Phasedown of Hydrofluorocarbons: Management of Certain Hydrofluorocarbons and Substitutes Under the American Innovation and Manufacturing Act of 2020

SUPPLEMENTARY INFORMATION:

Throughout this document whenever “we,” “us,” “the Agency,” or “our” is used, we mean EPA. Acronyms that are used in this rulemaking that may be helpful include:

AHRI—Air-Conditioning, Heating, and Refrigeration Institute

ALD—Automatic Leak Detection

AIM Act—American Innovation and Manufacturing Act of 2020

APF—Air Permitting Forum

APU—Auxiliary power unit

ASHRAE—American Society of Heating, Refrigerating and Air-Conditioning Engineers

ASTM—American Society for Testing and Materials

BOEM—Bureau of Ocean Energy Management

BTU/h—British thermal units per hour

CAA—Clean Air Act

CARB—California Air Resources Board

CBI—Confidential Business Information

CFC—Chlorofluorocarbon

CFR—Code of Federal Regulations

CH₄ —Methane

CO₂ —Carbon dioxide

CO₂ e—Carbon Dioxide Equivalent

DOD—Department of Defense

DOI—Department of the Interior

DOJ—Department of Justice

DOT—Department of Transportation

EEAP—Environmental Effects Assessment Panel

EOL—End of Life

EPA—Environmental Protection Agency

ER&R—Emissions Reduction and Reclamation

EVe—Exchange Value Equivalent

FAA—Federal Aviation Administration

FEMA—Fire Equipment Manufacturers Association

F-HTFs—Fluorinated Heat Transfer Fluids

FOIA—Freedom of Information Act

FSSA—Fire Suppression Systems Association

GHG—Greenhouse gas

GWP—Global Warming Potential

HARC—Halon Alternatives Research Corporation

HCFC—Hydrochlorofluorocarbon

HCFO—Hydrochlorofluoroolefin

HEEP—HFC Emissions Estimating Program

HFC—Hydrofluorocarbon

HFO—Hydrofluoroolefin

HSWA—Hazardous and Solid Waste Amendments of 1984

HVAC—Heating, Ventilation, and Air Conditioning

HVACR—Heating, Ventilation, Air Conditioning, and Refrigeration

ICR—Information Collection Request

in-Hg—inches of Mercury

IPCC—Intergovernmental Panel on Climate Change

IPR—Industrial Process Refrigeration

LRM—Lifecycle refrigerant management

MACS—Mobile Air Climate Systems Association

MMTCO₂ e—Million Metric Tons of Carbon Dioxide Equivalent

MMTEVe—Million Metric Tons of Exchange Value Equivalent

MVAC—Motor Vehicle Air Conditioner

NAICS—North American Industrial Classification System

NAFED—National Association of Fire Equipment Distributors

NEDA/CAP—National Environmental Development Association's Clean Air Project

NFPA—National Fire Protection Association

NODA—Notice of Data Availability

NRDC—Natural Resources Defense Council

NTTAA—National Technology Transfer and Advancement Act

OCS—Outer Continental Shelf

OCSLA—Outer Continental Shelf Lands Act

ODP—Ozone Depletion Potential

ODS—Ozone-depleting substances

OEM—Original Equipment Manufacturer

OMB—Office of Management and Budget

PII—Personally identifiable information

ppm—Parts Per Million

PRA—Paperwork Reduction Act

PTAC—Packaged terminal air conditioners

R4 Program—Refrigerant Recovery, Reclaim, and Reuse Requirements (CARB Program)

