Document ID: EPA-HQ-OAR-2016-0271-0085
Agency: epa
Document Type: Supporting & Related Material
Title: 
Posted Date: 2019-12-20T05:00Z

THE U.S. PHASEOUT OF HCFCS:
ESTIMATED COSTS FOR REGULATORY CHANGES TO LABELING OF CONTAINERS OF HCFC FIRE SUPPRESSION AGENT
                                       
                                       
                                       
                                       
                                       
                                       
                                       
                     U.S. Environmental Protection Agency
                          Office of Air and Radiation
                       Stratospheric Protection Division
                         1200 Pennsylvania Avenue, NW
                             Washington, DC 20460
                                       
                                       
                                       
                                       
                                 Final Report
                                 December 2019
Questions concerning this memo should be directed to: 

Katherine Sleasman
Stratospheric Protection Division 
U.S. Environmental Protection Agency
1200 Pennsylvania Avenue, NW (6205T)
Washington, D.C. 20460
1-202-564-7716 (phone)
1-202-343-2338 (fax)
sleasman.katherine@epa.gov

This memo was prepared with support from ICF under contract number EP-BPA-16-H-0021.

Background 
Under Title VI of the Clean Air Act (CAA), the U.S. Environmental Protection Agency (EPA) is responsible for developing and implementing programs that protect the stratospheric ozone layer. The EPA regulates the use of ozone-depleting substances (ODS) that are being phased out consistent with CAA Title VI and the Montreal Protocol on Substances that Deplete the Ozone Layer (Montreal Protocol). The EPA is also implementing complementary measures under CAA Title VI, including a Section 611 provision to require labeling to alert the public that a product contains or is manufactured with a substance known to harm public health and environment by destroying ozone in the upper atmosphere. 
Hydrochlorofluorocarbons (HCFCs) are a class of ODS being phased out in the United States and globally., The United States will complete its  production and consumption phaseout of HCFCs by 2030 by following the schedule is summarized in Table 1. 
              Table 1: Detailed Regulatory HCFC Phaseout Schedule
                                     Date
                                Restriction[a]
January 1, 2003
 Ban on production and import of HCFC-141b.
January 1, 2010
 Ban on production and import of HCFC-22 and HCFC-142b except for on-going servicing demand in equipment manufactured before January 1, 2010.
January 1, 2015
 Ban on production, import, and introduction into interstate commerce or use of HCFCs except where the HCFCs are used as a refrigerant in equipment manufactured prior to January 1, 2020, or where HCFCs are used as a fire suppression agent for non-residential applications.
January 1, 2020
 Ban on remaining production and import of HCFC-22 and HCFC-142b.
 Ban on production and import of all other HCFCs except for use in servicing AC, refrigeration, and fire suppresion equipment[b] manufactured before January 1, 2020.
January 1, 2030
 Ban on production and import of all HCFCs.
   [a] Exemptions apply, including exemptions for 1) HCFCs used in processes resulting in their transformation or destruction, and 2) HCFCs that are recovered and either recycled or reclaimed.
   [b] Through the rule that this report accompanies, the EPA is allowing servicing of fire suppression equipment until January 1, 2030 following the November 2018 adjustment to the Montreal Protocol (Decision XXX/2). 

Product labeling is mandated by Section 611 of the CAA, and requirements are specified in Title 40 Part 82 Subpart E in the Code of Federal Regulations (40 CFR 82.100 - 82.124). Products imported or manufactured after January 1, 2015 that contain or were manufactured with HCFCs must bear a clearly legible and conspicuous warning label that can be read by consumers before they can be introduced into interstate commerce (See 58 FR 8136, February 11, 1993).
WARNING: [Contains / Manufactured with] [insert name of HCFC], a substance that harms public health and environment by destroying ozone in the upper atmosphere.
WARNING: [Contains / Manufactured with] [insert name of HCFC], a substance that harms public health and environment by destroying ozone in the upper atmosphere.

HCFC-123 -- the primary constituent in one fire suppression agent called Halotron(R)I (also referred to as HCFC Blend B) -- is currently used as a streaming agent in fire suppression equipment including handheld extinguishers, wheeled extinguishers, and aircraft rescue and firefighting (ARFF) vehicles in various commercial, industrial, transportation, and military applications in the United States. After January 1, 2020, a distinction is drawn where only recovered and recycled or reclaimed HCFC-123, as well as stockpiled material imported prior to 2020, can be used to manufacture new fire suppression equipment, and newly imported material can only be used to service existing equipment. 

Since HCFC-123 imported after January 1, 2020 can only be used to service fire suppression equipment manufactured prior to January 1, 2020, the EPA is revising the existing labeling requirements in 40 CFR subpart E for containers of HCFC-123 fire suppression agent to provide clarity to the regulated community. These changes require redesign of labels already required under CAA Section 611 and the implementing regulations. The EPA is revising labels for containers of fire suppression agent made with HCFC-123 imported after January 1, 2020 by adding language to inform anyone using that fire suppression agent that the contents can only be used to service equipment manufactured before January 1, 2020. The rule that this report accompanies modifies the required label to read: 

WARNING: [Contains / Manufactured with] HCFC-123, a substance that harms public health and environment by destroying ozone in the upper atmosphere. Use only for recharge of equipment manufactured before January 1, 2020.
WARNING: [Contains / Manufactured with] HCFC-123, a substance that harms public health and environment by destroying ozone in the upper atmosphere. Use only for recharge of equipment manufactured before January 1, 2020.

