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DuPont Chemicals & Fluoroproducts 

Chestnut Run Plaza 702

P.O. Box 80702 

 Wilmington, DE 19880-0702 

 August 31, 2011 

Docket ID No. EPA-HQ-OAR-2010-1040 

Air and Radiation Docket and Information Center 

U.S. Environmental Protection Agency 

Mail Code 6102T 

1200 Pennsylvania Ave., NW 

Washington, DC 20460 

E. I. du Pont de Nemours and Company (“DuPont”) is pleased to provide 

comments on various issues raised by the Environmental Protection Agency (“EPA”) in 

the interim final rule, Protection of Stratospheric Ozone: Adjustment to the Allowance 

System for Controlling HCFC Production, Import, and Export 76 Fed. Reg. 47,451 

(August 5, 2011) (“Interim Rule”). 

As an initial matter, DuPont appreciates EPA’s continued leadership in efforts to 

implement the Montreal Protocol on Substances that Deplete the Ozone Layer (“Montreal 

Protocol”). We support the Agency’s continuing work to implement the Montreal 

Protocol on a chemical-by-chemical basis that allows for a smooth transition in meeting 

the requirements of the Protocol and the Clean Air Act (“CAA”). Nevertheless, we have 

concerns with several aspects of the Interim Rule. First, amending Arkema’s and 

Solvay’s baselines to account for their 2008 inter-pollutant transfers violates the CAA 

and DuPont’s due process rights. The United States Court of Appeals District of 

Columbia Circuit (“D.C. Circuit”) Arkema v. EPA decision did not address the validity of 

those transfers, but rather simply assumed they were valid for purposes of the challenge 

to the 2009 allocation rule1 Thus, we do not believe that EPA is mandated by that 

decision simply to assume the validity of those transfers. A more prudent course would 

be for EPA to grant the pending petition for reconsideration of these transfers filed jointly 

by DuPont and Honeywell. If EPA determines that the transfers are void ab initio, EPA’s 

justification for the Interim Rule would be moot. 

We also are concerned that the Interim Rule not extend beyond 2011. To the 

extent that EPA has justified the “good cause” exemption to the CAA and the 

Administrative Procedure Act to promulgate a rule without notice and comment, it has 

done so only for 2011. DuPont believes that it is imperative that EPA undergo notice and 

comment rulemaking to address an appropriate allocation scheme for 2012 and beyond. 

We also take this opportunity to comment on several issues raised by the interim 

rule. Specifically, we would like to comment on the following issues: (1) the annual 

 

1

 74 Fed. Reg. 66,412 (December 15, 2009). 
2 

reduction in hydrochlorofluorocarbon-22 (“HCFC-22”) consumption allocation amounts 

for years 2012-2014; (2) the use of different percentages of baseline in allocating 

calendar-year production and consumption allowances; and (3) whether the vacatur and 

remand issued by the United States Court of Appeals District of Columbia Circuit 

requires any further rulemaking to address 2010 allowances 

I. Reduction in HCFC-22 Consumption Allocation Amounts for 2012-2014

DuPont fully supports EPA’s objective of “encouraging a smooth transition to the 

2015 stepdown” to 10% of baseline HCFC consumption as required under provisions of 

the Montreal Protocol. Our current market assessment, however, suggests that the yearover-year reductions in consumption allowances as specified in the 2009 allocation rule 

are not sufficient to accomplish this objective. Instead, it would appear possible for EPA 

to further reduce total annual HCFC-22 consumption allowances for the years 2012 

through 2014. 

In taking such action, EPA should consider larger reductions for 2012 than for 

2013 and 2014 to draw down inventories and encourage a more rapid movement toward 

higher rates of recovery and reclamation of HCFC-22. Further reductions in 

consumption allowances would not only ensure a smooth transition to the 2015 stepdown 

but would also reduce the risk of future ozone depletion. In addition, such reductions 

might discourage installation and field charging of new condensing units with HCFC-22. 

Continued installation of such units will only increase the challenge of meeting the 2015 

stepdown and increase emissions of HCFC-22 to the atmosphere. 