RACA—Request for Additional Consumption Allowance

RACHP—Refrigeration, Air Conditioning, and Heat Pumps

RCOP—Recycling Code of Practice

RCRA—Resource Conservation and Recovery Act

RFA—Regulatory Flexibility Act

RIA—Regulatory Impact Analysis

SAE—Society of Automotive Engineers

SC-HFC—Social Cost of Hydrofluorocarbons

SISNOSE—Significant Economic Impact on a Substantial Number of Small Entities

SNAP—Significant New Alternatives Policy

TFA—Trifluoracetic acid

TSD—Technical Support Document

UMRA—Unfunded Mandates Reform Act

VCOP—Voluntary Code of Practice

VRF—Variable Refrigerant Flow

VSQG—Very Small Quantity Generator

Table of Contents

I. Executive Summary

A. What is the purpose of these regulations?

B. What is the summary of the regulations finalized in this notice?

C. What is the summary of the costs and benefits?

II. General Information

A. Do these regulations apply to me?

B. What is EPA's authority for these regulations?

III. Background

A. What are HFCs?

B. How do HFCs affect public health and welfare?

C. What regulatory programs addressing refrigerants has EPA already established under the Clean Air Act?

1. National Recycling and Emission Reduction Program (CAA section 608)

2. Motor Vehicle Air Conditioning Servicing Program (CAA section 609)

3. Significant New Alternatives Policy Program (CAA section 612)

IV. How is EPA regulating the management of HFCs and their substitutes?

A. What definitions is EPA implementing under subsection (h)?

1. Terms That Did Not Generate Comment and That EPA Is Finalizing as Proposed

2. Terms That Received Comment or That EPA is Modifying

3. What additional comments did EPA receive on definitions?

B. What types of equipment is EPA addressing under subsection (h)?

C. How is EPA addressing leak repair?

1. What refrigerants are subject to leak repair requirements?

2. Appliances with what charge size are subject to leak repair requirements?

3. What leak repair provisions is EPA establishing?

a. Leak Rate Calculations

b. Requirement To Repair Leaks, Timing and Applicable Leak Rates

c. Verification Testing

d. Leak Inspections

e. Chronically Leaking Appliances

f. Retrofit and Retirement Plans

g. Recordkeeping and Reporting

D. How is EPA establishing requirements for the installation of automatic leak detection systems?

1. Automatic Leak Detection Requirements

2. Recordkeeping and Reporting

E. How is EPA establishing requirements for recovered and reclaimed HFCs?

1. Reclamation Standard

2. Requirements for Servicing and/or Repair of Existing Equipment in the RACHP sector

F. How is EPA establishing an HFC emissions reduction program for the fire suppression sector?

1. Nomenclature Used in This Section

2. Emissions Reduction in the Fire Suppression Sector

a. Minimizing Releases of HFCs

b. Requirements for Initial Installation of Equipment for Fire Suppression

c. Requirements for Servicing and/or Repair of Existing Equipment for Fire Suppression

d. Fire Suppression Technician Training

e. Recycling of HFCs Prior to Disposal of Fire Suppression Equipment Containing HFCs

f. Recordkeeping and Reporting

G. What requirements is EPA establishing for handling disposable cylinders?

1. Requirements for Disposable Cylinders

2. Small Cans of Refrigerant

H. How is EPA establishing RCRA refrigerant recycling alternative standards?

1. Nomenclature Used in This Section

2. Background

3. Final Alternative RCRA Standards for Ignitable Spent Refrigerants Being Recycled for Reuse

a. Comments on the RCRA Alternative Standards and Changes Made in Response to Comments

