# 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**  **- 20**  **11 -**  **0 354**  **April 2013**  U.S. Environmental Protection Agency Office of Air and Radiation Stratospheric Protection Division

1200 Pennsylvania Avenue, NW Washington, DC 20460i 

## Table of **Contents** GENERAL SUMMARY OF C OMMENTS ................................ ................................ ................................ ........... 1 1. BASELINES FOR HCF C - 22 AND HCFC - 142B ALLOWANCES ................................ ................................ ........ 7 1.1. Establishing baselines for 2012 – 2014 that reflect past inter - pollutant baseline transfers ................. 7 1.2. Using more recent production and import data to establish baselines for 2015 – 2019, and whether there would be an environmental benefit to doing so ................................ ................................ ........ 9 1.3. Whether EPA should approve future inter - pollutant baseline transfers ................................ ........... 11 2. FACTORS CONSIDERE D IN ALLOCATING AMOU NTS FOR HCFC - 22 AND HCFC - 142B .............................. 11 2.1 Surplus inventory of HCFC - 22 ................................ ................................ ................................ ............ 13 2.2 Adjustments for recovery, reclamation, and reuse ................................ ................................ ........... 14 2.2.1 Projections of reclaim capabilities in the Adjustment Memo ................................ .......... 14 2.2.2 Comments from or about large end users of refrigerant, including supermarkets ......... 18 2.3 Estimated servicing need for HCFC - 22 as presented in the Adjustment Memo ................................ 19 2.4 Effects of dry - shipped HCFC - 22 equipment on the HCFC phaseout ................................ .................. 21 3. ISSUES RELATED TO THE ARKEMA V. EPA DECISION ................................ ................................ .............. 27 3.1 Whether EPA should provide recoupment ................................ ................................ ........................ 28 3.1.1 Whether the Arkema v. EPA decision should be interpreted as applying to the 2010 allocation (i.e., recoupment) ................................ ................................ ............................ 28 3.1.2 Whether EPA should provide recoupment for HCFC – 22 and HCFC – 142b, or just HCFC – 22 allowances ................................ ................................ ................................ ........................ 33 3.1.3 Whether EPA should provide recoupment for production and consumption, or just consumption allowances ................................ ................................ ................................ .. 33 3.2 Whether EPA should finalize option 1, 2, 3 or 4 to adjust allowances in future control periods to reflect the Arkema v. EPA decision (i.e., recoupment) ................................ ................................ ...... 33 3.2.1 Providing recoupment allowances in 2013 in addition to the aggregate level of production and consumpti on specified in the Final Rule (i.e., option 1) ......................... 34 3.2.2. Allocating recoupment allowances over two years (2013 – 2014) in addition to the aggregate leve l of production and consumption specified in the Final Rule (i.e., option 2)

................................ ................................ ................................ ................................ .......... 35 3.2.3 Allocating recoupment allowances from the aggr egate level of production and c onsumption specified in the Final Rule over two years (2013 – 2014) (i.e., option 3) ..... 36 3.2.4 Treating missed allowances from 2010 as impossible to recoup (i.e., option 4) ............. 37 4. HCFC - 22 AND HCFC - 142B ALLOCATIONS IN 2012 - 2014 ................................ ................................ ......... 38 4.1 Decreasing HCFC - 22 consumption allowances relative to the 2009 Final Rule ................................ . 40 4.2 Amount of HCFC - 22 production allowances relative to the 2009 Final Rule ................................ ..... 50 4.2.1 Whether EPA can decouple the percentage of baseline allocate d for production and consumption ................................ ................................ ................................ ..................... 50 4.2.2 Whether EPA should increase the percentage of baseline allocated for production ..... 51ii 4.2.3 Whether an increase in the number of HCFC – 22 production allowances would result in an increase in HCFC consumption and production ................................ ........................... 53 4.3 HCFC - 142b consumption and production allowance allocations ................................ ...................... 54 5. OTHER ISSUES ................................ ................................ ................................ ................................ ......... 55 5.1 HCFC supply, price, and economic conditions ................................ ................................ ................... 57 5.2 Providing allowances to reclaimers ................................ ................................ ................................ .... 63 5.3 Providing allowances to manufacturers of HCFC blends ................................ ................................ ... 66 5.4 Potential impacts of the propo sed rule on small entities and consumers ................................ ........ 67 5.5 Timely completion of the rule ................................ ................................ ................................ ............ 71 5.6 Compliance and enforcement issues ................................ ................................ ................................ . 731 

## GENERAL SUMMARY OF C **OMMENTS** This document summarizes comments on the p roposed 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 - 20 11 - 0354. A total of 124 comments were submitted and are listed in Table 1 by document ID and organization. Thirteen of these comments were submitted after the close of the comment period on February 3, 2012 . Another 14 are com ments that EPA received following publication of the August 5, 2011 Interim Final Rule, which has the same name as the proposed rule and covers related issues . The docket also contains comments with multiple signatories. These signatories are listed indi vidually in the table below. In the comments sections, two comments are listed by their group name, “ Group of EPA Certified ODS Reclaimers , ” and “ Rapid Recovery Franchise Partners, ” and contain 20 and 21 signatories, respectively. In addition, t he docket c ontains multiple comment s that were submitted by individuals associated with Johnstone Supply . 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 A & M Heating, Air Conditioning & Refrigeration, Inc. EPA - HQ - OAR - 2011 - 0354 - 0077 2 Able Distributors EPA - HQ - OAR - 2011 - 0354 - 0147 3 Air Conditioning Contractors of America (ACCA) EPA - HQ - OAR - 2011 - 0354 - 0081 4 Air - Conditioning, Heating, and Refrigeration Institute (AHRI) EPA - HQ - OAR - 2011 - 0354 - 0072 5 Airgas, Inc. EPA - HQ - OAR - 2010 - 1040 - 0022 a 6 EPA - HQ - OAR - 2011 - 0354 - 0079 7 APR Supply Co. EPA - HQ - OAR - 2011 - 0354 - 0148 8 Arkema Inc. EPA - HQ - OAR - 2010 - 1040 - 0028 a 9 EPA - HQ - OAR - 2011 - 0354 - 0073 10 AZ Refrigerant Abatement, Inc EPA - HQ - OAR - 2011 - 0354 - 0053 11 Bay Area Refrigerant Recovery, Inc EPA - HQ - OAR - 2011 - 0354 - 0080 12 Bettcher Enterprises, Inc EPA - HQ - OAR - 2011 - 0354 - 0056 13 BRYANS UNITED AIR CONDITIONING EPA - HQ - OAR - 2011 - 0354 - 0118 14 Bryson Insurance EPA - HQ - OAR - 2011 - 0354 - 0135 15 Carroll Area Development Corporation EPA - HQ - OAR - 2011 - 0354 - 01 59 b 16 Center for Energy Efficiency and Sustainability, Ingersoll Rand EPA - HQ - OAR - 2011 - 0354 - 0063 17 Certified Refrigerant Services Inc. EPA - HQ - OAR - 2011 - 0354 - 0057 18 Coburn Supply Company, Inc. EPA - HQ - OAR - 2011 - 0354 - 0149 19 Consolidated Refrigerant Reclaim EPA - HQ - OAR - 2011 - 0354 - 0083 20 Coolgas, Inc. EPA - HQ - OAR - 2011 - 0354 - 0088 b 21 Cottongim Heating & Cooling EPA - HQ - OAR - 2011 - 0354 - 0154 22 DALHOUSIE UNIVERSITY EPA - HQ - OAR - 2011 - 0354 - 0091 23 Delta Ice Air & Heat, Inc. EPA - HQ - OAR - 2011 - 0354 - 0138Response to Comments on the 2012 - 2014 HCFC Allocation Rulemaking Page 2 Count Document ID Organization

24 Dermid Enterprises, LLC EPA - HQ - OAR - 2011 - 0354 - 0113 25 Doug's Refrigeration EPA - HQ - OAR - 2011 - 0354 - 0116 26 DuPont EPA - HQ - OAR - 2010 - 1040 - 0020 a 27 EPA - HQ - OAR - 2011 - 0354 - 0070 28 E.A.S.E. LLC EPA - HQ - OAR - 2011 - 0354 - 0107 29 Energy Specialists Air Conditioning Co. EPA - HQ - OAR - 2011 - 0354 - 0109 30 Express Heating and Air Conditioning Services LLC EPA - HQ - OAR - 2011 - 0354 - 0137 31 Express Recovery, Inc EPA - HQ - OAR - 2011 - 0354 - 0050 c 32 EPA - HQ - OAR - 2011 - 0354 - 0075 33 Food Marketing Institute (FMI) EPA - HQ - OAR - 2011 - 0354 - 0157 b 34 EPA - HQ - OAR - 2011 - 0354 - 015 8 b 35 Fountainbleau Management Services, LLC EPA - HQ - OAR - 2011 - 0354 - 0139 36 Golden Refrigerant EPA - HQ - OAR - 2011 - 0354 - 0054 37 EPA - HQ - OAR - 2010 - 1040 - 0025 a 38 Goodman Global, Inc. EPA - HQ - OAR - 2011 - 0354 - 0084 39 Greens Services Inc. EPA - HQ - OAR - 2011 - 0354 - 0090 40 Greer Holdings, LLC EPA - HQ - OAR - 2011 - 0354 - 0052

41 Group of EPA Certified ODS Reclaimers

EPA - HQ - OAR - 2011 - 0354 - 0085 d Aerosys Inc. Airgas Refrigerants, Inc. AllCool Refrigerant Reclaim American Refrigerants, Inc. Certified Refrigerant Services, Inc. Consolidated Refrigerant Reclaim Coolgas, Inc. ICOR International J.R.’s Appliance Disposal Novent Refrigerant Services Refrigerant Exchange Corp. Refrigerants Inc. REMTEC International Perfect Cycle CFC Group Pure Chem Separation LP RMS of Georgia Safe Disposal Systems, Inc. SpecGas Inc.Response to Comments on the 2012 - 2014 HCFC Allocation Rulemaking Page 3 Count Document ID Organization Summit Refrigerants Total Reclaim, Inc. 42 Harrell's A/C & Heating Services EPA - HQ - OAR - 2011 - 0354 - 0104 43 Heating, Air - Conditioning and Refrigeration Distributors International EPA - HQ - OAR - 2011 - 0354 - 0069 44 Highland Electric Heat & Air LLC EPA - HQ - OAR - 2011 - 0354 - 0096 45 Hinton A/C Services EPA - HQ - OAR - 2011 - 0354 - 0106 46 Honeywell EPA - HQ - OAR - 2011 - 0354 - 0082 47 EPA - HQ - OAR - 2010 - 1040 - 0029 a 48 Houston Refrigerant Recovery, LLC EPA - HQ - OAR - 2011 - 0354 - 0060 49 Hudson Technologies Company EPA - HQ - OAR - 2010 - 1040 - 0027 a 50 EPA - HQ - OAR - 2011 - 0354 - 0071 51 HVAC Service Solutions EPA - HQ - OAR - 2011 - 0354 - 0115 52 ICOR International Inc. EPA - HQ - OAR - 2010 - 1040 - 0031 a 53

Johnstone Supply EPA - HQ - OAR - 2011 - 0354 - 0095 54 EPA - HQ - OAR - 2011 - 0354 - 0097 55 EPA - HQ - OAR - 2011 - 0354 - 0098 56 EPA - HQ - OAR - 2011 - 0354 - 0099 57 EPA - HQ - OAR - 2011 - 0354 - 0101 58 EPA - HQ - OAR - 2011 - 0354 - 0120 b 59 EPA - HQ - OAR - 2011 - 0354 - 0124 60 EPA - HQ - OAR - 2011 - 0354 - 0132 61 EPA - HQ - OAR - 2011 - 0354 - 0133 62 EPA - HQ - OAR - 2011 - 0354 - 0136 63 EPA - HQ - OAR - 2011 - 0354 - 0140 64 EPA - HQ - OAR - 2011 - 0354 - 0145 65 EPA - HQ - OAR - 2011 - 0354 - 0153 66 LA Refrigerant Recovery, Inc EPA - HQ - OAR - 2011 - 0354 - 0051 67 Lemoine Marine Refrigeration, Inc EPA - HQ - OAR - 2011 - 0354 - 0127 68 Lennox International Inc. EPA - HQ - OAR - 2011 - 0354 - 0061 69 Mayeux's A/C & Heating, Inc. EPA - HQ - OAR - 2011 - 0354 - 0093 70 EPA - HQ - OAR - 2011 - 0354 - 0094 71 MDA Manufacturing, Inc. EPA - HQ - OAR - 2010 - 1040 - 0030 a 72 Mexichem Fluor Inc. EPA - HQ - OAR - 2011 - 0354 - 0066 73 Mondy Global, Inc. EPA - HQ - OAR - 2011 - 0354 - 0055 74 National Multi Housing Council (NMHC) EPA - HQ - OAR - 2011 - 0354 - 0156 b , e National Apartment Association (NAA)Response to Comments on the 2012 - 2014 HCFC Allocation Rulemaking Page 4 Count Document ID Organization

75 National Refrigerants, Inc. (NRI) EPA - HQ - OAR - 2011 - 0354 - 0068 76 Natural Resources Defense Council (NRDC) EPA - HQ - OAR - 2011 - 0354 - 0067 f Institute for Governance & Sustainable Development (IGSD) Environmental Investigation Agency (EIA) 77 Natural Resources Defense Council (NRDC) EPA - HQ - OAR - 2010 - 1040 - 0033 a 78 NORDYNE EPA - HQ - OAR - 2011 - 0354 - 0089 79 Perfect Score Technologies, LLC EPA - HQ - OAR - 2011 - 0354 - 0150 b 80 Perry’s Electric, Inc. EPA - HQ - OAR - 2011 - 0354 - 0131 81 Polar Technology EPA - HQ - OAR - 2011 - 0354 - 0076 82

Private Citizen Comment EPA - HQ - OAR - 2011 - 0354 - 0100 83 EPA - HQ - OAR - 2011 - 0354 - 0102 84 EPA - HQ - OAR - 2011 - 0354 - 0103 85 EPA - HQ - OAR - 2011 - 0354 - 0110 86 EPA - HQ - OAR - 2011 - 0354 - 0111 87 EPA - HQ - OAR - 2011 - 0354 - 0112 88 EPA - HQ - OAR - 2011 - 0354 - 0119 b 89 EPA - HQ - OAR - 2011 - 0354 - 0121 b 90 EPA - HQ - OAR - 2011 - 0354 - 0123 b 91 EPA - HQ - OAR - 2011 - 0354 - 0125 92 EPA - HQ - OAR - 2011 - 0354 - 0126 93 EPA - HQ - OAR - 2011 - 0354 - 0128 94 EPA - HQ - OAR - 2011 - 0354 - 0129 95 EPA - HQ - OAR - 2011 - 0354 - 0130 96 EPA - HQ - OAR - 2011 - 0354 - 0134 97 EPA - HQ - OAR - 2011 - 0354 - 0142 98 EPA - HQ - OAR - 2011 - 0354 - 0143 b 99 EPA - HQ - OAR - 2011 - 0354 - 0144 b 100 EPA - HQ - OAR - 2011 - 0354 - 0146 101 EPA - HQ - OAR - 2011 - 0354 - 0151 102 EPA - HQ - OAR - 2011 - 0354 - 0152 103 EPA - HQ - OAR - 2011 - 0354 - 0155

104 Rapid Recovery Franchise Partners EPA - HQ - OAR - 2011 - 0354 - 0086 g Georgia Carolina Refrigerant Recovery, Inc. AZ Refrigerant Abatement, Inc. SLC Abatement, Inc. Abatement and Recovery Services of WA, Inc.Response to Comments on the 2012 - 2014 HCFC Allocation Rulemaking Page 5 Count Document ID Organization Southeast Refrigerant Recovery, Inc. Bay Area Refrigerant Recovery, Inc. Mid - South Refrigerant Abatement, LLC Sacramento Refrigerant Recovery, Inc Houston Refrigerant Recovery, LLC Greer Holdings, LLC Express Recovery, Inc. Bettcher Enterprises, Inc. KC Refrigerant Recovery Services, Inc SAMCOM, Inc. Rocky Mountain Refrigerant Abatement, LLC Refrigerant Recovery, Inc. Landco Industrial Services, LLC Rhynard and White Enterprises, Inc. LA Refrigerant Recovery, Inc. RR Operations, LLC John Thompson 105 Regional Mechanical EPA - HQ - OAR - 2011 - 0354 - 0117 106 RemTec International EPA - HQ - OAR - 2010 - 1040 - 0024 a 107 Rheem Manufacturing Company EPA - HQ - OAR - 2011 - 0354 - 0087 108 Rhynard and White Enterprises, Inc. EPA - HQ - OAR - 2011 - 0354 - 0058 109 RMS of Georgia, LLC EPA - HQ - OAR - 2011 - 0354 - 0078 110 Rocky Mountain Refrigerant Abatement, LLC EPA - HQ - OAR - 2011 - 0354 - 0059 111 RSS Realtors EPA - HQ - OAR - 2011 - 0354 - 0105 112 Solvay Fluorides, LLC EPA - HQ - OAR - 2010 - 1040 - 0026 a,h 113 EPA - HQ - OAR - 2011 - 0354 - 0064 a,h 114 Southeast Refrigerant Recovery, Inc. EPA - HQ - OAR - 2011 - 0354 - 0074 115 Summit Refrigerants EPA - HQ - OAR - 2011 - 0354 - 0062 116 Surgi's Heating and Air Conditioning EPA - HQ - OAR - 2011 - 0354 - 0114 117 Sustainable Energy Solutions LLC EPA - HQ - OAR - 2011 - 0354 - 0141 118 T.L. Maintenance HVAC EPA - HQ - OAR - 2011 - 0354 - 0092 119 Thermal Solutions LLC EPA - HQ - OAR - 2011 - 0354 - 0108 120 Tri - Parish A/C & Refrigeration, L.L.C. EPA - HQ - OAR - 2011 - 0354 - 0122 b 121 USA Refrigerants EPA - HQ - OAR - 2010 - 1040 - 0021 a 122 EPA - HQ - OAR - 2010 - 1040 - 0023 a 123 UTC Climate EPA - HQ - OAR - 2011 - 0354 - 0065Response to Comments on the 2012 - 2014 HCFC Allocation Rulemaking Page 6 Count Document ID Organization

124 Williams & Associates EPA - HQ - OAR - 2010 - 1040 - 0032 a a. Comment on 2011 Interim Final Rule. b. Comment was submitted after the close of the comment period on February 3, 2012 . c. Duplicate copy of EPA - HQ - OAR - 2011 - 0354 - 00 75 . All Express Recovery, Inc. comments are listed under EPA - HQ - OAR 2011 - 0354 - 00 75 in the following sections. d. For the remainder of the document, the collective group of 20 reclaimer signatories will be referred to as “ Group of EPA Certified ODS Reclaimers .” e. EPA - HQ - OAR - 2011 - 0354 - 0156 was collectively submitted by the National Multi Housing Council (NMHC) and National Apartment Association (NAA) . f. EPA - HQ - OAR - 2011 - 0354 - 0067 was collectively submitted by the Natural Resources Defense Council (NRDC), the Institute for Governance & Sustaina ble Development (IGSD), and the Environmental Investigation Agency (EIA). g. For the remainder of the document, the collective group of 21 reclaimer signatories will be referred to as “Rapid Recovery Franchise Partners .” h. This comment was submitted on behalf of Solvay Fluorides, LLC and Solvay Solexis. All comments have been reviewed, summarized, and organized by main topics within the remainder of this document to highlight major issues and clarif y requests pertinent to t he rule. Summaries are organized by the following main topics of stakeholder concern:

• Section 1 – Baselines for HCFC - 22 and HCFC - 142b Allowances • Section 2 – Factors Considered in Allocating Amounts for HCFC - 22 and HCFC - 142b • Section 3 – Issues Related to the Arkema v. EPA Decision • Section 4 – HCFC - 22 and HCFC - 142b Allocations in 2012 - 2014 • Section 5 – Other Issues For the purpose of this comment summary, section organization does not exactly follow the outline established in the proposed rule , but follows a logical order of discussion; the selection and organization of these section topics are based on topic frequency and whether EPA sought specific comments on the issue . At the beginning of each section, an outline of topics is provided fol lowed 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 s are provided in parentheses at the end of each comment. The majority of comments submitted to EPA express support f or EPA in its commitment to the Montreal Protocol and reduction of ozone - depleting substances for public and environmental health interests. Comments deal primarily with EPA’s request for comments regarding HCFC allocations in 2012 - 2014 . Commenters were sp lit between supporting a reduction and opposing a reduction. However, a slight majority of the organizations comment ing supported the reduction of HCFC - 22 consumption allowances relative to the 2009 Final Rule , with many of those comment er s supporting at l east a 20 percent or greater reduction. Commenters also generally supported the decoupling of production and consumption allowances . In addition, of the nine entities comment ing on recoupment, seven were in opposition . Comments regarding the Adjustment Memo generally supported the concept that the reclamation industry is able to increase its current capacity , and many commenters also noted concerns about an oversupply and low price for HCFC - 22 . Several commenters express ed concern regarding the timi ng of the proposed and final rule s ’ release and effect on the HVACR industry and consumers. Commenters request ed swift and clear direction from EPA . Commenters further expressed the need for enforcement to ensure a smooth phase out .Response to Comments on the 2012 - 2014 HCFC Allocation Rulemaking Page 7 

## 1. **BASELINES FOR HCFC**  **- 22 AND HCFC**  **- 142B ALLOWANCES**  1.1 Establishing baselines for 2012 – 2014 that reflect past inter - pollutant baseline transfers 1.2 Using more recent production and import data to establish baselines for 2015 – 2019, and whether there would be an environmental benefit to doing so 1.3 Whether EPA should approve future inter - pollutant baseline transfers Count Commenter Organization Document ID No 1 Diran Yegparian Mondy Global, Inc. EPA - HQ - OAR - 2011 - 0354 - 0055 2 Don Magid Solvay Fluorides, LLC EPA - HQ - OAR - 2011 - 0354 - 0064 3 Steven H. Bernhardt Honeywell EPA - HQ - OAR - 2011 - 0354 - 0082 4 Mack McFarland DuPont EPA - HQ - OAR - 2011 - 0354 - 0070 5 William J. Hamel Arkema Inc. EPA - HQ - OAR - 2011 - 0354 - 0 073 6 Mack McFarland DuPont EPA - HQ - OAR - 2010 - 1040 - 0020 7 Steven H. Bernhardt Honeywell EPA - HQ - OAR - 2010 - 1040 - 0029 8 Don Magid Solvay Fluorides, LLC EPA - HQ - OAR - 2010 - 1040 - 00 26 

## 1.1. **Establishing baselines for 2012 –**  **2014 that reflect past inter**  **- pollutant**  **baseline transfers** EPA received comments from two companies that support the baselines used in the proposal for 2012 - 2014. Two other companies do not suppor t the proposed baselines. Arkema and Solvay support EPA’s inclusion of past inter - pollutant transfers of baseline all owances.  Arkema and Solvay support EPA’s interpretation of the D.C. Circuit’s decision in Arkema v . EPA with regard to baseline allowances. Arkema states that the question of baseline allowances was a straightforward problem and was correctly settled in the Interim Final Rule providing 2011 HCFC - 22 and HCFC - 142b baseline allowances, published on August 5, 2011.[0073, 0064] EPA Response: EPA agrees with the commenters that the baselines used in the proposed rule are consistent with the U.S. Court of Appeal s for the D.C. Circuit’s decision in Arkema v . EPA . A more complete discussion of the baselines used in the final rule is available in section IV.A.1. of the preamble and in the 2011 Interim Final Rule (76 FR 47451). DuPont and Honeywell expressed concern and opposition regarding EPA’s proposed method for establishing baselines.  DuPont is concerned with the proposed readjustments in baselines and the economic harm it will cause DuPont. DuPont asserts that the U .S. Cou rt of Appeals for the District of Columbia Circuit decision in Arkema v. EPA did not address the validity of Arkema's and Solvay's 2008 transfers, but rather simply assumed they were valid for purposes of the challenge to the 2009 Final Rule. Thus, DuPont comments that the Arkema decision does not mandate that EPA simply assume the validity of those transfers. The commenter believes that amending Arkema’s and Solvay’s baselines to account for their 2008 inter - pollutant transfers violates the CAA and DuPont’ s due process rights. DuPont believes a more prudent course would be for EPA to grant the pending joint petition for reconsideration of the approval of those 2008 transfers filed by DuPont and Honeywell. DuPont comments that granting this petition would no t prevent the agency from adopting its proposed decoupling and reductions in consumption allowances, and would result only in the proper readjustment of individual company baselines. [0070 , 0020 ]Response to Comments on the 2012 - 2014 HCFC Allocation Rulemaking Page 8 Honeywell objects to the Proposed Rule’s method for establis hing baselines. According to the commenter, EPA’s underlying assumption in the Proposed Rule is that the D.C. Circuit’s decision in Arkema mandates the establishment of baselines that recognize the 2008 transfers by Arkema and Solvay of HCFC - 142b into HCFC 22 on a permanent basis. Honeywell believes both the Clean Air Act and EPA policy prohibit such permanent transfers. Furthermore, Honeywell believes that the method and allocation EPA now proposes violates the Arkema decision and fundamental concepts of d ue process. Honeywell also incorporated its previous comments on this issue (a petition to EPA submitted Oct. 6, 2010, and the petitioners’ briefs in Honeywell International Inc. v . EPA ) by reference. [0082] Honeywell believes the D.C. Circuit decision in Arkema did not address the validity of the 2008 inter pollutant transfers by Arkema and Solvay, but rather assumed they were valid for purposes of the challenge to the 2009 Final Rule. Thus, Honeywell does not believe that EPA is mandated by that decision simply to recognize the validity of those transfers. Instead, Honeywell believes EPA should grant the pending petition for reconsideration of these transfers filed jointly by Honeywell and DuPont. Honeywell states that if EPA determines that the transfers are void ab initio , EPA’s justification for the Interim Rule’s allocation of baseline would be moot. The commenter states that very issue is the subject of pending litigation involving Honeywell and EPA before the D.C. Circuit. Honeywell notes that were th e Court to vacate the four 2008 transfers, EPA would have no choice but to begin another rulemaking, as the Proposed Rule is erroneously premised on the legitimacy of those transfers. [0082 , 0029 ] Honeywell comments that EPA’s decision to approve inter - pollutant transfers in 2008 was not consistent with the CAA or EPA’s own regulations. Honeywell notes that inter - pollutant transfers and inter - company transfers are treated quite differently under the terms of the CAA statute. Under §607(b) of the CAA, inter pollutant transfers of allowances may occur only on a current year basis. The provision governing inter company transfers – § 607(c) – contains no such temporal restriction. Honeywell states that E PA’s regulations are consistent with this view of § 607(b). Honeywell notes the subsection dealing with inter pollutant transfers refers repeatedly to the “control period,” which is defined in EPA regulations as a calendar year. Honeywell further comments that in the Proposed Rule, EPA has departed from the clear language of the statute and the provisions of its own regulations that distinguish inter - pollutant transfers from inter company intra - pollutant transfers on the grounds that inter - pollutant transf ers are available only for the current “control period” (i.e., year). Honeywell urges EPA to change its approach and act consistently with the statute and EPA’s regulations. [0082] Honeywell comments that EPA’s approach fails to follow the agency’s origina l interpretation of its transfer regulations that the “phase - down follows the allowance” – in other words, that any inter - pollutant transfer is subject to the phase - down of the transferred chemical. Honeywell states that EPA may not change this interpretat ion without notice - and - comment rulemaking. Honeywell believes that to the extent that EPA intends to grant Arkema and Solvay additional allowances in 2012 - 2014 to reflect the 2008 transfers, it must reduce those allowances by the same percent that the agen cy is phasing out HCFC - 142b. Honeywell comments that only in that way will the transferred allowances fairly reflect EPA’s ongoing effort to meet the Clean Air Act’s mandate to accelerate the phaseout of HCFCs. [0082] Honeywell further notes that EPA’s aut hority to promulgate regulations is limited to those which are reasonable and not arbitrary and capricious, citing Chevron U.S.A. Inc. v . Natural Res. Def. Council , 467 U.S. 837, 842 - 844 (1984). Under the Court decision, HCFC - 22 baseline transferred from H CFC - 142b is considered “vested.” The Proposed Rule responds to the Arkema ruling by increasing the share of the baseline awarded to Arkema and Solvay. The share of the baseline awarded to Honeywell and other holders of baseline is accordingly reduced. Hone ywell believes this result is arbitrary and capricious: Honeywell and others' shareResponse to Comments on the 2012 - 2014 HCFC Allocation Rulemaking Page 9 of the baseline is vested and therefore Honeywell does not think it may be invaded by EPA to award to other participants. Honeywell comments that they are injured by the Pr oposed Rule, which increases the annual allocation of HCFC - 22 allowances to Arkema and Solvay. As a consequence of these transfers, Honeywell notes that they suffer a decrease in the total number of HCFC - 22 annual production and/or consumption allowances a llocated to them, a dilution in the value of those HCFC - 22 production and consumption allowances, a decrease in their share of the demand market, and other potential injuries. Honeywell urges EPA to adopt an allocation scheme that does not take from the ve sted rights of Honeywell and other baseline holders to give to Arkema and Solvay to protect their vested rights. [0082] EPA Response: As discussed in this final rule and the 2011 Interim Final Rule (76 FR 47451), the decision in Arkema v . EPA required EPA to consider the 2008 inter - pollutant transfers in setting the baselines for future allocations , at least to the extent EPA continue s to use the historical production and consumption baselines . The D.C. Circuit recently held that Arkema v. EPA forecloses challenges to the 2008 transfers . Honeywell International, Inc. v. EPA , D.C. Cir. No. 10 - 1347 (January 22 nd , 2013) . A more complete discussion of the baselines used in the final rule is available in section IV.A.1. of the preamble and in the 2011 Interim F inal Rule (76 FR 47451). The full response to this comment is in section IV.A.1. of the preamble. 

