Document ID: EPA-HQ-OAR-2021-0669-0003
Agency: epa
Document Type: Notice
Title: Phasedown of Hydrofluorocarbons: 2023 Allowance Allocations for Production and Consumption of Regulated Substances under the American Innovation and Manufacturing Act
Posted Date: 2022-10-11T04:00Z

[Federal Register Volume 87, Number 195 (Tuesday, October 11, 2022)]
[Notices]
[Pages 61314-61318]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2022-22059]

-----------------------------------------------------------------------

ENVIRONMENTAL PROTECTION AGENCY

[EPA-HQ-OAR-2021-0669; FRL-9116-03-OAR]

Phasedown of Hydrofluorocarbons: Notice of 2023 Allowance 
Allocations for Production and Consumption of Regulated Substances 
Under the American Innovation and Manufacturing Act of 2020

AGENCY: Environmental Protection Agency (EPA).

ACTION: Notice.

-----------------------------------------------------------------------

SUMMARY: The Environmental Protection Agency (EPA) has issued calendar 
year 2023 allowances for the production and consumption of 
hydrofluorocarbons in accordance with the Agency's regulations as 
established in the 2021 final rule titled Phasedown of 
Hydrofluorocarbons: Establishing the Allowance Allocation and Trading 
Program under the American Innovation and Manufacturing Act. The 
American Innovation and Manufacturing Act directs the Environmental 
Protection Agency by October 1 of each calendar year to determine the 
quantity of production and consumption allowances for the following 
calendar year. The Agency also provided notice to certain companies on 
September 30, 2022, that the Agency intends to retire an identified set 
of those companies' allowances in accordance with the administrative 
consequences provisions established in the final rule.

FOR FURTHER INFORMATION CONTACT: Andy Chang, U.S. Environmental 
Protection Agency, Stratospheric Protection Division, telephone number: 
202-564-6658; email address: [email protected]. You may also visit 
EPA's website at https://www.epa.gov/climate-hfcs-reduction for further 
information.

SUPPLEMENTARY INFORMATION: Subsection (e)(2)(D)(i) of the American 
Innovation and Manufacturing Act of 2020 (AIM Act) directs the 
Environmental Protection Agency (EPA) to determine, by October 1 of 
each calendar year, the quantity of allowances for the production and 
consumption of regulated substances that may be used for the following 
calendar year. EPA has codified the production and consumption 
baselines and phasedown schedules for regulated substances in 40 CFR 
84.7. Under the phasedown schedule, for 2023, total production 
allowances may not exceed 344,299,157 metric tons of exchange value 
equivalent (MTEVe) and total consumption allowances may not exceed 
273,498,315 MTEVe.
    EPA regulations at 40 CFR part 84, subpart A, outline the process 
by which the Agency determines the number of allowances each entity is 
allocated. EPA allocated allowances consistent with this process for 
calendar year 2023, and has posted entity-specific allowance 
allocations on its website at https://www.epa.gov/climate-hfcs-reduction. An allowance allocated under the AIM Act does not constitute 
a property right and is a limited authorization for the production or 
consumption of a regulated substance.
    EPA has codified the procedure for calculating application-specific 
allowance allocations in 40 CFR 84.13. These allowances are drawn from 
both the production and consumption allowance pools. EPA is issuing 
``application-specific allowances'' to end users in five applications 
established by the AIM Act: propellants in metered dose inhalers, 
defense sprays, structural composite preformed polyurethane foam for 
marine use and trailer use, etching of semiconductor material or wafers 
and the cleaning of chemical vapor deposition chambers within the 
semiconductor manufacturing sector, and onboard aerospace fire 
suppression. Additionally, EPA is issuing ``application-specific 
allowances'' to the U.S. Department of Defense for mission-critical 
military end uses.
    EPA has denied requests for application-specific allowances from 
Applied Materials, Inc; Benuvia Manufacturing; General Electric Global 
Research Center; Gilero LLC; Guardian Protective Devices, Inc.; 
nHalience LLC; and Shamrock Filling LLC because they are ineligible 
under 40 CFR 84.13. The requests were ineligible for at least one of 
the following reasons:
    (1) Did not meet the criteria for HFC use in a covered application;
    (2) Did not submit by the deadline;
    (3) Did not provide proper supporting documentation or 
justification for their requests; or
    (4) Did not report purchases of regulated substances in the past 
three years.
    EPA has allocated 2023 application-specific allowances as shown in 
Table 1.

