and Company HCFC-22 2,081,018

MDA Manufacturing HCFC-22 2,541,545

Mondy Global HCFC-22 281,824

HCFC-22 5,528,316

HCFC–123 72,600

National Refrigerants

HCFC–124 50,380

Refricenter of Miami HCFC-22 381,293

Refricentro HCFC-22 45,979

R-Lines HCFC-22 63,172

Saez Distributors HCFC-22 37,936

Solvay Fluorides HCFC-22 413,509

HCFC-141b 3,940,115

Solvay Solexis HCFC-142b 3,047,386

HCFC-141b 89,913

HCFC–123 34,800

Tulstar Products

HCFC–124 229,582

EPA Response: EPA agrees that as a result of not including permanent inter-pollutant 

transfers the values in Table 2 for HCFC-22 and HCFC-142b in 2010 would be similar to 

those in 40 CFR 82.16. EPA also agrees that the values in Table 3 and Table 4 match 

those that EPA generated by not accounting for the inter-pollutant transfers, with some 

exceptions to particular entities that had provided additional/revised data as discussed in 
2-12

the preamble. EPA responds to the suggestion for year-by-year reductions in HCFC-22 

allowances below.

 Honeywell states that the companies that benefit from the proposed allocation that 

includes inter-pollutant transfers are foreign manufacturers. Foreign producers are 

already advantaged as those in China receive financial benefits such as Clean 

Development Mechanism credits and lower HF costs. [118.1]

EPA Response: EPA has not based its allocation on whether a producer is a domestic or 

foreign company. Regardless, EPA is not incorporating inter-pollutant transfers in the 

baselines calculated for the 2010-2014 control periods.

 C.C. Dickson Co. recommends a methodology that would use the 2003 baselines, 

allowing for permanent intra-company HCFC-22 transfers only, and then reduce the 

allowances on a consistent manner for all parties. [0123]

EPA Response: EPA responds to this comment in favor of adjusting the baseline to 

reflect intra-company transfers above and in the preamble

 HARDI appreciates EPA’s willingness to consider alternative allocation systems, but 

does not believe EPA has adequate time to significantly alter the current allocation 

system. Further, this commenter’s distributors rely heavily on certainty that their 

significant investments to forge, build, and grow their supplier relationships will continue 

to generate returns for the foreseeable future, and any major disruption to the current 

allocation system at this late date could erode and nullify these distributor investments.

[0117.1]

EPA Response: EPA recognizes the importance of having time for industry to adopt the 

regulations and has sought to finalize this rule as quickly as practicable. 

2.1.3. General opposition to the proposed allocation system

Three commenters provided alternative allocation methods based on the position that domestic 

manufacturers should be favored over foreign manufacturers.

 Weitron states EPA appears to have rewarded companies who import HCFCs rather than 

those that use American-made products. The commenters propose that the two companies 

(DuPont and Honeywell) with current U.S. manufacturing facilities should be awarded a 

fair share (25% of either their existing allocation or the average amount they produced in 

the last couple of years) of the allocation since they will be able to realize a reasonable 

return on their investments. The rest of the ODP allocation should be up for auction 

limited to U.S. companies (below a maximum amount). To benefit smaller companies, 

the amount auctioned at one time could be small. North Lakes Distributing states that the 

current allocation system disproportionately rewards imported, rather than domestic 

product. The commenter suggests that consumption allowances be allowed to be used for 

domestic purchases without retiring the production allowances of domestic 

manufacturers. Williams & Associates state that U.S. manufacturing, which provides 
2-13

jobs, is adversely affected because these products are not only acquired abroad they are 

packaged abroad. If the EPA were to consider the current economic climate, these rights 

have a value of $1.4 billion. [0076, 0115.1, 0140]

EPA Response: EPA has not based its allocation on whether a producer is a domestic or 

foreign company. EPA granted allowances to all companies that were engaged in the 

HCFC market between 1994 and 1997 regardless of nationality. EPA believes that it 

should maintain the current baseline to foster stability in the marketplace. Suddenly 

limiting the market to domestic producers would disrupt the market. Furthermore, EPA 

disagrees with the suggestion that consumption allowances be used in lieu of production 

allowances if the production occurs domestically. Because the Protocol has instituted 

both a consumption and production cap, both types of allowances must be allocated and 

expended as appropriate.

2.2. Allocating allowances based on evaluation of the most recent three years of 

production, import, and/or export data

 York/Johnson Controls, Coolgas, Condor Products, and Discount Refrigerants state that 

EPA should base the 2010-2014 allocation on the three most recent years of actual HCFC 

production and import. This option is fair because it would truly reflect what each 

participants’ real market share is or their participation in the business in the current 

period. This method would also avoid controversial issues of transfers, market segment 

movements, and the complicated auction systems. [0074, 0082]

EPA Response: EPA agrees that this approach offers a transparent design for allocating 

allowances, similar to Option 1. However, EPA is not convinced that 2004-2006 sales 

data would more accurately reflect the marketplace in 2010 than the original 1994-1997 

baselines. Starting in 2010, the only use of virgin HCFC-22 will be for servicing existing 

equipment. Therefore, the segment of the market in which HCFC-22 was produced for 

new equipment will no longer exist. While it is true that the 1994-1997 baseline has the 

same shortcoming, the existing baseline is well-vetted and known by all market 

participants. This alternate option would require the Agency to disregard the existing 

baseline in its entirety. This would minimize the value of establishing a baseline and lead 

to market uncertainty. EPA seeks instead to minimize unanticipated changes and prevent 

market disruptions. Finally, EPA believes it is appropriate to address the issue of interpollutant transfers and discusses the subject above.

 Solvay states that they do not support this option as it would penalize companies that did 

not use all of their allowances. It would also raise questions about the accuracy of data. 

Arkema states that the use of the last three years’ data would 1) reward entities that 

continued supplying HCFC-22 for new appliances instead of switching to alternatives, 2) 

rearrange the market by giving a non-representative share of servicing business to entities 

that have been supplying refrigerant for use in new equipment, and 3) disrupt the market 

by taking away allowances from entities who decreased production or import, thereby 

gaining environmental benefits. Furthermore, it would be a poor indicator of servicing 

needs and would result in a non-representative allowance system. [0106.1, 0111.1]
2-14

EPA Response: EPA discusses above how the market for virgin HCFC-22 is changing in 

2010 and thus recent sales data will not accurately reflect the 2010-2014 market. This 

commenter raises additional equity concerns with moving to a different system. As 

discussed in the preambles to both the proposed and final rules, each of these five 

methods offers advantages and disadvantages for potential allowance holders that vary

according to, among other things, whether a particular entity currently sells HCFC-22 and 

HCFC-142b to original equipment manufacturers, wholesalers, retailers, or companies 

that service appliances; whether the portion of its business that is ODS-based is

expanding or contracting as the next major milestone in the phaseout approaches; and 

whether it sold HCFCs for applications that do not lend themselves to servicing. EPA 

does not seek to select winners and losers in its method of allocation, recognizing that 

any method will be more favorable for some and less favorable for others. EPA’s 

primary considerations are allocating HCFC-22 and HCFC-142b allowances in a manner 

that is the least disruptive to the current market and best ensures a continued smooth 

transition away from ozone-depleting substances. EPA believes that maintaining the 

existing baseline, with minor adjustments to account for inter-company transfers, 

maintains the greatest stability. 

2.3. Allocating allowances based on evaluation of past sales of HCFCs by allowance 

holders by considering how HCFCs were ultimately used

 Solvay Chemicals states they do not endorse this option as it feels the option would be 

very difficult to distinguish what the final use of HCFC-22 actually was over a three year

period when companies were under no obligation to maintain such records. Also, as 

significant quantities of product are sold through extensive distribution networks, the end 

use for these volumes would be difficult to establish accurately. Arkema states that this 

option could result in a representative baseline in that future after-market needs could be 

based on after-market sales. This option, however, would embroil the Agency and 

industry in a lengthy information gathering process; Arkema warns that the 2010 phasedown is fast approaching. Coolgas/Dynatemp states that adjusting allowances based on 

past sales presents an enormous logistical burden for allowance holders and EPA. Such a 

proposal is unworkable and would result in substantial delays in publishing a final rule 

and allocating baseline allowances for 2010. [0106.1, 0111.1, 0113.1] 

EPA Response: EPA agrees that this option may present challenges to implement. While 

EPA could request the sales data via its information gathering authority under Section 

114 of the CAA for the years 2004 to 2006 this would result in additional burden on 

producers and importers. This burden on stakeholders is heightened given they do not 

typically collect and maintain this data. Companies with multiple sales offices or 

secondary distributors may face an especially cumbersome burden in gathering their 

detailed sales data.

 Coolgas/Dynatemp states there is no apparent reason for reducing the allowances based 

on the sale of HCFCs other than to penalize HCFC stockpiling. Such a method would 

present a major disruption in the market and would force difficult regulatory decisions 

about what constitutes inventory. [0113.1]
2-15

EPA Response: EPA’s reason for presenting this option in the proposal was to minimize 

disruption to the servicing market. As discussed above, EPA believes that maintaining 

the existing baseline, with minor adjustments to account for inter-company transfers, 

maintains the greatest stability.

2.4. Allocating allowances based on aggregated ODP tons

 Arkema states that, ideally, allowances would have been allocated in 2003 strictly on the 

basis of aggregated ODP-tons. This method is more closely tied to the overall objective 

of preserving the ozone layer. Second it would minimize EPA intervention in the market 

because the Agency would no longer have needed to predict supply and demand for 

individual chemicals. The NPRM’s preferred approach is the next best thing because it 

approximates the results of an ODP-based system with a chemical-by-chemical approach 

and the flexibility for trading. Arkema also believes different percentages could be used 

as long as trading before June 16, 2008, is fully recognized because trading portrays 

market directions and best approximations on an ODP-system. [0111.1]

EPA Response: At this point in the phaseout, EPA does not believe that it would be 

appropriate to switch to an ODP-weighted allocation. EPA raised, and rejected, this 

option in 2003 when it initially established baselines and allocated production and 

consumption allowances for HCFCs. In 2003, EPA applied a “worst first” approach to 

the phaseout of HCFCs and set limits only on HCFC-141b, HCFC-22, and HCFC-142b. 

Moving to an ODP-weighted allocation system at this point would disrupt the market and 

not reflect the market decisions made between 2003 and 2009.

 Coolgas/Dynatemp does not support allocating based on aggregated ODP tons because 

there is no existing precedent or method and would result in a drastic departure from the 

existing and successful allocations system. [0113.1]

EPA Response: EPA agrees that this option would be a departure from the existing 

allocation method and is instead using option 1.

2.5. Allocating a total amount of allowances and allowing for purchase by establishing an 

auction system

2.5.1. Support for an auction system

Three commenters support EPA using an auction system.

 Weitron and North Lakes Distributing Inc. state that EPA’s current allocation is arbitrary 

and provides a large windfall to a limited number of companies while excluding others. 

North Lakes Distributing Inc. states that having a greater number of companies and a 

wider distribution of market participants (as could be achieved under an auction system) 

would bring competition, stability, and be closer to free market situation in the current

cap and trade scenario. This commenter also disagrees with the argument that current 

allowance holders have made a major capital investment that merits protection. [0076, 

0115.1]
2-16

EPA Response: EPA disagrees that the allocation for either the 2003-2009 control periods 

or the 2010-2014 control periods is arbitrary. EPA has chosen to allocate allowances to 

companies that participated in the HCFC market prior to any regulation by EPA. Section 

601(2) states that EPA may select “a representative calendar year” to serve as the 

baseline for HCFCs. In the 2003 allocation rule, EPA selected the years 1994 through 

1997. EPA concluded that allocating to all companies active prior to any notice of an 

upcoming rulemaking “most accurately reflects the true HCFC market in the United 

States during that period” (68 FR 2824). By selecting a year before 1997, EPA avoided 

creating an uneven playing field that skews allocations to those companies with ample 

resources and good access to information that could significantly increase activity or 

enter the HCFC import market to have activity on record. 

As discussed in the preamble, EPA provided an exception allowing new entrants 

provided that they began importing after the end of 1997 but before April 5, 1999, the 

date the advanced notice of proposed rulemaking was published. EPA believed that 

small businesses might not have been aware of the impending rulemaking that would 

affect their ability to continue in the HCFC market. However, EPA’s intent has been to 

limit the number of entities in the HCFC market as the compounds are being phased out. 

While EPA acknowledges that not having allowances can be a barrier to entry into this 

market, EPA does not believe it is necessary or appropriate to adopt a particular 

regulatory approach specifically for the purpose of encouraging new entrants at this point 

in a phaseout. As stated in the 2003 allocation rule “businesses that desired an allocation 

of HCFC allowances would have known the risks of jumping into the business at this 

juncture” (66 FR 38073). Since that statement eight years ago, access to information and 

knowledge of the risks regarding entering the HCFC-22 market have only increased. 

Furthermore, new entrants have entered the market by purchasing consumption 

allowances, as EPA predicted they could back in 2003. These entities can continue to 

purchase consumption allowances or import substitutes for HCFCs. 

As the market continues to decrease, EPA does not believe that providing consumption 

allowances to these or other new entities is necessary to prevent disruption to the 

continued servicing of existing equipment. Given EPA’s intent to phase down, and 

ultimately phase out, the use of HCFC-22, consistent with the requirements of the CAA 

and obligations under the Montreal Protocol, EPA believes it is justified in continuing to 

allocate only to those entities who participated in the market at the initial stages as well as 

those that have entered the market by purchasing HCFC-22 baseline allowances in 

accordance with the established practices. EPA therefore does not believe that auctioning 

allowances for the purpose of opening up the market to new entrants is appropriate at this 

time given the disruption it would create to the existing regulatory framework.

 ACCA states its members are intrigued by the allocation auction proposal. Should EPA 

select this option, ACCA recommends that auction proceeds go towards paying for tax 

incentives for the purchase of high-efficiency appliances and the enforcement of the 

Section 608 laws, and not be directed to the general fund. Weitron recommends that EPA 

use auction revenue to support the recycling and reclamation industry. North Lakes 
2-17

Distributing Inc. recommends that proceeds from the auction could go to fund efforts 

such as education and enforcement that foster reclamation. [0076, 0082, 0115.1]

EPA Response: Regardless of how the proceeds of an auction are directed, EPA is not 

utilizing an auction method given the disruption it would create to the existing regulatory 

framework. However, EPA believes that any proceeds from an auction would have to be 

directed to the Treasury rather than any particular project determined by the Agency. 

2.5.2. Opposition to an auction system

Five commenters oppose an auction system.

 Solvay Chemicals does not believe that the auctioning of allowance rights is a viable 

alternative as it would be a dramatic change from the current approach. NRI notes that 

an auction would be contrary to EPA’s stated goals as it would substantially and 

unnecessarily raise the cost of refrigerants and equipment to the industry and ultimately 

to the consumer. Such a system would also cause administrative delays, as well as 

contradict the stated goal of equality and create uncertainty in the market, and would be 

imposed without adequate time for preparation and market conditioning. Arkema states 

that suddenly switching to an auction system would upset years of decision making 

regarding investments in and rationalization of production. Coolgas/Dynatemp states that 

both companies have invested millions of dollars in infrastructure, transportation, and 

related overhead costs to establish and maintain their operations. Auctioning the 

allowances would put these investments at risk for no apparent environmental benefit. 

The commenter asks why EPA would now seek to encourage new entrants or claims for 

allocations after EPA disallowed any new entrants in 2003. Altair strongly opposes the 

auctioning of allowances, as they are a small business which has committed much time 

and expense in acquiring baseline allowances since 2003. [0106.1, 0110.1, 0111.1, 

0113.1, 0128]

EPA Response: EPA agrees that moving to an auction system would upset the business 

planning made by companies that purchased their way into the allocation system. EPA 

has noted before that there are risks associated with entering the HCFC production and 

import market due to it being a regulated market. However, EPA has discussed how new 

entrants can join the market by purchasing permanent baseline allowances from other 

allowance holders: “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” (66 FR 38073). 

EPA seeks to minimize unanticipated changes and prevent market disruptions. Of all the 

options, applying a uniformly smaller percentage of the existing baseline (option 1) as the 

method for allocating HCFC-22 and HCFC-142b allowances is the least disruptive to the 

current market and best ensures a continued smooth transition away from ozonedepleting substances.

 Solvay Chemicals states that the auction option contains significant uncertainties, 

including whether or not there is ample time to implement such a complex undertaking. 
3-18

Arkema states that an auction system cannot be developed and implemented in time to 

keep the refrigerant market functioning. [0106.1, 0111.1] 

EPA Response: EPA agrees that option 1 limits administrative burden for allowance 

holders and can be implemented more quickly than other options.

3. MEETING HCFC-22 SERVICING DEMAND IN 2010-2014

EPA received 28 comments on the projected estimate that 20% of 2010 servicing demand will be 

met with recovered HCFC-22 and the remaining 80% of demand will be met via allowances. 

Comments were in reference to five main topics: 

3.1. Appropriateness of EPA’s assumption that 20% of total HCFC-22 in 

retired/converted equipment can be recovered in 2010

3.2. Setting the HCFC-22 allocation total based on it meeting 80% of servicing demand

3.2.1 Greater than 80% of servicing demand needs to be met through HCFC-22 

consumption allowances.

3.2.2 Meeting 80% of servicing demand through HCFC-22 consumption allowances 

with the remaining 20% of demand being met through recovered material is 

appropriate.

3.2.3 The HCFC-22 allocation total should be less than the amount needed to meet 

80% of servicing demand.