## 1.2. **Using more recent production and import data to establish baselines for 2015**  **– 2019, and w**  **hether there would be an environmental benefit to**  **doing so** EPA receiv ed two comments supporting the use of 2005 - 2007 production and import data to establish baselines for 2015 - 2019 and two other comments stat ing that EPA should not revise company baselines. Honeywell and DuPont believe that 2005 - 2007 data should be used to establish baselines.  Honeywell and DuPont support the idea that the 2015 - 2019 allocation period should use the highest production and import levels for HCFC - 22 between 2005 - 2007 rat her than the 1994 - 1997 baseline. Honeywell believes baselines should be updated to more accurately reflect current market conditions. Honeywell suggests that EPA should revise each producer’s and importer’s production and consumption baselines by allowing each entity to select its highest year of actual production and consumption from among the calendar years 2005, 2006, and 2007. Honeywell states that EPA has set a precedent for using the period 2005 - 2007 since it chose to use that same period as the basel ine for newly - controlled HCFCs. ( 74 Fed. Reg. 66412 (Dec. 15, 2009) ) . Honeywell believes those three years are best suited to be the baseline here, too, because they are the three years nearest in time to the present that both represent relatively stable m arket conditions and were not influenced by the 2009 Final Rule. Honeywell believes using more recent years would be inappropriate: 2008 and 2009 production and consumption were negatively impacted by the economic downturn and are not fairly representative years; 2010 and 2011 are inappropriate as they fell under the 2009 Final Rule and thus already reflect the initial 2010 - 2014 step - down period reductions. Honeywell notes that allowing each baseline allowance holder to select the highest year of the three years allows for the smoothing of year - to - year variability. [ 0070, 0082] DuPont notes that to assign company baselines for the HCFCs for which no baselines had been established in the 2003 Final Rule, EPA utilized 2005 - 2007 data to "ensure that the baselin e reflects the current market as closely as possible...” in the 2009 Final Rule. This methodology followed past practice with respect to est ablishing baselines for HCFC - 141 b, HCFC - 22 and HCFC - 142b. DuPont notes that EPA has also chosen to implement a "worst first" policy for HCFCs, integral to which is a limited lifespan for HCFC allowances and allowances derived from an HCFC subject to 100 percent phase - out. HCFC allowances, even if transferred from one HCFC to another every calendar year do not live on in p erpetuity; instead, when the underlying HCFC source of an allowance is completely phased out, so too are all allowances derived from the HCFC.Response to Comments on the 2012 - 2014 HCFC Allocation Rulemaking Page 10 DuPont believes the a gency should continue to follow these past practices and take further action to revise all H CFC baselines through consideration of a company's highest reported consumption and production of such HCFCs during the years 2005 - 2007. DuPont notes that this action would reset baselines to reflect the current market as closely as possible and avoid rewa rding companies for attempting to manipulate their baselines by converting allowances from HCFCs that they knew would have no future value to HCFC allowances they knew would retain value in the current step down period and beyond. [0070] DuPont notes that in discussion of Arkema , the Court stated that "the Agency is certainly entitled to ... institute a program that forbids baseline inter - pollutant transfers in the future.” The Court in Arkema also agreed that EPA "may interpret what constraints, if any, Co ngress placed on the establishment of baselines for each step - down period.” DuPont notes that EPA thus has ample discretion under the CAA to update HCFC - 22 baselines and encourage s the agency to undertake this action utilizing the 2005 - 2007 production and consumption period. Given that EPA has considered different baseline allocation methodologies since 2001 and reconsidered updating baselines in 2008 - 2009 as part of the 2009 Final Rule, DuPont sees no reason why EPA cannot act in a more expeditious manner. DuPont urges EPA to take action on this matter at the earliest possible time and not to consider reallocation of HCFC allowances as inextricably tied to the next regulatory step down period of 2015 - 2019. [0070] EPA Response: EPA is not updating the basel ines for 2012 - 14. In the notice of proposed rulemaking, t he agency did not take comment on changing baselines in 2012 - 2014 . This was because the agency did not believe there would be adequate time to make a significant change to baselines or to adopt other allocation options in the current regulatory period. In addition, e valuating and implementing such a change could have inject ed additional uncertainty into the market in the short term. For these reasons, EPA did not propose, and is not finalizing, change d baselines for 2012 - 14. EPA remains open to revising the allowance system and baselines in the future. Several options EPA could use were discussed in the 2009 Final Rule (74 FR 66412) and could be explored in more detail . However , EPA would want to weig h whether updating baselines or changing the allocation system five years before the complete phaseout of H CFC - 22 would provide sufficient benefit (particularly environmental benefit) to justify the time and potential burden . In addition, if EPA were to co nsider updating baselines, EPA would want to assess whether and how the 2008 inter - pollutant transfers should be taken into account . EPA agree s that it has made past statements indicating that once an HCFC is phased out (not phased down) , all baseline allo wances associated with that HCFC are also phased out (as discussed further in section V.A. of the preamble to the final rule ). EPA will continue to review the se issue s as it develops the proposed 2015 - 2019 HCFC allocation. Solvay and Mondy Global Inc. state that EPA should continue to use existing baselines.  Mondy Global Inc. comments that EPA should not revise company baselines for the 2015 - 20 19 allocation period. They believe that EPA’s current allocation method is the fairest way to allo cate allowances because it is transparent and clear. Market participants know what their baselines are and thus can anticipate their share of the allocation in relation to other companies, which is critical for business planning. Therefore, continuing to u se existing baselines would be the least disruptive to the market. [0055] Solvay believes there is no benefit to using more recent data to establish baselines for 2015 - 2019 , and no benefit to a lengthy process to potentially distribute the same number of a llowances. However, Solvay believes that further reductions in the number of allowances that EPA issues in future calendar years will benefit the environment by promoting reclamation. [0064 ] EPA Response: See previous response. Additionally, no comments we re received indicating there is an environmental benefit to revising baselines in the future . However, the agency will continue to evaluate all options before establishing allowances for the 2015 - 2019 regulatory period.Response to Comments on the 2012 - 2014 HCFC Allocation Rulemaking Page 11 

## 1.3. **Whether EPA should approve future inter**  **- pollutant baseline transfers**  EPA received two comments on EPA’s proposed changes to the regulatory text covering future allowance transfers. Mondy Global Inc. supports EPA’s proposed changes, while Solvay does not.  Mondy Global Inc. supports EPA’s pr oposed changes to the regulatory text prohibiting permanent transfers of baseline allowances because it will prevent future manipulation of the allowance program. According to the commenter, t he CAA plainly prohibits permanent inter - pollutant transfers. [0 055] EPA Response: As discussed in the proposed rule and in the 2011 I nterim F inal R ule, EPA is concerned that allowing inter - pollutant baseline transfers could undermine the HCFC phaseout program and is therefore finalizing the changes to the regulatory text . EPA believes the CAA language is ambiguous but is best read as prohibiting permanent inter - pollutant transfers. A more complete response is available in section V. of the preamble to the fina l rule .  Solvay comments that EPA should revisit its thinking on future inter - pollutant baseline transfer s. Solvay disagrees with EPA’s statement in the preamble that EPA will not recognize inter - pollutant transfers when it updates the baseline in preparati on for the 2015 - 2019 step - down period. Solvay disagrees with EPA’s concern that by recognizing permanent inter - pollutant transfers in future baseline calculations , companies could ‘game’ the system by making transfers from substances that are being phased out into allowances for substances that may still be used. Solvay notes that in 2008 and 2009 it converted the vast majority of its HCFC - 142b allowances into HCFC - 22 allowances fo r sale to US customers, continu ing a practice it began in 2006 and which EPA acknowledged in 2009. Solvay comments that they made these inter - pollutant transfers because it was in Solvay and its customers’ interest to engage in those transactions. Solvay n otes these were market - driven transactions, which EPA seeks to promote. [0064] S olvay suggests that for 2015 - 2019, EPA could permit permanent inter - pollutant transfers to be converted from one control period to another only if substantial allowance convers ions and market activity has taken place before the last year of a control period. Solvay believes that mere paper transactions should be disallowed, but transactions that have actually taken place in the market should be recognized. Solvay notes that it h a s considered the precedent such a blanket rule [i.e. not recognizing inter - pollutant transfers] might have on any future cap - and - trade policy administered by EPA. Solvay envisions a scenario where an allowance holder could change the focus of its business to produce and sell a substance that is relatively less harmful to the environment. However, Solvay believes that if a company cannot be guaranteed allowances in future years, the company may decide that the cost is too great to justify production of that substance for just a limited time. The result would be greater production and sale of a substance that is more harmful to the environment and a lack of competition and innovation. [0064] EPA Response: EPA is not considering in this action whether permanen t inter - pollutant transfers should be allowed in other current or future cap - and - trade programs. EPA’ s policy and legal interpretation regarding inter pollutant transfers in the stratospheric ozone program are specific to the structure of the program and the language of section 607 of the CAA. A response to the remainder of this comment is available in section V. of the preamble to the final rule . 

## 2. **FACTORS CONSIDERED I N**  **ALLOCATING AMOUNTS F OR HCFC**  **- 22**  **AN D**  **HCFC -**  **142B** EPA received 43 comments (signed by multiple commenters) on factors considered in allocating HCFC allowances . Comments were in reference to four main topics:Response to Comments on the 2012 - 2014 HCFC Allocation Rulemaking Page 12 2.1 Surplus inventory of HCFC - 22 2.2 Adjustments fo r recovery , reclamation, and reuse 2.2.1 Projections of reclaim capabilities in the Adjustment Memo 2.2.2 Comments from or about large end users of refrigerant , including supermarkets 2.3 Estimated servicing need for HCFC - 22 as presented in the Adjustment Memo 2.4 Effects of dry - shipped HCFC - 22 equipment on the HCFC phaseout Count Commenter Organization Document ID No 1 David Doniger Natural Resources Defense Council (NRDC) EPA - HQ - OAR - 2011 - 0354 - 0067 2 William J. Hamel Arkema Inc. EPA - HQ - OAR - 2011 - 0354 - 0073 3 Rick Roland Certified Refrigerant Services Inc. EPA - HQ - OAR - 2011 - 0354 - 0057 4 Karim Amrane AHRI EPA - HQ - OAR - 2011 - 0354 - 0072 5 Rich Dykstra Consolidated Refrigerant Reclaim EPA - HQ - OAR - 2011 - 0354 - 0083 6 Gary L. Clark Goodman Global, Inc. EPA - HQ - OAR - 2011 - 0354 - 0084 7 RemTec International Group of EPA Certified ODS Reclaimers EPA - HQ - OAR - 2011 - 0354 - 0085 8 Steven H. Bernhardt Honeywell EPA - HQ - OAR - 2011 - 0354 - 0082 9 Stephen P. Mandracchia Hudson Technologies Company EPA - HQ - OAR - 2011 - 0354 - 0071 10 Jerry Dykstra Rapid Recovery Franchise Partners EPA - HQ - OAR - 2011 - 0354 - 0086 11 A. Stephen Trevino Summit Refrigerants EPA - HQ - OAR - 2011 - 0354 - 0062 12 Mack McFarland DuPont EPA - HQ - OAR - 2011 - 0354 - 0070 13 Don Magid Solvay Fluorides, LLC EPA - HQ - OAR - 2011 - 0354 - 0064 14 Walt Baker Polar Technology EPA - HQ - OAR - 2011 - 0354 - 0076 15 Michael Bleier Able Distributors EPA - HQ - OAR - 2011 - 0354 - 0147 16 Charles McCrudden ACCA EPA - HQ - OAR - 2011 - 0354 - 0081 17 John Tice APR Supply Co. EPA - HQ - OAR - 2011 - 0354 - 0148 18 Jeff Moe Center for Energy Efficiency and Sustainability , Ingersoll Rand EPA - HQ - OAR - 2011 - 0354 - 0063 19 Don Maloney Coburn Supply Company, Inc. EPA - HQ - OAR - 2011 - 0354 - 0149 20 Colt Anderson Cottongim Heating & Cooling EPA - HQ - OAR - 2011 - 0354 - 0154 21 Jonathan Melchi Heating, Air - Conditioning and Refrigeration Distributors International EPA - HQ - OAR - 2011 - 0354 - 0069 22 Kyle E. Gilley Lennox International Inc. EPA - HQ - OAR - 2011 - 0354 - 0061 23 David Lambert NA EPA - HQ - OAR - 2011 - 0354 - 0126 24 Maureen Beatty National Refrigerants, Inc. (NRI) EPA - HQ - OAR - 2011 - 0354 - 0068 25 Michael Seabaugh NORDYNE EPA - HQ - OAR - 2011 - 0354 - 0089 26 Karen B. Meyers Rheem Manufacturing Company EPA - HQ - OAR - 2011 - 0354 - 0087 27 John Mandyck UTC Climate EPA - HQ - OAR - 2011 - 0354 - 0065 28 M. J. Dermid Dermid Enterprises, LLC EPA - HQ - OAR - 2011 - 0354 - 0113 29 John M. Batt Airgas, Inc. EPA - HQ - OAR - 2011 - 0354 - 0079 30 Joel K. French Coolgas, Inc. EPA - HQ - OAR - 2011 - 0354 - 0088 31 Erik R. Lieberman Food Marketing Institute (FMI) EPA - HQ - OAR - 2011 - 0354 - 0157 32 Mack McFarland DuPont EPA - HQ - OAR - 2010 - 1040 - 0020 33 Theodore Broudy; James Burke USA Refrigerants EPA - HQ - OAR - 2010 - 1040 - 002 3 34 Richard Marcus RemTec International EPA - HQ - OAR - 2010 - 1040 - 00 24 35 Carl Grolle Golden Refrigerant EPA - HQ - OAR - 2010 - 1040 - 002 5 36 Stephen Mandracchia Hudson Technologies EPA - HQ - OAR - 2010 - 1040 - 002 7 37 Pete Williams Williams & Associates EPA - HQ - OAR - 2010 - 1040 - 00 32 38 Don Magid Solvay Fluorides, LLC EPA - HQ - OAR - 2010 - 1040 - 00 26Response to Comments on the 2012 - 2014 HCFC Allocation Rulemaking Page 13 Count Commenter Organization Document ID No

39 Erik R. Lieberman Food Market Institute EPA - HQ - OAR - 2010 - 1040 - 0158 40 Kenneth M. Ponder RMS of Georgia, LLC EPA - HQ - OAR - 2011 - 0354 - 0078 41 David P. Huet Johnstone Supply EPA - HQ - OAR - 2011 - 0354 - 0101 42 Terry Deppe Johnstone Supply EPA - HQ - OAR - 2011 - 0354 - 0140 43 Peter M. Geosits Mexichem Fluor Inc. EPA - HQ - OAR - 2011 - 0354 - 0066 

## 2.1 **Surplus i**  **nventory of HCFC -**  **22** EPA received ten comments on its estimate of surplus HCFC - 22 production from past years that is in existing inventory.  NRDC, IGSD, and EIA comment that the 45,400 MT stockpile and the 6,000 MT annual drawdown should reasonably be regarded as minimum, not maximum, estimates. They state that the Adjustment Memo indicates that the stockpile may be an underestimate due to grea ter stockpiling during an unexpectedly cool summer in 2009 and “in anticipation of higher prices” during the 2010 - 2014 period. [0067]  Hudson believes that there are significant volumes of HCFC - 22 stockpiled and available to meet demand. Hudson comments that EPA’s assessment of stockpiled inventory in the Adjustment Memo, and its effect on the aftermarket, is essential for supporting reco very and reclamation. [0071 , 0027 ]  Coolgas strongly supports EPA’s consideration of HCFC - 22 stockpiles. However, based on the amount of stockpiled HCFC - 22 Coolgas holds and based upon its own independent estimates of industry stockpiles, the company believ es that the quantity of inventory surplus used in the Vintaging Model may be underestimated. [0088]  Solvay urges EPA to reduce allowances in 2013 and 2014. Solvay notes that the amount of HCFC - 22 in inventory is likely greater than one year's supply of vir gin material based on the "Adjustment Memo" included in the Docket , which estimates current inventory of HCFC - 22 a s high as 45,400 MT. R educing future allowances should reduce this inventory overhang , supporting the sustainable reclamation industry while e nsuring that sufficient supply is available for all consumers. Solvay also notes that they have no first - hand knowledge of any company having a problem sourcing virgin material. [0064 , 0026 ]  Williams & Associates comments that all indicators suggest that t here is too much HCFC - 22 available in the U.S. market. Williams & Associates commend s EPA’s aggressive approach to phase - down HCFCS and believes that EPA must consider and adjust for the effects that oversupply is having throughout the industry. [0032] EPA Response: All comments on the amount of existing inventory, as well as confidential comments, indicate EPA’s estimate of surplus inventory is reasonable . While some comments suggested a larger annual adjustment, EPA did not receive enough data to s upport a larger change . EPA is finaliz ing the rule with the 6,000 MT adjustment for surplus inventory. More information and further response is provided in section IV.B.2. of the preamble to the final rule .  USA Refrigerants comments that it is well known that HCF C - 22 is being stockpiled and relates the stockpiles back to an over - supply of HCFC - 22 and low prices . It offer s the following three suggestions to fix the problem : • EPA has an auction option in which HCFC allocation would be purchased, thus increasing the v irgin gas price. • Give the allocation to whomever EPA chooses, charging a per pound fee ($3

- $7 per pound). USA Refrigerants is aware that EPA has a dilemma with receiving monies. They also respectfully disagree with EPA that it is difficult to collect fees. They believe that the allocation holders are well knownResponse to Comments on the 2012 - 2014 HCFC Allocation Rulemaking Page 14 and could be put on the honor system. USA Refrigerants believes that this will ensure that if there is a glut, they will not produce, and if there is a shortage, they will produce. • Do nothing (i.e. do not allocate allowances) until the market price of R - 22 is stable above $8 per pound. [0023] EPA Response: As discussed in the response to NRDC, Hudson, Coolgas and Solvay, comments indicate EPA’s estimate of surplus inventory is reasonable . However, the three options presented are not within the scope of the proposed rule for 2012 - 2014. EPA will consider whether to propose these options as it develops the 2015 - 2019 rule.  Golden Refrigerants asks that EPA review the current state of the HCFC m arket before issuing allocations for 2012 and future years . The amount of HCFC’s available in the marketplace is in excess of what is required for servicing existing units. The oversupply is causing the price of HCFC - 22 to fall and leading to a lack of con cern for recovery and reclamation. [0025] EPA Response: EPA agrees with the commenter that the 2009 Final Rule, which originally govern ed 2012 - 2014 , provided more allowances than were needed to meet servicing need . The proposed rule considered issuing fewe r allowances for this very reason . However, EPA does not believe it is in the best interest of the industry to issue annual rulemakings , nor would it promote a smooth transition out of HCFC - 22 . As evidenced by the timing of the 2011 I nterim Final R ule and this rule, providing allowances for the reminder of the regulatory period provides more certainty to industry than an annual approach. Additionally, EPA has previously addressed this issue in past rulemakings and reiterates its support for providing the an nual allocations as far in advance as possible.  Ingersoll Rand notes that from discussions with their dealers, parts centers, contractors, and other industry stakeholders, there is currently an oversuppl y of HCFC - 22 in the marketplace relative to demand. [ 0063] EPA Response : S ee previous response to NRDC and others .  AHRI comments that there is an excess supply of virgin HCFC - 22. [0072] EPA Response : See previous response in this section to NRDC others . 

## 2.2 **Adjustments for recovery, reclamation, and reuse** 2.2.1 Projections of reclaim capabilities in the Adjustment Memo Out of the 15 comments EPA received on reclaim capabilities, 14 comments (some signed by multiple organizations) stated that the reclamation industry is able to increase its current capacity, although some commenters noted that sufficient supply of recovered HCFC - 22 would be the limiting factor. One comment (from Goodman) stated that the infrastructure to effectively and efficiently recover, recycle, redistribute, and reuse HCFC - 22 likely will take several years to develop into a viable source for the market. In addition, Polar Technology agreed that the industry has the capacity to meet reclaim needs, but disagreed with the base assumption that this activity will automatically take place.  NRDC, IGSD, and EIA state that the 19,700 MT figure should be a minimum, rather than a maximum because established companies that reclaim refrigerants have the technical capacity to recover between 12,500 and 19,700 MT per year in 2012 and could easily exp and capacity to meet demand. NRDC, IGSD, and EIA note their support of EPA’s analysis of the impact on reclamation of the HCFC - 22 over - supply and support the agency’s proposal to reduce the over - supply and restore the conditions needed to build the ne cessa ry reclamation and reuse capacity. NRDC and IGSD support the reclamation and reuse of HCFC - 22 for two reasons: 1) every ton of reclaimed and reused HCFC - 22 avoids the need to produce a ton of new HCFC - 22, thus reducing theResponse to Comments on the 2012 - 2014 HCFC Allocation Rulemaking Page 15 total amount of HCFC - 22 that will ultimately be leaked into the atmosphere; and 2) a robust reclamation industry will be needed post - 2015 to meet the demand for HCFC - 22 to service existing equipment. [0067] EPA Response: The agency is finalizing the proposed 19,700 MT adjustment to foster increased HCFC - 22 recovery and reclamation. EPA agrees with NRDC’s reasons for supporting the adjustment. In addition, comments from the reclamation industry confirm that many reclaimers could quickly increase capacity, and that the 19,700 MT adjustment i s a reasonable change. While the reclamation industry may be able to increase capacity to even more than 19,700 MT, EPA did not receive sufficient data to warrant making an adjustment higher than the maximum 19,700 MT that was proposed. EPA’s estimate s of recover ed refrigerant also support finalizing this adjustment for recovery and reclamation (see the Recovery Memo included in the docket). Additionally, the commenter did not provide data supporting an upward adjustment. A complete response is availabl e in section IV.B.2. of the preamble to the final rule.  Based on discussions with its members, AHRI believes that the industry is capable of reclaiming HCFC - 22 in excess of 12,500 MT. [0072] EPA Response: The agency is finalizing the proposed 19,700 MT adj ustment to foster increased HCFC - 22 recovery and reclamation. A complete response is available in section IV.B.2. of the preamble to the final rule .  Certified Refrigerant Services, Inc. comments that as the demand for capacity grows, reclaim companies will be able to expand to cover the need that will ultimately be driven by higher prices and a decrease in supply. The commenter notes that they reclaimed 135,000 lbs of HCFC - 22 in 2011 with only a 35% utilization of their current equipment. Full utilization c ould yield 400,000 lbs of reclaim in one year, and could easily double production volumes if recovery becomes aggressive. However, companies will not expand until there is a need. Further, the commenter states that of all refrigerant reclaiming businesses, none are operating at greater than 60% of their capacity. The solution would be to reduce availability, forcing the price to go up, and therefore forcing contractors to participate in recycle and reuse programs. [0057] EPA Response: EPA agrees with the co mmenter that as the allowances for virgin HCFC - 22 decrease, there will be an increased incentive to recover and reclaim the gas. A more complete response is available in section IV.B.2. of the preamble to the final rule.  Hudson believes that the reclamatio n industry will easily support the maximum proposed reduction levels, as calculated in the Adjustment Memo. Hudson agrees that 25% to 80% of servicing need could be met, noting that Hudson can easily triple its current capacity and believes that this is ty pical amongst most reclaimers. Hudson believes that the issue is not whether the industry can supply but whether the market will recover and return sufficient product for reclamation. According to the commenter, with emphasis on responsible use and handlin g and a limitation on virgin supply, reclamation and recycling could serve 80% or more of the aftermarket. The commenter believes that a vibrant reclamation industry is a key component for the HCFC phaseout. Hudson states that unless the supply of new refr igerant is reduced and the value of the refrigerant increases, the volume of reclamation simply will not increase. The commenter believes this can be achieved by limiting the production of HCFC - 22. [0071, 0027] Airgas believes that U.S. reclaimers have suf ficient capacity to achieve and exceed the target of 12,500 MT. The commenter notes that having reclamation capacity, however, does not equate to having reclaimed product to supply the market. Current market pricing and economics do not support profitable reclamation. Airgas notes that instead of increasing, nationally reclaimed volumes of HCFC - 22 have remained relatively flat for the last two years. [0079] Summit Refrigerants notes that capacity exists in the reclamation industry to handle increased reclam ation volume. The commenter has made a significant investment in equipment, facilities, personnel, and training to handle a much greater volume of reclamation, including the packaging and sale of reclaimed refrigerantResponse to Comments on the 2012 - 2014 HCFC Allocation Rulemaking Page 16 to the HVAC service industry. The comm enter notes that they are willing to make additional capital investments. Summit Refrigerants has been informed that other refrigerant reclaimers throughout the country also have capacity to handle a greater volume of reclamation activity. [0062] EPA Respo nse: The agency is finalizing the proposed 19,700 MT adjustment to foster increased HCFC - 22 recovery and reclamation. A more complete response is available in section IV.B.2. of the preamble to the final rule .  A group of 20 EPA Certified ODS Reclaimers comment that they believe reclaimers can meet the projected demands of the industry if allocations are reduced to the maximum extent in 2012 - 2014. They agree that the amount of HCFC - 22 that they reclaimed was well below their capacity mainly due to the pr ice and ample supply of virgin manufactured and imported HCFC - 22. [0085] EPA Response: The agency is finalizing the proposed 19,700 MT adjustment to foster increased HCFC - 22 recovery and reclamation. A more complete response is available in section IV.B.2. of the preamble to the final rule.  Honeywell believes it is important to make clear to EPA that there is sufficient recovery and reclamation capability today. The supply chain from equipment - in - use to reclamation facilities is highly fragmented and comple x, however, so it will continue to take time to get this supply chain up - to - speed. [0082] EPA Response: While EPA agrees that reclamation will not increase overnight, t he agency is finalizing the proposed 19,700 MT adjustment to foster increased HCFC - 22 re covery and reclamation. A more complete response is available in section IV.B.2. of the preamble to the final rule.  Rapid Recovery Franchise Partners comment that it will be necessary to increase the quantity of high quality reclaimed R - 22. The commenter believes that existing reclaimers have the capacity to process more than enough R - 22 to meet the industry needs, but are not convinced that given the present situation, there will be enough used R - 22 recovered to meet the raw material needs of the reclaime rs. The commenter states that HVAC contractors are currently not recovering enough R - 22 to meet the level necessary to sustain the industry for the long term. [0086] EPA Response: The agency is finalizing the proposed 19,700 MT adjustment to foster increas ed HCFC - 22 recovery and reclamation. A more complete response is available in section IV.B.2. of the preamble to the final rule.  Consolidated comments that it has been well documented that the reclaim industry has both the capacity and the willingness to s ignificantly increase the amount of R - 22 it processes. Consolidated notes they could easily double their capacity immediately and if necessary add to their equipment and staffing to triple or quadruple the amount of refrigerants they reclaim each year. Con solidated believes the ability to increase processing capacity is not the real issue. If the industry expects to significantly increase the amount of R - 22 and other refrigerants available for reclamation, the concern will need to shift away from those who reclaim refrigerants to those involved in the recovery process. Consolidated notes that additional reclaimed R - 22 is, and will continue to be, directly proportional to the quantity of refrigerant that is captured and made available to the reclaimers. [0083 ] EPA Response: The agency is finalizing the proposed 19,700 MT adjustment to foster increased HCFC - 22 recovery and reclamation. A more complete response is available in section IV.B.2. of the preamble to the final rule.  Polar Technology agrees that the in dustry has the capacity to meet whatever increases in reclamation activity that may occur. However, they disagree with the base assumption that this activity will automatically take place. They believe history indicates that system owners/technicians/contr actors do not become actively engaged in reclaiming R - 22 as a result of reduced allocations. The commenter believes theResponse to Comments on the 2012 - 2014 HCFC Allocation Rulemaking Page 17 industry does not have concern for the environment, doing the right thing, or over the diminishing supply and rising prices. Polar Techn ology states that allocation reductions actually may not significantly impact existing reclamation activities and economics is one of the strongest factors. They believe the anticipated increase in reclamation volume of R - 22 will not occur for the followin g four reasons: • Enforcement or lack thereof. Technicians, contractors, and system owners do not fear that the failure to properly recover will be met with punishment. There are too many systems and technicians to monitor and hold accountable. Polar Technol ogy cites California’s AB32 that according to them was created based on the failure of the CAA. AB32 holds the system owner accountable for refrigerants in their control. Without enforcement, there is no motivating reason for anyone to adhere to regulation s. • New revenue opportunities. Small R - 22 system owners are forced to buy new and costly systems before their current system has naturally worn out because they are at the mercy of technicians and contractors. In this case, the manufacturers and contractors profit and the consumers (system owners) lose. • Reclamation rates. The commenter states that according to EPA, reclaimed refrigerant activity has remained the same since the CAA was implemented. The commenter states that reclamation capacity has increased, just not the amount of used refrigerants to reclaim. They believe it is easier to manufacture and buy new gas than it is to reclaim. Because they are at the mercy of the market, system owners will pay for poor recovery practices. • History. The commenter p oints to the phaseout of CFC - 12 and states that price and volume do not correlate. The applications are different and more widespread than was the case with CFC - 12. Polar Technology believes that as the price increases, technicians will hoard more refriger ant, which will lead to dirty refrigerants going into existing systems, creating inefficient cooling and other compromises. [0076] EPA Response: The agency recognizes that assuming 19,700 MT of annual servicing need can be met by recovered and reclaimed material — instead of 12,500 MT — does not mean that amount will actually be reclaimed each year. EPA’s adjustment to encourage recovery and reclamatio n could also encourage transition to HCFC - 22 alternatives and more recovery and reuse of HCFC - 22 in systems that require a large refrigerant charge. EPA believes adjusting allowances to encourage reclamation will still send the desired market signal to inc entivize recovery and reclamation. As the supply of virgin HCFC - 22 decreases, the value of the gas and the incentive to recover and reclaim it will likely increase . In response to the commenter’s statement about enforcement, EPA encourages anyone to report potential Clean Air Act violations and to send EPA concrete evidence when possible to help in enforcement. EPA reminds the industry that intentional venting is illegal under EPA regulations. In addition to the current venting prohibition, EPA is incentivi zing the proper handling and recovery of all existing HCFC - 22 by reducing allowances . Fewer allowances results in each allowance , and therefore each pound of HCFC - 22, having higher value. Reclaimers can use this increase in value to provide a financial inc entive for contractors and system owners to recover more used HCFC - 22. In response to the comment on decisions system owners are making with their contractors, EPA does not have data or evidence to verify or rebut the commenters ’ assertion. EPA encourages system owners to find a contractor that they trust using ENERGY STAR tips on How to Find a Good Heating and Cooling Contractor and to work with thei r contractor to determine the best path forward when deciding to repair or replace systems. In response to the commenter’s assertion that reclamation has remained the same since the CAA was implemented, EPA disagrees. The average reclamation amount for HCF C - 22 in 2000 - 2003 was about 5.2 millionResponse to Comments on the 2012 - 2014 HCFC Allocation Rulemaking Page 18 lbs per year compared to about 8.5 million lbs per year in 2008 - 2011 (source: Summary of Refrigerant Reclamation 2000 - 2011 , available at http://www.epa.gov/ozone/title6/608/reclamation/recsum.pdf ) . Additionally, EPA does not have data on the price of CFC - 12 to verify the statements made about the CFC - 12 phaseout’s effect on reclamation. EPA is aware that CFC - 12 equipment is still in use eve n though the production and import of CFC - 12 stopped in 1996.  RMS Georgia commented that it had the capacity and resources to increase the quantity of reclamation if the demand for reclaimed material increases. RMS Georgia has invested resources into incre asing the infrastructure to prepare for the need for higher reclamation. [0078] EPA Response: The agency is finalizing the proposed 19,700 MT adjustment to foster increased HCFC - 22 recovery and reclamation. A more complete response is available in section IV.B.2. of the preamble to the final rule.  Goodman believes that EPA relies far too much on the potential for recovery and reuse as a means of servicing existing HCFC - 22 during the time period 2012 - 2014. Due to the comparatively small amount of HCFC - 22 typ ically used in a residential air conditioning system (approximately 6 to 8 pounds), Goodman believes the infrastructure to effectively and efficiently recover, recycle, redistribute, and reuse HCFC - 22 likely will take several years to develop into a viable source for the market. [0084] EPA Response: EPA disagrees with the comment. Even with lower recovery in the residential AC market, there is enough recoverable HCFC - 22 in existing HCFC - 22 equipment to increase the adjustment for recovery and reuse from 12, 500 MT to 19,700 MT, especially in light of the 2015 Montreal Protocol cap and the 2020 phaseout of HCFC - 22 production and import. EPA believes it needs to encourage recovery and reuse now to ensure a smooth transition. While recovery and reclamation may n ot increase immediately, other sources (e.g., transition to alternatives, use of existing inventory, and in - house recovery and reuse) can help meet current need s . A more complete response is available in section IV.B.2. of the preamble to this final rule .  RemTec International comments that the capacity is available by reclaimers to meet or exceed the 20 percent target. Further, they believe that in the past, reclaimers have not been able to fully utilize their capacity due to the economics or pricing issues to incentivize the recovery efforts and then compete with low cost imported products. [0024] EPA Response: The agency is finalizing the proposed 19,700 MT adjustment to foster increased HCFC - 22 recovery and reclamation. A more complete response is available in section IV.B.2. of the preamble to the final rule. 2.2.2 Comments from or about large end users of refrigerant, including supermarkets  Honeywell notes that there is another high volume source that EPA should continue to recognize and quantify. Large users that are retiring equipment can efficiently and effectively capture the majority of refrigerant from commercial refrigeration and air conditioning units by recovery for future reuse for service needs in other equipment o wned by these users. These users do not require reclamation technology or equipment. Such recovery and reuse should continue to be considered as a source of HCFC - 22 service refrigerant. [0082] EPA Response: EPA agrees there are other large end users , in ad dition to supermarkets , that can be a source for recovered HCFC - 22. The extent to which large end - users meet their needs with refrigerant recovered in - house is unclear. The agency accounts for the recovery practices of large end - users in its Vintaging Mode l and is using its estimates of recoverable refrigerant to support the maximum proposed reduction for recycling and reclamation.  The Food Marketing Institute (FMI) states that the proposed rule will impose substantial burdens on food retailers and wholesal ers. The commenter believes a lack of true equal capacity HCFC replacement ‘drop - in’ refrigerants for packaged HVAC units will result in higher energy usage and increased carbon emissionsResponse to Comments on the 2012 - 2014 HCFC Allocation Rulemaking Page 19 while lowering the ability of the system to meet store condition req uirements. They believe that the inability to meet store requirements will additionally increase refrigeration system energy usage. [0157] EPA Response: EPA agrees with the commenter that refrigeration and AC systems are typically most efficient when using the refrigerant they were designed to run on. EPA encourages HCFC - 22 system owners to transition to equipment designed for alternatives when it makes sense for them, keeping in mind that virgin HCFC - 22 can no longer be imported or produced beginning in 20 20. Recovered and recycled refrigerant can be used as long as it is available.  FMI also submitted a late comment, asking EPA to immediately increase HCFC - 22 production and consumption allowances in order to provide relief to grocery retailers. FMI proposes a phaseout schedule of 65,000 MT of both consumption and production allowances in 2012, followed by 50,000 MT in 2013 and 40,000 MT in 2014. The commenter suggests that its proposed phaseout schedule would meet the requirements for the heads of executive departments and agencies to consider the cumulative effects of regulations, pursuant to Executive Order 13563. The comment also included information from individual FMI members: • HCFC - 22 prices have increased, but it is available. • Supermarkets have begun t o retrofit some stores, but still rely on HCFC - 22 in many systems. • Supermarkets vary in the extent to which they recover HCFC - 22 and bank it, with some chains utilizing all of their recovered refrigerant, and others selling HCFC - 22 to a recovery or reclam ation company [0158]. EPA Response : See previous responses to FMI and Honeywell. EPA appreciates the concerns raised by FMI. However, FMI’s request for EPA to increase the allowed amount of HCFC - 22 consumption beyond the level allowed under the 2009 Final Rule, rather than reduce consumption allowances or keep them the same, is counter to EPA’s understanding of the broader HCFC - 22 market as presented in the Adjustment Memo. As such, the agency is finalizing what it believes to be an appropriate amount of al lowances based on its analysis of the market and the comments supporting that analysis. The rationale and support for the finalized allocations is provided in the preamble to the rule. Additionally, Supervalu, Food Lion and Weis Market contributed to EPA’ s research and analysis presented in the Adjustment Memo. Based on conversations with these stores, EPA found that some supermarkets have converted a substantial proportion of their HCFC - 22 equipment and that many have sufficient recovered HCFC - 22 in stock for servicing such that they do not anticipate a need to purchase any more virgin material in the future. Other supermarkets that have not converted from HCFC - 22 equipment as aggressively indicated that as low as 10% to 20% of their servicing needs are met by material recovered from retrofitted stores they own. The agency recognizes that some stores are able to meet much of their HCFC - 22 needs with refrigerant that is recovered and reused in - house; however, EPA al so recognizes that some supermarket stores are not able to meet a significant portion of their servicing needs with in - house recovery, especially smaller chains or independent store owners. Since the agency does not have sufficient data on in - house reuse, EPA is not accounting for supermarket reuse as its own category. However, the agency’s Vintaging Model has reasonable estimates for actual recoverable material for various sectors, and EPA is using those modeled recovery rates for supermarkets to help supp ort overall recovery and reuse estimates in this rule (see the Recovery Memo for specifics on modeled recovery rates).  NRCD , IGSC, and EIA suggest downward adjustments for supermarkets by reducing leakage and by sourcing through recovery and reuse , in line with the Adjustment Memo . [0067] EPA Response: See previous responses in this section. 