[[Page 61315]]

     Table 1--Application-Specific Allowances for Calendar Year 2023
------------------------------------------------------------------------
                                                           Number of
                                                          application-
             Entity                   Application           specific
                                                       allowances issued
                                                           (MTEVe) \1\
------------------------------------------------------------------------
Analog Devices..................  Semiconductors.....           28,852.2
Apple...........................  Semiconductors.....            1,033.8
Armstrong Pharmaceuticals.......  Metered Dose                 157,231.4
                                   Inhalers.
ASML US.........................  Semiconductors.....            1,237.2
AstraZeneca Pharmaceuticals.....  Metered Dose                   4,652.7
                                   Inhalers.
Aurobindo Pharma USA............  Metered Dose                  65,427.9
                                   Inhalers.
Broadcom........................  Semiconductors.....              834.7
Compsys.........................  Structural                    14,152.8
                                   Composite Foam.
Defense Technology..............  Defense Sprays.....            9,366.7
Diodes Incorporated.............  Semiconductors.....            3,667.1
GlobalFoundries.................  Semiconductors.....          177,721.8
Hitachi High-Tech America.......  Semiconductors.....            1,064.4
IBM Corporation.................  Semiconductors.....              533.5
Intel Corporation...............  Semiconductors.....          746,212.5
InvaGen Pharmaceuticals.........  Metered Dose                  74,380.1
                                   Inhalers.
Jireh Semiconductor.............  Semiconductors.....            5,787.8
Keysight Technologies...........  Semiconductors.....              538.8
Kindeva Drug Delivery...........  Metered Dose                 408,952.0
                                   Inhalers.
Lupin...........................  Metered Dose                  24,098.0
                                   Inhalers.
Medtronic.......................  Semiconductors.....              637.6
Microchip Technology............  Semiconductors.....           31,266.7
Micron Technology...............  Semiconductors.....           42,600.7
Newport Fab DBA TowerJazz.......  Semiconductors.....            8,042.3
NXP Semiconductors..............  Semiconductors.....           86,878.8
Odin Pharmaceuticals............  Metered Dose                   1,708.5
                                   Inhalers.
Polar Semiconductor.............  Semiconductors.....           13,446.4
Proteng Distribution............  Onboard Aerospace              4,060.4
                                   Fire Suppression.
Qorvo Texas.....................  Semiconductors.....            1,237.2
Raytheon Technologies...........  Onboard Aerospace                952.6
                                   Fire Suppression.
Renesas Electronics America.....  Semiconductors.....            4,445.5
Samsung Austin Semiconductor....  Semiconductors.....          384,969.7
Security Equipment Corporation..  Defense Sprays.....           63,889.9
Semiconductor Components          Semiconductors.....           38,821.5
 Industries DBA ON Semiconductor.
SkyWater Technology.............  Semiconductors.....           17,549.8
Skyworks Solutions..............  Semiconductors.....            4,652.3
Texas Instruments...............  Semiconductors.....          194,744.9
The Research Foundation for The   Semiconductors.....              159.9
 State University of New York.
Tokyo Electron America..........  Semiconductors.....              558.8
Tower Semiconductor San Antonio.  Semiconductors.....            4,948.7
TSMC Arizona Corporation........  Semiconductors.....           32,632.0
UDAP Industries.................  Defense Sprays.....          110,727.8
Wabash National Corporation.....  Structural                    73,543.0
                                   Composite Foam.
WaferTech.......................  Semiconductors.....           22,355.4
Wolfspeed.......................  Semiconductors.....           36,114.7
X-FAB Texas.....................  Semiconductors.....            5,076.0
Zarc International..............  Defense Sprays.....            1,384.1
Department of Defense...........  Mission-critical           2,513,169.3
                                   Military End Uses.
                                                      ------------------
    Total.......................  All................        5,426,319.9
------------------------------------------------------------------------
\1\ Numbers may not sum due to rounding.

