EPA Proposed Rule tackles HCFCs, compliance reporting, & refrigerant imports
Last week the EPA published a proposed rule signed by Andrew Wheeler specifically addressing regulations on HCFC production and consumption, phase-outs, compliance reporting, labeling, refrigerant imports and destruction. They will be opening for public comment soon on this 165 page collection of regulatory changes, so here are some key takeaways to consider.
No more paper - reporting is going digital
The paperwork process is now going digital for all imports/exports and production. The development of this Electronic Reporting System was guided by 4 pillars of organization that have been enacted by congress over the past 10 years:
- CDX (Central Data Exchange): This is the agency’s electronic reporting site. It’s a central location where industries, states, local agencies and tribes can share their environmental data.
- E-enterprise: An effort approved in 2018 with a vision to bring the EPA, states, and tribes together to modernize business processes by streamlining and updating the implementation of environmental programs, enhance services to users by promoting electronic reporting and permitting online portals and other tools, and advance shared governance by collaborating on environmental programs.
- Cross-Media Electronic Reporting Rules (CROMERR): A legal framework for electronic reporting under the EPA’s regulatory programs. It removes regulatory obstacles to e-reporting.
- Government Paperwork Elimination Act: A requirement that Federal agencies provide individuals or entities the option to submit information or transact with the agency electronically, and to maintain records, including the ability to accept electronic signatures.
This paperwork elimination process could be the key ingredient in helping the EPA manage imports, since it requires extensive interaction with customs, the Department of Justice, Port Authorities. Paperwork is an unreliable and antiquated medium for the exchange of information for successful collaboration.
HCFC R-123 allocations will be increased, then drop
If you own, are planning to own an R-123 chiller, you will be happy to know the EPA is suggesting allowances be increased by more than 4M lbs after 2020. Under the status quo that number would have been closer to 2M lbs. However, keep in mind that this is still a reduction of 2M lbs overall. It is also only for 3 years, and production still shuts down in 2030. The EPA recognizes that R-123 equipment is still being installed, so they don’t want owners who waited until the last minute to end up with stranded assets. So, after 2030 when your R-123 chiller is only 7-10 years old, and has 29-32 years of deprecation left on the books, you will be the proud owner of an obsolete paperweight that some lucky OEM will be more than happy to retrofit for you.
The EPA is also proposing removing the swapping program, that enables distributors or credit owners the rights to transfer production or consumption allowances from one product to another. For instance if you owned the production rights to R-124, but there was no market for it, you could petition the EPA to produce R-123 instead, as long as the ODP value of the resulting material did not exceed your original quota. This made millionaires of many a speculator and completely adulterated the HCFC market, causing confusion, and misinformation everywhere. We consider the end to this program a good move.
The EPA intends to make some changes intended to ease the reporting burden, both for entities reporting, and for those reviewing the data on their end. For example, the electronic reporting requirement eliminates the need for regulations requiring manual calculations. For example, the elements that require the reporter to calculate values from data already provided. Since the data will be transmitted through electronic reporting forms, it can be automatically calculated and populated. Changes like this will save time for reporting entities, and reduce errors.
Other proposed changes would “harmonize the requirements for class I and class II substances.” So they’re proposing aligning submission timelines, consistency in requirements for quarterly reports, and correcting some of their terminology to be consistent with common usage.
The Halon industry will be happy to know that their outmoded infrastructure got a boost from the EPA. They will be allowed to import Halon easier from third world countries with ODS banks. It seems strange that third world countries don’t need antiquated materials that are harmful to the ozone, but here in the US we’re going to enhance imports of this non-produced enemy of the ozone because we need them. So the most advanced country in the world is importing one of the least environmentally friendly chemicals in the world. Since all of this is vented, it will be interesting to see if it shows up on the GHG emissions inventory someday, likely not since the governments including the US do not include ODS on the inventory.
On the other hand, they’re demonstrating proactive governance by acknowledging the issue of R-11 emissions from China. This spring news spread that the Chinese producers of foam insulation might be venting significant quantities of R-11 as they continue to produce this CFC. It has been out of production in the US since 1996, and there are no U.S. manufacturers currently using CFC-11 or any other class I substance for polyurethane foam systems. So to completely close the door to any possibility of accidentally contributing to emissions, the EPA is proposing to add polyurethane foam systems containing CFCs to the list of banned products.
It seems the EPA finally understands California’s refrigerant destruction market and that US destruction resources are an important global tool and resource. So now, foreign companies can import refrigerants for destruction, and the restriction for imports have been modified to align with access to data that is available from sources overseas. There are some problems here. For instance, most of the import requirements were implemented as a result of US companies providing false documentation on material origin during the CFC era. They added some requirements that stopped illegal imports, but they stopped everything in the process. This was commonly referred to as a “Win/Lose” outcome because restrictions blocked the illegal stuff, but back in the 90’s shut down the powerful US recycle/ destruction market
Refrigerant destruction facilities everywhere in the US will rejoice! Imports data sources will be relaxed and less information is required for each import. But keep in mind that most destruction projects are performed in order to generate carbon offset credits. Although the US relaxed import requirements, the carbon protocols in place to support Carbon Offset projects remain vigilant and robust and will likely require more information. But the regulation does allow more imports of these leaky stockpiles. So if you own a stock of CFCs or HCFCs (and you are not in the US) you can send them here, destroy them, and they will no longer harm the environment.
The EPA now accepts that all refrigerants are ventedThe EPA gets their market role! Their proposed actions and their words show that they understand all refrigerants are vented, and we no longer have to live under the false pretense that somehow the recycling effort is working. It is not, and we need to turn a corner and deal with that.
“The disbenefits the EPA is concerned about include near and longer term available supply of reclaimed and recycled HCFC-123, as well as emissions of ODS, given the agency’s assumption that all refrigerant produced is eventually emitted into the atmosphere.
More allocated allowances would likely suppress the recovery and reclamation market, and cause more HCFC material to be vented at the end of the equipment's lifetime.”
-EPA “Protection of Stratospheric Ozone: Adjustments to the Allowance System for Controlling HCFC Production and Import, 2020-2029; and Other Updates” Section VIII, pg. 118
If refrigerant venting is universally acknowledged, we can begin moving forward to find alternate end-of-life solutions, and we should start immediately. For decades here at trakref® we have been doing our best to sound the alarm that R-123 is in shortage (post 2020), and that even the best programs encourage venting if you don’t tackle the leak at the time of maintenance. The EPA is now soliciting feedback on the proposals in the document. We are sharing a summary so you can catch up, consider your impact, and engage the EPA with solutions. Here are our three suggestions for the most relevant feedback for EPA:
- Great work on the paperwork reduction program. It could/should be the cornerstone of your import process in order to enhance imports and support agencies on the front line in their need for data so they can manage our trading partners.
- Disappointed in the increase in R-123 production, but we understand that taxpayers did not prepare well for the phase out - they only had 25 years.
- Be careful of relaxing the import restriction. They served a useful purpose back in the day during the CFC phase out and helped the US to transition from the wild west of import controls into a sophisticated system of checks and balances. That built trust among all parties and protected importers who could reliably access foreign materials without fear of reprisal.
The Proposed Rule is a big move from the EPA at a time when acknowledgement of climate change is on the rise, refrigerant management is being recognized as a top solution to those changes, and the struggle between federal, state, and local regulation is evident in the patchwork evolving every day. Know that trakref® is on the case. We work hard to keep you up to date, and to create tools to help technicians and property owners stay in compliance. If you don’t already, subscribe to our weekly blog, and don’t hesitate to contact us to discuss what issues you’re trying to solve in staying compliant