## 2.3 **Estimated servicing need for HCFC -**  **22 as presented in the Adjustment**Response to Comments on the 2012 - 2014 HCFC Allocation Rulemaking Page 20 

## Memo EPA received four additional comments on the Adjustment Memo, all related to the estimated servicing need for HCFC - 22.  Airgas commented that servicing need for HCFC - 22 was overstated in the 2009 Final Rule and that the new estimates for 2012 - 2014 are even higher in the Adjustment Memo, meaning that the reduction in allowances will have to be even greater to arrive at where the market must be in 2015. [0079] EPA Response: Vintaging Model estimates of servicing need are higher in the Adjustment Memo than in the Servicing Tail Report published with the 2009 Final Rule. The Adjustment Memo discusses the reasons for the change. The adjustments in this proposed rule (77 FR 237) were made to th e updated servicing need estimate. EPA will revisit this estimate again as it develops the allo cations for 2015 - 2019.  Certified Refrigerant Services, Inc. noted that EPA did a reasonable job of forecasting service demand, but is concerned that the economic recession (2009) has impacted the service demand forecasts from 2007. The recession resulted in a drop in demand, while the importation and production became excessive, negatively impacting refrigerant reclaimers. [0057] EPA Response: EPA discusses several reasons why the allocation in the 2009 Final Rule likely resulted in an oversupply of virgin HCFC - 22 in the Adjustment Memo . The adjustments proposed in this rulemaking are an attempt to remedy that over - allocation, and to incentivize proper handling of HCFC - 22 and transition to alternatives.  DuPont comments that as a resul t of the proposed reductions in total HCFC - 22 allowances and the supporting Adjustment Memo, it initiated a review of its market assessment and what it believe s will be needed to move the market to where it must be in 2015 and 2020 to comply with Montreal Protocol requirements . DuPont’s assessment supports the a gency's HCFC - 22 “smaller allocation scenario,” even though its assessment of the market differs in deta il from that in the Adjustment Memo. DuPont comments that the primary difference between its assessment and the Adjustment Memo is that market demand for HCFC - 22 is significantly lower than the agency has estimated. DuPont believes that as supply shrinks, service practices will improve , emissions will decrease, and overall demand for newly produced, inventoried and reclaimed HCFC - 22 will decrease . In addition, DuPont comments that it is informed that service technicians and end users are increasingly using HFC retrofit options that will further reduce demand for HCFC - 22. DuPont’s analysis conclude s that the maximum proposed reductions in allocations can be achieved without causing a significant disruption in the market place. [0070] EPA Response: EPA is cont inually updating the Vintaging Model based on new market information. Before issuing the 2009 Final Rule and the 2009 Servicing Tail Report (using Vintaging Model results) , EPA issued and sought comment on three versions of a draft report . The report analy z es servicing need for HCFC appliances in the U.S. refrigeration and air - conditioning sector projected to be in service from 2010 - 2019 . A ll versions are available at Docket EPA - HQ - OAR - 2008 - 0496: published November 4, 2005 at 70 FR 67172; released at a stak eholder meeting on September 29, 2006; published December 23, 2008, with 2008 Proposed Rule. The Servicing Tail Report focuses on air - conditioning and refrigeration appliances because such equipment represents the bulk of the servicing need. EPA generally agrees with the commenter that the amount provided in the 2009 Final Rule was too high to foster an orderly transition away from HCFC - 22. Several possible contributing factors and supporting indicators of this over - allocation are discussed in the Adjustmen t Memo. EPA will revisit this estimate again as it develops allowances for 2015 - 2019.  Arkema comments that that the estimates from EPA’s Vintaging Model of 56,200 MT of HCFC - 22 in 2012, 51,200 MT in 2013 and 45,900 MT in 2014 are reasonable projections. Arkema also believes providing theResponse to Comments on the 2012 - 2014 HCFC Allocation Rulemaking Page 21 lowest number of HCFC - 22 allowances would foster reclamation without disrupting equipment servicing. [0073] EPA Response: See previous responses in this section. 

## 2.4 **Effects of dry -**  **shipped HCFC -**  **22 equipment on the**  **HCFC phaseout**  EPA received 2 0 comments on whether repairing an existing system with dry - shipped HCFC - 22 equipment affects the HCFC phaseout. Eight comment er s believe repairs with dry - shipped HCFC - 22 condensing units is affecting the phaseout and/or should be st opped.  Lennox comments that EPA should prohibit the sale and distribution of dry - shipped HCFC - 22 air conditioning condensing units. The commenter states that the continued installation of dry - shipped HCFC - 22 condensing units for air - conditioning systems is impacting the HCFC - 22 phase - out in significant, negative ways. The continued installation of dry - shipped condensing units effectively allows the manufacture of otherwise banned HCFC - 22 air - conditioning systems, which undercuts the market for new, more env ironmentally friendly air - conditioning equipment. It maintains demand for HCFC - 22 refrigerant that otherwise would not exist. [0061] Lennox further c omments that EPA should grant the Carrier petition and that whatever action EPA may take in tightening the HCFC - 22 allocations is likely insufficient to address the issue . The commenter states that HCFC - 22 air conditioning condensing systems create a sourc e of demand for HCFC - 22 that is known to be significant but difficult to predict, which could create undue volatility in the HCFC - 22 market. Despite what appears to be a current sufficient supply of HCFC - 22 refrigerant, future shortages may nonetheless res ult if HCFC - 22 air conditioning equipment remains in use that EPA had expected to be replaced. Lennox notes that the exact scale of the problem is difficult to determine because there is no public reporting on HCFC - 22 condensing unit shipments, but million s of units are believed to be at issue. [0061] The commenter further states that if EPA does not c hange its policy, it is encouraging manufacturers to avoid promoting environmentally - friendly equipment. The commenter expressed concern that , in the future , manufacturers may refrain from developing more environmentally - friendly equipment, driving up the costs of more advanced equipment and impeding the transition away from ozone - depleting substances. Accepting the Carrier petition should help EPA to more accu rately predict how significantly it may reduce HCFC - 22 allocations pursuant to the Proposed Rule. [0061]  EPA Response: EPA agrees with the commenter that servicing of appliances that have been repaired through the installation of dry - shipped HCFC - 22 conden sing units does make up part of HCFC - 22 servicing need and that there is no consensus on how much of total servicing need is due to repairing existing system s with new condensing unit s . G iven the paucity of concrete quantifiable information on this subject currently available to the a gency, EPA is not ready to determine whether the installation of dry - shipped HCFC - 22 condensing units will affect EPA’s ability to phase out HCFC - 22 by 2020. The limited data received to date suggest that it will not. Two documents , which serve as an example of the data received to date , are available in the docket: a September 24, 2010 letter with supporting analysis from AHRI and a market update from analysts at Credit Suisse . More information about how EPA is approaching this issue is available in the preamble. However, s ince banning the manufacture of HCFC - 22 condensing units is beyond the scope of this rulemaking ( i . e. , EPA didn’t propose to ban condensing units in this rule), EPA will continue to evaluate the issue as it develops future regulations. The agency continues to seek quantifiable information on the number of dry - shipped condensing units being shipped, whether they are being used as a repair inResponse to Comments on the 2012 - 2014 HCFC Allocation Rulemaking Page 22 lieu of a compressor or motor replacement, and whether they will h inder EPA’s ability to phase out HCFC - 22 by 2020.  United Technologies , the parent company of Carrier, supports banning the manufacture of uncharged HCFC 22 condensing units. They be lieve the installation of newly - manufactured, uncharged HCFC - 22 condensing units does affect the phaseout of virgin HCFC - 22 production and import. United Technologies states “there is no doubt” that EPA ’s policy on dry - shipped HCFC - 22 condensing units perpetuate s the demand for HCFC 22 and hamper s the transition to alternatives. United Technologies state s that the proposed reduction in allocations will not address their concerns. The commenter estimates that approximately 74 million AC systems are operating today with HCFC - 22, with enough refrigerant to perpetuate newly installed HCFC - 22 condensing units for the next decade or more. United Technology comments that new condensing units can extend the lifetime of HCFC - 22 equipment by over 100%. The company states that 25 - 30% of equipment replacements are dry - shipped condensing units and that these replacements are being sold in lieu of alternatives; the company suggests that if this is left unchecked, HCFC - 22 projections would increase rather than decrease. United Technologies requests that EPA invite comments on all aspects of Carri er’s petition and expresses concern about the continued delay in acting on Carrier’s position. The commenter states that if the Carrier petition is not accept ed before the end of the upcoming peak sales season, the potential exists for more than one millio n additional replacement units to be sold this year and manufacturers will continue to ramp up production capacity and inventories. Further, the commenter believes that EPA has sufficient information to grant the petition now. United Technologies believes that the information readily available to EPA shows that 1) dry - shipped HCFC - 22 units newly produced to take advantage of existing regulations is a substantial and growing segment of the market; 2) the installations of dry shipped units greatly extend the useful lives of existing HCFC - 22 systems and therefore will perpetuate the demand for HCFC - 22 well into the next regulatory step - down period; 3) additional emissions of HCFC - 22 into the atmosphere will occur due to the resulting increase in the installed b ase of HCFC - 22 units and additional servicing of the equipment; and 4) the next result of the exemption undermines the smooth phase - out of HCFCs and the use of newer, more energy efficient technologies. United Technologies further asserts that if AHRI’s p rojections are accurate, which contrast sharply with the Servicing Tail report, at the end of the current regulatory step - down period, between 5 and 10 million more HCFC - 22 units than originally forecasted will be in service as a result of EPA’s current po licy . According to United Technologies, EPA should invit e comments on all aspects of Carrier petition . EPA has only solicited comments on whether the dry - shipped HCFC - 22 condensing unit policy affects the phase - out of virgin HCFC - 22. While the commenter b elieves this issue is important, they state that there are many other important issues relevant to whether EPA should eliminate the dry - shipped condensing unit loophole. Further, the commenter states that the a gency’s view of the use of HCFC - 22 is contrary to how EPA viewed the issue in the Pre - charged Appliance Rule. United Technologies believes that EPA now has evidence that dry units are being marketed and sold not as repair parts, but as cheaper alternatives to installing new, more energy efficient equi pment. The commenter states that EPA has a responsibility to examine whether the expressed intention of its 2009 Pre - charged Appliance Rule is being met. Carrier’s petition explains that by focusing solely on production and import versus actual emissions of HCFC - 22, EPA’s rule s ignores the important issue of maintaining the production of dry - filled units throughout the phase - out of HCFC - 22 production and consumption. According to the commenter, more HCFC - 22 units being manufactured equate to more emissions over time regardless of whether aResponse to Comments on the 2012 - 2014 HCFC Allocation Rulemaking Page 23 refrigerant is newly produced or recaptured and reused. They believe that this is contrary to the goals of the CAA and Montreal Protocol. United Technologies comments that if Carrier’s petition is granted it will not aff ect the ability of consumers to service existing HCFC - 22 equipment. Their petition seeks to prohibit only the sale, marketing, and distribution of entirely new HCFC - 22 condensing units. United Technologies supports EPA’s recent decision to update home air - conditioning resources for consumers. They strongly believe that EPA should not in any way delay the transition to newer, more efficient and environmentally beneficial air conditioning systems. [0065] EPA Response: See the above response to Lennox Internat ional. United Technologies asserts that there is an adequate amount of refrigerant in existing systems “ to perpetuate newly installed HCFC - 22 condensing units for the next decade or more .” EPA understands this comment to mean that repair ing current system s with dry components, including condensing units, may not affect EPA’s ability to phaseout HCFC - 22 by 20 2 0 due to the large amount of HCFC - 22 in existing systems . EPA agrees that there is a significant amount of HCFC - 22 in existing systems that can be rec overed and reused to repair systems both now and in the future. As discussed in section IV.B.2. of the preamble, EPA anticipates that reclaimed and reused material can meet a significant portion of estimated servicing need over the coming years. United Tec hnologies also comments that dry condensing units can extend the lifetime of an existing system by 100% or more. EPA welcomes data to verify this claim. EPA disagrees with United Technologies’ statement that rep airing systems by rep lacing condensing units increases the installed base of HCFC - 22 equipment. EPA’s prohibition on the manufacture of new HCFC - 22 systems with virgin refrigerant began January 1, 2010 — capping the installed HCFC - 22 equipment base, with limited exceptions. As a result, the installed base of residential HCFC - 22 systems should not be growing , unless reclaimed HCFC - 22 is being used to install large numbers of new systems or illegal activity is occurring . If United Technologies or any other entity has knowledge of new systems being installed with virgin HCFC - 22, they should report the violation to EPA. EPA seeks more information from the commenter on how allowing repairs of existing systems with dry - ship ped condensing units results in increased emissions , especially in light of EPA’s venting prohibition and EPA ’s control of potenti al emissions through the allocation of annual production and consumption allowances. United Technologies questions whether th e intent of the Pre - C harged Appliance rule (74 FR 66450) is being met, considering the marketing and sales of dry - shipped units . EPA’s intent in the Pre - Charged Appliance rule was clear: t he Pre - C harged Appliance rule focuse s on pre - charged appliances and components. To the best of the agency’s knowledge, the intent of the rule is being realized. However, a s stated previously, EPA seeks quantifiable data and will continue to review this issue as it develops future regulations.  Ingersoll Rand does not believ e the issue of dry charged condensing unit production can be properly addressed through a reduction in HCFC - 22 allocation levels. Ingersoll Rand believes a direct regulatory approach is needed to properly address the growing penetration of dry charge HCFC - 22 unit volume in the residential and commercial markets. According to the commenter, e nd - users who are making service or replacement decisions today on their existing HCFC - 22 systems are not aware of the specifics associated with the supply/demand of HCFC - 22, especially when trying to predict what the future supply/demand market dynamics might be and how this may impact the cost of continued service of their systems. Consumers tend to make the decision based on the direct cost of the change - out. The po rtion of this direct cost associated with the HCFC - 22 refrigerant needed for the re - charging of the HCFC - 22 system is quite small (<5%) of the total cost so even a significant inflation on the cost of HCFC - 22 will still have a minimal impact on the end - use r decision. [0063]Response to Comments on the 2012 - 2014 HCFC Allocation Rulemaking Page 24 EPA Response: EPA agrees with the commenter that the price and availability of HCFC - 22 is not the only factor affecting the practice of repairing existing systems with dry - shipped HCFC - 22 condensing units. However, the reduction in allow ances does send a strong market signal about the future availability of HCFC - 22. Absent any change to current EPA policy on repairing pre - 2010 systems, as the allocation for HCFC - 22 production and importation decreases, consumers , in consultation with thei r AC and refrigeration contractor , will have to decide when to transition to a non - HCFC alternative. See the response to Lennox and United Technologies for more detail on several of the points raised in the comment.  NRDC, IGSD, and EIA comment that the mar ket for dry - shipped HCFC - 22 condensing units is expanding rapidly. The commenters express concern that because newly - produced HCFC - 22 is so cheap, service technicians are venting HCFC - 22 from broken units, installing dry - ship condensing units in their plac e, and then charging the u nit with virgin HCFC - 22. [0067] EPA Response: EPA has received conflicting reports on where the market for dry - shipped HCFC - 22 repair units is moving. However, through this rule EPA is reducing HCFC - 22 allowances to adjust for rec ent market changes and to encourage proper handling and recycling of HCFC - 22. EPA encourages everyone to report potential Clean Air Act violations and when possible, to send EPA concrete evidence to help with enforcement. EPA reminds the industry that inte ntional venting is illegal under existing EPA regulations.  One commenter urges EPA to consider ending the manufacture of HCFC - 22 dry shipped condensers instead of reducing the HCFC - 22 production beyond what has already been planned. [0126] EPA Response: EP A did no t propose to ban repairs with condensing units in this rule , but will continue to evaluate the issue as it develops future regulations. The agency continues to seek quantifiable information on the number of dry - shipped condensing units being shipped, whether they are being used as a repair in lieu of a compressor or mo tor replacement, and whether they will hinder EPA’s ability to phaseout the production and import of virgin HCFC - 22 by 2020.  Cottongim Heating & Cooling is concerned that dry ship condensing units are creating more harm than good with regard to overall equipment efficiency. They state that too many companies are using dry ship units to replace older systems and leaving the inside unit with a lower SEER rating. According to the commenter, a dry ship system is not going to last long in a mismatched configu ration. Instead, energy consumption can be decreased with a newly matched R - 410 a system. [0154] EPA Response: EPA encourages all system owners to install matched systems using non - ozone - depleting refrigerants when their existing system needs to be replaced . ENERGY STAR offers information on when to consider replac ing a system and encourages the installation of systems with higher energy efficiency (see www.energystar.gov/in dex.cfm?c=heat_cool.pr_checklist_consumers ) .  One commenter from Johnstone Supply urges EPA to stop allowing the manufacture of dry charged R - 22 condensing units. The commenter believe s this concern w as initially brought to EPA’s attention, but was ignored. [0101] EPA Response: Since banning the manufacture of HCFC - 22 condensing units is beyond the scope of this rulemaking, EPA will continue to evaluate the issue as it develops future regulations. Additionally, EPA disagrees with the assertion that the agenc y has ignored this concern. The agency has been reviewing the Carrier petition since its arrival, has discussed the issue with numerous stakeholders within the industry , and sent a preliminary response on January 24, 2012. The agency continues to seek quan tifiable information on the number of dry - shipped condensing units being shipped, whether they are being used as a repair in lieu of a compressor replacement, and whether they will hinder EPA’s ability to phase out the production and import of virgin HCFC - 22 by 2020.Response to Comments on the 2012 - 2014 HCFC Allocation Rulemaking Page 25  One commenter from Johnstone supply comments that the cost to fill and continuously operate the dry units currently in the market will be disastrous. [0140] EPA Response: EPA will continue to evaluate the issue as it develops future regulations . T he agency continues to seek quantifiable information on the number of dry - shipped condensing units being shipped, whether they are being used as a repair in lieu of a compressor replacement, and whether they will hinder EPA’s ability to phaseout the pro duction and import of virgin HCFC - 22 by 2020 . Also, the amount of refrigerant that a new condensing unit will need over its lifetime depend s significantly on installation and servicing practices. EPA notes that a well - installed, properly serviced system should not need ad d itional refrigerant added on a regular basis unless it develops a leak. Seven comment er s do not believe repairs with dry - shipped condensing units significantly affect the phaseout and/or do not believe repairs using dry - shipped HCFC - 22 condensing units should be banned.  Goodman disagrees with the view that the sale of dry condensing units must be prohibited, or else use of HCFC - 22 will continue practically in perpetuity. Goodman estimates that the HVAC industry ships between 5 million a nd 6 million units annually , o nly a small percentage of which are dry, uncharged HCFC - 22 components. Goodman estimates that the amount of HCFC - 22 used to install these dry components into systems is well below 10 percent of the total HCFC - 22 that is used b y the industry in a given year. In contrast, the vast amount of HCFC - 22 is used each year to service and/or repair existing systems that may have a small leak or simply are in need of normal servicing. Thus, Goodman believes the a gency’s proposed reduction in allowances for 2012 - 2014 would have an acute, negative impact on those homeowners who need to have their existing systems serviced. Goodman believes it is abundantly clear that the availability of dry, uncharged HCFC - 22 components is not materially aff ecting the amount of HCFC - 22 used each year. [0084] Goodman also believes that Carrier’s estimate that dry - shipped units constitute 25 - 30 percent of the total replacement market is significantly overstated. Goodman believes that Carrier’s projections and c laims regarding a purported “growth industry” in uncharged HCFC - 22 components, and resulting energy efficiency losses and greater HCFC - 22 emissions are wildly speculative at best. [0084] Goodman further notes that if an installer or contractor determines t hat a homeowner’s existing HCFC 22 system can be repaired through installation of a new, uncharged HCFC - 22 condensing unit (a repair that is permissible under EPA regulations), the repair and replacement would cost about $1,000 to $2,000. In contrast, a ho meowner who is forced to replace an existing HCFC - 22 system with a new system would have to spend about $4,000 to $ 5,000. [0084] EPA Response: See previous response s to Lennox and United Technologies , in particular EPA’s request for additional data . Additionally, EPA believes the number of HCFC - 22 allowances needed in 2012 - 2014 is significantly lower than the amount provided in the partially - vacated 2009 Final R ule . As discussed in sections 2.1 and 2 .2 of this Response to Comments and sections IV.B. 1 - 3. of the preamble to the final rule , there is adequate reclamation capacity and a large amount of HCFC - 22 available in inventory to help meet servicing need in 2012 - 2014.  NORDYNE disagrees with Carrier’s position in the Carrier petition, disagrees with EPA’s response to the Carrier petition requesting a rulemaking to ban the sale of residential split system air conditioners that use HCFC - 22 , and supports maintaining the availability of uncharged HCFC - 22 replacement condensing units for the marketplace. NORDYNE disagrees with an assumption within some of the HVAC industry that uncharged HCFC - 22 replacement condensing units are displacing charged HFC - 410A units. NORDYNE contends that the primary application of the uncharged HCFC - 22 replacement condensing u nits is to provide consumers anResponse to Comments on the 2012 - 2014 HCFC Allocation Rulemaking Page 26 affordable, more reliable and environmentally friendly service option to major failures of compressors and coils. NORDYNE states that historical AHRI shipment data clearly demonstrates the volume of repairs that have been oc curring and continue in today’s economic climate. NORDYNE notes there is no negative environmental impact caused by consumers choosing to service their unit with an uncharged HCFC - 22 replacement condensing unit instead of replacing a compressor; the define d cap on HCFC - 22 is unaffected. NORDYNE believes that the market demand for uncharged HCFC - 22 replacement condensing units will heavily contract in conjunction with the prescribed phase down. [0089] Able Distributors, APR Supply Co. and Coburn Supply Compa ny all contend that the primary application of the uncharged HCFC - 22 replacement condensing units is to provide consumers with an affordable, reliable and environmentally friendly service option to major failures of compressors and coils. All three compani es state their position is contrary to that of the Carrier petition. All three companies believe that the market demand for uncharged HCFC - 22 replacement condensing units will heavily contract in conjunction with the prescribed phase down. [0147, 0148, 014 9] EPA Response: See previous response to Goodman, United Technologies and Lennox , in particular EPA’s request for additional data . Banning repairs of existing HCFC - 22 systems using dry condensing units is beyond the scope of this rulemaking ; EPA did no t propose to ba n condensing units in this rule . However, EPA will continue to evaluate the issue as it develops future regulations.  Rheem does not agree that the installation of dry - shipped HCFC - 22 condensing units will have a negative effect on the phase - o ut of virgin HCFC - 22 production and import. Rheem believes that addressing the availability of the refrigerant is the appropriate driver; it is the declining availability of the refrigerant itself that matters. [0087] EPA Response: See previous responses i n this section.  NRI does not believe that dry shipped condensing units will affect the phaseout of virgin HCFC - 22 production and import. They also do not believe that all appliance problems result in loss of the refrigerant. If EPA has verifiable evidence that the servicing or repair of HCFC - 22 appliances is resulting in increased emissions of the refrigerant, then EPA should consider extending the leak repair requirements to all appliances, not just appliances with a refrigerant charge greater than 50 lbs. NRI believes that there will be a direct and immediate impact on consumer behavior by refining the allocation system. [0068] EPA Response: See previous responses in this section. Additionally, revising the leak repair regulations for systems with a refrig erant charge below 50 pounds is beyond the scope of this rulemaking. F ive additional comments discuss HCFC - 22 condensing units in more general terms:  HARDI suggests that EPA consider that most dry - shipped condensing units are being sold and installed with multi - year warranties which may require a revision to EPA servicing tail analyses if HCFC - 22 replacement refrigerants are not approved by the compressor and equipment manufacturers for warranty servicing beyond 2015. HARDI states its non - support of the Ca rrier petition. [0069] EPA Response: EPA will review service practices in the HCFC - 22 market as it revises its servicing need estimates for future regulatory periods.  Mexichem Fluor states that in determining the reduction of consumption allowances, the in creased installation of dry - shipped HCFC - 22 condensing units should be considered. [0066] ACCA commented that dry - charged units are affecting the demand for R - 22. This is based on AHRI shipment data w hic h suggests that dry charged units are in high demand yet prices of R - 22 remained low up until the proposed ruling. [0081]Response to Comments on the 2012 - 2014 HCFC Allocation Rulemaking Page 27 EPA Response: See previous responses in this section. The effect of repairs using dry - shipped HCFC - 22 condensing units was not directly estimated for this rulemaking, largely because EPA has not received enough quantifiable data to determine how large an effect, if any, this practice has on current and future servicing need .  One contractor notes that if the economy had been healthy, manufacturers would not have been coerced by a repair - mi nded public into producing a dry - ship condensing unit designed to operate on R - 407 that just happens to operate with HCFC - 22. The contractor states that contractors want to sell R - 410a systems in lieu of repairing older systems, since it is much more profi table , but that American consumers have other bills to pay. [0 1 13] EPA Response: EPA understands that consumers face a number of choices when deciding to repair or replace their existing AC system and will continue to provide information on the pros and co ns of different repair options.  DuPont comments that further reductions in consumption allowances might discourage installation and field charging of new condensing units with HCFC - 22. They believe that continued installation of such units will only increa se the challenge of meeting the 2015 stepdown and increase emissions of HCFC - 22 to the atmosphere. [0020] EPA Response: See responses to earlier comments in this section. EPA is not attempting to stop repairs using dry - shipped HCFC - 22 condensing units in t his rulemaking. EPA will review service practices in the HCFC - 22 market as it revises its servicing need estimates for future regulatory periods. 

## 3. **ISSUES RELATE**  **D TO THE**  ARKEMA V. EPA **DECISION** EPA received 1 3 comments in response to the request for comments on issues related to the Arkema v. EPA decision. 3.1 Whether EPA should provide recoupment 3.1.1 Whether the Arkema v. EPA decision should be interpreted as applying to the 2010 allocation (i.e., recoupment) 3.1.2 Whether EPA should provide recoupment for HCFC - 22 and HCFC - 142b, or just HCFC - 22 allowances 3.1.3 Whether EPA should provide recoupment for production and consumption, or just consumption allowances 3.2 Whether EPA should finalize option 1, 2, 3 or 4 to adjust allowances in future control periods to reflect the Arkema v. EPA decision (i.e., recoupment) 3.2.1 Providing recoupment allowances in 2013 in addition to the aggregate level of production and consumption specified in the Final Rule ( option 1) 3.2.2 Allocating recoupment al lowances over two years (2013 - 14) in addition to the aggregate level of production and consumption specified in the Final Rule ( o ption 2) 3.2.3 Allocating recoupment allowances from the aggregate level of production and consumption specified in the Final Rule over two years (2013 - 14) ( o ption 3) 3.2.4 Treating allowances from 2010 as impossible to recoup ( o ption 4) Count Commenter Organization Document ID No 1 William J. Hamel Arkema Inc. EPA - HQ - OAR - 2011 - 0354 - 0073 2 Joel K. French Coolgas, Inc. EPA - HQ - OAR - 2011 - 0354 - 0088 3 Mack McFarland DuPont EPA - HQ - OAR - 2011 - 0354 - 0070 4 Steven H. Bernhardt Honeywell EPA - HQ - OAR - 2011 - 0354 - 0082 5 Peter M. Geosits Mexichem Fluor Inc. EPA - HQ - OAR - 2011 - 0354 - 0066Response to Comments on the 2012 - 2014 HCFC Allocation Rulemaking Page 28 6 Diran Yegparian Mondy Global, Inc. EPA - HQ - OAR - 2011 - 0354 - 0055 7 Maureen Beatty National Refrigerants, Inc. (NRI) EPA - HQ - OAR - 2011 - 0354 - 0068 8 David Doniger Natural Resources Defense Council (NRDC) EPA - HQ - OAR - 2011 - 0354 - 0067 9 Don Magid Solvay Fluorides, LLC EPA - HQ - OAR - 2011 - 0354 - 0064 10 Mack McFarland DuPont EPA - HQ - OAR - 2010 - 1040 - 0020 11 William J. Hamel Arkema Inc. EPA - HQ - OAR - 2010 - 1040 - 002 8 12 Stephen Bernhardt Honeywell EPA - HQ - OAR - 2010 - 1040 - 002 9 13 Don Magid Solvay Fluorides, LLC EPA - HQ - OAR - 2010 - 1040 - 00 26 