    EPA has codified the procedure for calculating the production 
allowance allocation in 40 CFR 84.9. EPA has allocated calendar year 
2023 production allowances as shown in Table 2.

[[Page 61316]]

          Table 2--Production Allowances for Calendar Year 2023
------------------------------------------------------------------------
                                                             Number of
                                                            production
                         Entity                             allowances
                                                          issued (MTEVe)
                                                                \1\
------------------------------------------------------------------------
Application-specific allowances \2\.....................     5,426,319.9
Arkema..................................................    40,873,469.3
Chemour.................................................    75,703,417.3
Honeywell International.................................   171,747,616.1
Iofina Chemical.........................................         1,758.6
Mexichem Fluor DBA Koura................................    50,546,575.8
                                                         ---------------
    Total...............................................   344,299,157.0
------------------------------------------------------------------------
\1\ Numbers may not sum due to rounding.
\2\ See Table 1.

    EPA has codified the procedure for calculating the consumption 
allowance allocation in 40 CFR 84.11. Calendar year 2023 consumption 
allowances have also been allocated to new market entrants consistent 
with 40 CFR 84.15.\1\ EPA has allocated calendar year 2023 consumption 
allowances as shown in Table 3.
---------------------------------------------------------------------------

    \1\ A comprehensive overview and discussion of allocation 
decisions to new market entrants can be found in the Agency's April 
5, 2022, notice Phasedown of Hydrofluorocarbons: Notice of 2022 Set-
Aside Pool Allowance Allocations for Production and Consumption of 
Regulated Substances Under the American Innovation and Manufacturing 
Act of 2020 [87 FR 19683].

         Table 3--Consumption Allowances for Calendar Year 2023
------------------------------------------------------------------------
                                                           Number of
                                                          consumption
                        Entity                         allowances issued
                                                          (MTEVe) \1\
------------------------------------------------------------------------
Application-specific allowances \2\..................        5,426,319.9
A.C.S. Reclamation & Recovery (Absolute Chiller                200,000.0
 Services) *.........................................
Ability Refrigerants *...............................          200,000.0
ACT Commodities *....................................               77.8
Advance Auto Parts *.................................          190,699.1
Advanced Specialty Gases.............................          285,314.5
AFK & Co. *..........................................          193,335.9
AFS Cooling *........................................          200,000.0
A-Gas................................................        3,209,232.5
Air Liquide USA......................................          498,530.3
AllCool Refrigerant Reclaim *........................          200,000.0
Altair Partners......................................        2,918,730.4
American Air Components *............................          200,000.0
Arkema...............................................       31,075,488.7
Artsen...............................................        1,027,571.2
Automart Distributors DBA Refrigerant Plus *.........          200,000.0
AutoZone Parts.......................................        2,486,664.3
AW Product Sales & Marketing.........................          194,505.7
Bluon................................................           33,459.8
CC Packaging *.......................................          194,000.0
Certified Refrigerant Services *.....................          200,000.0
Chemours.............................................       33,382,686.1
Chemp Technology *...................................          200,000.0
Combs Gas............................................        1,287,918.3
ComStar International................................          374,063.9
Creative Solution *..................................          200,000.0
Cross World Group *..................................          200,000.0
Daikin America.......................................        3,120,932.2
EDX Industry *.......................................          200,000.0
Electronic Fluorocarbons.............................          104,289.0
Fireside Holdings DBA American Refrigerants *........          199,978.5
First Continental International......................          769,838.0
FluoroFusion Specialty Chemicals.....................        2,552,532.6
Freskoa USA *........................................          200,000.0
GlaxoSmithKline......................................          536,367.9
Golden Refrigerant *.................................          200,000.0
Harp USA.............................................          765,574.0
Honeywell International..............................       82,497,424.7
Hudson Technologies..................................        2,988,057.5
Hungry Bear *........................................          200,000.0
ICool USA............................................        3,406,995.9
IGas Holdings........................................       25,944,614.3
Iofina Chemical......................................            1,264.9
Kidde-Fenwal *.......................................          200,000.0
Lenz Sales & Distribution............................        1,110,319.3
Lina Trade *.........................................          200,000.0
Linde................................................          532,503.3
Meraki Group *.......................................          200,000.0
Metalcraft *.........................................          161,000.0
Mexichem Fluor DBA Koura.............................       25,479,884.3