3.3. Allocations of HCFC-22 allowances set aside for reclaimers for blending

3.4. Allocation should be ratcheted down each year based on projected decline in 

servicing demand

3.5. Facilitating an effort to improve reclaim (i.e., contractor participation) and increase 

the 20% rate 

3.6. Servicing Tail Report Clarifications and Potential Modifications

Count Commenter Organization Document ID No

1 Tony Digmanese York/Johnson Controls EPA-HQ-OAR-2007-0496-0074

2 Charlie McCrudden Air Conditioning Contractors of America 

(Public Hearing)

EPA-HQ-OAR-2007-0496-0082

3 Tim Kearney RemTec International (Public Hearing) EPA-HQ-OAR-2007-0496-0082

4 James Burke USA Refrigerants (Public Hearing) EPA-HQ-OAR-2007-0496-0082

5 Chad J. Schnuelle Refrigerants Inc. EPA-HQ-OAR-2008-0496-0087

6 Matthew R. Worchesek NA EPA-HQ-OAR-2008-0496-0091

7 Anonymous NA EPA-HQ-OAR-2008-0496-0092

8 John M. Batt Airgas EPA-HQ-OAR-2008-0496-0094.1

9 Mack McFarland DuPont EPA-HQ-OAR-2007-0496-0097.1

10 Jeff Moe Trane/Ingersoll-Rand EPA-HQ-OAR-2008-0496-0099.1

11 Julian de Bullet McQuay EPA-HQ-OAR-2008-0496-0100.1

12 Ted Atwood Polar Technology LLC. EPA-HQ-OAR-2008-0496-0102.1

13 Various Reclaimers without Allocations (multiple 

companies)

EPA-HQ-OAR-2008-0496-0105.1

14 Don Magid and Charles 

Jones

Solvay EPA-HQ-OAR-2008-0496-0106.1

15 Maureen Beatty National Refrigerants, Inc. EPA-HQ-OAR-2008-0496-0110.1

16 Emanuel (Manny) Katz Arkema EPA-HQ-OAR-2008-0496-0111.1
3-19

17 Stephen P. Mandracchia Hudson Technologies EPA-HQ-OAR-2008-0496-0112.1

18 Jill Tronca North Lakes Distributing, Inc. EPA-HQ-OAR-2008-0496-0115.1

19 Talbot H. Gee Heating, Airconditioning & Refrigeration 

Distributors International

EPA-HQ-OAR-2008-0496-0117.1

20 Steven Bernhardt Honeywell EPA-HQ-OAR-2008-0496-0118.1

21 Dave Stirpe The Alliance for Responsible 

Atmospheric Policy

EPA-HQ-OAR-2008-0496-0120.1

22 Charlie McCrudden Air Conditioning Contractors of America EPA-HQ-OAR-2008-0496-0122.1

23 Peter Geosits Ineos Fluor EPA-HQ-OAR-2008-0496-0125.1

24 Robert Allen Kamins Altair Partners, LP EPA-HQ-OAR-2007-0496-0128

25 Milton J. Cuevas II ICOR International EPA-HQ-OAR-2008-0496-0129

26 Karen B. Meyers Rheem EPA-HQ-OAR-2008-0496-0131.1

27 Various Reclaimers for Environmental Benefits EPA-HQ-OAR-2008-0496-0138

28 Pete Williams Williams & Associates EPA-HQ-OAR-2008-0496-0140

3.1. Appropriateness of EPA’s assumption that 20% of total HCFC-22 in retired/converted 

equipment can be recovered in 2010

EPA received sixteen comments on whether EPA’s assumption of a 20% recovery rate for 

retired/converted equipment is appropriate for 2010.

 ACCA states that their members are concerned that EPA’s 20% assumption is ambitious, 

as current recycling and reclamation rates are well below 15%. North Lakes Distributing 

estimates only 10% of the R-22 coming out of service is reclaimed, but that the goal of 

20% recovery could be achieved in 2 years were EPA to allocate allowances to 

reclaimers. Rheem states they have concern that EPA could be allocating too few 

allowances because the assumed amount of recycled and reclaimed HCFC-22 of 20 

percent used to determine allowance allocations may be excessive. The current use of 

recycled and reclaimed HCFCs is approximately seven percent and the increase EPA is 

suggesting in the proposed rule is significant. [0082, 0115.1, 0122.1, 0131.1] 

EPA Response: EPA believes Rheem is referring to data reported to EPA under 40 CFR 

part 82 subpart F showing that 4,556 MT of HCFC-22 was reclaimed in 2008. This 

amounts to 7.3% of the modeled demand in 2010, up from 5.9% in 2007. This value, 

though, does not reflect the total recovery rate as it excludes the amount of recycled 

refrigerant. EPA does not track recycled refrigerants since recycled refrigerant (unlike 

reclaimed refrigerant) must be charged back into equipment with the same ownership 

rather than re-enter the market. EPA therefore knows that the combined amount of 

recycled and reclaimed refrigerants is greater than 7.3%.

Furthermore, the amount reclaimed in one year does not mean that it was recovered in 

that year. Many reclaimers collect more than they reclaim in any one year due to market 

shifts. One commenter said that reclaimers have many tons of material in inventory 

waiting to be reclaimed when the economics of reclamation improve, which EPA 

believes will occur through the allocation levels established in this rule. EPA is aware 

that 20% recovery and reclamation for 2010 is greater than current industry practice but 

has not received comments that convince us that the rate is unreasonable.
3-20

 ACCA and Rheem state that the current economic situation may result in more

homeowners electing to repair their existing units than replace them with systems that use 

an alternative refrigerant. Thus, EPA’s estimates for the number of HCFC-22 systems, 

and the corresponding demand for HCFC-22 to service existing equipment, may need to 

be adjusted upward. [0122.1, 0131.1]

EPA Response: While the Servicing Tail report does not consider effects from the recent 

economic downturn, the estimate does account for the practice of replacing components 

rather than installing new equipment. EPA notes that while the economic downturn may 

extend the time existing HCFC-22 equipment is used, it has also reduced the amount of 

HCFC-based equipment installed and hence will reduce future demand for servicing. 

EPA understands that the actual transition will not perfectly synchronize with the model 

year-by-year, whether for economic conditions, weather, or other events. However, EPA 

is confident that this does not affect the accuracy of the model. The combination of 

reclaimed and virgin HCFCs based on the model should be sufficient to meet demand. 

 York/Johnson Controls is not optimistic on the fast establishment of adequate refrigerant 

reclamation facilities during the next few years (with the lack of economic incentives), 

and would be cautious on relying on 20% of our 2010-2014 servicing need on recycled 

and reclaimed material. [0100.1]

EPA Response: Reclamation companies together comment that they currently have 

sufficient capacity to reclaim 36 million pounds of refrigerants each year, which is equal 

to 16,329 MT, or 26% of the estimated demand in 2010. As discussed below, their main 

concern is not reclamation capacity but rather the economic disincentive to reclaim and 

poor recovery practices. EPA agrees with the assessment that recovery is the limiting 

factor, not reclamation capacity. EPA believes that the allocation in this rule will improve 

the incentive to reclaim and result in greater recovery. 

 Solvay Chemicals states that they believe EPA’s expectation that 20% of projected 

demand during the 2010 Allocation period must be met through recycling/reclamation is 

achievable, but it might take industry some time to reach this level. [0106.1]

EPA Response: EPA is aware that 20% recovery and reclamation for 2010 is greater than 

current industry practice but has not received comments that convince us that the rate is 

unreasonable.

 Solvay Chemicals states that they already see marketplace activity to increase the 

capacity to recycle/reclaim HCFC-22 in order to meet the tighter marketplace conditions 

in 2010 and beyond. They recently launched a new incentive-based national reclaim 

program for its distributors which relies on separation and distillation. HARDI states that 

they have seen an expansion in the number of distributor members offering refrigerant 

recovery services, as well as more aggressive reclamation programs from the certified 

reclaimer community. Their experience with CFC-12 has shown that the market can 

improve refrigerant reclamation when supplies are tight and prices for virgin refrigerant 

become prohibitively high. [0106.1, 0111.1, 0117.1]
3-21

EPA Response: EPA agrees that there is recent activity to increase the recovery and 

reclamation of HCFC-22. EPA also agrees that as the price of HCFC-22 increases, there 

will be greater economic incentive to recover and reclaim it and rates will increase. 

 Polar Technology, LLC, Reclaimers without Allocations, Hudson Technologies, The 

Alliance, and INEOS Fluor and ICOR International state that a 20% reclaim and recycle 

rate is reasonable and attainable. Polar Technology, LLC states that the reclaim industry 

has the capacity to meet the demand but the limiting factor in the growth of the reclaimer 

industry has not been capacity, but the ability to compete in a market with virgin material 

held by those with “free” allowances. Reclaimers without Allocations state 

unequivocally that the capacity is available to meet or exceed a 20% reclamation target.

Reclaimers have been unable to fully utilize their capacity due to the economics or 

pricing issues to incentivize the recovery efforts and then compete with lo cost imported 

products. Hudson Technologies states that the reclamation industry could support 18,000 

metric tons, or 30% of the servicing demand or more. The Alliance states that several 

reclamation companies have confirmed that the reclamation industry is capable of 

meeting this goal. They state that one of the most significant factors impacting the 

supply of reclaimed refrigerant is the ability of those who service and maintain 

equipment to conduct operating practices that prevent venting and allow the recovery of 

refrigerants for delivery to reclaimers. ICOR International states that although it supports 

EPA’s conclusion that a 20% reclaim and recycle rate is reasonable and attainable, it 

believes that if the allocation level were further reduced that the recovery and reclamation 

industry would be capable of delivering a greater percentage of the HCFC-22 back for 

service. [0102.1, 0105.1, 0112.1, 0120.1, 125.1, 0129]

EPA Response: EPA discusses in the preamble that in order to meet the total demand in 

2015, the recovery rate must increase to 26% (representing 29% of total servicing 

demand) by that year. EPA also agrees that one action the Agency can take in this rule to 

increase the recovery rate is to reduce the allocation for HCFC-22 on an annual basis. 

This is discussed in greater detail in the preamble and below.

 NRI states it supports and promotes the use of recovered and reclaimed HCFCs as a costeffective and environmentally beneficial way of reducing the need for further production 

or import of virgin HCFCs. NRI generally supports EPA’s conclusion that a 20% 

reclaim and recycle rate is attainable but cautions that simply reducing the available 

supply of newly produced and imported HCFC-22 will not automatically ensure that 

HCFC-22 will be recovered and reclaimed in amounts sufficient to meet the projected 

shortfall. [0110.1]

EPA Response: Based on the consideration of all the various commenters and EPA’s 

past experience, EPA believes that a 20% reclamation and recycling rate is attainable. 

 Williams & Associates states that while the reclaim numbers compiled by EPA and 

published represent the amount of material reclaimed, they do not give a true picture of 

the activities within the reclamation industry. The commenter also notes that reclaim 
3-22

companies are seeing these number increase from a 7% range in 2007, to upwards of 

12%-15% in 2008. [0140]

EPA Response: Based on the consideration of all the various commenters and EPA’s 

past experience, EPA believes that a 20% reclamation and recycling rate is attainable. 

3.2. Setting the HCFC-22 allocation total based on meeting 80% of servicing demand

3.2.1. Greater than 80% of servicing demand needs to be met through HCFC-22 

consumption allowances

Two commenters state that EPA should allocate HCFC-22 consumption allowances at a level 

higher than 80% of the estimated HCFC-22 servicing demand, at least in 2010.

 York/Johnson Controls encourages EPA to be cautious about relying on 20% of the

2010-2014 servicing need on recycled and reclaimed material. [0100.1]

EPA Response: EPA believes that if the 2010 allocation is 80% of the modeled demand, 

the remaining servicing need can be met from recycled or reclaimed material. Given the 

regulatory requirements for recycling and reclamation (at 40 CFR part 82 subpart F), 

experience with the CFC phaseout, and industry practices, EPA believes that the 

remaining 2010 servicing need can be met with recycled or reclaimed material.

 Trane/Ingersoll-Rand suggests EPA allocate 88% of estimated demand in 2010 to give 

the reclamation sector time to increase capacity. The commenter also suggests allocating 

fewer allowances in later years, with allocations at 72% of demand in 2014 and 68% in 

2015. [0099.1]

EPA Response: EPA believes that a 20% reclamation and recycling rate is attainable in 

2010 and that reclamation industry does not need additional time to increase capacity. 

EPA discusses annual reductions in the HCFC-22 allocation below.

3.2.2. Meeting 80% of servicing demand through HCFC-22 consumption allowances

with the remaining 20% of demand being met through recovered material is 

appropriate

Fifteen commenters believe that EPA’s proposal of meeting 80% of servicing demand through 

HCFC-22 consumption allowances with the remaining 20% of demand being met through 

recovered material is an appropriate approach.

 Airgas, DuPont, Polar Technology, LLC, NRI, Arkema, Hudson Technologies, 

Coolgas/Dynatemp, HARDI, Honeywell, The Alliance, INEOS Fluor, Altair Partners LP, 

and ICOR state they support EPA’s proposal to set the total allowances of HCFC-22 at 

80% of the projected servicing need for HCFC-22 in 2010. Allocating less than demand

will create a need, and therefore a market, for recovery and reclamation, with the result 

that more pounds will be recovered and reclaimed, and fewer pounds lost to the 

atmosphere. [0094.1, 0097.1, 0102.1, 0110.1, 0111.1, 0112.1, 0113.1, 0117.1, 0118.1, 

0120.1, 0125.1, 0128, 0129]
3-23

EPA Response: EPA proposed to allocate 80% of demand only in 2010. EPA is 

finalizing the same allocation amount in 2010 in the final rule but is applying the concept 

of allocating a percentage of estimated demand to the 2011-2014 control periods as well, 

as discussed in more detail below.

 Polar Technology, LLC states that any allocations in excess of demand will be used for 

stockpiling. The Reclaimers without Allocations state they support EPA’s proposal to 

allocating at 80% percent of demand. They also point out that in 2010, much of the 

remaining servicing demand likely will not be met with reclaimed or recycled HCFC-22 

but rather virgin HCFC-22 that has been stockpiled by those who currently have 

allocations. [0102.1, 0105.1]

EPA Response: Stockpiling of virgin R-22 may be pursued, particularly prior to 2020 

when production is entirely phased out; however, it is premature to state the extent to 

which this option will be technically and economically viable. As such, the Servicing 

Tail report does not make any projections on future inventories of virgin stockpiles and to 

be conservative assumes the amount to be zero. Information that allowance holders have 

stockpiled virgin HCFC-22 further supports EPA’s belief that demand will be met when 

allocating at less than 80% of demand. 

 North Lakes Distributing Inc. supports a more aggressive reduction of allocations so that 

the amount of allowances is not greater than the estimated demand. Allocating more than 

demand will lead to importers and manufactures to stockpile in anticipation of selling the 

surplus in subsequent years when supply is more restricted. [0115.1]

EPA Response: EPA proposed to allocate 80% of demand only in 2010. EPA is 

finalizing the same allocation amount in 2010 in the final rule but is applying the concept 

of allocating a percentage of estimated demand to the 2011-2014 control periods as well. 

This is discussed in more detail below.

3.2.3. The HCFC-22 allocation total should be less than the amount needed to meet 

80% of servicing demand 

Two commenters state that the HCFC-22 allocation should be set lower than 80% of HCFC-22 

servicing demand.

 An unaffiliated commenter notes that this rule is lenient in it enforcement of the reduction 

efforts. Allocating HCFC-22 consumption allowances to meet 80% of servicing needs 

for existing equipment, and assuming that the other 20% will be met through reclamation 

allows for the maintenance of all of the existing equipment. A more aggressive 

rulemaking could serve to greatly accelerate the replacement of equipment that uses these 

chemicals, which have such a high potential for creating negative health issues. A second, 

anonymous commenter suggested that EPA not allocate any HCFCs. [0091, 0092]

EPA Response: A smooth transition for stakeholders – including continued availability of 

needed material for approved uses – has historically been an essential aspect of the U.S.’s 

success in implementing the Montreal Protocol and Clean Air Act requirements. EPA 
3-24

believes that allocating at 80% of servicing demand will allow total demand to be met 

(through the use of reclaimed/recycled material) without forcing owners to prematurely 

scrap their existing equipment.

3.3. Allocations of HCFC-22 allowances set aside for reclaimers for blending

EPA received eleven comments (some signed by multiple commenters) supporting allocating 

HCFC-22 allowances to reclaimers to blend with the used material to raise the purity level to the 

ARI-700 standard of 99.5%. Two comments do not support issuing allowances to reclaimers.

Commenters outlined 1) the difficulties faced by the reclaim industry, 2) the benefits that the 

reclaim industry provides, and 3) a suggested allocation system for reclaimers.

 RemTec International, Refrigerants Inc., Polar Technology LLC, Reclaimers without 

Allocations, Hudson Technologies, ICOR International, and Williams & Associates state 

that reclaimers do not have any assurances of availability of HCFC-22 material needed 

for blending, and that which they do receive is at end-user or wholesaler prices. Four 

companies hold about 90 percent of the allowances for HCFC-22. This effectively allows 

them to preclude reclaimers from obtaining virgin material they need. Refrigerant 

producers and importers do not want to sell virgin product to reclaimers because they 

believe that they are selling to their competitors. They could run a reclaimer out of 

business simply by denying access to virgin material market or they could make the price 

prohibitively high for a reclaimer and that U.S. recovery facilities can not profitably 

compete with those with allocation rights because they can import at a lower cost. [0082, 

0087, 0102.1, 105.1, 112.1, 129.1, 0140]

 RemTec, Hudson Technologies, and ICOR International note the challenges associated 

with contaminated refrigerant. Hudson Technologies explains that the current HCFC 

phaseout has very different dynamics than the CFC phase-out as the incidence of crosscontamination is much higher. The company anticipates and is already beginning to see a 

higher percentage of recovered HCFC-22 cross-contaminated as new systems using 

alternate refrigerants increase in use. Cross-contaminated material requires several passes 

in a distillation tower to bring the purity to accepted ARI standards at a high cost and 

requiring the use of much energy. [0082, 0112.1, 0129]

 Reclaimers without Allocations state that reclaimers are forced to offer programs which 

collect all refrigerants including blends possibly still under patent protection. This 

impacts reclaimers’ operations without producing any revenue. [0105.1]

 Polar Technology LLC, Reclaimers without Allocations, Hudson Technologies, ICOR 

International, Williams & Associates, and Reclaimers for Environmental Benefits say 

that allocating allowances to reclaimers would provide the industry with additional 

incentive to increase reclamation. Hudson Technologies notes that if granted allowances, 

reclaimers will have a greater ability to accept slightly cross contaminated HCFCs from 

contractors and wholesalers without the need to assess additional costs for destruction or 

fractional distillation. Refrigerants, Inc., explains the reluctance of customers to bring 

mixed R-22 to recovery centers. 

 Reclaimers for Environmental Benefits estimate that 15% of recovered refrigerant 

is cross contaminated. Therefore, allocations for reclaimers for blending will 

result in as much as a 15% increase in recovered refrigerant within the first two 

years of allocations. [0138]
3-25

 ICOR International notes that many reclaimers are inventorying many tons of 

material that could be salvaged by blending but without virgin material at 

competitive pricing, this material cannot be sold in the market. Eventually it will 

have to be destroyed, which robs the industry of refrigerant and cripples the 

development of the Recovery Network. [0129]

 The Reclaimers for Environmental Benefits state that when deciding how many 

allocations should be granted and to whom EPA should consider who provides the 

greatest environmental benefit and who will encourage the most recovery and reuse of 

material. Under either criterion, EPA should grant allocations to certified reclaimers.

They submitted a list of rationales for why reclaimers should have increased allocations 

to allow for blending:

 Reduces need for new production and importations of HCFC-22;

 Reclaim efforts between 2000 and 2008 have created the equivalent of 140 

million tons of CO2 reductions;

 A healthy reclaiming industry can influence reclaiming better than any other 

group or unenforced regulations could;

 Efforts by reclaimers to educate contractors would be enhanced if used refrigerant 

had an economic value;

 Allocations for blending keep reclaiming costs lower and increase the amount 

reclaimed because reclaimers will pass economic benefit on to the contractors;

 Reclaimers could accept mixed material without penalty to the contractor, and as 

a result more refrigerant would be recovered and delivered back to reclaimers;

 A strong reclaim industry creates “Green jobs.” In addition, most reclaimers are 

small businesses;

 Should demand for reclaimed material not be forthcoming, many startup 

reclaimers will fail. [0138]

 Hudson Technologies, Williams & Associates, and Reclaimers for Environmental 

Benefits discuss the environmental benefits of increased reclamation.