## 3.1 **Whether EPA should provide recoupment** 3.1.1 Whether the **Arkema v. EPA** decision should be interpreted as apply ing to the 2010 allocation (i.e., recoupment) EPA received 13 comments in opposition to recoupment, stating that EPA should not interpret the court decision as applying to the 2010 allocation. Two commenters, Solvay and Arkema, believe that the decision should be interpreted as applying to the 2010 allocation and that EPA should issue recoupment.  Mexichem Fluor expects that a reduction of c onsumption allowances combined with recoupment allowances would lead to a distorted market and unfair treatment of allowance holders. Companies receiving recoupment would have an additional economic advantage compared to 2010 . The commenter notes that mark et conditions and price expectations were different in 2010 due to the absence of the 2012 - 2014 proposed rule. Mexichem Fluor further comments that EPA should also consider whether companies actually used all of t heir consumption allowances in 2010 ; only 86% (approximately) of allowances were used in 2010. According to the commenter, not t aking into account unused allowances might also lead to an overcompensation for loss and be unfair to other companies without recoupment allowances, given that the market conditions and price expectations were different in 2010 due to the absence of this proposed rule. [0066] EPA Response: See section IV.B.6. of the preamble to the final rule for a full response. EPA is issuing recoupment allowances in this final action in response to the Court ’s finding that the a gency had committed legal error . The grant of additional allowances is limited to this particular circumstance. EPA is not changing its standard policies regarding the issuance of allowances and the period of time during which allowances may be used. For example, EPA ’s policy that allowan ces may not be banked for future years is not affected by this final action .  NRDC, IGSD, and EIA oppose all of the recoupment proposals and strongly support the no recoupment option. They oppose any option for implementing Arkema that increases the total number of allowances, which would only increase harm to the ozone layer and to public health and welfare. The commenters note that t he mandate from the Court of Appeals did not issue until late 2010, which is too late to affect allocations in that year and that f urther annual allocations cannot be “ banked” from year to year. The commenters state that it is too late for an allocation in 2012 - 2014 to recoup for supposed shortfalls in 2010. According to the commenters, t here is no market need to justify this a dditional increment of allocations , and EPA has documented an extensive stockpile of unused HCFC - 22 carried over from 2010. The commenters stated that recoupment options would only give a few companies a financial advantage at the expense of public health. [0067] EPA Response: EPA is reducing the total number of HCFC - 22 consumption allowances by more than 31 ,000 MT over the three years . As a result , providing recoupment does not increase the allowed amount of HCFC - 22 produced and imported for U.S. use relative to the 2009 Final Rule. See section IV.B.6. of the preamble to the final rule for a full response on this portion of the comment .Response to Comments on the 2012 - 2014 HCFC Allocation Rulemaking Page 29 EPA does not believe that the mere fact that the Court’s mandate issued in 2011 is sufficient reason to decline to is sue recoupment allowances. As a general matter, “ the decision of a federal court must be given retroactive effect regardless whether it is being applied by a court or an agency .” Nat’l Fuel Gas Supply Corp. v . FERC , 59 F.3d 1281, 1289 (D.C. Cir. 1995). EPA noted in the proposal for this action that all 2010 allowances had expired at the time the vacatur occurred and raised the question of whether an expired portion of a rule can be vacated. EPA did not receive any analysis of that specific issue. However, i t is not necessary to resolve that specific issue here, because although the 2010 allowances had expired, the baselines had not. EPA concluded in the preamble to the Interim Final Rule that the Court’s vacatur applied at a minimum to the baselines and the 2011 - 2014 allowances. The Court’s finding of legal error with respect to the baselines means that the a gency has an obligation to allocate additional allowances representing the difference between what the affected parties would have received in 2010 under the 2008 proposed rule, which reflected the 2008 transfers, and what they actually received under the 2009 final rule, which did not.  Mondy Global Inc. agrees with EPA that the agency should not and cannot compensate companies for allowances they believ e they were owed during 2010. Since allowances are allocated for a calendar year only, 2010 allowances would be of no value beyond that year. The Court’s mandate issued on February 4, 2011 ; 2 010 allowances had already expired. Therefore, EPA only needs to adhere to allocations for calendar years 2011 and after. [0055] EPA Response: See section IV.B.6. of the preamble to the final rule and the response to the NRDC comment above for a full response.  Honeywell strongly supports EPA’s proposal to not provide ad ditional allowances to Arkema and Solvay in 2013 - 2014 as some form of “recoupment” for allowances that were allegedly due to Arkema and Solvay in 2010. Honeywell believes such recoupment would be both contrary to law and the public policy objectives of the stratospheric ozone program. [0082] Honeywell agrees with EPA that recoupment would effectively be a transfer from 2010 to later years, and that EPA’s own regulations preclude such a transfer. Honeywell notes that regulations require allocation of allowan ces only for a specific control period and that there is no provision for banking or borrowing of allowances in later years according to 40 C.F.R. § 82.3, 82.16(a). Honeywell believes that there is an even more fundamental objection to such a transfer: the Clean Air Act requires that any transfer of allowances “result in greater total reductions in the production in each year of ... class II substances than would occur in that year in the absence of such transactions,” 42 U.S.C. § 7671f (a), yet issuing addit ional recoupment allowances in 2013 - 2014 would have the opposite effect. Honeywell notes that by definition, the provision of recoupment allowances in any given year will cause the sum of all allowances allocated in that year to be higher than it would hav e been had no recoupment allowances been allocated. Honeywell believes that both Title VI of the Clean Air Act and its implementing regulations prohibit the allocation of recoupment allowances. [0082] Honeywell also agrees with the policy reasons that EPA listed for not providing recoupment allowances to Arkema and Solvay. For instance, EPA stated that not providing recoupment allowances will benefit the environment and public health as well as promoting the reclamation industry that is likely needed for th e 2015 stepdown period. 77 Fed. Reg. at 249. EPA also stated that providing recoupment allowances would decrease the actual number of allowances or the market share of all other allowance holders. 77 Fed. Reg. at 249. [0082] Honeywell believes that avoidin g losses of allowances or market share is more than just good public policy. Under Arkema v . EPA , the Court announced that companies have vested rights in their allowances. Honeywell believes EPA cannot simply reduce the number of shares held by companies, or degrade the value of those shares, without violating the principle underpinning the Arkema d ecision orResponse to Comments on the 2012 - 2014 HCFC Allocation Rulemaking Page 30 without due process of law. See , e.g. , Halbach v. Great - West Life & Annuity Ins. Co., 561 F.3d 872, 877 (8th Cir. 2009); Bell v. Burson , 402 U.S. 535 (1971) (licenses cannot be suspended or revoked without due process). Therefore, Honeywell stro ngly believes that any action by EPA to provide additional allowances to Arkema and Solvay at the expense of other allowance - holding companies (whether via a reduction in the number of allowances or a dilution of their value) is unlawful. [0082] In additio n to the legal and policy reasons mentioned above, Honeywell believes that there is no reason to provide recoupment allowances to either Arkema or Solvay as a matter of fact. EPA acknowledged that a “large number of HCFC allowances ... were not used in 2010... .” 77 Fed. Reg. at 245. Honeywell agrees that 2010 was marked by significant oversupply of HCFC - 22 allowances with a significant portion not being used. There were more than ample allowances available for use and/or sale. Providing recoupment allowances wo uld constitute an inequitable windfall to companies that were never harmed. Arkema and Solvay already attempted, unsuccessfully, to show that they would be harmed by the 2009 Final Rule in 2010, citing estimates of money they thought they would lose in 201 0. [ See Arkema v. EPA , Motion of Petitioner Arkema Inc. for Partial Stay and for Expedited Consideration of Petition for Review, No. 09 - 1318, Doc. No. 1222488 (D.C. Cir.) (filed Dec. 28, 2009); Motion for Partial Stay and Expedited Consideration of Petitio n for Review, No. 09 - 1318, Doc. No. 1224774 (D.C. Cir.) (Filed Jan. 8, 2010). The Court denied the motions. Order, No. 09 - 1318, Doc. No. 1226756 (Filed Jan. 21, 2010). ] Honeywell sees no justification for providing recoupment allowances under these facts. [0082] Honeywell comments that Arkema and Solvay have no legal right to what is essentially the recovery of damages by way of rulemaking. If the companies believe they were deprived of their property and are entitled to compensation, they could file a clai m for compensation under the Tucker Act. [ See 28 U.S.C. § 1491(a)(1). ] This is the exclusive avenue for the recovery of damages against the government, absent an alternative statutory mechanism for compensation. [ See United States v . Fausto , 484 U.S. 439 ( 1988). ] According to the commenter, any attempt to provide additional allowances to Arkema and Solvay as means of compensation for whatever monetary losses they allegedly suffered in 2010 raises serious legal questions. Honeywell believes EPA should declin e to provide recoupment allowances to Arkema and Solvay on these grounds alone. [0082 , 0029 ] EPA Response: See section IV.B.6. of the preamble to the final rule for a full response to many of the points the commenter raises . See section IV.A.1. of the preamble for additional discussion of “vested rights” and market share as it relates to the Arkema decision. Regarding the Tucke r Act, the commenter appears to be saying that if Arkema and Solvay believe they are entitled to compensation for deprivati on of property, their only potential recourse would be to file a claim under the Tucker Ac t for the recovery of damages. The Tucker Act states that the U.S. Court of Federal Claims has jurisdiction over claims against the United States for “liquidated or u nliquidated damages,” including takings claims. 28 U.S.C. 1491(a). This jurisdictional provision concerns monetary claims. See Bywaters v. U.S. , 670 F.3d 1221, 1224 (Fed. Cir. 2012) ( “The United States Court of Federal Claims has exclusive jurisdiction ove r such claims where the amount in controversy is greater than $10,000 . . . .”). EPA is not pr oviding monetary compensation. Instead, EPA is working within the constraints of its stratospheric protection program to compensate for lost opportunities in 2010 by allocating additional allowances in 2013 - 2014. Issuance of recoupment allowances in this final action is well within EPA’s statutory authority. Section 605 of the CAA authorizes EPA to promulgate regulations phasing out the production and consumption o f class II substances in accordance with the phaseout schedule as accelerated pursuant to section 606. Section 607 authorizes EPA to issue production and consumption allowances. As long as EPA does not issue allowances in excess of the accelerated phaseout schedule, the precise quantity of allowances issued in any given control period is subject to the Agency’s discretion. In the circumstance of the Court’s remand and vacatur, EPA canResponse to Comments on the 2012 - 2014 HCFC Allocation Rulemaking Page 31 correct the legal error found by the Court by issuing additional allowanc es while at the same time ensuring that the total quantity remains consistent with the accelerated phaseout schedule.  DuPont believes that it is unnecessary to consider any option with regard to "recoupment" of 2010 allowances since this action is not requ ired by the CAA or the D.C. Circuit decision in Arkema . DuPont comments that while EPA discusses several related matters in the Proposed Rule, including advantages for the environment, public health and the reclamation industry in not providing any additio nal "recoupment" allowances, DuPont believes that the a gency is under no legal duty to provide additional allowances to certain companies on a policy basis. DuPont comments that reducing their company’s allowances in future allocation periods to provide " recoupment" would cause significant financial harm to DuPont. DuPont believes EPA has a duty to avoid such harm and no authority to impose it on the basis that has been articulated by companies seeking additional allowances. DuPont further believes that EP A should not finalize any of the recoupment options outlined in the Proposed Rule or the regulatory language in 40 C.F.R. § 82.16(a)(2) providing such allowances for the 2013 calendar year. [0070 , 0020 ] EPA Response: See section IV.B.6. of the preamble to the final rule for a full response. See section IV.A.1. of the preamble for additional discussion of “vested rights” and market share as it relates to the Arkema decision.  Coolgas agrees with EPA and does not support recoupment of 2010 allowances for those companies that benefited by the court’s decision in Arkema v . EPA . The court’s mandate issued on February 4, 2011, by which time all of the 2010 HCFC allowances had expired. Ther efore, EPA is obligated to adhere to the court’s mandate only with respect to HCFC allowances for 2011 - 2014. According to the commenter, to provide additional allowances would be contrary to the Proposed Rule’s efforts to reduce allocations for 2012 - 2014. In addition, EPA has a long - standing policy against re - allocation of market share ; the proposed recoupment options would violate such policy. The proposed recoupment would, in effect, re - allocate market share to the recoupment recipients at the expense of companies not receiving recoupment. [0088] EPA Response: See section IV.B.6. of the preamble to the final rule and previous responses in this section for a full response.  NRI does not support recoupment, noting that EPA has already stated that the 2010 control period has expired and 2010 allowances have no current or future value. [0068] EPA Response: See section IV.B.6. of the preamble to the final rule and previous responses in this section for a full response. Two commenters, Solvay and Arkema, believ e that the decision in Arkema v. EPA should be interpreted as applying to the 2010 allocation and support recoupment.  Solvay states that recoupment allowances must be issued, and further states that there can be no doubt that the 2010 allowances were cover ed under the litigation. The deprivation of rightful allowances beginning in 2010 was the reason for the litigation, and the Court ordered EPA to "promptly" make these changes for the entire 2010 - 2014 control period. Solvay comments that to comply with the Court order, recoupment is essential to remedy the error made by the EPA in issuing the 2010 HCFC allowances. Solvay disagrees with EPA’s concern that as the number of allowances is lowered, providing the recoupment allowances could upset the market by d epriving other holders of the allowances they anticipate they will receive. Solvay also disagrees with EPA’s statement that if EPA were to literally follow the Court's order and provide the 2010 consumption allowances, they could not be used to consume or produce product since these allowances have expired. Solvay quotes AT&T Corp. v . FCC , 448 F.3d 426 , 433 ( D.C Cir. 2006 ) for the proposition that when an agency “...commits legal error, the proper remedy is one that puts the parties in the position they would have been in had the error not been made ” (citing Exxon Co . v . FERC , 182 F.3d 30, 47 ( D.C. Cir. 1999 ). Solvay notes that t he Court has furthe rResponse to Comments on the 2012 - 2014 HCFC Allocation Rulemaking Page 32 held that the proper remedy to an error is “ to put the victim of the agency error ‘ in the economic position it would have occupied but for the error ’ ." [The correct citation for this quotation is Ethyl Corp. v. Browner, 67 F.3d 941, 945 (D.C. Cir. 1995) (quoting Delta Data Sys. Corp. v. Webster, 744 F.2d 197, 206 - 07 (D.C. Cir. 1984). ] Solvay notes that the faulty production and consumption baselines determined individual company allowances not for the single year of 2010, but as EPA itself notes, for fiv e years, 2010 through 2014. Further, the Court ruled that absent a new act of Congress, these 2010 allowances cannot be withheld. Solvay comments that there is still ample time to implement this remedy and Solvay has repeatedly suggested scenarios for reco upment, as well as reminding the a gency that it has an obligation to promptly issue these recoupment allowances. [0064 , 0026 ] EPA Response: After reviewing comments and relevant case law , and considering the Agency’s ability to provide a remedy for the legal error identified by the Court, EPA has decided to provide recoupment for both HCFC - 22 and HCFC - 142b allowances. The agency believes this addresses any remaining issues arising from the Arkema v . EPA decision. See section IV.B.6. of the preamble to the final rule and earlier responses in this section for a full response.  Arkema fully believes that EPA should provide recoupment. Further, Arkema comments that recoupment of allowances would not provide full compensation for Arkema’s losses in 2010. They believe that their shortfall in HCFC - 22 allowances resulted in loss of sales of other refrigerants to their one - stop loyal customers. Arkema states that by vacating the 2009 Final Rule “insofa r as it operates retroactively,” the D.C. Circuit annulled any and all portions reflecting the invalid baseline allowance levels, including the 2010 allocations, and EPA cannot pick and choose the parties or times to which the vacatur applies. Further, the y believe that by questioning whether Arkema applies to 2010, EPA is indicating that it wants to continue treating a vacated rule as binding and denying that effective judicial review of its action could be had. The commenter states that to deny them what they asked for in their original complaint would make a mockery of the appellate review. [0073 , 0028 ] Arkema believes that their losses were significant, and therefore cannot compete effectively in the after - market. They state that they expended practicall y all of their 2010 allowances and would have used more had they been freely available. Arkema comments that even if EPA were to assume (incorrectly) that Arkema in 2010 could not have sold all the HCFC - 22 for which it should have received allowances, Arke ma could have stockpiled the material for sale in later years. Arkema believes that EPA’s analysis of the current market indicates that allowance holders have done exactly that, and the agency expects those quantities of HCFC - 22 to be sold into the market in future years. Arkema believes they should have a fair opportunity to compete for those sales. Arkema beli e ves that the D.C. Circuit precedent requires reimbursement of Arkema and Solvay. Arkema states that the Court repeatedly has held, when an agency “commits legal error, the proper remedy is one that puts the parties in the position they would have been in had the error not been made.” Further more , it state s that it would be an abuse of discre tion for EPA not to provide Arkema and Solvay relief for the allowances denied them in 2010. According to Arkema, any claim that compensating Arkema and Solvay for their losses would require improper retroactive action, or somehow resurrect expired 2010 al lowances, is off the mark. [0073 , 0028 ] EPA Response: See previous response s in this section and section IV.B.6. of the preamble to the final rule .  Arkema comments that EPA may act in excess of its statutory authority in providing a remedy for legal error , and may even impose retroactive changes. [0073, 0028]Response to Comments on the 2012 - 2014 HCFC Allocation Rulemaking Page 33 EPA response: EPA is not acting in excess of its statutory authority. See response to Honeywell in this section. In addition, EPA is not acting retroactively. EPA is not assigning new legal consequences to acts of production or import that occurred in 2010 using allowances allocated under the 2009 Final Rule. Nor is it taking away allowances from any company in order to give them to others. Rather, it is allocating additional allowances to ma ke up for the loss of opportunities to produce or import that would have existed had EPA finalized the baselines as proposed in the regulatory text of the 2008 Proposed Rule . 3.1.2 Whether EPA should provide recoupment for HCFC – 22 and HCFC – 142b, or just HCFC – 22 allowances EPA received two comments regarding whether EPA should provide recoupment allowances for HCFC - 22 and HCFC - 142b, or just HCFC - 22.  Arkema comments that EPA should not increase the allowance pool for HCFC - 142b production allowances when providing recoupment. Arkema suggests that EPA should provide recoupment based on the total allowance pool of 118 metric tons , rather than try to guess what it might have issued if the 2008 transfers had been honored in the 2009 Final Rule . According to the co mmenter, this means that the a gency need only provide 69.8 metric tons of HCFC - 142b production allowance s in recoupment. [0073] EPA Response: EPA is prov iding recoupment production and consumption allowances for both HCFC - 142b and HCFC - 22. See section IV.B.6. of the preamble to the final rule for a full response.  Solvay believes EPA should provide recoupment for both HCFC - 22 and HCFC - 142b allowances. Solva y notes that its focus on HCFC - 22 allowances should not be interpreted as a lack of interest in recoupment of HCFC 142b allowances. Solvay believes recoupment should be provided for 142b as well, in part because it ensures traceability. Solvay believe s tha t it is important to be consistent, to establish practices that benefit the environment and can serve as model both for future environmental programs and for developing countries that are only now beginning to have to design their own systems. [0064] EPA R esponse: EPA is providing recoupment production and consumption allowances for both HCFC - 142b and HCFC - 22. See section IV.B.6. of the preamble to the final rule for a full response. 3.1.3 Whether EPA should provide recoupment for production and consumption, or just consumption allowances The above comments from Arkema and Solvay indicate that they believe recoupment should be provided for production and consumption. EPA Response: EPA is providing reco upment production and consumption allowances for both HCFC - 142b and HCFC - 22. See section IV.B.6. of the preamble to the final rule for a full response. 

## 3.2 **Whether EPA should finalize o ption**  **1, 2, 3 or 4 to**  **adjust allowances in**  **future control periods to r eflect**  **the** Arkema v. EPA **decision (i.e., recoupment)**  EPA received five comments in support of a specific option for recoupment. One comment supported o ption 1, two comments supported o ption 3, and two comments supported o ption 4. An additional two comments did not support a specific option.Response to Comments on the 2012 - 2014 HCFC Allocation Rulemaking Page 34 3.2.1 Providing recoupment allowances in 2013 in addition to the aggregate level of production and consumption specified in the Final Rule ( i.e ., o ption 1) Out of the four comments provided on o ption 1, only Mexichem Fl uor would support this option under certain conditions. Solvay, Honeywell, and Arkema do not support o ption 1.  Mexichem Fluor commented that, i f recoupment allowances are issued, it would not object to this option as long as: overcompensation is avoided; unused 2010 allowances are taken into account; and market distortions are minimized. [0066] EPA Response: EPA is finalizing recoupment option 2 for the reasons provided in the preamble . See section IV.B.6. of the preamble to the final rule for a full response.  Solvay disagrees with this option . Solvay believes that expanding the number of allowances is in direct contradiction with EPA’s stated goal of promoting a sustainable recycling industry, and that issuin g further allowances is not necessary to correct EPA’s mistake. Solvay aligns with the June 2, 2011 submission to the Docket by the Natural Resources Defense Council: “...NRDC opposes any option that would increase the number of HCFC allowances issued for 2 011 or subsequent years. That would increase the burden of ozone - depleting HCFC - 22 in the atmosphere, and increase the risk of fatal and non - fatal skin cancers, cataracts, and immunological disorders for all Americans and for billions of other people. EPA needs to find a solution to the allocation problem before the agency that does not place any additional burden on the stratosphere, on public health, or on the natural environment.” [0064] EPA Response: EPA is finalizing recoupment option 2 for the reasons provided in the preamble . See section IV.B.6. of the preamble to the final rule for a full response.  Honeywell states that under EPA’s option 1, HCFC consumption and production would increase for 2013, which is prohibited by Title VI of the Clean Air Act. [0082] EPA Response: EPA is finalizing recoupment option 2 for the reasons provided in the preamble . See previous response to Honeywell on EPA’s statutory authority as well as section IV.B.6. of the preamble to the final rule for a full response.  Arkema states that option 1 ignore s the D.C. Circuit’s holding by preserving benefits of the vacated 2009 Final Rule to other allowance holders. Recoupment under option 1 would sustain the advantage of other allowance holders over Arkema a nd Solvay. In addition, they state that option 1 w ould ignore the public interest, allow some parties to keep unlawful benefits, and result in increased environmental injury. Beyond that, Arkema states that EPA would obtain the extra allowances for recoupment by taking allowance s from the “cushion” between the Montreal Protocol cap and the total allocation . Further, releasing extra allowances would defeat EPA’s goal of supporting the reclamation industry. Arkema states that EPA should not thwart the goals of the program solely fo r the sake of making sure that certain allowance holders retain advantages to which they never were entitled. Arkema believes that recoupment on these terms would short - change Arkema and Solvay because it would perpetuate the imbalance in the allowance sha res created by the 2009 Final Rule. [0073] EPA Response: See section IV.B.6. of the preamble to the final rule for a response to the commenter’s concern regarding the public interest and injury to the environment . The commenter contends that they should re ceive recoupment allowances at the expense of all other allowance holders because other allowance holders received a supposed “windfall” in 2010 . EPA does not find this argument convincing. While the commenter argues that all other allowance holders had more opportunity to produce or import than they would have had if the 2008 inter pollutant transfers were included in the 2009 Final Rule, those opportunities were not in fact used industry wide . As stated in the preamble to the propo sed rule at 77 FR 248, 425 ODP - weighted MT of consumption allowances industry - wide were not used in 2010. T his amount is more than 20 percent larger than the numberResponse to Comments on the 2012 - 2014 HCFC Allocation Rulemaking Page 35 of consumption allowances EPA is providing in recoupment. The commenter is in effect arguin g that companies who had the opportunity to produce or import in 2010 and did not use it, should now have fewer allowances merely because they could have produced or imported more in 2010 . EPA does not agree with this logic and is finalizing recoupment opt ion 2. 3.2.2. Allocating recoupment allowances over two years (2013 – 2014) in addition to the aggregate level of production and consumption specified in the Final Rule ( i.e. , o ption 2) EPA received five comments regarding o ption 2, all in opposition .  Mexichem Fluor comments that option 2 would lead to further unfair economic rewards for the companies receiving recoupment allowances. [0066] EPA Response: EPA is finalizing recoupment option 2 for the reasons provided in the preamble . See section IV.B.6. of the preamble to the final rule for a full response.  Mondy Global Inc. states that to provide additional allowances to companies in the form of recoupment in 2013 and/or 2014 would reallocate market share in violation of long

- standing EPA policy. The com menter supports EPA’s practice of allocating allowances based on baseline. According to the commenter, i f EPA were to provide companies additional allowances in the form of recoupment during this period, the market share will shift in favor of these compan ies and at the expense of those not receiving recoupment allowances. [0055] EPA Response: EPA is finalizing recoupment option 2 for the reasons provided in the preamble . See section IV.B.6. of the preamble to the final rule for a full response.  Solvay disa grees with allocating recoupment allowances over two years in addition to the aggregate level of production and consumption specified in the 2009 Final Rule. Solvay believes that expanding the number of allowances is in direct contradiction with EPA’s stat ed goal of promoting a sustainable recycling industry, and that issuing further allowances is not necessary to correct EPA’s mistake. [0064] EPA Response: EPA is finalizing recoupment option 2 for the reasons provided in the preamble . See section IV.B.6. of the preamble to the final rule for a full response.  Honeywell states that under EPA’s option 2, HCFC consumption and production for both 2013 and 2014 would increase when compared to the 2009 Final Rule, which is prohibited by Title VI of the Clean Air Act. [0082] EPA Response: EPA is finalizing recoupment option 2 for the reasons provided in the preamble . See section IV.B.6. of the preamble to the final rule for a full response.  Arkema states that option 2 ignore s the D.C. Circuit’s holding by preservin g benefits of the vacated 2009 Final Rule to other allowance holders. Recoupment under option 2 would sustain the advantage of other allowance holders over Arkema a nd Solvay. In addition, option 2 w ould ignore the public interest, allow some parties to kee p unlawful benefits, and result in increased environmental injury. Arkema believes that recoupment on these terms would short - change Arkema and Solvay because it would perpetuate the imbalance in the allowance shares created by the 2009 Final Rule. [0073] EPA Response: EPA is finalizing recoupment option 2. See the response to Arkema’s comment on option one in section 3.2.1 of this RTC and section IV.B.6. of the preamble to the final rule for a full response.Response to Comments on the 2012 - 2014 HCFC Allocation Rulemaking Page 36 3.2.3 Allocating recoupment allowances from th e aggregate level of production and consumption specified in the Final Rule over two years (2013 – 2014) ( i.e. , o ption 3) Three comments were received regarding o ption 3, which was supported by Arkema and Solvay. Mexichem Fluor believes this option would lead to further unfair economic rewards for those receiving allowances.  Arkema states that option 3 is the only recoupment alternative that satisfies the D.C. Circuit mandate to make Arkema and Solvay whole. Arkema believe s that recoupment of both production and consumption allowances should be spread out over two years to maximize Arkema and Solvay’s opportunity to utilize allowances and minimize disruption to other allowance holders. Arkema comments that a reduction in al lowances for other allowance holders is not a disadvantage due to the fact that these parties had more HCFC - 22 allowances in 2010 than they should have . Arkema states that any failure to provide full and prompt relief to Arkema and Solvay for 2010 would di sregard the Arkema mandate, ignore D.C. Circuit precedent, and compromise the integrity of EPA’s HCFC program by confirming that the underlying rules may be disregarded on a whim. [0073] EPA Response: EPA is finalizing recoupment option 2 for the reasons g iven in the preamble . That option does spread out the recoupment over two years. See previous responses to Arkema comments in this section of the document and section IV.B.6. of the preamble to the final rule for a full response. In addition, see response to Mexichem Fluor at section 3.1.1 of this document.  Solvay sees option 3, whereby EPA allocates HCFC - 22 allowances (both recoupment for 2010 and their allotted percentage of baseline for 2013 and 2014) to Solvay and Arkema and then allocates the remainder to all other allowance holders by revising the percentage of baseline allocated, as the only available course of action. Solvay notes that because the number of HCFC allowances for 2010 was capped at an absolute number, t he decision to issue Solvay and Arkema this lower quantity of allowances provided all other consumption and production allowance holders with 19 percent more allowances than they should have lawfully received. Thus, according to the commenter, Solvay, Arke ma, and their customers were the only entities harmed when, as the Court ruled, they were unlawfully deprived of 22,481,543 metric tonnes of HCFC - 22 baseline consumption allowances . As EPA notes in the preamble accompanying the Proposed Rule, the 2010 wind fall allowances that other companies received over and above what they should have received were not consumed. The commenter notes that i n 2010, these companies had the opportunity to consume these allowances or even use them to build inventory of HCFC - 22 for future use, but as noted in the Preamble, this was not done. In contrast, for both 2010 and 2011 Solvay consumed nearly all (>98%) of its HCFC allowances issued for use in those years. [0064] Solvay notes that their efforts to overturn EPA's Final Rule commenced well in advance of the May 10, 2010 Court hearing. They believe that since their request for review and subsequent litigation was known within the industry, the possibility that the Court could rule in Solvay’s favor should have been a clear var iable for all market participants to consider. Since the Court issued its decision on August 27, 2010, these windfall allowance holders had four months to digest the factual implications of the decision and decide what actions they would take. Solvay says that these companies cannot now look to the EPA to compensate them for their own market decisions. [0064] EPA Response: EPA is finalizing recoupment option 2 for the reasons given in the preamble . Regarding the concept of a windfall, see the response to Ar kema at section 3.2.1. of this document. The commenter also asserts that EPA is compensating companies for past market decisions by other allowance holders. EPA is only providing recoupment allowances to make up for lost opportunities for those companies that would have received more HCFC - 22 or HCFC - 142b allowances in 2010 if the 2008 inter - pollutant transfersResponse to Comments on the 2012 - 2014 HCFC Allocation Rulemaking Page 37 were accounted for in the 2009 Final Rule. EPA is issuing HCFC - 22 recoupment allowances to Arkema and Solvay because they received fewer HCFC - 22 allowances than they would have received if the Agency had reflected the 2008 inter - pollutant allowance transfers in the baselines. EPA is issuing HCFC - 142b recoupment allowances to all companies that received fewer HCFC - 142b allowances than they would have received if the Agency had reflected the 2008 inter - pollutant transfers in the baselines. However, the Agency is not compensating any company for decisions not to use allowances they did receive . In addition, EPA is not extracting future al lowances from companies based on their 2010 production and consumption levels for the reasons stated previously. See responses to Arkema earlier in this document and section IV.B.6. of the preamble to the final rule for a full response.  Mexichem Fluor beli eves that option 3 would lead to further unfair economic rewards for the companies receiving recoupment allowances and would provide distinct overcompensation due to the changed market conditions. [0066] EPA Response: EPA is finalizing recoupment option 2 for the reasons given in the preamble . EPA does not believe providing the number of allowances “lost” in 2010 in 2013 and 2014 is overcompensating the petitioners in Arkema since (1) they received fewer allowances than they would have received had the 200 8 inter - pollutant transfers been included in the 2009 Final Rule, and (2) they could have used those allowances to either produce or import HCFC - 22 in 2010 or stockpile it for later years when there are fewer HCFC - 22 allowances. See previous responses in t his section and section IV.B.6. of the preamble to the final rule for a full response. 3.2.4 Treating missed allowances from 2010 as impossible to recoup ( i.e ., o ption 4) Three comments were received regarding o ption 4. Two commenters supported this option and Arkema objected.  NRDC, IGSD, and EIA oppose all of the recoupment proposals and support the option of not allowing recoupment. The commenter states that they oppose any option for implementing Arkema that i ncreases the total number of allowances, which would only increase harm to the ozone layer and to public health and welfare. [0067] NRI supports option 4 for recoupment. EPA should not further impair allowance holders who had no role in the reason for the litigation. It is the cleanest, simplest way to satisfy the Court’s ruling without causing further disruption to the industry. [0068] EPA Response: EPA is finalizing recoupment option 2 for the reasons given in the preamble . See responses to NRDC comment i n section [ ] above and section IV.B.6. of the preamble to the final rule for a full response.  Arkema comments that EPA’s preferred position of option 4 contradicts previous decisions and court rulings, as well as EPA’s position before the D.C. Circuit. Du ring the Arkema litigation, EPA obtained more time for briefing by telling the Court that any economic loss to Arkema could be remedied by shifting additional allowances to Arkema and Solvay in future years. Arkema states that concerns raised over the disadvantage that recoupment would bring to other allowance holders (who would receive a smaller proportional share of the total allowance pool) ignores the fact that these same allowance holders received a correspondi ngly larger proportion of the market in 2010 when the a gency acted in violation of law in assigning those allocations. [0073] EPA Response: EPA is not finalizing recoupment option 4 . See section IV.B.6. of the preamble to the final rule for a full response .Response to Comments on the 2012 - 2014 HCFC Allocation Rulemaking Page 38 