[[Page 61317]]

 
Mondy Global.........................................          318,706.9
National Refrigerants................................       19,806,810.9
Nature Gas Import and Export.........................          819,624.4
North American Refrigerants *........................          200,000.0
O23 Energy Plus *....................................          200,000.0
Perfect Score Too DBA Perfect Cycle*.................           37,876.0
Reclamation Technologies *...........................          200,000.0
Refrigerants, Inc....................................           26,550.9
RMS of Georgia.......................................        1,621,276.8
RTR Suppliers *......................................          198,000.0
Saalok *.............................................          200,000.0
Sciarra Laboratories *...............................            8,700.0
SDS Refrigerant Services *...........................          200,000.0
Showa Chemicals of America...........................           73,466.6
Solvay Fluorides.....................................        1,102,459.2
Summit Refrigerants *................................          200,000.0
SynAgile Corporation *...............................            1,125.1
Technical Chemical...................................          974,140.0
TradeQuim *..........................................          200,000.0
Transocean Offshore Deepwater Drilling...............               16.8
Tulstar Products.....................................          734,110.9
Tyco Fire Products *.................................          200,000.0
USA United Suppliers of America DBA USA Refrigerants           200,000.0
 *...................................................
USSC Acquisition Corp *..............................          131,451.0
Walmart..............................................        2,280,583.0
Waysmos USA..........................................          634,504.6
Weitron..............................................        6,338,344.6
Wesco HMB *..........................................          200,000.0
Wilhelmsen Ships Service.............................           40,392.5
                                                      ------------------
    Total............................................      273,498,315.0
------------------------------------------------------------------------
\1\ Numbers may not sum due to rounding.
\2\ See Table 1.
* These entities were issued consumption allowances consistent with the
  provisions in 40 CFR 84.15(e)(3). Consistent with 40 CFR 84.15(e)(3)
  and as clarified in the Agency's 2021 final rule, these entities were
  issued the same number of allowances for 2023 as they were in 2022. In
  accordance with 40 CFR 84.15(f)(1), allowances allocated to these
  entities may not be transferred.

    On September 30, 2022, EPA also provided notice to four entities of 
the Agency's intent to take administrative consequences in accordance 
with 40 CFR 84.35. Using this authority, EPA can retire, revoke, or 
withhold the allocation of allowances, or ban a company from receiving, 
transferring, or conferring allowances.\2\ EPA provided notice of its 
intent to retire an identified set of each of the four companies' 
allowances, affecting both calendar year 2022 and calendar year 2023 
allowances.
---------------------------------------------------------------------------

    \2\ Administrative consequences that the Agency has finalized 
can be found here: https://www.epa.gov/climate-hfcs-reduction/administrative-consequences-under-hfc-allocation-rule.
---------------------------------------------------------------------------