 Hudson Technologies states in their supplemental comment that if 10% of HCFC22 allowances are reserved for reclaimers, between 2010 and 2015, 25,000 metric 

tons of virgin HCFC-22 would be available to restore up to 6,250 metric tons 

(approx. 13.8 million pounds) of 98% purity HCFC-22, which would eliminate 

the high energy cost of fractional distillation and thereby prevent emission of 

more than 74,000 metric tons of CO2. Additionally, restoring 13.8 million pounds 

of 98% purity HCFC-22 will prevent the venting of 13.8 million pounds of 

crossed HCFC-22 which on an ODP basis is equivalent of preventing 690,000 

pounds of R-12 from being emitted into the atmosphere, and on a CO2 basis is 

equivalent to 10.6 million metric tons of CO2. [0112.1]

 Reclaimers for Environmental Benefits request 5% or more of the total allocations 

(12.5 million lbs) be set aside for blending. Doing so would provide benefits in 

three ways: 1) separation systems now employed to process a portion of this 

material could be redirected to process even more challenging mixed refrigerants; 

2) it is estimated that the blendable material can result in 15% more material 

salvaged than currently, or approximately 2 million lbs; and 3) the cost of 

salvaging and destroying ~2.6 million lbs now or in the future would be saved –

this will save 2.34 million tons of CO2 being released into the atmosphere. [0138]
3-26

EPA Response: EPA has previously detailed the importance of recovering and reusing 

HCFC-22 and the Agency strongly encourages increased recovery and either recycling or 

reclamation of HCFC-22. Section 608 of the CAA prohibits the intentional venting of 

HCFCs and EPA regulations require that they be recovered and then either recycled, 

reclaimed, or destroyed. The recovery and reuse of HCFCs prevents emissions to the 

atmosphere where they can deplete the stratospheric ozone layer and reduces the amount 

of virgin material that needs to be produced. Recovery becomes even more important in 

light of the 2015 Montreal Protocol phasedown step, when the U.S. HCFC consumption 

cap is reduced from 3,810 ODP-weighted metric tons to 1,524 ODP-weighted metric 

tons, equivalent to 90% below baseline. In its report The U.S. Phaseout of HCFCs: 

Projected Servicing Needs in the U.S. Air-Conditioning and Refrigeration Sector (the 

“Servicing Tail” report), EPA estimates that to meet demand in 2015, recovered material 

will have to provide 29% of the total servicing demand for HCFC-22. A smooth 

transition for stakeholders – including continued availability of needed material for 

approved uses – has historically been an essential aspect of the U.S.’s success in 

implementing the Montreal Protocol and Clean Air Act requirements.

 Polar Technology LLC, Reclaimers without Allocations, Hudson Technologies, and 

ICOR International suggest that EPA set aside at least 10 percent of the allowance 

allocation each year to allocate to certified reclaimers. The reclaimers could then use the 

allowances to purchase bulk virgin material for blending purposes. An example of 10% 

of the total proposed allocations being reserved for reclaimers in 2010 is shown in Table 

6 below:

Table 5: Example of Set-Aside Allocations for Reclaimers in 2010

100% of total Allocations for 2010 50,000 MT

90% of total Allocations to existing allocation holders proportionately to 

their 2009 allocations

45,000 MT

10% set-aside for reclaimers 5,000 MT

Total MT of HCFC-22 reclaimed in year 2009 as reported by all certified 

reclaimers (example only)

4,000 MT

Allocation to reclaimers based on number of MT each reclaimed in 2009 would be 125% if 

reclaimer (A) reported 500 MT in 2009, it would get allocation sin 2010 of 625 MT for 2010 

(125% of 500 MT)

The consumption allowances could be distributed among the reclaimers based on the 

annual reports submitted to EPA of material reclaimed in the previous year. The 

commenters note that all recordkeeping and reporting systems already exist. [0102.1, 

0105.1, 0112.1, 0129]

 Reclaimers for Environmental Benefits state that there are several equitable 

methods for distributing allocations to the reclaimer industry: 1) divide the 

designated total allocations based on the total pounds of refrigerant reclaimed by 

the current list of EPA reclaimers, and determine the % of the total that each 

represents; 2) give allocations to all current EPA reclaimers that have supported 

EPA for many years and have the verifiable capacity for bulk shipments of 

HCFC-22 for blending; 3) form a non-profit reclaimer alliance or co-operative 
3-27

that could determine an equitable use of allocations to reclaimers for blending 

given to them by the EPA. [0138]

EPA Response: EPA does not believe that allocating allowances to reclaimers in this 

rulemaking is necessary or the most appropriate action that EPA can take to foster greater 

recovery and reclamation of HCFC-22. 

First, while commenters stated that providing allowances to reclaimers for HCFCs to be 

used in blending may foster increased recovery, EPA is concerned that it may foster 

unsustainable reclamation practices. Commenters stated that the blending ratios of virgin 

to recovered material range from 4:1 to as high as 10:1 (reflecting “blending up” 

recovered material from either 98.5% pure or 97.5% pure respectively, to 99.5%). The 

amount of virgin HCFC-22 produced or imported for all purposes, including for blending 

out impurities, will decrease significantly in 2015 when the overall HCFC cap declines 

from 25% of baseline to 10% of baseline. Production and import of virgin HCFC-22 for 

refrigerant uses will cease in 2020. Therefore, reclamation through separation and 

distillation will be more important in 2015 and absolutely necessary in 2020.

Second, allocating allowances to reclaimers would be a major change to the rule that 

would affect other stakeholders who have not had the opportunity to comment on the 

reclaimers’ suggestion. Current allowance holders would have their allocations reduced 

10% under this suggestion. If EPA were to finalize such a suggestion, EPA would want 

to provide other stakeholders an opportunity to comment. The suggestion raises several 

issues that would benefit from the notice and comment process. Specifically, issuing 

allowances to reclaimers raises questions of who would receive allowances, what the 

baselines would be, and how many allowances would be allocated. Other questions 

about how to implement this suggestion would include whether EPA should provide 

additional allowances to reclaimers that currently have baseline allocations, and whether 

EPA should set the baseline according to the amount reclaimed, as commenters 

suggested, or according to the amount recovered. Furthermore, some reclaimers 

currently manufacture and sell niche blend refrigerants that include HCFC-22 as a 

component, so EPA would need a mechanism to ensure that they would use the allocation 

for reclamation purposes, not for continued production of these blends. Different

allocation methods offer advantages and disadvantages for potential allowance holders 

that vary according to the specific characteristics of the stakeholder. Thus, altering the 

final rule to accommodate the reclaimers’ suggestion is not a simple matter. If EPA were 

to issue a supplemental proposal to provide an opportunity for all stakeholders to 

comment on these issues, the rule would likely be delayed beyond January 1, 2010. This 

would have a negative impact on all stakeholders who are depending on an allowance 

allocation for the production and import of HCFCs in 2010.

EPA believes that it can take other actions in this rule that will foster recovery and 

reclamation while avoiding the complications raised by the commenters’ suggestion. The 

same commenters that suggested allocations to reclaimers also noted that a constant 

allocation rate over the five control periods, as proposed, might discourage rather than 

foster reclamation. To avoid that, in this final rule EPA is allocating at 80% of the 
3-28

estimated demand in 2010 and is reducing the allocation over five years. EPA anticipates 

that the price of HCFC-22 will increase as allocations decrease and supply is reduced. 

Some of the economic constraints for recovery and reclamation will therefore loosen and 

more recovered material being held in inventory may be reclaimed. EPA believes that 

encouraging the market for recovered material in this way will be the most effective and 

appropriate mechanism that this current rulemaking can take to increase recovery and 

reclamation.

 Polar Technology LLC suggests that EPA could go final on the remaining allocations and 

take additional comment on the set aside approach so to not impact the goal of having the 

allocations in place by the 2010 deadline. [0102.1]

EPA Response: EPA does not believe that allocating allowances to reclaimers in this 

rulemaking is necessary or the most appropriate action that EPA can take to foster greater 

recovery and reclamation of HCFC-22. EPA is open to further consideration of the 

suggestion of providing allocations to reclaimers in future allocation rulemakings. 

 Polar Technology LLC states that in considering allocating allowances to reclaimers, 

EPA should not simply default to the existing formula for allocating allowances because 

of a sense of obligation to current allowance holders, or because it is easier to administer. 

[0102.1]

EPA Response: EPA seeks to minimize unanticipated changes and prevent market 

disruptions. Of all the options, applying a uniformly smaller percentage of the existing 

baseline (option 1) as the method for allocating HCFC-22 and HCFC-142b allowances is 

the least disruptive to the current market and best ensures a continued smooth transition 

away from ozone-depleting substances.

 RemTec International encourages EPA to allocate a small portion of the allowances to 

certified reclaimers who petition the EPA and prove that they would return more 

reclaimed material to the market with those allowances. RemTec states that reclaimers 

that have not historically imported before 2003, or even before 1997, are not allowed to 

participate in allocations. The Rule perpetuates an earlier-created “refrigerant cartel,” of a 

small group of companies that control the price and supply of all R-22. EPA is effectively 

creating an uneven playing field by not allowing these new entrants into the allocation 

schedule. [0082]

EPA Response: EPA does not believe that allocating allowances to reclaimers in this 

rulemaking is necessary or the most appropriate action that EPA can take to foster greater 

recovery and reclamation of HCFC-22. EPA discusses the suggestion of providing 

allowances to reclaimers in more detail in the preamble. EPA is open to further 

consideration of the suggestion of providing allocations to reclaimers in future allocation 

rulemakings.

 Williams & Associates states that current stakeholders simply buy virgin product from 

overseas and make it available to the public for sale. This activity does nothing more 
3-29

than increase the wealth of those who were granted these consumption rights and paid 

nothing for them. The better use of these consumption rights would be to distribute these 

rights on a pro-rata basis to those companies that EPA legislated into business as 

stewards of the environment, with respect to ODS. Similarly, USA Refrigerants states 

that all of the virgin gas should get shipped to qualified reclaimers and separation 

companies first, so that they can use that gas to clean up the impurities. [0082, 0140]

EPA Response: EPA seeks to minimize unanticipated changes and prevent market 

disruptions. Of all the options, applying a uniformly smaller percentage of the existing 

baseline (option 1) as the method for allocating HCFC-22 and HCFC-142b allowances is 

the least disruptive to the current market and best ensures a continued smooth transition 

away from ozone-depleting substances. EPA does not believe that allocating allowances 

to reclaimers in this rulemaking is necessary or the most appropriate action that EPA can 

take to foster greater recovery and reclamation of HCFC-22. EPA discusses the 

suggestion of providing allowances to reclaimers in more detail in the preamble. EPA is 

open to further consideration of the suggestion of providing allocations to reclaimers in 

future allocation rulemakings.

Three commenters state they do not believe allocations to reclaimers are necessary.

 Arkema states it is not necessary to allocate allowances to reclaimers or other new 

entrants. EPA need not undertake significant administrative burden of creating and 

enforcing any additional distribution mechanism, especially when even larger number of 

reclaimers would be involved and when the end result would be to encourage reclamation 

by dilution instead of the removal of impurities. [0111.1]

EPA Response: For the reasons discussed above and in the preamble, EPA is not 

establishing baselines or allocating allowances to reclaimers in this rule.

 Honeywell states that allocations of consumption allowances to reclaimers will result in

greater recycling/reclamation in the marketplace for three reasons: 1) Sufficient 

reclamation capacity to meet greater future demand exists today; 2) Additional 

consumption allowances are not needed by reclaimers because virgin HCFC-22 is not 

required to reclaim product. Reclamation can easily be accomplished by distillation 

processes that do not at all require the use of virgin HCFC-22; and 3) Allocating 

allowances to reclaimers creates a myriad of administrative and practical problems. EPA 

would face difficult questions relating to the amount of allowances to allocate, to whom it 

should allocate those allowances, and how to prevent virgin HCFC-22 producer or 

imported with “Reclamation” allocation from simply being sold in the marketplace.

[0118.1]

EPA Response: For the reasons discussed above and in the preamble, EPA is not 

establishing baselines or allocating allowances to reclaimers in this rule.

 HARDI states that EPA must do more to encourage the increased capacity of efficient 

refrigerant separation and distillation processes. As the supply of virgin refrigerant 

continues to shrink, it will be essential that the reclamation community increase its 
3-30

capacity without greatly increasing its demand for virgin refrigerant. This commenter 

does not believe that it is responsible for the EPA to alter the allowance allocation 

process for HCFCs or any other refrigerant, at least until the reclaimer certification 

process takes into account the efficiency of the reclamation process. [0117.1]

EPA Response: As discussed above and in the preamble, EPA is concerned that blending

may be an unsustainable reclamation practice, especially as the supply of virgin HCFC22 available to blend with recovered material is reduced again in 2015. 

3.4. Allocation should be reduced each year based on the projected decline in servicing 

need

EPA received seventeen comments regarding whether allowances should be constant from 2010 

to 2014 or should decrease over this time period. Thirteen commenters urge EPA to annually 

reduce the allocation amounts to prepare industry for the next step-down in 2015. Fixing 

allowances at 50,000 metric tons over all five control periods will cause the industry to be 

unprepared for the 90% reduction that will be mandated in 2015. Four commenters stated that 

the allocation amounts should remain level.

 DuPont, Polar Technology LLC, Reclaimers without Allocations, North Lakes 

Distributing Inc, Hudson Technologies, and Reclaimers for Environmental Benefits point 

out that allocating 50,000 metric tons of HCFC-22 over all five control periods creates a 

surplus of virgin material based on EPA projections of demand. The surplus will 

eliminate the reclamation market because by 2013 the allocations will exceed demand. 

Fixing allowances for five years will have the unintended consequence of requiring a 

fledgling reclamation industry to make the investments to meet immediate needs only to 

see demand for these services shrink after the first year and all but disappear by 2013. 

Reclaimers cannot justify making those investments under that scenario. [0097.1, 

0102.1, 0105.1, 0112, 0115.1, 0138]

EPA Response: EPA estimates the demand for HCFC-22 to service existing equipment 

will decline to 48,400 MT in 2013 and 43,600 MT in 2014. The proposed allocation of 

50,000 MT would exceed the demand for those two years. EPA has provided a table in 

the final rule showing the estimated demand for 2010-2015. EPA agrees that allocating 

more HCFC-22 than the demand could harm the recovery and reclaim industry at exactly 

the time when rates of recovery and reclamation need to be increasing. EPA is finalizing 

an allocation that is less than demand, for the reasons discussed below and in the 

preamble. 

 DuPont states that the key to driving recovery and reclamation of HCFC-22 is year-overyear reductions in total allowances. With such reductions there will be sufficient market 

demand for reclaimed HCFC-22 and reclaimers can acquire virgin HCFC-22 from 

existing allowance holders to mix with the lower purity material. At the same time 

existing allowance holders will have a strong incentive to purchase the lower purity 

material. [0097.1]

EPA Response: EPA is finalizing an allocation that is less than demand, for the reasons 

discussed below and in the preamble. 
3-31

 Honeywell states EPA has properly proposed to allocate less than 100% of the available 

volume, as this will serve to heighten awareness of the need to move from the long term 

use of ODS and speed transition to non-ozone depleting alternatives. This commenter 

suggests EPA consider gradual reduction of these allocations annually between 2010 and 

2014 to continue to encourage recover/recycle, responsible use, and transition to nonODS alternatives. [0118.1]

EPA Response: EPA is adjusting the allocations on an annual basis to reflect the decline 

in demand. 

 The Reclaimers for Environmental Benefits state that a linear annual reduction would 

provide environmental benefit by eliminating the need for production or import of new 

HCFCs especially when that production, along with expected reclaimed material, would 

far surpass the demand. Hudson Technologies notes that based upon the schedule they 

suggested, the total allocations over the five year period will be 199,830 metric tons, a 

reduction of 50,270 metric tons. This would eliminate the need to produce 50,270 metric 

tons of HCFC-22 and prevent more than 95,000 metric tons from being vented into the 

atmosphere. [0138, 0112.1]

EPA Response: EPA agrees that annual reductions to the allocation provides clear 

environmental benefits compared to the lead option in the proposed rule, assuming the 

same starting point. Over the five-year period 2010-2014, the proposed rule would have 

allocated 250,000 metric tons of HCFC-22. Over the same period, the final rule is 

allocating 203,100 MT of HCFC-22, a difference of 46,900 MT. With an ODP of .055, 

this is equivalent to 2,574 ODP tons. In addition, given HCFC-22 has a GWP of 1,810, 

this reduction would equal 84.9 million metric tons of CO2 equivalent (MMTCO2E), or 

the annual greenhouse gas emissions from 15.5 million passenger vehicles.

 Airgas, Polar Technology LLC, and Hudson Technologies note that a steady allocation of 

50,000 MT from 2010 to 2014 fails to adhere to EPA’s stated position of having 20% of 

the servicing needs met through reclamation and recycling after 2010. By 2013, under 

EPA’s proposal, new HCFC-22 will satisfy the entire servicing demand, such that 

reclaimed refrigerant will not be necessary. [0094.1, 0102, 0112]

EPA Response: EPA proposed “to allocate HCFC-22 consumption allowances to meet 80 

percent of the servicing need, assuming that the remaining 20 percent will be met by 

recovered HCFC-22 that is either recycled or reclaimed. This translates into 

approximately 50,000 metric tons (2,750 ODP-weighted metric tons), or approximately 

72 percent of the total HCFC consumption cap for each of the control periods from 2010 

through 2014.” Commenters are correct that while EPA 50,000 MT is equal to 80% of 

the modeled demand in 2010, it is not 80% of demand in later years. 

The proposed rule took comment on the idea of increasing the expected contribution of 

recycled and reclaimed refrigerant for each control period by annually reducing the 

allocation of HCFC-22. EPA now believes that unless it were to reduce the allocations 
3-32

for virgin HCFC-22 between 2010 and 2014, there could be an oversupply of HCFC-22 

and the contribution of recycled and reclaimed refrigerant would decrease, both in the 

total number of kilograms and as the proportion of overall need.