## 4. **HCFC -**  **22 AND HCFC -**  **142B ALLOCATIONS IN 2012**  **- 2014**  EPA received 104 comments on HCFC allocations in 2012 - 2014. Comments were in reference to three main topics: 4.1 Decreasing HCFC - 22 consumption allowances relative to the 2009 Final Rule 4.2 Increasin g HCFC - 22 production allowances relative to the 2009 Final Rule 4.2.1 Whether EPA can decouple the percentage of baseline allocated for production and consumption 4.2.2 Whether EPA should increase the percentage of baseline allocated for production 4.2.3 Whether an increase in the number of HCFC - 22 production allowances would result in an increase in HCFC consumption and production 4.3 HCFC - 142b consumption and production allowance allocations Count Commenter Organization Document ID No 1 Tony Arceneaux A & M Heating, Air Conditioning & Refrigeration , Inc. EPA - HQ - OAR - 2011 - 0354 - 0077 2 David Wallace AZ Refrigerant Abatement EPA - HQ - OAR - 2011 - 0354 - 0 053 3 Charles McCrudden ACCA EPA - HQ - OAR - 2011 - 0354 - 0081 4 Karim Amrane AHRI EPA - HQ - OAR - 2011 - 0354 - 0072 5 John M. Batt Airgas, Inc. EPA - HQ - OAR - 2011 - 0354 - 0079 6 William J. Hamel Arkema Inc. EPA - HQ - OAR - 2010 - 1040 - 002 8 7 William J. Hamel Arkema Inc. EPA - HQ - OAR - 2011 - 0354 - 0073 8 Matthew Jahn Bay Area Refrigerant Recovery, Inc EPA - HQ - OAR - 2011 - 0354 - 0080 9 Rick Boettcher Bettcher Enterprises, Inc EPA - HQ - OAR - 2011 - 0354 - 0056 10 Zachary T. Mouton BRYANS UNITED AIR CONDITIONING EPA - HQ - OAR - 2011 - 0354 - 0118 11 Kelli K. Williams Bryson Insurance EPA - HQ - OAR - 2011 - 0354 - 0135 12 Jim Gossett Carroll Area Development Corp. EPA - HQ - OAR - 2010 - 1040 - 0159 13 Jeff Moe Center for Energy Efficiency and Sustainability , Ingersoll Rand EPA - HQ - OAR - 2011 - 0354 - 0063 14 Rick Roland Certified Refrigerant Services Inc. EPA - HQ - OAR - 2011 - 0354 - 0057 15 Rich Dykstra Consolidated Refrigerant Reclaim EPA - HQ - OAR - 2011 - 0354 - 0083 16 Joel K. French Coolgas, Inc. EPA - HQ - OAR - 2011 - 0354 - 0088 17 Anonymous DALHOUSIE UNIVERSITY EPA - HQ - OAR - 2011 - 0354 - 0091 18 Larry N. Buras Delta Ice Air & Heat, Inc. EPA - HQ - OAR - 2011 - 0354 - 0138 19 M. J. Dermid Dermid Enterprises, LLC EPA - HQ - OAR - 2011 - 0354 - 0113 20 Jeff Tauzin Doug's Refrigeration EPA - HQ - OAR - 2011 - 0354 - 0116 21 Mack McFarland DuPont EPA - HQ - OAR - 2010 - 1040 - 0020 22 Mack McFarland DuPont EPA - HQ - OAR - 2011 - 0354 - 0070 23 Dennis deBoisblanc Sr. E.A.S.E. LLC EPA - HQ - OAR - 2011 - 0354 - 0107 24 Mike Falgout Energy Specialists Air Conditioning Co. EPA - HQ - OAR - 2011 - 0354 - 0109 25 Terry Leonard Express Heating and Air Conditioning Services LLC EPA - HQ - OAR - 2011 - 0354 - 0137 26 John Haynes Express Recovery, Inc EPA - HQ - OAR - 2011 - 0354 - 0075 27 Erik R. Lieberman Food Marketing Institute (FMI) EPA - HQ - OAR - 2011 - 0354 - 0157 28 Sandra Benenate Fountainbleau Management Services, LLC EPA - HQ - OAR - 2011 - 0354 - 0139 29 Carl Grolle Golden Refrigerant EPA - HQ - OAR - 2011 - 0354 - 0054 30 Gary L. Clark Goodman Global, Inc. EPA - HQ - OAR - 2011 - 0354 - 0084 31 Anonymous Greens Services Inc. EPA - HQ - OAR - 2011 - 0354 - 0090 32 Jeff Greer Greer Holdings, LLC EPA - HQ - OAR - 2011 - 0354 - 0052 33 RemTec International G roup of EPA Certified ODS Reclaimers EPA - HQ - OAR - 2011 - 0354 - 0085 34 Jonathan Melchi Heating, Air - Conditioning and Refrigeration EPA - HQ - OAR - 2011 - 0354 - 0069Response to Comments on the 2012 - 2014 HCFC Allocation Rulemaking Page 39 Count Commenter Organization Document ID No Distributors International 35 Marsha D Fowler Highlan d Electric Heat & Air LLC EPA - HQ - OAR - 2011 - 0354 - 0096 36 Leonard Tavlin Hinton A/C Services EPA - HQ - OAR - 2011 - 0354 - 0106 37 Stephen Bernhardt Honeywell EPA - HQ - OAR - 2010 - 1040 - 002 9 38 Steven H. Bernhardt Honeywell EPA - HQ - OAR - 2011 - 0354 - 0082 39 Dave Mann Houston Refrigerant Recovery, LLC EPA - HQ - OAR - 2011 - 0354 - 0060 40 Stephen P. Mandracchia Hudson Technologies EPA - HQ - OAR - 2010 - 1040 - 002 7 41 Stephen P. Mandracchia Hudson Technologies Company EPA - HQ - OAR - 2011 - 0354 - 0071 42 David Murray HVAC Service Solutions EPA - HQ - OAR - 2011 - 0354 - 0115 43 Bill Sciacca Johnstone Supply EPA - HQ - OAR - 2011 - 0354 - 0 095 44 Brad Campagna Johnstone Supply EPA - HQ - OAR - 2011 - 0354 - 0133 45 David P. Huet Johnstone Supply EPA - HQ - OAR - 2011 - 0354 - 0101 46 Barry Tumminello Johnstone Supply EPA - HQ - OAR - 2011 - 0354 - 0 098 47 Joey Larson Johnston Supply EPA - HQ - OAR - 2011 - 0354 - 0136 48 Jim Cherry Johnstone Supply EPA - HQ - OAR - 2011 - 0354 - 0099 49 Dwayne Farbe Johnstone Supply EPA - HQ - OAR - 2011 - 0354 - 0097 50 Jim Gandy Johnstone Supply EPA - HQ - OAR - 2011 - 0354 - 0120 51 Joe Cardenas Johnstone Supply EPA - HQ - OAR - 2011 - 0354 - 0124 52 Terry Deppe Johnstone Supply EPA - HQ - OAR - 2011 - 0354 - 0140 53 Tommy Royer Johnstone Supply EPA - HQ - OAR - 2011 - 0354 - 0145 54 George Sexton Johnstone Supply EPA - HQ - OAR - 2011 - 0354 - 0132 55 Harold Petit, Jr Johnstone Supply EPA - HQ - OAR - 2011 - 0354 - 0153 56 Tim and Noemi Frazee LA Refrigerant Recovery, Inc. EPA - HQ - OAR - 2011 - 0354 - 0 051 57 Paul Metzler Lemoi ne Marine Refrigeration, Inc EPA - HQ - OAR - 2011 - 0354 - 0127 58 Kyle E. Gilley Lennox International Inc. EPA - HQ - OAR - 2011 - 0354 - 0061 59 Dwayne A. Mayeux Mayeux's A/C & Heating, Inc. EPA - HQ - OAR - 2011 - 0354 - 0094 60 Dianne Mayeux Mayeux's A/C & Heating, Inc. EPA - HQ - OAR - 2011 - 0354 - 0093 61 Peter M. Geosits Mexichem Fluor Inc. EPA - HQ - OAR - 2011 - 0354 - 0066 62 Peter Koelsch MDA Manufacturing, Inc. EPA - HQ - OAR - 2010 - 1040 - 0030 63 Diran Yegparian Mondy Global, Inc. EPA - HQ - OAR - 2011 - 0354 - 0055 64 Maureen Beatty National Refrigerants, Inc. (NRI) EPA - HQ - OAR - 2011 - 0354 - 0068 65 David Doniger Natural Resources Defense Council (NRDC) EPA - HQ - OAR - 2010 - 1040 - 0033 66 David Doniger Natural Resources Defense Council (NRDC) EPA - HQ - OAR - 2011 - 0354 - 0067 67 Michael Seabaugh NORDYNE EPA - HQ - OAR - 2011 - 0354 - 0089 68 Perry L. Pullen Perry’s Electric, Inc. EPA - HQ - OAR - 2011 - 0354 - 0131 69 Kerry K. Private Citizen Comment EPA - HQ - OAR - 2011 - 0354 - 0103 70 Anonymous Private Citizen Comment EPA - HQ - OAR - 2011 - 0354 - 0102 71 Anonymous Private Citizen Comment EPA - HQ - OAR - 2011 - 0354 - 0110 72 R.A. Mika Private Citizen Comment EPA - HQ - OAR - 2011 - 0354 - 0111 73 Anonymous Private Citizen Comment EPA - HQ - OAR - 2011 - 0354 - 0112 74 Anonymous Private Citizen Comment EPA - HQ - OAR - 2011 - 0354 - 0100 75 Kenny Peffer Private Citizen Comment EPA - HQ - OAR - 2011 - 0354 - 0121 76 Ti - Joe Augustin Private Citizen Comment EPA - HQ - OAR - 2011 - 0354 - 0123 77 Jaime Dheming Private Citizen Comment EPA - HQ - OAR - 2011 - 0354 - 0119 78 Larry Burton Private Citizen Comment EPA - HQ - OAR - 2011 - 0354 - 0125 79 J. Young Private Citizen Comment EPA - HQ - OAR - 2011 - 0354 - 0142 80 B. Truse Private Citizen Comment EPA - HQ - OAR - 2011 - 0354 - 0128 81 A. Russo Private Citizen Comment EPA - HQ - OAR - 2011 - 0354 - 0146 82 E. E. Wellmeyer Private Citizen Comment EPA - HQ - OAR - 2011 - 0354 - 0130Response to Comments on the 2012 - 2014 HCFC Allocation Rulemaking Page 40 Count Commenter Organization Document ID No

83 Anonymous Private Citizen Comment EPA - HQ - OAR - 2011 - 0354 - 0129 84 C. Legendre Private Citizen Comment EPA - HQ - OAR - 2011 - 0354 - 0134 85 Anonymous Private Citizen Comment EPA - HQ - OAR - 2011 - 0354 - 0151 86 B. Stephens Private Citizen Comment EPA - HQ - OAR - 2011 - 0354 - 0152 87 J. Welsh Private Citizen Comment EPA - HQ - OAR - 2011 - 0354 - 0155 88 J. Guidry II Private Citizen Comment EPA - HQ - OAR - 2011 - 0354 - 0144 89 Jerry Dykstra Rapid Recovery Franchise Partners EPA - HQ - OAR - 2011 - 0354 - 0086 90 Jeff Hudson Regional Mechanical EPA - HQ - OAR - 2011 - 0354 - 0117 91 Richard Marcus RemTec International EPA - HQ - OAR - 2010 - 1040 - 002 4 92 Karen B. Meyers Rh eem Manufacturing Company EPA - HQ - OAR - 2011 - 0354 - 0087 93 John White Rhynard and White Enterprises, Inc. EPA - HQ - OAR - 2011 - 0354 - 0058 94 Kenneth M. Ponder RMS of Georgia, LLC EPA - HQ - OAR - 2011 - 0354 - 0078 95 Nick Thomas Rocky Mountain Refrigerant Abatement, LLC EPA - HQ - OAR - 2011 - 0354 - 0059 96 Bruce MacMorran RSS Realtors EPA - HQ - OAR - 2011 - 0354 - 0105 97 Don Magid Solvay Fluorides, LLC EPA - HQ - OAR - 2010 - 1040 - 00 26 98 Don Magid Solvay Fluorides, LLC EPA - HQ - OAR - 2011 - 0354 - 0064 99 Chan Ritchie Southeast Refrigerant Recovery, Inc. EPA - HQ - OAR - 2011 - 0354 - 0074 100 A. Stephen Trevino Summi t Refrigerants EPA - HQ - OAR - 2011 - 0354 - 0062 101 Craig Johnson Surgi's Heating and Air Conditioning EPA - HQ - OAR - 2011 - 0354 - 0114 102 Timothy LeCoq T.L. Maintenance HVAC EPA - HQ - OAR - 2011 - 0354 - 0092 103 Joey Pittman Thermal Solutions LLC EPA - HQ - OAR - 2011 - 0354 - 0108 104 Michael Kelly Tri - Parish A/C & Refrigeration, L.L.C. EPA - HQ - OAR - 2011 - 0354 - 0122 

## 4.1 **Decreasing HCFC -**  **22 consumption allowances relative to the 2009 Final Rule**  EPA received 5 5 comments (some signed by multiple organizations) related to the level of HCFC - 22 consumption allowances, with 4 2 comments supporting a decrease in allowances relative to the 2009 Final Rule, and 13 comments opposing a decrease. EPA received another 47 com ments opposed to decreasing HCFC - 22 production , but th ese comments are most likely using the term “production” in a general sense, and are in fact referring to the HCFC - 22 consumption allocation . The following 42 comments support decreasing HCFC - 22 consumption allowances relative to the 2009 Final Rule. The majority of commenters support the higher end of proposed reductions.  NRI supports EPA’s proposal to reduce baseline consumption allocations to the lowest amoun t proposed for 2012, 2013, and 2014. NRI believes a reduced HCFC - 22 allocation will stimulate the recovery and reclamation of refrigerant installed in equipment. [0068] EPA Response: EPA is finalizing an amount of consumption allowances that is almost 30 pe rcent below the consumption amount in the 2009 Final Rule. EPA is providing consumption allowances in this final rule based on its assessment of market conditions (see section IV.B.1 - 3 . of the preamble for the specifics). For 2012, the timing of this rule means that EPA is looking back at actual events during 2012 rather than projecting future needs. The amount of consumption allowances EPA is finalizing for 2012 corresponds with the lowest proposed consumption amount for that year. In projecting future nee ds during 2013 - 2014, EPA is taking into account the ability to recover HCFC - 22, the capacity for reclaiming or reusing HCFC - 22 , and the amount of existing inventory from past years, The agency is not finalizing the smallest allocation proposed for 2013 - 2014 because EPA did not receive sufficient data on in - house supermarket reuse (see section IV.B.3 of the final rule preamble) . EPAResponse to Comments on the 2012 - 2014 HCFC Allocation Rulemaking Page 41 believes that the amount s in this rulemaking will increase market incentives to properly manage and recover HCFC - 22 whi le still allowing for servicing of existing HCFC - 22 systems .  Arkema comments that a further reduction in HCFC - 22 allowances is the best way to foster the necessary reclamation that is based on distillation. For HCFC - 22 consumption allowances, Arkema belie ves that 25,100 MT in 2012, 20,800 MT in 2012, and 16,400 MT in 2014 would be appropriate allocations . The company states that these allocation levels would help achieve a strong, sustainable recycling industry, avoid market disruption in 2015 and also all ow for continued equipment servicing. [0073 , 0028 ] EPA Response: See previous response in this section to NRI.  RMS Georgia recommends a full 38% reduction in allocation for 2012. It supports EPA’s statement in the proposed rule that a lower HCFC - 22 consumption allocation is justified by decreased demand and the availability of surplus inventory and the goal of further incentivizing recovery and reclamation. [0078] EPA Response: See previous response in this section to NRI.  Airgas suggests that EPA use the Lowest Annual Allocations/Smaller Allocation Scenario due to the fact that U . S . reclaimers have the capacity to meet necessary volumes so long as enough used HCFC - 22 is recovered and returned for reclamation. [0079] EPA Response: See previous response in this section to NRI as well as EPA’s discussion of reclamation capacity in section IV.B . 2 of the final rule.  Rocky Mountain Refrigeration Abatement encourages EPA to decrease the amount of HCFC - 22 allowances to the fullest extent proposed in the new ru le. As a small refrigerant recovery company, Rocky Mountain Refrigerant Abatement has observed that contractors and technicians are more inclined to recover HCFC - 22 if they receive payment for the used gas, and at the present price levels it is nearly impo ssible for a contractor to recover the costs involved in EPA compliant recovery. The commenter states that many who could recover refrigerants are not doing so because of the additional costs involved. Rocky Mountain Refrigerant Abatement notes that EPA sh ould decrease the amount of virgin HCFC - 22 available in the marketplace to increase the value of reclaimable used refrigerant. The commenter states that reducing the allowances to the fullest extent proposed will ultimately decrease the quantity of availab le virgin HCFC - 22 and increase the market value of recovered HCFC - 22. [0059] EPA Response: See previous response in this section to NRI. EPA agrees that decreased availability of HCFC - 22 should increase the value of used refrigerant. Additionally, since th e publication of the proposed rule, EPA has heard from stakeholders that some reclaimers are already offering increased incentives to return recovered refrigerant.  Thermal Solutions, Surgi’s Heating and Air Conditioning, and Doug’s Ref r igeration support th e proposed decrease in consumption allowances for HCFC - 22. They state that this will accelerate the adoption of the more environmentally friendly R - 410A. [0108, 0116, 0114] EPA Response: See previous response in this section to NRI.  Greer Holdings, Rhynard and White Enterprises, Bettcher Enterprises, Southeast Refrigerant Recovery, Express Recovery, and Bay Area Refrigerant Recovery encourage EPA to decrease the amount of HCFC - 22 allowances as proposed in the new rule (some emphasizing their support for the maximum reduction). They discuss the economics of refrigerant recovery: when the value of HCFC - 22 is low, no incentives exist to encourage recovery, and recovery may be more expensive than simply venting the gas. Reducing the allocation will shrink the available supply of HCFC - 22, and increased buyback prices will incentivize better recovery of HCFC - 22. [0052, 0056, 0058, 0074, 0075, 0080] EPA Response: See previous response in this section to NRI.  Houston Refrigerant Recovery supports the proposed rule to reduce HCFC - 22 allowances. The commenter states there is an oversupply of HCFC - 22 on the market today, and if the supply does not decrease, the priceResponse to Comments on the 2012 - 2014 HCFC Allocation Rulemaking Page 42 of both new and used HCFC - 22 will remain low. As long as it is less expensive to vent than to reco ver refrigerants, contractors have no financial incentive to recover. The commenter would like the overall supply of HCFC - 22 to be reduced, so that the value of reclaimed refrigerant is high enough to encourage compliance by the industry. [0060] EPA Respon se: See previous response in this section to NRI.  Summit Refrigerants supports the maximum reduction in allocations for HCFC - 22. Summit Refrigerant comments that significantly reduced allocations will result in greater recovery of used HCFC - 22 refrigerant. The commenter notes that based on the decline in prices for HCFC - 22 in 2011, they conclude that the availability of virgin HCFC - 22 from U.S. manufacturers and importers, together with the unknown supply of stockpiled HCFC - 22, is greater than the demand fo r HCFC - 22 by the HVAC service industry. A reduction in the availability of virgin HCFC - 22 will result in an increase in value of both virgin and reclaimed HCFC - 22, which will allow reclaimers to offer greater financial incentives to the HVAC service indust ry to recover used HCFC - 22 and to wholesalers. Summit Refrigerants further comments that greater recover y of used HCFC - 22 will result in increased use of reclaimed HCFC - 22, and reduce the need to manufacture and import virgin HCFC - 22. [0062] EPA Response: See previous response in this section to NRI.  Solvay supports a significant reduction in HCFC - 22 allowances. EPA reports that approximately 20 percent of consumption allowances it issued in 2010 and 2011 went unused. Solvay therefore believes that a reduction of at least this magnitude should be applied to future allowances. [0064] EPA Response: See previous response in this section to NRI. The commenter’s statement about 2011 consumption is not accurate. EPA had not released 2011 consumption data pri or to publishing the proposed rule. The agency release s U.S. HCFC consumption data through the Montreal Protocol Article 7 report to the United Nations Environment Programme . Historically, EPA has also announced the final annual consumption of HCFC - 22, spe cifically, once all of the data has been reviewed. In 2010, reported HCFC - 22 consumption was approximately 85 percent of the total HCFC - 22 consumption allocation for that year.  A group of 20 EPA Certified ODS Reclaimers recommend that EPA reduce allowances as far as legally possible: a full 38% reduction in allocations for 2012, 42% in 2013, and 47% in 2014. The reclaimers unanimously support EPA’s belief “that establishing a lower aggregate HCFC - 22 consumption allocation for 2012 - 2014 than in the 2009 Fina l Rule is not only justified by decreased demand and the availability of surplus inventory from past years, but also because a lower virgin supply will further incentivize recovery and reclamation.” They note that up to this point in time, there is no ince ntive in the marketplace that encourages recovery and reclamation, which is reflected in the fact that a significant percentage of the allowances authorized for 2010 and 2011 were unused in those two years. According to the commenters, further steep reduct ions in allocations are needed to incentivize recovery and reclamation. [0085] EPA Response: See previous response in this section to NRI.  NRDC, IGSD, and EIA strongly support reducing the existing allowance schedule by at least the maximum percentages pro posed by EPA for 2012 - 2014. Specifically, the consumption allocation for virgin HCFC - 22 should be no larger than 25,100 MT in 2012, 20,800 MT in 2013 and 16,400 MT in 2014. NRDC, IGSD, and EIA support allocating no more consumption allowances than 17.7 per cent of the revised baseline in 2012, no more than 11.4 percent in 2013, and no more than 8.3 percent in 2014. Rather, t he commenters strongly believe reducing consumption allowance allocations below these values is both necessary and practicable under Section 606(a) of the CAA. They strongly oppose any larger allocations. The basis for accelerating reductions is : 1 ) it is necessary to protect human health and the environment; and 2) it is practicable in terms of technology, safety, and availability of alternatives. [0067 , 0033 ] • The commenter states that the recovery of the ozone layer has been delayed by the rapid increase in global HCF C production, most of which is HCFC - 22. In addition to destroying ozone,Response to Comments on the 2012 - 2014 HCFC Allocation Rulemaking Page 43 HCFC - 22 is a potent greenhouse gas contributing to climate change. The commenter also notes that a more rapid acceleration of reductions will help ensure a smooth transition to the 20 15 step - down requirements of the Montreal Protocol. [0067] • The commenter states that containment, reclamation, reprocessing, and reuse of recovered HCFC - 22 are all practicable with present technology. Additionally, alternatives are on the market and more a re emerging. Accelerating the phase out schedule would address the HCFC - 22 market price issue by reducing over - supply. In effect, this would make containment, reclamation, processing and reuse more competitive and permi t a larger percentage of HCFC - 22 deman d to be met with recovered materials. Similarly, it would reduce demand for HCFC - 22 based equipment and encourage transition to appliances that use av ailable substitutes and achieve higher energy efficiency. The transition to new substances and i mproved re covery and recycle at service will create new well - paid jobs. [0067] EPA Response: See previous response in this section to NRI. EPA is providing allowances in this final rule based on its assessment of market conditions. For 2012, the timing of this rule means that EPA is looking back at actual events during 2012 rather than projecting future needs. The amount of consumption allowances EPA is finalizing for 2012 corresponds with the lowest proposed consumption amount for that year. For 2013 - 2014, EPA is ta king the proposed reduction for existing inventory and the maximum proposed reduction for reclamation and reuse . EPA is not reducing allowances for 2013 - 2014 to account for recovery and reuse in the large retail food sector because t he agency did not receive c omments or data to sufficiently support such a reduction . However, expected supermarket recovery rates are incorporated in to Vintaging Model estimates of recoverable refrigerant; the model estimates that in 2012 - 2014 there is enough recovered refr igerant to support the maximum proposed reduction for reclamation and reuse. The commenter request s that EPA accelerate the phase out schedule under section 606 of the CAA. As noted in the January 4, 2012 notice of proposed rulemaking (77 FR 242) , EPA accelerated the HCFC phaseout schedule through the 1993 Final R ule. EPA further accelerated the HCFC phaseout schedule through the 2009 Final Rule. The accelerated schedule established through the 2009 Final Rule was unaffected by the Arkema decision and is therefore still in effect. EPA did not propose a further acceleration of the HCFC phaseout schedule in the January 4, 2012 notice of proposed rulemaking. Rather, EPA stated : “To meet the 2010 stepdown requirement, EPA is continuing to allocate HCFC allowances at a level that will ensure the aggregate HCFC production and consumption will not exceed 25 percent of the U.S. baselines.” Because EPA did not propose an acceleration under section 606, and is not finalizing such an acceleration in this action, EPA did not specifically evaluate the factors listed in section 606. EPA did propose and take comment on various options for the aggregate consumption allocation in each of the years 2012 - 2014. All proposed amounts would have kept aggregate consumption below the amount required by the 2010 stepdown. As discussed in the preamble, EPA’s goal is to foster an orderly tra nsition to the 2015 stepdown. The aggregate consumption allocat ion in this final rule is designed to further that goal.  Certified Refrigerant Services, Inc. supports a radical reduction of allowances to import and produce HCFC 22 , noting that c urrently there are too many import and production allocations. [0057] EPA Response: See previous response in this section to NRI.  Coolgas requests EPA to reduce the HCFC - 22 allowances for 2012 - 2014 by the maximum alternative set forth in the Proposed Rule, i.e., 38% in 2012, 42% in 2013, and 47% in 2014. Coolgas believes that re ducing HCFC - 22 allowances by the maximum amount proposed will not cause a shortage of, or disruption in, the supply of HCFC - 22 required to meet future servicing need . Any reduction in supply caused by the reduction in HCFC - 22 allowances over 2012 - 2014 can be met from HCFC - 22 stockpiles (surplus inventory) and fromResponse to Comments on the 2012 - 2014 HCFC Allocation Rulemaking Page 44 current and future recovery and reclamation capacity. Regarding the concern of some that the maximum proposed reduction would cause disruption in the market and a lack of supply for future servici ng need s, Coolgas points out that t he phase out of CFCs did not result in a lack of supply. On the c ontrary, recover y and reclamation flourished, the market adjusted, and over the years there has been more than enough supply to meet the servicing need s. Coolgas believes that EPA’s adoption of the maximum proposed reduction in HCFC - 22 allowances for 2012 - 2014 will not cause a disruption to the market or lack of supply similar to the CFC phase out. [0088] EPA Response: See previous response in this section t o NRI. EPA acknowledges that CFC equipment is still in use to day, having been serviced exclusively with recovered material for well over a decade. By reducing the HCFC - 22 allocation, the agency hopes to incentivize recovery and encourage transition to new non - ODS equipment. Recovery and reclamation are essential to ensuring that the transition is smooth, and that HCFC - equipment can still be serviced.  Honeywell supports EPA’s proposal to make large reductions in the number of consumption allowances. Honeywel l believe reductions on the higher end of the 11 to 47 percent range set forth in the Proposed Rule will strike the appropriate balance between the needs of the marketplace and the urgent need to encourage transition and recovery and reclamation. [0082 , 00 2 9 ] EPA Response: See previous response in this section to NRI.  Rapid Recovery Franchise Partners comment that EPA should reduce baseline consumption allowances by no less than 45%. The commenters believe that d oing so will result in an immediate and signi ficant increase in the market price of virgin and reclaimed R - 22 , and that , in very short order, the price of used, reclaimable R - 22 will rise to the level that contractors will quickly adapt their business practices by recovering significantly greater quantities for reclamation. According to the commenters, h owever, increasing the price by reducing the available quantity of R - 22 is only part of the solution because regardless of the price, the recovery of small quantities of R - 22 will continue to be eco nomically impractical. Rapid Recovery Franchise Partners concur with the a gency’s encouragement of increased recovery and note that the a gency has focused much of its attention on production and consumption of virgin gas and reclaimed gas , a wise but inco mplete approach. According to the commenter, s imply reducing the available R - 22 without increasing the amount of reclaimed gas will ultimately result in a severe shortage of R - 22 for the service and repair industry in the future. Currently, HVAC contractor s are not recovering enough R - 2 to meet the level necessary to sustain the industry for the long term. [0086] EPA Response: See previous response in this section to NRI, and section IV.B.2. of the preamble for a more complete response.  Consolidated agrees with EPA that there is too much R - 22 available in the market place today. Therefore Consolidated urges the EPA to enact the proposed rule and implement a reduction of 38% in 2012, 42% in 2013, and 47% in 2014. [0083] EPA Response: See previous response in this section to NRI.  DuPont fully supports EPA's objective of encouraging a smooth transition to the 2015 step - down (to 10% of baseline HCFC consumption) and the 2020 elimination of HCFC - 22 consumption required under the Montreal Protocol and previous rule makings. DuPont’s market assessment supports EPA's conclusion that a significant reduction in HCFC - 22 allocations is necessary to meet that objective. Specifically, DuPont supports the a gency's suggested maximum reduction of total allowances proposed in th e Proposed Rule; a total allocation of 25,100 MT in 2012, 20,800 MT in 2013, and 16,400 MT in 2014. [0070 , 0020 ] EPA Response: See previous response in this section to NRI.  HARDI supports an aggressive and orderly phase down of HCFC - 22, as well as EPA’s ef forts to expedite the reduction HCFC - 22 in this rulemaking. [0069]Response to Comments on the 2012 - 2014 HCFC Allocation Rulemaking Page 45 EPA Response: See previous response in this section to NRI.  Golden Refrigerant states that EPA should cut the allocations at least to the level where the allocations plus the available amount of material coming from reclamation is less than the estimated demand for 2011. [0054] EPA Response: See previous response in this section to NRI. The HCFC - 22 allocation in the final rule is less than estimated need — accounting for sources other than newly - produced HCFC - 22 that will meet that need (i.e. recovered or reclaimed refrigerant and surplus mater ial from prior years).  LA Refrigerant Recovery, Inc and AZ Refrigerant Abatement, Inc both were in support of EPA’s proposed rule to further limit the importation of virgin HCFC - 22 refrigerant . [0051, 0053] EPA Response: See previous response in this sect ion to NRI.  RemTec International comments that the allocation percentages promulgated in the 2009 Final Rule were too high and therefore have not affected additional recovery and reclamation. They believe that current allocations should be reduced to 2015 levels in order to eliminate excess supplies of virgin R - 22. [0024] EPA Response: See previous response in this section to NRI , which explains how and why EPA set the final allocation level . EPA considered the 2015 allocation cap when setting the allo wance s for 201 2 - 2014. In fact, the 2014 allocation is less than the maximum allowed amount in 2015 , which helps support EPA’s overall goal of increasing recovery and reclamation in order to help ensure a smooth transition to alternatives .  Rheem stated their support of the EPA in the step - down of allocation levels to accelerate the move to non fluorinated refrigerants. The company agrees that a reduction in allocations from 2012 - 2014 is appropriate given that industry is moving away from HCFCs. Rheem states th at such an action may spur recovery and recycling efforts. The company comments that it is important that no action be taken that will limit the useful life of appliances that are already fielded by customers. [0087] EPA Response: See previous response in this section to NRI. EPA also notes that it is not imposing any additional appliance use restrictions through this rule.  Lennox supports the reduction of HCFC - 22 allocations to the extent that the reduction constitutes reasonable regulation, and allows the orderl y phase down and ultimate phase out of HCFC - 22 without market disruption. [0061] EPA Response: See previous response in this section to NRI.  AHRI supports EPA’s efforts to adjust the consumption allowances for HCFC - 22 based on the evidence that suppl y has exceeded demand for 2010 and 2011. AHRI recognizes that the goal of 20% reclamation set by EPA has not been met, mainly due to the excess supply. [0072] EPA Response: See previous response in this section to NRI.  Mexichem Fluor support s EPA’s proposa l to reduce consumption allowances relative to the 2009 Final Rule. According to the commenter, i n determining the reduction, the need to expand reclamation activity and the increased installation of dry - shipped HCFC - 22 condensing units should both be cons idered. Further, Mexichem Fluor supports the position set out in the Alliance for Responsible Atmospheric Policy to the EPA dated December 1, 2011, which indicates support for a 20% reduction in consumption allowances relative to the 2009 Final Rule. [0066 ] EPA Response: See previous response in this section to NRI , as well as the responses in section 2.4 of this document, which respond to comments on dry - shipped condensing units .  Hudson Technologies comments that their assessment of the market fully suppor ts EPA’s conclusion that a significant reduction in HCFC - 22 allocations is necessary to transition to the 2015 stepdown. Hudson recommends the maximum reduction of total allowances to ensure the continued viability of the reclamation industry : 25,100 MT in 2012, 20,800 MT in 2012, and 16,400 MT in 2014 . [0071 , 0027 ]Response to Comments on the 2012 - 2014 HCFC Allocation Rulemaking Page 46 EPA Response: See previous response in this section to NRI.  Ingersoll Rand supports measured reduction in the allocation levels from the 2009 Final R ule in order to provide an incentive for incr eased recovery for re - use or reclamation without dramatically altering the dynamics of the HCFC - 22 production market. Ingersoll Rand believes reductions should be toward the less aggressive end of the range defined by EPA in the proposed rule. Ingersoll Rand supports the 20% reduction target for each year 2012, 2013, and 2014 relative to the original allocation levels established in the 2009 HCFC Allocation outlined in a December 1, 2011 letter from the Alliance for Responsible Atmospheric Policy. The com menter believes a 20% reduction is a significant move and is more than sufficient to provide an incentive for increased recovery for re - use and reclamation. Ingersoll Rand further comments that there is no consensus understanding based on industry data of the actual amount of virgin or used refrigerant in the marketplace today. The existing inventory is a critical element of understanding the balance between current and future demand relative to supply, so reductions more aggressive than 20% for each year could be considered more of a wild guess than a reasoned estimate. A more aggressive reduction risks overly constraining supply and the potential impact this could have on end - users is too negative to represent a reasonable balance with the value of a more compelling incentive for re - use and reclamation. [0063] EPA Response: See previous response in this section to NRI, as well as section IV.B.1. of the preamble for a more complete response.  ACCA, in light of price volatility, suggests limiting any allocat ion adjustments to the Larger Allocation Scenario until the next stepdown in 2015 . [0081] EPA Response: See previous response in this section to NRI. The following 1 3 comments do not support EPA’s proposal to decrease HCFC - 22 consumption allowances relative to the 2009 Final Rule.  Mondy Global, Inc. comments that EPA should not reduce the total number of consumption allowances allocated. The commenter state s that none of the proposed allocation levels are adequate or appropriate for today’s market. The commenter has not seen a decrease in demand for HCFC - 22 , rather , Mondy could import more and customers would purchase it. Since EPA already reduced the cap on the total H CFC - 22 consumptions allowances in the 2009 Final Rule, the commenter see s no need to make further reductions at this time. [0055] EPA Response: EPA is providing allowances in this final rule based on its assessment of market conditions. EPA presented its market research in the Adjustment Memo that accompanied the proposed rule. Comments on the memo, along with additional market data submitted during the comment period , helped EPA determine the final allocation amount. Taking into account the capacity for r ecovering and reclaiming or reusing HCFC - 22 and the amount of existing inventory from past years, the final allocation is sufficient to meet servicing needs , as estimated by EPA’s Vintaging Model. Changes in servicing need projections from the 2009 Final R ule to this rulemaking are explained in the Adjustment Memo. The Recovery Memo, which is accompanying this final rule, shows the recovery estimates used in the Vintaging Model, and supports the agency’s decision to adjust the 2009 allocations to further ac count for recovery and reclamation. EPA is finalizing an allowed amount of production and/or import that is almost 3 0 percent below the amount s finalized for 2012 - 2014 in the 2009 Final Rule. EPA believes that the amount s in this rulemaking will increase m arket incentives to properly manage and recover HCFC - 22 while still allowing for servicing of existing HCFC - 22 systems.  One commenter is concerned with the panic over the HCFC - 22 phaseout. They believe that full allocation should remain for this year. [012 0] EPA Response: See previous response in this section to Mondy Global.Response to Comments on the 2012 - 2014 HCFC Allocation Rulemaking Page 47  Carroll Area Development Corporation is not asking EPA to reverse its decision to eliminate HCFC - 22 but rather do it at a more stable and consistent rate so that the market can adjust to the new reduced production levels in a managed way, reducing uncertainty in the marketplace and less en ing the impact on rural Iowa employers like American Home Shield, their employees and customers. The commenter requests the EPA to reevaluate their pro posed reduction schedule and introduce a more consistent reduction schedule of HCFC - 22 of 11% each year from 2012 - 2014. [0159] EPA Response: See previous response in this section to Mondy Global. In the 2009 Final Rule EPA issued HCFC 22 consumption allowances such that the allocation decreased by about 4,000 - 5,000 MT each year from 2010 - 2014. In this rulemaking EPA is unable to provide a constant reduction amount from year to year due to factors i ncluding the provision of recoupment allowances and a revised assessment of market needs.  One air conditioning contractor opposes decreasing HCFC - 22 consumption allowances relative to the 2009 Final Rule. The contractor requests that EPA leave the present phase out as planned. [0092] EPA Response: See previous response in this section to Mondy Global. EPA is not adjusting the phaseout schedule but is allocating fewer HCFC - 22 consumption allowances than in the 2009 Final Rule for the reasons discussed in the preamble.  One commenter urges EPA to leave the schedule as it is. The commenter notes that the phase out of HCFC 22 was scheduled, and everyone in the industry had made plans to deal with it. [0115] EPA Response: See previous response in this section to M ondy Global. EPA is not adjusting the phaseout schedule but is allocating fewer HCFC - 22 consumption allowances than in the 2009 Final Rule for the reasons discussed in the preamble.  NORDYNE does not support reducing the 2012 allocation relative to the 200 9 Final Rule. NORDYNE believes due diligence and process was followed during the 2009 Final Rule writing and throughout the previous re assessment conducted for the last rule . [0089] EPA Response: See previous response in this section to Mondy Global. The agency did follow due diligence and process during the development of the 2009 Final Rule ; however, market conditions have changed drastically since that time . For this rulemaking, EPA conducted market research, which is presented in the Adjustment Me mo , and took comment on the proposed allocation range. EPA again followed due diligence and process in this rulemaking, and carefully considered all submitted comments and data when finalizing the allocation amounts for 2012 - 2014.  One commenter urges EPA t o delay the phase out of HCFC - 22 . [0112] EPA Response: In 2015, the U.S. must reduce its HCFC production and consumption below 10 percent of its historic HCFC baseline under the Montreal Protocol on Substances that Deplete the Ozone Layer . By 2020, HCFC pro duction and consumption must be below 0.5 percent of the historic baseline . EPA has previously accelerated the domestic HCFC phaseout schedule to reflect these reduction steps. Under long - established EPA regulations, HCFC - 22 may not be produced or imported at all in 2020 or beyond . Rather than create a drastic cut - off in 2015, the finalized allocation for 2012 - 2014 fosters the market transition necessary to prevent future disruptions.  Goodman strongly opposes EPA’s latest Proposed Rule regarding HCFC - 22 allowances. Goodman believes the proposed rule is contrary to EPA’s public commitment to a smooth transition to alternative refrigerants. Goodman notes that EPA has stated repeatedly that it believes it is necessary to continue to permit the servicing of a ir - conditioning and refrigeration appliances manufactured prior to January 1, 2010, to ensure a smooth transition to non - ozone depleting alternatives. Goodman believes that EPA’s most recent proposal to reduce HCFC - 22 allowances by 11 to 47 percent in 2012 - 2014 would have the very effect that EPA has stated that it wants to avoid. Goodman recognizes that the a gency must address the Court decision in Arkema vs. EPA , but Goodman believes the proposed reduction in allowances of HCFC - 22 for 2012 - 2014 appears to go well beyond any result envisioned by the Court decision. [0084]Response to Comments on the 2012 - 2014 HCFC Allocation Rulemaking Page 48 EPA Response: See previous response in this section to Mondy Global. Additionally, EPA’s assessment of the market as outlined in the preamble and in the adjustment memo indicates the alloc ation being established in this final rule will allow for servicing of existing systems both now and into the future and foster a smooth transition to non - ODS alternatives.  Four similar comments were received from representatives of Johnstone Supply in opp osition to the proposed decrease in HCFC - 22 allocations. The commenters cite economic considerations as the reason for their opposition. [099, 0101, 0152, 0136] One commenter specifically ask s that EPA re considers the drastic cuts in R - 22 to get the economy restarted and cost consumers less money. [0099] One commenter believes that the proposed rulings have created chaos in their industry. They state that these decisions regarding the acce l er ated phaseout have been made without regard to the impact on manufacturers, distributors, contractors, and consumers. They strongly recommend that EPA returns to the original plan for the phaseout of R - 22. Because of uncertainty about what lies ahead, the commenter states that R - 22 is being hoarded and cautiously s old with increased prices to ensure adequate inventory levels over time. [0101] One commenter specifically states that significant reductions in the R - 22 allocation will close businesses and create unfair hardships to the HVAC industry . They are concerned that EPA is not considering the people. [0152] One commenter from Johnstone Supply requests that EPA leave the original reductions of R - 22. The current proposed change has caused R - 22 prices to increase and shortages in the industry. The commenter states that the majority of units in the field are still under warranty. They believe that the consumer does not have the money to replace these systems and they shou ldn’t have to if the unit is under warranty. The commenter does not think anyone wants to raise p rices during these hard economic times and the proposed change in HCFC - 22 reductions is another example of why the American people have no faith in the government. [0136 ] EPA Response: See previous response in this section to Mondy Global. Since the close of the comment period, EPA has heard from numerous stakeholders , including the late comments from the Food Marketing Institute, that there is an ample supply of HCFC - 22 to meet servicing need. EPA strives to provide an amount of HCFC - 22 consumption that al lows system owners to service their systems while encouraging a gradual transition to non ODS alternatives. Additionally, signature o f the final rule for 2012 - 2014 establishes market certainty, and allows more HCFC - 22 in 2013 and 2014 than the minimum amou nt proposed. Providing recoupment allowances in addition to the allowances provided to meet estimated servicing need provides additional refrigerant that can be used to service equipment . To the extent that HCFC - 22 prices rose due to regulatory uncertai nty, publication of the final rule provides market stability through 2014.  The Food Marketing Institute (FMI) comments that according to the UNEP Synthesis Report, “HFCs: A Critical Link in Protecting Climate and the Ozone Layer,” the Montreal Protocol is working as intended and expected. The existing allowance system provides adequate protection and the accelerated schedule in the proposed rule is not necessary. They state that the accelerated schedule will negative ly impact the retail food industry by inc reasing the cost of HCFC - 22 refrigerant and rushing retrofits . FMI urges the agency to revisit the proposed rule. [0157] EPA Response: See previous response s in this section to Mondy Global and Johnstone Supply. EPA notes that it is not adjusting the phaseo ut schedule but is allocating fewer HCFC - 22 consumption allowances than in the 2009 Final Rule for the reasons discussed in the preamble. Additionally, this action should not rush retrofits, as all reports, including a later comment from FMI, indicate ther e is a significant supply of HCFC - 22. There are numerous retrofit options available that can lead to improved energy efficiency and smaller leak rates. If supermarkets are considering retrofitting their existing system, EPA encourages them to review the Gr eenChillResponse to Comments on the 2012 - 2014 HCFC Allocation Rulemaking Page 49 Retrofit Guidelines available at www.epa.gov/greenchill . This report was originally introduced in 2008 and was recently updated. EPA received 47 comments opposed to decreasing HCFC - 22 production , but that use “production” as a general term to cover production and import for U.S. use. Since new production (and import) in a given year is limited by the consumption allocation, EPA interprets these comments as opposition to the proposed decrease in consump tion allowances. For clarity, the agency separated these comments from the previous 1 3 that are opposed to a decrease in consumption allowances even though EPA believes all 60 commenters share the same opinions about consumption.  One commenter urges EPA n ot to limit the production of HCFC - 22, as that will place an undue burden on consumers. [0155]  3 4 commenters do not support the proposed decrease in production allowances. They stated that further production restrictions will cause an unnatural and unplann ed shift in the market, thus resulting in unnecessary hardships to U.S. citizens. Further, they state that the cost of this plan will ultimately be the burden of U.S. citizens as they will pay inflated costs for HCFC - 22 repairs. One commenter was concerned about the impact this may have on senior citizens. [0090, 0142, 0100, 0096, 0093, 0129, 0139, 0128, 0138, 0125, 0137, 0134, 0111, 0110, 0109, 0131, 0130, 0118, 0117, 0106, 0105, 0103, 0077, 0091, 0107, 0113, 0119, 0123, 0122, 0121, 0144 , 0135 , 0097 , 0095 ]  One cont r actor urges EPA to leave the HCFC - 22 phase out plan in place with original production restrictions and not to accelerate it. [0113]  Four commenters urge EPA to leave the HCFC - 22 phase out plan in place with current production restrictions. [0094, 0 127 , 0135, 0097]  Two commenter s request EPA to allow the full 2012 allocation to produce that was originally planned. The commenter believes that EPA is not considering the large amount of HCFC - 22 that was produced and purchased in the last quarter of 2010 that was not sold until 2011. [0102 , 0153 ]  Nine similar comments were received from representatives of Johnstone Supply in opposition to the proposed decrease in HCFC - 22 allocations. All commenters cite economic hardship and burden on small businesses and citizens as the reason for their opposition. They ask that EPA considers that if HCFC - 22 is not produce d as planned, all HVAC businesses and their customers will suffer due to the large price increase in HCFC - 22. Further, one of the commenter s specifically states that due to tough economic times, customers are opting to repair and not replace their systems. The current shortage and the concurrent rise in price will cost a consumer approximately double to repair a unit. The commenter believes this will be very hard on lower income persons who cannot afford to switch to new alternatives and should not have to if their unit is still under warranty. [0140, 0145, 0146, 0151, 0153 , 0132, 0124, 0095, 0098 ]  Commenters from Johnstone Supply support the original planned ruling for HCFC - 22 allocation in 2012. They comment that the total amount of HCFC - 22 that was origin ally scheduled for production in 2012 should stand, and ask EPA to reconsider the proposed decrease in production . [0124, 0132, 0133 , 0097 ] EPA Response: See previous response s in this section , especially those to Mondy Global , Johnstone Supply , and The Fo od Marketing Institute . In regards to small business concerns, EPA is required under the Regulatory Flexibility Act to consider whether this rule will have a significant economic impact on a substantial number of small entities. This rule was determined to not have a significant impact on small business because it relieves the regulatory ban on production and import of HCFC - 22 that would other wise apply in the wake of the Court’s vacatur.Response to Comments on the 2012 - 2014 HCFC Allocation Rulemaking Page 50 EPA disagrees with the two comments that assert that EPA did not consider what was produced and purchased in the last quarter of 2010 and sold for servicing in 2011. EPA understands that material produced in one year is often actually used in later years. Regardless of when the material was produced or sold, leaving 15 percent of allowances unused in 2010 indicates (1) there was enough material in inventory to cover the early part of 2011 without additional production in 2010 , (2) the servicing need in 2011 was anticipated to be significantly lower than anticipated in EPA’s original analysis , or (3) a combination of the two would result in lower necessity for production . All three scenarios , coupled with recent industry feedback, still indicate there is an a mple supply of R - 22 to service existing equipment. 