b. Scope of the Final RCRA Alternative Standards

c. RCRA Alternative Standards Requirements

4. RCRA Very Small Quantity Generator Wastes

5. RCRA Regulation of Exports and Imports of Certain Ignitable Spent Refrigerants

6. Applicability of Alternative Standard in RCRA-Authorized States

7. Effect on State Authorization

I. MVAC Servicing and Reprocessed Material

V. How is EPA treating data reported under this rule?

A. Background on Determinations of Whether Information is Entitled to Treatment as Confidential Information

1. Confidential Treatment of Reported Information

2. Emission Data Under section 114 of the Clean Air Act

B. Data Elements Reported to EPA Under the Leak Repair Provisions

C. Data Elements Related to Fire Suppression

VI. What are the costs and benefits of this action?

A. Background

B. Estimated Costs and Benefits of the Final Rule

1. Total Incremental Costs and Benefits of the Final Rule

2. Estimating Costs and Benefits Based on Affected Equipment and Appliances

VII. How is EPA considering environmental justice?

VIII. How is EPA responding to other comments on the proposed rule?

IX. Judicial Review

X. Severability

XI. Statutory and Executive Order Review

A. Executive Order 12866: Regulatory Planning and Review and Executive Order 14094: Modernizing Regulatory Review

B. Paperwork Reduction Act (PRA)

C. Regulatory Flexibility Act (RFA)

D. Unfunded Mandates Reform Act (UMRA)

E. Executive Order 13132: Federalism

F. Executive Order 13175: Consultation and Coordination With Indian Tribal Governments

G. Executive Order 13045: Protection of Children From Environmental Health and Safety Risks

H. Executive Order 13211: Actions That Significantly Affect Energy Supply, Distribution, or Use

I. National Technology Transfer and Advancement Act (NTTAA)

J. Executive Order 12898: Federal Actions To Address Environmental Justice in Minority Populations and Low-Income Populations and Executive Order 14096: Revitalizing Our Nation's Commitment to Environmental Justice for All

K. Congressional Review Act (CRA)

I. Executive Summary

A. What is the purpose of these regulations?

The Environmental Protection Agency (EPA) is issuing regulations to implement certain provisions of the American Innovation and Manufacturing Act of 2020, codified at 42 U.S.C. 7675 (AIM Act or “the Act”). The AIM Act authorizes EPA to address hydrofluorocarbons (HFCs) in three main ways: Phasing down HFC production and consumption through an allowance allocation program; facilitating the transition to next-generation technologies by restricting use of these HFCs in the sector or subsectors in which they are used; and promulgating certain regulations for purposes of maximizing reclaiming and minimizing releases of HFCs from equipment and ensuring the safety of technicians and consumers. This rulemaking focuses on the third area—establishing certain regulations for HFCs and their substitutes for the purposes of maximizing reclaiming and minimizing releases of HFCs from equipment and ensuring the safety of technicians and consumers.

More specifically, subsection (h) of the AIM Act, titled “Management of Regulated Substances,” directs EPA to promulgate regulations to control, where appropriate, any practice, process, or activity regarding the servicing, repair, disposal, or installation of equipment that involves: a regulated substance (used interchangeably with “HFCs” in this rulemaking), a substitute for a regulated substance, the reclaiming of a regulated substance used as a refrigerant, or the reclaiming of a substitute for a regulated substance used as a refrigerant.

This rulemaking establishes the Emissions Reduction and Reclamation (ER&R) Program to implement the provisions of subsection (h), including its authority to issue regulations to control such practices, processes, or activities, particularly as related to the management, use, and reuse of HFCs and substitutes in equipment. Further, these regulations include provisions to support implementation of, compliance with, and enforcement of requirements under subsection (h) of the AIM Act.

Additionally, EPA is establishing alternative RCRA standards for certain ignitable spent refrigerants being recycled for reuse, as that term is used under RCRA. These standards involve regulatory changes to 40 Code of Federal Regulations (CFR) parts 261 through 271 and are separate from the regulations under subsection (h)(1) of the AIM Act. These standards are established under a different set of statutory authorities than the ER&R regulations, and they are part of an independent and distinct regulatory regime. EPA is providing notice of the AIM Act regulations and the RCRA regulations in one Federal Register notice given both the RCRA regulations concerning the recovery and recycling of certain ignitable spent refrigerants and the AIM Act regulations concerning recovery and reclamation of refrigerants may be of interest to some of the same stakeholders.

B. What is the summary of the regulations finalized in this notice?

EPA is promulgating two separate and distinct sets of regulations. First, EPA is establishing an ER&R program for the management of HFCs and certain substitutes under subsection (h) of the AIM Act. The Agency is including provisions that address the purposes identified in subsection (h)(1) of the AIM Act of maximizing reclamation, minimizing the release of HFCs from equipment, and ensuring the safety of technicians and consumers. Specifically, the AIM Act regulations include requirements for:

• Leak repair of appliances that contain at least 15 pounds of a refrigerant that contains an HFC or a substitute for an HFC with a global warming potential (GWP) above 53, with specific exceptions;
• Installation and use of an automatic leak detection (ALD) system for certain new and existing appliances containing 1,500 pounds or more of a refrigerant that contains an HFC or a substitute for an HFC with a GWP above 53;
• A reclamation standard limiting the amount of virgin HFCs that can be contained in reclaimed HFC refrigerants;
• The servicing and/or repair of existing equipment in certain refrigeration, air conditioning, and heat pumps (RACHP) subsectors to be done with reclaimed HFCs;
• The servicing, repair, disposal, or installation of fire suppression equipment that contains HFCs, with the purpose of minimizing the release of HFCs from that equipment, including requirements for the initial installation and servicing and/or repair of fire suppression equipment to be done with recycled HFCs, as well as requirements related to technician training in the fire suppression sector;
• Removal of HFCs from disposable cylinders before discarding; and
• Recordkeeping, reporting, and labeling.

Enforcement and compliance. To support compliance with these requirements, EPA is establishing labeling, reporting, and recordkeeping requirements as described in this rulemaking notice. The Agency intends to use a reporting platform the same as or similar to those used for prior AIM Act rules, and will consider making information not entitled to confidential treatment, as described in section V of this action, publicly available.

Exemptions for certain applications and other provisions. Provisions finalized in this action do not apply to two applications, mission-critical military end uses and on board aerospace fire suppression, as listed at 40 CFR 84.13(a), for a year or years for which that application receives an application-specific allowance as defined at 40 CFR 84.3. As such, the provisions established in this action include exemptions for the following applications, for a year or years for which that application receives an application-specific allowance:

• Mission-critical military end uses and
• On board aerospace fire suppression.

Amendments to the RCRA hazardous waste regulations. Second, EPA is amending a separate set of regulations promulgated under RCRA, a separate statutory authority from the AIM Act, to establish alternative standards for ignitable spent refrigerants when “recycled for reuse,” as the term is to be defined under RCRA. EPA is establishing that the alternative standards at 40 CFR part 266, subpart Q, under RCRA, apply to HFCs and other substitutes that are lower flammability ( i.e., that do not belong to flammability Class 3 as classified by the American Society of Heating, Refrigerating and Air-Conditioning Engineers (ASHRAE) Standard 34-2022). EPA is limiting the alternative standards to lower flammability HFCs and substitutes (Class 1, 2, and 2L) because of the lower risk of fire from the collection and recycling for reuse of these refrigerants, and the greater market value of these refrigerants, which supports the conclusion that these spent refrigerants will be recycled for reuse and not stockpiled, mismanaged, or abandoned.

Other topics. Together with the proposal for this rule, EPA issued an advanced notice of proposed rulemaking (ANPRM) seeking information on approaches for establishing requirements for technician training and/or certification. As stated at proposal, EPA is not addressing technician training in this final rulemaking and accordingly is not responding to comments on the ANPRM in this final rule.

Additionally, EPA is not finalizing as part of this action under the AIM Act the proposed provisions for container tracking of HFCs that could be used in the servicing, repair, and/or installation of refrigerant-containing or fire suppression equipment. EPA is also not finalizing in this action provisions requiring the initial installation of refrigerant-containing equipment in certain subsectors in the RACHP sector to be done with reclaimed refrigerant where HFCs or a blend containing HFCs are used. The Agency intends to further consider those provisions and the comments submitted on the proposed requirements before determining how to proceed. As such, EPA need not respond to public comments on those proposed requirements as part of this action.

EPA received many comments on this rulemaking, including those that were in general support or opposition of the various provisions. Specific comments as relevant to provisions in this rulemaking are discussed in the respective sections of this rulemaking. Some comments raised issues that are beyond the scope of this rulemaking; because those comments require no response, EPA need not address them in this notice, though in many cases the Agency has noted the submission of such comments for informational purposes.