Our belief that the total HCFC-22 production allowances in the 2009 allocation 

rule are too large to achieve the desired objective is based on a combination of several 

factors. First, it must be remembered that the 2009 allocation rule was based on 

information available to the agency as of the date of promulgation of that rule, including 

a 2005 Notice of Data Availability2 and a subsequent stakeholder meeting held in 2006. 

More recent and accurate information is now available and show that greater reductions 

in consumption allowances are warranted. 

Second, the previously projected shortfall in the HCFC-22 allowances allocated 

as compared to projected demand in the June 2008 report prepared for EPA, The U.S. 

Phaseout of HCFCs: Projected Servicing Needs in the U.S. Air-Conditioning and 

Refrigeration Sector (“Service Tail report”), encouraged companies throughout the value 

chain to build inventory of HCFC-22. This report indicated that the servicing need for 

HCFC-22 in 2010 was 62,500 metric tons. The final allocation rule, however, allocated 

allowances at 20% below the modeled need in 2010, decreasing to 26% below the 

modeled need in 2014 based on the expectation that recycled and reclaimed HCFCs 

would offset the need for newly-manufactured HCFCs. The Agency stated that it 

“believe[d] that reduction in the allocation each year from 2010 to 2014 to reflect 

declining demand will lead to higher rates of recovery and recycling/reclamation.”3

 

While DuPont does not dispute the 2008 report, EPA’s allocation of allowances 

 

2

 70 Fed. Reg. 67,172 (November 5, 2005). 

3

 74 Fed. Reg. at 66,247. 
3 

depended on several projections, including the development of greater capacity to recycle 

and reclaim HCFCs in response to constraints placed upon the supply of newly-produced 

HCFCs. The effect of these layered projections and the inherent uncertainty involved in 

making such projections can encourage conservative behavior in producing, acquiring, 

and retaining HCFCs for later use. EPA should use the opportunity afforded by new 

notice-and-comment rulemaking to update and revise its assessments. 

Finally, the HCFC-22 demand assumptions used in developing the Service Tail 

report, in retrospect, were too high. They did not adequately account for the success of 

GreenChill Partnership or the market awareness of potential HCFC-22 shortages at that 

time (which caused end users to improve maintenance to reduce emissions). These 

factors have reduced HCFC-22 demand. In this regard, and as further detailed below, 

EPA data show that only about 86% of the HCFC-22 consumption allowances were 

actually used in 2010 and that 2010 reclamation was only about 30% of what is projected 

to be required in 2015. This provides evidence that the total HCFC-22 consumption 

allowances provided for 2010 in the 2009 allocation rule exceeded those needed by the 

market and supports the belief that, overall, the total HCFC-22 production allowances in 

the 2009 allocation rule are too large. 

II. Allocation of Different Percentages of Baseline Calendar-year Production 

Allowances and Calendar-year Consumption Allowances

The interim final rule states that “EPA welcomes comment on whether an 

increase in the level of production allowances would result in more U.S. production, 

either for domestic use or for export, and whether any additional U.S. production for 

export would result in greater worldwide production of HCFCs.”4

 We believe that an 

increase of production allowances could result in more U.S. production for both domestic 

use and for export. Baseline production allowances are less than baseline consumption 

allowances. Because making product requires both a production and consumption 

allowance, to make product equivalent to consumption allowances an allowance holder 

must either import HCFC-22 or transfer additional production allowances to the U.S. 

This situation is exacerbated by the fact that a significant amount of production 

allowances are held by an entity that no longer has HCFC-22 production facilities in the 

U.S. If the 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 offshore competitors to take 

market share from U.S. producers. 

Additional U.S. HCFC-22 production for export will not result in greater 

worldwide production of HCFCs. Total HCFC-22 use is determined by market demand, 

not production capacity. Instead, additional U.S. HCFC-22 production allowances will 

only allow U.S. producers to meet existing demand domestically and in Article 5 

countries. Additional allowances will not serve increase demand – but merely help 

determine which global producers have an opportunity to compete to service that demand. 

 

4

 76 Fed. Reg. at 47,463. 
4 

Not allocating additional production allowances will only penalize domestic producers to 

the benefit of producers in Article 5 countries. 