## 4 **.2 Amount of**  **HCFC -**  **22 production allowances relative to the 2009 Final Rule**  4 .2.1 Whether EPA can decouple the percentage of baseline allocated for production and consumption EPA received four comments on whether EPA can decoupl e production and consumption baselines. DuPont and NRDC were the only two commenters that explicitly address ed EPA’s statutory authority to decouple baseline percentages , and did so in their responses to both the Interim Final Rule and the proposed rule .  DuPont comments on the statutory authority for decoupling. DuPont notes that CAA§ 605 requires that regulations phasing out class II substances need only implement restrictions on production and consumption that meet (or are greater than) those required by the statutory schedule provided within CAA Title VI and any acceleration of that schedule pursuant to the authority granted EPA in CAA § 606. DuPont notes that the agency has previously utilized its CAA § 606 authority to accelerat e the statutory schedule contained in CAA § 605. DuPont comments that the "schedule" as referenced in CAA § 605 is the "schedule" established in the CAA and through operation of the Montreal Protocol that is "applicable to the phaseout and termination of p roduction of class II substances." The use of the term is constrained by this statutory context and does not encompass other schedules as may be defined in regulation or elsewhere. Thus, DuPont believes the "same schedule" as contained in the second senten ce of CAA § 605(c) and as applied to consumption means no more than the schedule contained in the CAA and the schedule altered by EPA through subsequent action using the authority in CAA § 606. DuPont does not believe it means that production and consumpti on allowances are somehow tied to the same regulatory schedule established by EPA and must be identical in terms of number of allowances, but rather that production and consumption are tied to the same statutory and treaty schedule. DuPont comments that EP A thus has legal authority to allocate differing amounts of production and consumption allowances. DuPont supports EPA’s view that the second interpretation is most consistent with the statutory language and purpose, and believes that there is no statutory provision or Congressional intent for rules implemented under title VI of the CAA to disadvantage domestic HCFC producers to the advantage of offshore producers. DuPont comments that EPA may use its discretion under CAA §§ 605 and 606 to provide for incre ased domestic production, especially in the situation contemplated in the Proposed Rule where there will be no environmental disadvantage to allocating different levels of production and consumption allowances. [ 0020, 0070] EPA Response: EPA is decoupling baseline percentages for production and consumption in the final rule. EPA responds fully to comments on decoupling , its statutory authority, and its policy decision n section IV.B.7. and IV.C.2. of the preamble to the final rule. EPA received two comment s from a group of environmental organizations that believe EPA does not have the statutory authority to decouple.  NRDC, IGSD, and EIA do not support decoupling. T he commenters believe that the language presented in CAA section 605(c) equates the quantity of consumption and production allowances and cannot be interpreted to allow more production allowances than consumption allowances in any given year. [ 0033, 0067]Response to Comments on the 2012 - 2014 HCFC Allocation Rulemaking Page 51 EPA Response: EPA is decoupling baseline percentages for production and consumption in the fi nal rule. EPA responds fully to comments on decoupling , its statutory authority, and its policy decision in section IV.B.7. and IV.C.2. of the preamble to the final rule. 4. 2 .2 Whether EPA should provide the same percentage of baseline production as in the 2009 Final Rule EPA received six comments supporting the issuance of more production than consumption allowances. Hudson and DuPont specifically express support for EPA’s proposed option 2, which would decouple baselines and provide the same percentage o f the production baseline as in the 2009 Final Rule. This would have the effect of increas ing the number of production allowances above the amount allocated in the 2009 Final Rule. Three comments do not support issuing more production than consumption allowances .  Solvay comments that since the production of HCFCs requires both a production allowance and a consumption allowance, the availability of HCFC consumption allowances will be the limiting factor for the sale of HCFCs in the U . S. Solvay believes d ecoupling would be appropriate so that companies that consume HCFC production allowances can effectively compete in export markets where these products will otherwise be secured from other sources. Solvay notes that this decoupling becomes especially impor tant as the cap in consumption allowances continues to decline in the U.S. in the years ahead, thereby reducing producers’ opportunities to sell these products domestically. [0064] EPA Response: For 2013 - 14, t he agency is providing the same percentage of t he production baseline as in the 2009 Final Rule for the reasons provided in section IV.C.2. of the preamble to the final rule .  Honeywell comments that i f there are additional production allowances, then U.S. producers can export HCFC - 22 for non - Article 5 Parties demand if they choose. Honeywell notes that this allows U.S. producers to compete with other global sources, will have no impact on domestic consumption, and is unlikely to add to global consumption. Honeywell notes that U.S. producers do not enjo y Clean Development Mechanism benefits for HFC - 23 destruction allowed to Korean, Chinese and Indian manufacturers and so increased production will not likely cause a reduction in global pricing of HCFC - 22 and will not contribute to increased consumption. H oneywell believes the U.S. should also continue to allow a separate allocation to U.S. producers for export to meet needs of Article 5 Parties to a level consistent with what is allowed under the restrictions imposed by the Montreal Protocol. [0082] EPA Re sponse: For 2013 - 14, t he agency is providing the same percentage of the production baseline as in the 2009 Final Rule for the reasons provided in section IV.C.2. of the preamble to the final rule . The agency is also continuing to allocate Article 5 allowances as provided in 40 CR 82.18.  MDA Manufacturing supports action to restore production allowance allocation to 38 percent of baseline in 2011 and apply similarly proportionate levels to productio n allowance allocations for the years 2012 - 2014. They state that an increase in available production allowances will provide broader options for expending those consumption allowances through U.S. production vs. import of the associated R - 22 material. [003 0] EPA Response: For 2013 - 14, t he agency is providing the same percentage of the production baseline as in the 2009 Final Rule for the reasons provided in section IV.C.2. of the preamble to the final rule .  DuPont supports EPA’s proposed option 2 for “deco upling” production allowances. DuPont comments that not decoupling production allowances will only penalize domestic producers to the benefit of producers in other countries, which could have negative environmental consequences. DuPont notes that without decoupling, production allowances would be less than consumption allowances. Because making product requires both a production and a consumption allowance, to make product equivalent to consumption allowances, allowance holders must either import HCFC - 22 o r transfer additional production allowances to the U.S. DuPont notes that this situation is exacerbated by the fact that a significant quantity of production allowances is held by an entity that no longer has HCFC -Response to Comments on the 2012 - 2014 HCFC Allocation Rulemaking Page 52 22 production facilities in the U.S. DuPon t believes that if the EPA does not "decouple" HCFC - 22 production and consumption allowances, the ability of U.S. suppliers to export to Article 5 countries will be restricted, allowing offshore competitors to take market share from U.S. producers. DuPont further comments that to the extent that, as a result of decoupling, demand for HCFC - 22 can be met by U.S. production rather than by facilities in other countries with higher pollutant emissions, e.g. higher HFC - 23 emissions, then the environmental impact of decoupling is also positive. DuPont cites published analyses of increasing atmospheric concentrations ofHFC - 23 that show increasing emissions of HFC - 23 despite significant abatement in non - Article 5 countries and in Article 5 countries as a result of CDM projects. DuPont notes that this result suggests that newer HCFC - 22 facilities are emitting significant quantities of HFC - 23 and, in the absence of decoupling, it is probable that these facilities (that would produce the HCFC - 22 that could not be sourc ed from the U.S. facilities) would produce more HFC 23 emissions than U.S. fa cilities where H FC - 23 emissions are largely abated. DuPont notes that reducing production allowances could therefore lead to increased global emissions ofHFC - 23 and its correspond ing negative effects. DuPont also comments that the net effect of decoupling is positive for the U.S. economy, to the extent that it results in preservation of existing markets or additional market opportunities. [0020,0070] EPA Response: For 2013 - 14, t h e agency is providing the same percentage of the production baseline as in the 2009 Final Rule for the reasons provided in section IV.C.2. of the preamble to the final rule.  Hudson supports EPA’s option 2 for “decoupling” production allowances. Hudson comm ents that not decoupling production allowances would penalize domestic producers to the benefit of producers in other countries. [0071] EPA Response: For 2013 - 14, t he agency is providing the same percentage of the production baseline as in the 2009 Final Rule for the reasons provided in section IV.C.2. of the preamble to the final rule . Two comment er s do not support p roviding more production than consumption allowances.  NRDC, IGSD, and EIA do not support allocating an increment of production for export. They note that the Protocol and domestic regulations already provide a production allocation above and beyond U.S. production and consumption allocations to serve export markets. The commenters express that they cannot support a further production allocat ion to enable further exports, unless EPA is able to demonstrate with transparent data that the production allocation for basic domestic need is insufficient to serve foreign markets . NRDC, IGSD, and EIA strongly support reducing the existing allowance sch edule by at least the maximum percentages proposed b y EPA for 2012 - 2014. The commenters do not support the “high %” production allocation values in Table 3, but they note the production column reflects an annual production increment of approximately 5 perc ent of baseline over the consumption column. [0067 , 0033 ] EPA Response: For 2013 - 14, t he agency is providing the same percentage of the production baseline as in the 2009 Final Rule for the reasons provided in section IV.C.2. of the preamble to th is final rule . EPA’s rationale for allowing an increase in production allowances relative to the 2009 Final Rule is discussed in the following section of this document (section 4.2.3) .  Arkema comments that EPA’s suggestion to leave the total HCFC - 22 production allowance pool at its 2009 level, or even increase it, is misaligned with EPA’s observed changes to the market since 2009. Evidence suggests that a reduction of production allowances is justified, rather than an increase. [ 0073] EPA Response: For 2013 - 14, t he agency is providing the same percentage of the production baseline as in the 2009 Final Rule for the reasons provided in section IV.C.2. of the preamble to the final rule and section 4.2.3. of this document .Response to Comments on the 2012 - 2014 HCFC Allocation Rulemaking Page 53 4. 2 .3 Whether an increase in the number of HCFC – 22 production allowances would result in an increase in HCFC consumption and production Eight comments addressed EPA’s request for comment on whether an increase in the number of HCC - 22 production allowances would result in an increase in HCFC consumption and production. Four comments stated that an increase in the number of HCFC - 22 production allowances would result in an increase in HCFC consumption and production .  NRDC , IGSD, and EIA express concern that allowing more production allocations than consumption allocations will only worsen the surplus of HCFC - 22 on the global market, further decrease HCFC - 22 prices, and discourage the adoption of leak prevention measures, r eclamation, and adoption of alternatives in other countries. NRDC believes that increasing production allocations will not result in net environmental benefits. They state that increasing exports of HCFC - 22 will only worsen the glut on the market and further depress prices. [0067 , 0033 ] EPA Response: The agency disagrees with the commenter ’s assertion that increasing production allowances increases the global supply of HCFC - 22 . See section IV.C.2. of the preamble to the final rule for a complete discus sion of why EPA believes it is appropriate to allow an increase in the number of production allowances in 2013 and 2014 .  Arkema comments that b y increasing production allowances, EPA would be contributing to an increase in the use and release of HCFC - 22. E ven if all extra production allowances would be used for export, additional supplies in overseas markets would be available, while domestic supplies would be the same, which would drive down foreign prices and increase demand, and thus, environmental damag e. According to the commenter, i f HCFC - 22 production allowances are increased, the ill - effects of oversupply will simply be exported. Arkema also comments that extra supplies of HCFC - 22 globally would incentivize illegal activity. [0073] EPA Response: See the above response to NRDC and the preamble to the final rule for a full discussion of this issue . EPA is aware that as the supply of HCFC - 22 decreases in the U.S., the incentive for illegal activity increases, much as it did when CFCs were phased out in t he 1990s. The primary reason why the potential for illegal imports exists is that not all countries are restricting the supply of HCFC - 22 on the same schedule. The agency will continue to work with other government partners to catch and prevent illegal imports of HCFCs. EPA encourages all industry participants and private citizens to report any illicit activity. EPA takes enforcement of its regulations seriously, and encourages all industry players to maintain accurate records that document appropriate handling and use of refrigerant. To report a violation online, visit http://epa.gov/tips/ .  MDA Manufacturing states that the pot e ntial increase in production allowances for domestic use could result in a slight relative increase in U.S. R - 22 production. However, all or part of the increase would be counterbalanced by a decrease in R - 22 importation. MDA believes that it is unlikely t hat greater U.S. production of R - 22 for export would result in a significant increase in R - 22 exports. [0030] EPA Response: This comment appears to be based on a scenario where a company with production allowances and a company with consumption allowances pair up to produce HCFC - 22 domestically. EPA doe s not believe this is a likely scenario . See the above response to NRDC and the preamble to the final rule for a full discussion of EPA’s decision to finalize production option 2 . The following two comments noted that the quantity of consumption allowances is the limiting factor for U.S. consumption of HCFCs:  DuPont notes that the quantity of consumption allowances allocated, not production allowances allocated, determines U.S. consumption of HCFCs. Therefore , implementation of option 2 for decoupling production allowances cannot increase U.S. consumption or impact the smooth U.S. phase out of HCFC - 22.Response to Comments on the 2012 - 2014 HCFC Allocation Rulemaking Page 54 DuPont comments that an increase of production allowances could result in more U.S. production for both domes tic use and for export. DuPont believes that because making product requires both a production and consumption allowance, to make a product equivalent to consumption allowances an allowance holder must either import HCFC - 22 or transfer additional productio n allowances to the U.S. DuPont notes that additional U.S. HCFC - 22 production allowances that would result from implementation of option 2 will not result in greater worldwide production or consumption of HCFCs and, hence, will not have a negative impact o n the global environment. Total HCFC - 22 use is determined by market demand and/or consumption allocations, not the ability to produce. DuPont believes that additional U.S. HCFC - 22 production allowances will only allow U.S. producers to meet existing demand domestically and in Article 5 countries in accordance with the CAA and the Montreal Protocol. DuPont comments that additional allowances will not increase demand, but rather, afford U.S. producers the opportunity to compete to service existing demand. Fur ther, DuPont believes that if EPA does not allocate additional HCFC - 22 production allowances or worse yet, further decreases those production allowances, the ability of U.S. suppliers to export to developing country markets will be restricted, allowing off shore competitors to take market share from U.S. producers. DuPont comments that additional U.S. HCFC - 22 production for export will not result in greater worldwide production of HCFCs. DuPont believe that additional allowances will not serve to increase demand but merely help determine which global producers have an opportunity to compete to service that demand. [0070 , 0020 ] EPA Response: See the above response to NRDC and the preamble to the final rule for a full discussion of this issue.  Solvay comment s that since the production of HCFCs requires both a production allowance and a consumption allowance, the availability of HCFC consumption allowances will be the limiting factor for the sale of HCFCs in the U . S. As such , Solvay does not believe that increasing U.S. HCFC - 22 production for export will lead to greater global HCFC - 22 consumption than would otherwise take place. [0064 , 0026 ] EPA Response: See the above response to NRDC and the preamble to the final rule for a full discussion of this issue. 

## 4. **3 HCFC**  **- 142b consumption and production allowance allocations**  Four comments were received on HCFC - 142b consumption and production allowance allocations, three in support of reducing allocation levels.  DuPont comments that they support a reduction in c alendar year production and consumption allowances for HCFC - 142b. Lesser amounts of HCFC - 142b than provided in the Proposed Rule are needed on a going forward basis. DuPont urges EPA to further examine this issue with the possibility of phasing out this su bstance. DuPont notes that HCFC - 142b is used only in blends to service old CFC equipment. By 2015, any CFC equipment still in service will be at least two decades old and replacement with new and more efficient equipment is a far better option than keeping the old inefficient equipment in operation. [0070] EPA Response: EPA did not propose to decrease HCFC - 142b allowances in this rulemaking. The agency assessed the need for the chemical in the 2009 Final Rule and will revisit the need for HCFC - 142b for servicing during the rulemaking for the next regulatory period.  Arkema agrees with EPA’s proposal to make 100 metric tons of HCFC - 142b consumption allowances available each year from 2012 - 2014 , especially since HCFC - 142b continues to be a critical componen t of R409a used to service refrigeration equipment . For HCFC - 142b, Arkema states that no increase to the amount of allowed production in both 2013 and 2014 is necessary. Further, the commenter states that the a gency need only provide 69.8 metric tons of 14 2b production allowances in recoupment. [0073]Response to Comments on the 2012 - 2014 HCFC Allocation Rulemaking Page 55 EPA Response : EPA is providing 100 MT of HCFC - 142b consumption allowances and approximately 463 MT of HCFC - 142b production allowances, excluding recoupment, in 2012, 2013 and 2014 . Similar to the rationale for providing more HCFC - 22 production allowances, EPA is providing a higher number of HCFC - 142b production allowances.  NRDC, IGSD, and EIA strongly support reducing the existing HCFC - 142b production and consumption allowance schedule by at least the maximum p ercentages proposed by EPA for 2012 - 2014. [0067] EPA Response : EPA is finalizing the same number of HCFC - 142b allowances as proposed.  Solvay states that EPA should not lower the HCFC - 142b production allowances to compensate for any increase in total U . S . H CFC - 22 production. [0026] EPA Response : EPA is finalizing the same number of HCFC - 142b allowances as proposed. 