 Airgas notes that a constant Allowance level, combined with decreasing demand does not 

accomplish the goal of incentivizing recovery and reclamation of materials from existing 

banks, and thus create market reliance on reclaimed material. A constant level of 

Consumption Allowances from 2010 – 2014 has the following impacts: 1) It creates 

severe market disruption, with wildly fluctuating need for reclaimed material, especially 

in 2015 when the next phase-down is expected to occur; 2) It prolongs market 

dependence on higher than necessary levels of virgin material; and 3) It does not 

encourage or promote the recovery and reclamation of HCFC-22. This is illustrated in 

Table 6 below, which shows a scenario EPA should consider that would gradually reduce 

demand for virgin product and increase reliance on reclaimed product, thereby creating 

less market disruption and a more stable reclamation market. [0094.1]

EPA Response: EPA is finalizing an allocation that is less than demand, for the reasons 

discussed below and in the preamble.

Table 6: Constant allowance level compared to step-down approach

HCFC-22 

Expected Service 

Demand

(K MT) 1

Constant HCFC22 Consumption 

Allowance

(K MT)

Reclaimed 

HCFC-22 Needed 

w/ Constant

Allowances (K 

MT)

Step-down

HCFC-22 

Consumption 

Allowance

(K MT)

Reclaimed 

HCFC-22 Needed 

w/ Step-down 

Allowances (K 

MT)

2010 62.5 50 12.5 50 12.5

2011 57.8 50 7.8 45 12.8

2012 53.0 50 3.0 40 13.0

2013 48.3 50 0 35 13.3

2014 43.5 50 0 30 13.5

2015 38.8 25 2 13.8 25 13.8

2016 34.7 25 9.7 20 14.7

2017 30.6 25 5.6 15 15.6

2018 26.4 25 1.4 10 16.4

2019 22.3 25 0 5 17.3

2020 18.2 0 18.2 0 18.2 1 Estimation using 2010/2015/2020 data from: Servicing Tail Report June 2008.

2

 Based on 90% of anticipated 2015 Consumption Cap (10% of HCFC baseline).

Commenters provided a number of different methods for implementing an annual reduction in 

allocations. 

 RemTec International suggests that allocations be reduced in relation to the demand line 

from 2011 to 2014. They recommend that allocations be set at approximately 90% of the 

demand line, so that reclaimers have an incentive to produce their reclaimed product and 

bring it to the marketplace. [0082]
3-33

 Airgas notes that the annual decrease in HCFC-22 consumption allowances in a stepdown approach would grow market dependence on reclaimed product from 20% in 2010 

to 31% of anticipated service demand in 2014, yet keep the amount of reclaimed material 

relatively constant, growing at less than 2% per year from 2010 to 2014. If this model 

were continued through the 2015-2019 phase-down period, growth of reclaimed material 

would average less than 4% per year over the 10 year period. [0094.1]

 DuPont believes that for the years 2011-2014, allocations for HCFC-22 should be 

reduced year over year toward 90% of the ODP-weighted HCFC consumption cap in 

2015. [0097.1]

 Polar Technology, LLC, Reclaimers without Allocations, and ICOR International suggest

the approach presented in Table 7 below: [0102.1, 105.1, 0129]

 Arkema recommends that annual allowances of HCFC-22 should start at 50,000 metric 

tons, as proposed, and thereafter should decline linearly during the period 2011 to 2014.

The total quantity of allowances should be at least 20 percent less than the projected 

servicing demand. [111.1]

 Hudson Technologies states that a gradual reduction in total allowances will require only 

a modest 2% per year growth in reclamation after the initial 12,500 metric tons has been 

achieved. [0112.1]

Table 7: EPA’s Proposed and Commenters’ Recommended HCFC-22 Allocations

2010 2011 2012 2013 2014 2015

Total Servicing Tail Demand (EPA Estimate) 62,500 57,900 53,200 48,400 43,600 38,800

EPA’s proposed consumption allocation 50,000 50,000 50,000 50,000 50,000 NA

Hudson’s recommended consumption allocation* 50,000 44,988 39,976 34,964 29,902 24,938

DuPont’s recommended consumption allocation 50,000 45,542 41,084 36,626 32,168

Polar/ICOR’s recommended consumption allocation 50,000 45,000 40,000 35,000 30,000

Hudson’s estimate of reclaimed product needed under proposal 12,500 7,760 3,020 (1,720) (6,460) 13,862

Reclaimed product needed under Hudson’s approach 12,500 12,772 13,044 13,316 13,638 13,862

Reclaimed product needed under ICOR’s approach 12,500 12,760 13,020 13,280 13,800

* In a supplemental comment, Hudson states that the 2008 reclaim numbers released after the close of the 

comment period support a reduced allocation amount from 2010-2014: 46,875, 42,488, 38,100, 33,713, 

29,326. 

EPA Response: Commenters present EPA with numerous methods for annually reducing

the allocation levels. Because the primary benefit of annually reducing the allocation is 

to ensure demand in 2015 is met through greater recovery and reclamation, EPA believes 

that it is appropriate to base the allocation on that goal. In 2015, EPA estimates demand 

of HCFC-22 at 38,800 MT. Were the allocations to consist entirely of HCFC-22, the cap 

would limit the 2015 HCFC-22 allocation to only 27,709 MT, a difference of 11,091 MT 

that would have to be made up with recovered material. Furthermore, it is likely that the 

allocation in 2015 will not consist entirely of HCFC-22 as EPA will need to reserve room 

under the cap for other HCFCs, similar to the approach EPA is taking in this rule for the 

2010-2014 control periods. 

EPA believes it is appropriate to establish an annual step-down such that the amount of 

total demand to be met from recovered HCFC-22 will equal 12,500 MT each year, as that 

is the amount EPA proposed to be met in 2010 and it is approximately the amount that 

will be needed to meet the servicing demand in 2015. Under this approach, the 
3-34

allocations would equal 50,000 MT in 2010, 45,400 MT in 2011, 40,700 MT in 2012, 

35,900 MT in 2013, and 31,100 MT in 2014. These values, shown in the table below, are 

derived by subtracting 12,500 MT from the estimated demand each year. EPA will not 

issue allowances for 2015 and beyond until a future rulemaking but extends the table to 

2015 to show the estimated demand for that year and the amount of recovered material 

that must be used to meet the demand at that date, assuming the allocation in 2015 

consists entirely of HCFC-22 and does not include other HCFCs. 

This annual stepdown lies in the middle of the ranges suggested by commenters. As the 

total demand decreases, maintaining the supply of recovered HCFCs at a constant level 

results in recovered material comprising a greater proportion of the total demand each 

year. Under this approach, the percentage of the total need to be met with reclaimed 

material will rise from 20% to 29% of total demand in 2014, though the total amount of 

reclaimed material supplied remains at 12,500 MT for all five years. EPA believes this is 

appropriate as it facilitates meeting the demand in 2015, of which at least 29% must be 

met with recovered material.

2010 2011 2012 2013 2014 2015

Total Servicing Tail Demand (EPA Estimate) 62,500 57,900 53,200 48,400 43,600 38,800

EPA’s final consumption allocation 50,000 45,500 40,700 35,900 31,100 NA

Reclaimed product needed under final rule 12,500 12,500 12,500 12,500 12,500 11,091

 Solvay Chemicals believes that if EPA reduces the allocation annually, it should do so 

within a modest band that does not decrease the total quantity of allowances available 

over the five control periods when it issues the Final Rule. [0106.1]

EPA Response: EPA believes that such an approach would negate many of the benefits of 

annually reducing the allocations, including easing the transition to the 2015 control 

period and providing an environmental benefit. To implement the suggestion, the

allocation would have to equal demand in 2010, which would not create any impetus for 

reclamation in that year, and be 84% of demand in 2014. EPA believes that meeting 20% 

of demand with used material in 2010 is feasible and that the Agency should not wait 

until 2014 to approach that goal.

 HARDI urges EPA to issue annual servicing need forecasts should the Agency establish 

annual step downs in the allocation. HARDI states it has not seen enough detailed data 

on which 2011, 2012, and 2013 caps could be adequately established. [0117.1]

EPA Response: The Servicing Tail Report accompanying this rule contains the most 

recent servicing need estimates. Unlike previous drafts, this final version provides 

servicing demand estimates for each year between 2010-2015, whereas the previous 

report provided only 2010 and 2015.

The Vintaging Model is continually updated to improve assumptions and modeling 

techniques and refine inputs based on information received from these sources. EPA 

shares the revised assumptions and results of model improvements with industry through 
3-35

publications such as the Servicing Tail Report as well as through presentations, such as 

those given at the April 2007 Spring Meetings of AHRI.

 Trane/Ingersoll-Rand supports the intention and concept of an accelerated phase-down 

but urges that it be implemented more gradually than other parties suggested. This 

commenter suggests EPA allocate 88% of estimated demand in 2010 in order to give the 

reclamation sector time to increase capacity. The commenter also suggests allocating 

fewer allowances in later years, with allocations at 72% of demand in 2014 and 68% in 

2015. [0099.1]

EPA Response: Based on the comments received, EPA believes that a 20% reclamation 

and recycling rate is attainable in 2010 and that reclamation capacity doesn’t need 

additional time. 

 National Refrigerants Inc., Coolgas/Dynatemp, and Atair Partners state that EPA should 

not reduce the allocation amounts from what was proposed. These commenters state that 

EPA should ensure that a sufficient number of allowances are allocated for the costeffective service of existing equipment. Meeting demand is essential for a smooth 

transition. [0110.1, 0113.1, 0128]

EPA Response: EPA agrees that meeting demand is essential for a smooth transition. 

EPA believes that demand can be met through a combination of virgin HCFC-22 and 

recovered HCFC-22 that has either been reclaimed or recycled. EPA disagrees that it 

needs to maintain a constant allocation to ensure that enough allowances are allocated to 

meet demand given that demand decreases over the five control periods. EPA is 

concerned that without an annual reduction in the allocations, there would not be 

sufficient recycling and reclamation to meet demand in 2015, which would be contrary to 

EPA’s goal of seeking a smooth transition. 

 Coolgas/Dynatemp supports maintaining an allocation at 50,000 MT for all five control 

periods. An annual stepdown was not discussed at the June 18, 2008, stakeholder 

meeting or in the proposed rule. This commenter states that there is no basis for a linear 

stepdown in the Montreal Protocol, the Clean Air Act, or EPA’s implementing 

regulations. It would also be a departure from past practice. [0113.1] 

EPA Response: EPA believes that moving from a constant allocation of 50,000 MT per 

year for five years to an annually decreasing allocation does not present notice and 

comment issues. The proposed rule discussed the idea of increasing the expected 

contribution of recycled and reclaimed refrigerant for each control period by annually 

reducing the allocation of HCFC-22. “EPA has considered, but is proposing to reject, 

using an increasing number to represent the contribution of recycled and reclaimed 

refrigerant for each of the control periods from 2010–2014 and thus simultaneously 

reducing the amount of allowances needed for HCFC–22. EPA believes for these control 

periods, maintaining a constant number of allowances would reduce the overall burden 

for the allowance holders and would ease business practices.” (73 FR 78691) Though a 
3-36

year-by-year reduction was not discussed at the June 18, 2008, stakeholder meeting, it 

was raised in comments by a variety of stakeholders. 

EPA has considerable discretion in designing mechanisms to ensure that the U.S. will 

meet its commitments under the Montreal Protocol. For example, EPA chose a chemicalby-chemical approach to implement the Montreal Protocol’s stepwise phaseout of the 

basket of HCFCs. In addition, EPA introduced the class II allowance system in part to 

ensure that the U.S. would be able to meet the phaseout steps already incorporated into 

EPA’s regulations. Similarly, EPA has determined that an annually decreasing allocation 

is the best mechanism to ensure that the U.S. can meet the 2015 phasedown step while 

maintaining sufficient supply of HCFC-22 for authorized uses. The Clean Air Act does 

not prohibit the use of annually decreasing allocations to meet either the phaseout

schedule set forth in section 605 or an accelerated schedule adopted pursuant to section 

606. In this instance, EPA is implementing the accelerated schedule reflected in 40 CFR 

82.16

3.5. Facilitating an effort to improve reclaim (i.e., contractor participation) and increase 

the 20% rate 

Commenters provide the following comments on EPA facilitating an effort to improve 

reclamation.

 USA Refrigerants, NRI, Arkema, and the Alliance for Responsible Atmospheric Policy

state that EPA should implement a recycler certification program that includes stringent 

recordkeeping and reporting requirements. Certification would help purchasers verify that 

they are dealing with persons qualified to handle used HCFCs and would help EPA 

prevent impure or smuggled HCFC-22 from entering the market as reclaimed. [0082, 

0110.1, 0111.1, 0120.1]

EPA Response: EPA believes that this issue is beyond the scope of this rulemaking, 

however, EPA has previously considered a third party certification requirement for 

reclaimers (July 24, 2003; 68 FR 43786). The Agency may consider changes to the 

reclamation requirements including, reconsideration of a third party certification program 

under different authority (i.e., Section 608 of Title VI of the CAA).

 NRI encourages EPA to promote education to contractors and technicians about the 

requirements and necessity to recover refrigerant. The Alliance states that a significant 

factor impacting the supply of reclaimed refrigerant is the ability of those who service 

and maintain equipment to conduct operating practices that prevent venting and allow 

recovery of refrigerants for delivery to reclaimers. The commenter believes that EPA 

should promote comprehensive education and training of servicers of equipment. 

[0110.1, 0120.1]

EPA Response: EPA believes that this issue is beyond the scope of this rulemaking. 

However, EPA requires contractors and technicians to be certified and part of that 

certification test is an understanding of the Section 608 of the Clean Air Act prohibition 

of venting refrigerant. 
3-37

 Polar Technology, LLC, Reclaimers without Allocations, NRI, and the Alliance 

encourage EPA enforce Clean Air Act prohibitions against intentional venting of 

refrigerant during service/manufacture of equipment. One commenter suggests that EPA 

hold a press conference to announce that it intends to implement field audits for the 

purpose of enforcing Section 608 of the CAA. The press conference by itself would 

provide enough momentum for changing views on recovery. A publicized violation 

would even do more good. [0102.1, 0105.1, 0110.1, 0120.1]

EPA Response: EPA continues to enforce its regulations that prohibit venting and require 

the recapture of used refrigerants. More information on EPA’s Title VI enforcement 

efforts can be found at http://www.epa.gov/ozone/enforce/index.html.

 ICOR International states the reclaim industry has been able to develop many programs 

which have provided service technicians with an outlet for recovered refrigerant. The 

commenter also notes that most, if not all, of the Certified Reclamation companies have 

invested a great deal of money, business resources and man hours based on Section 608 

of the CAA and numerous Servicing Tail Reports which have continually stated that the 

industry would have to depend on recovered refrigerants in order to satisfy demand. The 

commenter notes that after January 1, 2015, the HVAC/R industry will be faced with an 

inability to satisfy market demand for HCFC-22 through the use of virgin product alone. 

At that time, the commenter states that the reclamation industry will not be able to pull 

out the equipment and start delivering ARI-700 product to fill the gap between supply 

and demand. ICOR International recommends a Recover Network be developed and 

maintained. Certified reclaimers must educate their customers in the value of recovering 

refrigerant efficiently as recovery will enhance the overall profitability of their company. 

[0129]

EPA Response: EPA agrees that certified reclaimers must educate their customers of the 

value of recovered refrigerant. EPA also supports the concept of a recovery network to 

increase the amount of recovered HCFC-22. EPA believes that the allocation amounts in 

this rule will facilitate the transition to the required levels in 2015.

 DuPont requested that EPA clarify that the mixing of virgin HCFC-22 with reclaimed 

HCFC-22 not be considered a prohibited “use” of that virgin HCFC-22 under Section 605 

of the Clean Air Act. Further, DuPont commented that use of the resulting HCFC-22 be 

limited only to those permitted uses of virgin HCFC-22. Without such clarification there 

would be a strong incentive to not recover HCFC-22 that cannot be easily purified since

it would need to be destroyed and decrease the amount of reclaimed HCFC-22 available 

to meet market demand. [0097.1]

EPA Response: EPA clarifies that the blending of virgin HCFC-22 with reclaimed but 

cross-contaminated HCFC-22 is not a prohibited use of virgin material under Section 

605. EPA disagrees with DuPont that the resulting reclaimed HCFC-22 that meets ARI700 should be limited to servicing existing equipment. EPA believes that such material 

has been used, recovered, or recycled per Section 605(a) and may thus be used in any 
3-38

permissible use under Section 605, which would include use in newly manufactured 

appliances.

3.6. Servicing Tail Report Clarifications and Potential Modifications

 DuPont states that they believe the information available to EPA in the Servicing Tail 

report provides an adequate basis to reasonably estimate servicing needs for 2010-2014. 

[0097.1]

 HARDI states that the 2008 Servicing Tail report’s estimates of a decrease in post-2010 

HCFC-22 demand of approximately 6,100 metric tons are unjustified, even if leak rate 

regulations are made more stringent for commercial applications. This commenter 

believes there might also be clerical errors in the 2008 report: 

 HCFC-22 chilling units expected to be in service in 2010 increase by 4,295% 

between the 2006 and 2008 reports

 2010 unitary projections for HCFC-22 retail food refrigeration equipment 

increases 72% between the two most recent reports

 There is a drop of over two million dehumidifiers projected to be in service in 

2010, which is the only significant projected equipment reduction and seems 

questionable at best. [0117.1]

EPA Response: The decrease in projected R-22 demand of almost 6,100 metric tons 

between the September 2006 and June 2008 reports is a direct result of updates made to 

EPA’s Vintaging Model (VM) based on industry and stakeholder input. These changes 

are part of EPA’s ongoing effort to improve modeling assumptions. Model assumptions 

and results (such as consumption and emissions estimates) from major air-conditioning 

and refrigeration end-uses were presented at the April 2007 spring meetings of the AirConditioning and Refrigeration Institute (AHRI). Revisions were made to the VM based 

on comments received on those presentations. Revised model output was subsequently 

used to update the June 2008 report. 

Specifically, the VM was updated to reflect slight increases in R-22 demand for chillers, 

cold storage, and industrial process refrigeration (IPR), and to reflect a decrease in R-22 

demand for dehumidifiers and a significant decrease in R-22 demand for retail food end 

uses. Additionally, the retail food sector in the VM was updated to reflect information 

presented in the “2006 Report of the Refrigeration, Air Conditioning and Heat Pumps 

Technical Options Committee: 2006 Assessment,” issued in January 2007 by the United 

Nations Environment Programme (UNEP). As part of this update, the VM’s “large retail 

food” end-use, which represents supermarkets, was broken out into two end-uses to 

reflect the usage of both R-12 and R-502 as initial ODS’s used within large retail food 

equipment. In addition, stocks and growth rates for all retail food end-uses were altered, 

and leak rates and charge sizes were decreased in small and medium retail food end-uses, 

causing a decrease in overall R-22 demand.