Judicial Review

    The AIM Act provides that certain sections of the Clean Air Act 
(CAA) ``shall apply to'' the AIM Act and actions ``promulgated by the 
Administrator of [EPA] pursuant to [the AIM Act] as though [the AIM 
Act] were expressly included in title VI of [the CAA].'' 42 U.S.C. 
7675(k)(1)(C). Among the applicable sections of the CAA is section 307, 
which includes provisions on judicial review. Section 307(b)(1) 
provides, in part, that petitions for review must only be filed in the 
United States Court of Appeals for the District of Columbia Circuit: 
(i) when the agency action consists of ``nationally applicable 
regulations promulgated, or final actions taken, by the 
Administrator,'' or (ii) when such action is locally or regionally 
applicable, but ``such action is based on a determination of nationwide 
scope or effect and if in taking such action the Administrator finds 
and publishes that such action is based on such a determination.'' For 
locally or regionally applicable final actions, the CAA reserves to the 
EPA complete discretion whether to invoke the exception in (ii).
    The final action herein noticed is ``nationally applicable'' within 
the meaning of CAA section 307(b)(1). The AIM Act imposes a national 
cap on the total number of allowances available for each year for all 
entities nationwide. 42 U.S.C. 7675(e)(2)(B)-(D). For 2023, there was a 
national pool of 344,299,157 production allowances and 273,498,315 
consumption allowances available to distribute. The action noticed 
herein distributed that finite set of allowances consistent with the 
methodology EPA established in the nationally applicable framework 
rule. As such, the allowance allocation is the division and assignment 
of a single, nationwide pool of HFC allowances to entities across the 
country according to the uniform, national methodology established in 
EPA's regulations. Each entity's allowance allocation is a relative 
share of that pool; thus, any additional allowances awarded to one 
entity directly affects the allocations to others.
    In the alternative, to the extent a court finds the final action to 
be locally or regionally applicable, the Administrator is exercising 
the complete discretion afforded to him under the CAA to make and 
publish a finding that the action is based on a determination of

[[Page 61318]]

``nationwide scope or effect'' within the meaning of CAA section 
307(b)(1).\3\ In deciding to invoke this exception, the Administrator 
has taken into account a number of policy considerations, including his 
judgment regarding the benefit of obtaining the D.C. Circuit's 
authoritative centralized review, rather than allowing development of 
the issue in other contexts, in order to ensure consistency in the 
Agency's approach to allocation of allowances in accordance with EPA's 
national regulations in 40 CFR part 84. The final action treats all 
affected entities consistently in how the Part 84 regulations are 
applied. The allowance allocation is the division and assignment of a 
single, nationwide pool of HFC allowances to entities across the 
country according to the uniform, national methodology established in 
EPA's regulations, and each entity's allowance allocation is a relative 
share of that pool; thus, any additional allowances awarded to one 
entity directly affect the allocations to others. The Administrator 
finds that this is a matter on which national uniformity is desirable 
to take advantage of the D.C. Circuit's administrative law expertise 
and facilitate the orderly development of the basic law under the AIM 
Act and EPA's implementing regulations. The Administrator also finds 
that consolidated review of the action in the D.C. Circuit will avoid 
piecemeal litigation in the regional circuits, further judicial 
economy, and eliminate the risk of inconsistent results for different 
regulated entities. The Administrator also finds that a nationally 
consistent approach to the allocation of allowances constitutes the 
best use of agency resources. The Administrator is publishing his 
finding that the action is based on a determination of nationwide scope 
or effect in the Federal Register as part of this notice in addition to 
inclusion on the website announcing allocations.
---------------------------------------------------------------------------

    \3\ In the report on the 1977 Amendments that revised section 
307(b)(1) of the CAA, Congress noted that the Administrator's 
determination that the ``nationwide scope or effect'' exception 
applies would be appropriate for any action that has a scope or 
effect beyond a single judicial circuit. See H.R. Rep. No. 95-294 at 
323, 324, reprinted in 1977 U.S.C.C.A.N. 1402-03.
---------------------------------------------------------------------------

    For these reasons, the final action of the Agency allocating 
hydrofluorocarbon allowances to entities located throughout the country 
is nationally applicable or, alternatively, the Administrator is 
exercising the complete discretion afforded to him by the CAA and finds 
that the final action is based on a determination of nationwide scope 
or effect for purposes of CAA section 307(b)(1) and is hereby 
publishing that finding in the Federal Register.
    Under section 307(b)(1) of the CAA, petitions for judicial review 
of this action must be filed in the United States Court of Appeals for 
the District of Columbia Circuit by December 12, 2022.

Hans Christopher Grundler,
Director, Office of Atmospheric Programs.
[FR Doc. 2022-22059 Filed 10-7-22; 8:45 am]
BILLING CODE 6560-50-P