The EPA is also requiring a modified label for containers made with recycled or reclaimed HCFC-123 or HCFC-123 imported before January 1, 2020. The required label reads: 

WARNING: [Contains / Manufactured with] HCFC-123, a substance that harms public health and environment by destroying ozone in the upper atmosphere. For use in any equipment.
WARNING: [Contains / Manufactured with] HCFC-123, a substance that harms public health and environment by destroying ozone in the upper atmosphere. For use in any equipment.

This analysis presents an estimate of the overall costs associated with these revisions to labeling for containers of fire suppression agent manufactured with HCFC-123 e.g., Halotron(R)I. 
Methodology and Cost Assumptions
The costs to revise labels for fire suppression agent containers were calculated by estimating the one-time labor costs and printing preparation costs associated with redesigning the existing label for HCFC-123 fire suppression agent containers manufactured between 2020 and 2029. Products containing HCFC-123 are assumed to require one-color, vinyl sticker labels.
 
Companies producing HCFC-123 fire suppression agent are assumed to incur labeling redesign costs associated with the following: 
 Administrative activities (e.g., work by purchasing, marketing, legal, and/or regulatory staff to initiate and approve label development or changes). 
 Graphic design (e.g., work by a graphic designer to develop or alter the label).
 Prepress and engraving activities to convert the design created by the graphic designer into the film or files that are used to engrave or etch the printing plates or cylinders, and then engrave the plates or cylinders for printing. 
These one-time costs for fire suppression agent labeling are assumed to be incurred on a company-level basis in response to the new labeling requirements and are estimated based on information from the U.S. Food and Drug Administration (FDA) Labeling Cost Model (RTI 2003). 
Administrative and graphic design labor costs are estimated based on the total number of hours required to redesign existing labels as well as hourly labor costs. Administrative and graphic design costs (one-color printing) for redesign were assumed to require half the amount of time estimated for new design activities in the FDA Labeling Cost Model, because the redesigned labels will be similar to the existing labels -- a sentence is being added to the existing label. The average hourly labor cost for a marketing manager (administrative) is $195.34 and the average hourly labor cost for a graphic designer is $72.54 (U.S. Department of Labor 2018a and 2018b). These hourly costs include wages, overhead rates, and fringe rates. 
Prepress and engraving costs vary depending on the printing method used and the number of colors. For the purposes of this analysis, which assumes printing of vinyl sticker labels, companies are assumed to use flexographic printing with one color. The EPA assumes that the redesigned labels will have similar dimensions to those already required and will be constructed with the same material (i.e., vinyl) as the existing label. Therefore, the EPA expects that printing the redesigned labels will cost the same amount as printing the existing label.
Results
The labor and printing preparation costs associated with redesigning labels for HCFC-123 fire suppression agent containers are summarized in Table 2. The calculated labor cost includes the administrative labor costs and graphic design labor costs associated with redesigning the labels. The prepress and engraving costs are estimated to be $1,363 per label. The total cost per producer includes labor costs and prepress and engraving costs for the two labels required in the rule. 

Table 2. Labor and Printing Preparation Costs of Labeling Redesign (2018$)
Criteria
                                    Estimate
Administrative Hours (Redesign)[a]
                                      5.5
Administrative Labor Costs (Redesign)[b]
                                    $1,074
Graphic Design Hours (Redesign)[a]
                                      7.5
Graphic Design Labor Costs (Redesign)[b]
                                     $544
Subtotal for Labor Costs[c]
                                    $1,618
Prepress Costs (per label)
                                     $714
Engraving Costs (per label)
                                     $649
Subtotal for Prepress and Engraving Costs (per label)
                                    $1,363
Subtotal for Prepress and Engraving Costs (for two labels)
                                    $2,726
Total Cost per Producer[d]
                                    $4,344
Sources: RTI (2003), U.S. Department of Labor (2018aand 2018b) , U.S Department of Labor (2019)
[a] The hours shown are rounded to the nearest tenth of an hour. 
[b] Labor cost totals may not reflect independent rounding of hours shown in the table.
[c] The labor hours and costs are assumed to cover the redesign of both labels required in the rule. 
[d] Total cost per producer includes prepress and engraving costs for two labels required in the rule for containers made with HCFC-123 imported on or after January 1, 2020 and containers made with recycled or reclaimed HCFC-123.

As there is only one producer of an HCFC-123 based fire suppression agent, the total one-time cost of the modification to the required labels is estimated at $4,344.
References
RTI. 2003. FDA Labeling Cost Model: Final Report. Prepared for DHHS/PHS/FDA/CFSAN/OSAS/DMST by RTI. Revised January 2003. Available online at: http://foodrisk.org/default/assets/File/labeling_cost_model.pdf. 

U.S. Department of Labor. 2018a. Occupational Employment and Wages, May 2018. 27-1024 Graphic Designers. Available online at: http://www.bls.gov/oes/current/oes271024.htm.

U.S. Department of Labor. 2018b. Occupational Employment and Wages, May 2018. 11-2021 Marketing Managers. Available online at: https://www.bls.gov/oes/current/oes112021.htm.

U.S. Department of Labor. 2019. Employer Costs for Employee Compensation - June 2019. Available online at: http://www.bls.gov/news.release/pdf/ecec.pdf.