## 5. **OTHER ISSUES** EPA received 7 2 comments concerning other issues associated with the Proposed Rule. Comments were in reference to six main topics: 5 .1 HCFC supply, price, and economic conditions 5 .2 Providing allowances to reclaimers 5 .3 Providing allowances to manufacturers of HCFC b lends 5 .4 Potential impacts of the proposed rule on small entities and consumers 5 .5 Timely completion of the rule 5 .6 Compliance and enforcement issues Count Commenter Organization Document ID No 1 Michael Bleier Able Distributors EPA - HQ - OAR - 2011 - 0354 - 0147 2 Charles McCrudden ACCA EPA - HQ - OAR - 2011 - 0354 - 0081 3 Karim Amrane AHRI EPA - HQ - OAR - 2011 - 0354 - 0072 4 John Tice APR Supply Co. EPA - HQ - OAR - 2011 - 0354 - 0148 5 William J. Hamel Arkema Inc. EPA - HQ - OAR - 2011 - 0354 - 0073 6 David Wallace AZ Refrigerant Abatement, Inc EPA - HQ - OAR - 2011 - 0354 - 0053 7 Matthew Jahn Bay Area Refrigerant Recovery, Inc EPA - HQ - OAR - 2011 - 0354 - 0080 8 Rick Boettcher Bettcher Enterprises, Inc EPA - HQ - OAR - 2011 - 0354 - 0056 9 Kelli K. Williams Bryson Insurance EPA - HQ - OAR - 2011 - 0354 - 0135 10 Jeff Moe Center for Energy Efficiency and Sustainability, Ingersoll Rand EPA - HQ - OAR - 2011 - 0354 - 0063 11 Rick Roland Certified Refrigerant Services Inc. EPA - HQ - OAR - 2011 - 0354 - 0057 12 Don Maloney Coburn Supply Company, Inc. EPA - HQ - OAR - 2011 - 0354 - 0149 13 Rich Dykstra Consolidated Refrigerant Reclaim EPA - HQ - OAR - 2011 - 0354 - 0083 14 Joel K. French Coolgas, Inc. EPA - HQ - OAR - 2011 - 0354 - 0088 15 M. J. Dermid Dermid Enterprises, LLC EPA - HQ - OAR - 2011 - 0354 - 0113 16 Mack McFarland DuPont EPA - HQ - OAR - 2011 - 0354 - 0070 17 John Haynes Express Recovery, Inc EPA - HQ - OAR - 2011 - 0354 - 0075 18 Carl Grolle Golden Refrigerant EPA - HQ - OAR - 2011 - 0354 - 0054 19 Gary L. Clark Goodman Global, Inc. EPA - HQ - OAR - 2011 - 0354 - 0084 20 Jeff Greer Greer Holdings, LLC EPA - HQ - OAR - 2011 - 0354 - 0052 21 RemTec International Group of EPA Certified ODS Reclaimers EPA - HQ - OAR - 2011 - 0354 - 0085 22 Jerry T. Harrell Harrell's A/C & Heating Services EPA - HQ - OAR - 2011 - 0354 - 0104Response to Comments on the 2012 - 2014 HCFC Allocation Rulemaking Page 56 Count Commenter Organization Document ID No 23 Jonathan Melchi Heating, Air - Conditioning and Refrigeration Distributors International EPA - HQ - OAR - 2011 - 0354 - 0069 24 Steven H. Bernhardt Honeywell EPA - HQ - OAR - 2011 - 0354 - 0082 25 Dave Mann Houston Refrigerant Recovery, LLC EPA - HQ - OAR - 2011 - 0354 - 0060 26 Stephen P. Mandracchia Hudson Technologies Company EPA - HQ - OAR - 2011 - 0354 - 0071 27 David Murray HVAC Service Solutions EPA - HQ - OAR - 2011 - 0354 - 0115 28 Brad Campagna Johnstone Supply EPA - HQ - OAR - 2011 - 0354 - 0133 29 Dwayne Farbe Johnstone Supply EPA - HQ - OAR - 2011 - 0354 - 0097 30 Bill Sciacca Johnstone Supply EPA - HQ - OAR - 2011 - 0354 - 0095 31 Barry Tumminello Johnstone Supply EPA - HQ - OAR - 2011 - 0354 - 0098 32 Joe Cardenas Johnstone Supply EPA - HQ - OAR - 2011 - 0354 - 0124 33 Joey Larson Johnstone Supply EPA - HQ - OAR - 2011 - 0354 - 0136 34 George Sexton Johnstone Supply EPA - HQ - OAR - 2011 - 0354 - 0132 35 Tim and Noemi Frazee LA Refrigerant Recovery, Inc EPA - HQ - OAR - 2011 - 0354 - 0051 36 Paul Metzler Lemoine Marine Refrigeration, Inc EPA - HQ - OAR - 2011 - 0354 - 0127 37 Dwayne A. Mayeux Mayeux's A/C & Heating, Inc. EPA - HQ - OAR - 2011 - 0354 - 0094 38 Dianne Mayeux Mayeux's A/C & Heating, Inc. EPA - HQ - OAR - 2011 - 0354 - 0093 39 Peter M. Geosits Mexichem Fluor Inc. EPA - HQ - OAR - 2011 - 0354 - 0066 40 Diran Yegparian Mondy Global, Inc. EPA - HQ - OAR - 2011 - 0354 - 0055 41 Anonymous Private Citizen Comment EPA - HQ - OAR - 2011 - 0354 - 0102 42 Anonymous Private Citizen Comment EPA - HQ - OAR - 2011 - 0354 - 0112 43 B. Truse Private Citizen Comment EPA - HQ - OAR - 2011 - 0354 - 0128 44 Warren Private Citizen Comment EPA - HQ - OAR - 2011 - 0354 - 0143 45 E. E. Wellmeyer Private Citizen Comment EPA - HQ - OAR - 2011 - 0354 - 0130 46 J. Welsh Private Citizen Comment EPA - HQ - OAR - 2011 - 0354 - 0155 47 Cindy V. Chetti and Gregory Brown National Multi Housing Council (NMHC) and National Apartment Association (NAA) EPA - HQ - OAR - 2011 - 0354 - 0156 48 Maureen Beatty National Refrigerants, Inc. (NRI) EPA - HQ - OAR - 2011 - 0354 - 0068 49 Michael Seabaugh NORDYNE EPA - HQ - OAR - 2011 - 0354 - 0089 50 David Doniger Natural Resources Defense Council (NRDC) EPA - HQ - OAR - 2011 - 0354 - 0067 51 David Andrew Perfect Score Technologies, LLC EPA - HQ - OAR - 2011 - 0354 - 0150 52 Walt Baker Polar Technology EPA - HQ - OAR - 2011 - 0354 - 0076 53 Jerry Dykstra Rapid Recovery Franchise Partners EPA - HQ - OAR - 2011 - 0354 - 0086 54 John White Rhynard and White Enterprises, Inc. EPA - HQ - OAR - 2011 - 0354 - 0058 55 Nick Thomas Rocky Mountain Refrigerant Abatement, LLC EPA - HQ - OAR - 2011 - 0354 - 0059 56 Bruce MacMorran RSS Realtors EPA - HQ - OAR - 2011 - 0354 - 0105 57 Don Magid Solvay Fluorides, LLC EPA - HQ - OAR - 2011 - 0354 - 0064 58 Chan Ritchie Southeast Refrigerant Recovery, Inc. EPA - HQ - OAR - 2011 - 0354 - 0074 59 Ray Diaz Sustainable Energy Solutions LLC EPA - HQ - OAR - 2011 - 0354 - 0141 60 Timothy LeCoq T.L. Maintenance HVAC EPA - HQ - OAR - 2011 - 0354 - 0092 61 Erik R. Lieberman Food Marketing Institute (FMI) EPA - HQ - OAR - 2011 - 0354 - 0157 62 Michael Mulligan USA Refrigerants EPA - HQ - OAR - 2010 - 1040 - 0021 63 John M. Batt Airgas, Inc. EPA - HQ - OAR - 2010 - 1040 - 002 2 64 Richard Marcus RemTec International EPA - HQ - OAR - 2010 - 1040 - 00 24 65 Carl Grolle Golden Refrigerant EPA - HQ - OAR - 2010 - 1040 - 002 5 66 Stephen Mandracchia Hudson Technologies EPA - HQ - OAR - 2010 - 1040 - 002 7 67 William J. Hamel Arkema Inc. EPA - HQ - OAR - 2010 - 1040 - 002 8 68 Pete Williams Williams & Associates EPA - HQ - OAR - 2010 - 1040 - 00 32 69 Milton J. Cuevas II ICOR International EPA - HQ - OAR - 2010 - 1040 - 00 31Response to Comments on the 2012 - 2014 HCFC Allocation Rulemaking Page 57 Count Commenter Organization Document ID No 70 David Doniger Natural Resources Defense Council (NRDC) EPA - HQ - OAR - 2010 - 1040 - 0033 71 Dave Mann Houston Refrigerant Recovery, LLC EPA - HQ - OAR - 2010 - 1040 - 0060 72 Jim Gossett Carroll Area Development Corp. EPA - HQ - OAR - 2010 - 1040 - 0159 

## 5.1 **HCFC supply, price, and economic conditions** EPA received 4 0 comments regarding HCFC supply, price, and economic conditions. Many are concerned with the impacts of the oversupply and low price of HCFC - 22. In addition, five commenters have concerns regarding how the Proposed Rule relates to the current status of the U.S. economy.  NRDC , IGSD, and EIA are concerned about the following negative effects of the oversupply and low price of HCFC - 22 . First, the commenters note that oversupply and low price is hurting the development of industrial capacity to reclaim and reuse HCFCs . Second, the commenters state that the glut of HCFC - 22 is encouraging higher HCFC leakage by discouraging the adoption of leak prevention practices . NRDC, IGSD, and EIA believe that the situation is undermining compliance and enforcement of current anti - venting requirements to the detriment of the atmosphere and to the detriment of publi c health and the environment. According to the commenters, h igher HCFC - 22 prices will increase employment in the equipment service sector that will be paid for from revenue of recycle and recovery. Third, the oversupply and low price of HCFC - 22 is hurting the development and adoption of alternatives and substitutes to HC FCs. The commenters note that the phase out approach is undermined if the reduction in supply is so slow that prices do not rise, since this situation stymies the development and deployment of substitutes and alternatives. [0067 , 0033 ] EPA Response : EPA con siders market conditions along with estimated servicing need when it determines allocations for HCFCs, and HCFC - 22 in particular. Industry concern over low price and over - supply prompted the agency to conduct additional market analysis prior to issuing the proposed rule. As explained in the Adjustment Memo (included in the docket) and in sections IV.B.1 - 3. of the preamble to the final rule , market conditions are different now than they were during development of the 2009 Final Rule. EPA used its analysis to propose a reduction in HCFC - 22 consumption allocations for 2012 - 2014, relative to the allocations in the 2009 Final Rule. A reduced consumption allocation increase s the value of new and existing HCFC - 22 ; as the value of HCFC - 22 increases, so do the incent ives to recover and reclaim the gas, and also to replace equipment that has reached the end of its life. Since production and import of HCFC - 22 must cease by 2020, both of these actions must become more frequent between now and then to ensure a smooth tran sition out of HCFC - 22 with minimal market disruption. The final allocation for 2012 - 2014 balances the needs of consumers to service their air conditioning and refrigeration systems while also incentivizing greater recovery and recycling of HCFC - 22 and tran sition to non - ODS alternatives.  Ingersoll Rand comments that the economy has been and remains weak and sluggish. This has had a dampening effect on demand for HCFC - 22 and an expansion of the economy in the future will most certainly cause an increase in demand. An aggressive reduction in HCFC - 22 levels coincident with a market rebound could have devastati ng effects on consumers of the product. [0063] EPA Response : S ee previous response in this section to NRDC. One additional important point to note is tha t EPA has not decreased its estimate of HCFC - 22 servicing need. In fact, the estimate presented in the Adjustment Memo prepared for this rulemaking is higher than the estimated need presented in the Servicing Tail Report , which was developed for the rulema king resulting in the 2009 Final Rule .  Coolgas states that there has been and there currently is an oversupply of virgin HCFC - 22 in the market that has suppressed recovery and reclamation. [0088] EPA Response : See previous response in this section to NRDC and section IV.B.2. of the preamble .Response to Comments on the 2012 - 2014 HCFC Allocation Rulemaking Page 58  Mexichem Fluor states that the 2010 allocations and reduction schedule for consumption allowances through 2014 resulted in a notable increase in market price for HCFC - 22. [0066] EPA Response : See previous response in t his section to NRDC.  NRI comments that a reduction in the supply of HCFC - 22 production and import allocation will stimulate the recovery and reclamation of HCFC - 22 installed in equipment. NRI states that the proposed reduction in the supply of newly manufa ctured HCFC - 22 will provide reclaimers with the economic incentive necessary to make the collection and distillation of used refrigerant a viable business without adversely affecting t he phaseout. [0068] EPA Response : See previous response in this section to NRDC.  LA Refrigerant Recovery, Inc and AZ Refrigerant Abatement, Inc both were in support of EPA’s proposed rule to further limit the production and importation of virgin HCFC - 22 refrigerant . They state that if the supply does not decrease, the price wi ll continue to remain low. Their greatest concern is that the value of reclaimed refrigerant is high enough to encourage compliance by the industry, which will only occur when the overall supply of HCFC - 22 is significantly reduced. Both commenters note two factors that motivate customers to recover rather than vent HCFC - 22: • The first factor is that contractors do not believe that EPA will actually enforce the CAA Section 608 regulations. Contractors are ignoring the regulations because they believe EPA has no interest in compliance. • The second factor is that as long as it is less expensive to vent than to recover refrigerants, contractors have no financial incentive to recover. The contractors that are concerned about the negative environmental impacts of ve nting find themselves at a significant disadvantage in competitive bidding situations. [0051, 0053] EPA Response : See previous response in this section to NRDC. Enforcement - related responses are covered in section 5.6 of this document.  Certified Refrigerant Services, Inc. comments that the price of HCFC - 22 is currently very soft for the following reasons: • Excessive inventory, largely due to too much virgin product and too many import and production allocations. • There is less demand for HCFC - 22 due to the economic recession. • Contractors are not using alternative refrigerants and they will not until HCFC - 22 is either not available or too expensive. • Enforcement prohibiting venting is virtually nonexistent. [0057] EPA Response : See previous response in this section to NRDC. Enforcement - related responses are covered in section 5.6 of this document.  One commenter stated that the present price levels are too low for contractors to recover the costs involved in EPA compliant recovery. Refrigerants that coul d be recovered are not being recovered because of the additional costs involved. There is no price incentive to recover used gas at the current time. [0075] EPA Response : See previous response in this section to NRDC. Enforcement - related responses are cove red in section 5.6 of this document.  ACCA commented that the proposed rule has caused great uncertainty and prices to increase 200 - 300%. The price increase is paid by contractors who then pass costs along to consumers. ACCA also states that dry charged con densing units affect the demand for HCFC - 22. [0081] EPA Response : See previous response in this section to NRDC and responses to comments on dry - shipped condensing units in section 2.4 of this document . Additionally, any uncertainty caused by not having anResponse to Comments on the 2012 - 2014 HCFC Allocation Rulemaking Page 59 allocation at the beginning of 2012 is eliminated with publication of the final rule. The final rule also allows for an amount of consumption (i.e., production and import for U.S. use) that is above the minimum proposed allocation .  Hudson Technologies commented that reclamation is not viable with excess supplies of virgin refrigerants. The price to reclaim in 2011 was more than 20% higher than the suppressed price of virgin material. Reclaimers would need to reduce the b uyback price to be competitive and this would result in less refrigerant being recovered. Reducing virgin availability will promote reclamation and ensure an adequate aftermarket supply of HCFC - 22. They believe that recovery and reuse will not grow until t he contractor performing the recovery has an economic incentive to perform the work. Hudson state s that as long as there is ample supply of low - priced virgin refrigerants, the economics of vent and replace will prevail. Hudson encourage s EPA to assess the impact of the current economic and industry conditions and information on its past assumptions on the dynamics and size of the market in future rulemakings. [0071 , 0027 ] EPA Response : See previous response in this section to NRDC.  Solvay comments that the viability of the reclamation process is linked to higher prices for competing virgin material. Solvay comments that too much virgin HCFC - 22 on the market depresses demand for reclaimed or recycled HCFC - 22. Solvay believes EPA must significantly reduce all owances in order to raise prices to levels that make EPA's preferred mode of reclaiming used HCFC - 22 price competitive. The viability of the reclamation process is linked to higher prices for competing virgin material. By cutting allowances significantly, EPA can make the supply of product sourced from the reclaiming industry competitive with virgin production. [0064] EPA Response : See previous response in this section to NRDC.  A group of 20 EPA Certified ODS Reclaimers commented that the cost to reclaim re covered HCFC - 22 from the field exceeds the cost of newly manufactured material. Processing the refrigerant in order to return it to AR I 700 Standards is only a small part of the overall cost of recovery and reclaiming operations. In collecting the necessary amounts of R - 22, reclaimers incur tremendous recovery related expenses in raw material purchasing, tanks, transportation and significant program expenses to entice refrigerant to be returned, i.e. advertising, promotions, seminars, education, and focused sales efforts. Additionally, once the used refrigerant arrives at the reclaimer facility, it must be identified, segregated, documented, transferred and held for processing. From there the recovered refrigerant is reclaimed using a number of steps includin g: filtration, distillation, oil separation, moisture removal, final blending, packaging, and documentation. This process is costly compared to the newly manufactured or imported virgin product production costs. [0085] EPA Response : See previous response i n this section to NRDC.  A group of 20 EPA Certified ODS Reclaimers commented that in some cases, capacity was idle in 2010 and 2011 due to oversupply of HCFC virgin products available to the market. They noted that it makes no economic sense to reclaim any product that could not be sold at a profit. As long as virgin material is available in quantities greater than demand, recovery will not be worth the effort for many contractors. Significantly reducing HCFC allocations will rectify this situation and enco urage reclamation to levels that are needed to avoid future disruptions in the market place. [0085] EPA Response : See previous response in this section to NRDC.  Rocky Mountain Refrigerant Abatement, Greer Holdings, Bettcher Enterprises, Rhynard and White Enterprises, Southeast Refrigerant Recovery, and Bay Area Refrigerant Recovery comment that at the present price level it is nearly impossible for any reclaimer to offer a buyback price that will meet the cost of recovery on most projects, much less a profit for the contractor. If the availability of HCFC - 22 were to decrease, the value of reclaimed product would increase. The result would be more recoveries, more product for reclaimers, and far less refrigerant vented into the atmosphere. [0052, 0051, 0056, 0058, 0059, 0060, 0074, 0075, 0080]Response to Comments on the 2012 - 2014 HCFC Allocation Rulemaking Page 60 EPA Response : See previous response in this section to NRDC.  One company states that in a recent week, their company had to more than double the price they charge customers for HCFC - 22. Their cost went from $ 145/cylinder to $399/cylinder. The company believes this is a direct result of the government phase out. The company urges EPA to consider the economic impact to US citizens from the phase out. [0112] EPA Response : See previous response s in this section to N RDC and ACCA .  Honeywell agrees with EPA that an over - supply of HCFC - 22 exists and that the estimates of market demand upon which the 2009 Final Rule were based are out - dated. Honeywell believes the factors that have influenced these market dynamics include lower pricing of HCFC - 22, built - up channel inventory, and increased installation of dry - ship condensing units, among other things. Honeywell agree s with EPA that the price of HCFC - 22 must rise to a point to make recovery and reclamation economically attractive, and that limitations on supply will accomplish this goal. [0082] EPA Response : See previous response in this section to NRDC.  Bay Area Refrig erant Recovery comments that if the amount of HCFC - 22 were to decrease, the value of the reclaimed product would almost certainly increase (as Bay Area Refrigerant Recovery has already observed in Northern California), reclaimers would be able to increase the buyback price paid to contractors, and contractors would find profit in selling their otherwise worthless, dirty refrigerants. [0080] EPA Response : See previous response in this section to NRDC.  Goodman notes that this year, as a result of EPA’s action s, refrigerant manufacturers have more than doubled the price of HCFC - 22 for sale, and prices are likely to go even higher. [0084] EPA Response : See previous response s in this section to NRDC and ACCA .  One commenter notes that in the days following the ann ouncement that HCFC - 22 supplies may be reduced sooner than later, the price of HCFC - 22 increased threefold, based simply on the speculation. [0127] EPA Response : See previous response s in this section to NRDC and ACCA .  Rapid Recovery Franchise Partners com ment that at the present price levels, it is not economically feasible for a contractor to invest in the resources involved in recovery. It is far more profitable to simply vent refrigerants. Though the industry recognizes that such practices are illegal, the risk of prosecution is less than the perceived costs involved. While it is impossible to accurately measure the amount of refrigerant that is vented, the commenters’ many years of experience across the nation have convinced them that far more refrigera nt is vented or lost through improper recoveries than is actually recovered for recycling or reclamation. [0086] EPA Response : See previous response in this section to NRDC. Enforcement - related responses are covered in section 5.6 of this document.  Consoli dated comments that at the present price point for R - 22, there is little or no financial incentive for refrigerant contractors to expend the time, energy, or equipment necessary to recover used product. As long as venting is the most cost effective way to deal with R - 22, many contractors will refuse to recover . This will ultimately result in a dwindling supply of product available to reclaimers for processing. Consolidated believes the proposed decrease in allocations of production and importation of virgin R - 22 should significantly address this situation. As the rule change suggests, decreasing the quantity of virgin R - 22 will create an increase in the value of reclaimed R - 22. This will in turn increase the value of the used gas that is the feedstock for the reclaim industry. Consolidated notes that as the value of recovered R - 22 climbs, contractors and their technicians will be more likely to recover and sell these refrigerants. In this process, the industry will need to find ways to assure that contracto rs actually receive fair compensation for the refrigerants they recover. Consolidated believes the incentives will only work if everyone – contractors,Response to Comments on the 2012 - 2014 HCFC Allocation Rulemaking Page 61 wholesale houses, recovery companies, and reclaimers all share in the increase in value created by the r eduction of available virgin R - 22. Consolidated estimates that 80% of R - 22 available for recovery and reclaim is found in AC systems containing less than 10 pounds of refrigerant. They believe it is unlikely that recovering R - 22 will ever be cost - effectiv e in small residential AC units, of which there are 115 million in the U.S. Consolidated notes that this subset represents approximately 600 million pounds of R - 22 that has yet to be recovered. Consolidated comments that while there are significant quantit ies of R - 22 for reclaim, those who handle such appliances will need to be motivated with more than higher prices for recovered refrigerant . [0083] EPA Response : See previous response in this section to NRDC. Enforcement - related comments are included in sec tion 5.6 of this document.  Perfect Score Technologies, LLC comments that the recent recession in combination with low cost HCFC - 22 being imported decreased reclaim demand and profitability. However, with the recent increase in virgin HCFC - 22 prices this mo nth, profitability and stability have returned. With these fluctuations, they are concerned with maintaining a stable and growing demand for small reclaim businesses. According to the commenter, the percentage of mixed HCFC - 22 will increase this year compa red to prior years which will drive customers to alternative systems. This will complicate repairs for AC contractors. Therefore, having virgin HCFC - 22 for blending will simplify the processing while lowering the cost of handling mixed refrigerant. [0150] EPA Response : See previous response in this section to NRDC.  The National Multi Housing Council (NMHC) and the National Apartment Association (NAA) are primarily concerned with the price and availability of HCFC - 22 , stating that several of their members ha ve said that long - standing service contracts have been voided due to the a gency’s action. They note that the price of the refrigerant has more than doubled and will likely increase until EPA establishes a final allocation figure. These prices have large im pacts on affordable housing providers. Property owners cannot access the capital to replace existing equipment in the near term without having planned in advance and neither can they pass the burden to their residents. Therefore, they call upon EPA to prom ulgate the final rule within 60 days to ease supply disruptions and facilitate routine maintenance on equipment before the nationwide peak demand for air conditioning. Further, they urge EPA to consider the impacts that the interim allocation final rule ha d on the economy at large, the housing sector, property owners, and residents. They state that establishing an allocation figure that provides for a steady supply of HCFC - 22 to meet the servicing needs of existing equipment at an affordable price should be the a gency’s goal. [0156] NMHC further comments that the apartment industry is aware that R - 22 refrigerant is being phased out and that after 2020, only recycled product will be available to service existing equipment. They are extremely concerned about the market distortions which are fueled by manufacturers who are concerned about the market price of R - 22. NMHC comments that many apartment owners and managers are transitioning to higher performing equipment with alternative refrigerants, but that their industry’s experience with products offered as alternatives to R - 22 has been mixed. Many owners have reported less than satisfactory results having made the costly switch to alternatives such as 410A. [0156] EPA Response : See previous response s in this sec tion to NRDC and ACCA . EPA also would be interested to learn more about the “less than satisfactory results” apartment owners have had with HFC - 410A.  Golden Refrigerants asks that EPA reviews the current state of the HCFC market before issuing allocations for 2012 and beyond. The amount of HCFC’s available in the marketplace is in excess of what is required for servicing existing units. The oversupply is causing the price of HCFC - 22 to fall and leading to a lack of concern for recovery and reclamation. D ue to the costs associated with changing refrigerant types, Golden Refrigerant is skeptical that a large percentage of HCFC - 22 units would be replaced under natural attrition in the first 5 to 10 years of the phase out. The commenter asks that EPA looks at th e faulty change - outResponse to Comments on the 2012 - 2014 HCFC Allocation Rulemaking Page 62 projections made for the CFC units and verify that any needed corrections were made to the HCFC projections. They suggest that EPA issue 2012 allowances as quickly as possible and review the market conditions, setting the allowances for the following years by September of the previous year. They are concerned that if the phase out is ill - structured, it will have a negative effect on the industry and will bring a lot of criticism from outside parties. They state that the first shot at the allowances were off the mark and want to be certain that EPA has the numbers right this time. [0054] EPA Response : See previous response in this section to NRDC.  Houston Refrigerant Recovery comments that those contractors who are concerned about the envir onment find themselves at a significant disadvantage in competitive bidding situations, since it is more expensive to recover refrigerant than to vent it. The commenter notes that customers are very willing to recover when the value of the recovered refrig erant at least equals the cost of recovery. [0060] EPA Response : See previous response in this section to NRDC.  Bay Area Refrigerant Recovery comments that competition for refrigerant jobs is greater than at any time in recent history, and competitive advantage is everything today. [0080] EPA Response : See previous response in this section to NRDC.  One commenter notes that some people will profit from even a rumor of an unscheduled reduction in production. The commenter notes that the industry is shaky enough right now, without surprises. They believe that the reduction EPA is proposing will cause great financial turmoil. The commenter states that HCFC - 22 prices have already jumped by 30%. [0115] EPA Response : See previous response s in this section to NR DC and ACCA .  The Food Marketing Institute ( FMI ) believes that the proposed rule will impose substantial burdens on food retailers and wholesalers. They state that because refrigeration equipment is among the most expensive in the store, increased costs for refrigeration operations can have a very significant impact on the bottom line. FMI comments that the publication of the proposed rule has resulted in an enormous spike in the cost of HCFC - 22 refrigerant. They believe that the price of HCFC - 22 has increas ed by 200 - 300 percent since January and it is become difficult to find any R - 22. FMI comments that if the proposed rule is not significantly changed, many retailers and wholesalers will face hundreds or thousands or millions of dollars of new costs. Accord ing to FMI, one of the smaller retailers in the commercial refrigeration sector, has notified FMI that the uncertainty in production quotas for 2012 as a consequence of the proposed rule will likely increase operating costs by more than $500,000. FMI comm ents that potential 2012 HCFC shortages will likely result in large sales disruptions caused by extended system downtimes or higher refrigerant prices due to unavailable HCFC refrigerants. They state that shortages could even result in higher leak rates du e to emergency or expedited retrofits under non ideal conditions. Further, FMI believes that emergency retrofits will require additional capital thus negatively impacting available capital for retro - commissioning and planned system maintenance, resulting i n higher energy usage and higher long - term operational costs. FMI further comments that the proposed rule could require retailers to retrofit many of their systems, which often costs $50,000 per system. They believe that these costs could easily range from $5

- 10 millions dollars depending on the size of the retailer. Further, they believe that expedited retrofits may be funded at the expense of other maintenance leak reduction initiatives and energy improvement projects. [0157] EPA Response : See previou s response in this section to NRDC and ACCA . In regards to potential shortages in 2012, EPA has heard from numerous stakeholders , including a later comment from FMI, that there is an ample supply of HCFC - 22 to meet servicing need .  USA Refrigerants comments that the necessity for reclamation of R - 22 is non - existent from a supply perspective. They believe it is far less expensive to purchase newly manufactured, packaged virgin materialResponse to Comments on the 2012 - 2014 HCFC Allocation Rulemaking Page 63 within the U.S. than it is to recover, consolidate, transport, reclaim, re package, inventory, and redistribute R 22. They state that currently there are no incentives to reclaim. Further, USA Refrigerants states that R - 22 replacements will not sell until their price point is lower than R - 22. [0021] EPA Response : See previous res ponse in this section to NRDC.  Airgas comments that the demand for HCFC - 22 has changed from the estimate EPA used in 2008/9 and has continued to drop each year. Airgas believes that since the supply continued to exceed demand, pricing has continued to drop . They are concerned that the low pricing has kept some applications from switching to alternative refrigerants. Airgas further comments that individuals, contractors, and equipment manufacturers all believe that there will not be any supply shortage of HC FC - 22 in the foreseeable future. Airgas believes that EPA’s allowance allocations made in the 2009 Final Rule have unexpectedly resulted in an ample supply of virgin HCFC - 22 in the market. They state that EPA needs to make more aggressive reductions in supply of virgin material to spur a switch to alternative refrigerants and increased reclamation. [0022] EPA Response : See previous response in this section to NRDC.  RemTec International is c oncerned that there is too much R - 22 being manufactured and sold on the market, which deflates the price of R - 22 to levels that make it impossible for reclaimed R - 22 to compete with newly manufactured material. They would like to see an incentive based sys tem for end - users to reclaim. RemTec International believes that there is no need to amend the HCFC P re - charged Appliance R ule unless the supply of R - 22 is substantially reduced. [0024] EPA Response : See previous response in this section to NRDC.  Williams & Associates comments that no reclaim facility can process recovered product anywhere near the cost of virgin product. The commenter states that all indicators suggest that there is too much HCFC - 22 available in the U.S. market. They commend EPA’s aggressi ve approach to phase - down HCFCS. They believe that EPA must consider and adjust for the effects that over supply of HCFC - 22 is having throughout the industry. [0032] EPA Response : See previous response in this section to NRDC. 

## 5.2 **P roviding allowances to**  **reclaimers** EPA received eight comments related to providing allowances to reclaimers, four in support and four in opposition . Four commenter s believe that EPA should issue allowances to reclaimers:  Golden Refrigerant believes that significant allowances should be provided to reclaimers. The com menter sugge sts that allowances could be distribute d to reclaimers based on an average of their past three years reported HCFC - 22 reclamation totals or some ot her mechanism that directs the allowances in proportion to the actual amount of reclamation being provided by the entity to directly reward reclamation actions. To help prevent “gaming” the numbers, reclaimers could be required by EPA to submit (confidenti ally) both a transactional list of received HCFC - 22 and production tracking documents showing yields and losses. In order to promote good practices, reclaimers that are not able to provide such data should not qualify for allowances. Golden Refrigerant su ggests a pound of consumption allowance for each pound of average reclamation yield for HCFC - 22, which is approximately 10% to 15% of the total allowances for 2012, and the percentage would increase as the phase out progresses. The reclaimers would buy the material from the manufacturers and importers, which will provide a strong incentive for the manufacturers and other allowance holders to work cooperatively with the reclamation industry. As HCFC - 22 becomes scarce, the commenter believes that reclaimers wi ll likely distribute their product back first to the wholesalers andResponse to Comments on the 2012 - 2014 HCFC Allocation Rulemaking Page 64 contractors that provide the reclaimer with the recovered and used refrigerant. According to Golden Refrigerant, this will provide a strong incentive to the wholesalers and contractors to participate in good recovery practices since it will allow them greater access to supplies of HCFC - 22 moving forward. Therefore, by providing allowances to reclaimers, all parties will have their best interests aligned with EPA in addition to strengthenin g the reclamation industry, fostering a competitive environment for reclamation, and leading to a smoother transition from HCFCs. [0054] Golden Refrigerant notes that a large majority of the current reclaimers do not have access to any of the allocations a nd that most allowances are given to a few manufacturers, putting the reclamation industry in a weak position. The commenter provides a few examples of how manufacturers provide a difficult working environment for reclaimers: • The manufacturers exert press ure on wholesalers and contractors not to return their used refrigerants to a reclaimer, using their supply of virgin refrigerants as leverage. • The manufacturers seldom work cooperatively with reclaimers and often expect reclamation work to be done for a l ow number (50 cents/lb) that would not allow the reinvesting of any profits into new technology. • The manufacturers have threatened legal action against reclaimers attempting to work on newer patented blends. • The manufacturers have refused to sell component s or allow reclaimers a method to work with them to restore fractionated blends back to specification. • The manufacturers have asked cylinder manufacturers not to sell pre - labeled DOT 39 cylinders for their blends to reclaimers. • The manufacturers will offer cash bounties to wholesalers collecting their used refrigerant but will not offer any incentive to reclaimers to do the same. • The manufacturers or their agents will buy an account back by offering cash for the used refrigerants higher than justified. • The desire of manufacturers to promote their own best self - interest results in a difficult environment for a refrigerant reclaimer to prosper. For these reasons, Golden Refrigerant believes that EPA should assign a portion of total pool of allowances to the re claimers to build a strong reclamation industry that is profitable enough to make investments in the technology to fully reclaim HCFC refrigerants as well as other refrigerants. According to the commenter, EPA is only providing the main instrument of finan cial benefit to a portion of the needed participants. Further, the commenter believes it would be appropriate to subtract any stockpiles from the allowances of any of the allowance holders in their next years’ allowances. Allowance holders could choose wh ether allowances or stockpiles serve their best interests. This would result in a more predictable supply of material into the marketplace, which would also allow EPA to better understand the market to adjust allocations moving forward. Golden Refrigerant comments that they are also concerned about the demand for the reclaimed product. They state that the problem occurs when there is an oversupply in the market. Because reclaimers work on a fairly low margin, it is critical to sell quickly to recover expenses and fund the next round of purchases and production. When demand is low, reclaimers are forced to lower prices, which strain the business. Therefore, the commenter suggests that EPA cuts the allocations at least to the level that the allocations p lus the available amount of material coming from reclamation is less than the demand amount for 2011. [0054 , 0025 ]Response to Comments on the 2012 - 2014 HCFC Allocation Rulemaking Page 65 EPA Response : See section IV.B.4. of the preamble to the final rule and section 4.1 of this document for a full response to comments on this issue.  USA Refrigerants asks that EPA gives reclaimers an opportunity and level the playing field. They comment that the acquisition price, whether imported or produced domestically, of R - 22 for allocation holders has remained virtually unchanged, despite the years of touting price increases, increased manufacturing costs, shortages, etc. [0021] EPA Response : See section IV.B.4. of the preamble to the final rule for a full response to comments on this issue.  ICOR International believes that EPA’s refusal t o establish reclamation credit allocation was bad policy. They state that EPA should provide each EPA certified reclaimer, currently not holding HCFC - 22 allocation, HCFC 22 consumption allocation equal to two times their previous year’s HCFC - 22 recovery ac tivity. They believe this process should begin in 2012, using 2011 reclamation data and continue until 2014. [0031] EPA Response : See section IV.B.4. of the preamble to the final rule for a full response to comments on this issue. EPA received four commen ts in opposition of issuing allowances to reclaimers:  NRI does not believe that EPA should issue allowances to reclaimers. There is no precedent for EPA to do so. The commenter states that advocating the blending of newly manufactured refrigerant with used refrigerant is irresponsible and will adversely affect the reputation of reclaimed refrigerant. Further, they state that it does not make economic sense to dilut e the supply of newly manufactured refrigerant. NRI disagrees with EPA’s assertion that “reclaiming without significant blending further increases the costs of reclamation.” The commenter believes that if a reclaimer cannot properly remove impurities in us ed refrigerant, it should be sent to a reclaimer to destroy it. [0068] EPA Response : See section IV.B.4. of the preamble to the final rule for a full response to comments on this issue.  Honeywell does not support the allocation of allowances to reclaimers. According to the commenter, t o provide allowances to reclaimers would give them the ability to contaminate virgin product with recovered (but not reclaimed) material and then sell this blend for use. The commenter believes that EPA should not encourage su ch actions , and that r eclaimers need to upgrade recovered material to specification by reclamation, not by blending contaminants to a lower concentration through the use of virgin - 22. Moreover, f or several reasons, Honeywell does not believe that allocati ons of consumption allowances to reclaimers will have the effect of encouraging greater recycling and reclamation in the marketplace. First, Honeywell believes that sufficient reclamation capacity to meet greater future demand already exists today , and is aware of several reclaimers, including Honeywell, with capacity to accept large additional future volumes of reclamation material. Second, Honeywell notes that additional consumption allowances are not needed by reclaimers, because virgin HCFC - 22 is not re quired to reclaim product. Reclamation of product can easily be accomplished by distillation processes that do not require the use of virgin HCFC - 22. Finally, Honeywell states that 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 the virgin HCFC - 22 produced or imported with “Reclamation” allocation from simply being sold in the marketplace. Honeywell expresses concern that d eveloping, vetting, and implementing these new procedures would only further delay the Final Rule. Honeywell believes the continued success of efforts to encourage more recycling and reclamation does not depend upon the capacity of the reclamation industry (of which there already is plenty), but instead depends upon incentives for users to recycle and send more product for reclamation. This has been accomplished by limiting the proposed number of HCFC - 22 allowances to a volume that is well short of EPA demand estimates. Honeywell believes the EPA’s current proposal fully encourages recycling and reclamation and there is no need to allocate allowances to reclaimers. [0082]Response to Comments on the 2012 - 2014 HCFC Allocation Rulemaking Page 66 EPA Response : See section IV.B.4. of the preamble to the final rule for a full response to comments on this issue.  DuPont does not support providing allowances to reclaimers. DuPont comments that it is clear from the definition of "refrigerant reclamation" contained in a report ref erenced in the Proposed Rule that blending used HCFC - 22 with new HCFC - 22 is not reclamation. DuPont comments that it is critical that the reclamation industry be ready for the 2020 elimination of HCFC - 22 consumption by developing the infrastructure to recl aim HCFCs. DuPont believes that providing allowances to reclaimers would be counterproductive in achieving this objective. [0070] EPA Response: See section IV.B.4. of the preamble to the final rule for a full response to comments on this issue.  HARDI believes that refrigerant reclaimers should not be provided allowances. HARDI states it is supportive of refrigerant reclamation and maintain s that the EPA should continue to support reclamation through distillation , which is a much more viable option in t he long run and does not require allocation rights for refrigerant reclaimers. [0069] EPA Response: See section IV.B.4. of the preamble to the final rule for a full response to comments on this issue.  Arkema comments that new entrants to the HCFC market should not receive HCFC allowances. Arkema is not aware of any reason to believe that the market has prevented any party, including especially blenders, from acquiring unused allowances at a fair price. Given the assumption that the market is saturated with HCFC - 22, there is no reason to suspect that allowance holders would rather keep and allow allowances to expire than to sell them. Arkema notes that it has not been in a position to sell allowances in 2010 an d 2011. [0073] EPA response : See section IV.B.4. of the preamble to the final rule for a full response to comments on this issue. 