C. What is the summary of the costs and benefits?

The costs and benefits for the provisions related to managing regulated substances and their substitutes in this rule comes from the Analysis of the Economic Impact and Benefits of the Final Rule: Management of Certain Hydrofluorocarbons and Substitutes Under Subsection (h) of the American Innovation and Manufacturing Act of 2020 technical support document (TSD) (referred to as the “Economic Impact and Benefits TSD” in this rule) and the Regulatory Impact Analysis (RIA) Addendum for this rule (referred to in this rule as the “RIA addendum”) contained in the docket of this rule to provide the public with information on the relevant costs and benefits of this action, and to comply with executive orders. EPA notes that the costs and benefits associated with the management of regulated substances and their substitutes under the AIM Act are described and calculated separately from those associated with the amendments to the RCRA hazardous waste regulations. These analyses—as summarized later in this section—highlight the economic costs and benefits of the provisions in this rulemaking.

Given that the provisions being finalized concern the management of HFCs, and HFCs are subject to the phasedown of production and consumption under the AIM Act, the Agency relied on its previous analyses as a starting point for the assessment of costs and benefits of this rule. Specifically, the Allocation Framework Rule, “Phasedown of Hydrofluorocarbons: Establishing the Allowance Allocation and Trading Program Under the American Innovation and Manufacturing Act” (86 FR 55116, October 5, 2021), the 2024 Allocation Rule, “Phasedown of Hydrofluorocarbons: Allowance Allocation Methodology for 2024 and Later Years” (88 FR 46836, July 20, 2023), and the 2023 Technology Transitions Rule, “Phasedown of Hydrofluorocarbons: Restrictions on the Use of Certain Hydrofluorocarbons Under the American Innovation and Manufacturing Act of 2020” (88 FR 73098, October 24, 2023) are assumed as a baseline for this rule. In this way, EPA analyzed the potential incremental impacts of the rule, attributing benefits only insofar as they are additional to those already assessed in the Allocation Framework Rule RIA, the 2024 Allocation Rule RIA Addendum, and the 2023 Technology Transitions Rule RIA Addendum (collectively referred to as “Allocation and 2023 Technology Transitions Rules” in this discussion).

As detailed in the RIA addendum and the Economic Impact and Benefits TSD, the number, charge sizes, leak rates, and other characteristics of potentially affected RACHP equipment were estimated using EPA's Vintaging Model. These estimates served as a basis for calculating the reductions in HFC consumption and emissions from the various requirements of the final rule. As described in the RIA addendum and the Economic Impact and Benefits TSD, the leak repair and ALD system provisions finalized in this rule are assumed to result in the repair of leaking systems earlier than they otherwise would have, leading to reduced emissions of HFCs. Provisions requiring reclaimed refrigerant, requirements for the fire suppression sector, and provisions related to the handling of disposable cylinders are further estimated to result in incremental reductions in HFC emissions.

Estimated reductions in HFC releases from equipment result in climate benefits due to reduced climate forcing, which have been monetized in the RIA addendum by multiplying avoided emissions by estimates of the social cost of each HFC (collectively referred to as SC-HFC) affected by the rule. The RIA addendum includes these SC-HFC estimates and uses them in some of the analyses for the purpose of providing information to the public and to comply with executive orders. Although we utilized the SC-HFC estimates for purposes of those analyses, this action does not rely on those values or the resulting quantification of climate benefits as a record basis for this rule, and we would reach the same conclusions in absence of the social costs of HFCs. In the years 2026 through 2050, EPA estimates the rule will prevent approximately 120 million metric tons of carbon dioxide equivalent (MMTCO₂ e) in HFC emissions, and the present value of economic benefit of avoiding the damages associated with those emissions is estimated at $8.4 billion (discounted to 2024 dollars using a three percent discount rate). The annual benefits are estimated to decrease over time due to the HFC phasedown and the transition out of the higher-GWP HFCs, lowering the average GWP of later emissions. For example, it is estimated that the leak repair and ALD system provisions will prevent approximately 5.6 MMTCO₂ e of HFC emissions in 2030 and 3.0 MMTCO₂ e in 2040.