The interim final rule also states that EPA must “promulgate regulations to insure 

that the consumption of class II substances in the United States is phased out and 

terminated in accordance with the same schedule . . . as is applicable to the phase-out and 

termination of production of class II substances under [Title VI].’’5 EPA is considering 

three possible interpretations of the term ‘‘schedule’’ as referenced in section 605(c) of 

the CAA: (1) The schedule that appears on the face of section 605, which contains no 

deadlines until 2015; (2) the schedule that appears on the face of section 605, as 

accelerated under section 606; and (3) the specific allocation percentages or amounts 

established by EPA through rulemaking for each control period. In the interim rule, EPA 

expresses the agency’s opinion that the second interpretation is the most consistent with 

the statutory language and purpose of the CAA. DuPont supports this interpretation and 

believes that there was no intent for rules implemented under Title VI of the CAA to 

disadvantage domestic HCFC producers to the advantage of offshore producers when 

there is no environmental gain in such limitations.

Altogether, for the reasons stated above, DuPont encourages the EPA to allocate 

different percentages of baseline calendar-year production allowances than for calendar 

year consumption allowances for HCFC-22 for years 2012 and beyond. Production 

allowance allocations should ensure that domestic producers are not disadvantaged by 

reducing their ability to compete in both domestic and Article 5 markets. Of course, such 

allocations should be consistent with U.S. obligations under the Montreal Protocol and 

DuPont would clarify that is not requesting EPA to allocate additional production 

allowances for calendar year 2011. 

III. EPA Does Not Need to Address 2010 Allowances 

While EPA has indicated that it is not addressing 2010 allowances in the interim 

final rule, the agency states that it “plans to take comment in a future notice-andcomment rulemaking on whether the vacatur and remand [in Arkema v. EPA6

] should be 

interpreted as applying to the 2010 allocations, and if so, how allowances in future 

control periods might be adjusted to reflect this.”7

 Such a rulemaking is unnecessary and 

not required by the D.C. Circuit decision in Arkema. Were the agency nonetheless to 

proceed with such rulemaking, it would be inappropriate and potentially unlawful for the 

agency to adjust future allowances in order to readjust retroactively 2010 allocations. 

 The Arkema decision vacated the 2009 allocation rule “insofar as it operates 

retroactively” and remanded the matter for resolution by EPA.8 The interim final rule, 

coupled with a rulemaking addressing 2012-14 allocations, addresses fully EPA’s 

obligation under the Arkema remand. In the interim final rule, EPA amended the 

 

5

Id. 

6

 618 F.3d 1 (D.C. Cir. 2010). 

7

 76 Fed. Reg. at 47,456. 

8

 618 F.3d 1, 18. 
5 

phaseout schedule of 40 C.F.R. § 82.16 for 2011, changed the baseline production 

allowances for Arkema in 40 C.F.R. § 82.17 and changed the baseline consumption 

allowances for Arkema, Solvay Fluorides and Solvay Solexis in 40 CFR § 82.19. 

Nothing else is required with respect to 2010 allocations. Any attempt by EPA to adjust 

allowances in future control periods to address allocations made for the 2010 control 

period is unnecessary and would unlawfully harm those that appropriately relied on the 

2009 allocation rule.9

 In addition, available data demonstrates that the industry as a whole only utilized 

86 percent of available allowances in 2010. The existence of unused allowances in 2010 

would strongly suggest that Arkema and Solvay were not meaningfully harmed in 2010 

by the 2009 allocation rule. The data further demonstrates that DuPont and others did not 

benefit in 2010 at Arkema’s and Solvay’s expense. Therefore, any adjustment to future 

allocations to mitigate for this alleged harm is unwarranted would only result in yet 

another windfall to those entities. 

Finally, reducing DuPont’s allowances in future allocation periods as a form of 

mitigation to Arkema and Solvay would cause significant financial harm to DuPont and 

would constitute unlawful retroactive rulemaking on the part of EPA. At bottom, EPA 

cannot correct one allegedly unlawful act by undertaking yet another. 

* * * 

Thank you again for the opportunity to submit these comments. Should you 

require further explanation on any matter contained within these comments please contact 

Mack McFarland at e-mail mack.mcfarland@usa.dupont.com or by phone at 302 999 

2505. 

 

9

 EPA’s specified that the rule was effective on January 1, 2010. 74 Fed. Reg. at 66,412.