The increase in R-22 chiller units between the 2006 and 2008 reports is not a clerical 

error; it is the result of the addition of new chiller end-uses into the VM and resulting 
4-39

analysis. Prior to 2007, the VM contained five chiller end-uses (R-11, R-12, R-114, R500, and R-22). These end-uses all had relatively large charge sizes and were modeled 

under a single category of “centrifugal chillers.” Through further research, ICF 

determined that the VM did not include smaller, positive displacement chillers. As a 

result, three new positive displacement chiller end-uses were added to the VM. Because 

the charge sizes of centrifugal and positive displacement are so significantly different, the 

total quantity of refrigerant remains relatively unaffected in making this change to the 

modeling despite the enormous jump in the number of units.

Updates made to assumptions for the retail food end-uses in the VM resulted in an 

increase in equipment. However, despite the increase in units of equipment, there was 

also a decrease in stocks, growth rates, leak rates, and charge sizes which caused a 

decrease in R-22 demand post-2010. 

Finally, conversations with industry indicated that dehumidifier projections in the 

September 2006 report were too high. The number of dehumidifiers was decreased to 

reflect historical data provided by the Association of Home Appliance Manufacturers 

(AHAM), including data on shipments of new units from the AHAM Trends and 

Forecasts Report (AHAM 2005) and data on existing units from the 2003 Major 

Appliance Fact Book (AHAM 2003). 

4. ALLOCATIONS OF ALLOWANCES OF HCFCs OTHER THAN 

HCFC-22 AND HCFC-142b

Nine commenters submitted comments in response to EPA’s request for comments regarding 

allocations of allowances of HCFCs other than HCFC-22 and HCFC-142b. Comments were 

either in support of or opposed to EPA’s proposed baseline and allocation setting approach.

4.1. Support for EPA’s proposed baselines and allocations for the “other” HCFCs

4.2. Opposition to EPA’s proposed baselines and allocations for the “other” HCFCs

Count Commenter Organization Document ID No

1 Tony Digmanese York/Johnson Controls EPA-HQ-OAR-2007-0496-0074

2 Mack McFarland DuPont EPA-HQ-OAR-2007-0496-0097.1

3 John M. Mandyck Carrier EPA-HQ-OAR-2008-0496-0098.1

4 Jeff Moe Trane/Ingersoll-Rand EPA-HQ-OAR-2008-0496-0099.1

5 Julian de Bullet McQuay EPA-HQ-OAR-2008-0496-0100.1

6 Maureen Beatty National Refrigerants, Inc. EPA-HQ-OAR-2007-0496-0110.1

7 Emanuel (Manny) Katz Arkema EPA-HQ-OAR-2007-0496-0111.1

8 Steven H. Bernhardt Honeywell EPA-HQ-OAR-2008-0496-0118.1

9 Paul Schoonover Perfect Technology Center EPA-HQ-OAR-2008-0496-0134

4.1. Support for EPA’s proposed baselines and allocations for the “other” HCFCs

 DuPont supports EPA’s proposal to establish and apportion baselines on a chemical-bychemical and entity-by-entity basis for HCFC–123, HCFC–124, HCFC–225ca, and 

HCFC–225cb and to allocate a percentage of those baselines for the 2010–2014 control 

periods. This commenter believes it is important to establish baselines for all HCFCs in 
4-40

this rule to provide adequate planning time for industry to adjust to the phase-down and -

out and to ensure the United States meets its Montreal Protocol obligations. Establishing 

the chemical-by-chemical baselines using each company’s highest reported consumption 

and production for 2005– 2007 is consistent with the procedure already successfully used 

by the EPA to establish chemical-by-chemical baselines for HCFC-141b, HCFC-22 and 

HCFC-142b. [0097.1]

 Trane/Ingersoll-Rand supports the modest growth allowance proposed by EPA for 

HCFC-123, which is consistent with the characteristics of this refrigerant and with the 

characteristics of the equipment which uses this refrigerant. The volume allowed appears 

sufficient to meet the needs for on-going OEM demand along with demand for service of 

existing equipment. [0099.1]

 McQuay notes that it is necessary for EPA to establish baselines for the four additional 

HCFCs addressed in the proposal for which EPA has not previously set baselines 

(HCFC-123, -124, -225ca, -225cb) in order to insure that the United States does not 

exceed the 25% HCFC cap under the September 2007 Montreal Protocol Adjustment.

[0100.1]

 National Refrigerants, Inc. (NRI) notes that with regard to HCFC-123 and HCFC-124, it 

fully supports the allocation of baseline allowances for these substances that it has 

received, and supports the other company-specific allowance allocations for these low 

ozone depleting potential HCFCs. [0110.1]

 Honeywell notes that the allocation approach for these low volume, low-ODP HCFCs is 

appropriate and supports EPA’s proposed actions in this area. [118.1]

EPA Response: EPA is establishing a baseline and apportioning baseline allowances for 

HCFC-123, HCFC-124, HCFC-225ca, and HCFC-225cb. EPA discusses this in more 

detail in the preamble.

 Arkema adds that they believe that the reserve equal to 23 percent of consumption 

allowances and 32 percent of production allowances should be permanently retired. If 

EPA continues to hold the reserve, the market will always look to the Agency as the 

lender of last resort instead of seriously pursuing recycling. [0111.1]

EPA Response: EPA disagrees that the unallocated room under that cap constitutes a set 

of allowances that can be “retired”; it simply represents the differential between the cap 

and the amount of allowances allocated. As stated earlier, room under the cap provides 

for potential market penetration of other HCFCs that do not have allocations. 

Furthermore, the Agency is not maintaining a “reserve” to be allocated at a future time 

but rather is maintaining an accounting of the total U.S. HCFC production and 

consumption to ensure compliance with the HCFC cap. EPA does not intend to allocate 

the extra amount under the cap, except under unforeseen extenuating circumstances, 

because it is important to promote greater use of recycled and reclaimed material in 

anticipation of the next phasedown step.
4-41

4.2. Opposition to EPA’s proposed baselines and allocations for the “other” HCFCs

 York/Johnson Controls and McQuay note that allocations of 72% for HCFC-22 are 

inadequate, while 27% for "other" HCFCs seems excessive as HCFC-22 will have the 

greatest servicing needs and projected shortages. [0074, 0100.1]

EPA Response: EPA agrees that the greatest need for all HCFC in the future will be for 

servicing existing HCFC-22 equipment. However, as discussed in the preamble, EPA 

carefully analyzed such needs through multiple iterations of its Servicing Tail report to 

determine an allocation of HCFC-22 necessary to avoid shortages. EPA believes that it is 

appropriate to allocate HCFC-22 based on demand (and considering the role of 

reclamation) because this will help the transition to the 2015 phase-down step, when the 

cap is reduced from 25% to 10% of baseline. While EPA is not “reserving” room under 

the cap for these other HCFCs, the effect of allocating allowances based on need is 

additional room under the aggregate HCFC cap for any HCFCs that EPA has not 

specifically included in §§82.16, 82.18, and 82.19.

 Carrier and McQuay disagree with EPA’s proposal to establish the HCFC-123 baseline as 

the highest production between 2005 and 2007. Research and experience of McQuay 

indicates that the number of chillers using HCFC-123 as the refrigerant has been steadily 

declining over the last several years. Therefore, McQuay believes it is more accurate and 

reflective of the chiller market trends to select the lowest reported data from the 2005-

2007 data reporting periods to set the HCFC-123 baseline. Carrier urges EPA to 

calculate the baseline using calendar year 2008, which reflects the latest data and better 

reflects the market. [0098.1, 0100.1]

EPA Response: EPA disagrees with these alternative methods for establishing the 

baseline for HCFC-123. EPA does not support choosing the lowest year’s reported data 

because EPA is not seeking to actively restrict the market for HCFC-123 in this rule. 

EPA does not wish to prejudge the market for HCFC-123, be it increasing or decreasing. 

EPA also does not believe that selecting the 2008 year is appropriate because EPA’s 

experience has been that a single year’s data may actually not be reflective of the market, 

even if the date is closer to the present. For example, the economic conditions in 2008 

may have affected production for that year in a way that is not reflective of the market in 

2010 and beyond. Also, as mentioned above, the entities receiving allowances have very 

different production and import histories and no one year is representative for all 

companies. For these reasons, EPA is establishing the HCFC-123 production and 

consumption baselines based on an entity’s highest reported consumption and production 

for the 2005-2007 control periods.

 Carrier and McQuay disagree with EPA’s proposed allocation formula of 125% of the 

HCFC-123 baseline. These commenters state that contrary to EPA’s belief that market 

expansion is possible during 2010-2014 for HCFC-123 (based on some stakeholders), 

that based on current chiller market trends, this proposed allocation amount is excessively 

large. Carrier states that the proposed allocation rule should encourage the transition to 

non-ozone depleting substances by accelerating the phase out of HCFC-123. Carrier 

states that 25% market growth for chillers is unrealistic when the building market is in 
4-42

decline today. In October 2008, McGraw-Hill Construction Research & Analytics 

forecasted a 5% decline in new nonresidential construction from 2007 to 2013. Since that 

time, the construction market has worsened with the global recession. This commenter 

suggests the following allocation schedule for HCFC-123 (see 

 Table 8):

Table 8: Suggested HCFC-123 Allocation Schedule

YEAR ALLOCATION

2008 Baseline established

2010 80% of baseline allocated

2011 70% of baseline allocated

2012 50% of baseline allocated

2013 20% of baseline allocated

2014 10% of baseline allocated

2015 5% of baseline allocated

McQuay believes the maximum justifiable percentage of the HCFC-123 baseline for the 

2010-2014 control periods is 80%. The commenter states that by establishing baseline 

allocations for HCFC-123 which reflect realistic chiller market projections will reduce 

the possibility of excessive HCFC-123 production. York/Johnson Controls notes that an 

allocation of 125% of baseline is surprising and excessive, as they project decreasing 

demands with the ongoing phase-down of all HCFCs. Demand for HCFC-123 and -124 

are gradually decreasing, while HCFC-225ca/cb are being replaced. The allocation 

should at most be in the 80% to 90% range, with the balance allocated to HCFC-22 to 

meet pending shortages. [0074, 0098.1, 0100.1]

EPA Response: EPA disagrees that allocating more than 100% of baseline for HCFC123 will artificially increase demand for this compound. Currently, there is no limit on 

HCFC-123 production or consumption. EPA does not believe that placing such a limit in 

this rule would artificially increase demand for this compound. As discussed above, EPA 

chose more than 100% to allow for normal growth in the market, not to impose any 

constraints or confer any benefits on the market. If the full amount of allowances is not 

needed, then EPA expects that the excess allowances may go unused or be transferred for 

other HCFCs. Second, under current domestic regulations, HCFC-123 can be produced 

or imported for new appliances until 2020 (40 CFR 82.16(d)). Third, EPA does not 

believe that the continued use of HCFC-123 at this point will threaten U.S. compliance 

with the overall HCFC cap. Therefore, the Agency disagrees that it is necessary to 

accelerate that schedule in this rule.

 York/Johnson Controls notes that the proposed rule lists annual production and import 

allocation for HCFC-123 at 3 million kg. The commenter believes this quantity is way 

over the EPA projected demand (presented at the June Stakeholders meeting) for HCFC123 at 24 ODP tons (1.2 million kg) by 2010. The commenter suggests EPA may wish to 

take a look at this disparity. The commenter believes EPA's June projection is closer to 

market reality, and probably somewhat over-stated based on current new HCFC-123 

chiller sold and installed. Carrier believes that EPA has severely overestimated the need 

for HCFC-123 by proposing allowances at three million kilograms. Using industry 

shipment data for large water cooled chillers, they estimate annual capacity at 2,154,000 

full load tons. If one makes the assumption that HCFC-123 is 45% of the large water 
4-43

cooled chiller market and that there are 1.5 pounds of refrigerant charge per ton of 

capacity, new HCFC-123 chillers would require only 691,786 kg of charge. The proposed 

EPA allowances appear to be more than four times the requirement for new equipment. 

The proposed allowances also appear especially high considering that the manufacturer 

of HCFC-123 chillers claims leak rates below 1%. This commenter does not believe that 

data for new equipment or service supports allowances at three million kilograms. The 

commenter recommends that EPA significantly reduce the proposed allowances for 

HCFC-123 to reflect the above points. [0074, 0098.1]

EPA Response: While EPA did not use a straight needs-based analysis for allocating 

HCFC-123, EPA did review the HCFC-123 needs analysis in the June 2008 Servicing 

Tail report and found that the source data used to project needs were not the same as 

those used to establish the allocation of HCFC-123. EPA has issued a final version of the 

Servicing Tail report (accessible in the docket to this action and at 

http://www.epa.gov/ozone). In any case, EPA has not chosen to allocate HCFC-123, 

HCFC-124, HCFC-225ca, or HCFC-225cb at the estimated need as shown in the 

Servicing Tail report. Instead, to allow for market growth as previously discussed, EPA 

is setting allocation baselines in the same manner for all four of these low-ODP HCFCs. 

Namely, EPA is setting each company’s baseline at the highest consumption or 

production in the years 2005-2007, and allocating 125% of those baselines to avoid 

interfering with the existing market.

 Carrier urges EPA to reconsider its generalization that it is too early to expect 

reclamation of HCFC-123. By the commenter’s estimates, HCFC-123 chillers have been 

in the market for nearly 20 years, a time period that in some cases exceeds the life of a 

chiller. Therefore, EPA should expect and require full compliance with refrigerant 

reclamation and recycling laws that already exist. Accordingly, the commenter

recommends that EPA require HCFC-123 reclamation to account for 20% of market 

demand for initial allocation purposes to align with the proposed allocation formula for 

HCFC-22. [0098.1]

EPA Response: Given that in many cases these appliances have expected lifespans of 

more than 20 years, it will be some time before significant amounts of HCFC-123 are 

recovered and recycled or reclaimed. In future rulemakings, however, EPA may estimate 

the amount of the total need for HCFC-123 that can be met through recycling and 

reclamation. As the HCFC-123 market matures, the refrigerant recovery, recycling, and 

reclamation requirements in 40 CFR part 82 subpart F will result in a greater amount of 

reusable HCFC-123.

 Perfect Technology Center, LP requests to qualify to be allocated an allowance for the 

2010-2014 control periods to import and consume HCFC-123. [0134]

EPA Response: EPA is adding Perfect Technology Center, LP (doing business as Perfect 

Cycle) to the list of companies being allocated baselines for the other HCFCs. Perfect 

Technology Center, LP had imported HCFC-123 during the time period used to set the 
5-44

baseline but its reporting forms – although submitted in compliance with EPA regulations 

– were misdirected and the information was not included in EPA’s baseline calculations.

5. 605(A) USE RESTRICTION 

Twenty-four commenters submitted 25 comments regarding Section EPA’s authority and the 

605(a): Restrictions of use of class II substances. Section 605(a) phases out production and 

consumption and restricts the use of HCFCs in accordance with the schedule set forth in that 

section. Comments were in reference to four main topics: 

5.1. “Manufactured” clarification

5.2. Accelerating the 605A use restriction under the authority of Section 606

5.3. Introducing HCFCs into Interstate Commerce

5.4. Niche applications for HCFC-22 and HCFC-142b

Count Commenter Organization Document ID No

1 Michael Welch Welch Heating and Air EPA-HQ-OAR-2008-0496-0079

2 David Swift Goodman Air Conditioning and Heating EPA-HQ-OAR-2008-0496-0080.2

3 Karim Amrane Air-Conditioning, Heating, and 

Refrigeration Institute (Public Hearing) EPA-HQ-OAR-2008-0496-0082

4 Tom Roberts CFM Distributors (Public Hearing) EPA-HQ-OAR-2008-0496-0082

5 Jim Crawford Trane/Ingersoll-Rand (Public Hearing) EPA-HQ-OAR-2008-0496-0082

6 James Burke USA Refrigerants (Public Hearing) EPA-HQ-OAR-2008-0496-0082

7 Robert Wilkins Danfoss EPA-HQ-OAR-2008-0496-0084.1

8 Charlie A. Barefoot Jr. Dometic EPA-HQ-OAR-2008-0496-0085.1

9 Kevin Messner

Association of Home Appliance 

Manufacturers EPA-HQ-OAR-2008-0496-0089

10 Shawne C. McGibbon U.S. Small Business Administration’s 

Office of Advocacy EPA-HQ-OAR-2007-0496-0090.1

11 David A. Amrhein Ascent Healthcare Solutions, Inc. EPA-HQ-OAR-2008-0496-0095.1

12 Cary Rayment Alcon Laboratories, Inc. EPA-HQ-OAR-2008-0496-0096.1

13 Mack McFarland DuPont EPA-HQ-OAR-2007-0496-0097.1

14 Jeff Moe Trane/Ingersoll-Rand EPA-HQ-OAR-2008-0496-0099.1

15 Diran Yegparian Mondy Global, Inc. EPA-HQ-OAR-2008-0496-0101.1

16 Warren L. Beeton Emerson Climate Technologies EPA-HQ-OAR-2008-0496-0104.1

17 Maureen Beatty National Refrigerants, Inc. EPA-HQ-OAR-2008-0496-0110.1

18 Emanuel (Manny) Katz Arkema EPA-HQ-OAR-2008-0496-0111.1

19 Talbot H. Gee Heating, Airconditioning & Refrigeration 

Distributors International EPA-HQ-OAR-2007-0496-0117.1

20 Steven Bernhardt Honeywell EPA-HQ-OAR-2008-0496-0118.1

21 Karim Amrane Air-Conditioning, Heating, and 

Refrigeration Institute EPA-HQ-OAR-2008-0496-0119.1

22 David Stirpe The Alliance for Responsible 

Atmospheric Policy EPA-HQ-OAR-2008-0496-0120.1

23 Charlie McCrudden Air Conditioning Contractors of America EPA-HQ-OAR-2008-0496-0122.1

24 Cos Caronna and 

Steve Maddox Johnson Controls EPA-HQ-OAR-2007-0496-0126.1

25 Kyle Gilley Lennox International EPA-HQ-OAR-2008-0496-0127.1

26 Karen B. Meyers Rheem EPA-HQ-OAR-2007-0496-0131.1

27 Sarah Meyer American Medical Systems EPA-HQ-OAR-2008-0496-0141

28 Roger Wertheimer The Spectranetics Corporation EPA-HQ-OAR-2008-0496-0142
5-45

5.1. “Manufactured” Clarification

Seventeen commenters requested clarification regarding EPA’s definition of “manufactured.”

These commenters expressed concern that EPA’s definition of “manufactured,” as they 

interpreted it in the proposed rule, will limit their ability to sell stockpiled inventory after January 

1, 2010.