Reducing HFC emissions due to fixing leaks earlier is also anticipated to lead to savings for some system owners and operators, as less new refrigerant needs to be purchased to replace leaked refrigerant. In 2026, it is estimated that the leak repair and ALD provisions will lead to savings of $19.5 million (2022$) based on reduced HFC refrigerant needed to maintain the equipment. We also are aware that a refrigerant-containing appliance would operate less efficiently if not properly charged and maintained, leading to increased energy costs; however, we have not quantified such savings in our analysis. EPA acknowledges that these $19.5 million in savings may not completely offset leak repair compliance costs and may not accrue uniformly to all regulated entities. Further, while these provisions have been estimated to result in savings, EPA understands that entities that may be affected by these regulations might not perform the practices, processes, or activities that would result in cost savings absent regulation. When entities are reviewing their own economic analyses, some factors may be pertinent that make new technologies or economically favorable best practices less attractive than existing practices, or some market failure may exist that acts as a barrier to businesses' adoption of the most profitable course. For example, market failures may exist where there is imperfect information or split incentives, such as decision-makers not knowing the percentage of energy use associated with refrigeration or the costs of replacing refrigerant lost from leaking appliances.

The compliance costs of the rule include recordkeeping and reporting costs, the costs of purchasing and operating ALD systems, costs of required inspections, the cost of repairing leaks earlier than would have been necessary without the provisions, the costs associated with using reclaimed HFCs in certain RACHP subsectors for the servicing of existing equipment (vis a vis virgin manufactured HFCs), the costs associated with minimizing releases of HFCs from fire suppression equipment (including using recycled HFCs in the initial and servicing and/or repair of fire suppression equipment), and the cost of disposable cylinder management requirements. In the years 2026 through 2050, these provisions would result in compliance costs (inclusive of refrigerant savings) with a present value estimated at $1.5 billion (in 2022 dollars discounted to 2024) at a two percent discount rate, $1.3 billion at a three percent discount rate, or $0.9 billion at a seven percent discount rate.

Taking into account both benefits and compliance costs over the 2026 through 2050 time period, it is estimated that the rule results in present value net benefit (climate benefits, as monetized by application of SC-HFCs, discounted at three percent, minus compliance costs) of $6.9 billion (with compliance costs discounted at two percent) to $7.5 billion (with compliance costs discounted at seven percent).

As detailed in the RIA addendum and the Economic Impact and Benefits TSD, these values represent an estimate of potential incremental benefits and assume that industry would comply with previous AIM Act regulations as outlined in the 2023 Technology Transitions RIA Addendum but would not undertake certain improvements to leak repair and refrigerant recovery practices in the absence of this rulemaking that were not required by those regulations. Since these assumptions are ultimately uncertain, in the RIA addendum and the Economic Impact and Benefits TSD, EPA has also provided estimates under an additional scenario in which leak repair and recovery improvements do occur in the baseline, thus resulting in lower incremental benefits. The assumptions in this alternative scenario translate into reduced estimates of the incremental effect of the provisions of this final rule since additional impacts are only quantified insofar as they go beyond baseline assumptions of existing policy and industry practice.

Some of the information regarding projected impacts of certain aspects of the action was considered by EPA as it finalized this rulemaking. To the extent that EPA has considered such information, it is compiled in the Economic Impact and Benefits TSD, which is in the docket for this rulemaking. While EPA has included estimates of the costs and benefits of this rulemaking in the RIA addendum to provide the public with information on the relevant costs and benefits of this action and to comply with Executive Orders, the analysis in the RIA addendum does not form a basis or rationale for any of the provisions EPA is promulgating in this rulemaking.

Further, as explained previously in this section, although EPA is using the SC-HFCs for purposes of some of the analysis in the RIA addendum, this action does not rely on those SC-HFC estimates as a record basis for the Agency's action. EPA would reach the conclusions in this rule even in the absence of the SC-HFCs. Additional information on these analyses can be found in section VI of this preamble, as well as the RIA addendum, which is in the docket for this rulemaking.

II. General information

A. Do these regulations apply to me?

You may be potentially affected by the regulations established in this final rule if you own, operate, service, repair, recycle, dispose, or install equipment containing HFCs or their substitutes, as well as if you recover, recycle, or reclaim HFCs or their substitutes. You may also be potentially affected if you manufacture or sell equipment containing HFCs or their substitutes. Potentially affected categories, by North American Industrial Classification System (NAICS) code, are included in Table 1.