## 5.3 **Providing allowances to manufacturers of HCFC blends** EPA received five comments on the provision of allowances to manufac turers of HCFC blends . Four commenters are opposed while one commenter , on the Interim Final Rule, would like EPA to consider redistribution of allowances to assist small HCFC blenders.  NRI does not believe that EPA should issue allowances to manufacturers of HCFC blends. The commenter notes EPA’s provision for new entrants when establishing the HCFC allocation system in 2003 , and states that this provision plus EPA’s intent to accelerate the phaseout of HCFC - 22 does not support a request to in crease the overall allocation. [0068] EPA Response : See section IV.B.4. of the preamble to the final rule for a full response to comments on this issue.  Honeywell does not support providing allowances to manufacturers of HCFC blends. Blend preparers are no t manufacturers and have no history of production or consumption. In Honeywell’s experience, these entities have been able to obtain HCFCs – in fact; Honeywell has been a supplier to parties involved in such blending operations. Honeywell believes blend pr eparers should experience the same market dynamics as the rest of the user community. [0082] EPA Response : See section IV.B.4. of the preamble to the final rule for a full response to comments on this issue.  DuPont does not support providing additional all owances to manufacturers of HCFC blends. DuPont notes that some manufacturers of HCFC blends have baseline allowances and would have HCFC allowances under any of the options in the Proposed Rule. For any other company, DuPont supports the a gency's conclusi on that "[c]ompanies can transfer allowances between companies and, on a temporary basis, between chemicals ... [and] can also purchase HCFCs at the wholesale price. ” DuPont notes that others are not prevented from entering the market but can purchase HCFC baseline allowances in accordance with the established practices. [0070] EPA Response : See section IV.B.4. of the preamble to the final rule for a full response to comments on this issue.Response to Comments on the 2012 - 2014 HCFC Allocation Rulemaking Page 67  Arkema comments that new entrants to the HCFC market should not rec eive HCFC allowances. Arkema is not aware of any reason to believe that the market has prevented any party, including especially blenders, from acquiring unused allowances at a fair price. Given the assumption that the market is saturated with HCFC - 22, the re is no reason to suspect that allowance holders would rather keep and allow allowances to expire than to sell them. Arkema notes that it has not been in a position to sell allowances in 2010 and 2011. [0073] EPA response : See section IV.B.4. of the preamble to the final rule for a full response to comments on this issue.  ICOR International requests an updated recalibration of allowances, recognizing that millions of pounds of U.S. HCFC allowances are left unused every year. They believe that EPA ’s current allocation system puts small firms that are producing HCFC refrigerant blends out of business. [0031] EPA Response : See section IV.B.4. of the preamble to the final rule for a full response to comments on this issue. 

## 5.4 **Potential impacts of the proposed rule on small entities and consumers**  EPA received 33 comments expressing concern about the impact of the proposed rule on small entities and consumers.  Goodman comments that if the proposed rule is made final, American consumers would find it increasingly difficult and more expensive to service their existing HCFC - 22 systems, and in many instances would be forced to purchase new, more expensive systems that use a different refrigerant. Goodman does not believe that EPA should promulgate a Final Rule on allowances that penalizes consumers who want to service existing equipment. Goodman comments that EPA’s proposed rule is creating uncertainty and chaos within the industry, and increasing costs to American consumers. Goodman notes that the first f ew months of every year is the period during which air conditioning manufacturers ramp up production for the coming cooling season. The increased uncertainty as to the availability of HCFC - 22 is making the manufacturing process much more difficult to manag e and speculative, which Goodman believes is inconsistent with EPA’s desire for a “smooth transition” away from HCFC - 22. Goodman comments that American businesses that utilize HCFC - 22 equipment, as well as consumers who need to service their existing HCFC - 22 systems, will bear the brunt of these higher prices. Goodman notes that if industry stakeholders do not have adequate assurances regarding the availability of HCFC 22 in 2012 and beyond, distributors and installers will increasingly recommend the insta llation of more costly air conditioning systems that utilize other refrigerants. Goodman believes that by accelerating the phase - down of HCFC - 22 allowances, EPA’s proposed rule would make the repair and servicing of existing HCFC - 22 systems much more expen sive and difficult, which is at cross purposes with the interests of American consumers. [0084] EPA Respons e : While EPA does not set the price, the agency is aware that the price of HCFC - 22 has risen. As explained in the preambles to the proposed rule and the final rule, EPA proposed adjustments in the HCFC - 22 consumption allocation because of industry feedback and data. Ample existing supply and low price were not encouraging transition to alternatives or recovery and recycling of existin g refrigerant. EPA notes that the phaseo ut schedule is already in place and that the agency is not altering it. T his final rule simply prepares industry and consumers for the 2015 stepdown, and the complete HCFC - 22 phaseout in 2020 . EPA is striving to enco urage a smooth transition out of HCFC - 22 over time and believes that a smooth transition is supported by strong incentives to properly manage and recover refrigerant, which is less likely to happen when the value of the refrigerant is low. The allocation i n the final rule balances the needs of consumers to service their air conditioning and refrigeration systems while also incentivizing greater recovery and recycling of HCFC - 22 and transition to non - ODS alternatives. The continued allocation of allowances f or production and import forResponse to Comments on the 2012 - 2014 HCFC Allocation Rulemaking Page 68 servicing existing equipment helps consumers and small businesses who cannot currently afford to buy new equipment . Additionally, the final rule relieves the regulatory uncertainty that some commenters feel was linked to price fluctuations, and t he final rule also allows for an amount of consumption (i.e., production and import for U.S. use) that is above the minimum proposed alloca tion .  Mayeaux’s A/C & H eating , Inc. commented that small businesses as well as end - users would be hurt by decreasing current production allowances. The commenter further states that decreasing current production allowances will result in an aggressive push of the market for R - 410A. [0093] EPA Response: See previous response in this section to Goodman.  One commenter is concerned about the cost increases associated with further production restrictions. They state restrictions will cause hardships to low and middle class citizens and state “the small people need a break.” [0128] EPA Response: See previous response in this section to Goodman.  One commenter noted that further restrictions on HCFC - 22 production will cause unnecessary hardships to citizen, as they pay inflated costs for R - 22 repair. [0130] EPA Response: See previous response in this section to Goodman.  One commenter is concerned about the economic burden on landlords and tenants that may result from a decrease in current production allowances. Th e commenter asks that EPA considers how this action could increase the cost of housing. [0 105] EPA Response: See previous response in this section to Goodman.  One commenter is concerned the price escalation [of HCFC - 22] will eventually find its way to the end consumer, many who are elderly and on fixed incomes and can least afford to do without air conditioning or who can absorb unnecessary price escalations. [0159] EPA Response: See previous response in this section to Goodman.  Mondy Global Inc. states that reducing consumption allowances would threaten small businesses like them and is not warranted by the current market situation. [0055] EPA Response: See previous response in this section to Goodman.  One commenter stated that the ec onomic realities of the past few years has been difficult for small businesses and that contractors who want to follow the law find themselves at a disadvantage by those who vent. Reducing R - 22 availability would increase the value of reclaimed product, th us incentivizing recovery. [0075] EPA Response: See previous response in this section to Goodman.  HARDI states its belief that EPA erred in limiting the production and importation on the basis of a proposed rule and this could have a negative impact on small businesses. According to the commenter, t here could be financial harm and devaluation of invent ory for distributors who purchased HCFC - 22 during the interim period if the allocation is highe r than at the level prescribed in the non - enforcement letter. [0069] EPA Response: See previous response in this section to Goodman. EPA notes that without the N o Action Assurance (which allowed limited production and import based on the minimum amounts proposed), no import or production could have occurred. Without prejudging the outcome of the final rule, EPA’s No Action Assurance limited the extent of market di sruption that could have otherwise occurred under a complete regulatory ban on production and import.  One commenter stated that a reduction in production levels will impose an undue burden on many working Americans who would have to go without AC. The com menter suggested a phaseout during better economic conditions. [0141]Response to Comments on the 2012 - 2014 HCFC Allocation Rulemaking Page 69 EPA Response: See previous response in this section to Goodman. Additionally, the rationale for the rule, as well as the requirements under the Montreal Protocol and Clean Air Act are di scussed in sections III.A. and III.B. of the preamble to the final rule.  Rocky Mountain Refrigerant Abatement, Greer Holdings, Rhynard and White Enterprises, Bettcher Enterprises, Southeast Refrigerant Recovery, and Bay Area Refrigerant Recovery comment th at the economic realities of the past few years have been difficult for small businesses. Most commenters state that contractors who follow the law and recover HCFC - 22 find themselves disadvantaged because venting refrigerant is easier and more profitable. The commenters encourage EPA to reduce consumption allowances to the fullest extent, to decrease the availability of HCFC - 22 and increase the buyback price paid to contractors. [0052, 0056, 0058, 0059, 0074, 0075, 0080] EPA Response: See previous response in this section to Goodman.  One commenter urges EPA to consider the small businesses and consumers that will suffer with a large price increase on HCFC - 22. [0102] EPA Response: See previous response in this section to Goodman.  One air conditioning contrac tor comment s that an increased phase out will create extreme hardship on all those with HCFC - 22 systems since it is costly to change to a R - 410a system due to the type of line sets, oil, etc. that must be changed when conversion to R - 410a systems are installed. The contractor urges EPA to remember that R - 410a components and HCFC - 22 components are not interchangeable, and complete systems must be installed with new copper line sets as needed. The commenter notes that most people cannot pay for a simple HCFC - 22 condenser change out, which costs significantly less than a complete system change - out conversion to R - 410a. [0092] EPA Response: See previous response in this section to Goodman.  One commenter states that a reduction of the magnitude EPA is consi dering will cause great financial turmoil. Consumers have planned their change - over with the phase out schedule as their guide. Some businesses have spent large sums of money on repairs of their HCFC - 22 equipment with the phase out schedule in mind, to get t he most from their existing equipment. [0115] EPA Response: See previous response in this section to Goodman.  One contractor noted that economic burdens are being placed on American households at rates never seen before, and any acceleration of the impend ing phase out of HCFC - 22 would be disastrous to the critically fragile American economy because it would cause an unnatural and unplanned shift in the market. The commenter believes the cost will ultimately be borne by the citizens as they will pay inflate d cost for HCFC 22 repair. [0113] EPA Response: See previous response in this section to Goodman.  Three commenters state that further restrictions on HCFC - 22 will cause an unnatural and unplanned shift in the market. The commenter believes the cost will ultimately be borne by citizens as they will pay inflated cost for HCFC - 22 repair. [0135, 0094, 0097] EPA Response: See previous response in this section to Goodman.  One commenter states that running a small business is hard enough without increasing prices of consumable goods. [0094] EPA Response: See previous response in this section to Goodman.  Commenters from Johnstone Supply note that EPA’s proposed ruling to reduce the quantity of HCFC - 22 for production and import in 2012 will only hurt small bus inesses and consumers. The commenters urge EPA to consider that if the total amount of HCFC - 22 is not produced as planned, HVAC businesses and their customers will suffer due to a large price increase on HCFC - 22. [0124, 0132, 0098]Response to Comments on the 2012 - 2014 HCFC Allocation Rulemaking Page 70 EPA Response: See previo us response in this section to Goodman.  One commenter from Johnstone Supply notes that this proposed rule not only affects distributors that have produced equipment, wholesalers inventorying stagnate product, customers buying power to allow a product at a lower cost, and the consumer having to absorb a high price in an economy that is steadily sinking. The commenter states that the whole U.S. is affected by this move. [0133] EPA Response: See previous response in this section to Goodman.  One commenter notes that HVAC is one of the greatest expenses a property owner has. The commenter stat e s that raising the cost of maintenance will cause property expenses to increase, raising rents and further creating economic hardship on the ultimate consumer. [0155] EPA Response: See previous response in this section to Goodman.  One company comments that the cost of the phase out presents an additional hardship to people already struggling in the current economy. [0112] EPA Response: See previous response in this section t o Goodman.  One commenter notes that the increase in price is being paid by the consumer, which seems unfair in today’s economy. The commenter believes homeowners will not be able to pay their air conditioning service bills because the fear of higher prices has driven the cost of HCFC - 22 beyond reason. In the commercial market, decisions were made to retrofit or not based on the government’s published plans, and changing the plans overnight after years of notification of a set schedule unduly affects all bus iness plans. The commenter believes further production restrictions will result in unnecessary hardships to citizens. [0127] EPA Response: See previous response in this section to Goodman.  Two commenters note that with the difficult economic times, many co nsumers are opting to repair and not replace their systems. The commenter states that many of the systems in use are under warranty, so the HCFC - 22 will have to be replaced, and with the current shortage and the concurrent rise in price, the cost to a cons umer has now doubled to repair a unit. The commenters do not want to raise prices in these economic times [0095, 0136] EPA Response: See previous response in this section to Goodman.  One commenter notes that reducing production of HCFC - 22 will place an und ue and perhaps unmeant burden on the consumer. The commenter notes that this will be an especially hard burden on lower income individuals who cannot afford to switch over to another refrigerant and should not have to if their unit is still under warranty [0095]. EPA Response: See previous response in this section to Goodman.  One commenter is concerned with how the rulemaking will affect the lower and middle class U.S. citizens. They state that after the ruling was made, the price of HCFC - 22 greatly increased in just one day primarily affecting those who cannot afford to switch systems. They believe that EPA is disconnected with these citizens. [0143] EPA Response: See previous response in this section to Goodman.  One commenter suggested that Nu - 22B b e used to avoid an expensive change in systems for the consumer. In the commenter’s experience, the transition from HCFC - 22 to R - 410a has been very challenging in the field since a lot of citizens are not aware of the phaseout and therefore don’t understan d why those in the HVAC industry have no choice to change refrigerants. Further, the commenter has concerns about the safety of R 410a and the time it takes to service. The commenter also expresses concern about the welfare of citizens in warm climates and what would happen to them without AC, and suggests that environmental damage from refrigerants should not be the biggest of concerns. The commenter states that either more R - 22 should be sold, or Nu - 22B should be pushed as a replacement. [0104]Response to Comments on the 2012 - 2014 HCFC Allocation Rulemaking Page 71 EPA Respon se: See previous response in this section to Goodman. EPA’s SNAP program has approved numerous alternatives to HCFC - 22 for this end use . A full list of approved alternatives is available at http://www.epa.gov/ozone/snap/refrigerants/index.html .  ICOR International believes that the phase down total U.S. baseline HCFC production and consumption most benefited the legacy chemical producers. They state that the three companies that received approximately 90% of the total HCFC allocation would use the extraordinary competitive advantage that the HCFC allocation rule gave them to put small businesses like ICOR out of business by denying them the components to make products, or effectively recla im HCFC refrigerants. They point out that the three producers with the majority of allocation are not using all their allocation, but now refuse to trade. ICOR International is concerned that EPA did not allow flexibility to empower small refrigerant manuf acturers. [0031] EPA Response: See section IV.B.4. of the preamble to the final rule for the full response. 

## 5.5 **Timely completion of the rule** EPA received 1 8 comments related to timely completion of the rule.  NRI comments that EPA’s timing for releasing the proposed rule was a disservice to the industry that has worked tirelessly over the years with EPA to accomplish the mutually beneficial goal of protecting the ozone layer. [0068] EPA Response : The agency recognizes the importance of regulatory certaint y in order for companies to plan and be prepared for the eventual phaseout of HCFCs. The 2009 Final Rule covered HCFC allocations for 2010 - 2014, but was partially vac a ted by the D.C. Court of Appeals for the District of Columbia Circuit . In response to tha t partial vacatur, EPA worked as quickly as possible to issue the 2011 Interim Final Rule and the 2012 - 2014 Final Rule, and hopes to establish allowances for 2015 - 2019 well before that regulatory period be g ins.  Arkema comments that EPA has created market disruptions by changing the rules mid - stream, starting with the 2009 Final Rule. The IFR set all owance levels for 2011 that did not take effect until August of that year and the current rule is not expected until later 201 2 . Arkema states that these types of delays have increased cost and injected unnecessary uncertainty into the economy. They believe that by failing to re - set 2012 allowances in a timely manner, EPA is denying to Solvay and Arkema the relief mandated by the D.C. Circuit. [0073 , 0028 ] EPA Response : See previous response in this section to NRI. EPA does not agree that the timing of this rule means it is denying Solvay and Arkema appropriate relief. Realizing that the final rule would be issue d late , EPA a llowed companies to produce and import at the lower end of the proposed range through No Action Assurance . That authorized amount was proportional to the baseline allowances which EPA established in the 2011 Interim Final Rule, in direct response to the Court’s ruling. In addition, any costs or uncertainty associated with the timing of the 2012 - 14 rule fall equally on all allowance holders, not on Solvay and Arkema uniquely.  ACCA comments that the proposed rule must be promulgated quickly to reduce the un certainty in the market. ACCA urges EPA to send a signal to industry to communicate intentions before the summer season. [0081] EPA Response: See previous response in this section to NRI.  AHRI urges EPA to finalize the rulemaking as soon as feasible to avo id uncertainty and restore confidence in the marketplace. [0072] EPA Response: See previous response in this section to NRI.  While HARDI is supportive of EPA efforts in reducing HCFC - 22, they are concerned that EPA’s delay in publishing the proposed rule h as negatively impacted distributors and caused a great deal of confusion. The commenter recommends that in the future, EPA should consider extending the prior year’s allocation level ifResponse to Comments on the 2012 - 2014 HCFC Allocation Rulemaking Page 72 the rulemaking for the next control period is delayed and pro - rate the allocations established in the new rule for remainder of the new control period once the rule is complete. HARDI states that there are concerns within its membership that EPA’s delay in publishing the proposed rule and delay in issuing non - enforcement le tters has negatively impacted distributors. HARDI discourages EPA from further consideration of adjustments to caps or allocations established by this rule after its effective date. HARDI does not support retroactive enforcement actions. HARDI comments on the risk for market confusion due to the lateness of the rulemaking and encourages EPA to complete subsequent rulemakings prior to the control period which they are intended to govern. Further, the commenter has concerns with the non - enforcement letter pr ocess. They question why there was such a delay in providing this letter to the producers and importers of HCFC - 22. The commenter believes that this three week delay in providing the non - enforcement letter to producers and importers caused market uncertain ty and should have been avoided. HARDI emphasizes that this delay has caused (and continues to cause) significant harm to many HARDI members. HARDI recommends that in the future, a posting in the Federal Register, followed by a communication to all stakeho lders would suffice, noting that impacts are felt in the marketplace far beyond just the allocation holders. [0069] EPA Response : See previous response in this section to NRI. Additionally, EPA will keep HARDI’s comments in mind if future No Action Assurance letters are issued to authorize production and consumption in the absence of a final rule.  Solvay comments that a timely decision by EPA to issue recoupment allowances and make other necessary adjustments will give all market participants sufficient notice that Solvay believes they were denied in 2010. Solvay notes that EPA issued the Final Rule governing HCFC production and consumption for 2010 - 2014 on December 15, 2009, gi ving Solvay and customers less than two weeks to adjust to the loss of 90 percent of the allowances that the company had anticipated receiving. Solvay comments that a timely decision by EPA to issue recoupment allowances will provide the precise allowance shares to all participants as EPA originally intended to do over the life of the control period, and allow the market to function smoothly. [0064] EPA Response: See previous response in this section to NRI.  Two commenters request EPA to allow the full allo cation to be produced for 2012 that was originally planned since changing the allocation at such late notice will put an unreasonable hardship on HVAC businesses and customers. [0102, 0098] EPA Response: See previous response in this section to NRI.  NORDYN E does not support reducing the 2012 allocation since 2012 has already started. NORDYNE notes that the possibility of reducing this allocation is already creating significant issues in the marketplace. Pricing has become extremely volatile and significant inventory concerns are commonly discussed. Manufacturers have already planned their production for 2012. NORDYNE believes that to change the rules mid - year is unfair, disruptive, and will create significant unnecessary burdens on the industry. [0089] EPA R esponse: See previous response in this section to NRI. In addition, the court vacated the allocation s . A s a result, EPA is not changing an existing allocation but rather issuing a new allocation.  Goodman comments that this proposed rule is tantamount to changing the rules in the middle of the game as industry stakeholders prepare to meet the next scheduled phase - down of HCFC - 22 in 2015. Goodman is disconcerted that EPA is now promulgating a rule for 2012 that will not provide allowances for HCFC - 22 until well into calendar year 2012. Goodman notes that if last year’s experience is any guide, a final rule or interim final rule may not be published until the traditional cooling system is practically over. Goodman states that while EPA’s No Action Assurance l etters have given refrigerant manufactures certainty that theyResponse to Comments on the 2012 - 2014 HCFC Allocation Rulemaking Page 73 may permissibly produce specified quantities of HCFC - 22, industry stakeholders already have seen the price of HCFC - 22 double , and in the upcoming weeks and months , prices will potentially incre ase further. [0084] EPA Response: See previous response s in this section to NRI and NORDYNE .  Able Distributors, APR Supply Co. and Coburn Supply Company state their opposition to the proposed 2012 allocation reduction since 2012 has already started. According to the commenters, the possibility of reducing this allocation has already created significant issues in the market place and created price volatility. The three companies comment that manufacturers have already planned their production for 2012 and regard a change in rules to be unfair, disruptive and will create unnecessary burdens. [0147, 0148, 0149] EPA Response: See previous response s in this section to NRI and NORDYNE .  One commenter noted that industry has already made plans and purchases ac cording to the guidelines that were advertised. [0130] EPA Response: See previous response s in this section to NRI and NORDYNE .  Golden Refrigerant suggest s that EPA issue 2012 allowances as quickly as possible and review the market conditions, setting the allowances for the following years by September of the previous year. [0054] EPA Response: See previous response in this section to NRI.  The National Multi Housing Council (NMHC) and the National Apartment Association (NAA) call upon EPA to promulgate the final rule within 60 days to ease supply disruptions and facilitate routine maintenance on equipment before the nationwide peak demand for air conditioning. [0156] EPA Response: See previous response in this section to NRI.  The Food Marketing Institute (FM I) states that lack of time to assess options will lead to suboptimal results. Accelerated retrofits will likely result in higher energy usage as retailers are forced to retrofit without complete evaluation of all potential refrigerants. They believe that the pricing pressures imposed by the proposed rule will cause a rush to implement new and unproven technologies to reduce refrigerant charge. This will likely result in additional emissions due to unproven technology (e.g., micro channel condenser leaks). [0157] EPA Response: See previous response in this section to NRI as well as the previous response to FMI in section 4.1 of this document .  Hudson Technologies comments that further delay in the finalization of a final rule for subsequent control periods wi ll create confusion and disruption in the industry, will adversely affect the market, and will likely further damage an already withering reclamation industry. [0027] EPA Response: See previous response in this section to NRI. 

## 5.6 **Compliance and enforcement issues**  EPA received 1 3 comments regarding compliance and enforcement of regulations, generally urging EPA to increase the level of enforcement for refrigerant recovery.  Rapid Recovery Franchise Partners comment that if there is to be a signific ant reduction in venting and a corresponding increase in the amount of R - 22 recovered and made available for reclamation, EPA will need to significantly increase both the level of enforcement of Section 608 of the CAA and the visibility of that enforcement . As the national refrigerant recovery experts, the commenters meet every day with HVAC and demolition contractors as well as recycling and disposal companies. The commenters hear two different perspectives from these companies. Those who are complying wit h EPA regulations, many of whom are Rapid Recovery customers, express frustration that they are at a significant competitive disadvantage when bidding against those companies who do not comply. They believe that increased enforcement will create a level pl aying field. On the other hand, those who are not presently in compliance, advise Rapid RecoveryResponse to Comments on the 2012 - 2014 HCFC Allocation Rulemaking Page 74 that they have never been contacted by the EPA and they know of no one in their particular industry who has been. In the commenters’ experience there are no r egular audits and often the commenters are told that even when violations have been reported to the EPA, there has been no follow up. The franchise partners of Rapid Recover y note, however, that in those few situations that some enforcement or even threat of enforcement has taken place, there has been immediate and wide - spread compliance for a time. The commenters believe that if EPA desires a significant increase in both compliance and additional recovered R - 22, enforcement must be a significant part of th e process. [0086] EPA Response : EPA encourages all industry participants and private citizens to report any illicit activity. EPA takes enforcement of its regulations seriously, and encourages all industry players to maintain accurate records that document appropriate handling and use of refrigerant . To report a violation online, visit http://epa.gov/tips/ . Additionally, EPA’s enforcement history of ODS cases can be found at http://www.epa.gov/ozone/enforce/index.html  Cert ified Refrigerant Services, Inc. is concerned that participation in the reclaiming effort is taken too lightly and are not satisfied with the estimated 10% compliance with the regulations. Further, they state that money is the only real motivator for parti cipation in the reclamation effort. [0057] EPA Response : See previous response in this section to Rapid Recovery Franchise Partners. Additionally, see the response to NRDC in section 5.1 of this document.  One commenter stated that enforcement is necessary for compliance with Section 608. Increased visibility of enforcement efforts may increase the level of reclamation. [0075] EPA Response : See previous response in this section to Rapid Recovery Franchise Partners.  Rocky Mountain Refrigerant Abatement notes that EPA should increase the level and visibility of its enforcement efforts so that contractors comply with EPA regulations to recover refrigerant. [0059] EPA Response : See previous response in this section to Rapid Recovery Franchise Partners.  LA Refrige rant Recovery, AZ Refrigerant Abatement , Rhynard and White Enterprises, and Houston Refrigerant Recovery , all comment that customers are best motivated to recover refrigerant by publicized enforcement. The commenter states that contractors do not believe E PA will enforce the CAA Section 608 regulations, they have never been visited by the EPA, and they believe that no one cares about venting. The commenter notes that contractors are therefore ignoring the regulations. [ 0051, 0053, 0058, 0060] EPA Response : See previous response in this section to Rapid Recovery Franchise Partners.  NRDC, IGSD, and EIA believe that the over - supply and low price of virgin HCFC - 22 is undermining compliance and enforcement of current anti - venting requirements to the detriment of the atmosphere and to the detriment of the public health and the environment. [0067] EPA Response : See previous response in this section to Rapid Recovery Franchise Partners.  A group of 20 EPA Certified ODS Reclaimers appreciate EPA's desire to promote a viable recovery and reclamation industry. They comment that by reducing allocations, EPA and reclaimers have a joint opportunity to utilize the existing "Recovery and Reclamation Network", which is needed to meet the needs of2015 and beyond. To do this the EPA must help those who provide recovered refrigerants to reclaimers develop a "culture" of recovery for reclamation. The twenty certified refrigerant reclaimers note that EPA must enforce existing regulations, especially “no venting” rules. They comment that as a result of these efforts, a positive value for the recovered product will be established and maintained, not just in 2012, but throughout the phase out period. [0085] EPA Response : See previous response in this section to Rapid Recovery Franchise Partners.  Bay Area Refrigerant Recovery comments that that any enforcement taken by the EPA has a significant impact on the industry and that the number of companies that recover refrigerants increases greatly. TheResponse to Comments on the 2012 - 2014 HCFC Allocation Rulemaking Page 75 commenter believes that gentle reminders of the rules and the threat of enforcement would go a long way toward increasing the amount of recovered and subsequently reclaimed refrigerants. Bay Area Refrigerant Recovery urges the EPA to consider new and creative ways in which it might engage in appr opriate enforcement. Bay Area Refrigerant Recovery would welcome the opportunity to discuss some ideas with those in the San Francisco office who are responsible for this important part of the process. [0080] EPA Response : See previous response in this sec tion to Rapid Recovery Franchise Partners. EPA is always interested in effective ways to improve compliance, and encourages the commenter to contact EPA headquarters to discuss ideas .  Consolidated comments that there are three potential motivators for rec overing refrigerant , the first of which is doing the right thing. The commenter believes a program similar to GreenChill that encourages government and industry partnerships that will recognize and reward good recovery practices , would lead to greater comp liance and additional available recovered refrigerants. Consolidate d continues that the second motivator is economic incentive ( aggressive allotment adjustments which impact price will address this ), and the third is enforcement by the EPA. Consolidated no tes that it appears that the EPA does not have the resources necessary to police the industry. Until such time that contractors actually believe they risk enforcement and penalties, the only tangible incentive is the buyback they receive from reclamation a nd/or recovery companies. A letter from the EPA to stakeholders reminding them of the laws and penalties for violations would go a long way toward compliance. Consolidated believes publicized cases of enforcement on the average sized company would also res ult in compliance . Consolidated believes that EPA can publicize its work and enforcement through News Releases . Consolidated also believes that contractors in compliance are at a disadvantage contractors not in compliance and think enforcement would level the playing field. [0083] EPA Response : See previous response in this section to Rapid Recovery Franchise Partners and Bay Area Refrigerant Recovery . The agency appreciates suggestions for encouraging bet ter compliance and will consider ways it can improve compliance . EPA also lists all ODS enforcement cases at http://www.epa.gov/ozone/enforce/index.html .  NRI agrees with EPA that refrigerant should be reclaimed using distillation and separation and encoura ges EPA to require third party certification of reclaimers so that consumers can have as much confidence in reclaimed refrigerant as they do newly manufactured refrigerant. [0068] EPA Response : This comment is beyond the scope of this rulemaking. However, EPA will consider this comment as it develops future regulations . Reclaimers are currently required to follow the certification provisions in 40 CFR 82.164.  Polar Technology believes that proper reclamation of R - 22 will not occur because of the lack of e n forcement. They state that t echnicians, contractors, and system owners do not fear that the failure to properly recover will be met with punishment ; t here are too many systems and technicians to monitor and hold accountable. Polar Technology cites California’s AB32 that , according to the commenter, was created based on the failure of the CAA. AB32 holds the system owner accountable for refrigerants in their control. Without enforcement, there is no motivating reason for anyone to adhere to regulatio ns. [0076] EPA Response : See previous response in this section to Rapid Recovery Franchise Partners.  Golden Refrigerant is concerned about where additional HCFC - 22 that will be reclaimed will come from. The commenter believes additional HCFC - 22 will come from increased compliance and increased retrofits. They believe that the majority of non - compliance comes from smaller heating and cooling contractors, smaller demolition contractors, and individuals because their prices are too low for legitimate contract ors to match and they do not want to pay the cost or take the time to correctly recover the refrigerant. They suggest that EPA dramatically increases enforcement, or it is doubtful that there will be a dramatic increase in the returned refrigerant from thi s source. [0054]Response to Comments on the 2012 - 2014 HCFC Allocation Rulemaking Page 76 EPA Response : See previous response in this section to Rapid Recovery Franchise Partners.