 Goodman, Dometic, U.S. Small Business Administration’s Office of Advocacy, National 

Refrigerants Inc (NRI), Arkema, HARDI, AHRI, ACCA, and Lennox International

commented that they believed that products (components and appliances) should be 

allowed to continue to be produced through December 31, 2009. The proposed rule’s

interpretation of the term “manufactured” instead would have had the effect of banning 

installation, thereby accelerating the use ban in a way that would strand inventory that 

has been produced before January 1, 2010, but not installed. These commenters 

recommended that EPA use a more conventional definition such that an appliance be

deemed to be “manufactured” when the product leaves the manufacturer’s final assembly 

process, is packaged for shipment and placed into initial inventory. Commenters 

indicated that this simplification and clarification will significantly increase compliance 

with the final rule and enable EPA to use this definition of “manufactured” to enforce a 

recommended ban on the production of equipment requiring HCFC-22 after January 1, 

2010. [0080.1, 0085.1, 0090.1, 0131.1, 0110.1, 0111.1, 0117.1, 0119.1, 0122.1, 0127.1]

EPA Response: EPA is providing the following definition for “manufactured:”

Manufactured, for an appliance, means the date upon which the appliance’s 

refrigerant circuit is complete, the appliance can function, the appliance holds a 

full refrigerant charge, and the appliance is ready for use for its intended 

purposes; and for a pre-charged appliance component, means the date that such 

component is completely produced by the original equipment manufacture, 

charged with refrigerant, and is ready for initial sale or distribution in interstate 

commerce.

The commenters’ concern arises from how the two terms “appliance” and “manufacture” 

apply together. Small appliances, i.e., devices that have a completed refrigerant circuit,

are fully charged, and are functional and ready for use at the time they leave the factory 

are “manufactured” at the time they are placed into initial inventory at the factory and are 

shipped as complete “appliances” rather than as a set of components. In contrast, 

appliances used in commercial refrigeration and industrial process refrigeration are not 

placed in inventory or shipped as complete “appliances.” Rather, they are assembled, the 

refrigerant loop is completed, the full and proper charge is provided and the system is 

ready for its intended purpose on-site. In such cases, OEMs are manufacturing 

components and not appliances in their factory. The point of manufacture of the 

commercial or industrial process refrigeration appliance occurs after the components 

have left the factory. EPA has consistently stated its interpretation that individual 

components such as condensers, evaporators, compressors, line sets, and valves in 

themselves do not constitute an appliance. In an earlier rulemaking addressing the sales 

of pre-charged appliance components, the Agency stated that pre-charged components 

are parts of but “are clearly not appliances” (November 9, 1994; 59 FR 55912). In this 
5-46

HCFC allocation rule, EPA is clarifying that the appliance itself is not manufactured until 

the component parts, whether pre-charged or not, are fully installed and charged.

In response to stakeholders comments, EPA is establishing a grandfathering clause where 

appliances are manufactured on site rather than in a factory. Specifically, EPA’s is 

allowing appliances containing HCFC-22, HCFC-142b, or blends thereof to be 

“manufactured” onsite for a particular project between January 1, 2010, and December 

31, 2011, if their components are made prior to January 1, 2010, and specified for use at 

that project under a building permit or a binding contract dated before January 1, 2010. 

 Welch Heating and Air states that EPA should allow manufacturing to continue through 

the end of 2009, and allow the country to absorb that inventory through 2010. A 

compromise may be to require that there can be no more HCFC-22 equipment sold after 

Dec. 31, 2010. CFM Distributors states that they maintain inventories that fulfill market 

demands, which necessitates immediate replacement of failed systems and major 

components like condensing units. Because they have enough inventory and cannot 

forecast the precise demand for each model, type, and variety, they often carry over 20% 

of their inventory. The company has no incentive to stockpile HCFC equipment versus 

HFC. They state that EPA should allow the sell-through of existing inventory. NRI 

comments that EPA’s definition could force technicians to abandon the product as 

unusable. This result would effectively terminate the split system market for any unit 

actually manufactured prior to January 1, 2010, at a tremendous cost to companies with 

existing inventories of split systems and their components and render it illegal to 

complete the installation of a system that is only partially installed as of January 1, 2010.

The Alliance requests that the final rule allow for the sale and installation of components, 

whether charged or uncharged, that have been placed in inventory prior to Jan 1, 2010,

for both replacement and certain split-system new installations. [0079, 0082, 0110.1, 

0120.1]

EPA Response: EPA is allowing for the continued manufacture of appliances and 

components through 2009. 

Sale and distribution of appliances pre-charged with HCFC-22 or HCFC-142b is allowed 

for self-contained, factory-charged appliances such as pre-charged window units, 

packaged terminal air conditioners (PTACs), and some commercial refrigeration units, if 

manufactured before January 1, 2010.

Sale and distribution of appliance components pre-charged with HCFC-22 or HCFC142b is allowed if the components (e.g. condensing units, line sets, and coils that are 

charged with refrigerant) were manufactured before January 1, 2010. Pre-charged 

components manufactured before January 1, 2010, may be used to service appliances 

manufactured before January 1, 2010, but may not be assembled to create new appliances 

unless there is no use of virgin HCFC-22 or HCFC-142b in the components or otherwise.

 SBA disagrees with EPA’s proposed interpretation of when air-conditioning and 

refrigeration appliances and components are considered “manufactured.” SBA asks EPA 
5-47

to use the same language adopted in the 2001 Reconsideration of the 610 Nonessential 

Products Ban for class I refrigerants so that the items are considered “manufactured” 

once they enter the initial inventory at the manufacturing site. SBA states that the 2001 

rule gives a definition of initial inventory that is compatible with common industry usage: 

the date “that the original product has completed all its processes and is ready for sale by 

the manufacturer.” SBA urges EPA to use shipping forms, lot numbers, manufacturer 

date stamps or codes, invoices, or the like to determine proof of the date of manufacture. 

SBA notes that EPA’s proposed definition would be a new interpretation that would 

conflict with the conventional understanding of “manufacturing” and contribute to 

unnecessary confusion. [0090.1]

EPA Response: In the Section 610 nonessential products ban for class I refrigerants, 

found at 40 CFR Part 82 Subpart C, EPA did not define “manufactured.” Rather, EPA 

provided a temporary exemption for products that had been manufactured and placed into 

initial inventory by a specified date. “Initial inventory” was defined as meaning that “the 

original product has completed all its manufacturing processes and is ready for sale by 

the manufacturer.” EPA has considered using a similar approach here. However, in 

implementing Section 605, EPA is taking into account commercial refrigeration and 

industrial process refrigeration, which is not placed into initial inventory or shipped as a 

complete “appliance.” In such cases, OEMs are manufacturing components in their 

factory, not appliances. 

 NRI notes that EPA’s definition of when an appliance or component is deemed 

manufactured should be distinct from the date of installation. Using the date of field 

charging as the date of “manufacture” will cause tremendous confusion in the field as to 

what refrigerant may legally be charged into a given system. NRI notes that EPA’s 

definition of “manufactured” will place a disproportionate burden on retailers and 

installers as they attempt to determine whether they may service certain products lawfully 

depending on what type of installation and adjustments may be required. [0110.1]

EPA Response: EPA disagrees that this will create tremendous confusion in the field. All 

existing appliances using HCFC-22 after January 1, 2010, may continue to be serviced 

with virgin HCFC-22. Appliances that are manufactured under the grandfathering 

provision for already contracted projects discussed in the preamble, and above, can also 

be serviced with virgin HCFC-22. New appliances not covered by the grandfathering 

provision may not be manufactured (installed in the field) after January 1, 2010, unless 

assembled from components that are shipped dry and charged on-site with reclaimed 

HCFC-22. Only these systems may not be charged with virgin HCFC-22 but EPA 

anticipates this number to be small. Technicians should be able to easily ascertain

whether the equipment they are servicing falls into this small category by simply asking 

the owner if their equipment was installed after January 1, 2010, and if so, how.

 NRI comments that EPA’s definition would create enforcement issues over which entity 

manufactured the product. [0110.1]
5-48

EPA Response: The distributor or installer of a system would be responsible if they 

assembled components into a new appliance after January 1, 2010. There would be no 

change from current practice regarding other issues concerning the component parts (e.g. 

failure of a condensing unit under warranty).

 NRI, AHRI, The Alliance, Johnson Controls, and Lennox International express concern

that EPA’s current definition of “manufactured” would negatively affect HVAC 

equipment used in commercial and residential buildings (including modular buildings) 

where installation commenced prior to January 1, 2010. One commenter could easily 

envision a situation where both the pre-charged condensing unit and indoor coil would be 

manufactured prior to January 1, 2010, but where the refrigerant loop would not be 

completed before that date. In the event that EPA does not amend the definition of 

“manufacture’ as this commenter suggests, they would recommend that EPA consider the 

appliance to be manufactured in cases of residential and commercial new construction 

and remodeling, including modular buildings, when the indoor coil is installed. One 

commenter states that given the current economic conditions, the pace of building 

construction on a project may move faster or slower depending on several conditions, 

including, financing, weather, etc... [0110.1, 0119.1, 0120.1, 0126.1, 0127.1]

EPA Response: EPA believes that partial installation of certain components does not 

make sense as a definition of manufacture for split systems. In effect, the commenter is

requesting that the appliance be considered manufactured when all of its component 

parts, or one specific part, are placed into initial inventory, not when those various parts 

are combined into a functional appliance, as defined at Section 601 of the Clean Air Act.

EPA recognizes that contractual arrangements exist for projects that involve airconditioning systems that will not be “manufactured” (e.g., completion of the refrigerant 

circuit) until after December 31, 2009. In response to comments expressing this concern, 

this rule establishes a grandfathering provision which allows appliances containing 

HCFC-22, HCFC-142b, or blends thereof to be “manufactured” onsite for a particular 

project between January 1, 2010, and December 31, 2011, if their components are made 

prior to January 1, 2010, and specified for use at that project under a building permit or 

contract dated before January 1, 2010.

Three commenters suggested exceptions to minimize the stranding of existing inventory 

created by EPA’s proposed definition of “Manufacture.”

 SBA and the Alliance suggested that the EPA 1) make exemptions for binding contracts 

for the purchase of equipment made prior to the deadline but for economic or other 

reasons cannot be delivered until after 2010, and 2) provide an exemption for 

construction projects that have received building code approval of plans that include

equipment subject to the ban, but will not be completed until the ban is in effect. [0090.1, 

0120.1]

 Trane/Ingersol Rand suggested that EPA create an exemption to the use ban for when 1) 

the equipment is supplied under a binding contract dated before the final rule publication 
5-49

date AND EITHER A) where enforcement of the ban would require substantial rework of 

the wiring, piping, mounting provisions or other preparations, including significant 

redesign of the specifications for the installation equipment put in place before 1/1/2010, 

OR B) the indoor section of a split system was installed prior to 1/1/2010 and completion 

of the system requires only placement, connection, and commissioning of the condensing 

unit, OR BOTH. The commenter proposed that this exemption be time limited; after 6 

months any newly manufactured unit could use reclaimed material. [0099.1]

EPA Response: In response to stakeholders comments, EPA is establishing a 

grandfathering clause where appliances are manufactured on site rather than in a factory. 

Specifically, EPA is allowing appliances containing HCFC-22, HCFC-142b, or blends 

thereof to be “manufactured” onsite for a particular project between January 1, 2010, and 

December 31, 2011, if their components are made prior to January 1, 2010, and specified 

for use at that project under a building permit or a binding contract dated before January 

1, 2010. 

EPA believes this will provide relief to the various concerns (i.e., stranded inventory) that 

were expressed by stakeholders. EPA uses language received in industry comments as 

the basis for the grandfathering provision. EPA wants to minimize stakeholder burden.

For this reason, EPA is only requiring that the contract be in place for equipment; EPA is 

not requiring the stakeholder also prove that substantial rework of the building site will 

be required or that the indoor section of the split system be installed, as suggested. 

Furthermore, we are requiring that the contract be dated before January 1, 2010 – not by 

the final rule’s Federal Register publication date. Finally, we are allowing this provision 

to be effective for 2 years, rather than the 6 months requested by the commenter. EPA 

believes that these changes provide stakeholders sufficient flexibility. 

Other:

 HARDI and the Alliance encourage EPA to use clear language (as used in the Jan. 14, 

2009, fact sheet) when defining manufactured equipment. This clarification will avoid 

conflicts between the two rules and will allow business to operate more easily and in a 

manner that complies with the regulation. [0117.1, 0120.1]

EPA Response: EPA has provided a bulleted list of how the two rules interact with one 

another in the “Summary of this Final Action” sections of both the 2010 HCFC 

Allocation rule and the Pre-Charged Appliances rule. The list is identical in both rules. 

EPA also provides a copy on its website.

 Trane/Ingersoll-Rand proposes that EPA consider moving the definition of the date of 

manufacture to the pre-charged rule. [0082, 0099.1]

EPA Response: EPA is providing the same definition of the term “manufactured” in both 

40 CFR 82.3 and 82.302.

 Goodman notes that EPA’s interpretation creates a loophole in that one could argue that 

replacing a condenser on an existing system is not installing a new appliance but rather 
5-50

replacing a component of that appliance. Under EPA’s definition of “manufactured,” it 

would be permissible to service an existing system by replacing the condensing unit.

[0080.1]

EPA Response: The commenter is correct that EPA intended to allow this. Sale and 

distribution of appliance components pre-charged with HCFC-22 or HCFC-142b is 

allowed if the components (e.g. condensing units, line sets, and coils that are charged 

with refrigerant) were manufactured before January 1, 2010. Pre-charged components 

manufactured before January 1, 2010, may be used to service appliances manufactured 

before January 1, 2010. This is the intent of the Agency, not a loophole, in order to ease 

the transition by not stranding equipment. EPA seeks to allow the continued sale of 

existing inventory while ensuing that end users are able to service their existing 

equipment. 

 AHRI and HARDI request that for imported products, the term “manufacture” be defined 

to mean when the product enters the customs territory of the United States. This meaning 

is consistent with Department of Energy regulations. [0082, 0117.1]

EPA Response: EPA does not believe that it is necessary to establish a different definition 

of “manufactured” for imported products. However, EPA does address this concern in 

the definition of “introduction into interstate commerce.” The entry points for which a 

product is introduced into interstate commerce are the release of a product from the 

facility in which the product was manufactured, the entry into a warehouse from which 

the domestic manufacturer releases the product for sale or distribution, and at the site of 

United States customs clearance. Thus, precharged appliances or pre-charged appliance 

components may not continue to be imported after January 1, 2010.

 AHAM supports EPA’s definition of “manufacture” as used in EPA’s January 14, 2009,

clarifying document. The definition applies favorably to room air conditioners, 

dehumidifiers, and portable air conditioners which are essentially ready to plug-in for use 

by the consumer after purchase. The commenter believes that EPA has reached a correct 

conclusion as these types of products are seasonal and often have very large carry over 

from year to year, and the financial and environmental costs of making obsolete the 

significant volume of product that will still be in inventory as of January 1, 2010, would 

be huge, particularly this year. [0089]

EPA Response: Under the final rule, as under the proposal, small appliances, i.e., devices 

that have a completed refrigerant circuit, are fully charged, and are functional and ready 

for use at the time they leave the factory are “manufactured” at the time they are placed 

into initial inventory at the factory and are shipped as complete “appliances” rather than 

as a set of components.

 Johnson Controls understands EPA’s definition of “Appliance” to include all refrigerantcontaining components assembled and ready for use. The commenter interprets the 

following products to be appliances: 1) Products of light commercial and residential 

package units (self contained); and 2) Residential split systems with components of 
5-51

outdoor sections (Air conditioner or heat pump), an indoor section (includes a coil 

section), and line-sets, that are field assembled and the refrigerant circuit is completed 

and properly charged. The commenter requests that EPA provide immediate clarification 

in the form of fact sheets postings on its website regarding the definition of “Appliance”.

[0126.1]

EPA Response: Three weeks after the publication of the proposed rule, EPA provided 

clarification on the website. EPA did not propose a definition of “appliance” specific to

this action as “appliance” is already defined in 40 CFR part 82, subpart F, based on the 

definition provided in section 601 of the Clean Air Act. Commenters requested 

clarification from EPA on what is an appliance, therefore, to facilitate understanding of 

this issue EPA is adding this same definition to Subpart A in 40 CFR 82.3. Further 

discussion of what is an appliance is found in the preamble. 

 Danfoss states that EPA should allow uncharged condensing units to be used to service 

existing equipment. Prohibiting the sale of these components would strand existing 

inventory and would force equipment owners to make more costly repairs or completely 

replace expensive commercial refrigeration equipment. The U.S. Small Business 

Administration encouraged EPA to clarify that uncharged components manufactured 

after 2010 that are field charged with reclaimed refrigerant may continue to be 

manufactured after January 1, 2010. Lennox International states that EPA should allow 

all dry components (whether manufactured before or after January 1) to be field-charged 

with virgin, recycled, or reclaimed HCFC-22 when they replace components for existing 

appliances on a like-for-like basis (i.e., the replacement component does not increase the 

existing capacity of the refrigeration or air conditioning system), in order to allow proper 

servicing of existing appliances. Lennox asserts that the supply of reclaimed HCFC-22 

will be unpredictable and that manufacturers may not be able to obtain sufficient recycled 

or reclaimed HCFC to field-charge these newly-manufactured components and complete 

the necessary servicing of a pre-January 1 appliance. Although the proposed rule appears 

to allow for this, EPA should clarify this point (such as through a statement in the 

preamble to the final rule), as allowing such replacement components to be charged with 

either virgin, recycled, or reclaimed refrigerant is vital to avoiding stranding existing 

equipment in the field. [0084.1, 0090.1, 0127.1]

EPA Response: EPA is allowing for the continued sale of dry components after January 

1, 2010. When used to replace components for existing appliances dry components may 

be field charged with virgin, recycled, or reclaimed HCFC-22 because the components 

are being used in the servicing of an existing appliance. Dry components can be 

assembled into a new appliance, but must be charged with recycled or reclaimed 

refrigerant.

5.2. Accelerating the 605A use restriction under the authority of Section 606

 DuPont supports the addition of the direct use prohibitions as it will facilitate 

enforcement of the rule. [0097.1]
5-52

 Lennox International states that due to the short deadline before the Allocation rule and 

the need to avoid stranding dry components, that EPA should allow the use of virgin 

HCFC-22 with dry components that are in initial inventory before January 1, 2010, and 

that are installed, after January 1, 2010, in new appliances in two limited situations: 1) 

dry components in initial inventory prior to January 1, 2010, constitute all, or 

substantially all of that new appliance (thus making all the components of that appliance 

effectively subject to the Existing Equipment Exception), or 2), the dry component is 

used to complete the installation of certain split-systems where the installation had 

commenced prior to January 1, 2010. Given the recent, significant slowdown in the real 

estate markets, many contractors may install the indoor equipment in these split-systems 

before January 1, 2010, but not install a condensing unit (which contains components 

which are typically field-charged) until after January 1, when the market recovers and a 

buyer or lessee can be found. [0127.1]

EPA Response: Dry components manufactured prior to January 1, 2010, may be 

assembled into new appliances, but those appliances must be charged with reclaimed 

HCFC-22. As this is the manufacture of a new appliance, the use of virgin HCFC-22 is 

prohibited. In the second scenario, EPA is allowing the use of dry components to 

complete the installation of certain split systems after January 1, 2010 until December 31, 

2011, if there is a building permit or contract specifying its use. This exception is 

discussed in the preamble.

 Lennox International adds that because the use ban takes effect less than one year after 

the proposal was issued, manufactures have little time to adjust their production schedule 

if EPA retains its proposed definition of manufacture. The commenter adds that many 

manufacturers cannot ramp down production of equipment that may be subject to the 

Direct Use Ban this year, let alone ensure that such equipment is fully installed with the 

refrigerant loop closed by January 1, 2010. Supply agreements and projections are 

already in place through the end of this year that often cannot be changed on such short 

notice. [0127.1]

EPA Response: EPA appreciates the concern that the timing of this rule has caused. 

However, EPA does not believe the concern that manufacturers cannot ramp down 

production of HCFC-22 equipment on such short notice is legitimate. The January 1, 

2010, date for restricting the use of newly produced or imported HCFC-22 and HCFC142b was discussed in the Federal Register on December 10, 1993 (58 FR 65018). 

Manufactures have known of this restriction for sixteen years and have had the 

opportunity to plan their transition to alternatives.

5.3. Introducing HCFCs into Interstate Commerce

Three commenters expressed concern about their ability to domestically manufacture and export 

products to countries that do not have restrictions on HCFC-22. 

 Arkema states that EPA should not interpret the definition of interstate commerce to bar 

the production, import, or sale of appliances for export. This would only cost U.S.

manufacturing jobs without yielding an environmental benefit. HARDI notes that the 

export ban to Article 5 countries penalizes their manufacturing partners and could have a 
5-53

detrimental effect on their partners’ ability to fund the research and development of new 

technologies for the domestic market that is supplied by their distributors. This 

commenter believes this proposed export ban runs contrary to the spirit of the Montreal 

Protocol and unnecessarily disadvantages domestic manufacturer partners, while also 

creating the potential for domestic price inflations if economies of scale from the 

production of exports are lost. Johnson Controls requests that EPA treat pre-charged 

equipment intended for export to Article 5 countries in the same fashion as it does the 

export of bulk refrigerant: allow for the factory charge of the equipment intended for 

export with HCFC-22 and count that usage by OEM’s against the total production cap in 

the same fashion that bulk shipments of HCFC-22 are treated. [0111.1, 0117.1, 0126.1]

EPA Response: The inability to export pre-charged appliances derives from the section 

605(a) prohibition on use of HCFCs, since manufacturers would not be able to use 

HCFC-22 to charge newly manufactured appliances and thus could not manufacture such 

equipment for either domestic or foreign markets. At the point of entry into interstate 

commerce, any appliances containing HCFC refrigerant would be covered under 

provisions in the Pre-Charged Appliances rule (discussed in conjunction with this rule in 

Section III of this preamble) regarding sale and distribution in interstate commerce, not 

under the section 605(a) introduction into interstate commerce provision, which pertains 

to substances rather than products. Therefore, the comment suggesting that EPA allow 

factories to charge equipment intended for export and to count that usage of HCFC-22 

against the total production cap is not consistent with EPA’s interpretation of the 605(a) 

use ban, as the use of the bulk HCFC-22 to produce the new equipment is prohibited 

under 605(a). Furthermore, export of any new appliances and components containing 

HCFC-22 is prohibited under the Pre-Charged Appliances rule.

Section 605(d)(2) states that notwithstanding 605(a) and (b), which contain the use and 

production restrictions on HCFCs, EPA may authorize production of limited quantities of 

HCFCs “solely for export to and use in developing countries.” The restrictions in section 

605(a) and (b) pertain to bulk substances, not to products. In addition, section 605(d)(2) 

refers to HCFCs directly, and not to products containing HCFCs. EPA interprets section 

605(d)(2) as allowing production of these ODS where the ODS themselves, as bulk 

substances, will be exported to developing countries for use in those countries. EPA does 

not interpret section 605(d)(2) as allowing use of HCFCs in U.S. product manufacture, 

even where the products are destined for use in developing countries. 

EPA notes that export of appliances that do not contain an HCFC refrigerant charge is 

legal under both this final allocation rule and the pre-charged products rule. In addition, 

as noted above, EPA is not prohibiting introduction of HCFCs into interstate commerce 

for the purpose of export to Article 5 countries.

 USA Refrigerants states that EPA must stop illegal imports. DuPont, Honeywell, and 

ARCO have enough facilities to supply the country. There just needs to be an even 

playing field. USA refrigerants suggests shutting down the borders. If anyone needs the 

gas, a rule can be made where it is $90 - $100/cylinder. [0082]
5-54

EPA Response: EPA does not believe that prohibiting all imports is an appropriate 

method of preventing illegal imports. EPA is aware that as the phaseout continues and 

the supply of HCFC-22 is restricted, there is greater incentive to illegally import HCFC22. EPA has experience preventing illegal imports from the phaseout of CFCs and is 

working with Customs and Border Protection and other agencies to stop illegal importers 

and enforce violations.

 DuPont believes that §82.15(g)(2) and (g)(3) of the proposed rule would prohibit export 

to non-Article 5 countries of HCFC-22 and HCFC-142b and blends thereof beginning 

1/1/2010 and of HCFC-123 and HCFC-124 and blends thereof beginning 1/1/2015. The 

commenter argues that the exception in Section 605(a)(3), “Is used as a refrigerant in 

appliances manufactured prior to January 1, 2020” is not limited to appliances within the 

borders of the U.S. and, hence, export of HCFCs should be allowed to service such 

appliances outside of the United States. The commenter states that excluding U.S. HCFC 

producers from participating in export markets, as allowed both under the Montreal 

Protocol and by the importing countries, lessens U.S. international competitiveness and 

adversely affects the commenter’s balance of trade. Furthermore, it does nothing to 

enhance protection of stratospheric ozone since the requirements for these HCFCs will 

simply be sourced with HCFCs from other countries. DuPont encourages EPA to add to 

both § 82.15(g) (2) and § 82.15(g) (3) the language “for other export as allowed under 

provisions of the Montreal Protocol”, as they believe it is not the intent of the CAA to 

prohibit exports to non-Article 5 countries. However, since HCFC-141b is not used as a 

refrigerant and its use has been banned in the United States except for limited and 

scrutinized exemption needs, DuPont supports EPA’s interpretation of section 605(a) for 

HCFC-141b and the proposed language in § 82.15(g)(1) to sunset provisions for export 

production allowances. [0097.1]

EPA Response: EPA agrees that the exemptions provided in 605(a) are not limited to the 

boundaries of the United States and reiterates that exports of HCFC-22 and HCFC-142b 

to non-Article 5 Parties are allowable if those HCFCs 1) are used, recovered, and 

recycled, 2) will be used for transformation, or 3) will be used as a refrigerant in 

appliances manufactured before January 1, 2010. Because the current regulatory 

language does not prohibit such exports, EPA does not believe it is necessary to change 

the regulatory text as suggested by the commenter.

5.4. Niche applications for HCFC-22 and HCFC-142b

Three commenters note that they continue to use HCFC-22 in a sterilant mixture. These 

commenters anticipated the production phaseout but not the use restriction and requested 

additional time to transition to an alternative.

 Alcon Laboratories Inc. (Alcon) states that EPA’s acceleration of the ban will negatively 

affect production of intraocular lenses. Effective sterilization is a fundamental element of 

the manufacturing process for intraocular lenses, which cure vision-related problems such 

as cataracts and lens opacification. Alcon states they have long known that EPA’s 

regulations call for a ban on production and import of HCFC-22 and as a result they are 

implementing a strategy to eliminate the use of HCFC-containing sterilants by 2015. 

Alcon has commenced construction on a new intraocular lens manufacturing facility 
5-55

which includes a 100% ethylene oxide sterilization center. The construction schedule was 

geared toward assuring compliance with EPA’s 2015 deadline, and the estimated 

completion date is between 2012 and 2014 (depending on U.S. and foreign regulatory 

approval processes). The strategy includes stockpiling HCFC-22 produced prior to 2010 

under the current allocation.

This commenter opposes EPA’s proposed revision to 40 CFR 82.15 that would accelerate 

the ban on most uses of HCFC-22 by five years – from the statutory default date of 

1/1/2015 to 1/1/2010. If adopted as proposed, this provision would prohibit continued 

use of Oxyfume 2002. Alcon states finding an interim substitute would require 

substantial time and financial investment. Alcon states they have assessed possible 

substitutes, namely off-site commercial sterilization and switching to Oxyfume 2000, 

both of which are not economically feasible or logical. Alcon requests that EPA allow for 

the continued use of HCFC-22 for production of medical devices such as intraocular 

lenses until the time that the new 100% ethylene oxide sterilization facility is approved 

by FDA for operation. Alcon provides five justifications: 

1) The environmental integrity of EPA’s ozone protection program will still be 

maintained; 

2) Global public health will benefit from the uninterrupted supply of intraocular lenses; 

3) HCFC use at the commenter’s current facility will be expeditiously eliminated;

4) Alternate sterilization methods are not reasonably available; 

5) EPA has ample legal authority to allow the continued use under these circumstances 

under Sections 605 and 606 of the Clean Air Act. 

For its proposed accelerated ban, EPA stated that all three criteria under Sec. 606 were 

satisfied. However, as applied to Alcon’s use of sterilization in the 2010-2014 timeframe, 

none of the three criteria set forth in Sec 606 are met. [0096.1]

EPA Response: EPA is exempting the use of HCFC-22 produced prior to January 1, 

2010, for medical equipment. This limited exception ends December 31, 2014, as that is 

the date upon which all uses of HCFCs, except for those specifically enumerated in 

section 605(a), are banned. The preamble discuses this issue in full.

 Ascent Healthcare Solutions Inc. (Ascent) uses a small amount of Oxyfume 2002 

Sterilant Mixture/Gas to sterilize used heart catheters and return them to hospital partners 

in a straight-packaged configuration. Ascent notes that they intend to replace their 

sterilization vessel with a new one that uses 100% EO (ethylene oxide). The 

commenter’s company is planning to seek its Board of Directors’ approval and release of 

these capital funds for calendar years 2011-2012. The commenter requests an exemption 

that would enable it to continue using Oxyfume 2002 Sterilant Mixture/Gas up to and 

through calendar year 2012. American Medical Systems provided a late comment

describing their Her Option Cryoablation Therapy System which uses HCFC-22. The 

commenter states they will have a non HCFC-22 alternative within a year and has 

requested a one year exemption from the use ban. The Spectranetics Corporation also 

provided a late comment describing their excimer laser system, which is used within the 
5-56

cardiovascular system, is currently sterilized using Oxyfume 2002. The commeter states 

that they are currently in the process of commissioning and validating a new ethylene 

oxide sterilizer and requested a one year exemption from the use ban. [0095.1, 0141, 

0142]

EPA Response: EPA is exempting the use of HCFC-22 produced prior to January 1, 

2010, for medical equipment. This limited exception ends December 31, 2014, as that is 

the date upon which all uses of HCFCs, except for those specifically enumerated in 

section 605(a), are banned. The preamble discuses this issue in full.

 Honeywell states that two firms exist which cannot transition away from HCFC-22 

before January 1, 2010, which both use HCFC-22 in combination with ethylene oxide as 

a sterilant for medical devices: 1) a major manufacturer of devices used for eye care; 2) a 

firm that serves over 1,800 hospitals, reprocessing costly heart catheters that were once 

thrown out after one use. [0118.1]

EPA Response: EPA is exempting the use of HCFC-22 produced prior to January 1, 

2010, for medical equipment. This limited exception ends December 31, 2014, as that is 

the date upon which all uses of HCFCs, except for those specifically enumerated in 

section 605(a), are banned. The preamble discuses this issue in full.

Three commenters note that they continue to use HCFC-22 in thermostatic expansion valves 

(TXVs). These commenters had not anticipated that the use ban would affect TXVs and 

requested additional time to transition to an alternative.

 Emerson Climate Technologies states that TXVs should be exempt from the regulation 

because the refrigerant in TXVs does not provide cooling effect. Instead, the bulb charge 

is used to sense the temperature of the suction line and transforms this temperature into 

an equivalent pressure. TXVs incorporate a small hermetically sealed bulb which 

activates and controls TXV operation in order to optimize energy efficiency of the airconditioning or refrigeration system. The commenter provides the following reasons for 

exemption for TXVs with virgin R-22 pre-charged bulbs: 

1) The amount of charge used in a TXV is typically less than 5 grams. The charge is 

hermetically sealed. The opportunity for leaks is very small and if one should 

leak, the amount of HCFC-22 that escapes into the atmosphere is less than the deminimis loss associated with routine servicing.

2) Finding a suitable replacement for virgin R-22 for these TXV bulb charges 

presents numerous engineering challenges. Although many substitutes exist for R22 they may not be suitable for TXV charges for several reasons. The greatest 

concern is that the P/T characteristics are not identical, which will affect the 

operation of the TXV, especially at the extremes of the valve’s operating 

envelope. This can have the effect of flooding or starving a system with the 

potential side effect of permanent damage to the compressor. [0104.1]

 AHRI states in their supplemental comment that proposed ban on the use of TXVs 

charged with HCFC-22 caught manufacturers by surprise for two reasons: (1) the small 
5-57

amount of HCFC-22 in the sensing bulb of the TXV, not being used for heat transfer 

purposes to provide cooling, did not fall under EPA’s definition of “refrigerant”; (2) EPA 

did not implement a similar ban in 1996, when CFCs were phased out. AHRI states in 

their supplemental comment that a total ban on HCFC-22 for TXVs would have a 

devastating impact on manufacturers, distributors, and consumers and that EPA should 

authorize the use of virgin HCFC-22 in TXVs until January 1, 2014, for several reasons: 

1) The amount of HCFC-22 used in TXVs is very small, less than 3 grams. The 

refrigerant charge is sealed in a hermetic assembly that can not leak unless 

physically broken. Should the valve leak, the amount of refrigerant that escapes 

into the atmosphere is less than the de minimis loss associated with routine 

servicing of the air conditioning or refrigeration equipment.

2) The use of reclaimed HCFC-22 to ARI 700 is not recommended in TXVs. The 

amount of lubricant in reclaimed refrigerants will affect TXVs operation and 

could impact the equipment operation and efficiency.

3) Millions of HCFC-22 air conditioning and refrigeration equipment are currently 

in operation. Banning the use virgin HCFC-22 containing TXVs after January 1, 

2010, will likely incapacitate thousands of air conditioning and refrigeration 

products in need of a TXV replacement. It could force technicians to use 

inappropriate replacement parts that could cause the system to fail or to operate 

outside of its optimal operating condition resulting in increase energy 

consumption

4) While there are HFCs with vapor-pressure curve characteristics similar to HCFC22, most of them are non-azeotrope mixtures and do not behave like azeotropes 

(such as HCFC-22). Additional time is needed to fully analyze the use of new 

refrigerants.

5) If a valve reacts too quickly or too slowly to a change in temperature, the result 

will be either flooding or starving of the evaporator. Flooding can damage the 

compressor potentially leading to catastrophic failure and the need to replace the 

compressor. Starving causes the evaporator to operate inefficiently.

The commenter requests additional time to find appropriate substitutes stating that lab 

testing and long term field trials are needed to thoroughly assess the viability of the 

alternative. [0119.1]

EPA Response: EPA agrees that the HCFC-22 sealed within TXVs is not used for heat 

transfer purposes and not part of the refrigerant loop. Since it is not used for heat transfer 

in a refrigeration system the HCFC-22 used in TXVs is therefore not used as a 

“refrigerant” as defined in section 605(a). Therefore, this use of HCFC-22 is not 

exempted under section 605(a)(3). 

EPA disagrees with the commenter’s suggestion to consider providing a de minimis 

exception in this instance. EPA has regulated many products that individually contain 

small amounts of ozone-depleting substances, such as aerosols and metered dose inhalers. 

While EPA agrees that a single TXV contains a small amount of HCFC-22, the amount 

of HCFC contained within a single product is not determinative of whether the total 

amount of HCFCs contained in such products is trivial.
6-58

The lack of a TXV could result in a system running less efficiently or, in a worst case 

scenario, lead to compressor damage. EPA is concerned that failing to ensure an 

adequate supply of TXVs will result in the unintended consequence of removing existing 

equipment from service faster than anticipated. While likely rare, EPA wants to avoid 

the result of requiring existing equipment owners to have to replace an entire system due 

to the unavailability of an inexpensive valve. Therefore, this final rule allows for the 

introduction into interstate commerce and use of HCFC-22 produced prior to January 1, 

2010, to be used until January 1, 2015, for the manufacture of TXVs.

 The U.S. Small Business Administration’s Office of Advocacy (SBA) asks that EPA 

allow some small pre-charged units (TXV valves and other equipment as industry may 

suggest) to continue to be manufactured beyond 2010 if the industry can show that it is 

not cost-effective or practical to manufacture such item as an uncharged component. The 

commenter asks that EPA allow exemptions for TXVs and other equipment as industry 

may suggest to ensure an adequate inventory of component parts available to service

equipment manufactured prior to January 1, 2010. [0090.1]

EPA Response: EPA does not believe that the accelerated 605(a) ban is practicable in the 

instance of thermostatic expansion valves because while alternatives exist, it is not 

feasible to implement them immediately. In this final rule, EPA is exempting virgin 

HCFC-22 for use in TXVs from the 2010 accelerated ban on introduction into interstate 

commerce and use. The preamble discusses this in greater detail.

6. RECLAIM USE: ENFORCEMENT/COMPLIANCE ISSUES

EPA received four comments requesting clarification regarding EPA’s exemption for newly 

manufactured equipment charged with recycled or reclaimed HCFC-22 refrigerant. Comments 

were in reference to how EPA enforces suspected non-compliance and how EPA will prove that 

material claimed as reclaimed/used is virgin.

Count Commenter Organization Document ID No

1 Robert Wilkins Danfoss EPA-HQ-OAR-2008-0496-0084.1

2 David L. Swift Goodman EPA-HQ-OAR-2008-0496-0088.1

3 Talbot H. Gee Heating, Airconditioning & 

Refrigeration Distributors International EPA-HQ-OAR-2008-0496-0117.1

4 Kyle Gilley Lennox International EPA-HQ-OAR-2008-0496-0127.1

 Danfoss states that EPA’s proposal to exempt from regulation newly-manufactured 

HCFC-22 equipment charged with recycled or reclaimed refrigerant for new applications 

would perpetuate the introduction of new HCFC-22 systems into the marketplace, 

delaying conversion to non-ODP systems, and would also lead to abuse, since it would be 

impossible for EPA to determine if the system’s refrigerant charge was virgin or 

recycled/reclaimed refrigerant. [0084.1]

 Goodman does not believe EPA has the resources to police whether the type of 

refrigerant used in the field is virgin or reclaimed or reclaimed. Moreover, both virgin 

and reclaimed HCFC-22 are ODS and should be treated in the same manner. Goodman 

asks EPA to rethink the Proposed Rule so that it would be illegal to manufacture 
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uncharged components after December 31, 2009, where the intention is to charge the 

component with any HCFC-22 (virgin or reclaimed). [0088.1]

 HARDI has serious concerns that the EPA’s efforts to promote the use of reclaimed and 

recycled refrigerant through an exemption to HCFC use-bans only opens the door to 

enforcement loopholes which could result in the illegal installation of new HCFC 

systems. HARDI does not believe that this exemption adds value to reclaimed refrigerant 

because they believe that value is entirely a function of the limited supply and increased 

price of virgin refrigerants. [0117.1]

 Lennox International states that EPA should ban the use of all HCFC-22 in new 

appliances manufactured after January 1, whether that HCFC-22 is reclaimed or virgin, to 

further ensure adequate HCFC supplies for servicing needs. Lennox International further 

states that the physical similarity between virgin and recycled/reclaimed material raises 

important enforceability issues in that regulatory inspectors will not be able to tell 

whether these new appliances were charged with recycled or reclaimed refrigerant or 

virgin refrigerant. [0127.1]

EPA Response: Unlike the proposal, in the final rule EPA does not provide an exemption 

from the pre-charged appliance rule for the sale or distribution of pre-charged appliances 

and pre-charged components that are charged with reclaimed HCFC-22 or HCFC-142b 

refrigerant. EPA is prohibiting the sale of equipment pre-charged with reclaimed HCFCs 

due to the difficulty of distinguishing between new and reclaimed material. EPA believes 

this outcome is appropriate because it is not practicable to achieve the Congressional goal 

of ending use of virgin HCFCs in the manufacture of new appliances without 

simultaneously banning use of reclaimed HCFCs in pre-charged appliances. Further 

information can be found in the preamble and response to comments document in the 

docket to that rule.

7. SMALL BUSINESS CONCERNS

EPA received twelve comments concerning costs and impacts the proposed rule could have on 

small businesses. Comments were in reference to two main topics: 

7.1. Costs to small businesses

7.2. Specific requests for allowances from small businesses

Count Commenter Organization Document ID No

1 Charlie McCrudden Air Conditioning Contractors of America

(Public Hearing)

EPA-HQ-OAR-2007-0496-0082

2 Karim Amrane Air-Conditioning, Heating, and 

Refrigeration Institute (Public Hearing)

EPA-HQ-OAR-2007-0496-0082

3 Talbot Gee Heating, Airconditioning & Refrigeration 

Distributors International (Public 

Hearing)

EPA-HQ-OAR-2007-0496-0082

4 Shawne C. McGibbon U.S. Small Business Administration’s 

Office of Advocacy EPA-HQ-OAR-2007-0496-0090.1

5 Robert R. Clark Peoples Welding Supply EPA-HQ-OAR-2008-0496-0093.1

8 Jill Tronca North Lakes Distributing, Inc. EPA-HQ-OAR-2008-0496-0115.1

9 Charlie McCrudden Air Conditioning Contractors of America EPA-HQ-OAR-2008-0496-0122.1

10 Dana Studebaker Refrigerant Supply Inc. EPA-HQ-OAR-2007-0496-0124
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11 Cos Caronna and Steve 

Maddox

Johnson Controls EPA-HQ-OAR-2007-0496-0126.1

12 Robert Allen Kamins Altair Partners, LP EPA-HQ-OAR-2007-0496-0128

7.1. Costs to small businesses

 HARDI states they have serious concerns over the distributors being omitted as 

stakeholders in this rulemaking, as it pertains to a regulatory flexibility analysis. Potential 

losses for their member companies are estimated to be millions of dollars in lost 

inventory in 2010 alone. [0082]

 ACCA notes that although the notice mentions that “[o]ther types of entities not 

listed...could also be affected,” the commenter is concerned that air conditioning and 

refrigeration contractors are not listed as regulated entities in Section I of the proposed 

rule notice. In relying on the five listed categories of impacted entities, EPA overlooked 

the significant economic impact this proposed rulemaking will have on a substantial 

number of small entities. ACCA feels that EPA should have completed a review of the 

impacts this rulemaking will have as required under the Regulatory Flexibility Act.

[0122.1]

 AHRI states they believe that the Proposed Rule is subject to the requirements of Section 

202 or 205 of the Unfunded Mandates Reform Act, and that EPA is also required to 

prepare regulatory flexibility analysis to assess the impact on small businesses. AHRI 

also states that EPA fails to recognize under the Regulatory Flexibility Act requirements, 

that small distributors and contractors are affected by this Rule. To resolve this issue, 

EPA should use a more conventional definition of the term, “manufacture.” [0082]

 SBA commented that EPA had no discussion of the potential impacts of stranded 

inventory on retailers and distributors of air conditioners, refrigerators, and other 

appliances. Johnson Controls asks that EPA consider the impact of this rule on both the 

distributors and contractors/dealers who were not included in this analysis. They believe 

that there is substantial impact on these parts of the supply channel.[0126.1]

EPA Response: EPA has expanded the list of potentially affected entities to include the 

following:

Category NAICS code SIC code Examples of regulated entities

Industrial Gas Manufacturing 325120 2869 Fluorinated hydrocarbon gases 

manufacturers and reclaimers

Other Chemical and Allied 

Products Merchant 

Wholesalers 424690 5169

Chemical gases and compressed gases 

merchant wholesalers

Air-Conditioning and Warm 

Air Heating Equipment and 

Commercial and Industrial 

Refrigeration Equipment 

Manufacturing 333415 3585

Air-Conditioning Equipment and 

Commercial and Industrial Refrigeration 

Equipment manufacturers

Air-Conditioning Equipment 

and Supplies Merchant 

Wholesalers 423730 5075

Air-conditioning (condensing unit, 

compressors) merchant wholesalers
7-61

Category NAICS code SIC code Examples of regulated entities

Electrical and Electronic 

Appliance, Television, and 

Radio Set Merchant 

Wholesalers 423620 5064

Air-conditioning (room units) merchant 

wholesalers

Plumbing, Heating, and AirConditioning Contractors

238220 1711, 7623

Central air-conditioning system and 

commercial refrigeration installation; 

HVAC contractors

EPA has tried to reduce the impact to small businesses from the section 605(a) provisions 

restricting the introduction into interstate commerce and use of HCFC-22 and HCFC142b. EPA clarifies that distributors and contractors, typically small businesses, may 

continue to sell components that are still in inventory on January 1, 2010, in order to 

service existing equipment that uses HCFC-22. Such servicing includes the replacement 

of whole condensing units, compressors, or line sets. While the proposed rule prohibited 

the manufacture of new appliances containing HCFC-22, HCFC-142b, or blends thereof, 

EPA is providing a limited exception in this final rule to allow for continued manufacture 

of such appliances between January 1, 2010, and December 31, 2011, if the components 

are made prior to January 1, 2010, and specified for use at that project under a building 

permit or contract dated before January 1, 2010. Finally, EPA is clarifying that new 

appliances may continue to be manufactured from dry components if the competed 

appliance is charged with recovered, recycled, or reclaimed refrigerant. EPA believes 

these three options will provide relief to the various concerns that were expressed by 

stakeholders.

 North Lakes Distributing Inc. is asking for a reassessment of small and disadvantaged 

entities in the refrigerant reclaim and supply industry. The commenter is unaware of an 

assessment being made on the effects of this proposed regulation on small business, 

specifically, in the refrigerant reclamation and supply. The statement of compliance in the 

proposed rule with the Regulatory Flexibility Act (RFA) 73 FR 78700 & 787013 and the 

supporting table does not include small companies in the reclamation and refrigerant 

supply industry. Currently none of the consumption allocation holders are small 

disadvantaged businesses or woman or minority owned. The commenter estimates that 

small business in the reclamation and refrigerant supply industry comprise about 30% in 

numbers of entities, but not market share. 20% of these entities are owned and run by 

minorities and women. Small businesses have already been compromised and adversely 

effected by the current allocation system. Although they enable a significant amount of 

reclamation, their efforts are under-represented in reports to EPA because they job out a 

significant amount of reclamation and because they hold smaller inventories; they also 

sell a significant amount of recovered refrigerant to reclaimers (showing up on their 

reports to EPA). The current apportionment has also given current allocation holders 

"stakeholders", a huge advantage in information and resources for acquiring allocations

“new to them” from other parties. These allocations where initially supposed to be 

nontransferable. Instead these transfers have increased the inequity which already exists 

in an industry with a surplus market. To allocate only to existing allocation holders and to 

the larger companies in this industry will continue to make it harder for the diverse 
7-62

businesses in this industry to compete by keeping small business costs of goods higher 

than costs of small business competitors. It will also continue to severely compromise 

competition and reclamation in the industry as a whole. Small companies are an 

important part of the network of recovery and competition in this industry. Even though 

we were established before the initial allocations took effect, the regulation has 

prohibited us from pursuing lower cost product. [0115.1]

EPA Response: EPA believes that reclaimers will benefit from the allocation levels in 

this final rule. EPA is allocating at 80% of the estimated demand in 2010 and is reducing 

the allocation over five years. EPA anticipates that the price of HCFC-22 will increase as 

allocations decrease and supply is reduced. Some of the economic constraints for 

recovery and reclamation will therefore loosen and more recovered material being held in 

inventory may be reclaimed. EPA believes that encouraging the market for recovered 

material in this way will be the most effective and appropriate mechanism that this 

current rulemaking can take to increase recovery and reclamation.

 Altair Partners LP strongly opposes the auctioning of allowances, as they are a small 

business which has committed much time and expense in acquiring baseline allowances 

since 2003. [0128]

EPA Response: EPA is not changing the methodology for the 2010-2014 control periods. 

Instead, EPA is continuing to allocate production and consumption allowances using the 

same approach currently used for control periods 2003-2009. Thus the 13 small 

businesses eligible for allowances for HCFC-22 and HCFC-142b identified in that 

rulemaking (68 FR 2845) are still eligible for allowances under this rule. In addition, 

small businesses eligible for HCFC-123, HCFC-124, HCFC-225ca, and HCFC-225cb 

allowance allocations using the same methodology, are eligible for allowances.

EPA continues to try to reduce further any impacts on small entities. With respect to the 

allowance allocation system as a whole, EPA is continuing to provide flexibility. 

Consistent with the methodology for establishing baselines for HCFC-141b, HCFC-22, 

and HCFC-142b, while small entities will be on the same footing as larger entities, EPA 

is again using the highest year of consumption. EPA is also limiting consideration of 

company-specific baseline adjustments to reflect only permanent inter-company transfers 

made prior to June 16, 2008, to avoid skewing baselines to entities with ample resources 

or access to information. The ability to transfer allowances among entities provides the 

greatest flexibility for small entities to manage their allocation. As noted in the 2003 

allocation rule (68 FR 2846), unlike with the class I substances, there is no restriction to 

limit inter-pollutant transfers to groups of substances. Both inter-pollutant and intercompany transfers of allowances are possible. A small entity can opt for short-term or 

long term decisions concerning the allowances it holds after evaluating its place in the 

overall market.

7.2. Specific Requests for Allowances from Small Businesses

 People’s Welding Supply uses HCFC-22, HCFC-142b, and HCFC-124 to manufacture R406A and R-414A, and plans to import a portion of the HCFCs that will be used. 
7-63

People’s Welding Supply requests the following allowances to permit import of HCFCs 

to manufacture R-406A and R-414A: 

 HCFC-22: 600,000 kg

 HCFC-142b: 450,000 kg

 HCFC-124: 200,000 kg

People’s Welding Supply also notes that these allowances are at the low end of the 

allowances allocated to other companies in the proposed rule. [0093.1]

 Refrigerant Supply Inc., a small business (refrigerant distribution), requests an allowance 

of 2 million pounds of R-22. The commenter states that their business has suffered 

because they used domestic HCFC-22 rather than importing it in 2003 and that they will 

most likely go out of business without importation allowances. Refrigerant Supply Inc 

states that its only options are to purchase consumption allowances from their current 

owners, or purchase overpriced domestically produced HCFC-22, and that both of these 

options are not economically viable. [0124]

EPA Response: In the July 20, 2001, proposed HCFC allocation rule, EPA expressed 

skepticism about promoting new entrants into the HCFC market: “Encouraging new 

companies to join the business after the ANPRM would counter the efforts of moving 

people out of HCFCs into more environmentally sound substitutes. 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. They also have the 

opportunity to import recovered HCFCs through EPA’s petition system or deal in 

substitutes to HCFCs, which would benefit the ozone layer and provide longer-term 

business security. Accordingly, EPA believes that the market will sufficiently allow for 

any new entrants after April 5, 1999, as appropriate.” (66 FR 38073). In the 2003 final 

rule, (68 FR 2820), EPA provided a limited exemption for companies that began 

importing HCFCs after the first stakeholder meeting in 1997 but before the ANPRM 

publication date, after which they would have had reason to know of an imminent 

rulemaking allocating allowances based on historical production and importation. EPA 

did not extend this exemption further because once public notice was given via the 

ANPRM, “businesses that desired an allocation of HCFC allowances would have known 

the risks of jumping into the business at this juncture.” (66 FR 38073). Since that time 

eight years ago, access to information and knowledge of the risks regarding entering the 

HCFC-22 market have only increased. There have been new entrants to the market, as 

evidenced by commenters seeking allocation rights who were not in operation in 2003. 

These entities have entered the market by purchasing consumption allowances, as EPA 

predicted they could back in 2003. These entities can continue to purchase consumption 

allowances or import substitutes for HCFCs. As the market continues to decrease, EPA 

does not believe that providing consumption allowances to these or other new entities is 

necessary to prevent disruption to the continued servicing of existing equipment. Given 

EPA’s intent to phase down, and ultimately phase out, the use of HCFC-22, consistent 

with the requirements of the CAA and obligations under the Montreal Protocol, EPA 

believes it is justified in continuing to allocate only to those entities who participated in 
8-64

the market at the initial stages as well as those that have entered the market by purchasing 

HCFC-22 baseline allowances in accordance with the established practices.

With regard to the request for HCFC-124, EPA is amending §§82.17 and 82.19 to include 

company-specific production and consumption baselines for HCFC-123, HCFC-124, 

HCFC-225ca, and HCFC-225cb. EPA is apportioning company-specific baselines for 

these HCFCs based on production and import data during the 2003-2007 control periods. 

Entities that wish to enter the market for these other HCFCs that were not producers or 

importers during 2003-2007 have similar options available to them to purchase baseline 

allowances from companies that are not using them. EPA anticipates that the market for 

allowances may be easier for these other HCFCs as EPA is allocating 125% of baseline 

to companies with baseline allowances. 

8. TIMELY COMPLETION OF THE RULE

EPA received eight commenters urging EPA to expedite the finalization of this rule to allow for 

an orderly phase-out of HCFC-22 and HCFC-142b. 

Count Commenter Organization Document ID No

1 Karim Amrane Air-Conditioning, Heating, and 

Refrigeration Institute (Public Hearing) EPA-HQ-OAR-2007-0496-0082

2 Adam Devoe Coolgas Inc and Dynatemp International

(Public Hearing) EPA-HQ-OAR-2007-0496-0082

3 Robert Wilkins Danfoss EPA-HQ-OAR-2007-0496-0084.1

4 Mark McFarland DuPont EPA-HQ-OAR-2007-0496-0097.1

5 Don Magid and 

Charles Jones

Solvay EPA-HQ-OAR-2008-0496-0106.1

6 Karim Amrane Air-Conditioning, Heating, and 

Refrigeration Institute EPA-HQ-OAR-2007-0496-0119.1

7 Charlie 

McCrudden Air Conditioning Contractors of America EPA-HQ-OAR-2008-0496-0122.1

8 Cos Caronna and 

Steve Maddox Johnson Controls EPA-HQ-OAR-2007-0496-0126.1

 AHRI recognizes that EPA attempted to finalize this rule more than 18 months ago but 

was delayed by inter-agency administrative reviews. [0119.1] Additionally, AHRI states 

that by EPA’s own admission, the Rule will not be finalized until Summer, 2009. This 

will be far too late, and AHRI urges EPA to immediately clarify its definition of 

“manufacture.” [0082]

 Coolgas Inc. and Dynatemp International states that the public hearing for this Rule was 

scheduled too quickly, and it seems apparent that the industry has not had time to analyze 

the potential effect of the Proposed Rule and the put together meaningful public comment 

for the hearing. [0082]

 Danfoss urges EPA and other governmental entities involved in the rulemaking process 

to pursue urgently and diligently a timely completion of the rulemaking process, and take 

into consideration the difficulties that will be caused by the short remaining time period 

when establishing specifics of the rules. [0084.1]

 DuPont notes that there is an urgent need to finalize the regulations as soon as possible in 

order to provide certainty in the marketplace. DuPont strongly recommends that the EPA 
8-65

not, at this late date, introduce brand new regulatory proposals that would require 

additional time for public commenting and finalization. [0097.1]

 DuPont strongly encourages EPA to publish the final rule as soon as possible. Producers, 

importers and distributors of HCFCs will begin sourcing planning for 2010 as early as the 

middle of 2009. The uncertainty created by the lack of a final allocation rule will 

complicate this planning process. Delays in publishing the final rule could cause sourcing 

problems during the first quarter of 2010 when the supply chain is preparing for spring, 

the time of highest demand for HCFCs for servicing. [0097.1]

 Solvay Chemicals urges quick action by EPA to finalize this rule. [0106.1]

 ACCA notes that this proposed rule must be enacted in less than one year in order to 

meet the HCFC phase-out obligations under the Montreal Protocol. ACCA urges EPA to 

expedite a final rule so that the industry can adequately prepare to its implementation.

[0122.1]

 Johnson Controls states that the planning and selling cycle of an OEM begins well before 

the cooling season, and, in fact, starts shortly after the previous season’s sales taper down 

to what they call an end. The economic slow down is effecting inventory positions as 

well with slower inventory turnover. Along with this, industry has been planning its 

product designs to transition to a non-ODS refrigerant for a long period of time. For 

Johnson Controls’ residential and light commercial interest, they are moving to mostly R410A for the U.S. market. Johnson Controls states they have been working to fill out with 

R-410A its entire product line for the past four years based upon its understanding of how 

the inventory for the domestic reductions and expectations for considerations for exports 

were understood. It is important to signal these directions due to the long term investment

and transition time in product development. This includes both domestic and exports 

concerns. Johnson Control’s product development plans have been built upon the fact 

that the transition would occur on Jan. 1, 2010. The EPA’s proposed rule is placing the

commenter at risk for potential domestic sale losses if their inventory positions do not 

line up with the final ruling. [0126.1]

EPA Response: EPA recognizes the importance of having time for industry to adapt to 

the regulations and has sought to finalize this rule as quickly as practicable. Such 

timeliness concerns were considered in support for the grandfathering provision allowing 

for the continued manufacture of appliances beyond January 1, 2010, in some 

circumstances.